Ross v. Kinsale Insurance Company
3:24-cv-00779
| D.S.C. | May 1, 2024Background
- Ronald Ross, as personal representative of Sarah Ross’s estate and assignee of Blue Ridge of Sumter, LLC, sued Kinsale Insurance Company and Ironshore Specialty Insurance Company for insurance bad faith and related claims.
- The underlying facts pertain to allegations of sexual assault and harassment against Sarah Ross while she was a resident at a nursing home operated by Blue Ridge.
- Ross and Sarah obtained a $4 million default judgment against Blue Ridge in South Carolina state court, subsequently receiving assignment of Blue Ridge’s rights against its insurers.
- The insurance policy at issue was issued by Ironshore to Dawn Healthcare LLC, the asserted parent company of Blue Ridge.
- An amendment (Endorsement #20) to the policy redefined "Company" to mean only Dawn Healthcare, removing subsidiaries (such as Blue Ridge) as insureds.
- Ironshore moved to dismiss Ross's claims on grounds that Blue Ridge was not covered under the amended policy; the District Court considered this as a dispositive issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Blue Ridge is covered as an insured under the Ironshore policy as amended | Policy still covers subsidiaries and Endorsement #20's language is ambiguous | Policy was amended to cover only Dawn Healthcare, not subsidiaries | Blue Ridge not insured; policy unambiguous |
| Whether ambiguity in the policy should be construed against Ironshore | Ambiguities should be resolved in favor of the insured/assignee | No ambiguity; policy is clear in excluding subsidiaries | No ambiguity; strict policy language applies |
| Whether the assignment from Blue Ridge confers enforceable rights on Ross | Yes, based on prior assignment and coverage of Blue Ridge | No, because Blue Ridge is not covered after the amendment | Assignment irrelevant if no coverage exists |
| Whether language about claims “by or on behalf of any Subsidiary” applies to claims against subsidiaries | Phrase supports possible coverage or creates ambiguity | Phrase applies only to claims brought by subsidiaries, not against them | Court agrees with Ironshore's reading |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6) motions)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards; conclusory allegations not sufficient)
- Edwards v. City of Goldsboro, 178 F.3d 231 (standards for reviewing a motion to dismiss)
- Diamond State Ins. Co. v. Homestead Industries, Inc., 456 S.E.2d 912 (S.C.) (clear policy language controls over attempts to extend coverage)
- Mylan Lab’ys, Inc. v. Matkari, 7 F.3d 1130 (standards for motions to dismiss in the Fourth Circuit)