UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 12-2256

LIBERTY MUTUAL FIRE INSURANCE COMPANY; EMPLOYERS INSURANCE 

OF WAUSAU, a mutual company,

Plaintiffs - Appellees,

v.

JT WALKER INDUSTRIES, INC., f/k/a Metal Industries, Inc.; MI 

WINDOWS & DOORS, INC., f/k/a MI Home Products, Inc., f/k/a 

Metal Industries, Inc. of California,

Defendants - Appellants.

No. 12-2350

LIBERTY MUTUAL FIRE INSURANCE COMPANY; EMPLOYERS INSURANCE 

OF WAUSAU, a mutual company, now known as Employers 

Insurance Company of Wausau,

Plaintiffs - Appellants,

v.

JT WALKER INDUSTRIES, INC., f/k/a Metal Industries, Inc.; MI 

WINDOWS & DOORS, INC., f/k/a MI Home Products, Inc., f/k/a 

Metal Industries, Inc. of California,

Defendants - Appellees.

Appeals from the United States District Court for the District 

of South Carolina, at Charleston. Margaret B. Seymour, Chief 

District Judge. (2:08-cv-02043-MBS)
2

Argued: November 6, 2013 Decided: February 10, 2014

Before GREGORY, DAVIS, and THACKER, Circuit Judges.

Affirmed in part, vacated in part, and remanded by unpublished 

opinion. Judge Gregory wrote the opinion, in which Judge Davis

and Judge Thacker joined. Judge Davis wrote a separate 

concurring opinion.

ARGUED: Richard Hugh Lumpkin, VER PLOEG & LUMPKIN, P.A., Miami, 

Florida, for Appellants/Cross-Appellees. Charles Mitchell 

Brown, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South 

Carolina, for Appellees/Cross-Appellants. ON BRIEF: Meghan C. 

Moore, W. Allen Bonner, VER PLOEG & LUMPKIN, P.A., Miami, 

Florida; William K. Davis, Alan M. Ruley, BELL, DAVIS & PITT, 

P.A., Winston-Salem, North Carolina, for Appellants/CrossAppellees. William C. Wood, Jr., NELSON MULLINS RILEY & 

SCARBOROUGH LLP, Columbia, South Carolina; Morgan S. Templeton, 

WALL TEMPLETON & HALDRUP, PA, Charleston, South Carolina; J. 

Mark Langdon, ELMORE AND WALL, Raleigh, North Carolina, for 

Appellees/Cross-Appellants.

Unpublished opinions are not binding precedent in this circuit.
3

GREGORY, Circuit Judge:

Liberty Mutual Fire Insurance Company (“Liberty”) filed an 

action in the district court seeking reimbursement under its 

insurance policies after settling five product defect lawsuits. 

Liberty insured J.T. Walker Industries, Inc. and its subsidiary 

MI Windows & Doors, Inc. (collectively, “MI”), named defendants 

in the product defect actions. Despite MI’s insistence on 

taking the cases to trial, Liberty settled all five cases within 

the deductible limits of the applicable insurance policies. MI 

refused to pay the costs of settlements it did not desire. When 

Liberty sued for breach of contract, MI filed counterclaims 

alleging that Liberty breached both the explicit terms of the 

insurance policies and the implied covenant of good faith and 

fair dealing.

A jury found both parties liable for contract damages and 

also found Liberty liable for actual and punitive damages on 

MI’s bad faith claim. The district court set aside the bad 

faith damages, finding that MI failed to prove actual damages 

and, as a result, was not entitled to punitive damages. The 

district court affirmed the verdict as to the breaches of 

contract, and refused to award litigation costs and prejudgment 

interest. The parties now appeal the post-trial rulings and 

evidentiary issues. For the reasons stated below, we affirm the 
4

district court’s ruling on all issues except bad faith damages. 

We vacate the ruling on punitive damages and remand.

I.

A.

MI has manufactured windows and doors for nearly sixty 

years. Throughout that time, MI purchased various insurance 

policies, providing general liability, umbrella, and excess 

coverage. Between 1997 and 2003, Liberty insured MI under six 

annual commercial general liability insurance policies (“the 

Policies”). The Policies conferred upon Liberty the duty and 

right to defend MI against lawsuits claiming property damage. 

They also vested in Liberty the discretion to “investigate any 

occurrence and settle any claim or suit that may result.”

Each policy contained a $2,000,000 aggregate limit, with a 

limit of $1,000,000 per occurrence. The Policies also provided 

for a $500,000 deductible, requiring MI to reimburse Liberty up 

to that amount for any defense and indemnity costs incurred per 

occurrence. The Policies established claim handling fees, with 

charges ranging from $625 to $967 for each claim file Liberty 

opened in relation to MI’s coverage.

B.

During the time period covered by the Policies, MI was a 

named defendant in five property damage lawsuits in South 
5

Carolina. Each suit alleged that, inter alia, defective 

manufacturing and installation of MI windows and doors led to 

progressive water damage in five condominium developments. The 

plaintiffs in each suit were the individual homeowners and the 

respective homeowners’ associations for each development. The 

plaintiffs sued MI alongside other contractors and developers

involved in constructing the condominiums, alleging millions of 

dollars in damages for each lawsuit. The five suits were:

Avian Forest, Tilghman Shores, Riverwalk, Magnolia North, and 

Marais.1

MI tendered each suit to Liberty, which agreed to defend MI 

in all five cases. Liberty retained counsel to represent MI’s 

interests in each of the underlying lawsuits. Finley Clarke 

served as counsel in four cases, and Scott Taylor served as 

counsel in Magnolia North due to Clarke’s conflict in that case. 

MI involved its national outside counsel, Paul Gary, in each 

case. Defense counsel in the underlying cases prepared and 

 1 Avian Forest Homeowners’ Ass’n v. MI Windows & Doors, Inc. 

et al., CA No. 02–CP–22–0687, Horry County, South Carolina; 

Tilghman Shores Homeowners’ Ass’n v. MI Windows, et al., CA No 

03–CP–26–4021, Horry County, South Carolina; Riverwalk at 

Arrowhead Country Club Prop. Owners’ Ass’n, Inc. v. MI Home 

Products, et al., CA No. 03–CP–26–7169, Horry County, South 

Carolina; Magnolia N. Homeowners Ass’n v. MI Windows, et al., CA 

No. 05–CP–26–0044, Horry County, South Carolina; Marais Prop.

Owners’ Ass’n v. MI Windows, et al., CA No. 05–CP–10–1140, 

Charleston County, South Carolina.
6

presented reports for Liberty, MI, and Gary. During the 

underlying litigation, MI expressed its position, through Gary, 

that it desired to defend the reputation of its products and 

avoid settling meritless cases, lest it become an easy target 

for suits related to other buildings or developments.

