The South Carolina Supreme Court has ruled that an insurer was properly
held in default following its failure to answer a complaint after being
served via US Mail Certified Restricted Delivery in substantial compliance
with the policy terms creating an alternative method of service.
The default was upheld even though South Carolina has a statute that requires
an insurer to be served through the Director of Insurance.
The relevant portion of the opinion is reproduced below:
White Oak argues the court of appeals' holding ignores the settled
principle that parties are free to agree to alternative methods of service,
just as they may waive service altogether. Furthermore, White Oak contends
the conclusion that the Director has a right to receive copies of the
pleadings is not supported by any evidence or legislative history. We
agree on both points. "The purpose of the summons is to acquire jurisdiction
of the person of the defendant and to give him notice of the action and
an opportunity to appear and defend."
State v. Sanders, 118 S.C. 498, 502–03, 110 S.E. 808, 810 (1920). Consistent with
this purpose, parties are generally permitted to agree to particular methods
of service or waiving service altogether.
See Fin. Fed. Credit Inc. v. Brown, 384 S.C. 555, 565, 683 S.E.2d 486, 491 (2009) ("[W]here service
is accomplished in a manner consented to by the defendant, service of
process is valid and a court has jurisdiction over the defendant for purposes
of entering judgment.");
Myrtle Beach Lumber Co. v. Globe Int'l Corp., 281 S.C. 290, 292, 315 S.E.2d 142, 143 (Ct. App. 1984) ("[A] defendant
may waive personal service by consent or by designating an agent to receive
service of process."). Furthermore, allowing for the waiver of service
is consistent with the principle that a defendant can waive personal jurisdiction.
See Bakala v. Bakala, 352 S.C. 612, 629, 576 S.E.2d 156, 165 (2003) ("Objections to personal
jurisdiction, unlike subject matter jurisdiction, are waived unless raised.");
see also Rule 4(d), SCRCP ("Voluntary appearance by defendant is
equivalent to personal service . . . .").
We therefore cannot agree it was the intent of the legislature to circumvent
the long-standing rule that service can be consented to by the parties
or waived entirely. Service of process is intended to provide notice and
obtain personal jurisdiction, and Lexington designated in its policy a
method for an insured to accomplish both those goals. We hold Lexington
is bound by its own policy's terms. We reject the notion that the
statute is intended to allow an insurance company to prescribe a method
of service in its policy and then declare its own provision invalid under
section 15-9-270. We have previously interpreted insurance service statutes
as "designed by the legislature to provide a simple and easy method
of obtaining jurisdiction over a foreign insurance company."
Equilease Corp. v. Weathers, 275 S.C. 478, 483, 272 S.E.2d 789, 791 (1980). Thus, their purpose is
to provide an insured with a method to obtain service of process on insurance
companies; it is not to serve as a shield for insurance companies, protecting
them from their own policy terms.