UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 06-1782

GENE W. CROFT, JR., as Personal Representative

of the Estate of Gene W. Croft, Sr., Estate of

Gene W. Croft, Sr.,

Plaintiff - Appellee,

versus

OLD REPUBLIC INSURANCE COMPANY,

Defendant - Appellant.

Appeal from the United States District Court for the District of

South Carolina, at Columbia. Matthew J. Perry, Jr., Senior

District Judge. (3:02-cv-03769-MJP)

Argued: March 12, 2007 Decided: May 16, 2007

Before WILKINSON, MICHAEL, and KING, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Clayton Monroe Custer, WOMBLE, CARLYLE, SANDRIDGE & RICE,

Greenville, South Carolina, for Appellant. Richard Ara

Harpootlian, Columbia, South Carolina, for Appellee. ON BRIEF:

William J. Watkins, Jr., WOMBLE, CARLYLE, SANDRIDGE & RICE,

Greenville, South Carolina, for Appellant. Graham L. Newman,

RICHARD A. HARPOOTLIAN, P.A., Columbia, South Carolina, for

Appellee. 

Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:

The personal representative of the estate of Gene W.

Croft, Sr. (the Croft Estate) brought this action to reform an

insurance policy under South Carolina law due to the alleged

failure of Old Republic Insurance Co. (ORIC) to make a meaningful

offer of underinsured motorist coverage (UIM) to its insured,

Penske Truck Leasing Corp. (Penske). Croft, a Penske employee, was

killed when the Penske truck he was driving was negligently struck

by a passenger car. The negligent driver was underinsured and the

ORIC insurance policy covering the truck did not include UIM.

Under South Carolina law an insurer’s failure to make a meaningful

offer of UIM requires reformation of the policy to provide UIM in

an amount equal to the policy’s liability limits. After receiving

answers to several questions certified to the South Carolina

Supreme Court, the district court concluded that ORIC failed to

make a meaningful offer of UIM to Penske and granted the Croft

Estate’s motion for summary judgment. We affirm.

I.

Penske held a three-year automobile insurance policy with

ORIC that took effect on January 1, 2000. The policy was a

“fronting policy,” under which the deductible equaled the limits of

liability. Although the policy covered a three-year period, ORIC

sent forms to Penske on an annual basis that allowed Penske to
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select or reject uninsured and underinsured motorist coverage. The

annual submission of forms to Penske was meant to accommodate any

intervening changes in state law and to ensure that appropriate

endorsements were in place.

The South Carolina forms consisted of Form Number 2006

issued by the South Carolina Department of Insurance and a

supplemental form created by ORIC containing additional information

regarding available uninsured and underinsured motorist coverage

options. The forms state that the insured has “the right to buy

underinsured motorist coverage in limits up to the limits of

liability coverage which you will carry under your automobile

insurance policy,” J.A. 27, 35, 39, and the supplemental form

provides a list of optional limits. This list includes the option

of limits equal to the $1 million liability limits of the policy.

The forms also state, however, that UIM “is available at Limit(s)

up to the same Limit(s) selected for Uninsured Motorists

[coverage.]” J.A. 29, 33, 42. Each year, Penske chose the minimum

uninsured motorist limits required by South Carolina law (i.e.,

$15,000/$30,000/$10,000) and rejected UIM. Only the 2000-2001 and

2001-2002 forms were returned to ORIC in a timely fashion.

The Croft accident occurred in January 2002. In October

2002 the Croft Estate filed this declaratory judgment action

against ORIC in South Carolina state court, seeking to reform the

Penske policy to include UIM coverage equal to the $1 million
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liability limits of the policy. ORIC subsequently removed the case

to federal court, and in December 2003 the court heard the parties’

cross-motions for summary judgment on the issue of whether ORIC had

made a meaningful offer of UIM to Penske, as required by South

Carolina law. One of ORIC’s arguments was that Penske’s fronting

policy was exempt from the meaningful offer requirement under a

recent South Carolina statute dealing with exempt commercial

policies. The lack of case law on the statute’s interpretation

prompted the district court to certify several questions to the

South Carolina Supreme Court. The South Carolina court determined

that Penske’s fronting policy is an exempt commercial policy, but

that such a policy was still subject to the meaningful offer

requirement. Croft v. Old Republic Ins. Co., 618 S.E.2d 909, 913-

14 (S.C. 2005). The state court held that the same requirement

also applies to all fronting policies. Id. at 917. Moreover, the

state court determined that the insured’s sophistication and

expressed desire not to purchase UIM do not relieve an insurer of

its responsibility to make a meaningful offer. Id. at 918.

