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Flagstar Corporation v. Royal Surplus Lines6/12/2000
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal From Spartanburg County J. Derham Cole, Circuit Court Judge
Heard April 4, 2000
REVERSED AND REMANDED
We granted certiorari to review a decision of the Court of Appeals granting immediate appellate review of a trial court's order requiring bifurcation of issues and discovery in a contract case.
We hold this order is not immediately appealable under S.C. Code Ann. ยง14-3 330(2) (1976), and therefore reverse and remand for trial.
ISSUES
Is an order granting bifurcation of issues in a contract case immediately appealable?
Is an order bifurcating discovery immediately appealable?
FACTS
Petitioners ("Flagstar") operate restaurants throughout the United States.
Two class actions were filed against Flagstar in United States District Courts, in addition to which numerous individual claims alleging discriminatory treatment of African-American patrons were filed. Those claims were settled, and Flagstar brought this declaratory judgment action alleging that an insurance policy issued by respondents ("Royal") provides coverage for the discrimination claims. This policy includes a provision which purports to exclude "bodily injury " or "personal injury" that "arises on the basis of race . . . color . . . national origin." (Exclusion "C") The policy nonetheless defines "personal injury" as injury "arising out of . . . discrimination." The insuring agreement further provides that the insurer covers obligations which the insured may become legally obligated to pay as a result of damages arising from "personal injury" stemming from an "occurrence."
Royal moved for judgment on the pleadings pursuant to Rule 12(c), SCRCP, asserting that coverage for race-based injury claims was barred under Exclusion C. After that motion was denied, Flagstar moved for bifurcation of the trial into two distinct phases, pursuant to Rule 42(b), SCRCP. This rule provides for separate trials of any "separate issue" as long as the right to trial by jury is preserved inviolate. Flagstar proposed that a jury would first determine whether Exclusion C operated to preclude coverage. If so, the litigation would end adversely to Flagstar. If not, trial would proceed on to the issues of whether the acts constituted "occurrences" or "personal injury" under the policy.
The trial judge, over the objection of Royal, granted the motion for bifurcation. In addition to bifurcating the issues for trial, the order bifurcated discovery. The trial judge noted that Royal had, in its Rule 12(c), SCRCP motion, demonstrated ". . . some recognition on its part that Exclusion C and its application in this case are a critical, threshold issue in this case."
The Court of Appeals initially dismissed the appeal on the order of a single judge, but a full panel thereafter determined that the order was immediately appealable, and reversed the trial court on the merits of the Rule 42(b) bifurcation. In reversing the trial court, the Court of Appeals held:
Given the complexities of the insurance coverage issues in this case, we hold that the trial court erred in granting the motion for separate trials. Rule 42(b) SCRCP, contains a distinct issue requirement. Clearly this case presents overlapping issues and ambiguity in the contract terms. Because this court has concluded there are overlapping issues that entitle Royal to one trial on both coverage and exclusion we also conclude that under Fortune, Royal was entitled to a single trial under Rule 42(b). Therefore, denial of a single trial amounts to denial of a mode of trial an
Page 1 2 3 South Carolina Personal Injury Attorneys
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