Within the firm’s insurance practice, significant resources and talents are devoted to coverage issues. Because West Virginia is a litigious jurisdiction, coverage is continually challenged and the state courts have created additional avenues of coverage through which the Firm has successfully navigated insurer clients. While the Firm has successfully represented insurers in coverage litigation including successful appeals on all lines of insurance including personal lines, commercial policies, custom-designed and multinational policies, we constantly strive to resolve coverage disputes in non-traditional ways to avoid litigation expense to insurers wherever possible. West Virginia is somewhat unique in that it promotes coverage litigation by recognizing standing to file declaratory judgment actions in insureds, insurers and third-party claimants who are strangers to the insurance contract thus requiring heightened attention to how coverage questions may come to an insurer.
The Firm has represented most major insurers transacting business in the State concerning exclusions, various definitions of “occurrence” and priorities of coverage questions in addition to conflicts of law questions that impact coverage. The Firm has litigated issues as simple as whether a mix breed dog was a terrier under a “pit bull” exclusion to twice successfully defending Liberty Mutual before the U.S. Court of Appeals for the Fourth Circuit in Millville Quarry, Inc. v. Liberty Mutual Fire Insurance Company, 31 Fed.Appx. 116, 2002 WL 429365 (4th Cir. 2002); 217 F.3d 839 (4th Cir. 2000), arising from a $17 million commercial coverage and extra‑contractual liability claim following a flood at a quarry whereby the insured sue to recover remediation costs as “cost of replacement” and “additional expenses” while also attempting to expand “period of recovery” under its policy.
Likewise, the Firm has successfully advocated on appeal to the West Virginia Supreme Court of Appeals the application of the professional services exclusion in a commercial general liability policy. Webster County Solid Waste Authority v. Brackenrich & Associates, Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005). Appellate successes on coverage issues were also obtained in Boniey v. Kuchinski, 223 W.Va. 486, 677 S.E.2d 922 (2009), which exempts all-terrain vehicles from underinsured motorist coverage. We have appeared before state appellate courts on numerous issues involving liability exclusions. See e.g., Blake v. StateFarm Mut. Auto. Ins. Co., 224 W.Va. 317, 685 S.E.2d 895 (2009); Kelly v Painter, 202 W.Va. 344, 504 S.E.2d 171 (1998). Coverage issues were also successfully litigated in U.S. District Court concerning choice of law questions in Crum v Progressive Preferred Ins. Co., 2008 WL4371399 (N.D.W.Va. 2008), which ultimately expanded Ohio exclusionary law in auto policies. We have litigated at the trial and appellate levels the “owned but not insured” exclusion, the “named insured” exclusion, the “family use doctrine, ”the “resident of household” exclusion, the “dramshop exclusion”, the “dealership use” exclusion, the use of arbitration and the application of “reasonable expectations of coverage.” The Firm has also litigated coverages applicable to builders and contractors under CGL policies, coverage afforded under “insured contract” provisions, the scope of “your work,” and many related topics.
The Firm also successfully rolled back application of an industry challenging appellate decision that exclusions must be individually priced to be effective in the State of West Virginia. We approached this issue on multiple fronts to the satisfaction of industry interests, first leading the charge to legislatively override the decision and apply it retroactively and then defending the constitutionality of that legislative correction in the trial and appellate courts of the State. Findley v State Farm Mut. Auto. Ins. Co., 213 W.Va. 80, 576 S.E.2d 807 (2002). As a result, dozens of class actions were dismissed and West Virginia returned to a more industry-acceptable philosophy regarding exclusions.
Because of its fossil fuel reserves, West Virginia is the site of numerous pollution and toxic tort cases, many of which involve conditional, absolute or manuscript pollution exclusions in policies insuring mines, steel mills or other plants. Currently, the firm is representing an international insurer on pollution exclusions in custom-designed policies in coal slurry litigation which has been assigned to the Mass Litigation Panel. This defense is in conjunction with thousands of individual suits throughout southern West Virginia on behalf of insurers with similar pollution exclusions. Likewise, the Firm defended insurers on pollution exclusion clauses in Wheeling-Pittsburgh Steel litigation that was conducted in multiple jurisdictions. Key decisions were secured on the determination of coverage triggers and exhaustion of coverage provisions. The Firm has also litigated surplus lines and excess coverage in class actions in which coverage determinations were subject to the Federal Arbitration Act (9 U.S.C. §1, et seq.) and the exclusive jurisdiction of the federal courts. We have used federal jurisdiction to remove such actions from state courts and to assign the cases to arbitration in the jurisdiction of the insurer’s rather than responding in a forum selected by a claimant.
The employment arena also faces insurance coverage concerns and again Martin & Seibert, L.C. has successfully advised insurers on employment practices and errors & omissions policies including coverages afforded thereunder. The Firm has litigated employment practices coverage, “workers’ compensation” exclusions, loaned or leased employee issues in the context of temporary agencies and various theories of coverage advanced by employees. In that regard, the Firm has engaged in significant arbitration practice regarding the application and enforcement of employer exclusions in surplus lines coverage.
