Civil Practice – Service of Process – Insurance Company – Contract – Policy’s Method

White Oak Manor, Inc. v. Lexington Insurance Co. (Lawyers Weekly No. 010-011-14, 10 pp.) (Kaye G. Hearn, J.) (Costa M. Pleicones, J., dissenting) Appealed from Spartanburg County Circuit Court (J. Derham Cole & Roger L. Couch, JJ.) On writ of certiorari to the Court of Appeals. S.C. S. Ct.

Holding: Although S.C. Code Ann. § 15-9-270 says insurance companies are to be served through the Director of the Department of Insurance, the parties could – and did – agree to a different method of service of process.

We reverse the Court of Appeals and affirm the circuit court’s order denying the defendant-insurance company’s motion to set aside default.

Section 15-9-270 states, “The summons and any other legal process in any action or proceeding against it must be served on an insurance company … by delivering two copies of the summons or any other legal process to the Director of the Department of Insurance…. A company shall appoint the director as its attorney pursuant to the provisions of Section 38-5-70. This service is considered sufficient service upon the company. When legal process against any company with the fee provided in this section is served upon the director, he shall immediately forward by registered or certified mail one of the duplicate copies prepaid directed toward the company at its home office….”

Nevertheless, parties are free to agree to alternative methods of service, just as they may waive service altogether.

Service of process is intended to provide notice and obtain personal jurisdiction, and the insurance company designated in its policy a method for an insured to accomplish both those goals. The insurance company is bound by its own policy’s terms. The insurance service statutes’ purpose is to provide an insured with a method to obtain service of process on insurance companies; it is not to serve as a shield for insurance companies, protecting them from their own policy terms.

Furthermore, we find no support for the Court of Appeals’ holding that service on the Director is a requirement that cannot be waived because the Director has a right to receive this information.

Although the policy’s service-of-suit clause required that service be directed to “Counsel … or his or her representative,” and although plaintiff addressed the pleadings to “Attn: LEGAL DEPARTMENT,” the mere omission of the word “Counsel” in the address did not render service ineffective.

The circuit court acted within its discretion in concluding that the insurance company’s losing the complaint was not a satisfactory explanation for failing to timely respond.

Finally, nothing in the S.C. Rules of Civil Procedure requires the service of a courtesy copy of the summons and complaint on opposing counsel. Furthermore, we find no inequity in plaintiff’s actions. We fail to see how serving an insurance company in accordance with its own service-of-suit clause can be characterized as unfair or an attempt to take advantage of the attorney. Instead, we find it would be inequitable to fault plaintiff for not serving an additional courtesy copy in case the insurance company lost the pleadings.

Reversed.

Dissent

(Pleicones, J.) The statutes and case law are clear: The exclusive method for service of process on a foreign insurance company is by service on the Director of the Department of Insurance.