After receiving the cases, Liberty set a reserve for each 

case -- an estimate of losses due to MI’s potential exposure. 

Liberty set the reserves based upon the facts of each claim and 

adjusted the amounts to reflect any new information it received. 

Liberty used these figures to inform an evaluation of whether a 

given case should be tried or settled. The aggregate reserve 

total amounted to $475,000. Liberty also estimated costs of 

defending each case through trial, eventually allocating 

$769,310 for defense costs. Based on the evidence, these 

estimates, the nature of the claims, and the potential for joint 

and several liability, Liberty settled each of the five 

underlying lawsuits, despite MI’s desire to proceed to trial on 

four of them.

Avian Forest settled first. Liberty set the Avian Forest

reserve at $300,000 and estimated $96,250 in defense costs. 

Clarke estimated the potential liability to be between $3 

million and $7 million. Clarke expressed confidence that 

summary judgment would not resolve the case. The plaintiffs in 

the case retained three sets of experts prepared to fault MI for 
7

the property damages based on the quality of its windows. Being 

that the jury verdict would turn on whichever set of experts the 

jury found more credible, Clarke considered MI’s likelihood of a 

favorable jury verdict to be no better than fifty percent.

Approximately one week before trial was to commence, MI 

learned that the claims adjuster authorized Liberty to settle 

MI’s portion of the Avian Forest claims. MI objected to 

settlement, stating its intent to reject Liberty’s defense and 

assume control of the defense through trial. In response, 

Liberty offered MI an opportunity to withdraw the claim for 

coverage, whereupon Liberty would cede full control of the 

defense to MI. Doing so would have released Liberty from any 

liability and caused MI to assume the risk of a verdict greater 

than the settlement amount. MI refused to release Liberty from 

its coverage obligations. Liberty settled Avian Forest one day 

later for $72,300.2

In Tilghman Shores, Liberty set a reserve of $75,000 and 

estimated $65,000 for defense costs. Clarke estimated potential 

liability in the vicinity of $6 million, not including punitive 

damages. He estimated settlement would cost between $300,000 

and $500,000. Just as with Avian Forest, Clarke found no 

 2 The developer in Avian Forest proceeded to trial, where a 

jury returned a verdict in the plaintiffs’ favor and awarded 

$2.2 million in damages. (J.A. 771, 2125.)
8

possibility of a favorable summary judgment resolution and 

estimated no more than a fifty percent chance for a favorable 

jury verdict. Liberty settled Tilghman Shores for $75,000.

The next two cases, Riverwalk and Magnolia North, settled 

simultaneously for $400,000. For Riverwalk, Liberty estimated 

defense costs at $125,000 but set the reserve at $0. Clarke 

expressed concern that an adverse verdict in Riverwalk could 

result in joint and several liability between $7 million to $10 

million. He doubted the possibility of a favorable summary 

judgment disposition, and estimated no better than a fifty 

percent chance of a favorable jury verdict. He also expressed 

concern that MI’s windows in nine of the Riverwalk buildings 

would not meet applicable building codes. Liberty settled 

Riverwalk for $200,000.

In Magnolia North, Liberty estimated defense costs at 

$192,000 and set a reserve of $50,000. Taylor estimated damages 

upwards of $10 million, with an additional $3.8 million for the 

individual homeowners’ loss-of-use claims. He was certain the 

conflicting expert reports would preclude summary judgment. 

Taylor also believed MI held a fifty percent chance of a 

favorable verdict if the developer remained a co-defendant. He 

held no expectation that the developer, who suffered a multimillion dollar liability in the Avian Forest trial, would settle 
9

prior to trial in Magnolia North.3 Liberty settled Magnolia 

North at the same time as Riverwalk and for the same amount --

$200,000.

The final case, Marais, was the only one for which MI 

expressed a desire to settle. Upon defense counsel’s advice, 

Liberty estimated $291,000 for defense costs and set a reserve 

of $50,000. MI accepted some level of responsibility for damage 

due to its failure to remedy an improper installation. MI 

sought a $150,000 settlement. According to Clarke, the 

plaintiffs sought more than $20 million from all defendants. 

The mediator in the case estimated settlement would require 

between $7 million and $10 million. Liberty settled MI’s 

portion of the Marais case for $500,000. Liberty paid $210,000 

of that amount and allocated the remaining $290,000 to Zurich, 

MI’s succeeding insurance carrier.

Being that each claim settled for no more than $500,000, 

Liberty sought reimbursement from MI for the full settlement 

amounts in accordance with the deductible under the Policies. 

Liberty also requested fees for opening twenty-six processing 

claims in connection with the lawsuits. Having intended to go 

 3 The same developer was also found liable for $4.3 million 

in damages in a suit with another condominium development. 

(J.A. 771-78, 2125-26.)
10

to trial and exonerate its products, MI refused to submit the 

requested amounts.

C.

Liberty filed this diversity action in the United States 

District Court for the District of South Carolina. Liberty 

sought declaratory relief concerning the trigger of insurance 

coverage, allocation, and the right to refuse and control 

settlement. Liberty also sought damages for breach of contract, 

seeking the settlement amounts and processing fees incurred in 

resolving the underlying lawsuits. MI countersued for contrary 

declarations and for damages for breach of contract and bad 

faith.

In ruling on the parties’ summary judgment motions, the 

district court held that Liberty retained sole discretion to 

settle the underlying cases. As a result, the district court 

held that MI lacked the authority to approve settlement 

decisions. The district court also denied Liberty’s motion for 

summary judgment on the bad faith claims for two reasons. 

First, the district court held that MI’s inability to approve of 

settlements would not preclude a finding that Liberty acted in 

bad faith in settling the claims. This was because bad faith 

extends to unreasonableness in paying a claim as well as the 

manner in which a claim is processed. Second, the district 
11

court held that the settlement amounts provided sufficient 

evidence for MI to take its bad faith claim to a jury.

The district court held a jury trial on the breach of 

contract and bad faith claims. The district court granted 

Liberty’s motion in limine to exclude any evidence that Liberty 

never defended or settled a case against MI, aside from those at 

issue, for an amount exceeding the $500,000 deductible. During 

MI’s case-in-chief, the district court sustained Liberty’s 

objection to MI evidence related to Liberty’s motive in reaching 

the final settlement amounts, finding this motive evidence 

irrelevant and unduly prejudicial.4

The evidence adduced at trial tracked the aforementioned 

facts. MI offered evidence that Liberty failed to disclose 

certain portions of settlement discussions, including the timing 

of the Avian Forest and Marais settlements. MI’s evidence also 

suggested that Liberty’s claims expert failed to closely review 

the reserves. Don Langro, a Liberty claims adjuster who 

negotiated the settlements, admitted that he was unaware of MI’s 

financial stake at the time of his negotiations. MI presented 

evidence of its intent to defend its reputation and protect 

itself from being an easy target for future products defect 

 4 MI sought introduction of a de bene esse deposition of an 

underwriting expert as evidence of Liberty’s financial selfinterest.
12

lawsuits, in which other plaintiffs might sue in hopes of 

obtaining a settlement payout. This included testimony by Gary

regarding his evaluation of the claims and settlements, and his 

belief that Liberty should have taken the underlying lawsuits to 

trial.

