                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 06-1241



THE CINCINNATI INSURANCE COMPANY,

                                             Plaintiff - Appellant,

           versus


URGENT CARE PHARMACY INCORPORATED; W. RAY
BURNS; R. KEN MASON, JR.; G. DAVID SCYSTER, as
Administrator of the Estate of Mary Virginia
Scyster and Individually Estate of Mary
Virginia Scyster; VIRGINIA RAUCH; VIVIAN
CONRAD; DONALD M. BOLES; ANNIE MCGILL; DANIEL
W. BOWMAN; JAMES HICKMAN; SHIRLEY KUS; DEBORAH
J. HENSLEY; ROBERT CONRAD, individually and as
Administrator for the Estate of Vivian Conrad,

                                            Defendants - Appellees.

---------------------------------------------

SOUTH CAROLINA STATE BOARD OF PHARMACY,

                                                            Movant.



Appeal from the United States District Court for the District of
South Carolina, at Spartanburg. Henry M. Herlong, Jr., District
Judge. (7:04-cv-01057-HMH)


Argued:   January 30, 2007                    Decided:   May 7, 2007


Before WILKINSON, GREGORY, and DUNCAN, Circuit Judges.


Reversed and remanded by unpublished per curiam opinion.
ARGUED: Mark S. Barrow, SWEENY, WINGATE & BARROW, P.A., Columbia,
South Carolina, for Appellant. James B. Maxwell, MAXWELL, FREEMAN
& BOWMAN, P.A., Durham, North Carolina; William Marvin Grant, Jr.,
GRANT & LEATHERWOOD, P.A., Greenville, South Carolina, for
Appellees. ON BRIEF: Martin S. Driggers, Jr., SWEENY, WINGATE &
BARROW, P.A., Columbia, South Carolina, for Appellant. Joe McLeod,
THE MCLEOD LAW FIRM, Fayetteville, North Carolina, for Appellee
Virginia Rauch; H. Forest Horne, Jr., MICHAELS, JONES, MARTIN,
PARRIS & TESSNER, Raleigh, North Carolina, for Appellee Robert
Conrad.


Unpublished opinions are not binding precedent in this circuit.




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PER CURIAM:

     The Cincinnati Insurance Company (“Cincinnati”) appeals the

district court’s grant of summary judgment to Urgent Care Pharmacy

and other appellees (collectively “Appellees”) on the issues of (1)

whether   Urgent    Care’s       business   liability   policy     included

professional liability coverage in a “missing endorsement” or

otherwise; (2) whether this coverage was unlimited; and (3) whether

an exclusion in the policy precludes coverage in this case.              The

district court granted summary judgment in Appellees’ favor on all

issues,   finding   that   the    professional   liability    coverage   was

included in a “missing endorsement,” was without liability limits,

and that no exclusion applied to preclude coverage.                For the

reasons that follow, we reverse, holding that summary judgment was

inappropriate because there is a genuine issue of material fact as

to whether professional liability coverage was included in a

“missing endorsement” or elsewhere in the policy.             Therefore, we

remand for further proceedings consistent with this opinion.



                                      I.

     As is required upon review of a grant of summary judgment, we

view all disputed facts in the light most favorable to Cincinnati

and draw all reasonable inferences in its favor.             See Tinsley v.

First Union Nat’l Bank, 155 F.3d 435, 438 (4th Cir. 1998).




                                      3
                           A.   The Drug

     In 2002, Urgent Care Pharmacy, Inc. (“Urgent Care”) was a

compounding pharmacy in Spartanburg, South Carolina. A compounding

pharmacy has the capability to produce drugs from raw ingredients.

Urgent Care compounded a variety of different drugs for sale to

hospitals, physicians, and individuals with a prescription. One of

the drugs compounded by Urgent Care was methylprednisolone acetate

(the “Drug”), also known by the trade name Depo-Medrol.    The Drug

is an injectable steroid used by anesthesiologists to treat severe

back and joint pain.    When the Drug’s commercial manufacturers

decided to stop producing it, compounding pharmacies like Urgent

Care stepped forward to fill requests from physicians and hospitals

for the Drug.

