UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

YOUNG BROTHERS PROPERTIES,

INCORPORATED; YOUNG BROTHERS,

INCORPORATED; YOUNG BROTHERS

INCORPORATED OF FLORENCE, d/b/a

Days Inn East,

No. 96-1004

Plaintiffs-Appellants,

v.

ROYAL INSURANCE COMPANY OF

AMERICA,

Defendant-Appellee.

Appeal from the United States District Court

for the District of South Carolina, at Florence.

Cameron McGowan Currie, District Judge.

(CA-95-511-4-22)

Argued: October 29, 1996

Decided: February 21, 1997

Before RUSSELL and ERVIN, Circuit Judges, and

PHILLIPS, Senior Circuit Judge.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Charles Craig Young, WILLCOX, MCLEOD, BUYCK

& WILLIAMS, Florence, South Carolina, for Appellants. Finley B.
Clarke, CLARKE, JOHNSON, PETERSON & MCLEAN, P.A., Florence, South Carolina, for Appellee. ON BRIEF: William Reynolds

Williams, WILLCOX, MCLEOD, BUYCK & WILLIAMS, Florence,

South Carolina, for Appellants.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Young Brothers Properties, Inc. ("Young") appeals the district

court's order granting summary judgment to Royal Insurance Company of America ("Royal") on its claims against Royal for breach of

contract and bad faith refusal to defend and pay benefits under the

contract--a general liability insurance policy. Young contends the

district court erroneously granted Royal summary judgment because

it misconstrued the facts in favor of Royal and disregarded existing

questions of material fact. Finding no error in the district court's

order, we affirm on the reasoning of the district court.

I.

Young initiated its breach of contract and bad faith failure to

defend and pay benefits claims against Royal in the Court of Common Pleas for Florence County, South Carolina. Citing diversity of

citizenship pursuant to 28 U.S.C. § 1332, Royal removed the controversy to the United States District Court for the District of South Carolina. 28 U.S.C. § 1441. This case, however, arose from an antecedent

state court negligence action, the facts of which bear on the case at

hand.

On March 19, 1990, George Roche ("Roche") sustained injuries

when he slipped and fell on motel property owned by Young.

Although Roche's injuries required medical attention and Young

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knew about the accident the day it happened, Young failed to immediately notify its commercial general liability insurer--Royal--as

required by the terms of the contract. Instead, Young notified Royal

of the accident three months later in June, after Roche had obtained

an attorney and sent a letter to Young stating his potential claim

against Young.

On August 31, 1990, Roche filed an action against Young in the

Court of Common Pleas for Florence County, South Carolina. On

September 4, 1990, Roche served process on Young by restricted registered mail addressed to Ed L. Young (the registered agent for service of process). Instead of Ed L. Young receiving the process, James

Neil Young, a vice-president of the corporation, signed for and subsequently misplaced the letter of service. Consequently, Young

remained unaware of the lawsuit against it until February 12, 1992,

when it received notification that a default judgment had been entered

against it in the amount of $ 45,000. Upon learning of the judgment,

Young immediately notified Royal. Said notification, therefore, was

the first time Royal learned that a suit had been brought against

Young.

Royal refused to tender a defense and/or provide coverage for

Young, on the grounds that Young failed to comply with the condition precedent outlined in its insurance contract that specifically

required Young to timely notify Royal whenever it sought coverage.

Eventually Young and Royal signed a non-waiver agreement, which

stipulated that Royal would retain counsel to assist Young's counsel

in its appeal from the default judgment.

On appeal, the South Carolina Court of Appeals reversed and

vacated the judgment against Young for improper service of process

and deficient notice. When Roche appealed to the Supreme Court of

South Carolina, however, the Court reinstated the default judgment

against Young, finding that Roche had shown compliance with the

service of process provisions stated in Rule 4(d)(8), SCRCP, and that

Young had failed to show that James Neil Young was unauthorized

to accept service on behalf of the corporation. The Supreme Court did

however remand the matter for a hearing on damages.

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II.

In district court, Young sought actual and punitive damages for

breach of contract and bad faith refusal to defend and indemnify.

Young argued it did not receive notice of the suit until the day the

default judgement was entered against it because the summons had

been erroneously delivered to James N. Young, an officer of the corporation who lacked the authority to accept service of process. Royal

countered that because Young lost the summons and complaint and

consequently failed to send proper notification to Royal as required

under its policy, Royal was not obligated to provide a defense.

Upon Royal's motion for summary judgment, the district court

found that Royal did not breach the contract by not defending Young

in Roche's state court action against Young. And it further found that

Young was precluded from pursuing its bad faith refusal claim.

With respect to the breach of contract action, the district court

found that no material issue of fact existed as to Young's failure to

fulfill the condition precedent of timely notice to Royal. Young

received proper service pursuant to Rule 4(d)(8), SCRCP, but failed

to immediately notify Royal. The district court also found as a matter

of law that notice of suit given to an insurer approximately one and

a half years after actual receipt of the papers, and after the suit had

been reduced to a default judgment, failed to constitute timely notice

within the policy terms.

With respect to the bad faith refusal to defend and indemnify, the

district court, citing Walters v. Canal Ins. Co. , 363 S.E.2d 120 (S.C.

App. 1987), found that under South Carolina law a bad faith suit will

not lie against an insurer unless the insured has met all conditions precedent under the policy.

Young appeals the district court's order of summary judgment. It

asserts the district court misconstrued the facts in favor of Royal, and

disregarded existing questions of material fact concerning its receipt

of process in the state court action and its notification of the state suit

to Royal.

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After carefully reviewing the record, reading the briefs, hearing

oral argument, and giving full consideration to the parties' contentions, we affirm the judgment below of the district court.

AFFIRMED

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