Submitted: October 4, 2022.
Certified Question from the United States Court of Appeals
for the Fourth Circuit No. 20-1452.
CERTIFIED
QUESTION ANSWERED
Stephen B. Farmer, Esq. R. Chad Duffield, Esq. Jennifer D
Roush, Esq. Farmer Cline & Campbell, PLLC Charleston,
West Virginia Counsel for Petitioner.
Jeffrey A. Holmstrand, Esq. Grove Holmstrand & Delk PLLC
Wheeling, West Virginia Ancil G. Ramey, Esq.
Susan
R. Snowden, Esq. Jackson Kelly PLLC Martinsburg, West
Virginia Counsel for Respondent United Financial Casualty
Company.
Steptoe & Johnson PLLC Huntington, West Virginia Dallas
F. Kratzer III, Esq. Steptoe & Johnson PLLC Columbus,
Ohio Counsel for Amicus Curiae Defense Trial Counsel of West
Virginia.
CHIEF
JUSTICE HUTCHISON delivered the Opinion of the Court. JUSTICE
WALKER concurs and reserves the right to file a concurring
opinion. JUSTICE ARMSTEAD dissents and reserves the right to
file a dissenting opinion. JUSTICE BUNN, deeming herself
disqualified, did not participate in the decision of the
case. JUDGE SADLER, sitting by temporary assignment.
1.
"The mandatory omnibus requirements imposed by W.Va.
Code, 33-6-31(a), indicate that the legislature has
demonstrated a clear intent to afford coverage to anyone
using a vehicle with the owner's permission as a means of
giving greater protection to those who are involved in
automobile accidents. The statute should be liberally
construed to effect coverage." Syl. Pt. 3, Burr v.
Nationwide Mut. Ins. Co., 178 W.Va. 398, 359 S.E.2d 626
(1987).
2.
"Any provision in an insurance policy which attempts to
contravene W.Va. Code, 33-6-31(a), is of no effect."
Syl. Pt. 2, Burr v. Nationwide Mut. Ins. Co., 178
W.Va. 398, 359 S.E.2d 626 (1987).
3.
"W.Va. Code, 33-6-31(a) [1998] expressly requires that a
motor vehicle insurance policy contain a provision insuring
the named insured and any other person responsible for the
use of or using the motor vehicle against liability to
another for death, bodily injury, loss or damage sustained as
a result of negligence in the operation or use of such
vehicle. Any additional provision in a motor vehicle
insurance policy which tends to limit, reduce or nullify that
. . . liability coverage . . . is void and ineffective as
against public policy." Syl. Pt. 3, Gibson v.
Northfield Ins. Co., 219 W.Va. 40, 631 S.E.2d 598
(2005).
4. When
an exclusion in a motor vehicle liability insurance policy
violates West Virginia Code § 33-6-31(a) [2015] because
it would deny coverage to a
permissive user of an insured vehicle, the exclusion is void,
and the insurance policy must provide coverage to the
permissive user up to the full limits of liability coverage
available under the policy.
OPINION
HUTCHISON, Chief Justice:
This
case is before this Court on a certified question from the
United States Court of Appeals for the Fourth Circuit
concerning the amount of motor vehicle liability insurance
coverage, if any, that United Financial Casualty Company
("United Financial") must provide to a non-employee
permissive user of an insured vehicle who caused personal
injuries to an employee of a named insured under a standard
commercial automobile insurance policy issued by United
Financial ("the policy"):
When an exclusion in an automobile liability insurance policy
violates West Virginia Code § 33-6-31(a) because it
would deny coverage to a permissive user of an insured
automobile, must the insurance policy provide the permissive
user with the full liability coverage available under the
policy or the minimum liability coverage required by the
Motor Vehicle Safety Responsibility Law, West Virginia Code
§ 17D-1-1 et seq.?
The
Fourth Circuit has determined that an Employee
Indemnification and Employer's Liability's
exclusion[1] in United Financial's policy is void
and unenforceable
under the mandatory omnibus requirements of West Virginia
Code § 33-6-31(a) [2015]. Upon review of the
parties' briefs, appendix record, oral argument, and
applicable legal authority, and for the reasons stated below,
we find the void exclusion may not be invoked to limit the
amount of liability insurance coverage available to a
permissive user of a vehicle insured by United
Financial's policy. We conclude that United Financial
must afford the permissive user with coverage up to the full
limits of liability coverage available under the insurance
policy for any damages proven.
I.
Factual and Procedural Background
In its
published order, United Financial Casualty Company v.
