Marlin v. Wetzel County Bd. of Educ.

• Decision Date: 18 June 2002
• Docket Number: No. 30100.,30100.
• Citation: 212 W.Va. 215,569 S.E.2d 462
• Court: West Virginia Supreme Court
• Parties: Jeffrey L. MARLIN, Sr., et al., Plaintiffs Below, Appellees, v. WETZEL COUNTY BOARD OF EDUCATION, et al., Defendants and Third Party Plaintiffs Below. Wetzel County Board of Education, Defendant and Third Party Plaintiff Below, Appellant, v. Commercial Union Insurance Company and Northern Assurance Company of America, a subsidiary of Commercial Union Insurance Company, Third-Party Defendants Below, Appellees.

569 S.E.2d 462

212 W.Va. 215

Jeffrey L. MARLIN, Sr., et al., Plaintiffs Below, Appellees, v. WETZEL COUNTY BOARD OF EDUCATION, et al., Defendants and Third Party Plaintiffs Below.

Wetzel County Board of Education, Defendant and Third Party Plaintiff Below, Appellant, v. Commercial Union Insurance Company and Northern Assurance Company of America, a subsidiary of Commercial Union Insurance Company, Third-Party Defendants Below, Appellees.

No. 30100.

Supreme Court of Appeals of West Virginia.

Submitted March 12, 2002.

Decided June 18, 2002.

Thomas E. Buck, Esq., James M. Hoffman, Esq., Bailey & Wyant, P.L.L.C., Wheeling, for the Appellant.

John J. Polak, Esq., Rose & Atkinson, Charleston, John C. Falls, Esq., Christie, Pabarue, Mortensen & Young, Philadelphia, PA, for the Appellees. STARCHER, Justice.

In this declaratory judgment action appealed from the Circuit Court of Wetzel County, the parties dispute whether a property owner is an "additional insured" under two liability insurance policies issued to a general contractor that was hired by the property owner to perform construction work. The property owner seeks the coverage in response to a lawsuit filed against the property owner by employees of various subcontractors of the general contractor, who allege they were exposed to asbestos during the construction work.¹

The circuit court issued an order on January 5, 2001, declaring that the property owner was not entitled to coverage under the two policies. As set forth below, we reverse the circuit court's order.

I. Facts & Background

The appellant is the Wetzel County Board of Education ("Board"). On August 17, 1987, the Board entered into a construction contract with a general contractor, Bill Rich Construction (doing business as American Contractors), to renovate Hundred High School. The contract required, inter alia, that Bill Rich Construction indemnify and hold harmless the Board from and against all claims arising from Bill Rich Construction's performance of the contract.² Furthermore, the contract required Bill Rich Construction to purchase and maintain a liability insurance policy, which was to include contractual liability insurance covering its indemnification obligations.³ The contract also required Bill Rich Construction to have the Board named as an "additional insured" on that liability insurance policy.⁴ Lastly, the construction contract required Bill Rich Construction to provide the Board with a "certificate of insurance" indicating that the Board had been added to the policy as an additional insured. Bill Rich Construction purchased several liability insurance policies from appellee Commercial Union Insurance Company ("Commercial Union"). During the 1987-1988 contract period, Commercial Union insured the contractor under a commercial general liability policy with $500,000.00 in coverage for each occurrence, and $500,000.00 in aggregate coverage. Commercial Union also provided Bill Rich Construction with an umbrella policy with liability limits of $2,000,000.00 for each occurrence, and $2,000,000.00 in aggregate coverage.

Bill Rich Construction purchased its insurance coverage through B & W Insurance Agency, a licensed and authorized insurance agent for Commercial Union. In accordance with the requirements in the construction contract, Bill Rich Construction arranged for the insurance agent to issue an "Acord 25 (2/84)"⁵ certificate of insurance that described the Wetzel County Board of Education as an "additionally insured" and as a certificate holder. The record contains the certificate of insurance, which was apparently delivered to the Board.⁶

In the Fall of 1987, the renovations to Hundred High School began with Bill Rich Construction as the general contractor for the project. During the renovations, throughout 1988, workers dismantled ceilings, walls and floors that were constructed of asbestos-containing materials. The workers allege that they were repeatedly exposed to high levels of asbestos dust.

