Dairyland Ins. Co. v. Conley, 32704.

• Decision Date: 16 December 2005
• Docket Number: No. 32704.,32704.
• Citation: 624 S.E.2d 599
• Court: West Virginia Supreme Court
• Parties: DAIRYLAND INSURANCE COMPANY, Plaintiff Below, Appellee v. Stephanie Michelle CONLEY, Defendant/Third-Party Plaintiff Below, Appellee v. West Virginia National Auto Insurance Company, Third-Party Defendant Below, Appellant.

624 S.E.2d 599

DAIRYLAND INSURANCE COMPANY, Plaintiff Below, Appellee v. Stephanie Michelle CONLEY, Defendant/Third-Party Plaintiff Below, Appellee v. West Virginia National Auto Insurance Company, Third-Party Defendant Below, Appellant.

No. 32704.

Supreme Court of Appeals of West Virginia.

Submitted November 2, 2005.

Decided December 2, 2005.

Concurring Opinion of Chief Justice Albright December 16, 2005.

Syllabus by the Court

1. "Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Syllabus Point 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).

2. "By virtue of the authority of Article VIII, Section 21 of the Constitution of West Virginia and of Code, 1931, 2-1-1 it is within the province of the Legislature to enact statutes which abrogate the common law." Syllabus, Perry v. Twentieth St. Bank, 157 W.Va. 963, 206 S.E.2d 421 (1974).

3. Under W.Va.Code, 33-6A-1(e)(7) [2000], if an insurance company chooses to issue a new policy of automobile liability insurance to an insured, and the insured fails to pay the initial premium or otherwise provide necessary consideration for the new policy, the insurance company may cancel the policy. However, the cancellation of the policy can take effect no earlier than ten days after notice of the cancellation is provided to the insured.

4. Where there has been an invalid cancellation of an automobile liability insurance policy, the policy remains in effect until the end of its term or until a valid cancellation notice is perfected, whichever event first occurs.

James A. Varner, Sr., Debra T. Herron, Dana N. Bonnell, McNeer, Highland, McMunn and Varner, L.C., Clarksburg, for Appellant West Virginia National Auto Insurance Company.

Amy C. Crossan, Bouchillon, Crossan & Colburn, L.C., Huntington, for Appellee Stephanie Michelle Conley.

STARCHER, J.:

In this appeal from the Circuit Court of Cabell County, we are asked to review a circuit judge's summary judgment order, in favor of an insured, in an insurance declaratory judgment action.

This appeal centers on the validity of an insurance company notice, issued eleven days after its insured had been in an automobile collision, telling its insured that it was cancelling her automobile liability insurance policy. The insurance company indicated in the notice that the cancellation was retroactive to a date that preceded the collision, and therefore that the insured had no coverage for the collision.

The circuit court's November 22, 2004 summary judgment order found the cancellation notice was ineffective. The circuit court ruled that a cancellation notice cannot be retroactive because state law requires an automobile insurance company to give an insured ten days advance notice before a policy cancellation takes effect. Because the insurance company failed to follow state law and prospectively notify the insured that her policy was being cancelled, the circuit court granted summary judgment to the insured and ruled that she was entitled to coverage under the insurance policy. The insurance company now appeals.

As set forth below, we affirm the circuit court's summary judgment order.

I. Facts & Background

On August 15, 2001, appellee Stephanie Michelle Conley visited an insurance agent and completed an application for automobile liability insurance from the appellant, West Virginia National Auto Insurance Company ("West Virginia National"). The application stated that the "Eff[ective] Date" of coverage was August 15, 2001, and that "[c]overage will be bound no earlier than the date and time you sign below[.]" The application was signed and dated by Ms. Conley on August 15, 2001, at 10:00 a.m.

Ms. Conley presented the insurance agent with a check for $174.00, which the application called the "minimum required down payment." The application stated, however, that "if my premium remittance is not honored by the bank no coverage will be bound."¹

Thereafter, on August 30, 2001, West Virginia National issued Ms. Conley an insurance policy bearing Policy No. WV1032724. West Virginia National delivered to Ms. Conley a declarations page setting forth the policy number and the extent of automobile liability coverage. Ms. Conley was also provided with a certificate of insurance and two "proof of insurance" cards. Each of these documents showed that the effective dates of coverage were from August 15, 2001, to February 15, 2002.

