Electronic Newsletter: Update on the Law,
August 27, 2001
Electronic Newsletter: Update on the Law, March 10, 2001
Electronic Newsletter: Update on the Law, April 12, 2002
Electronic Newsletter: Update on the Law, November 18, 2002
additional articles, please check our Insurance Law Archives:
DENIED DOUBLE RECOVERY
West Virginia Supreme Court of Appeals has prohibited a plaintiff from
collecting uninsured motorist benefits after recovering liability proceeds
from the tortfeasor. The
issue arose in Tennant v Smallwood, (No. 30036, W.Va., filed April
5, 2002). In Tennant, the
plaintiffs were involved in an automobile accident with a State Auto
insured carrying mandatory minimum liability limits.
The plaintiff had uninsured motorist coverage with State Farm. After suit was filed, the defendant’s liability carrier
offered its policy limits. The
plaintiffs accepted and then asserted an uninsured motorist claim against
Farm denied coverage arguing that the plaintiff did not meet the
definition of an uninsured motorist event.
The Circuit Court of Wetzel County granted summary judgment to the
plaintiff which the Supreme Court reversed.
Chief Justice Davis, writing for the majority, found that the
plaintiff simply did not present an uninsured motorist claim pursuant to
W.Va. Code §33-6-31(c). The
Court found that the tortfeasor carried liability limits at the financial
responsibility minimum limits and thus, determined he was not an uninsured
motorist. The plaintiff
argued that the State Farm policy was ambiguous because of the grammatical
structure of the definition. The
Supreme Court disagreed indicating such an argument would require the
Court to “completely ignore both the letter and intent of the UM
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CAN COLLECT CONTINGENCY FEE ON MED-PAY
a lawyer disciplinary proceeding the West Virginia Supreme Court has held
that a lawyer may retain a contingency fee from medical payment
recoveries. The issue arose
in Lawyer Disciplinary Board v Morton, (No. 27051, W.Va., filed May
2, 2002), in which the Board recommended a public reprimand and payment of
$1,500.00 from a $5,000.00 med-pay recovery.
The Supreme Court, however, rejected the recommendation and
dismissed all charges finding that counsel was engaged for full legal
representation to recover “all monies and things of any value” from
any person desirable or necessary. The
Court found this language of the representation agreement did not limit
counsel’s role nor did it preclude pursuit of medical
payments. The Court further
found that the representation agreement empowered plaintiff’s counsel to
pursue “every source of and right to recovery” to which the plaintiff
may have been entitled. Furthermore, the Court considered the itemization
of hours which translated to approximately $37.50 per hour and found that
this fee was not grossly disproportionate to the services rendered.
a dissenting opinion, Chief Justice Davis argued that the majority opinion
permits attorneys to collect fees “when they have performed absolutely
no services on behalf of those clients.”
Reviewing the contingency fee agreement, Chief Justice Davis found
that counsel was retained to seek compensation from the tortfeasor and
found that counsel was “not hired to merely receive checks from the
insurance company.” Chief
Justice Davis based her opinion upon the fact that med-pay was never
disputed and thus, no legal services were necessary and characterized
counsel’s actions as picking up the telephone and instructing the
insurer to “send me the money.” This, she wrote, “is wrong.”
his concurring opinion, Justice Starcher argued that the dissent was
merely an attack on a minority lawyer who “provides legal services to
many people in her community that might otherwise go unrepresented.”
another disciplinary proceeding the Supreme Court found that a lawyer who
withheld fees from his partners, one of whom was his father, should not be
suspended or harshly disciplined because he was suffering from alcoholism
and that punishment may exacerbate his condition, Lawyer Disciplinary
Board v Ford, (No. 29463, W.Va., filed May 3, 2002). In this case the Disciplinary Board recommended suspension
for 45 days. The Supreme
Court, however, only admonished the lawyer finding that the lawyer had
freely admitted his misconduct, and had undergone counseling and
furthermore found that no prior discipline had occurred in his
approximately 20 years of practice. Finally
the Court found that suspension would do substantial damage to his law
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COURT CONTINUES TO TOLL STATUTE OF LIMITATIONS
West Virginia Supreme Court of Appeals has again granted plaintiffs the
opportunity to toll the running of the statute of limitations.