     In mid-2002, Urgent Care received requests for the Drug from

several anesthesiologists and medical facilities in North and South

Carolina, including the Johnston Pain Clinic and the pain clinic at

Moore Regional Medical Center.       Some of the Drug compounded at

Urgent Care and sold to these two clinics was contaminated by a

fungus.   The contaminated samples were administered to several

patients at these clinics, who subsequently contracted meningitis

from the fungus.   The affected patients and decedents are, along

with Urgent Care, Appellees in this case.    After the contamination

was discovered, the South Carolina Board of Pharmacy investigated




                                 4
Urgent Care, issuing a cease-and-desist order on September 27,

2002, which resulted in Urgent Care’s closure.



                             B.    The Policy

     Urgent Care purchased a Businessowner’s Policy (“Policy”) from

Cincinnati for the policy period of November 21, 1999 to November

21, 2002.     Urgent Care paid a yearly premium of $713 for the

Policy.    The Policy provides two categories of coverage: business

liability    and property liability.        Urgent Care also opted for

“professional liability” coverage by checking a box on the Policy’s

declarations page indicating “Professional Liability - Per Attached

Form.”    J.A. 31.   What “Attached Form” means is a point the parties

dispute.     Cincinnati   argues    that   the   “Attached   Form”   is   the

substantive portion of the Policy, which is found in the record.

See J.A. 33-87.      The district court agreed with Appellees that

“Attached Form” refers to a separate, “missing endorsement” setting

out the parameters of the professional liability coverage.                The

Policy also provides a coverage limit of one million dollars per

occurrence for business liability.          It is disputed whether the

coverage limits in the Policy apply to the professional liability

coverage as well as other business liability.            The Policy also

contains an exclusion, “Exclusion j,” that denies coverage if the

injury is caused by “products manufactured or compounded in bulk

for sale by the insured to others.” J.A. 60.


                                     5
       While several lawsuits have emerged from the sale of the

contaminated samples, the litigation underlying this particular

appeal arose when Cincinnati filed a declaratory judgment action in

April 5, 2004 seeking an order that it has no duty to defend Urgent

Care or to provide it coverage in connection with the patients’

claims against Urgent Care.           Appellees filed cross-motions for

summary judgment on three separate issues in August and September

2005.     The parties sought judgment as to (1) whether the Policy

provided coverage for liability arising from the sale of the Drug;

(2) whether the coverage was unlimited; and (3) whether “Exclusion

j” of the Policy excludes coverage because Urgent Care illegally

“manufactured” the Drug.

        On the issue of whether the Policy covered Urgent Care’s sale

of the drug, the district court found that there was a “missing

endorsement” to the Policy in which professional liability coverage

was outlined.      The court based its subsequent conclusions on this

finding.     With respect to the second issue, the court held that

under South Carolina law, it was proper to infer unlimited coverage

because the professional liability endorsement was missing and

“nowhere     in    the   Policy     are       professional   liability    limits

contemplated.” Cincinnati Ins. Co. v. Urgent Care Pharm., Inc., 413

F. Supp. 2d 644, 651 (D.S.C. 2006).                With respect to the third

issue, it found that “Exclusion j,” which excludes the pharmacy

from    coverage    if   it   was   illegally      manufacturing   a     drug   or


                                          6
compounding it in bulk, did not apply to preclude coverage here.

Reasoning that because professional liability was outlined in a

missing endorsement, the district court found that the Policy was

at least ambiguous as to the applicability of “Exclusion j,” the

district court theorized “two reasonable interpretations:” (1) that

the exclusion applied only to business liability coverage and (2)

that the exclusion covers professional liability coverage.                     Id. at

649.      It   chose    the   first   interpretation      because      under   South

Carolina       law,    the    court   is    required     to    adopt   the     policy

construction most favorable to the insured.               Id. (citing Poston v.

