Berry v. Nationwide Mut. Fire Ins. Co.
| Decision Date | 19 May 1989 |
| Docket Number | No. 18241,18241 |
| Citation | 381 S.E.2d 367,181 W.Va. 168 |
| Parties | Robert BERRY and Janice Sue Berry v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY. |
| Court | West Virginia Supreme Court |
Syllabus by the Court
1. Where an insurer decides, after complete investigation, not to approve payment to its insured based upon the allegedly tortious conduct of another party, the insurer's claim that a subsequent settlement by the insured with the other party violates the subrogation clause of the insurance contract by prejudicing the insurer's subrogation rights is invalid.
2. "An implied private cause of action may exist for a violation by an insurance company of the unfair settlement practice provisions of W.Va.Code, 33-11-4(9); but such private cause of action cannot be maintained until the underlying suit is resolved." Syl. pt. 2, Jenkins v. J.C. Penney Casualty Ins. Co., 167 W.Va. 597, 280 S.E.2d 252 (1981).
3. "The provisions for ... separate trials under Rule 42(c), West Virginia Rules of Civil Procedure, are within the sound discretion of the trial court and where the third party procedure may create confusion or cause complicated litigation involving separate and distinct issues the trial court does not abuse its discretion in refusing to allow impleader under third party practice." Syl. pt. 5, in part, Bluefield Sash & Door Co. v. Corte Construction Co., 158 W.Va. 802, 216 S.E.2d 216 (1975), overruled on other grounds, Haynes v. City of Nitro, 161 W.Va. 230, 240 S.E.2d 544 (1977).
4. "An insurer cannot be held liable for punitive damages by its refusal to pay on an insured's property damage claim unless such refusal is accompanied by a malicious intention to injure or defraud." Syl. pt. 2, Hayseeds, Inc. v. State Farm Fire & Cas., 177 W.Va. 323, 352 S.E.2d 73 (1986).
5. Punitive damages may be awarded to an insured if the insurer actually knew that the claim was proper and the insured can prove that it was willfully, maliciously and intentionally denied. Therefore, in such a case, it is not error for a trial court to give an instruction stating that punitive damages may be awarded.
6. "The purpose of the words 'and leave [to amend] shall be freely given when justice so requires' in Rule 15(a) W.Va.R.Civ.P., is to secure an adjudication on the merits of the controversy as would be secured under identical factual situations in the absence of procedural impediments; therefore, motions to amend should always be granted under Rule 15 when: (1) the amendment permits the presentation of the merits of the action; (2) the adverse party is not prejudiced by the sudden assertion of the subject of the amendment; and (3) the adverse party can be given ample opportunity to meet the issue." Syl. pt. 3, Rosier v. Garron, Inc., 156 W.Va. 861, 199 S.E.2d 50 (1973).
7. "Where a general verdict is returned for loss or damage to real and personal property which includes an amount for loss of use arising from annoyance and inconvenience, the plaintiff is entitled to prejudgment interest on the entire amount of the general verdict unless the jury has by separate finding established an amount for such loss of use." Syl. pt. 3, Kirk v. Pineville Mobile Homes, Inc., 172 W.Va. 693 , 310 S.E.2d 210 (1983).
W. Stephen Flesher, Flesher & Flesher, Huntington, for Nationwide Mut. Fire Ins. Co., a corp.
Kenneth H. Fisher, Huntington, for Robert Berry and Sue Berry.
This case is before the Court upon an appeal from a final judgment of the Circuit Court of Cabell County.
The appellant, the defendant below, is Nationwide Mutual Fire Insurance Company. The appellees, the plaintiffs below, are Robert Berry and Janice Sue Berry.
This Court has reviewed the appellant's petition for appeal, the appellees' brief in opposition to granting the appeal, all matters of record and briefs of the parties. 1 We are of the opinion that the judgment of the Circuit Court of Cabell County should be affirmed.
The appellees own residential property in Huntington. Adjacent to their property is the property of Turman Construction Company. From November, 1980 through February, 1981, personal property items in the appellees' residence were disheveled. Records of Turman Construction Company revealed that it had detonated several blasts in late January, 1981. The blasts were part of a process to alter the configuration of the company's land to create accessible storage for equipment. Blasts performed by the construction company on January 28 and 29, 1981 severely damaged the appellees' house. An attempt by the appellees to have the construction company stop the blasting was unsuccessful.
