UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BALCOR EQUITY PROPERTIES XVIII, a 

Real Estate Limited Partnership, as

successor in interest to Hidden

Lakes Partners, as successor in

interest to the Lakes Partners

Limited Partnership,  No. 01-1913 Plaintiff-Appellee,

v.

CALIGO LIMITED, now known as

Philip Automotive, Limited,

Defendant-Appellant. 

BALCOR EQUITY PROPERTIES XVIII, a 

Real Estate Limited Partnership, as

successor in interest to Hidden

Lakes Partners, as successor in

interest to the Lakes Partners

Limited Partnership,  No. 01-1960 Plaintiff-Appellant,

v.

CALIGO LIMITED, now known as

Philip Automotive, Limited,

Defendant-Appellee. 

Appeals from the United States District Court

for the District of South Carolina, at Greenville.

Henry M. Herlong, Jr., District Judge.

(CA-97-1494-6-20)

Argued: June 6, 2002

Decided: August 13, 2002
Before WIDENER and WILKINS, Circuit Judges, and

Frederick P. STAMP, Jr., United States District Judge of the

Northern District of West Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: W. Howard Boyd, Jr., GALLIVAN, WHITE & BOYD,

P.A., Greenville, South Carolina, for Appellant. James William

Logan, Jr., LOGAN, JOLLY & SMITH, L.L.P., Anderson, South

Carolina, for Appellee. ON BRIEF: Luanne Lambert Runge, GALLIVAN, WHITE & BOYD, P.A., Greenville, South Carolina, for

Appellant. Michael T. Smith, LOGAN, JOLLY & SMITH, L.L.P.,

Anderson, South Carolina, for Appellee. 

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

Caligo Limited (Caligo) appeals a judgment in favor of Balcor

Equity Properties XVIII (Balcor) in a lawsuit arising out of a July 4,

1994 fire. Finding no error, we affirm. 

I.

In early June 1994, Caligo began an industrial cleaning project in

Greer, South Carolina. Caligo staffed the project in part with employees from outside the Greer area and housed these employees in apart2 BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED
ments leased from Balcor. Caligo rented and signed leases for several

apartment units, including Units 161 and 166. 

The form leases signed by Caligo stated in pertinent part:

10. DAMAGE AND LOSS. You shall at all times exercise

due care in the use of the Premises[.] . . . You agree to carry

insurance covering all Your property located in the Premises

and to indemnify Us from any damage or loss We may sustain because of any fire or the extinguishing of such fire

originating in the Premises which damages Our Property[.]

J.A. 2010. The terms "fire" and "originating" were not defined in the

leases. 

During the evening of July 4, some Caligo employees residing in

Units 161 and 166 were discharging fireworks onto the ground from

their balconies. The employees subsequently began shooting bottle

rockets and Roman candles at each other. Shortly afterward, the

wooden deck of Unit 164—which was not leased by Caligo but which

was situated between Units 161 and 166—caught on fire, and the

resulting blaze caused more than $1,000,000 in damage to the complex. 

Balcor had purchased fire insurance coverage for the apartment

complex from four different carriers. After the fire, the carriers jointly

paid Balcor $991,796.41, which represented Balcor’s claimed damages less its $100,000 deductible. Balcor then instituted this action,

claiming that Caligo was liable for the conduct of its employees in

discharging the fireworks and seeking to recover damages in the full

amount of the loss caused by the fire. Balcor alleged, inter alia,

claims of breach of paragraph 10 of the contract, negligent supervision, and negligent retention. Caligo generally denied Balcor’s claims

and also asserted, as is relevant here, that the action was barred by

South Carolina Code § 38-75-60, which precludes suits by insurers

against tenants for damage to leased real or personal property unless

the damage is caused intentionally or recklessly. See S.C. Code Ann.

§ 38-75-60 (Law. Co-op. 2002). 

BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED 3
Caligo moved to join Balcor’s insurance carriers as involuntary

plaintiffs. See Fed. R. Civ. P. 19(a). After the carriers stipulated that

they would be bound by the judgment, the district court denied the

joinder motion. The district court also struck Caligo’s § 38-75-60

defense, ruling that the statute did not apply to Balcor’s suit. 

The parties cross-moved for summary judgment. Following a hearing, the court granted judgment in favor of Balcor on its claim based

upon Paragraph 10 of the lease and denied Caligo’s motion regarding

that claim. The court reasoned that Caligo had a contractual duty to

indemnify Balcor for the fire damage because, as a matter of law, the

fire originated on the premises leased by Caligo. The district court

also granted summary judgment to Caligo on Balcor’s claims of negligent supervision and negligent retention. 

