McCormick v. Allstate Ins. Co.

• Decision Date: 10 July 1998
• Docket Number: No. 24487.,24487.
• Citation: 202 W.Va. 535,505 S.E.2d 454
• Court: West Virginia Supreme Court
• Parties: Donald C. McCORMICK, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.

505 S.E.2d 454

202 W.Va. 535

Donald C. McCORMICK, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.

No. 24487.

Supreme Court of Appeals of West Virginia.

Submitted February 17, 1998.

Decided July 10, 1998.

Concurring Opinion of Justice Workman July 20, 1998.

Concurring and Dissenting Opinion of Justice Starcher August 7, 1998.

James C. Peterson, Harry G. Deitzler, Hill, Peterson, Carper, Bee & Deitzler, Charleston, for Appellant.

Charles M. Love, III, Benjamin L. Bailey, Bowles, Rice, McDavid, Graff & Love, Charleston, for Appellee.

McCUSKEY, Justice:

This is an insurance dispute from the Circuit Court of Kanawha County. The appellant, Donald C. McCormick, asks this Court to reverse the lower court's April 10, 1997 order granting summary judgment in favor of the appellee, Allstate Insurance Company, on the appellant's punitive damages claim. The questions presented by this appeal are: (1) what standard is appropriate for recovery of punitive damages where an insured brings a claim against his or her insurance carrier for unfair claim settlement practices under W.Va.Code § 33-11-4(9) [1985], and (2) does the evidence in this case meet or fail to meet that standard. For the reasons stated below, we conclude that the trial court did not err in granting summary judgment for the appellee. Accordingly, we affirm.

I.

FACTUAL BACKGROUND

This has been a protracted and arduous litigation. Indeed, the instant appeal makes the fourth time that relief has been sought from this Court during the course of the proceedings below. In our last opinion, McCormick v. Allstate Ins. Co., 197 W.Va. 415, 475 S.E.2d 507 (1996), the factual and procedural background of this case is comprehensively detailed. Consequently, we set forth herein only the salient facts pertinent to the narrow issues now before us.

On August 28, 1988, a 1984 Ford Escort owned by the appellant was severely damaged in a collision. The vehicle was insured by the appellee, Allstate Insurance Company (hereinafter "Allstate"). On August 29, 1988, the appellant notified Allstate of the damage to his automobile.

On August 30, 1988, David Dailey, the Allstate adjuster who handled the claim, inspected the vehicle and determined that it was a "total loss." In a total loss case, the appellant's insurance contract with Allstate required Allstate to pay the "actual cash value" of the appellant's vehicle prior to the loss. By the appellant's own account, his car was in poor condition before the accident. For example, two of the tires were "fairly worn out;" the lock cylinder on the hatchback had "rusted out;" and there were paint scratches on the hood, doors, and quarter panels.

In accordance with W.Va.Code of State Regulations § 114-14-7.4(a)(1),¹ Mr. Dailey utilized the National Automobile Dealer's Association Used Car Guide (NADA) in estimating the value of the appellant's vehicle. Mr. Dailey determined the loss payable under the appellant's policy to be $1,429.50. To arrive at that figure, Mr. Dailey began with the average retail value of the vehicle, which was $3,100.00. He then deducted $940.00 for high mileage, $595.00 for the car's condition prior to the loss,² and $250.00 for the appellant's deductible and added $25.00 for an AM/FM stereo, $79.50 for taxes, and $10.00 for the license fee.

On September 6, 1988, Mr. Dailey and the appellant had a telephone conversation. During the phone call, Mr. Dailey first offered to pay the appellant $1,100 and to allow him to keep his car. The appellant rejected that offer. Mr. Dailey then offered the appellant the $1429.50 total loss figure based upon the NADA guide book.

On September 9, 1988, Mr. Dailey and the appellant had another conversation regarding the appellant's claim. There is some disagreement as to whether the appellant accepted Mr. Dailey's previous offer of $1,429.50 during that conversation. However, it is undisputed that the appellant never made a counteroffer to Mr. Dailey for the amount which the appellant thought would be sufficient to compensate him. Moreover, after speaking with the appellant on September 9, Mr. Dailey mailed a check in the amount of $1,429.50 to the appellant's bank, which held a lien on the insured vehicle.

