A $200,000 cargo loss, a denied insurance claim, and a sharply contested policy exclusion have sparked a high-stakes legal battle in South Carolina.
Bay Island Sportswear, Inc. and Wildcat Retro Brands, LLC, two textile companies with operations in South Carolina and California, have taken their fight to federal court after a shipment of goods vanished en route from Los Angeles to Greenwood, S.C. The companies allege that Liberty Mutual Insurance and its subsidiary, The Ohio Casualty Insurance Company, wrongly refused to cover the loss, while transportation provider Priority-1, Inc. failed in its duty to safeguard the cargo.
According to the complaint filed in the United States District Court for the District of South Carolina, Greenwood Division, Bay Island and Wildcat Retro Brands manufacture and sell textile products, primarily t-shirts, distributed by both companies. In April 2024, the companies contracted with Priority-1 to transport goods from their Wildcat Retro Brands facility in California to their facility in Greenwood, South Carolina. The shipment was picked up on April 12, 2024, by a tractor trailer with an integrated lifting platform, as specified in the agreement. The driver presented a bill of lading prepared by Priority-1, confirming authorization for the loading and transportation.
The goods never reached their destination. After repeated inquiries, Bay Island was notified by Priority-1 that the goods were lost and presumably stolen. Law enforcement was notified, but the goods were never recovered.
Bay Island submitted a claim to Liberty Mutual under its insurance policy, which provided coverage for losses incurred during the transportation of goods. On Sept. 17, 2024, Liberty Mutual denied the claim, citing a clause in the policy that excluded coverage if the insured “voluntarily parted” with its goods. The insurer stated this exclusion as the basis for its denial.
The complaint asserts that this exclusion does not apply when the insured, in “good faith,” relies on bills of lading or shipping receipts. Bay Island contends it acted in good faith, relying on the bill of lading provided by Priority-1 and following the agreed transportation procedures.
Bay Island, through legal counsel, presented additional facts to Liberty Mutual on Jan. 15, 2025, and July 18, 2025, supporting its position that the claim should be covered. Despite these efforts, Liberty Mutual continued to deny coverage.
The complaint alleges breach of contract, seeks declaratory relief, and claims bad faith and unreasonable claims practices by Liberty Mutual, including failing to pay sums due under the policy, delays in payment, and providing false and misleading explanations for the denial. Bay Island also alleges breach of fiduciary duty, asserting that Liberty Mutual was required to act with the utmost care in handling the claim and to pay promptly once liability was established.
Claims against Priority-1, Inc. include breach of contract, conversion, breach of trust, negligence, and unfair trade practices. The complaint alleges Priority-1 failed to transport the goods as agreed, lost the property, and did not reimburse Bay Island for the loss.
Bay Island seeks actual and punitive damages, attorneys’ fees, and a declaration confirming coverage under the policy. The case underscores the importance of policy language, claims handling, and the responsibilities of transportation intermediaries for commercial insurers.
At this stage, the case is a complaint and all allegations remain unproven. No final decision has been made by the court.