Caligo appealed to this court, contending that the district court

erred in granting summary judgment to Balcor regarding Paragraph

10, in denying its motion to join Balcor’s insurance carriers as involuntary plaintiffs, and in striking its statutory defense. Balcor crossappealed, maintaining that the district court erred in granting summary judgment against it on its negligent supervision and negligent

retention claims. 

We reversed the grant of summary judgment on the paragraph 10

claim ("the origination claim"), holding that the language of the paragraph was at least ambiguous and therefore that the district court

erred in ruling as a matter of law that the fire originated on the premises leased by Caligo. See Balcor Equity Properties XVIII v. Caligo

Ltd., 238 F.3d 410, 2000 WL 1853087, at *2-*3 (4th Cir. 2000) (per

curiam) (unpublished table decision) (Balcor I). We also concluded

that the district court correctly ruled that South Carolina Code § 38-

75-60 did not bar the origination claim because it bars insurers’, not

landlords’, claims. See id. at *3. We further determined that the statute would not have barred Balcor’s claim even had Balcor’s insurance

carriers been joined as involuntary plaintiffs. See id. at *3 n.3. On that

ground, we held that any error in denying Caligo’s motion to join Balcor’s insurance carriers was harmless. See id. We also affirmed the

order granting summary judgment against Balcor on its negligent

supervision and retention claims. See id. at *3-*4. 

4 BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED
On remand to the district court, on the day before trial, Caligo

admitted for the first time that it had failed to exercise due care in its

use of the premises and that its breach had proximately caused Balcor’s fire damage. On the basis of this admission, Balcor moved for

judgment as a matter of law on its breach of contract claim on the

ground that the facts admitted established that Balcor’s fire damage

was the proximate result of Caligo’s breach of its contractual duty to

use the premises with due care ("the due care claim"). The district

court reserved judgment on the motion, and the case was tried on stipulated facts, the only jury issue being where the fire originated. The

district court denied motions by Caligo for judgment as a matter of

law on that issue, and the jury found that the fire originated on the

premises leased by Caligo. 

Following the jury verdict, the district court addressed the due care

claim. Caligo argued that Balcor had not pled any cause of action

based solely on the "due care" language, to which Balcor responded

that it had pled a cause of action based on Paragraph 10, which contained the language. In any event, the district court concluded that to

the extent that Balcor’s pleadings had not sufficiently alleged the due

care claim, an amendment to the pleadings would be allowed, and the

district court subsequently granted judgment as a matter of law to

Balcor on this claim. On this basis, and on the basis of the jury verdict

on the origination claim, judgment was entered in Balcor’s favor for

$1,050,000, which represented the entire amount of Balcor’s fire

damage. 

Caligo moved to amend the judgment, arguing, as is relevant here,

that it should be responsible only for the $100,000 in fire damage for

which Balcor was not compensated by insurance benefits. Caligo contended that Balcor’s insurance carriers should have been joined as

involuntary plaintiffs, and if they had been, South Carolina Code

§ 38-75-60 would have barred recovery of the amounts paid by the

insurers to Balcor. The district court denied the motion, noting that

we had rejected that argument in Balcor I. 

II.

Caligo first argues that the district court erred in granting judgment

as a matter of law to Balcor on the due care claim. We disagree.1

1Because we reject Caligo’s challenge to the judgment as a matter of

law on the due care claim, we do not address the parties’ arguments

regarding the other liability theories. 

BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED 5
We review an order granting judgment as a matter of law de novo.

See Anderson v. Russell, 247 F.3d 125, 129 (4th Cir.), cert. denied,

122 S. Ct. 342 (2001). Because the district court sat in diversity, we

must apply South Carolina law and predict how the South Carolina

Supreme Court would decide the issue. See Doe v. Doe, 973 F.2d 237,

240 (4th Cir. 1992). Here, two principles of South Carolina law are

relevant. First, when a contract term is unambiguous, the term must

be given its plain meaning. See Warner v. Weader, 311 S.E.2d 78, 79

(S.C. 1983). Second, absent an agreement to the contrary, a party is

liable for any damages following as a natural and proximate result of

its breach of contract. See Fuller v. E. Fire & Cas. Ins. Co., 124

S.E.2d 602, 610 (S.C. 1962); Ancrum v. Camden Water, Light & Ice

Co., 64 S.E. 151, 156 (S.C. 1909). 

