Casaccio v. Curtiss

• Decision Date: 09 November 2011
• Docket Number: No. 101527.,101527.
• Citation: Casaccio v. Curtiss , 228 W.Va. 156, 718 S.E.2d 506 (W. Va. 2011)
• Parties: Joseph CASACCIO and National Indemnity Company, Petitioners v. Harold A. CURTISS, Executor of the Estate of Norma Lee Curtiss, Deceased; Harold A. Curtiss, Executor of the Estate of Mary Lynn Curtiss, Deceased; Harold A. Curtiss, Executor of the Estate of Charles E. Curtiss, Deceased, Plaintiffs Below, RespondentsandHartley Trucking Company, Inc., John R. Tanner and Martha Hoy, Defendants Below.
• Court: West Virginia Supreme Court

228 W.Va. 156

718 S.E.2d 506

Joseph CASACCIO and National Indemnity Company, Petitioners

v.Harold A. CURTISS, Executor of the Estate of Norma Lee Curtiss, Deceased; Harold A. Curtiss, Executor of the Estate of Mary Lynn Curtiss, Deceased; Harold A. Curtiss, Executor of the Estate of Charles E. Curtiss, Deceased, Plaintiffs Below, RespondentsandHartley Trucking Company, Inc., John R. Tanner and Martha Hoy, Defendants Below.

No. 101527.

Supreme Court of Appeals of West Virginia.

Submitted: Sept. 28, 2011.Decided Nov. 9, 2011.

Syllabus by the Court

1. “This Court reviews the circuit court's final order and ultimate disposition under an abuse of discretion standard. We review challenges to findings of fact under a clearly erroneous standard; conclusions of law are reviewed de novo.” Syllabus point 4, Burgess v. Porterfield, 196 W.Va. 178, 469 S.E.2d 114 (1996).

2. Court rules are interpreted using the same principles and canons of construction that govern the interpretation of statutes.

3. For purposes of West Virginia Trial Court Rule 25.10, the insurance carrier for an insured party is considered a party to court-ordered mediation and, thus, may be sanctioned by a trial court for its unauthorized failure to participate in said mediation through the presence of a representative who has full decision-making discretion to examine and resolve issues and make decisions in connection with the mediation.

Daniel R. Schuda, Lynnette Simon Marshall, Schuda & Associates, PLLC, Charleston, WV, for the Petitioners.

Robert B. Allen, Pamela C. Deem, Philip J. Combs, Allen Guthrie & Thomas, PLLC, Charleston, WV, for the Respondents.

DAVIS, Justice:

In this appeal from an order imposing monetary sanctions against petitioners Joseph Casaccio (hereinafter referred to as “Mr. Casaccio”) and National Indemnity Company (hereinafter referred to as “National Indemnity”), this Court is asked to determine whether West Virginia Trial Court Rule 25.10 permits a circuit court to impose sanctions upon the insurance carrier for an insured party when the insurance carrier fails, without good cause, to appear at court-ordered mediation through the presence of a representative who has full decision-making discretion to examine and resolve issues and make decisions in connection with the mediation. We find that West Virginia Trial Court Rule 25.10 does authorize a trial court to sanction such an insurance carrier; however, because we find no sanctionable conduct occurred in this case, we reverse the circuit court's order imposing sanctions.

I.FACTUAL AND PROCEDURAL HISTORY

The events giving rise to the lawsuit that ultimately led to the sanctions at issue herein occurred on May 30, 2003, when Charles E. Curtiss, Norma Lee Curtiss, and Mary Lynn Curtiss were killed in a vehicular accident on I–64 East at the Lee Street exit in Charleston, West Virginia. On May 26, 2005, Harold A. Curtiss, in his capacity as Executor of the estates of his parents and sister who were killed in the aforementioned accident (hereinafter referred to as “the Plaintiffs”), filed a wrongful death action against John Tanner and Hartley Trucking Company, Inc. Hartley Trucking was bankrupt, but insurance coverage for the accident was available through a policy issued to Hartley Trucking by Converium.¹

On March 2, 2006, the circuit court ordered the parties to complete mediation in this case by November 17, 2006. The trial was scheduled for December 3, 2006. The first mediation in this case was held on November 10, 2006. Ms. Jo Knapp, an employee of a third-party administrator, appeared at the mediation as the designated representative of Converium.²

Prior to the mediation, on October 16, 2006, Converium entered into a “Stock Purchase Agreement” with National Indemnity whereby National Indemnity agreed to purchase all or certain portions of Converium. The agreement contained the following clause that is relevant to the instant matter, which effectively limited Converium's settlement authority to amounts less than $500,000:

5.1. Conduct of Business. ... (b) Except for the Restructuring Transactions, or as set forth in Schedule 5.1 or any of the other Schedules hereto, or as otherwise contemplated by this Agreement or the Ancillary Agreements from the date hereof to and including the Closing Date, the Seller will not, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed), permit the Company or any of its Subsidiaries to directly or indirectly:

....

