Ball v. United Fin. Cas. Co., 22-0155

CourtSupreme Court of West Virginia
Writing for the CourtHUTCHISON, Chief Justice:
PartiesGREG ALLEN BALL, Petitioner, v. UNITED FINANCIAL CASUALTY COMPANY, MILTON HARDWARE, LLC, BUILDERS DISCOUNT, LLC, and RODNEY PERRY, Respondents
Docket Number22-0155
Decision Date17 November 2022

GREG ALLEN BALL, Petitioner,
v.

UNITED FINANCIAL CASUALTY COMPANY, MILTON HARDWARE, LLC, BUILDERS DISCOUNT, LLC, and RODNEY PERRY, Respondents

No. 22-0155

Supreme Court of Appeals of West Virginia

November 17, 2022


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.

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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.

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SYLLABUS

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

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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.

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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

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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

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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,
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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.
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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.
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