In 1990, many of the workers on the project and their families filed suit against, inter alia, the Board and Bill Rich Construction, alleging that the defendants knew or should have known about the presence of asbestos, and that the defendants negligently failed to warn the workers of the existence of asbestos or to protect the workers from harmful levels of asbestos dust. The workers also alleged that the defendants fraudulently, deceitfully and willfully, wantonly and recklessly concealed from the workers the fact that they were being exposed to unsafe levels of asbestos. The workers sought compensation for their fear of contracting an asbestos-related disease in the future, and for medical costs to test for the potential future development of an asbestos-related disease. See Marlin v. Bill Rich Construction, Inc., 198 W.Va. 635, 482 S.E.2d 620 (1996).

Based upon the indemnification clauses in the contract between the Board and Bill Rich Construction, and upon the certificate of insurance listing the Board as an additional insured on both the general liability and umbrella policies, the Board demanded that Commercial Union assume the Board's legal defense and agree to indemnify the Board in the litigation filed by the workers.

Commercial Union refused to provide coverage, contending that it was only obliged to provide coverage to Bill Rich Construction under the policies. Commercial Union took the position that the indemnification provisions in the construction contract did not change the insurance contract with Bill Rich Construction.

Furthermore, Commercial Union asserted that its agent, B & W Insurance Agency, did not notify Commercial Union that the Board was to be added to the insurance policies as an additional insured. The insurance company asserted that it never received either the certificate of insurance or any other document suggesting the insurance policies needed to be amended. Despite the errors committed by its agent, Commercial Union argued that the certificate of insurance was issued, by its own terms, for "information only," and could not alone modify the policies to extend coverage. Commercial Union points to disclaimer language prominently on the certificate of insurance which states:

This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.

The certificate of insurance also contains the following disclaimer:

This is to certify that [the] policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which this certificate may be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies.

Commercial Union contended that there was no coverage available to the Board under the certificate because it issued no amendments or alterations to the actual insurance policy to extend coverage to the Board, and because the certificate, by its own terms, could not amend or alter the policy.

The Board subsequently filed a third-party complaint for a declaratory judgment against Commercial Union, contending that it was an "additional insured" under the policies at issue. After substantial discovery, the parties both filed motions for summary judgment.

In an order dated January 5, 2001, the circuit court denied the Board's motion for summary judgment and granted Commercial Union's motion. The circuit court concluded that because of the prominent disclaimer language on the certificate of insurance, the Board could not have reasonably expected coverage under the insurance policies at issue. Furthermore, the circuit court concluded that there was no provision in the insurance policies requiring Commercial Union to provide coverage to the Board merely because of the indemnity provisions in the construction contract with Bill Rich Construction.

The Board now appeals the circuit court's January 5, 2001 order.

II. Standard of Review

This Court reviews a circuit court's entry of a declaratory judgment de novo, because the principal purpose of a declaratory judgment action is to resolve legal questions. Syllabus Point 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995). When a declaratory judgment proceeding involves the determination of an issue of fact, that issue may be tried and determined by a judge or a jury, just as issues of fact are tried and determined in other civil actions. W.Va.Code, 55-13-9 [1941].⁷ See also, Syllabus Point 16, Mountain Lodge Ass'n v. Crum & Forster Indem. Co., 210 W.Va. 536, 558 S.E.2d 336 (2001) ("West Virginia Code § 55-13-9 and Rules 38, 39 and 57 of the Rules of Civil Procedure, read and considered together, operate to guarantee that any issue triable by a jury as a matter of right in other civil actions cognizable by the circuit courts shall, upon timely demand in a declaratory judgment proceeding, be tried to a jury."). Any determinations of fact made by the circuit court or jury in reaching its ultimate judgment are reviewed under a clearly erroneous standard. Cox, 195 W.Va. at 612, 466 S.E.2d at 463.

In this case we are asked to review the circuit court's interpretation of an insurance contract. In Syllabus Point 2 of Riffe v. Home Finders Associates, Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999), we stated that "[t]he 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." "Determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law." Syllabus Point 1, Tennant v. Smallwood, 211 W.Va. 703, 568 S.E.2d 10 (2002). See also, ...