Hawkins v. Ford Motor Co., 30357.

• Decision Date: 19 June 2002
• Docket Number: No. 30357.,30357.
• Citation: 566 S.E.2d 624,211 W.Va. 487
• Court: West Virginia Supreme Court
• Parties: Dorothy L. HAWKINS and Paul E. Hawkins, Plaintiffs Below, Appellants v. FORD MOTOR CO., A Delaware Corporation, Defendant Below, Appellee

566 S.E.2d 624

211 W.Va. 487

Dorothy L. HAWKINS and Paul E. Hawkins, Plaintiffs Below, Appellants v. FORD MOTOR CO., A Delaware Corporation, Defendant Below, Appellee

No. 30357.

Supreme Court of Appeals of West Virginia.

Submitted June 4, 2002.

Decided June 19, 2002.

Concurring Opinion of Justice McGraw July 3, 2002.

Christopher J. Heavens, Esq., Heavens Law Offices, Charleston, Charleston, West Virginia, Attorney for Appellants.

Jeffrey M. Wakefield, Esq., Michael Bonasso, Esq., Erica M. Baumgras, Esq., Robert P. Lorea, Esq., William J. Hanna, Esq., Flaherty, Sensabaugh & Bonasso, Attorneys for Ford Motor Co. Charleston, West Virginia.

Marc E. Williams, Esq., Robert L. Massie, Esq., Paul J. Loftus, Esq., The Defense Trial Counsel of West Virginia; William L. Frame, Esq., Paul T. Farrell, Jr., Esq., The West Virginia Trial Lawyers Association; James D. Lamp, Esq., Daniel R. Mordarski, Esq., General Motors Corporation; William F. Foster, II, Esq., John R. Hoblitzell, Esq., Richard E. Holtzapfel, Esq., The West Virginia Hospital Association; Leah J. Heimbach, Esq., West Virginia University Hospitals, Inc.; Cheryl A. Eifert, Esq., Charleston Area Medical Center, for Amicus Briefs. MAYNARD, Justice:

The appellants, Dorothy and Paul Hawkins, seek reversal of an order entered by the Circuit Court of Kanawha County on January 29, 2001. In that order, the court denied the Hawkins' motion for attorney fees and costs under the Magnuson-Moss Act. The court also refused to allow the Hawkins to amend their complaint to assert bad faith and unfair trade practices claims against Ford Motor Company.

I.

FACTS

The Hawkins owned a 1991 Ford Aerostar van which was destroyed by fire on October 28, 1996. The Hawkins purchased the used vehicle from a Chevrolet dealership. By the time fire consumed the van, its engine had been replaced and it had been driven almost 90,000 miles. The van was insured by State Farm Automobile Insurance Company who paid $10,715.25 to settle the claim. State Farm then demanded subrogation from Ford Motor Company.

State Farm and Ford offer differing accounts of the facts surrounding the fire. State Farm believes the origin of the fire is uncontroverted and not suspicious; the ignition switch malfunctioned when the van was parked and unattended in the Hawkins' driveway. Ford believes the origin of the fire is controverted and suspicious; the Hawkins' son discovered the fire and said that it started with an explosion while Paul Hawkins, the owner, was in a shed in the dark at the time but did not hear an explosion. Moreover, Paul Hawkins claimed the front portion of the van was consumed by fire within five minutes and that he was blown back five feet when he opened the passenger door. Photographs of the ignition switch did not reveal signs which are normally apparent when an ignition switch causes a fire; in contrast to an ignition switch fire which usually smolders and requires significant time to develop, this fire appeared to be rapid and intense. In a word, Ford suspected arson.

Nonetheless, the van was part of a voluntary recall by Ford due to a short circuit which could develop in the ignition switch and lead to overheating, smoke, and in rare circumstances, fire in the steering column of the vehicle. The Hawkins received their recall letter the day following the fire.

State Farm's subrogation claim was denied by Ford because the facts surrounding the loss did not indicate that a faulty ignition switch caused the fire. Settlement negotiations between Ford and State Farm failed. On May 30, 1997, State Farm instituted a subrogation action in circuit court by filing a complaint in the name of its insureds. In addition to pursuing a claim for the fair market value of the vehicle, the Hawkins sought recovery for loss of use, annoyance, inconvenience, and general damages as well as attorney fees and expenses. The case ultimately went to trial and the jury returned a verdict for the Hawkins in the amount of $10,715.25, the fair market value of the vehicle, plus $1,000 for loss of use.

