Bell v. Inland Mut. Ins. Co.

• Decision Date: 11 April 1985
• Docket Number: 16257,Nos. 16252,s. 16252
• Citation: 332 S.E.2d 127,175 W.Va. 165
• Court: West Virginia Supreme Court
• Parties: Luther F. BELL v. INLAND MUTUAL INSURANCE COMPANY, a corporation. CAMDEN FIRE ASSOCIATION v. Lonnie JUSTICE.

Page 127

332 S.E.2d 127

175 W.Va. 165

Luther F. BELL v. INLAND MUTUAL INSURANCE COMPANY, a corporation.

CAMDEN FIRE ASSOCIATION v. Lonnie JUSTICE.

Nos. 16252, 16257.

Supreme Court of Appeals of West Virginia.

April 11, 1985.

Rehearing Denied June 11, 1985.

Syllabus by the Court

1. The imposition of sanctions by a circuit court under W.Va.R.Civ.P. 37(b) for the failure of a party to obey the court's order to provide or permit discovery is within the sound discretion of the court and will not be disturbed upon appeal unless there has been an abuse of that discretion.

2. The striking of pleadings and the rendering of judgment by default against a party as sanctions under W.Va.R.Civ.P. 37(b) for that party's failure to obey an order of a circuit court to provide or permit discovery may be imposed by the court where it has been established through an evidentiary hearing and in light of the full record before the court that the failure to comply has been due to willfulness, bad faith or fault of the disobedient party and not the inability to comply and, further, that such sanctions are otherwise just.

3. Although the party seeking sanctions under W.Va.R.Civ.P. 37(b) has the burden of establishing noncompliance with the circuit court's order to provide or permit discovery, once established, the burden is upon the disobedient party to avoid the sanctions sought under W.Va.R.Civ.P. 37(b) by showing that the inability to comply or special circumstances render the particular sanctions unjust.

4. Where a party's counsel intentionally or with gross negligence fails to obey an order of a circuit court to provide or permit discovery, the full range of sanctions under W.Va.R.Civ.P. 37(b) is available to the court and the party represented by that counsel must bear the consequences of counsel's actions.

5. "A default judgment obtained in accordance with the provisions of Rule 55(b), West Virginia Rules of Civil Procedure, is a valid and enforceable judgment and a motion to set aside such judgment will not be granted unless the movant shows good cause therefor as prescribed in Rule 60(b) of the aforesaid Rules of Civil Procedure." Syl. pt. 1, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970).

6. "A motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion." Syl. pt. 3, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970).

7. Prejudgment interest accruing on amounts as provided by law prior to July 5, 1981, is to be calculated at a maximum annual rate of six percent under W.Va.Code, 47-6-5(a) [1974], and thereafter, at a maximum annual rate of ten percent in accordance with the provisions of W.Va.Code, 56-6-31 [1981].

8. The restriction contained in W.Va.R.Civ.P. 54(c) that "[a] judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment," does not apply where the judgment by default has been rendered as the result of the defaulting party's failure to obey an order of the circuit court to provide or permit discovery under W.Va.R.Civ.P. 37(b) and the defaulting party otherwise appears at the subsequent trial on the issue of damages.

Hudgins, Coulling, Brewster, Morhous & Cameron, Donald T. Caruth, Bluefield, for Inland Mut. Ins. Co.

Steptoe & Johnson, James R. Watson, Charleston, Steptoe & Johnson, Christopher P. Bastien, Clarksburg, for Camden Fire Assn.

Ballard & Brumfield, C. David Brumfield, Welch, for Luther F. Bell and Lonnie Justice.

McHUGH, Justice:

These actions, No. 16252 and No. 16257, involving the appellants, Inland Mutual Insurance Company (hereinafter "Inland Mutual") and Camden Fire Association (hereinafter "Camden Fire"), respectively, contain similar issues and have been consolidated for the purpose of resolution of those issues.

I

A. INLAND MUTUAL

The action involving Inland Mutual is before this Court upon appeal from an order entered June 19, 1983, by the Circuit Court of McDowell County in which that court denied a motion of Inland Mutual to set aside a default judgment obtained against it by Luther F. Bell, the appellee, for $53,491.85 in compensatory damages and $25,000 in punitive damages plus interest and costs.