Conflicting testimony arose as to the processing claims 

files. The evidence demonstrated that Liberty opened twenty-six 

claims related to the underlying lawsuits. According to Langro,

Liberty typically opened one claim file per lawsuit per year of 

coverage. Another Liberty witness noted that a single 

occurrence of injury or damage could give rise to multiple 

processing claims. Additional witnesses suggested that each of 

the five underlying cases were actually two lawsuits -- one 

involving the homeowners association and one involving the 

individual homeowners -- thus requiring multiple claims per 

suit.

After MI’s case-in-chief, Liberty moved for a directed 

verdict. Liberty averred, inter alia, that MI failed to prove 

bad faith damages. Specifically, Liberty’s counsel argued that

MI’s only evidence on damages were the settlement amounts --

which MI had not paid -- and these amounts could not undergird a 

bad faith action because MI failed to provide evidence of 

causation. The district court denied this motion and the 

parties’ other Rule 50 motions.
13

The jury returned a verdict in favor of both parties. The 

jury ruled in Liberty’s favor on its breach of contract claim, 

thereby holding MI liable for $894,416.01 -- the amount billed 

by Liberty to MI for the settlements. The jury also ruled in 

MI’s favor on its breach of contract claim, awarding MI $18,290

-- the amount of excess processing fees. On MI’s bad faith 

claim, the jury ruled in MI’s favor and found Liberty liable for 

consequential damages of $684,416.01. The jury also awarded MI 

$12.5 million in bad faith punitive damages.

The parties filed numerous post-trial motions. Liberty 

sought judgment notwithstanding the verdict (JNOV) on the bad 

faith claim, a new trial based on improper jury instructions, 

reduction of punitive damages, and an award of prejudgment 

interests and costs. MI sought judgment as a matter of law 

(JMOL) as to a portion of Liberty’s contract damages, and for 

attorney’s fees and costs.

The district court disposed of most of the post-trial 

motions on August 10, 2012, leaving prejudgment interest and 

costs for later resolution. The district court granted 

Liberty’s motion for JNOV on the grounds that MI failed to prove 

damages flowing from any bad faith. The district court held 

that the jury had sufficient evidence to find the settlement 

amounts unreasonably high, based on the reserve amounts, alleged 

unpreparedness of defense counsel to conduct a trial, and 
14

disputes between the parties as to whether Liberty should have 

taken the underlying cases to trial. However, the district 

court held that MI failed to prove that absent bad faith, MI 

would have spent less than the settlement amounts on defense 

costs and, in the event of an adverse verdict, damages. With MI 

having failed to prove actual or consequential damages, the 

district court found that MI was not entitled to punitive 

damages.

The district court granted in part MI’s JMOL on the basis 

that Liberty was not entitled to the $290,000 of the Marais

settlement allocated to Zurich. Having construed MI’s motion as 

including a request for remittitur, the court reduced Liberty’s 

contract damages to $684,416.01. The district court denied 

Liberty’s motion for a new trial and MI’s motion for attorney’s 

fees. Subsequent to this order, after Liberty notified the 

district court it would accept remittitur in lieu of a new trial 

on the contract claims, the district court denied Liberty’s 

motion for prejudgment interest and costs.

The parties timely appealed the post-trial rulings, and MI 

also appealed the district court’s evidentiary rulings. We have

jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.

The parties raise a host of issues arising from the 

district court’s disposal of the case, virtually all of which 

track the parties’ post-trial motions. They concern (1) bad 
15

faith liability and damages, (2) breach of contract damages, (3) 

prejudgment interest, (4) litigation costs, and (5) jury 

instructions and evidentiary rulings. We discuss each of these 

in turn.

II.

The central issue on appeal concerns the district court’s 

granting in part of Liberty’s motion for JNOV. In doing so, the 

court set aside the damages for Liberty’s breach of the duty of 

good faith and fair dealing. We review de novo the grant or 

denial of a motion for judgment as a matter of law. Anderson v. 

Russell, 247 F.3d 125, 129 (4th Cir. 2001). We “accord the 

utmost respect to jury verdicts and tread gingerly in reviewing 

them.” Price v. City of Charlotte, N.C., 93 F.3d 1241, 1250 

(4th Cir. 1996). Where the district court rules contrary to the 

jury’s findings, we reverse such a decision, thereby affirming 

the jury’s conclusions, where “substantial evidence” supports 

the jury verdict. Anderson, 247 F.3d at 129; see also First 

Union Commercial Corp. v. GATX Cap. Corp., 411 F.3d 551, 556 

(4th Cir. 2005).

The parties dispute whether Liberty waived its challenge on 

the damages evidence, as well as the district court’s 

substantive rulings on liability, damages, and attorney’s fees.
16

A.

As an initial matter, MI argues that Liberty waived its 

right to argue causation of bad faith damages in its motion for 

JNOV. MI claims that Liberty’s motion for directed verdict, by 

failing to make the specific arguments in the motion for JNOV, 

waived any challenge on those grounds asserted post-trial. We 

disagree and find that Liberty sufficiently preserved the issue.

A trial court may entertain a motion for judgment as a 

matter of law any time before the case has been submitted to the 

jury and after a party has been fully heard on a claim or an

issue. Fed. R. Civ. P. 50(a). The court may grant the motion 

if the evidence could not provide a legally sufficient basis for 

a reasonable jury to find for the nonmoving party. Fed. R. Civ. 

P. 50(a)(1). “The motion must specify the judgment sought and 

the law and facts that entitle the movant to the judgment.” 

Fed. R. Civ. P. 50(a)(2).

Rule 50(b) permits a party to renew its Rule 50(a) motion 

post-trial, asserting the same grounds initially raised in the 

prior motion. Fed. R. Civ. P. 50(b); see also Price, 93 F.3d at 

1248-49. In considering a challenge based on a lack of 

specificity in the Rule 50(a) motion, we remain mindful that the 

Federal Rules are to be construed liberally, and consider 

whether the motion provides the court and the nonmoving party 

sufficient notice of any alleged deficiencies in evidence. 
17

Singer v. Dungan, 45 F.3d 823, 829 (4th Cir. 1995) (citations 

omitted).

