Court Opinion

ID: 7008121
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:57:02.511148+00
Date Added: 2024-06-11T16:10:07.843260
License: Public Domain

MICHAEL, Circuit Judge,
concurring in part and concurring in the judgment:
I concur in the judgment and in part III of the majority’s opinion. The majority, relying on our 1988 decision in Cincinnati Ins. Co. v. Milliken & Co., 857 F.2d 979 (4th Cir.1988), interprets South Carolina law to mean that the term “damages” in an insurance contract generally refers to legal damages and not to equitable relief. South Carolina law, however, has not remained static since 1988, and it now appears that “damages” can include equitable relief in some instances. At the very least, the question is unsettled. I therefore respectfully decline to join parts I and II of the majority’s opinion. Regardless of the state of South Carolina law on the legal/equitable distinction, contract terms are nevertheless limited to their ordinary, plain meaning. Here, the underlying lawsuits do not seek “damages” in the plain sense of the word: they do not seek compensation for past injuries. Accordingly, I vote to affirm the judgment.
I.
The majority cites Braswell v. Faircloth, 300 S.C. 338, 387 S.E.2d 707 (S.C.Ct. App.1989), as an indication that the legal/equitable distinction in Milliken has been reaffirmed by the South Carolina courts. Braswell does cite Milliken with approval, but not for the proposition that “damages” means legal damages. Indeed, the ultimate holding in Braswell appears to conflict with Milliken’s legal/equitable distinction. To the extent that South Carolina case law deviates from or contradicts our holding in Milliken, we must defer to the courts of South Carolina. See Gooding v. Wilson, 405 U.S. 518, 526 n. 3, 92 S.Ct. 1103, 31 L.Ed.2d 408 (1972).
In Braswell the South Carolina Court of Appeals was presented with an action by the lessor of property who sought a declaration that his former lessee’s insurance policy covered costs for the removal of stored chemicals from the property and costs for a government-ordered cleanup of a chemical spill on the property. Bras-well, 387 S.E.2d at 708-09. The insurance contract in Braswell, like the contract here, limited coverage to lawsuits seeking “damages” resulting from “property damage” and did not define the term “damages.” Id. at 709. The trial court had dismissed all of the lessor’s claims as falling outside the definition of “property damage.” Id. at 710. In addition, the trial court had held that the lessor’s lawsuit “was restitutionary in nature because it was an attempt to restore the status quo,” and therefore the suit sought only equitable relief, which did not count as a suit seeking “damages.” Id.
On appeal the lessor in Braswell sought to distinguish Milliken by arguing that his action was “not a suit for restitution or equitable relief but ... a suit for damages for breach of contract.” Id. at 711. The South Carolina Court of Appeals brushed aside the question of whether the suit was legal or equitable, saying, “[c]all it what you may, the underlying issue is whether [the lessee’s] insurer must indemnify under its policy for the costs incurred in complying with a government directive.” Id. The court resolved this coverage issue by looking at whether the suit sought costs associated with remediating past or future injuries. As to stored chemicals that had “not yet caused physical injury to property,” the court held: “under the authority of [Maryland Cas. Co. v. Armco, Inc., 822 *390F.2d 1348 (4th Cir.1987),] and Milliken and Company ... the costs of removal of the stored waste is [sic] not covered.” Id. As to the costs of the government-ordered cleanup of the chemical spill, the court held that “an occurrence causing property damage did result ... as to the ... damages directly related to the contamination of the land by [the] spill [of the 1000 gallons of chemicals].” Id. The South Carolina Court of Appeals reversed the trial court on this one issue, concluding that the costs associated with cleanup of the chemical spill were covered under the insurance policy. Id. While the court did not say so explicitly, it necessarily determined that these costs constituted “damages” as that term was used in the policy. Cf. Hazen Paper Co. v. USF & G, 407 Mass. 689, 555 N.E.2d 576, 582-83 (1990) (holding that costs for removal of 115 drums of hazardous materials were not covered because no damage had occurred, but that costs for a government-ordered cleanup of .spilled hazardous materials were “damages” and therefore covered).