In May, 1967, the appellee was injured when he fell from the back of a truck driven by Kenny West and owned by his father, Ozie West. The appellee commenced a civil action against Kenny and Ozie West, however, Kenny West was residing in New Jersey. In February, 1975, service of process was made upon Kenny West but no timely answer was filed. The circuit court entered a default judgment against Kenny West. The court also addressed the issue of the father's liability for the accident. In an order entered on February 23, 1978, Ozie West was dismissed from the action with prejudice. The court, however, entered judgment against Kenny West for $35,000 in compensatory damages plus costs and interest at an annual rate of six percent.

In Bell v. West, 168 W.Va., 391, 284 S.E.2d 885 (1981), this Court affirmed the judgment of the circuit court dismissing Ozie West from the action by refusing to extend liability to the father under the family purpose doctrine because of the attenuated connection between Kenny and Ozie West. This Court further affirmed the default judgment against Kenny West. In so doing, we noted the existence of W.Va.Code, 17D-4-12(b)(2) [1959], that requires all motor vehicle "liability insurance policies issued in this State to contain a provision making anyone using an insured vehicle with the express or implied permission of the named insured, an additional insured." 168 W.Va. at 394, 284 S.E.2d at 887 n. 1.

The record indicates that soon thereafter the appellee contacted Inland Mutual's counsel by letter and requested Inland Mutual to pay the judgment, including interest and costs, against Kenny West. In September, 1982, the appellee filed a complaint in the Circuit Court of McDowell County against Inland Mutual under W.Va.Code, 17D-4-12(b)(2) [1959], alleging that the insurance company wilfully failed to pay the judgment against Kenny West and demanding compensatory and punitive damages. Inland Mutual, by counsel, answered the complaint and denied liability beyond a $10,000 policy limit and asserted defenses to the original personal injury suit against Kenny West.

Approximately one month later, the appellee served upon Inland Mutual interrogatories that were not answered. In February, 1983, the appellee moved the circuit court to compel Inland Mutual to answer the interrogatories. In an order entered on February 4, 1983, the circuit court ordered the appellant to answer the interrogatories "by February 14, 1983 or all defenses of the defendant will be ordered stricken and judgment will be granted to the plaintiff on his pleadings." The interrogatories remained unanswered in contravention of the court's order and in April, 1983, the appellee moved the circuit court to strike the appellant's pleadings under W.Va.R.Civ.P. 37(b) and enter default judgment for the appellee. After hearing argument of counsel, the court, in an order entered May 2, 1983, struck the appellant's pleadings, and granted the appellee a judgment by default.

At a jury trial on the issue of damages, the appellee presented four witnesses, one of whom was the appellee. The jury awarded the appellee the amount of the original judgment against Kenny West of $35,000, prejudgment interest upon that amount at an annual rate of 10% from the date of the original award, February 23, 1978, totalling $18,491.85, and $25,000 in punitive damages: a total award of $78,491.85 plus interest and costs. The circuit court denied the appellant's motion to set aside the judgment.

B. CAMDEN FIRE

The case involving Camden Fire is before us upon appeal from an order of the Circuit Court of McDowell County, entered on December 21, 1983, in which that court denied the appellant's motion under W.Va.R.Civ.P. 60(b) to set aside a default judgment obtained against it by Lonnie Justice, the appellee, for $61,276.16 in compensatory damages and $300,000 in punitive damages plus interest and costs.

In August, 1979, the appellee obtained fire insurance from Camden Fire upon real property titled in the name of his son. In 1981, the property was destroyed by fire, however, upon investigation, Camden Fire refused to pay the appellee the benefits under the policy. Camden Fire filed an action for declaratory judgment in the Circuit Court of McDowell County to determine the existence of an insurable interest in the property by the appellee.

The appellee answered the complaint and asserted a counterclaim against Camden Fire for the loss to the property under the terms of the policy. He also joined as a third-party defendant the insurance brokerage firm through which the insurance was purchased. In the counterclaim, the appellee demanded $63,900 in compensatory damages and $25,000 in punitive damages plus interest and costs.

Approximately one year later, the appellee served interrogatories upon Camden Fire and the third-party defendant. Camden Fire failed to answer the interrogatories. The appellee moved the circuit court to compel Camden Fire to answer the interrogatories and in an order entered on February 4, 1983, the appellant was ordered to answer such interrogatories "by February 14, 1983, or judgment will be entered against the plaintiff...." The interrogatories remained unanswered and in April, 1983, the appellee moved the circuit court to strike the appellant's pleadings. In an order entered on May 2, 1983, the court granted the appellee a default judgment and dismissed from the action the insurance broker.

A jury trial was held to determine damages. The jury returned a verdict for $61,276.16 in compensatory damages and $300,000 in punitive damages. The judgment order...