(xiv) settle or compromise any Action, other than (A) any claims or litigation for which the sole remedy is monetary damages in an amount less than $500,000 or, (B) claims or litigation arising out of any Reinsurance Contracts in an amount less than $500,000, (C) as required by a final or non-appealable judgment or an arbitration panel or court, or (D) Regulatory Body Matters; provided, however, that if the settlement or compromise of any Regulatory Body Matter would require the Purchaser, the Company or any of its Subsidiaries to admit any liability or pay damages or other amounts in settlement, the Seller may not effect such settlement without the Purchaser's written consent (which consent shall not be unreasonably withheld or delayed)[.]

No representative of National Indemnity appeared at the mediation. Notwithstanding the forgoing agreement limiting Converium's unilateral authority to settle actions to amounts less than $500,000, which had not been communicated to the Plaintiffs or to the mediator, Ms. Knapp made an unqualified offer of $700,000 to settle the case. This offer was rejected. Ultimately, Ms. Knapp agreed to recommend and seek approval for a settlement in the amount of $900,000, and the Plaintiffs agreed to accept $900,000 to settle all claims. At the conclusion of the mediation session, Ms. Knapp, for the first time, revealed that the proposed settlement could not be consummated without approval from National Indemnity. Mr. Curtiss relates that Ms. Knapp then promised the Plaintiffs' counsel and the mediator that the Plaintiffs' acceptance of the $900,000 offer would not be used as bargaining leverage against them if National Indemnity refused to settle the case. National Indemnity refused to consent to the $900,000 settlement. In the week following the mediation, Converium reduced its settlement offer to $350,000 ³ at the suggestion of National Indemnity, which reduced offer was made through National Indemnity's Vice President and Legal Counsel, Mr. Casaccio.

The circuit court then ordered the parties to try again to mediate this case on November 27, 2006, and instructed the mediator to inform the parties that certain individuals were to attend the mediation, including a representative of National Indemnity. Mr. Casaccio was National Indemnity's designated representative to attend this mediation. Mr. Casaccio did not appear at the November 27th mediation, claiming that he missed a connecting flight. Nevertheless, Mr. Casaccio participated in the November 27th mediation by phone. The circuit court scheduled a third mediation for November 28, 2006, and again required Mr. Casaccio's presence. Mr. Casaccio attended the November 28th mediation, which took place in Judge Zakaib's chambers, and the case was settled for $850,000.

On December 13, 2006, the circuit court held a summary proceeding and ratified the settlement and proposed distribution of the settlement proceeds. During this proceeding, the circuit court sua sponte instructed the parties that it was setting for hearing the issue of whether the conduct of Mr. Casaccio or National Indemnity warranted sanctions under either West Virginia Trial Court Rule 25.10 or the inherent powers of the circuit court.

On December 28, 2006, the circuit court entered an “Order Scheduling Sanctions Hearing on February 7, 2007,” which set a hearing date and briefing schedule on the issue of whether the conduct of Mr. Casaccio and/or National Indemnity Company warranted sanctions. Mr. Casaccio and National Indemnity then filed a “Motion to Dismiss for Lack of Jurisdiction; Motion for Due Process Identification of Alleged Wrongful Conduct; and Motion for Identification of Rule Pursuant to Which Sanctions Are Sought.” The February 7th hearing was then converted to a hearing on the various motions and petitions that had been filed by the parties. Thereafter, on September 25, 2007, the circuit court denied Mr. Casaccio and National Indemnity's motion. Mr. Casaccio and National Indemnity then petitioned this Court for a writ of prohibition, which petition was denied.

At a hearing on May 15, 2008, the circuit court took evidence and heard oral argument on the issue of sanctions. On August 22, 2008, the circuit court entered its first sanction order, titled “Plaintiffs' Proposed Findings of Fact, Conclusions of Law and Order Awarding Sanctions.” The order awarded the Plaintiffs $50,000 as the difference between the $900,000 settlement to which they initially agreed and the $850,000 for which the case ultimately settled; $25,000 as compensation for injuries caused by Mr. Casaccio's and National Indemnity's conduct; $150,000 to punish Mr. Casaccio and National Indemnity; and attorney's fees expended by the Plaintiffs from the date of the first court-ordered mediation, November 10, 2006, through the date of the entry of the order imposing sanctions. The Plaintiffs were directed to submit an affidavit setting forth their attorney's fees.

On August 29, 2008, the Plaintiffs submitted their attorney's fees and expenses to the circuit court claiming they amounted to $115,279.78. Mr. Casaccio and National Indemnity opposed the attorney's fees. In addition, in November 2008, Mr. Casaccio and National Indemnity filed a motion asking the court to reconsider its August 22, 2008, order.

There was apparently no activity in the case for fifteen months until, on February 22, 2010, the circuit court entered an “Order Regarding...