When is the insured considered the real party in interest under SC law?
Under South Carolina law, where an insurer only pays part of the loss (as where a deductible is borne by the insured), insured and not insurer is real party in interest in action against wrongdoer. See Pringle v. Atlantic Coast Line R. Co., 47 Se2d 722 (SC 1948); See also Spearman v. J&S Farms, Inc., 755 F.Supp. 137 (D.S.C. 1990). In such a case, the insured’s right of action is single and indivisible, and therefore, insurer may either join with the insured in bringing the action, or intervene in the action against the wrongdoer commenced by the insured–but it can’t bring the action in its own name. See Calvert Fire Insurance Company v. James, 114 SE2d 832 (1960). There is an exception to the rule where the insured has parted with all beneficial interest in the right of action, but the cases adopting this rule involved situations where the insured settled for the difference between the loss and the amount of insurance paid. (See Phoenix Ins. Co. v. Southern Ry. Co., 68 SE 21 (SC 1910).
Consequently, there is a potential pitfall in partial subrogation under South Carolina law. If an insured does not retain my firm to plead their deductible cause of action or join in the action with their own personal attorney representing their beneficial interest in the subject cause of action, then there is a possibility that the adverse Defendant will move to dismiss the Complaint by alleging the partial subrogated insurer is not the real party in interest because the insured was not made whole because they had uninsured losses (whether it be the deductible or other uncovered claims). Although South Carolina Appellate Courts have not ruled directly on the issue, most courts will permit joinder of the insured instead of dismissing the insurer’s Complaint after the statute of limitations has run. It can also be argued at that time that the insured parted with all beneficial interest in the subject cause of action since the insured failed to commence a lawsuit prior to running of the applicable limitations period, and therefore, the insurer is the real party in interest. Nonetheless, there is no guarantee that a court will permit joinder instead of dismissing the partial subrogation claim. If an insured’s only uncovered loss is the deductible, then payment of the deductible to the insured will avoid this potential pitfall.