We find that Liberty preserved its Rule 50(b) arguments. 

In its Rule 50(a) motion, Liberty plainly stated, albeit 

briefly, that the settlement amounts alone were insufficient to 

demonstrate what damages resulted from any alleged bad faith. 

Having identified a perceived deficiency in damages and 

causation, Liberty sufficiently preserved this issue for posttrial review.5

 See Price, 93 F.3d at 1249. The fact that a 

party expands its reasoning and offers more specificity in its 

post-trial motion does not run afoul of the Federal Rules, so 

long as the legal and factual basis for the renewed motion 

mirrors that presented in the Rule 50(a) motion. See Wallace v. 

Poulos, 861 F. Supp. 2d 587, 595-96 (D. Md. 2012) (Rule 50(b) 

motion was properly preserved where a less detailed Rule 50(a) 

motion set forth the same basic facts, thus providing adequate 

notice of perceived deficiencies). In both motions, Liberty 

focused on the failure to demonstrate damages actually caused by 

bad faith, and that MI’s mere reliance on the settlement amounts 

 5 This Court has found issues sufficiently preserved where 

the Rule 50(a) motion contained nonspecific explanations or was 

otherwise improper yet placed the court and nonmoving party on 

notice of the alleged defects. See Singer, 45 F.3d at 829; Fed. 

Savings & Loan Ins. Corp. v. Reeves, 816 F.2d 130 (4th Cir. 

1987); Miller v. Premier Corp., 608 F.2d 973 (4th Cir. 1979).
18

could not prove harm. Thus, Liberty did not waive its posttrial challenge to the bad faith consequential damages award.

B.

The substantive challenges to the district court’s ruling 

on bad faith concern the legal standard applied by the court, 

sufficiency of evidence on actual or consequential damages, the 

availability of nominal and punitive damages, and an award of 

attorney’s fees either as damages or by statutory provision.

1.

South Carolina recognizes a common law tort action for an 

insurer’s bad faith in exercising duties owed to policyholders. 

Charleston Cnty. Sch. Dist. v. State Budget & Ctrl. Bd., 437 

S.E.2d 6, 7-8 (S.C. 1993); Nichols v. State Farm Mut. Auto. Ins. 

Co., 306 S.E.2d 616, 619 (S.C. 1983). Bad faith claims subject 

insurers to tort liability where the insurer unreasonably 

refuses to settle within policy limits, Tyger River Pine Co. v. 

Maryland Cas. Co., 170 S.E. 346 (S.C. 1933), and where an 

insured demonstrates “bad faith or unreasonable action by the 

insurer in processing a claim,” Nichols, 306 S.E.2d at 619. 

This tort is rooted in the implied covenant of good faith and 

fair dealing in every insurance contract. Id. at 618.

Where an insurer refuses to provide benefits under a 

mutually binding insurance contract, the insured may prevail on 

a bad faith action by proving “the insurer’s bad faith or 
19

unreasonable action in breach of an implied covenant of good 

faith and fair dealing arising on the contract,” and damages 

stemming from that breach. See Crossley v. State Farm Mut. 

Auto. Ins. Co., 415 S.E.2d 393, 396-97 (S.C. 1992); Peterson v. 

W. Am. Ins. Co., 518 S.E.2d 608, 614-15 (S.C. Ct. App. 1999). 

“An insurer acts in bad faith where there is no reasonable basis 

to support the insurer’s decision.” Doe v. S.C. Med. 

Malpractice Liability Joint Underwriting Ass’n, 557 S.E.2d 670, 

674 (S.C. 2001) (internal quotation marks and citations 

omitted). The parties dispute the presence of both a bad faith 

breach and resulting damages.

2.

MI contends that the district court applied an incorrect 

legal standard for what comprises bad faith.6

 In its JNOV order, 

 6 Liberty alternatively proposes two bad faith liability 

standards, in the event we are inclined to reverse the district 

court’s ruling on bad faith conduct. The first is that a 

settlement within policy limits cannot be unreasonably high. 

The second is that express discretionary authority to settle 

cannot give rise to bad faith absent an abuse of discretion. 

Neither proposal appears sustainable under South Carolina law. 

See Doe, 557 S.E.2d at 675-76 (discretion to settle is a 

significant factor in assessing reasonableness of a settlement 

decision, but not a bar to bad faith liability); Tadlock 

Painting Co. v. Md. Cas. Co., 473 S.E.2d 52, 54 (S.C. 1996)

(“The fact that the claims were ultimately settled for an amount 

less than the applicable deductible . . . is irrelevant to 

whether the insurer performed its duties in good faith.”); Tiger 

River Pine Co. v. Maryland Cas. Co., 161 S.E. 491, 493 (S.C. 

1931) (exclusive control of and right to settle a suit does not 

eliminate the insurer’s duty to avoid bad faith).
20

the district court determined that there was sufficient evidence 

introduced at trial to support the jury’s finding that the 

settlement amounts were unreasonably high. In addition to 

evidence of unreasonably high settlement amounts, MI contends 

that the district court should have also considered evidence as 

to Liberty’s bad faith processing of MI’s claims. On these 

facts, we disagree.

Evidence regarding processing fees did not inform the 

jury’s bad faith finding. The verdict form provided space to 

write in the damage amount for each claim. These amounts

provided insight into the usually unascertainable thoughts of 

the jury, to the extent that we know that the jury considered 

the processing fees under MI’s breach of contract claim. For 

MI’s contract claim, the jury entered $18,290 -- the amount of 

the wrongfully charged processing fees. For bad faith damages, 

the jury awarded an amount equal to the total owed to Liberty 

for the settlements. The jury’s award thus suggests that it 

found bad faith in the settlements, not any aspect of 

processing. See Dowling v. Home Buyers Warranty Corp., II, 428 

S.E.2d 709, 711 (S.C. 1993) (no bad faith damages where the 

verdict form permitted separate entries for contract and bad 

faith damages and “[t]he jury returned its verdict with a slash 

drawn through the space where it could have awarded actual 

damages on the bad faith cause of action”). Had the jury found 
21

bad faith in the overcharging of claims fees, it presumably 

would have added another $18,290 in bad faith damages.7 Thus, 

the jury’s verdict demonstrates that the district court properly 

limited its bad faith examination to the unreasonableness of the 

settlement amounts.

Furthermore, MI’s contention that charging excessive fees 

supports bad faith is beyond the bounds of South Carolina law in 

this context. The bad faith tort rests upon the special 

characteristics of the insurance relationship and the concern 

that, in the absence of potential tort liability, an insurer 

could “delay and deny a claim with virtual impunity” and pay 

only the contractual limits. Masterclean, Inc. v. Star Ins. 

