Certain Underwriters v. Pinnoak Resources

• Decision Date: 06 November 2008
• Docket Number: No. 33898.,33898.
• Citation: 674 S.E.2d 197
• Court: West Virginia Supreme Court
• Parties: CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Subscribing to Policy No. B0711, Plaintiffs Below, Appellants, v. PINNOAK RESOURCES, LLC and PINNACLE MINING CO., LLC, Defendants Below, Appellees.

674 S.E.2d 197

CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Subscribing to Policy No. B0711, Plaintiffs Below, Appellants, v. PINNOAK RESOURCES, LLC and PINNACLE MINING CO., LLC, Defendants Below, Appellees.

No. 33898.

Supreme Court of Appeals of West Virginia.

Submitted October 7, 2008.

Decided November 6, 2008.

Syllabus by the Court

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

2. "`"The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed." Syllabus point 1, Wickland v. American Travellers Life Insurance Co., 204 W.Va. 430, 513 S.E.2d 657 (1998).' Syllabus point 2, Bowers v. Wurzburg, 205 W.Va. 450, 519 S.E.2d 148 (1999)." Syllabus point 1, Alden v. Harpers Ferry Police Civil Service Commission, 209 W.Va. 83, 543 S.E.2d 364 (2001).

3. "`The interpretation of an insurance contract, including the question of whether the contract is ambiguous, is a legal determination that, like a lower court's grant of summary judgement, shall be reviewed de novo on appeal.' Syllabus point 2, Riffe v. Home Finders Associates, Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999)." Syllabus point 2, Horace Mann Insurance Co. v. Adkins, 215 W.Va. 297, 599 S.E.2d 720 (2004).

4. "`A meeting of the minds of the parties is a sine qua non of all contracts.' Syl. pt. 1, Martin v. Ewing, 112 W.Va. 332, 164 S.E. 859 (1932)." Syllabus point 1, Burdette v. Burdette Realty Improvement, Inc., 214 W.Va. 448, 590 S.E.2d 641 (2003).

5. "`A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.' Syllabus Point 1, Cotiga Development Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962)." Syllabus point 1, Wellington Power Corp. v. CNA Surety Corp., 217 W.Va. 33, 614 S.E.2d 680 (2005).

6. "The mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court." Syllabus point 1, Berkeley County Public Service District v. Vitro Corp. of America, 152 W.Va. 252, 162 S.E.2d 189 (1968).

7. "`Where the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended.' Syllabus, Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714 (1970)." Syllabus point 2, West Virginia Fire & Casualty Co. v. Stanley, 216 W.Va. 40, 602 S.E.2d 483 (2004).

8. "`The law favors and encourages the resolution of controversies by contracts of compromise and settlement rather than by litigation; and it is the policy of the law to uphold and enforce such contracts if they are fairly made and are not in contravention of some law or public policy.' Syl. Pt. 1, Sanders v. Roselawn Mem'l Gardens, Inc., 152 W.Va. 91, 159 S.E.2d 784 (1968)." Syllabus point 5, Riner v. Newbraugh, 211 W.Va. 137, 563 S.E.2d 802 (2002).

9. "`Where parties have made a settlement ..., such settlement is conclusive upon the parties thereto as to the correctness thereof in the absence of accident, mistake or fraud in making the same.' Syllabus point 1, in part, Calwell v. Caperton's Adm'rs, 27 W.Va. 397 (1886)." Syllabus point 7, DeVane v. Kennedy, 205 W.Va. 519, 519 S.E.2d 622 (1999).

David S. Hart, Hayden & Hart, PLLC, Beckley, Mark F. Bruckmann (Pro hac vice), Timothy G. Church (Pro hac vice), Bruckmann & Victory, LLP, New York, NY, for the Appellants, Certain Underwriters at Lloyd's, London, Subscribing to Policy No. B0711.

W. Richard Staton, Moler, Staton, Staton & Houck, LC, Mullens, Peter N. Flocos (Pro hac vice), Melissa J. Tea (Pro hac vice), Kirkpatrick & Lockhart Preston Gates Ellis, LLP, Pittsburgh, PA, for the Appellees, PinnOak Resources, LLC and Pinnacle Mining Co., LLC.

