A federal court in South Carolina recently held that the “reasonable expectations” doctrine recently applied by the South Carolina Supreme Court in the context of ambiguous or conflicting policy language does not apply when interpreting unambiguous policy language. Evanston Ins. Co. v. R & L Development Corp., LLC, 2014 WL 7148715 (D.S.C. Dec. 15, 2014).
A South Carolina federal court found an endorsement excluding coverage for all property damage caused by water precluded coverage for damages caused by the insured during renovations. The insured filed a motion to alter or amend the judgment, arguing that there had been an intervening change in the controlling law in the South Carolina Supreme Court’s decision in Bell v. Progressive Direct Ins. Co., 407 S.C. 565, 757 S.E.2d 399 (2014), in which it found that the “reasonable expectation” doctrine can be used to interpret coverage under certain circumstances. The insured argued that Bell required the court to apply the doctrine of reasonable expectations to avoid an outcome it deemed to be unreasonable. The court disagreed, holding that the “reasonable expectations” doctrine applies only when policy language is unclear and unambiguous. The court noted that the relevant exclusion unambiguously excluded from coverage the property damage at issue and was not susceptible to more than one interpretation.