After receiving the state court’s answers to the

certified questions, the district court granted summary judgment to

the Croft Estate, concluding that ORIC failed to fulfill the

meaningful offer requirement because language in the ORIC forms

effectively precludes a choice of UIM up to the liability limits

when the insured opts for a lesser level of uninsured motorist
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coverage. Specifically, the court determined that, according to

the forms, Penske would not have been able to purchase UIM greater

than the $15,000/$30,000/$10,000 limits it had chosen for its

uninsured motorist coverage. We review de novo a district court’s

grant of summary judgment. Wash. Metro. Area Transit Auth. v.

Potomac Inv. Props., Inc., 476 F.3d 231, 234 (4th Cir. 2007).

II.

South Carolina requires automobile insurers to offer

optional UIM up to the limits of liability coverage. S.C. Code

Ann. § 38-77-160. Such an offer must be meaningful under standards

set forth in S.C. Code Ann. § 38-77-350 or in the South Carolina

Supreme Court’s decision in State Farm Mutual Auto Insurance Co. v.

Wannamaker, 354 S.E.2d 555, 556 (S.C. 1987). See McDowell v.

Travelers Prop. & Cas. Co., 590 S.E.2d 514, 517 (S.C. Ct. App.

2003). If the insurer fails to make a meaningful offer of UIM, a

court will reform the policy to include UIM up to the limits of

liability coverage. Butler v. Unisun Ins. Co., 475 S.E.2d 758, 760

(S.C. 1996).

A.

An insurer is entitled to a conclusive presumption that

it made a meaningful offer of UIM if the insured has signed a form

that uses a state-approved format and meets certain statutory

requirements. S.C. Code Ann. § 38-77-350(B). Forms must (1)
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briefly and concisely explain the nature of the coverage; (2) list

available limits and additional premiums; (3) provide spaces to

accept or reject coverage and to state the desired coverage limits;

(4) provide a space for the insured to acknowledge the offer of

optional coverage; and (5) provide contact information for any

further questions the insured might have. S.C. Code Ann. § 38-77-

350(A). The list of available limits must include the option of

UIM equal to the limits of the insured’s liability coverage.

Butler, 475 S.E.2d at 761.

As a threshold matter, the Croft Estate contends that

ORIC cannot benefit from the statutory presumption because Penske

failed to return the 2002-2003 forms to ORIC within the statutory

time limit. S.C. Code Ann. § 38-77-350(E) states that when an

insured fails to return an executed offer form to the insurer

within thirty days, the insurer shall add on UIM with the same

policy limits as the insured’s liability limits. On December 4,

2001, ORIC sent the 2002-2003 forms to Penske. Penske completed

the forms on December 28, 2001, and returned them to its insurance

broker, AON Risk Services, Inc. (AON). AON, however, failed to

deliver the forms to ORIC until August 2002. The untimely return

of the 2002-2003 forms thus prevents them from giving rise to the

statutory presumption of a meaningful offer.

Although the Croft accident occurred during the period

covered by the ineffective forms, we may look at earlier forms
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submitted for the same policy to find a meaningful offer. An

insurer may rely on effective past offers of UIM when an insured’s

coverage continues. Ackerman v. Travelers Indem. Co., 456 S.E.2d

408, 411 (S.C. Ct. App. 1995) (citing S.C. Code Ann. § 38-77-

350(C)). ORIC may still benefit from the statutory presumption if

it shows that prior forms signed by Penske made an effective offer

of UIM. Both the 2000-2001 and 2001-2002 forms used a stateapproved format and were signed and returned within thirty days.

