BPI, Inc. v. Nationwide Mut. Ins. Co.

Decision Date20 May 2015
Docket NumberNo. 14–0799.,14–0799.
CourtWest Virginia Supreme Court

Leigh G. Latherow, Esq., VanAntwerp, Monge, Jones, Edwards & McCann, LLP, Ashland, KY, for Petitioner.

Ronda L. Harvey, Esq., Bowles Rice LLP, Charleston, WV, Drew Byron Meadows, Esq., Pro Hac Vice, Kellie M. Collins, Esq., Pro Hac Vice, Golden & Waters, PLLC, Lexington, KY, for Respondent.


WORKMAN, Chief Justice:

This matter is before the Court upon certified question from the United States District Court for the Eastern District of Kentucky (hereinafter District Court). That court has certified two questions regarding retroactive application of this Court's decision in Cherrington v. Erie Insurance Property & Casualty Co., 231 W.Va. 470, 745 S.E.2d 508 (2013). This Court accepted the certified questions and docketed the matter for resolution. Upon review of the parties' briefs and arguments, this Court answers the retroactivity issue presented in the first certified question and remands this matter to the District Court for further proceedings.

I. Factual and Procedural History

The underlying insurance dispute arose from a construction project in Prestonsburg, Kentucky, for which BPI, Inc. (hereinafter BPI), was the general contractor. In February 2008, American Towers LLC (hereinafter “American Towers”) hired BPI, a West Virginia contractor, to construct a 300–foot cell tower and cell tower compound, with an access road to the tower, using plans engineered and provided by American Towers. The access road collapsed within one year after the completion of the project, allegedly due to faulty workmanship of BPI and/or its subcontractors.

American Towers filed a civil action against BPI, and BPI filed a cross-claim against Nationwide Mutual Insurance Company (hereinafter Nationwide), claiming that BPI's potential liability was covered under the commercial general liability (hereinafter “CGL”) policy it had purchased from Nationwide. In response, Nationwide sought a declaration that it was not obligated to insure BPI for this incident. Subsequent to discovery, BPI and Nationwide filed cross-motions for summary judgment.1

The District Court determined that West Virginia law should apply, based upon the residence of the named insured and the contract itself. The District Court also recognized that determinative issues in this case depend upon the application of West Virginia law regarding BPI's insurance policy covering property damage caused by an “occurrence.” The District Court examined this Court's holding in Cherrington and noted that damages arising from faulty workmanship had not been deemed damages caused by an “occurrence” prior to this Court's Cherrington decision. See, e.g., Corder v. William W. Smith Excavating Co., 210 W.Va. 110, 116, 556 S.E.2d 77, 83 (2001) ; Erie Ins. Prop. & Cas. Co. v. Pioneer Home Improvement, Inc., 206 W.Va. 506, 512, 526 S.E.2d 28, 34 (1999) ([D]amages to a building sustained by an owner as the result of a breach of a construction contract due to a contractor's faulty workmanship are a business risk to be borne by the contractor and not by his commercial general liability insurer.”).

The 2013Cherrington decision, issued after American Towers filed the underlying civil action against BPI, overruled several cases examined by the District Court,2 HOLDING AS FOLLows in syllabus point six:

Defective workmanship causing bodily injury or property damage is an “occurrence” under a policy of commercial general liability insurance. To the extent our prior pronouncements in Syllabus point 3 of Webster County Solid Waste Authority v. Brackenrich and Associates, Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005) ; Syllabus point 2 of Corder v. William W. Smith Excavating Co., 210 W.Va. 110, 556 S.E.2d 77 (2001) ; Syllabus point 2 of Erie Insurance Property and Casualty Co. v. Pioneer Home Improvement, Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999) ; and Syllabus point 2 of McGann v. Hobbs Lumber Co., 150 W.Va. 364, 145 S.E.2d 476 (1965), and their progeny are inconsistent with this opinion, they are expressly overruled.
231 W.Va. at 473, 745 S.E.2d at 511–12, syl. pt. 6. Thus, under Cherrington, defective workmanship may qualify as an occurrence, allowing resulting damages to be covered under a policy such as BPI's policy in this case.

In the certified questions presented to this Court, the District Court observes that at least a portion of BPI's potential damages may arise from what could be characterized as defective workmanship. Thus, the District Court requests this Court to answer the question of whether our decision in Cherrington applies retroactively. Further, the District Court poses the question: “if Cherrington does not apply retroactively, and the road collapsed because it was poorly constructed, then does the collapse of the road nevertheless qualify as an ‘occurrence’?” For reasons explained below, this Court holds that Cherrington applies retroactively.