In its entirety, paragraph 10 of the lease provides as follows:

10. DAMAGE AND LOSS. You shall at all times exercise

due care in the use of the Premises[.] You are taking occupancy of the Premises and accepting the Premises "as is"

and "where is[.]" You agree that We shall not be liable to

You, your family, your guests or any other person for any

loss[,] injury or damage to person or property arising out of

the failure of any appliance, fixture, the roof[,] any plumbing, heating, air conditioning, electric, gas, water or sewerage systems in or about the Premises, or caused by any

casualty or catastrophe including without limitation storm,

flood[,] fire, criminal acts, moths, termites, or vermin, or

caused by latent defects, or from any other cause whatsoever, whether or not due to negligent acts or omissions by

You, your family and guests or by any third parties, including without limitation other occupants of this Apartment

Community, and You assume all risk of and agree to indemnify Us from any such loss, injury or damage[.] Further, the

use of the parking spaces, storerooms, laundry facilities,

swimming pool, recreational facilities, community buildings, and all other common areas in this Apartment Community shall be at Your own risk and We shall not be liable to

You, your family, your guests or any other person for any

loss, injury or damage to person or property arising out of

use of the foregoing, from any cause whatsoever, and You

6 BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED
assume all risk of and agree to indemnify Us from any such

loss, injury or damage[.] You agree to carry insurance covering all Your property located in the Premises and to

indemnify Us from any damage or loss We may sustain

because of any fire or the extinguishing of such fire originating in the Premises which damages Our Property. 

J.A. 2010 (emphasis added). 

Caligo does not dispute that Paragraph 10 contractually obligated

it to exercise due care in using the leased premises, that Caligo

breached that duty, and that the damages for which it has been held

liable were the natural and proximate result of its breach. Caligo also

does not assert that the district court abused its discretion in allowing

amendment of the complaint to include the due care claim. Caligo’s

only contention supporting its challenge to the judgment as a matter

of law is that the due care language in Paragraph 10 "must be read

in conjunction with the indemnification provision at the end of paragraph 10 to mean that Caligo is only required to indemnify Balcor for

fire damage which originates in the leased premises and is caused by

Caligo’s failure to exercise due care." Br. of Appellant/CrossAppellee at 28. 

We conclude, however, that the duty to exercise due care in using

the premises is plainly an independent duty, unrelated in any significant way to Caligo’s duty to indemnify Balcor for damage from fires

originating in Caligo’s leased premises. Paragraph 10 unambiguously

sets forth a series of provisions concerning damage and loss. There

is no indication in the language that these seemingly independent provisions in fact do not stand alone. And, indeed, they are separated in

the lease by several undeniably independent provisions. 

Caligo argues that if the first and last provisions are read to create

separate duties, the last sentence will be reduced to surplusage. See

Gibbes Mach. Co. v. Johnson, 61 S.E. 1027, 1028 (S.C. 1908) (adopting a contract construction that would avoid reducing certain language to surplusage). Caligo is mistaken. Without the last sentence,

Caligo would not be required to indemnify Balcor for damage from

a fire originating on the leased premises unless Balcor could prove

that Caligo’s lack of due care caused the fire. The presence of the proBALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED 7
vision obligates Caligo to indemnify Balcor for damage from any fire

originating on Caligo’s leased premises, regardless of fault. 

Caligo further contends that obligating it to indemnify Balcor for

some fires not shown to have been proximately caused by Caligo’s

lack of due care would be an absurd result. See Farr v. Duke Power

Co., 218 S.E.2d 431, 434 (S.C. 1975) (stating that constructions of

contractual terms creating absurd results are disfavored). However,

we fail to see the absurdity in the parties’ allocation of the risk of loss.

Cf. Campbell v. Beacon Mfg. Co., 438 S.E.2d 271, 272 (S.C. Ct. App.

1993) (holding that when security company agreed to hold customer

harmless for any damages "arising out of" the acts of security company’s employees, security company was liable for employee’s actions

in starting fire even if actions causing fire were outside scope of

employee’s employment (internal quotation marks omitted)). Caligo

was arguably best positioned to prevent a fire from originating on its

leased premises, and Caligo would certainly have been able to purchase insurance to cover its indemnification duties. 