The appellees orally notified their homeowners' insurance carrier, the appellant, of the damage to their house. The insurance carrier for Turman Construction, Transamerica Insurance Company, was notified as well. Transamerica, however, investigated the damage claim and decided not to settle immediately, so the appellees filed a formal claim with the appellant in May, 1982.
A claims manager and claims adjuster for the appellant went to the appellees' property to inspect the damage. The appellee, Robert Berry, was dissatisfied with what he felt was a poor inspection, claiming that for every item of damage shown to the adjusters, the adjusters suggested an "alternate reason" that may have caused the damage. The appellees assert that the adjusters refused to go on portions of their property to see where the blasting occurred.
Transamerica, the insurance carrier for Turman Construction Company, secured a seismographic report from Vibra-Tech Associates, a consulting firm in Pittsburgh, Pennsylvania. Vibra-Tech conducted a vibration study based on a blast detonated on February 28, 1981 by Turman Construction Company. The report submitted by Vibra-Tech concluded that blasts similar to the one conducted on February 28, 1981, did not constitute a hazard to structures in the vicinity of the work by Turman Construction Company.
The Vibra-Tech report, however, was conducted at another residential site. A representative of Vibra-Tech testified that the test blast conducted by Vibra-Tech had nothing to do with the appellees' property.
The appellant was advised of the Vibra-Tech report, and denied the appellees' claim based upon the conclusions of this report.
The appellees filed this action against the appellant and Turman Construction Company. A pretrial conference resulted in a settlement with Turman for $60,000. The case against the appellant went to trial and resulted in a jury verdict for the appellees. The appellees were awarded: $75,000 compensatory damages for breach of contract, reduced by the circuit court to $15,000, allowing for a set-off representing the amount of the $60,000 Turman settlement; $50,000 for the appellant's breach of its duty of good faith and fair dealing in failing to settle the appellees' claim; and $500,000 punitive damages for the appellant's willful, malicious and intentional conduct.
The appellant's motion to set aside the jury verdict and to be awarded a new trial was denied by the circuit court.
The appellant argues that its subrogation rights were precluded by the appellees' settlement with Turman Construction Company. We disagree.
The insurance contract between the appellant and the appellees contained a subrogation clause which provided:
11. Subrogation. Nationwide may require from the Insured an assignment of the Insured's right of recovery against any party or parties responsible for loss to the extent that payment therefor is made by the Company. The Insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights and shall do nothing after a loss to prejudice such rights.
(emphasis supplied)
Under the facts of this case, the subrogation clause never became operative because of the appellant's own conduct. As the facts of this case indicate, and as discussed in section IV of this opinion, the appellant did not approve the appellees' claim, but instead, wrongfully denied it. Under the subrogation clause in the insurance contract the appellant would have acquired the appellees' right of recovery against Turman "to the extent that payment" had been made by the appellant to the appellees. The appellant, however, exercised its own judgment not to pay the appellees' claim, without any conduct by the appellees to prejudice the appellant's subrogation rights. Therefore, the appellant's argument that the subrogation clause was violated by the appellees is factually inaccurate. 2
Accordingly, we hold that where an insurer decides, after complete investigation, not to approve payment to its insured based upon the allegedly tortious conduct of another party, the insurer's claim that a subsequent settlement by the insured with the other party violates the subrogation clause of the insurance contract by prejudicing the insurer's subrogation rights is invalid.
The appellant also contends that the circuit court erred by refusing to recognize that the appellees' $60,000 settlement with Turman Construction Company constituted an accord and satisfaction of the underlying claim for compensatory damages. Consequently, the appellant maintains, the appellees were barred from recovering any compensatory damages from the appellant.
Under the common law, the release of one joint tortfeasor operated as a release of all joint tortfeasors. This rule, however, has been changed by statute, namely, W.Va.Code, 55-7-12 [1931], which provides:
A release to, or an accord and satisfaction with, one or more joint trespassers, or tort-feasors, shall not inure to the benefit of another such trespasser, or tort-feasor, and shall be no bar to an action or suit against such other joint trespasser, or tort-feasor, for the same cause of action to which the release or accord and satisfaction relates.
The appellant contends that this statutory provision is not applicable to this case because it...
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