Civil Rights – Insurance – Covenants Not to Execute – Prisons & Jails

Although an Insurance Reserve Fund (IRF) policy and S.C. Code Ann. § 1-11-460 functioned to indemnify the defendant-corrections officers for the amounts they were liable to pay pursuant to a judgment for plaintiff, since plaintiff released the defendants from all liability, the IRF and the State Fiscal Accountability Authority were likewise no longer able to pay under the IRF policy and § 1-11-460.

We affirm the circuit court’s denial of plaintiff’s claim for declaratory relief.

Plaintiff relies on Fowler v. Hunter, 388 S.C. 355, 697 S.E.2d 531 (2010), in support of her argument that the covenants not to execute did not extinguish defendants’ liability or render her case moot. Fowler is factually distinguishable because it involved a prejudgment covenant not to execute that assigned an insured’s pending claim for professional liability against its insurance agent to the plaintiff. In Fowler, our Supreme Court held the prosecution of an assigned professional negligence claim against the insurer could proceed when a covenant not to execute was entered into. Fowler is inapplicable because plaintiff here signed a post-judgment covenant not to execute and this case does not involve the assigned claims.

As this court stated in Cobb v. Benjamin, 325 S.C. 573, 482 S.E.2d 589 (Ct. App. 1997), when an insured is relieved of a personal obligation to pay any judgment, the insurance company is relieved of its liability to pay under the policy. Moreover, the Cobb court enforced the reservation of right to proceed against any available underinsured motorist (UIM) coverage under the covenant not to execute. This is an important factual distinction because in Cobb, the UIM coverage acted as first party coverage for the complainant, not the insured.

We affirm the circuit court’s order on the ground of mootness.

Morris v. State Fiscal Accountability Authority (Lawyers Weekly No. 012-022-23, 5 pp.) (Per Curiam) Appealed from Richland County Circuit Court (Alison Renee Lee, J.) Garrett Brendan Johnson and Thomas Rode for appellant; Andrew Lindemann for respondents. South Carolina Court of Appeals (unpublished)