Thus, Braswell cites Milliken approvingly for the idea that “future response costs” do not constitute “damages” because no physical injury has yet occurred. Compare Braswell, 387 S.E.2d at 711, with Milliken, 857 F.2d at 980. Nevertheless, Braswell in effect rejects Milliken’s categorical rule excluding equitable relief from the term “damages” because Braswell awarded coverage for environmental cleanup costs that the trial court had categorized as equitable relief. See Nancy W. Monts, Insurance Coverage for Superfund Claims: Are Response Costs Recoverable Damages?, 41 S.C. L.Rev. 871, 878-79 (1990) (noting that the holding in Braswell implicitly contradicts Milliken’s legal/equitable distinction).
Neither the South Carolina Supreme Court nor its Court of Appeals has fully addressed whether “damages” can include equitable relief in the insurance context. In this case, the result is the same whether we interpret the term “damages” to mean only “legal damages” or simply to mean compensation for past injury. The interpretation chosen, however, can make a difference in other contexts. For example, the question of whether the term “damages” in an insurance contract encompasses equitable environmental cleanup costs is an intensely disputed area of state contract and insurance law. See, e.g., Braswell, 300 S.C. 338, 387 S.E.2d 707; Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wash.2d 869, 784 P.2d 507, 515 (1990) (rejecting a federal court’s prior interpretation of Washington law and stating, “we agree with the majority of cases across the country that the plain meaning of damages does not distinguish between sums awarded on a ‘legal’ or ‘equitable’ basis and that the plain meaning of damages may include cleanup costs to the extent that these costs are incurred because of property damage.”); Farmland Indus., Inc. v. Republic Ins. Co., 941 S.W.2d 505 (Mo.1997); Bausch & Bomb Inc. v. Utica Mut. Ins. Co., 330 Md. 758, 625 A.2d 1021 (1993). Because this case may be resolved on an alternate and well-established ground, I would not apply our rule in Milliken, which appears to be in conflict with the result in Braswell.
II.
The legal/equitable distinction aside, the lawsuits underlying this case still do not seek “damages” as that term is commonly understood. South Carolina law provides that a term in an insurance contract, as in contracts generally, should not be expanded beyond “its plain, ordinary and popular meaning.” State Farm Fire & Cas. Co. v. Breazell, 324 S.C. 228, 478 S.E.2d 831, 832 (1996). The term “damages” is ordinarily *391meant to include “the estimated reparation in money for detriment or injury sustained.” Webster’s Third New Int’l Dictionary of the English Language 571 (1989); see also Farmland Industries, 941 S.W.2d at 508; Bausch & Lomb, 625 A.2d at 1032 (rejecting this court’s statement of Maryland law in Maryland Cas. Co. v. Armco, Inc., 822 F.2d 1348 (4th Cir.1987)).
Here, the underlying lawsuits seek an injunction to abate a nuisance, restitution, disgorgement of profits, civil penalties, attorneys’ fees, costs, and contribution to a fund to monitor gun dealers. None of these remedies would repair or compensate for injuries sustained in the past by victims of gun violence. An injunction to abate a nuisance, specifically, one requiring changes in the methods of distributing and marketing firearms, is forward looking relief to prevent future harm, not relief to redress past harm. Likewise, monies for a fund to monitor gun dealers are not costs of past injuries, nor are attorneys’ fees and court costs. Civil penalties are fines payable to the government to punish and deter bad conduct, not payments of the costs of an injury or harm. In some cases, equitable relief in the form of restitution or disgorgement is used to restore damaged property or goods, as in the case of environmental cleanup, and thus the relief may fall within the ordinary meaning of “damages.” See Bausch & Lomb, 625 A.2d at 1032-33 (environmental cleanup costs required by the government’s resti-tutionary claims fall within the common usage of “damages”). Here, however, the gun makers’ and distributors’ revenue that would be subject to restitution and disgorgement would be paid into public treasuries. There is no indication that the funds would be paid to the victims of gun violence. Therefore, the restitution and disgorgement is not sought to compensate for or repair past injuries. All in all, because the underlying lawsuits do not seek “damages” in the ordinary sense, I concur in the judgment affirming the award of summary judgment to the defendant-insurers on the duty to defend claim.