Ball, 31 F.4th 164 (4th Cir. 2022), the Fourth Circuit
set forth the undisputed relevant facts and procedural
history as follows:
On October 25, 2016, employees of Milton Hardware, LLC, were
performing construction work at the home of Rodney Perry in
Milton, West Virginia. At one point during the work, Milton
Hardware's owner authorized Perry to move one of Milton
Hardware's trucks, which was blocking the driveway. As
Perry was moving the truck in reverse, however, he
accidentally struck Greg Ball, a Milton Hardware employee
temporarily pinning him between the truck Perry was driving
and another Milton Hardware truck. As a result, Ball
sustained serious injuries that required hospitalization.
At the time of the accident, Milton Hardware had a commercial
automobile liability insurance policy issued by United
Financial Casualty Company, which provided $1 million in
liability coverage to Milton Hardware and to any person using
Milton Hardware's vehicles with its permission.
Based on this provision, Ball demanded that United Financial
indemnify him for the injuries that he claimed were caused by
Perry's negligence. United Financial denied coverage and
commenced an action in [the United States District Court for
the Southern District of West Virginia] against the named
insureds, Milton Hardware and Builders Discount, LLC, as well
as Perry and Ball, seeking a declaratory judgment that it had
no obligation to cover Perry's liability to Ball. It
asserted that coverage for Perry's liability to Ball was
barred by two exclusions in the policy-a "Worker's
Compensation" exclusion[2] and an "Employee
Indemnification and Employer's Liability"
exclusion.[3] Ball filed a crossclaim against Perry,
seeking damages for his negligence, and a counterclaim
against United Financial for a declaratory judgment that,
among other things, the Worker's Compensation exclusion
did not apply and that the Employee Indemnification and
Employer's Liability exclusion violated West Virginia
Code § 33-6-31(a). Ball also sought money damages from
United Financial, alleging breach of contract, breach of the
covenants of good faith and fair dealing, unfair trade
practices, and common law bad faith.
On cross-motions for summary judgment, the district court
granted United Financial's motion. The court concluded
that because Ball "sustained his injuries while he was
working within the course of his employment with Milton
Hardware," his injuries fell within the scope of the
Worker's Compensation exclusion and "that, as a
result, he [was] barred from liability coverage under the
policy." The court also rejected Ball's argument
that West Virginia Code § 33-6-31(a) required United
Financial to extend liability coverage to Perry as a
permissive user of an insured automobile, reasoning that the
exception in § 33-6-31(h) applied to eliminate this
requirement. See W.Va. Code § 33-6-31(h)
(providing that subsection (a) does "not apply to any
policy of insurance to the extent that it covers the
liability of an employer to his or her employees under any
workers' compensation law"). The court dismissed all
of Ball's counterclaims against United Financial,
including his state law claims for damages, and it declined
to exercise supplemental jurisdiction over Ball's state
law tort claim against Perry.
On Ball's appeal, [the United States Court of Appeals for
the Fourth Circuit] vacated the district court's judgment
and remanded for further proceedings. United Financial
Casualty Co. v. Ball, 941 F.3d 710 (4th Cir. 2019). [The
Fourth Circuit] held first that "because Ball's
negligence claim against Perry was a claim against a third
party, rather than a claim against his employer for
workers' compensation, the [policy's] Worker's
Compensation exclusion did not apply." Id. at
712. [The Fourth Circuit] also "conclude[d] that the
policy's broader exclusion for Employee Indemnification
and Employer's Liability, which on its face would apply
to exclude coverage for Perry's liability to Ball, was
inoperable because its limitation of coverage contravened
West Virginia Code § 33-6-31." Id.
Specifically, United Financial had argued that "§
33-6-31 (a) [did] not apply because of the workers'
compensation exception in subsection (h)," but [the
Fourth Circuit] explained that because "Ball's claim
against Perry [was] not a workers' compensation claim,
but rather a third-party common law tort claim, the exception
in § 33-6-31 (h) [did] not apply, and § 33-6-31(a)
continue[d] to override the restrictions of the Employee
Indemnification and Employer's Liability exclusion."
Id. at 716. As [the Fourth Circuit] summarized,
At bottom, [the court] conclude[s] that while the language of
the Employee Indemnification and Employer's Liability
exclusion, considered alone, is sufficiently broad to deny
Perry coverage for his liability to Ball, such a
limitation of coverage for a permissive user of an insured
vehicle contravenes West Virginia Code § 33-6-31(a) and
thus renders the exclusion unenforceable. See Universal
Underwriters Ins. Co. v. Taylor, 185 W.Va. 606,
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