Consolidation Coal v. Boston Old Colony

• Decision Date: 17 July 1998
• Docket Number: No. 24753., No. 24752
• Court: West Virginia Supreme Court
• Parties: CONSOLIDATION COAL COMPANY, a Corporation, and Jack E. Lowe, Plaintiffs Below, v. BOSTON OLD COLONY INSURANCE COMPANY, a Corporation; M.A. Heston, Inc., a Corporation; and Omni Drilling, Inc., a Corporation, Appellees. CONSOLIDATION COAL COMPANY, a Corporation, and Jack E. Lowe, Plaintiffs Below, v. BOSTON OLD COLONY INSURANCE COMPANY, a Corporation, Appellees.

508 S.E.2d 102

203 W.Va. 385

CONSOLIDATION COAL COMPANY, a Corporation, and Jack E. Lowe, Plaintiffs Below, v. BOSTON OLD COLONY INSURANCE COMPANY, a Corporation; M.A. Heston, Inc., a Corporation; and Omni Drilling, Inc., a Corporation, Appellees.

CONSOLIDATION COAL COMPANY, a Corporation, and Jack E. Lowe, Plaintiffs Below, v. BOSTON OLD COLONY INSURANCE COMPANY, a Corporation, Appellees.

Nos. 24752, 24753.

Supreme Court of Appeals of West Virginia.

Submitted March 18, 1998.

Decided July 17, 1998.

Robert M. Steptoe, Jr., Esq., Larry J. Rector, Esq., Lori Dawkins, Esq., Stephen D. Williams, Esq., Steptoe & Johnson, Clarksburg, West Virginia, Robert M. Vukas, Esq., Senior Counsel, CONSOL, Inc., Pittsburgh, Pennsylvania, Attorneys for Plaintiffs Below.

D.C. Offutt, Jr., Esq., Chad S. Lovejoy, Esq., Scott W. Andrews, Esq., Offutt, Fisher & Nord, Huntington, West Virginia, Attorneys for Boston Old Colony.

James A. Liotta, Esq., Tharp, Liotta, Janes & Yokum, Fairmont, West Virginia, Attorney for M.A. Heston & Omni Drilling. MAYNARD, Justice:

This consolidated action¹ is before this Court upon an appeal of final orders of the Circuit Court of Monongalia County entered upon May 31, 1996, November 27, 1996, and April 9, 1997.² Following a coal silo fire at its Loveridge Mine in 1991 and a mine shaft explosion at its Blacksville No. 1 Mine in 1992, appellant, Consolidation Coal Company [hereinafter "CCC"], filed a declaratory judgment action against M.A. Heston, Inc. [hereinafter "Heston"] and Omni Drilling, Inc. [hereinafter "Omni"] seeking to determine its rights and obligations with respect to a policy of insurance issued by Boston Old Colony Insurance Company [hereinafter "BOC"] to Heston and Omni. Appellant now appeals the final orders of the circuit court which granted summary judgment in favor of Heston and Omni concerning claims for indemnity and contribution; granted summary judgment in favor of BOC with respect to the amount of Commercial General Liability [hereinafter "CGL"] and Special Employers Liability [hereinafter "SEL"] coverage; and denied CCC's motion to amend its complaint to add additional claims against BOC, Heston, and Omni including claims for bad faith and unfair settlement practices against BOC.

This Court has before it the petitions for appeal, all matters of record, and the briefs and argument of counsel. For the reasons set forth below, we³ reverse in part and affirm in part the final orders of the circuit court.

I.

In 1991 and 1992, CCC and Heston entered into "Blanket Contracts" which established and set forth the terms and conditions for work to be performed by Heston as an independent contractor for CCC in the respective years.⁴ In addition, CCC and Heston entered into "Purchase Order Contracts" which provided that all work performed under the purchase order was to be governed by and performed in accordance with the terms of the Blanket Contract. The contracts between CCC and Heston were insured pursuant to an insurance policy issued by BOC insuring Heston on the job sites. Heston subcontracted with Omni for assistance in performing its obligations under the contracts. Because of the intra-family ownership and corporate connection to Heston and its projects, Omni was added to the BOC policy as an additional insured.⁵

On April 3, 1991, two of Heston's employees were injured in a fire while they were performing work at the clean coal silo located at CCC's Loveridge Mine preparation plant. Both employees filed civil actions seeking damages against CCC arising from the injuries they sustained during the silo fire.

