Cannelton Industries, Inc. v. Aetna Cas. & Sur. Co. of America

• Decision Date: 16 December 1994
• Docket Number: No. 22164,22164
• Citation: 194 W.Va. 203,460 S.E.2d 18
• Court: West Virginia Supreme Court
• Parties: CANNELTON INDUSTRIES, INC., Plaintiff Below, Appellant, v. The AETNA CASUALTY & SURETY COMPANY OF AMERICA, et al., Defendants Below, Appellees.

Page 18

460 S.E.2d 18

194 W.Va. 203

CANNELTON INDUSTRIES, INC., Plaintiff Below, Appellant, v. The AETNA CASUALTY & SURETY COMPANY OF AMERICA, et al.,

Defendants Below, Appellees.

No. 22164.

Supreme Court of Appeals of

West Virginia.

Submitted Sept. 27, 1994.

Decided Dec. 16, 1994.

Syllabus by the Court

1. "A circuit court's entry of summary judgment is reviewed de novo." Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

2. "A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syl. pt. 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).

3. "Summary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove." Syl. pt. 4, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

4. The West Virginia Guaranty Association is not required to notify insureds of the insolvent insurer unless the West Virginia Insurance Commissioner requires that such notice be given pursuant to W.Va.Code, 33-26-10(2)(a) [1970] of the West Virginia Guaranty Association Act.

5. Pursuant to the West Virginia Guaranty Association Act, specifically, W.Va.Code, 33-26-8(1)(a) [1985], the West Virginia Guaranty Association is "obligated to the extent of covered claims existing prior to the determination of insolvency, and for such claims arising within thirty days after the determination of insolvency.... [However,] [n]otwithstanding any other provision of this article, a covered claim shall not include any claim filed with the guaranty fund after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer[.]"

John L. McClaugherty, W. Warren Upton, Gale R. Lea, Jackson & Kelly, Charleston, for appellant.

James D. McQueen, Jr., Kathlene Harmon-McQueen, McQueen & Brown, Charleston, for the appellee West Virginia Ins. Guar. Ass'n.

McHUGH, Justice:

This case is before this Court upon appeal from the September 28, 1993, order of the Circuit Court of Kanawha County, West Virginia. Pursuant to the appellee's, West Virginia Insurance Guaranty Association (hereinafter "WVIGA"), motion to dismiss, the circuit court, in that order, dismissed the appellant's, Cannelton Industries, Inc. (hereinafter "Cannelton"), complaint with prejudice. The appellant asks that this Court reverse the circuit court's order and remand the case to the circuit court for further proceedings. For the reasons set forth below we agree with the circuit court's ruling that the case against the WVIGA should be dismissed. ¹

I

Cannelton has numerous insurance carriers. Two of those carriers, Integrity Insurance Company (hereinafter "Integrity") and Midland Insurance Company (hereinafter "Midland"), became insolvent. Relief from insolvent insurers can be sought from the liquidator of the estate of the insolvent insurer, or through a state (property and casualty) guaranty association. See, e.g., W.Va.Code, 33-10-1, et seq. and W.Va.Code, 33-26-1, et seq.

In this case, Cannelton seeks relief from the WVIGA for claims that arose as a result of an environmental pollution action involving a site in Michigan owned by Cannelton. Cannelton submits that because it was not aware of the insolvencies of the two companies and it did not receive notice from the WVIGA (or from any other source), who was aware of the insolvencies, the WVIGA must indemnify Cannelton for the unpaid claims pending against the insolvent insurers.

II

The circuit court's order was well-reasoned and detailed. The circuit court's order set forth the sequence of events that lead to the action discussed herein, the more significant of which are noted in this opinion.

Between December 31, 1984, and December 31, 1985, Cannelton was involved in the coal business in West Virginia and was insured by Integrity and Midland Insurance Company (hereinafter "Midland") under the companies' respective excess liability policies. On April 3, 1986, Midland was declared insolvent and ordered liquidated by the Supreme Court of New York. The court ordered that all policyholders be notified of the liquidation order and that all proofs of claim be presented to the liquidator within a year, or by April 3, 1987. The WVIGA was notified of Midland's insolvency by the West Virginia Insurance Commissioner on April 14, 1986.