ORIC does not qualify for the presumption of a meaningful offer,

however, because the forms do not unambiguously offer UIM up to the

policy’s liability limits. The inclusion of the $1 million UIM

option in the Table of Limits and in the explanation of coverage is

negated by the statement that UIM is only “available at Limit(s) up

to the same Limit(s) selected for Uninsured Motorists [coverage.]”

J.A. 29, 33. This statement indicated that Penske could not select

UIM limits equal to its liability limits because it had opted for

minimum uninsured motorist coverage. South Carolina law requires

insurers to offer UIM up to the policy’s liability limits,

regardless of the choice of uninsured motorist coverage. See S.C.

Code Ann. § 38-77-160. ORIC’s forms failed to satisfy this

requirement because they misleadingly suggested that the insured

could not choose any level of coverage that exceeded its uninsured

motorist coverage.
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B.

For similar reasons, ORIC’s offer was not meaningful

under the Wannamaker test. In the absence of a qualifying form,

the insurer’s offer will be deemed meaningful if the insurer shows

that (1) its notification process was commercially reasonable; (2)

it specified the limits of optional coverage; (3) it intelligibly

advised the insured of the nature of the optional coverage; and (4)

the insured was told that optional coverages were available for an

additional premium. Wannamaker, 354 S.E.2d at 556. Both the

written forms and the parties’ oral communications about the

coverage may be considered to determine whether a meaningful offer

was made. We agree with the district court that ORIC never made an

unambiguous offer of UIM up to the policy’s liability limits,

either in writing or orally. The forms contained a misleading

statement that could have prevented an insured from opting for UIM

in the desired amount because of its choice of a lower set of

limits for uninsured motorist coverage. There is no evidence that

discussions between Penske and ORIC did anything to mitigate the

effects of this misstatement. George Frazier, a Penske

representative in charge of the company’s insurance matters,

testified in deposition that he was never offered UIM coverage

equal to the policy’s $1 million liability limits. When asked

“[W]as a million dollars in underinsured coverage ever offered to

Penske Trucking by Old Republic?”, J.A. 257-58, Frazier replied,
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“The answer is, no. It was never offered.” J.A. 258. Frazier

explained that he “never told [ORIC] to offer it. . . . And they

followed my instructions.” J.A. 258. He further testified, “I

understand these policies, and I understand the limits that are

being offered to me. And I understand that I could buy a million

dollars, if I wanted to. And, if they offered it to me, I would

send it back to them . . . .” J.A. 259. Penske’s understanding

and desires, however, do not detract from the admitted fact that

the offer was never made. Nothing in Frazier’s testimony indicates

that his understanding of the full range of UIM options came from

ORIC, as Wannamaker requires, see 354 S.E.2d at 556. Rather, he

maintains throughout his testimony that ORIC never offered $1

million UIM limits. Evidence of Frazier’s sophisticated knowledge

of typical insurance offerings and indications that Penske would

not have purchased the coverage even if it had received an

unambiguous offer are irrelevant. Croft, 618 S.E.2d at 918.

Before looking at the insured’s level of knowledge and

understanding to determine the meaningfulness of an offer, we must

first find that the insurer made an offer. See id. The gist of

ORIC’s misstatement was that UIM coverage up to the liability

limits was unavailable to an insured opting for a lower amount of

uninsured motorist coverage. ORIC thus failed to make a meaningful

offer of UIM to Penske, and the policy must be reformed to provide

UIM up to the policy’s liability limits.
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C.

This conclusion is not changed by ORIC’s meritless

assertion that the district court failed to follow the commands of

the Rules of Decision Act, 28 U.S.C. § 1652. The district court

neither neglected to apply South Carolina law nor impermissibly

generated its own federal rule to decide the case. 

III.

Because ORIC failed to satisfy either the statutory

requirements for form offers or the Wannamaker test, ORIC did not

make a meaningful offer of UIM to Penske. The policy must be

reformed to provide UIM coverage up to the policy’s liability

limits. The grant of summary judgment to the Croft Estate is

therefore

AFFIRMED.