South Carolina Supreme Court Ex Parte: Builders Mutual and Nationwide Mutual, Appellants In Re: Palmetto Pointe v. Island Pointe/May 13, 2020 Excerpts/Summary by Junfola


  • Insurers not entitled to intervene in construction defect trial as a matter of right.
  • In subsequent DJ, Insurers have right to determination of which portions of damages are covered under CGL policies between the Insurers and Insureds.      


  • Insurers provided independent counsel to defend subject to ROR.
  • At end of discovery, Insurers motioned to intervene for limited purpose of participating in preparation of a special verdict form or a general verdict form accompanied by answers to interrogatories for submission to jury during trial.
  • Insurers hoped jury would determine which portions of the damages were covered, obviating need for the DJ.
  • Trial court denied motions; Insurers’ appeal was certified.


  • Decision to grant or deny within discretion of the trial court.
  • Court will not disturb decision absent manifest abuse of discretion that results in error of law amounting to a deprivation of rights of the party.
  • Entity seeking intervention must:

(1) Timely application;

(2) assert an (real, material, substantial) interest;

(3) demonstrate that without intervention, disposition of the action may impair or impede ability to protect that interest;

(4) demonstrate that its interest is inadequately represented by other parties.

  • Insurers are not “real parties in interest” cannot satisfy the four-part test and have not met the requirements to intervene as a matter of right.
  • Insurers’ intervention would (1) unnecessarily complicate the action, including altering the Association’s burden of proof and possibly delaying the trial, and (2) create a conflict of interest for the Insureds’ counsel, who were supplied to them by the Insurers.
  • It was not the intent in Newman to categorically foreclose a subsequent DJ to resolve a coverage dispute.  To the extent Newman may be read to foreclose an insurer’s subsequent DJ to resolve the coverage dispute, we modify Newman accordingly.
  • Harleysville neither mandates intervention nor forecloses a DJ to resolve a coverage dispute.
  • The parties offer varying approaches on the specifics of how a subsequent DJ should be tried. 
  • A significant point of contention is the Insurers’ concern that any coverage decisions in the DJs will be bound by factual determinations made in the construction defect action.


  • Insureds and the Insurers are not precluded from introducing evidence as to which damages are covered (or excluded from coverage).
  • The parties are bound by the jury verdict.
  • We reject the notion that, in a DJ, it is “improper and purely speculative” to allocate a general verdict into covered and non-covered damages.
  • We do not oppose the parties coming to an agreement on a framework for allocating damages, subject to the approval of the court.
  • Failing an agreement of the parties, we set forth a default approach that shall serve as the framework for use in DJs for allocating covered and non-covered damages. 
  • This default allows litigants in a DJ to use percentages, rather than exact dollar amounts, to determine the amount of covered and non-covered damages in a general verdict.
  • The primary source of evidence in the DJ should be the transcript of the merits hearing. 
  • In the discretion of the court, additional evidence may be presented that is relevant to the coverage dispute determination, such as expert testimony.
  • The additional evidence, if any, must be narrowly tailored to the coverage dispute question, as the transcript of the merits hearing will be the primary source of evidence. 
  • The trier of fact shall then make a determination allocating on a percentage basis what portion of the underlying verdict constitutes covered damages and what portion constitutes non-covered damages. 
  • Perfect precision in allocating damages is not always achievable. 
  • Where perfect precision is not achievable, a fair approximation must suffice. 
  • Our research persuades us that the percentage-based approach will best achieve a fair allocation of damages.

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