Nat’l Fid. Life Ins. Co., 399 S.E.2d 770, 772 (S.C. 1990).                     Given

its interpretation, the district court did not assess whether

Urgent     Care’s       activities         constituted        “manufacturing”     or

“compounding in bulk” under the exclusion.                     The district court

awarded summary judgment to Appellees on all three issues on

February 7, 2006, and it is Cincinnati’s appeal from this order

that is now before us.



                                           II.

       Cincinnati argues that summary judgment was improper on all

issues.    Cincinnati does not dispute the existence of professional

liability coverage: rather, it argues that the district court erred

in finding that the professional liability coverage was outlined in

a “missing endorsement” to the Policy.            Because we find there to be


                                            7
a   genuine   issue    of   material   fact   as   to     whether    professional

liability coverage was delineated in a “missing endorsement” or in

the Policy itself, we hold that summary judgment on this issue was

improper. Because the district court’s finding on the other issues

was based in part on its reliance on the existence of a missing

endorsement, we need not reach the merits of the remaining issues

in order to reverse.

      Summary      judgment   is   appropriate     only    if   “the   pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled

to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).                     The

evidence of the non-moving party must be accepted as true and all

justifiable inferences must be drawn in the non-movant’s favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).                    This

court reviews a grant of summary judgment de novo. Med. Waste

Assocs. v. Mayor of Baltimore, 966 F.2d 148, 150 (4th Cir. 1992).



                                       A.

      We turn first to whether summary judgment was appropriate on

the   issue   of    professional    liability      coverage     in   the   Policy.

Importantly, Cincinnati does not contest that some professional

liability coverage was provided to Urgent Care under the Policy.




                                       8
It is the location of this coverage, and the provisions that are

applicable to it, that is at the heart of this case.

     A typical insurance contract for a business is divided into

two broad categories: property and business liabilities.                See 1

Barry R. Ostrager & Thomas R. Newman, Handbook on Ins. Coverage

Disputes,   §   10.06(a),    at   778   (13th   ed.   2006)*.     A   property

liability policy covers losses incurred by the insured as a result

of damage to the policy owner or damage to property the insured

owns or leases. Id.       A business liability policy covers injury to

a third party. Id.        Professional liability coverage is typically

excluded from business liability coverage unless the policy holder

elects this coverage. See id. at § 7.02 (b)(6) (“[M]any . . .

policies    contain   a    ‘professional      services   exclusion,     which

generally excludes coverage for ‘property damage or personal injury

arising out of the rendering of or the failure to render any

professional    services.”)       (internal     quotations      omitted).   If

professional liability coverage is elected, insurance contracts

vary as to how this coverage is outlined.                 The professional

liability coverage can be offered in a separate policy, in an

endorsement to an existing business liability policy, or within the

business liability policy itself. See, e.g. Stoudt v. Harleysville

Ins. Co., 17 Pa. D. & C. 4th 257 (C.P. Mercer County 1992) (within


     *
      This explanation occurs within the context of a discussion of
environmental liability but provides a helpful discussion of the
basic organization of insurance coverage for businesses.

                                        9
separate policy); Houg v. State Farm Fire & Casualty Co., 481

N.W.2d 393, 396 (Minn. Ct. App. 1992) (within business liability

policy).    No matter the structure, in South Carolina, contracts of

insurance    are   subject   to    the   general   rules    of    contract

construction.      Stewart v. State Farm Mut. Auto. Ins. Co., 533

S.E.2d 597, 601 (S.C. Ct. App. 2000).

     Here, all parties agree that Urgent Care elected professional

liability coverage and that the Policy offers such coverage.

