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A Scottsdale Insurance Co. unit that formerly insured a bar that served drinks to a man who was later involved in a fatal automobile accident, cannot be sued by the victim’s estate, the South Carolina Supreme Court ruled Wednesday in a divided opinion.
Garland Denson was killed in the accident that was allegedly caused by a drunk driver who had been “overserved” at the Royal Lanes bar in Goose Creek, South Carolina, in 2020, according to the South Carolina Supreme Court’s ruling in Anthony Denson v. National Casualty Co.
Anthony Denson discovered the bar had not renewed its liquor liability insurance with Scottsdale unit National Casualty and did not have the required coverage, according to the ruling.
Liquor liability coverage is statutorily mandated for certain establishments that sell alcoholic beverages, and failure to maintain this coverage violates South Carolina law, the ruling said.
As result of his discovery, Mr. Denson filed a direct negligence action against National Casualty rather than Royal Lanes, claiming the insurer was directly liable to the decedent’s estate for not notifying the South Carolina Department of Revenue of Royal Lane’s lapse or termination of its coverage. The insurer filed a motion to dismiss the case.
The Supreme Court agreed to consider the case after receiving a certified question from the U.S. District Court in Charleston.
The Supreme Court majority ruled 2-1 in the insurer’s favor, saying state law “does not create a private cause of action for its failure to report an insured’s lapse or termination of liquor liability coverage,” it said.
The ruling added the insurer may be liable for up to $15,000 for not notifying the Department of Revenue about the bar’s coverage lapse.
The dissenting opinion said, “Instead of answering the question asked - whether Denson can pursue an action in negligence – the majority answers a different question,” whether the statute created an implied private right of action.
Attorneys in the case did not respond to requests for comment.