Co., 556 S.E.2d 371, 374-75 (S.C. 2001). Hence, bad faith 

processing liability has typically involved a delay in providing 

or refusal to provide benefits. See Tadlock Painting Co. v. Md. 

Cas. Co., 473 S.E.2d 52, 53 (S.C. 1996) (insurer refused to 

continue settlement negotiations until insured agreed to 

insurer’s interpretation of deductible provision); Cock-N-Bull 

Steak House, Inc. v. Generali Ins. Co., 466 S.E.2d 727, 730 

(S.C. 1996) (insurer failed to provide reasonable basis for 

 7 Awarding the fee amounts under both bad faith and contract 

damages would have, in any event, resulted in an impermissible 

double recovery. See Braswell Shipyards, Inc. v. Beazer East, 

Inc., 2 F.3d 1331, 1338 (4th Cir. 1993) (citing Taylor v.

Hoppin’ Johns, Inc., 405 S.E.2d 410, 412 (S.C. Ct. App. 1991)).
22

excluding certain eligible items from coverage); Nichols, 306 

S.E.2d at 339 (insurer’s refusal to pay for damage incurred by 

auto theft loss resulted in seven-month delay in car repair); 

see also Ocean Winds Council of Co-Owners, Inc. v. Auto-Owners 

Ins. Co., 241 F. Supp. 2d 572, 576-77 (D.S.C. 2002) (question of 

fact for jury where insurer delayed resolution by failing to 

deny the claim, provide reasons for denial, or respond to 

insured attorney’s correspondence).

Liberty did not delay or deny coverage. It promptly 

defended and settled claims, and in the process charged a number 

of fees based on a disputed interpretation of the contract. 

Charging excessive fees might constitute bad faith when used to 

delay or deny coverage, or as leverage to pressure an insured 

into making certain concessions. Liberty engaged in no such 

use. The district court found the processing fees excessive 

only because two reasonable interpretations of policy language 

required a construction against Liberty, as the drafter, and

favorable to MI. Judicial interpretation and contract damages 

adequately resolve the excessive fee dispute, rendering an 

extra-contractual remedy unnecessary here. The excess charges 

are not the sort of bad faith processing of Nichols and its 

progeny.

For these reasons, we find no error in the bad faith legal 

standard applied by district court.
23

3.

The district court set aside the jury’s award of actual or 

consequential bad faith damages, finding that MI failed to 

provide sufficient evidence of ascertainable loss. The district 

court held that without any evidence of what MI would have spent 

on trial and potential liability absent any bad faith, the jury 

lacked a legally sufficient basis for determining the actual 

damages caused by Liberty’s actions. MI argues that the 

district court erred in requiring such evidence.8

 We disagree.

A policyholder may receive actual or consequential damages 

in a bad faith action. Nichols, 306 S.E.2d at 619. “To recover 

damages, the evidence must enable the jury to determine the 

amount of damages with reasonable certainty or accuracy.” 

Magnolia N. Prop. Owners Ass’n, Inc. v. Heritage Communities, 

Inc., 725 S.E.2d 112, 126 (S.C. Ct. App. 2012); Pope v. Heritage 

Communities, Inc., 717 S.E.2d 765, 781 (S.C. Ct. App. 2011). 

Although damages need not be proven with mathematical certainty, 

a close estimate of the loss is necessary, even if the damages 

 8 MI also contends that the district court’s post-trial 

order contradicted its denial of summary judgment. On the 

contrary, finding a genuine issue of material fact for the jury 

did not relieve MI of the burden to prove causation. If, for 

example, the jury found that MI was not contractually liable for 

the settlement amounts, the deductible amounts could have, in 

theory, represented actual damages. Because the jury found MI 

liable for the deductible amount under the Policies, additional 

evidence of causation was required.
24

calculation depends upon contingent events. Magnolia North, 725 

S.E.2d at 126 (citations omitted). Damages left to conjecture, 

guess, or speculation will not enable recovery. Piggy Park 

Enters., Inc. v. Schofield, 162 S.E.2d 705, 708 (S.C. 1968); see

also Eastman Kodak Co. of N.Y. v. S. Photo Materials Co., 273 

U.S. 359, 379 (1927) (damages must be based on evidence 

demonstrating an ascertainable loss amount, not guess or 

speculation).

To the extent it is not speculative, MI’s damages evidence 

undermines its argument by demonstrating an absence of damages. 

MI relies upon the estimated trial costs, reserves, and 

settlement amounts for each case. Considering all five 

underlying claims, the total estimate to defend the cases was 

$769,310 and the reserves, estimating MI’s exposure, totaled

$475,000. The total settlement amount was $1,047,300 --

$197,010 less than the combined estimated defense costs and 

reserves. Using these figures, no actual damage occurred. Cf.

Tyger River, 170 S.E. at 347 (actual damages shown where the 

adverse jury verdict awarded an amount greater that the rejected 

settlement). If, for example, Liberty settled all claims for 

$1,000,000 and defense and liability estimates totaled $500,000, 

then we would be considering a very different situation, wherein 

MI could reasonably claim $500,000 in actual or consequential

damages.
25

Further, MI failed to present evidence calling these 

estimates, upon which they now heavily rely, into question. MI 

offered no evidence that the defense costs were overstated, nor 

did it provide substantial evidence that it would have prevailed 

had it proceeded to trial in the underlying cases. In 

addressing the jury, MI’s trial counsel referred to Marais in 

closing argument as “catastrophically difficult.” The jury also 

heard testimony that the developer in Avian Forest and Magnolia 

North suffered adverse verdicts in Avian Forest and at least one 

other lawsuit. One adverse verdict, subject to joint and 

several liability, in any of the five underlying claims could 

have exceeded the total settlement amounts here. Without 

substantial evidence supporting a finding that it would have 

either prevailed in the underlying lawsuits or spent less than 

the settlement amounts on defense and liability, MI failed to 

show that it suffered any damages due to Liberty’s decision to 

settle.

MI contends that the jury was within its power to reject 

the defense costs and award the full settlement amounts. We 

find this position specious for two reasons. First, no 

reasonable factfinder could conclude that MI could have 

proceeded to trial without incurring any defense costs. MI’s 

argument that the jury was within its power to discount the 

prospective trial costs defies common sense. Proceeding to
26

trial would have certainly cost some amount, arguably a 

significant figure due to the complexity of construction defect 

cases and the need for expert testimony on claims seeking 

multimillion dollar damages.