In Trafalgar House Construction, Inc. v ZMM, Inc. et al.,
(No. 30246, W.Va., filed June 19, 2002), the Court applied the discovery
rule to toll the two-year statute of
limitations in a professional negligence/misrepresentation claim.
In Graham v Beverage, (No. 30110, W.Va., filed June 13,
2002), the Court applied the continuing tort theory to extend the running
of the statute of limitations.
Trafalgar, a dispute occurred during construction of a Department
of Labor facility in Charleston. Contractors
involved in site preparation sued the general contractor alleging
misrepresentation in bid documents concerning sub-surface conditions.
The defendant argued that the claim was barred by the two-year
statute of limitations and successfully obtained summary judgment in the
Circuit Court of Kanawha County. The Supreme Court, however, reversed finding genuine issues
of material facts over the term “misrepresentation” in the bid
documents. The Court further
found that questions remain as to when the plaintiffs first learned of
misrepresentations and the defendant’s actual knowledge of the
conditions and held that whether a claim is barred by the statute of
limitations is a question of fact for the jury.
Court also agreed with the plaintiffs’ arguments concerning detrimental
reliance. Because the
plaintiffs performed an independent investigation of the site, the
defendant argued under the independent investigation doctrine that the
plaintiffs could not have relied to their detriment upon any
representations contained in the bid documents.
The Court, however, disagreed finding that the independent
investigation doctrine is not an absolute defense and that plaintiffs may
rely on defendants’ representations due to expertise and the duty to
divulge anticipated shortfalls in bid documents.
The Court concluded that a jury could therefore determine that even
though the plaintiffs conducted an independent investigation of the site,
representations made by the defendant contributed in part to the
plaintiffs’ conclusion that the site was sufficient.
Therefore, the summary judgment order was reversed and the case
remanded for further proceedings.
a case considering when the statute of limitations begins to run, the
Court has held that where a tort involves a continuing or repeated injury,
the cause of action accrues at, and the statue of limitations begins to
run from, the date of the last injury or when the tortious overt acts or
omissions cease. This
question was presented in Graham v Beverage, et al., a case
involving surface water run-off in Berkeley County.
The case began when a homeowner sued a developer, an engineer and
the Department of Highways in 1991 for flooding.
The plaintiffs alleged their property was damaged by the negligent,
defective and improper construction of a storm water management system.
The plaintiffs argue they first noticed ponding on their property
in 1990 and 1991 and that they first experienced severe flooding in 1994.
Thereafter, the plaintiffs petitioned the Department of Highways in
1998 and filed suit in 1999. Their
suit was dismissed on summary judgment.
The Supreme Court reversed finding genuine issues of material fact
did exist and then turned its attention to the statute of limitations
issue also raised by the defendants.
Court analyzed W.Va. Code §55-2-12 which includes a statutory limitation
for filing claims for damage to property to two years. However, the Court noted that there are several exceptions to
the two- year statute of limitations and returned to its 1982 opinion of Handley
v Town of Shinnston, 169 W.Va. 617, 289 S.E. 2d 201 (1982).
The Handley case first adopted a continuing tort theory
which does not begin the running of the statute of limitations until the
date of the last injury or when the tortious acts cease.
On appeal, the Graham Court found that the plaintiffs were
not complaining solely about a specific traumatic event concerning
construction of the storm water management system, but rather their
Complaint alleged continuing
wrongful conduct and negligently failing to take action to correct
inadequacies of the system. The
Graham Court found that the allegation of negligently failing to
take action to correct inadequacies could cause continuing injury to the
plaintiffs’ real and personal property.
Therefore, the Court again restated its opinion in Handley
that where a tort involves a continuing or repeated injury, the
cause of action accrues at, and the statute of limitations begins
to run from, the date of the last injury or when the tortious overt acts
or omissions cease.
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- YEAR STATUE OF LIMITATIONS ON HOMEOWNER’S CLAIMS
U.S. District Court for the Southern District of West Virginia in Beckley
has held that the ten-year contract statute of limitations applies when a
homeowner pursues a first-party claim against his or her insurance carrier
under W.Va. Code §55-2-6. Policy
language requiring suit to be brought within one year after loss or damage
was declared void in Beasley, et al. v Allstate Ins. Co., (Civil
Action No. 5:01-1082, S.D.W.Va., filed Feb. 14, 2002).