Prior to trial, the Hawkins filed a motion seeking to amend their complaint to include claims of bad faith and claims under the Unfair Trade Practices Act, UTPA, W.Va. Code §§ 33-11-1 to 10, against Ford. The circuit court denied the motion because the common law duty of good faith and fair dealing runs between insurers and insureds, and while a contract of insurance did exist between State Farm and the Hawkins, no contract of insurance existed between Ford and the Hawkins. The court also found that the UTPA's purpose is to regulate trade practices in the business of insurance and "should not be interpreted to apply to entities which are not engaged in the business of insurance."

Subsequent to trial, the Hawkins filed a motion seeking attorney fees pursuant to the Magnuson-Moss Act, 15 U.S.C. § 2310(d)(2) (1975), and costs. The court denied the motion because the Hawkins did not properly plead or assert such a claim in their complaint. The Hawkins' complaint stated, "As a proximate result of the aforesaid negligence and breaches of warranties by Ford, including breach of the implied warranty of merchantability imposed by West Virginia law, plaintiffs are entitled to an award of damages for their legal costs and expenses, including attorney fees, pursuant to West Virginia Code, § 46-2-101, et seq." Ford filed a motion for a new trial which the court denied because Ford "failed to present a sufficient factual basis upon which to overturn the jury's decision in this case[.]" The Hawkins appeal from the court's January 29, 2001 order which denied the Hawkins' motion to vacate the February 29, 2000 order that denied the motion to amend the complaint to assert a cause of action under the UTPA; denied the Hawkins' motion for attorney fees and costs; and denied Ford's motion for a new trial.

II.

STANDARD OF REVIEW

On appeal, the Hawkins allege that the circuit court erred by denying their request to amend their complaint to assert a cause of action against Ford under the UTPA and by denying their request for attorney fees and costs. "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). Moreover, "[t]his 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). More specifically,

A trial court is vested with a sound discretion in granting or refusing leave to amend pleadings in civil actions. Leave to amend should be freely given when justice so requires, but the action of a trial court in refusing to grant leave to amend a pleading will not be regarded as reversible error in the absence of a showing of an abuse of the trial court's discretion in ruling upon a motion for leave to amend.

Syllabus Point 6, Perdue v. S.J. Groves and Sons Company, 152 W.Va. 222, 161 S.E.2d 250 (1968).

III.

DISCUSSION

The Hawkins recognize that the issue of whether a self-insured entity can be sued under the UTPA is an issue of first impression in West Virginia. They believe they should be allowed to amend their complaint to assert such a claim against Ford because the company "engage[s] in those activities regulated by the Act[.]"

Amendments to pleadings are governed by Rule 15 of the West Virginia Rules of Civil Procedure. Rule 15(a) states in pertinent part, "[A] party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." This Court previously observed that "`"The purpose of the words `and leave [to amend] shall be freely given when justice so requires' in Rule 15(a) W.Va.R.Civ. P., is to secure an adjudication on the merits of the controversy as would be secured under identical factual situations in the absence of procedural impediments; therefore, motions to amend should always be granted under Rule 15 when: (1) the amendment permits the presentation of the merits of the action; (2) the adverse party is not prejudiced by the sudden assertion of the subject of the amendment; and (3) the adverse party can be given ample opportunity to meet the issue." Syl. pt. 3, Rosier v. Garron, Inc., 156 W.Va. 861, 199 S.E.2d 50 (1973).' Syl. Pt. 6, Berry v. Nationwide Mut. Fire Ins. Co., 181 W.Va. 168, 381 S.E.2d 367 (1989)."

Syllabus Point 8, McDowell County Bd. of Educ. v. Stephens, 191 W.Va. 711, 447 S.E.2d 912 (1994).

The Hawkins argue that the three requirements were met in their case. First, they contend that an amendment to the complaint would have permitted them to present evidence that Ford's self-insured status rendered it subject to the laws which govern insurance companies. Next, the Hawkins contend that Ford's initial denial of the claim without an investigation justified an award under insurance law. Moreover, say the Hawkins, Ford would not have been prejudiced because the company had ample time to prepare a defense. Ford argues that the circuit court properly found that an uninsured product manufacturer¹ is not subject to the provisions of the UTPA. We agree.

The UTPA is but one component of an extensive statutory and regulatory scheme which is designed to govern those entities and individuals who are engaged in the business of insurance. In fact, W.Va.Code § 33-11-1 (1974) states:

The purpose of this article is to regulate trade practices in the business of insurance... by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade

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