Court Opinion

ID: 2652805
Source: CourtListenerOpinion
Date Created: 2014-02-10 19:39:11.792349+00
Date Added: 2024-06-11T12:55:37.754909
License: Public Domain

UNPUBLISHED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)
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Affirmed in part, vacated in part, and remanded by unpublished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/Cross-
Appellees.    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Unpublished opinions are not binding precedent in this circuit.

                                2
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

                                        3
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

                                          4
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.

                                        5
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

                                            6
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.)

                                                 7
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 multi-

million dollar liability in the Avian Forest trial, would settle

                                              8
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.)

                                               9
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

                                              10
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 self-
interest.

                                               11
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.

                                           12
     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

                                        13
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

                                           14
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.

                                       15
                                          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.

                                          16
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 post-

trial 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).

                                              17
could not prove harm.                Thus, Liberty did not waive its post-

trial 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

                                            18
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).

                                       19
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

                                         20
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)).

                                              21
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.

                                           22
                                       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.

                                       23
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.

                                              24
       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

                                           25
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

                                              26
(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.

                                      27
      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

                                                 28
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

                                           29
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

                                       30
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.

                                          31
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.

                                      32
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).

                                        33
       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

                                            34
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

                                    35
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

                                         36
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.

                                        37
                                            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.

                                            38
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

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     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-of-

pocket 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)
                                     40
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").

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