The Beasley claim stems from roof damage which occurred in
early 1998. The plaintiff did
not file a homeowner’s claim until April 1999.
Relying on policy language that required “any suit or action must
be brought within one year after the inception of loss or damage,”
Allstate moved to dismiss the plaintiff’s claim as untimely.
Chief Judge Charles Haden, however, denied Allstate’s motion.
interpreting amendments to W.Va. Code §33-6-14 state that no policy
delivered or issued in West Virginia shall contain any condition limiting
the time within which an action may be brought to a period of less than
two years from the time of cause of action accrues.
The Court concluded that in amending the statute, the Legislature
was presumed to know that the voiding of offending provisions in an
insurance policy would “result in the general contract limitations
period coming into play to fill the void.”
The general contract limitations period is ten years.
Therefore, the Court concluded that the homeowners had timely filed
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APPLIES ADDITIONAL INSURANCE COVERAGE FOR DOUBLE FATALITY
West Virginia Supreme Court of Appeals continues in its trend of finding
additional insurance coverage and in American States Ins. Co. v Tanner,
et al., (No. 29991, W.Va., filed April 26, 2002), found that an
insurance policy issued to the spouse of a woman involved in an automobile
accident while driving a rental vehicle could provide liability coverage
despite the regular use exclusion in the policy.
Tanner was involved in an automobile accident that killed two people while
she was driving a rental vehicle. The
rental vehicle had been provided to her as a result of a previous
accident. Following the
collision the insured’s liability carrier, State Farm, paid its
liability limits as did the insurer for the rental vehicle.
Thereafter, American States, which insured the tortfeasor’s
husband, filed a declaratory judgment action in the Circuit Court of
Monongalia County. American
States argued that it did not provide liability coverage because the
policy excluded such coverage for the ownership, maintenance, or use of
any vehicle other than the covered auto which is “furnished or available
for your regular use.” American States argued that the rental vehicle was made
available for the regular use of Mrs. Tanner and therefore, liability
coverage would be excluded. The
Circuit Court of Monongalia County agreed granting summary judgment to
appeal, however, the Supreme Court reversed finding that such cases must
be determined on a case-by-case basis.
Factors which Courts must consider in determining whether a vehicle
has been furnished or available for the insured’s or a family member’s
regular use, include but are not limited to: 1)
the general availability of the vehicle; 2) the frequency of the
use; 3) restrictions, if any, placed upon the vehicle’s use; and 4)
nature of the use. Analyzing
these factors, the Tanner Court held that the vehicle was not
generally available due to restrictions in the rental agreement and that
the use of the rental vehicle was for a “specific limited purpose as a
temporary substitute vehicle.” But
for the accident damaging Mrs. Tanner’s vehicle, she would not have
rented another vehicle and therefore, the Court concluded that the regular
use exclusion did not apply to this case.
The case was remanded for further proceedings.
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NOT GOVERNED BY UTPA
West Virginia Supreme Court of Appeals has held that the Unfair Claims
Settlement Practices Act and the tort of “bad faith” apply only to
persons, entities, or agents engaged in the business of insurance.
Finding that a self-insured entity is not in the business of
insurance, the Court concluded that self-insureds would not be subject to
the requirements of the UTPA in Hawkins v Ford Motor Co., (No.
30357, W.Va., filed June 19, 2002). The
Hawkins case began as a subrogation claim pursued by State Farm
against Ford after an insured’s Ford van burned. State Farm concluded the fire was a result of a
malfunctioning ignition switch; Ford suspected arson and denied the claim.
to trial, State Farm pursuing the claim in the name of its insured, sought
to amend the Complaint to allege “bad faith” against Ford.
The Circuit Court of Kanawha County denied the Motion finding no
contract of insurance existed between the plaintiff and Ford and found
that the UTPA should not be applied to entities not engaged in the
business of insurance. The
Supreme Court agreed.