PER CURIAM:¹

The plaintiffs below and appellants herein, Certain Underwriters at Lloyd's, London (hereinafter "Lloyd's)," appeal from an order entered April 11, 2007, by the Circuit Court of Wyoming County. By that order, the circuit court granted summary judgment to the defendants below and appellees herein, PinnOak Resources, LLC and Pinnacle Mining Co., LLC (hereinafter referred to collectively as "PinnOak"). Subsequently, the Circuit Court of Wyoming County entered an order on June 21, 2007, denying Lloyd's motion to alter or amend the April 11, 2007, order. In Lloyd's suit to collect a premium purportedly due under Insurance Policy No. B0711 (hereinafter "Policy B0711"), the circuit court found that the "Global Settlement Agreement and Release" (hereinafter referred to as "Settlement Agreement") represented the intent of the parties to depart from any previous agreements, and further, that the premium was barred by the Settlement Agreement. On appeal to this Court, Lloyd's argues that the premium due under Policy B0711 was not extinguished by the Settlement Agreement and that the term "payback" referred to payment of the insurance premium, not a payback of any settlement monies. Based upon the parties' arguments, the record designated for our consideration, and the pertinent authorities, we reverse and remand the decisions by the circuit court.

I. FACTUAL AND PROCEDURAL HISTORY

The parties have a long and convoluted history together. However, the facts relevant to this appeal are relatively straightforward. To understand the current litigation, it is necessary to understand a prior occasion of litigation concerning the parties. Subsection A will explain the previous insurance coverage litigation between the parties and the resulting Settlement Agreement. Subsection B will explain the subsequent insurance policy, Policy B0711, that is the subject of the current action wherein Lloyd's seeks the payment of the premium allegedly due by PinnOak under the insurance contract.

A. Previous Insurance Coverage and the Settlement Agreement

In 2003, PinnOak operated the Pinnacle Mine in Wyoming County, West Virginia. Various insurance companies, including Lloyd's, combined to provide property insurance to PinnOak totaling $75,000,000.00. Lloyd's explained that mining risks are large risks; thus, different insurance companies combined to spread the exposure so no insurer would be inordinately impacted by a large loss. Moreover, the insurance was broken up into "layers." Each layer is a piece of the $75,000,000.00 coverage, and the layers are stacked on top of each other. Each insurer agreed to provide insurance for one layer and as soon as one layer is exhausted, the next layer would go into effect. Thus, each insurance company would only be responsible for a proportional amount of any loss incurred.

Lloyd's was one of the insurers of PinnOak in August 2003 when PinnOak experienced a series of methane ignitions at its mines located in Pineville, West Virginia. In February 2004, PinnOak filed suit against Lloyd's, and other insurers, to recover insurance proceeds allegedly due under coverage policies in effect at the time of the methane ignitions. PinnOak's suit claimed that Lloyd's² breached insurance policies numbered AN0300335, AN0300336, AN0300337, and AN0300338, and committed bad faith in its handling of PinnOak's August 2003 loss related to the methane explosions.

Various insurers settled with PinnOak in 2004 and 2005. The remaining insurers were the Lloyd's syndicates providing the upper layers of insurance coverage. On May 30, 2006, PinnOak and the relevant Lloyd's syndicates entered into a "Global Settlement Agreement and Release" (also referred to throughout this opinion as "Settlement Agreement"). The Lloyd's syndicates paid their respective shares of a $56,000,000.00 settlement to PinnOak as a result of the 2003 methane ignition loss.

B. Insurance Policy B0711

During the pendency of the litigation surrounding the methane ignition coverage, Lloyd's³ agreed to further insure PinnOak. The record contains an initial contract for insurance, purporting to extend coverage from June 30, 2004, to June 30, 2005, for a premium of $5,000,000.00. Lloyd's argues that it soon became clear to PinnOak that it would not have the necessary cash flow to pay the premium, as it was due up-front. As asserted by Lloyd's, PinnOak's agent then contacted Lloyd's and proposed some alternative terms to the insurance contract.⁴

The subsequent policy, which is the relevant policy to this appeal, is known as Policy B0711. This policy was for a term of five years, beginning June 30, 2004, and lasting through June 30, 2009. An annual premium amount of $375,000.00 was due every year, and then the amount of $1,250,000.00 would be due in five equal installments totaling $6,250,000,00, but would be deferred until after settlement of the August 2003 loss. In the event of nonrenewal, the entire amount would be due in full. Lloyd's states that this provision was PinnOak's recommendation upon realizing that it would only have positive cashflow after the 2003 event settled.⁵

PinnOak elected not to renew the policy after the first full year. Subsequent to this nonrenewal, PinnOak and Lloyd's entered into a Settlement Agreement in May 2006 regarding the coverage issues surrounding the 2003 methane ignitions. PinnOak did not pay the premiums due under Policy B0711, which provided PinnOak coverage for the period of time subsequent to the time involved in the coverage lawsuit. Lloyd's then filed the underlying lawsuit on the theory that PinnOak had breached its obligations under Policy B0711, which was to pay the premium in full since PinnOak elected to cancel the coverage after the first year, and since...