Opinion ID: 2504740
Heading Depth: 1
Heading Rank: 2

Heading: standard of review

Text: The decision whether to set aside an entry of default or a default judgment lies solely within the sound discretion of the trial judge. Sundown Operating Co. v. Intedge Indus., 383 S.C. 601, 606, 681 S.E.2d 885, 888 (2009). The trial court's decision will not be disturbed on appeal absent a clear showing of an abuse of that discretion. Id. An abuse of discretion occurs when the judge issuing the order was controlled by some error of law or when the order, based upon factual, as distinguished from legal conclusions, is without evidentiary support. Id. at 607, 681 S.E.2d at 888. LAW/ANALYSIS Lexington argues that the South Carolina Code provides for the exclusive method of service upon a foreign insurance company and that White Oak was therefore required to serve notice pursuant to statute regardless of the service of suit clause. We agree. Section 38-5-70 of the South Carolina Code (2002) provides in pertinent part as follows: Every insurer shall, before being licensed, appoint in writing the director and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it must be served and in this writing shall agree that any lawful process against it which is served upon this attorney is of the same legal force and validity as if served upon the insurer and that the authority continues in force so long as any liability remains outstanding in the State. In addition, the legislature has imposed the following requirement regarding service on insurance companies: The summons and any other legal process in any action or proceeding against it must be served on an insurance company . . . by delivering two copies of the summons or any other legal process to the Director of the Department of Insurance, as attorney of the company. . . . A company shall appoint the director as its attorney pursuant to the provisions of section 38-5-70. This service is considered sufficient service upon the company. S.C.Code Ann. § 15-9-270 (2005) (emphasis added). In response to Lexington's argument that valid service requires delivery of copies of the summons and complaint to the Director of the Department of Insurance, the trial court held that the parties were free to agree to another form of service and that Lexington, through the inclusion of the service of suit clause in its policy, waived its right to insist on service pursuant to section 15-9-270. We hold this ruling was based on an error of law. According to section 15-9-270, the service of pleadings in a lawsuit against an insurance company must be accomplished by delivering two copies of the pleadings to the Director of the South Carolina Department of Insurance. See Equilease Corp. v. Weathers, 275 S.C. 478, 484, 272 S.E.2d 789, 792 (1980) (Clearly, in such a case where jurisdiction has not yet been acquired over an insurance company, service under the applicable substituted service statute is the proper and exclusive method of obtaining jurisdiction over the insurance company.). Whereas statutes prescribing methods of service on other legal entities include a proviso that the prescribed manner of service is not the only means or even the required means of service, section 15-9-270 does not allow service to be accomplished by other methods. [3] The absence in section 15-9-270 of a provision allowing alternate methods of service on insurers is consistent with the Supreme Court's interpretation of what is now section 38-5-70. See Murray v. Sovereign Camp, WOW, 192 S.C. 101, 108, 5 S.E.2d 560, 562 (1939) (holding that service on foreign insurance companies as provided for in Section 7964 of the Code of 1932 [now section 38-5-70] is exclusive, and that service made in any other way upon such corporations is invalid). Service of the pleadings on the Director of the South Carolina Department of Insurance is considered sufficient service upon the company. S.C.Code Ann. § 15-9-270 (2005). Upon receiving the pleadings, the Director shall immediately forward by registered or certified mail one of the duplicate copies prepaid directed toward the company at its home office. ... Id. This is more than a ministerial task. Rather, it is consistent with other statutory responsibilities entrusted to the Director, including duties to (1) see that all laws of this State governing insurers or relating to the business of insurance are faithfully executed[,] (2) report to the Attorney General or other appropriate law enforcement officials criminal violations of the laws relative to the business of insurance or the provisions of this title which he considers necessary to report[,] and (3) institute civil actions when appropriate. S.C.Code Ann. § 38-3-110 (2002). In order to perform such duties, the Director needs to be informed when an insurer's misconduct is alleged to be sufficiently serious to warrant litigation. Requiring the aggrieved party to serve the Director as a prerequisite to acquiring jurisdiction over the insurer is a reasonable and efficient way to achieve this objective. Based on this reasoning, we hold that service on the Department of Insurance of the pleadings in any lawsuit against an insurance company is a right granted to the Department to enable it to fulfill the responsibilities with which it has been charged. The service of suit clause in Lexington's policy was ineffective to waive a right that was not Lexington's to waive. The trial court therefore erred as a matter of law in holding that the service of suit clause in Lexington's policy operated as a waiver of the right to be served according to section 15-9-270.