Court also held that a consumer who prevails on a claim for breach of an
implied warranty of merchantability under the Uniform Commercial Code may
recover attorney’s fees under the Magnuson-Moss Act and held that a
manufacturer is not unduly prejudiced by the failure to plead the
Magnuson-Moss Act so long as the plaintiff sets forth sufficient factual
allegations to state such a claim. Therefore,
the Supreme Court reversed the Circuit Court’s denial of attorney’s
fees and costs to the plaintiff.
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The West Virginia
Legislature enacted four bills during the 2002 Legislative session which
impact the insurance industry. The
Legislature amended the procedure for the settlement of infant claims,
determined that the Mitchell v Broadnax decision was a
misinterpretation and misapplication of the law, added new procedures with
respect to filing claims against the State, and created a new subsection
to the Unfair Trade Practices Act concerning privacy issues as well as
broadening what constitutes an official used car guide.
through Senate Bill 215, created the “Minor Settlement Proceedings
Reform Act” which requires Court approval of minor claims if a
tortfeasor and/or his insurance carrier seeks a release.
The Act prescribes the form and contents of the Petition, Release,
and Final Order and created additional responsibilities with respect to
the investment of net settlement trust proceeds.
If net settlement trust proceeds are less than $25,000.00, the Act
permits Circuit Courts to direct monies be placed in interest bearing
accounts that are FDIC insured in a West Virginia bank until the minor
reaches the age of majority. The
bank receiving the funds is now required to file with the County Clerk an
acknowledgment that the funds have been received and that the funds will
not be released to the minor before the age of majority, absent a Court
Order to do so. The Act also
now requires guardians to provide an accounting within 60 days of initial
expense payments and deposit of net settlement trust proceeds.
Such an accounting must be filed with the County Fiduciary
Commissioner or the supervisor of the County Commission.
In House Bill 4670, the
West Virginia Legislature amended W.Va. Code §33-6-30 and made specific
findings that the Code does not provide a basis for a policyholder to sue
insurers for refunds when insurance forms have been approved by the
Insurance Commissioner. The
new statute further states that lawsuits based upon Mitchell v Broadnax
have a negative impact on insurers operating in West Virginia by exposing
insurers to unexpected risks which were not anticipated when policy forms
were drafted and approved. Policies
approved by the Commissioner are presumed to be in full compliance with
the law and the new Code Section specifically states that insurers are not
required to provide specific line item premium discounts or rate
adjustments corresponding to exclusions, conditions, definitions or terms.
The new statute found that the ruling in Mitchell v Broadnax,
208 W.Va. 36, 537 S.E. 2d 82 (2000), was a misinterpretation and
misapplication of the law.
AGAINST THE STATE
The Legislature amended
Chapter 55 of the West Virginia Code to add Article 17 concerning
procedures for certain actions brought against the State finding that
actions, suits and proceedings filed against State government agencies and
officials may affect the public interest.
Now, at least 30 days prior to the institution of an action against
a government agency, the complaining party must provide the Chief Officer
of the agency and the Attorney General written notice by certified mail of
the alleged claim and the relief desired.
The agency must forward a copy of the notice to the President of
the Senate and the Speaker of the House of Delegates.
Any applicable Statue of Limitations is tolled for 30 days from the
date the notice is provided. W.Va.
Code §55-17-4 permits government agencies 60 days to file an Answer and
prohibits default judgments and punitive damages.
The Legislature also
passed House Bill 4469 which amended W.Va. Code §33-11-4 and adds section
12 concerning the failure to maintain privacy of consumer financial and
health information. The new
provision of the Unfair Trade Practices Act states that any violation of
the Insurance Commissioner’s rule relating to the privacy of financial
and health information would constitute a violation of the Unfair Trade
Practices Act. However, any
insurer who complies with the provisions of the new section,
Commissioner’s rule or a Court Order in disseminating such information,
shall not be deemed to be a violation of the Unfair Trade Practices Act.
addition, the West Virginia Legislature passed Senate Bill 593 amending
W.Va. Code §33-6-33 concerning the type of media and/or products which
could be used in West Virginia as an “official used car guide.” Under the amendment the guide is not solely limited to
publicized or printed material. The Insurance Commissioner has previously
approved Automatic Data Processing, Inc., National
Automobile Dealers Association, and National Auto Research, but
anticipates that additional used car guides will now be approved.
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