Cincinnati admits that professional liability was covered under the

Policy: its reply below states that “[t]he allegation . . . is

admitted to the extent that [it] alleges that the Businessowners’

policy issued to Urgent Care Pharmacy included, as an integral part

of the policy, professional liability coverage.” J.A. 111.          Urgent

Care elected coverage on the declarations page of the policy by

checking a box indicating that it desired additional coverage for

professional    liability.   The   box   that   Urgent     Care   checked,

indicating professional liability coverage, stated “Professional

Liability--Per Attached Form.” J.A. 31.

     What Cincinnati disputes is the district court’s conclusion

that the optional professional liability coverage--the “Attached

Form”--was found in a separate endorsement that is apparently

missing from the record.     The district court based this conclusion

on the fact that the language of the Policy referred generally to

business liability and not professional liability. See Cincinnati,


                                    10
413 F. Supp. 2d at 649.    Cincinnati argues that form IB 101 03 99,

J.A. 33-87, is the “Attached Form” listed in the declarations.

Indeed,   there   is   a   provision   that   specifically   references

professional liability in the Policy. J.A. 60.       It sets out what

will not be covered “unless professional liability coverage has

been endorsed hereon.” Id.    Although the industry standard is that

professional liability coverage must be specially elected, see

Ostrager & Newman, supra, § 7.02(b)(6), whether that coverage is

included under the terms of the business liability policy or as a

separate endorsement can vary with the contract. Here, we find not

only an issue of contractual interpretation but issues of material

fact as to whether professional liability was outlined in a missing

endorsement or included within form IB 101 03 99.     The law is clear

that summary judgment is wholly inappropriate where such a dispute

of fact as we see here exists. See Fed. R. Civ. P. 56(c).      There is

at least a genuine issue of material fact as to whether the missing

endorsement even existed, and we find that this is sufficient to

preclude judgment as a matter of law in this case.



                                  B.

     We now turn briefly to the remaining issues: the scope of

professional liability under the Policy and whether “Exclusion j”

applies to preclude coverage here. As the district court’s finding

that professional liability was covered in a “missing endorsement”


                                  11
was an integral part of its analysis of these issues, we need not

reach   their   merits   in   order   to   reverse.   We   are,   however,

sufficiently troubled by the district court’s analysis of the

coverage limits that a note of caution is warranted.

     We view the district court’s finding of unlimited liability as

questionable, independent of its reliance on a presumption of a

separate, missing endorsement. Even if the court were to find that

the professional liability policy was contained in a missing

endorsement, we do not believe that an inference of unlimited

liability can be drawn from these facts.       As a practical matter, we

find it extremely unlikely that Cincinnati would provide unlimited

coverage for a premium of only $713 per year.

     The district court cites Williamson v. South Carolina Ins.

Reserve Fund, 586 S.E.2d 115 (S.C. 2003), as primary authority for

its conclusion that the court may infer unlimited liability in the

absence of a liability limit. See Cincinnati, 413 F. Supp. 2d at

649 (citing Williamson, 586 S.E.2d at 119). That case is, however,

clearly distinguishable from the one now before us. In Williamson,

the Supreme Court of South Carolina found unlimited liability

because the liability limits in a statute had been repealed. 586

S.E.2d at 119.    There is no statute involved here.       This is simply

a case of contractual interpretation, and South Carolina interprets

insurance contracts pursuant to the general rules of contract

construction.     State Farm Mut. Auto. Ins. Co. v. Calcutt, 530


                                      12
S.E.2d 896, 897 (S.C. Ct. App. 2000).   Further, South Carolina law

holds that an endorsement to an insurance policy must be read

together with the policy.   Long v. Adams, 312 S.E.2d 262, 265 (S.C.

Ct. App. 1984).   Consequently, the Policy here cannot be ignored

entirely in favor of unknown terms of the purportedly missing

endorsement.



                                III.

     For the foregoing reasons, we conclude that the district

court’s grant of summary judgment to Appellees should be reversed

and remanded for further consideration in light of this opinion.



                                              REVERSED AND REMANDED




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