Second, to the extent MI relies on testimony that some of 

the plaintiffs “might” have walked away from their claims at any 

moment, it presented nothing more than speculative testimony on 

this point. No facts indicated that any of the underlying 

plaintiffs considered abandoning their claims. Clarke

repeatedly noted that resolution would only occur through either 

settlement or trial. MI fails to demonstrate where in the 

record the evidence indicates that any of the underlying 

plaintiffs actually wavered on their commitment to litigate

their claims. Indeed, at least two sets of plaintiffs -- those 

in Avian Forest and Magnolia North -- proceeded to trial against 

other defendants. Thus, the jury was not free to reject the 

possibility of incurring any defense costs.

MI also urges that we impose upon Liberty, as the insurer, 

the burden of proving damages in instances of bad faith refusal 

to settle cases. Relying on Washington law, MI argues that in 

the insurance context, the insurer stands in a much better 

position of knowing the costs of litigation and thus being able 

to prove what would have happened absent bad faith. Mut. of 

Enumclaw Ins. Co. v. Dan Paulson Constr., Inc., 196 P.3d 1, 11 
27

(Wash. 2007). It further maintains that such a burden is 

appropriate in order to prevent Liberty from benefiting from its 

misconduct. See Champion v. Whaley, 311 S.E.2d 404, 406 (S.C. 

Ct. App. 1984) (once a plaintiff shows that defendant’s actions 

“substantially contributed” to the nonoccurrence of a 

contractual condition, burden shifts to defendant to show that 

condition would not have occurred regardless of prevention).

We decline to adopt MI’s burden shifting argument. MI’s 

reliance on Champion is “seriously misplaced,” as the “doctrine 

of prevention has yet to be applied as a substitute for proof of 

damages” in the insurance context. Royal Ins. Co. of Am. v. 

Reliance Ins. Co., 140 F. Supp. 2d 609, 621 (D.S.C. 2001). 

Without guidance from South Carolina courts, we decline to make 

such extension here. Similarly, we decline to follow Washington 

state law, notwithstanding that court’s thorough consideration 

of the issue, without guidance from the South Carolina courts.

For these reasons, we affirm the district court’s ruling 

that MI failed to prove direct or indirect damages.

4.

We reverse the district court’s ruling that absent actual 

or consequential damages, MI cannot receive punitive damages. 

An absence of ascertainable damages does not necessarily 

preclude nominal or punitive damages where, as here, the jury 

finds a party liable for punitive damages.
28

A court may award punitive damages in bad faith tort 

actions for conduct willful, wanton, or reckless in disregarding 

a plaintiff’s rights. Nichols, 306 S.E.2d at 619. Generally, 

punitive damages are only awarded where a court also awards 

actual or nominal damages. McGee v. Bruce Hosp. Sys., 545 

S.E.2d 286, 288 (S.C. 2001) (citing Cook v. Atl. Coast Line. 

R.R. Co., 190 S.E. 923 (S.C. 1937)). Nominal damages need not 

be specifically pleaded where a party alleges a claim for

general damages; the general damage allegation sufficiently 

encompasses nominal damages. Ins. Servs. of Beaufort, Inc. v. 

Aetna Cas. & Sur. Co., 966 F.2d 847, 853 (4th Cir. 1992). 

Furthermore, where pleadings allege and evidence proves a 

willful invasion or infringement of a right, courts presume 

nominal damages, even if exact measurement of actual damages is 

not possible. Cook, 190 S.E. at 924.

The rule requiring actual or nominal damages as a 

prerequisite to punitive damages “is premised on the fact that 

liability must be established before a plaintiff can seek 

punitive damages.” McGee, 545 S.E.2d at 288. Thus, a plaintiff 

is entitled to a jury determination on punitive damages 

liability even in the absence of ascertainable loss. Id. at 

288-89; cf. Aetna, 966 F.2d at 853 (“The recovery of nominal 

damages is particularly appropriate to vindicate the violation 

of a right . . . where injury is shown but damages cannot be 
29

proven.”). Where a jury finds a willful or reckless invasion of 

a legal right, a court presumes that nominal actual damages are 

merged into a punitive damage award. Hinson v. A. T. Sistare 

Constr. Co., 113 S.E.2d 341, 345 (S.C. 1960) (citing Cook, 190

S.E. at 924).

Despite its inability to demonstrate direct or indirect 

damages, MI was entitled to, and did receive, the opportunity to 

have the jury consider punitive damages liability. The court 

properly instructed the jury as to the punitive damages 

standard. In awarding punitive damages, the jury found 

Liberty’s actions willful, wanton, or reckless. As a result, MI 

is not prohibited from receiving punitive damages. See McGee, 

545 S.E.2d at 288-89.

The district court’s sole basis for setting aside the 

jury’s punitive damages award was MI’s failure to prove 

ascertainable damages of Liberty’s bad faith. Having already 

applied the preponderance of evidence standard to find bad 

faith, the district court should have further considered whether 

MI “might be entitled to nominal damages . . . even [though] 

actual damages cannot be precisely ascertained.” Aetna, 966 

F.2d at 853. The district court’s opinion does not speak to 

whether it found that the evidence supported the jury’s finding 

that Liberty acted willfully, wantonly, or recklessly. If the 

court finds the evidence sufficient, then nominal damages may be 
30

presumed, Cook, 190 S.E. at 924, and the court must consider 

whether punitive damages are appropriate and whether the jury’s 

award was excessive.

Accordingly, we vacate the district court’s ruling on 

punitive damages. On remand, the district court must consider 

whether the evidence supported the jury’s finding that Liberty 

engaged in willful, wanton, or reckless conduct. If so, MI is 

entitled to nominal damages, and then the court must consider 

Liberty’s challenge to the amount of the punitive damages award.

C.

MI argues that it was entitled to attorney’s fees either as 

consequential damages or pursuant to S.C. Code § 38-59-40. 

Neither argument carries the day.

1.

MI first claims attorney’s fees as consequential damages in 

bad faith claims. This theory relies on MI’s assumption that 

South Carolina follows California on issues concerning bad faith 

insurer actions. Because California recognizes attorney’s fees 

as damages in bad faith claims to a certain extent, see Brandt 

v. Super. Ct. of San Diego Cnty., 693 P.2d 796 (Cal. 1985), MI 

contends South Carolina implicitly recognizes attorney’s fees as 

consequential damages.

Courts applying South Carolina bad faith law have not 

awarded attorney’s fees as consequential damages in tort 
31

actions. MI acknowledges that in Andrews v. Central Surety 

Insurance Company, 271 F. Supp. 814 (D.S.C. 1967), the court 

held that a plaintiff could not recover attorney’s fees incurred 

in prosecuting a bad faith insurance claim. Id. at 821. No 

other South Carolina court speaks directly to this issue.