On March 19, 1992, Heston and Omni were installing a de-watering pipe into the production shaft at CCC's Blacksville No. 1 Mine when an explosion occurred. As a result of the explosion, four people were killed, and five others were injured. A leased crane located at the work site was also damaged. Consequently, ten civil actions were filed against CCC, Heston, Omni, and others seeking compensatory damages. CCC filed cross-claims and/or third-party claims against Heston, Omni, and their insurer, BOC, demanding contractual indemnity, contribution, insurance coverage, and a defense in the underlying tort claims. Once the issues were joined, CCC, Heston, Omni, and BOC agreed that they would work together to resolve the underlying tort claims and postpone the litigation of their respective rights and obligations until the tort claims were resolved.

By March 1995, all of the underlying tort claims were settled. The parties then proceeded to litigate the declaratory judgment action which had been filed by CCC on September 27, 1993. At a hearing on March 6, 1996, the circuit court considered a motion in limine filed by Heston and Omni seeking to limit the issues in the declaratory judgment action to a determination of the parties' rights under the insurance policy. Heston and Omni argued that the complaint filed by CCC did not set forth any claims for indemnification and contribution in amounts in excess of the policy limits. The court also considered a motion for partial summary judgment filed by BOC on behalf of Heston and Omni seeking to extinguish CCC's claims for contribution and indemnity on the basis that the parties had previously reached a settlement agreement. BOC asserted that in exchange for its contribution of $1,000,000 toward the settlements in the ten underlying lawsuits resulting from the Blacksville explosion, CCC agreed to drop its claims for contribution and indemnity.

Finding that Heston and Omni's motion in limine was in the nature of a motion for summary judgment, the circuit court concluded that the declaratory judgment action was filed for the purpose of determining the rights and obligations of the parties under the insurance policy only. Alternatively, the circuit court found that the parties had negotiated in good faith and reached an agreement whereby BOC contributed $1,000,000 toward the settlement of the underlying lawsuits and CCC agreed to forego its claims for contribution and indemnity. Consequently, the circuit court granted the motions, and Heston and Omni were dismissed from the case.

Subsequently, on August 19, 1996, the parties appeared for a hearing on CCC's motion to amend its complaint. Among the claims CCC sought to add to its complaint were assertions of bad faith and unfair claims settlement practices on the part of BOC. CCC also sought to determine the applicability of the products completed operation coverage in the BOC insurance policy. The circuit court denied the motion on the basis that CCC had been dilatory in pursuing its claims and that any alleged conduct giving rise to the claims for bad faith was known or should have been known by CCC at the time the original complaint was filed. The court also found that the products completed operation coverage was not applicable because at the time of the Blacksville explosion, work was ongoing, and abandonment, which was necessary to trigger the coverage, did not occur until after the explosion.

On December 30, 1996, the parties appeared for a hearing on cross-motions for summary judgment concerning the remaining issues in the case. CCC argued that it was entitled to an additional $1,000,000 in coverage under the terms of the policy issued to Heston and Omni by BOC with respect to the settlement of the personal injury, property damage, and wrongful death claims that arose out of the Blacksville explosion.⁶ The circuit court found that the insurance policy provided a maximum limit of insurance of $1,000,000 for any one occurrence regardless of the number of insureds. The court further found that the claims related to the Blacksville explosion arose out of a single occurrence. Accordingly, the circuit court granted summary judgment in favor of BOC concluding that there was only $1,000,000 in insurance coverage available. CCC now appeals the circuit court's orders.⁷

II.

As its first assignment of error, CCC contends the circuit court erred in granting summary judgment in favor of Heston and Omni with respect to CCC's claims for indemnification and contribution. In Syllabus Point 1 of Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994) we stated that: "A circuit court's entry of summary judgment is reviewed de novo." See also Syllabus Point 4, Dieter Eng'g Servs., Inc. v. Parkland Dev., Inc., 199 W.Va. 48, 483 S.E.2d 48 (1996); Syllabus Point 1, Smith v. Stacy, 198 W.Va. 498, 482 S.E.2d 115 (1996).

In this case, the circuit court was presented with a motion for partial summary judgment filed by BOC on behalf of Heston and Omni seeking to extinguish CCC's claims for contribution and indemnity on the basis that the parties had reached a settlement agreement. CCC contends the circuit court erred in finding that the parties reached a settlement agreement because the affidavit of Robert M. Steptoe, Jr., counsel for CCC, indicates that he did not believe that the parties had ever reached an agreement.⁸ BOC contends that its contribution of $1,000,000 toward the settlement of the underlying civil actions was conditioned upon CCC's agreement to release its claims for indemnity and contribution against Heston and Omni. BOC argues that although settlement documents memorializing the settlement agreement were not executed, a lengthy history of correspondence during the settlement negotiations and unexecuted settlement documents evidence an agreement between the parties.

Pursuant to Rule 56 of the West Virginia Rules of Civil Procedure, summary judgment is required when the record shows that there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In Syllabus Point 3 of Aetna Casualty & Sur. Co. v. Federal Ins. Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963), this Court 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...