Also on August 30, 2001, West Virginia National mailed a "personal automobile premium billing statement" to Ms. Conley. This billing statement requested that Ms. Conley, in order to "avoid the termination of your coverages," make an installment payment of $88.55 by September 9, 2001. Additionally, the billing statement advised Ms. Conley that if she remitted her premium payments on a timely basis, "continuous coverage" would be ensured. The billing statement set forth the same policy number and the same effective policy period as the other documents: August 15, 2001, to February 15, 2002.

One day later, on August 31, 2001, Ms. Conley was involved in an automobile accident that, allegedly as a result of her negligence, caused injury to three individuals. Ms. Conley thereafter notified West Virginia National of the accident.

West Virginia National refused to provide a defense or coverage to Ms. Conley for the accident. By a letter dated September 11, 2001 — twenty-seven days after her check was presented to the insurance agent with her application and eleven days after her accident — West Virginia National informed Ms. Conley that her check had been dishonored by her bank and returned due to insufficient funds. Further, West Virginia National stated that "the above insurance has been rescinded as of August 15, 2001, resulting in no coverage provided to you by this company."

The individuals injured in the accident with Ms. Conley subsequently sought coverage from their own insurer, appellee Dairyland Insurance Company ("Dairyland"). After Dairyland had paid out nearly $26,000.00 to its insureds, Dairyland filed a complaint against appellee Ms. Conley on July 24, 2003, for subrogation. Ms. Conley answered Dairyland's complaint by denying she had been negligent. Further, Ms. Conley filed the instant third-party complaint for declaratory relief against appellant West Virginia National. In her third-party complaint, Ms. Conley alleged that because West Virginia National had improperly cancelled her policy, the policy was in effect on the date of the accident, and therefore that West Virginia National had improperly denied her coverage and a defense.

Ms. Conley subsequently filed a motion for summary judgment against West Virginia National, arguing that W.Va.Code, 33-6A-1(e)(7) [2000]² requires an insurance company to give an insured ten days notice prior to the cancellation of an insurance policy for failure of consideration to be paid upon the initial issuance of a policy. In an order dated November 22, 2004, the circuit court granted the motion for summary judgment, finding that West Virginia National "failed to comply with West Virginia Code § 33-6A-1(e)(7), in that it failed to provide Ms. Conley with ten (10) days notice of cancellation." Because West Virginia National "did not give appropriate notice of cancellation to Ms. Conley, there was an invalid cancellation and, hence, automobile insurance was in effect on the date of the automobile accident."

West Virginia National now appeals the circuit court's November 22, 2004 declaratory judgment order.

II. Standard of Review

In the instant appeal, the primary points of contention concern the circuit court's interpretation of the cancellation and notice provisions of W.Va.Code, 33-6A-1 [2000], and the circuit court's application of the statute to West Virginia National's policy. "Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Syllabus Point 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995). We also review a circuit court's interpretation of an insurance policy de novo. Syllabus Point 1, Tennant v. Smallwood, 211 W.Va. 703, 568 S.E.2d 10 (2002) ("Determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law."); Syllabus Point 2, Riffe v. Home Finders Associates, Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999). ("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.").

III. Discussion

This appeal centers upon the circuit court's interpretation of W.Va.Code, 33-6A-1(e)(7) [2000] which states, in pertinent part and with emphasis added:

No insurer once having issued or delivered a policy providing automobile liability insurance for a private passenger automobile may, after the policy has been in effect for sixty days, or in case of renewal effective immediately, issue or cause to issue a notice of cancellation during the term of the policy except for one or more of the reasons specified in this section:

* * *

Notwithstanding any of the provisions of this section to the contrary, no insurer may cancel a policy of automobile liability insurance without first giving the insured thirty days' notice of its intention to cancel: Provided, That cancellation of the insurance policy by the insurer for failure of consideration to be paid by the insured upon initial issuance of the insurance policy is effective upon the expiration of ten days' notice of cancellation to the insured.

Appellee Ms. Conley argues that by enacting W.Va.Code, 33-6A-1(e)(7), the Legislature contemplated that an insurance company would issue an insurance policy to a new customer and subsequently there...