For additional reasons, we do not find that California’s 

rule on attorney’s fees applies here. MI’s inference that South 

Carolina strictly follows California law on bad faith insurance 

issues is dubious. South Carolina does not look explicitly to 

California law in the bad faith context, and will consider 

California’s principles equally with those of other states. 

See, e.g., Boldt Co. v. Thomason Elec. & Am. Contractors Indem. 

Co., 820 F. Supp. 2d 703, 705 (D.S.C. 2007). Nichols, which 

preceded Brandt, only recognized that the general principle 

supporting the bad faith processing tort was first noted in a 

1973 California case and later in other jurisdictions. 306 

S.E.2d at 618. MI does not cite any published South Carolina 

decision explicitly stating that South Carolina has faithfully 

adhered to California law in this context. Until the South 

Carolina courts advance MI’s position, we decline to do so. 
32

Thus, attorney’s fees are unavailable to MI as consequential 

damages.9

2.

Alternatively, MI seeks attorney’s fees pursuant to S.C. 

Code § 38-59-40. This statute provides for an attorney’s fees 

award where an insurer refuses to defend or pay a claim without 

reasonable cause. Mixson, Inc. v. Am. Loyalty Ins. Co., 562

S.E.2d 659, 663 (S.C. Ct. App. 2002); see also Boggs v. Aetna 

Cas. & Sur. Co., 252 S.E.2d 565, 568 (S.C. 1979) (applying a 

predecessor of the current statute). MI advances the novel 

argument that Liberty’s disregard of MI’s intentions effectively 

amounts to a refusal to defend.

MI’s construction crumbles upon the slightest of 

examinations. The South Carolina statute “did not intend . . . 

that attorneys’ fees should be paid in every contested case won 

by the insured.” Boggs, 252 S.E.2d at 465. Its title, 

“Liability for attorneys’ fees where insurer has refused to pay 

claim,” proves as much. We refrain from reading the statute as 

applicable to anything beyond a refusal to defend, a situation 

 9 MI also notes, albeit briefly, that South Carolina 

recognizes an exception to the unavailability of attorney’s fees 

where indemnification is at issue. See Addy v. Bolton, 183 

S.E.2d 708 (S.C. 1971). However, one element of this exception 

is that the defendant’s tortious conduct give rise to the 

plaintiff’s dispute with a third party, id. at 709-10, which is 

not the case here.
33

that did not arise on these facts. The evidence at trial runs 

counter to the argument that Liberty refused to defend MI. A 

bad faith settlement is still a settlement, and in this case, 

was a timely one. Liberty’s settlements do not equate to a 

failure to defend or refusal to pay that leaves a policyholder 

to fend for itself in the underlying dispute. The district 

court did not err in denying MI’s request for attorney’s fees 

under S.C. Code § 38-59-40.

III.

MI also appeals the district court’s order denying MI’s 

challenge to Liberty’s breach of contract damages. MI argues

that the district court should not have allowed Liberty to 

recover damages for liabilities incurred in bad faith. 

Essentially, MI contends, the breach of the covenant of good 

faith was unlawful and thus placed the settlements, and MI’s 

obligation to pay the deductible amounts, beyond the bounds of 

its contractual duties. See Wachovia Bank, N.A. v. Coffey, 698 

S.E.2d 244 (S.C. Ct. App. 2010) (lender’s unauthorized practice 

of law precludes recovery for the consequences of that act); 

Jackson v. Bi-Lo Stores, Inc., 437 S.E.2d 168 (S.C. Ct. App. 

1993) (no contract damages where bribery activities rendered 

contract illegal).
34

To the extent it rests on pillars of the illegality 

doctrine, MI’s argument fails. See Bi-Lo, 437 S.E.2d at 170 

(courts will not aid plaintiffs guilty of illegal act); see also

McMullen v. Hoffman, 174 U.S. 639 (1899) (“[N]o court will lend 

its assistance in any way towards carrying out the terms of an 

illegal contract . . . nor will [courts] enforce any alleged 

rights directly springing from such a contract.”). The 

illegality doctrine, prominent in Coffey and Bi-Lo, does not 

preclude recovery under valid agreements. See Graham v. Graham, 

278 S.E.2d 345, 347 (S.C. 1981) (“[T]he ground of illegality 

. . . was unavailable to the valid, separate agreement allegedly 

breached.”). The validity of the Policies is undisputed. MI’s 

attempt to analogize Liberty’s settlements to criminal activity 

or unenforceable agreements is simply overreaching.

The Policies obligated MI to reimburse Liberty up to 

$500,000 in indemnity and defense costs per occurrence. Each 

settlement fell within this limit. MI attempts to circumvent 

this obligation by saying that they are only “contractually 

bound to reimburse Liberty for payments that were properly 

incurred under the policies,” and should not reimburse Liberty 

for expenditures MI did not wish to incur. However, Liberty 

retained the right to settle cases at its discretion. Promptly 

defending, investigating, and settling the underlying suits was 

the very purpose of the Policies. Liberty’s settlement 
35

decisions were at odds with MI’s assessments of the cases, not 

any contractual duties or obligations. MI remained obligated to 

reimburse Liberty up to $500,000 spent per occurrence defending 

MI. Accordingly, we affirm the district court’s order awarding 

$684,416.01 in contract damages to Liberty.

IV.

Liberty appeals the district court’s orders denying 

prejudgment interests and costs. We affirm.

A.

Liberty argues that it is entitled to prejudgment interest 

under the terms of the Policies. State law governs prejudgment 

interest awards in diversity cases. Hitachi Credit Am. Corp. v. 

Signet Bank, 166 F.3d 614, 632-33 (4th Cir. 1999). Prejudgment 

interest awards lie within the discretion of the trial court.

Jacobs v. Am. Mut. Fire Ins. Co. of Charleston, 340 S.E.2d 142, 

143 (S.C. 1986). The district court held that the interest 

amount due was incapable of being readily ascertained at the 

time Liberty’s contract claim arose.

“In all cases of accounts stated and in all cases wherein 

any sum or sums of money shall be ascertained and, being due, 

shall draw interest according to law, the legal interest shall 

be at the rate of eight and three-fourths percent per annum.” 

S.C. Code Ann. § 34-31-20(A). South Carolina permits 
36

prejudgment interest “on obligations to pay money from the time 

when, either by agreement of the parties or operation of law, 

the payment is demandable, if the sum due is certain or capable 

of being reduced to certainty.” APAC Carolina, Inc. v. Town of 

Allendale, S.C., 41 F.3d 157, 165 (4th Cir. 1994) (quoting Babb 

v. Rothrock, 426 S.E.2d 789, 791 (S.C. 1993)); see also GTR 

Rental, LLC v. DalCanton, 547 F. Supp. 2d 510, 524 (D.S.C. 