On November 4, 1988, the appellant filed a complaint against Allstate and Mr. Dailey, who was later dismissed from the case. The complaint contained five counts, only two of which survived and are relevant to this appeal. In one count, the appellant claimed that Allstate failed to pay reasonable compensation on his property damage claim. In that count, he sought damages under the principles articulated in Hayseeds, Inc. v. State Farm Fire & Casualty, 177 W.Va. 323, 352 S.E.2d 73 (1986). In a second count, the appellant claimed that Allstate violated the unfair settlement practice provisions of W.Va.Code § 33-11-4(9) [1985], and sought damages, including attorneys fees and punitive damages, under the principles of Jenkins v. J.C. Penney Casualty Insurance Company, 167 W.Va. 597, 280 S.E.2d 252 (1981).

On July 31, 1992, the circuit court entered an order bifurcating the two counts of the appellant's complaint for trial purposes, with the first phase of the trial to be limited to the Hayseeds claim, and the second phase to be reserved for the statutory Jenkins claim. In addition, the parties and the trial court apparently agreed to bifurcate the issues within phase one, so that the issues of whether the appellant was entitled to compensatory damages and economic loss would be tried first, and after a verdict on those matters, the remaining damage questions under Hayseeds would be presented.

Beginning on May 2, 1994, a jury trial was conducted on the issues designated for the first portion of phase one (the Hayseeds claim), as explained above. At the conclusion of the trial, the jury returned a verdict of $995.00 for the appellant. This award consisted of $595.00 for Allstate's underpayment of damages to the appellant's vehicle and $400.00 for loss of use of the vehicle. The $400.00 loss of use award was later set aside by this Court on appeal.

After the verdict, the parties made several post-trial motions and presented various issues to the circuit court. Of those issues, only one is relevant to this appeal: whether the appellant was entitled to present his punitive damages claim to the jury. The circuit court ruled against the appellant on this issue, finding that he had not "substantially prevailed" on his underlying contract claim and that he had failed to establish the initial threshold of malice necessary to justify pursuit of punitive damages. Although the trial, as bifurcated, did not involve the appellant's Jenkins claim, the circuit court's post-trial order was more broad and precluded the appellant from pursuing punitive damages on both the Hayseeds count and the Jenkins count.

The appellant appealed from the circuit court's post-trial order, and this Court decided in McCormick v. Allstate Ins. Co., 197 W.Va. 415, 475 S.E.2d 507 (1996), that the trial court's order was erroneous insofar as it precluded the appellant from proceeding to a trial of his Jenkins claim. We reasoned that it was contradictory for the trial court to preclude a trial of the appellant's statutory claim because he had failed to introduce evidence of malice in the portion of the Hayseeds claim tried, when punitive damages were not an issue in that trial. We further reasoned that there is no predicate that an insured "substantially prevail" on an underlying action in order to seek relief under Jenkins, and Jenkins allows a party to seek punitive damages under certain conditions. Id. at 427-28, 475 S.E.2d at 519-20. Thus, we reversed the judgment of the trial court denying a phase two trial and remanded the matter on the appellant's Jenkins claim for further proceedings.

On April 10, 1997 the circuit court entered an order granting a motion by Allstate for summary judgment on the issue of punitive damages under the appellant's Jenkins claim. In its order, the circuit court concluded that the standard for recovering punitive damages on a Jenkins claim is "actual malice."

II.

STANDARD OF REVIEW

The standard for granting summary judgment was established in Syllabus Point 3 of Aetna Cas. & Sur. Co. v. Federal Ins. Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963), where 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 concerning the facts is not desirable to clarify the application of the law.

Moreover, on appeal, we review the circuit court's entry of summary judgment de novo. Syllabus Point 1, Fayette County Nat. Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997); Syllabus Point 1, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995); Syllabus Point 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

III.

DISCUSSION

As indicated above, this appeal causes us to determine the proper standard for the imposition of punitive damages where an insured brings a first-party claim against his or her insurance carrier for unfair settlement practices under W.Va.Code § 33-11-4(9) [1985], as permitted by Jenkins v. J.C. Penney, supra.³

The appellant argues that an insured's entitlement to an award of punitive damages under a Jenkins claim should be determined by applying the standard for punitives enunciated by this Court in Stevens v. Friedman, 58 W.Va. 78, 51 S.E. 132 (1905). The standard set forth in Stevens is as follows:

In actions of tort, where gross fraud, malice, oppression, or wanton, willful, or reckless conduct or criminal indifference to civil obligations affecting the rights of others, appears, or where legislative enactment authorizes it, the jury may assess exemplary, punitive, or vindictive damages, these terms being synonymous.

Id. at Syl. Pt. 3 (citation omitted).

Unlike the present case, which involves the highly specialized area of property...