West Virginia has judicially created the doctrine of “substantially prevailed” unique to first party claims which expands damages recoverable by an insured beyond policy terms. In Jones v Allstate Ins. Co., 120 F.3d 261 (4th Cir. 1997), however,the Firm successfully defended Allstate before the U.S. Court of Appeals for the Fourth Circuit to limit the application of the doctrine. Similarly, West Virginia recognizes the doctrine of reasonable expectations, another situation whereby first party claimants may expand available insurance coverage. Martin & Seibert, L.C. was directly involved in the series of cases which addressed the doctrine beginning with National Mut. Ins. Co. v. McMahon & Sons, 177 W.Va. 734, 356 S.E.2d 488 (1987) and Costello v. Allstate Ins. Co., 195 W.Va. 349, 465 S.E.2d 620 (1995), which was successfully defended twice at trial and twice on appeal.
Other doctrines created in West Virginia permit insureds to expand coverage beyond that set forth on the declarations sheet. When the Plaintiff's bar attempted to expand the application of Shamblin v. Nationwide Mut. Ins. Co., 183 W.Va. 585, 396 S.E.2d 766 (1970), to underinsured motorist carriers, we filed the amicus brief which was accepted by the West Virginia Supreme Court of Appeals in Marshall v. Saseen, 192 W.Va. 94, 450 S.E.2d 791 (1994). While the Court's ruling was not favorable to the industry, our position limiting exposure to an underinsured motorist carrier to policy limits was adopted.
Similarly, West Virginia law permits coverage to be “rolled on” to a policy by operation of law if coverage waiver forms are improper. This has spawned class actions against almost every personal lines insurer in the State. We defended and negotiated resolution of such a class action against Nationwide, the first such action upon which all others currently pending throughout the State are based. This entailed significant actuarial projections because of enhanced coverage implications and again demonstrates how coverage litigation transcends interpretation of policy language and exponentially expands insurer exposure beyond a single policy. Our experience in coverage-based class actions have included settlements that extended over 17 years in actuarially projected amounts in excess of $75 million.
Because coverage litigation is susceptible to class actions, the Firm has developed a close working relationship with the Insurance Commissioner in order to advocate to the regulator certain coverage positions and to keep pace with industry and NAIC standards that impact day-to-day business operations of insurers of all lines of coverage.
Most recently the firm has represented commercial insurers with respect to household items that have been the subject of safety recalls such as baby cribs, strollers and car seats. Given the nature of the items, several tangential factors weigh on the coverage litigation and it is of the utmost importance that coverage counsel convey to the Court the gravity of the coverage situation without treading upon the sensitive nature of underlying claims which may ultimately be unfunded due to exclusions and definitions in commercial policies.
Our success has not been limited to the actual coverage issues, but also our strategies to minimize overall corporate exposure. In that regard, our combined coverage and bad faith experience is relevant since any improper denial of coverage can serve as the basis of a common law and statutory “bad faith” claim. Such claims expose the insurer to institutional discovery and punitive damages. Here again, the Firm’s depth of experience permits for successful navigation and negotiation of claims, often with confidential and global settlements to avoid general business practice evidence in subsequent litigation.
Where possible, we employ our regulatory/legislative resources to craft and lobby for legislation that may resolve outstanding coverage issues. In addition, the Firm is committed to the training of insurance personnel from the executive office to the front line adjuster on pertinent coverage issues, doctrines and “traps” that can create exposure. Members of the Firm are routinely sought as authors, lecturers and expert witnesses on coverage issues. Members are routinely selected as faculty members of coverage seminars regionally and nationally. Presently one of our attorneys is serving as an expert witness on behalf of an insurer on a “bad faith” case arising from a coverage question created by an incorrect interpretation of an insurance statute which implicated the priority of multiple insurance coverages. It is due to this breadth of experience that the Firm can offer exemplary coverage advice in and out of the courtroom that most firms are unable to provide.
A large component of insurance coverage work is to avoid litigation. Here, the unparalleled experience of the Firm’s senior insurance attorneys is a key advantage to insurers. With early detection of issues that might later become class actions, the Firm can provide counsel and guidance through often uncharted waters and avoid costly litigation and exposure. The Firm excels at early identification of coverage issues which results in litigation avoidance. Moreover, due to the depth of experience, this advice is provided in a cost efficient manner again minimizing corporate exposure.
While Martin & Seibert, L.C. is an old firm, it employs innovative techniques for the benefit of clients. The Firm uses alternative dispute resolution, arbitration and other non-traditional approaches to coverage issues and when necessary, initiates rather than defends coverage questions in order to frame the issue to the advantage of the insurer. The Firm has been instrumental in securing coverage for an insurer client arising out of a $100 million dollar class action where the involved London-based carriers denied coverage based upon misrepresentation of the disclosure of the exposure at the time of application, the timing of notice, the definition of occurrence and the coverage of punitive damages. Only with these extraordinary approaches can coverage questions be resolved before they create statewide or national consequences to an insurance company.