Fortunately, despite being a perennial target every hurricane season, South Carolina rarely experiences extreme weather events, but the recent deluge has reset the bar for “extreme.” Over 20 inches of rain fell in many areas of the state, causing massive flooding and multiple dam collapses which have destroyed homes, businesses, roads, and bridges, At least 17 deaths are attributed to the storm. As I write this, flood waters remain high in many areas, hundreds of families and businesses remain displaced, many schools have yet to reopen, and the water system in Columbia, the capital of our state, is still struggling for survival, its supply canal breached and numerous water lines across the city broken by collapsing roads and bridges.
The initial response has been overwhelmingly positive and heartwarming, as neighbors, friends, and strangers across the country have offered assistance. As we move into the next phase, our firm is already receiving legal inquiries related to the storm damage. Based on our experience with the types of claims and inevitable lawsuits we expect to follow, here are some specific issues which will likely arise.
South Carolina is a wet state, even without a thousand-year flood, and construction claims involving water intrusion are, unfortunately, all too common. Many involve defective design (architectural, plans/specs) claims, defective engineering, surveying, and site prep issues, and construction-related product liability claims (e.g., roof products, exterior claddings, drainage products). South Carolina law provides a number of avenues for bringing water intrusion claims, including a somewhat unique common-law “warranty” claim for residential homeowners. On the insurance coverage side, the South Carolina law regarding the definition of “occurrence” has been fluid and quite complicated over the past few years. Regarding trigger of coverage issues, South Carolina follows a “modified continuous” trigger of coverage, and, although the storm is a discrete event, some claims may involve damage which began prior to the storm, therefore South Carolina’s statute of limitations and statute of repose (which has certain exceptions we see raised in many construction defect suits), may become an issue in certain claims.
Claims related to flooding and the concentrated discharge of water are not unusual in South Carolina, although obviously never on the scale we’ll likely see from this storm. South Carolina follows the “common enemy” rule for damage caused by the discharge of water, and litigation involving dam breaches will surely involve the South Carolina Dams and Reservoirs Act of 1977, which set standards for permitting, inspection, and maintenance of dams. Responsibility for such was given to the state’s Department of Health and Environmental Control (DHEC), but the program was notoriously underfunded and understaffed from the start. If litigation involves DHEC as a party, the action would fall under South Carolina’s Tort Claims Act and create another level of complexity for private entity co-defendants (for example, fault allocation and contribution rules are different in cases involving state agencies).
As with any catastrophe, insurance coverage claims are inevitable. Property and casualtyissues will be most common, for both homeowners and businesses. Business interruptioncoverage will also likely be a common issue with this storm, arising not only from companies directly damaged by flooding or water intrusion, but many businesses, especially food service businesses, are still impacted by the lack of a reliable and safe water supply. (The South Carolina v. LSU football game was moved from Columbia to Baton Rouge in part because of the water issue.) Curfews imposed in the first few days after the storm have also caused losses for businesses who derive much of their income in the evenings and at night.
And, of course, third-party liability claims are likely, including potentially high-exposure claims against property owners and homeowners’ associations which were responsible for building and maintaining the private dams which failed.
Many claims may involve more than one carrier, and South Carolina has somewhat unique rules concerning multiple carriers on the same claim.
Another by-product of a “wet” state are mold claims, particularly liability claims involving apartments and rental homes. The floods have damaged many apartment complexes in Columbia and Charleston, some of which will have to be demolished. Those which are not demolished will have to talk extensive precautions to prevent or address mold growth
Hazardous materials have been spread far and wide in this event. We have already seen contamination and personal injury concerns in the media and elsewhere. These environmental and toxic tort (personal injury claims from exposure to hazardous materials) claims can be quite complex, involving multiple parties, experts and third parties. And South Carolina’s rules regarding the allocation of fault amongst multiple parties were modified a few years ago in a manner which has created much uncertainty.
Premises Liability & related claims: South Carolina does not follow “the firefighter rule”; therefore, first responders and private citizens who are injured during rescues or attempted rescues may be able to sue property owners and those they attempted to assist. Hazardous materials and other property conditions, as well as the actions taken by those they attempted to rescue could be the basis for such suits. If first responders are involved, the provisions of South Carolina’s Workers Compensation Act related to third-party and subrogation claims may be implicated and can be quite complex – for example, one statutory provision allows an offset for employer-related fault, but the S.C. Supreme Court has held it is unenforceable.
Heavy Road and Bridge Construction: As we move into what will likely be years of massive road and bridge repairs, we can expect a high volume of the claims normally associated with this industry – defective design and materials claims, negligent warning and safeguarding claims, as well as contamination and other regulatory violation claims.