2008). In determining whether the sum may be ascertained, 

courts consider “whether the measure of recovery, not 

necessarily the amount of damages, is fixed by conditions 

existing at the time the claim arose.” Butler Contracting, Inc. 

v. Court Street, LLC, 631 S.E.2d 252, 259 (S.C. 2006). A claim 

will not be considered unliquidated for purposes of prejudgment 

interest solely due to a dispute as to the sum due. Babb, 426 

S.E.2d at 791. A damages dispute hinging on uncertainty of 

contractual terms renders the sum due unascertainable. Vaughn 

Dev., Inc. v. Westvaco Dev. Corp., 642 S.E.2d 757, 759-60 (S.C. 

Ct. App. 2007).

The district court could not determine the sum due Liberty 

until it resolved a contractual dispute regarding the parties’ 

rights. This contractual uncertainty could be enough to 

preclude a prejudgment interest award. Westvaco, 642 S.E.2d at 

759-60. In addition, we do not find that the measure of 

recovery was fixed at the time Liberty’s claim arose. Liberty 
37

identified two different owed sums in its First Amended 

Complaint. Liberty does not explain any mathematical equation 

for ascertaining its damages or how a fixed measure of recovery 

caused it to reference two different damages amounts in the same 

paragraph. Thus, we find that Liberty’s damages were not fixed 

at the time the claim arose.

B.

Liberty argues that the district court erred in denying its 

request for costs. We review a denial of costs for abuse of 

discretion. Teague v. Bakker, 35 F.3d 978, 996 (4th Cir. 1994). 

A prevailing party is presumptively entitled to receive costs.

Id. at 995-96; see also Fed. R. Civ. P. 54(d)(1). Departure 

from this presumption requires “some good reason for doing so.”

Teague, 35 F.3d at 996.

The district court did not abuse its discretion. The 

district court cited the closeness of the issues, which required

sifting through novel and difficult questions, including one 

certified to the Supreme Court of South Carolina. The district 

court further noted that in addition to complexity, the fact 

that both parties were prevailing parties as a result of the 

other’s breach of duties suggested hesitancy in shifting costs 

onto either party. This conclusion is well within the 

discretion of the court.
38

V.

The parties further appeal evidentiary and jury instruction 

issues. In light of our aforementioned conclusions, these 

issues are moot.

VI.

We affirm the district court’s ruling in all respects 

except for bad faith damages. We agree that without proof of 

expenditures absent bad faith, MI failed to demonstrate direct 

or indirect damages resulting from Liberty’s bad faith conduct. 

However, we vacate the ruling on punitive damages and remand 

with instructions to determine whether MI is entitled to nominal 

and punitive damages under South Carolina law. If the court 

finds that the evidence supports the jury’s conclusion that 

Liberty acted willfully, wantonly, or recklessly, MI is entitled 

to nominal damages, and the court must consider Liberty’s 

challenge to the amount of punitive damages. For these reasons, 

the judgment of the district court is

AFFIRMED IN PART,

VACATED IN PART,

AND REMANDED.
39

DAVIS, Circuit Judge, concurring:

I concur fully in the majority opinion, but not without a 

measure of discomfort regarding our remand of the case to permit

the district court to examine the record and determine the 

propriety of a punitive damages award. 

To be sure, it appears that South Carolina has something of 

a unique jurisprudence surrounding the availability of punitive 

damages. See, e.g., Gamble v. Stevenson, 406 S.E.2d 350 (S.C. 

1991)(punitive damages allowed against a utility company for 

personal injuries resulting from a motor vehicle collision in an 

intersection where employees of the utility negligently took 

down a stop sign during maintenance work in the street). One is 

moved to observe that South Carolina seems to have an endearing 

affinity for making available punitive damages in routine tort 

claims. Id.

In this case, the majority reasons as follows, in part:

Punitive damages are available only where a court 

also awards actual or nominal damages. Nominal damages 

are presumed where pleadings allege and evidence 

proves a willful invasion or infringement of a right, 

even if an exact measurement of actual damages is not 

possible.

The rule requiring actual or nominal damages as a 

predicate for punitive damages “is premised on the 

fact that liability must be established before a 

plaintiff can seek punitive damages.” Thus, a 

plaintiff is entitled to a jury determination on 

punitive damages liability even in the absence of 

ascertainable loss. [Ins. Servs. of Beaufort, Inc. v. 

Aetna Cas. & Sur. Co., 966 F.2d 847, 853 (4th Cir. 

1992)] (“The recovery of nominal damages is 
40

particularly appropriate to vindicate the violation of 

a right . . . where injury is shown but damages cannot 

be proven.”). Where a jury finds a willful or reckless 

invasion of a legal right, a court presumes that 

nominal actual damages are merged into a punitive 

damage award.

Ante, at 28-29 (citations and footnote omitted). I am dubitante. 

This case is truly sui generis: bad faith counts against an 

insurer based on property damage claims settled for less than 

policy limits, with little showing that if the insured had had 

its way and taken the cases to trial, it would have been out-ofpocket by a lesser amount than it was required to pay to settle 

the claims within its bargained-for deductible.

In short, I lack any certainty that the Supreme Court of 

South Carolina would reach the result we reach on the record 

before us. That is, I question whether the kind of pecuniary 

“injury” Liberty has ostensibly inflicted in this case, an 

injury for which there is no proof of actual damage or loss, 

supports a claim for nominal damages sufficient to serve as a 

predicate for an award of punitive damages. Nevertheless, I 

believe the majority opinion’s valiant effort to harmonize South 

Carolina’s “bad faith” case law and its damages principles is as 

well thought out as the law of the state allows.* I further 

 * Compare Daniels v. Coleman, 253 S.E.2d 593, 597-98 (S.C. 

1969)("In contradistinction with trespass and other direct 

injuries for which the complainant is awarded nominal damages if 

he should fail to plead and prove actual damage, deceit belongs 

(Continued)
41

understand that the district court is authorized to exercise its 

good judgment in its exploration of this issue upon the remand. 

We should not be surprised if the district court concludes, at 

the end of the day, that this is a bridge too far.

All that said, I concur fully in the majority opinion.

 

to that class of tort of which pecuniary loss generally 

constitutes part of the cause of action.") with Gignilliat v. 

Gignilliat, Savitz & Bettis, L.L.P., 684 S.E.2d 756, 762 n.4 

(S.C. 2009)(finding a presumption of nominal damages as it would 

be "illogical to conclude that a tort can exist without any 

potential for compensation under any circumstances").