II. Standard of Review

Pursuant to West Virginia Code § 51–1A–3 (2014),

the supreme court of appeals of West Virginia may answer a question of law certified to it by any court of the United States or by the highest appellate court or the intermediate appellate court of another state or of a tribe or of Canada, a Canadian province or territory, Mexico or a Mexican state, if the answer may be determinative of an issue in a pending cause in the certifying court and if there is no controlling appellate decision, constitutional provision or statute of this state.

This Court has consistently explained that [a] de novo standard is applied by this court in addressing the legal issues presented by a certified questions from a federal district or appellate court.’ Syl. Pt. 1, Light v. Allstate Ins. Co., 203 W.Va. 27, 506 S.E.2d 64 (1998).” Syl. Pt. 2, Aikens v. Debow, 208 W.Va. 486, 541 S.E.2d 576 (2000) ; see also Syl. Pt. 1, T. Weston Inc. v. Mineral Cnty., 219 W.Va. 564, 638 S.E.2d 167 (2006) : Syl. Pt. 1, Feliciano v. 7–Eleven, Inc., 210 W.Va. 740, 559 S.E.2d 713 (2001) ; Syl. Pt. 1, Gallapoo v. Wal–Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996). Likewise, in syllabus point one of Bower v. Westinghouse Electric Corp., 206 W.Va. 133, 522 S.E.2d 424 (1999), this Court explained that we “undertake [ ] plenary review of legal issues presented by certified question from a federal district or appellate court.” Under this plenary standard of review, we proceed to consider this matter.

III. Discussion
A. Holding of Cherrington: No Specific Reference to Retroactivity

As referenced above, this Court's decision in Cherrington addressed the issue of defective workmanship causing bodily injury or property damage and held that such event is properly characterized as an “occurrence” under a CGL insurance policy. The Cherrington decision altered the law in West Virginia with regard to that issue, and the new principle was applied to the 2004 insurance policy under review in Cherrington. Beyond its decision to apply the new principle to the 2004 policy in that case, this Court did not address the matter of retroactivity in Cherrington, and no reference to past or future insurance policies was made.

B. Retroactivity of Judicial Decisions

This Court has wisely explained that we will not attempt to formulate a “single answer to questions that may arise on the issue of retroactivity.” Adkins v. Leverette, 161 W.Va. 14, 20, 239 S.E.2d 496, 499 (1977).3 In this Court's scrutiny of concepts of retroactivity, however, discussions appropriately commence with the recognition that this Court, “like all courts in the country, adheres to the common law principle that, [a]s a general rule, judicial decisions are retroactive in the sense that they apply both to the parties in the case before the court and to all other parties in pending cases.’ Crowe v. Bolduc, 365 F.3d 86, 93 (1st Cir.2004).” Caperton v. A.T. Massey Coal Co., 225 W.Va. 128, 157, 690 S.E.2d 322, 351 (2009) ; see also Alaskan Vill., Inc. v. Smalley, 720 P.2d 945, 949 (Alaska 1986) (“Absent special circumstances, a new rule of law will apply in the case before the court and in all subsequent cases.”); Citicorp N. Am., Inc. v. Franchise Tax Bd., 83 Cal.App.4th 1403, 100 Cal.Rptr.2d 509, 525 (2000) ([T]he general rule as to judicial opinions is that they are fully retroactive.”); Findley v. Findley, 280 Ga. 454, 629 S.E.2d 222, 228 (2006) ([W]e shall continue to apply the general rule that a judicial decision announcing a new rule is retroactive[.]); Aleckson v. Village of Round Lake Park, 176 Ill.2d 82, 223 Ill.Dec. 451, 679 N.E.2d 1224, 1226 (1997) (“Generally, when a court issues an opinion, the decision is presumed to apply ... retroactively [.]); Dempsey v. Allstate Ins. Co., 325 Mont. 207, 104 P.3d 483, 489 (2004) (“Therefore today we reaffirm our general rule that [w]e give retroactive effect to judicial decisions.” (internal quotations and citation omitted)); In re Commitment of Thiel, 241 Wis.2d 439, 625 N.W.2d 321, 326 (Ct.App.2001) (“Wisconsin generally adheres to the ‘Blackstonian Doctrine,’ which provides that a decision that clarifies, overrules, creates or changes a rule of law is to be applied retroactively.”).

Particularly relevant in the civil context, courts have consistently held that common law provides that appellate decisions are presumed to apply retroactively. Ireland v. Worcester Ins. Co., 149 N.H. 656, 826 A.2d 577, 580–81 (2003) ; see also Beavers v. Johnson Controls World Servs., Inc., 118 N.M. 391, 881 P.2d 1376, 1383 (1994) ([W]e believe there should be a presumption that a new rule adopted by a judicial decision in a civil case will operate retroactively.”); Christy v. Cranberry Volunteer Ambulance Corps, Inc., 579 Pa. 404, 856 A.2d 43, 51 (2004) (“Our general principle is that we apply decisions involving changes of law in civil cases retroactively [.]); State v....

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