On March 24, 1987, Integrity was declared insolvent and ordered liquidated by the Superior Court of New Jersey. The court further ordered that notice be given to all policyholders of the liquidation and that all claims or potential claims be filed with the liquidator within a year, or by March 25, 1988. The West Virginia Insurance Commissioner notified the WVIGA of the insolvency on March 31, 1987.

Cannelton received a letter, on June 23, 1988, from the United States Environmental Protection Agency (hereinafter "USEPA") informing Cannelton that it may be a responsible party and thus liable with regard to an environmental pollution problem which occurred at the Michigan site owned by Cannelton. The Michigan Department of Natural Resources (hereinafter "MDNR") joined the USEPA in these allegations. See Cannelton Industries, Inc. v. The Aetna Casualty & Surety Company of America, 194 W.Va. 186, 189-90, 460 S.E.2d 1, 4-5 (1994). Subsequently, on May 25, 1989, the USEPA issued, to Cannelton, a unilateral order regarding the problem.

On August 16, 1989, Cannelton notified Integrity of the environmental claims asserted by the USEPA and the MDNR. On November 6, 1989, Cannelton received a reply from Integrity in Liquidation informing Cannelton time had expired in which the claim could be considered timely filed; however, a subsequent claim could be filed but such a claim would share in the distribution of assets only after the timely filed claims had been paid. ²

Cannelton notified Midland of the claims asserted by the USEPA and the MDNR on August 20, 1991. On January 15, 1992, the notice was forwarded first to the New York Liquidation Bureau and then to WVIGA for examination and possible coverage. Thereafter, on January 24, 1992, the WVIGA notified Cannelton that coverage was denied under the Midland policy and it would not indemnify Cannelton.

Cannelton instituted a declaratory judgment action against approximately 56 of its insurance carriers including the WVIGA on July 1, 1992. See Cannelton, supra at 188, 460 S.E.2d at 3. The complaint alleged that under W.Va.Code, 33-26-1, et seq., the WVIGA was obligated to indemnify Cannelton for sums in excess of the limits in which Cannelton was obligated to pay in connection with the claims alleged by the USEPA and MDNR. The WVIGA moved to dismiss Cannelton's claims on the ground that the claims were not filed with the WVIGA before the final date for filing claims against the liquidators as set by the respective state courts. See W.Va.Code, 33-26-8(1)(a) [1985]. See also Cannelton, supra at 188-89 n. 2, 460 S.E.2d at 3-4 n. 2. On September 28, 1993, the circuit court granted the WVIGA's motion and dismissed Cannelton's complaint with prejudice stating that Cannelton's claims were filed late and therefore not covered claims.

III

In reviewing this case, we are guided by the principles applying to motions for summary judgment. ³ We recently held that "[a] circuit court's entry of summary judgment is reviewed de novo." Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). Upon reviewing a circuit court's summary judgment ruling, this Court has repeatedly held: "A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syl. pt. 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963). Therefore, "[s]ummary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove." Syl. pt. 4, Painter, supra. Based upon a review of all relevant matters of record under the principles above, we are of the opinion that the circuit court did not err in dismissing the WVIGA from the case.

IV

The primary focus of this case is upon whether the WVIGA, pursuant to W.Va.Code, 33-26-1, et seq., was required to notify Cannelton of Midland's and Integrity's insolvencies and if, in any event, the WVIGA must indemnify Cannelton for its unpaid claims. The West Virginia Guaranty Association Act (hereinafter the "Act") was enacted in 1970, as set forth in chapter thirty-three, article twenty-six, section 1 of the West Virginia Code. The purpose of the Act is to provide for the payment of covered claims under certain insurance policies in the event that an insurer becomes insolvent and to aid in the detection and prevention of insurer insolvencies. W.Va.Code, 33-26-2 [1970]. The definitions of key terms are found in W.Va.Code, 33-26-5 [1985]. For the purposes of this case, we will specifically refer to the definition of the term "covered claim" which is defined as:

[A]n unpaid claim, ..., which arises out of and is within the coverage of an insurance policy to which this article applies and which policy is in force at the time of the occurrence giving rise to such unpaid claims if (a) the insurer issuing the policy becomes an insolvent insurer after the effective date of this article [May 12, 1970] and (b) the claimant or insured is a resident of this state at the time of the insured...