Caligo similarly argues that if the first and last sentences of Paragraph 10 are read to create independent duties, the parties’ agreement

that Caligo would indemnify Balcor for all damage resulting from

fires originating on the leased premises is unconscionable and therefore unenforceable. We seriously doubt that such an agreement is

unconscionable under South Carolina law. Cf. Fanning v. Fritz’s

Pontiac-Cadillac-Buick, Inc., 472 S.E.2d 242, 245 (S.C. 1996)

("Unconscionability has been recognized as the absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms which are so oppressive that no reasonable

person would make them and no fair and honest person would accept

them."). However, even if the indemnity provision were unenforceable, that would in no way negate Caligo’s duty to exercise due care

in using the leased premises. The lease specifically provides that it

shall if possible be construed consistently with all laws and

public policies, and if any court of competent jurisdiction

determines that it is impossible to so construe any provision

of this Lease and consequently holds that provision to be

invalid, then such holding shall in no way whatsoever affect

the validity of any other provisions of this Lease[.] 

8 BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED
J.A. 2010. 

Caligo finally points to the last sentence of Paragraph 10 and several other provisions of the lease and argues that the fact that remedies

were explicitly provided for some contractual breaches indicates that

the parties intended that there would be no contractual remedy for

damage caused by Caligo’s simple lack of due care.2 Caligo similarly

argues that the explicit inclusion in the contract of a remedy for Balcor for fire damage caused by a fire originating on the leased property

indicates that the parties intended that there would be no remedy for

any fire damage caused by a fire not originating on the leased property. The lease explicitly negates these inferences, however, and states

that "[t]he remedies provided in this Lease shall be cumulative and

shall not in any way abridge, modify or preclude any other rights or

remedies to which We are entitled at law or in equity." Id.

For all of these reasons, we conclude that the lease placed an

unqualified duty on Caligo to exercise due care in its use of the leased

premises and in no way limited the legal remedies available to Balcor

for Caligo’s breach of that duty. 

III.

Caligo also argues that the district court erred in denying its

motions to join Balcor’s insurers as involuntary plaintiffs. Caligo contends that because Balcor’s insurers have paid Balcor $991,796.41 as

a result of the fire, these insurers owned a portion of Balcor’s claim.

Caligo continues that had the insurers been joined as involuntary

plaintiffs, they would have been prohibited under South Carolina

Code § 38-75-60 from asserting their claims, and therefore Balcor’s

damages would have been reduced by $991,796.41. As the district

court correctly ruled, we rejected this precise argument in Balcor I

when we held that any error in not joining Balcor’s insurers did not

prejudice Caligo because the "statute at most would have prevented

the insurance carriers from stating a claim against Caligo, but would

have had no effect on Balcor’s cause of action." Balcor I, 2000 WL

2At oral argument, Caligo argued that the lease would entitle Balcor

to evict Caligo for a breach of its duty to exercise due care but cited no

language in the lease supporting that assertion. 

BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED 9
1853087, at *3 n.3. That ruling is the law of the case. See United

States v. Aramony, 166 F.3d 655, 661 (4th Cir. 1999). 

In any event, Caligo’s argument that Balcor’s damages would have

been reduced if its insurers had been joined as involuntary plaintiffs

is simply incorrect. In partial subrogation cases, the insured’s right of

action against the wrongdoer is "single and indivisible, even though

the insurer is subrogated to the rights of the insured to the extent of

the loss paid." Spearman v. J & S Farms, Inc., 755 F. Supp. 137, 141

(D.S.C. 1990); see Pringle v. Atl. Coast Line R.R., 47 S.E.2d 722, 724

(S.C. 1948). Additionally, South Carolina follows the "collateral

source rule," under which compensation from insurance proceeds will

not reduce the amount of damages for which the wrongdoer is liable.

See Citizens & S. Nat’l Bank of S.C. v. Gregory, 463 S.E.2d 317, 318

(S.C. 1995); Otis Elevator, Inc. v. Hardin Constr. Co. Group, 450

S.E.2d 41, 45-46 (S.C. 1994) (applying rule in contractual indemnity

setting). Accordingly, as we determined in Balcor I, any error in not

joining Balcor’s insurers as involuntary plaintiffs did not increase the

amount of damages for which Caligo could be liable.

IV.

In sum, because we conclude that the district court correctly

granted judgment as a matter of law to Balcor on its due care claim

and because Caligo was not prejudiced by the denial of its joinder

motion, the judgment of the district court is affirmed. 

AFFIRMED

10 BALCOR EQUITY PROPERTIES XVIII v. CALIGO LIMITED