Miller v. Liberty Mut. Ins. Co.
| Decision Date | 21 June 2005 |
| Docket Number | No. Civ.A.2:03-2325.,Civ.A.2:03-2325. |
| Citation | 393 F.Supp.2d 399 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | Christina MILLER, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant, Liberty Mutual Fire Insurance Company Counter-claimant, v. Christina Miller, Counter-defendant. |
Tony L. O'Dell, Berthold, Tiano & O'Dell, Charleston, WV, for Plaintiff.
Joanna I. Tabit, Jennifer R. Anderson, Steptoe & Johnson, Charleston, WV, for Defendant.
Pending before the court is the motion of plaintiff/counter-defendant Christina Miller, filed May 13, 2005, seeking summary judgment on the counterclaim of defendant/counter-claimant Liberty Mutual Fire Insurance Company ("Liberty Mutual"). Also pending is the motion of Liberty Mutual, filed May 4, 2005, seeking to dismiss the counterclaim of Miller to Liberty Mutual's counterclaim. In the alternative, Liberty Mutual seeks summary judgment on Miller's counterclaim.
This action arises out of a claim for faulty maintenance that resulted in a single vehicle accident occurring in Charleston, West Virginia, on July 26, 2001.1 Miller contends that the accident was the proximate result of the negligent conduct of Liberty Mutual's insured, Sears Roebuck & Company ("Sears") and it employees. Specifically, Miller asserts that employees of a Sears-owned National Tire and Battery facility in Dunbar, West Virginia, negligently failed to fasten the lug nuts on one of her vehicle's wheels after performing routine tire maintenance. As a result of the accident, Miller suffered a little over $5,000 in documented medical expenses.
Sears initially decided to handle the incident internally, repairing the property damage to Miller's vehicle. However, Miller retained the Sutter law Firm to prosecute her personal injury claim — a fact communicated to Sears in September 2001. Sears thereafter elected to make a claim under the policy of insurance it had purchased from Liberty Mutual.
Liberty Mutual's claims adjuster, Kathy Murray, was initially assigned to handle the claim. Subsequent to an investigation overseen by her, Liberty Mutual denied the claim on the stated ground that there was no negligence on behalf of Sears. That ground, however, was not supported by Liberty Mutual's own investigation which indicated that Sears' employees more likely than not failed to secure the lug nuts.
Subsequent to receipt of the denial, the Sutter law firm withdrew from their representation of Miller. Miller then retained Tony O'Dell of the law firm of Berthold, Tiano & O'Dell. On July 21, 2003, Tori Caprio, another Liberty Mutual claims adjuster, completed a negotiation plan concerning Miller's claim. Caprio estimated full liability, absent an assessment of comparative negligence, on Miller's claim to be between $10,553.15 and $13,553.15. Factoring Miller's comparative negligence at 50%, she estimated liability between $5,276.51 and $6,151.57. That same day, Caprio contacted O'Dell and offered $5,000.00 to settle the action with the possibility of $1,000.00 more. O'Dell stated that his bottom line was $15,000.00 and the settlement discussions concluded unsuccessfully.
On July 25, 2003, Miller filed this action in the Circuit Court of Kanawha County, West Virginia, against Sears and Charles Adkins, a West Virginia resident. She also sued Liberty Mutual, Murray and Caprio, alleging that during the handling of her claim Liberty Mutual and its adjusters had engaged in unfair settlement practices as set forth in West Virginia's Unfair Trade Practices Act, W. Va.Code § 33-11-4(9) ("UTPA").
After the action was commenced, the file was assigned to Wally Bruneau. The factual predicate for both of the pending motions is based upon the handling of Miller's claim from August 2003 through September 2003.
Upon his review of the file, Bruneau decided that "the most cost effective thing to do was to try to settle all the claims involved in the file," including the bad faith claims. Dep. Bruneau at pp. 9-10. At that time, he was aware that a demand had been made for $15,000 and that such demand encompassed only the underlying claims against the insureds — Sears and Adkins. Id. at p. 12. He was not aware of a demand having been made concerning the bad faith claims. Id. at p. 11.
On or about August 28, 2003, Bruneau contacted O'Dell. In response to O'Dell's questioning, Bruneau testified to the substance of the August 28, 2003, conversation as follows:
Q. Okay. And after suit was filed, that demand remained open?
A. Yes. As you and I discussed, it had remained open, yes.
Q. And you made a decision to settle this case for the demand that was made prior to the suit being filed?
A. We discussed it, you and I, and you actually made a demand of 25, and I reminded you that you had made a demand of 15, and I settled — I said I wanted to settle all claims, and you finally said — there was a day that went by, and you called me back or I called you back. I countered with 10 when you said 25.
You said your client's bottom line was 15.
And I said, "This is for all claims?"
And You said, "Yes."
Id. at pp. 12-13. Bruneau stated that it was his "absolute belief" that the proposed settlement included the bad faith claims. Id. at p. 121.
Bruneau spoke with his supervisor the next day, August 29, 2003, and received authority to resolve all of Miller's claims for $15,000. Id. at p. 13. That same day he contacted O'Dell. In response to questions from defense counsel, Bruneau testified as follows:
Q. All right. Now, looking at the next note where you talked with Mr. O'Dell the next day [August 29], what happened in that next phone call?
A. I called him, and I told him I would be willing to settle the underlying claim for 15K with the understanding and agreement that the claims against Liberty Mutual, Kathy Murray, and Tori Caprio would likewise be dismissed, to make sure we had an agreement on that. He said he changed his mind.
Q. Did he use those words?
A. He said, "No, I decided to go forward against Liberty." I assumed he changed his mind when he said that because it was not my agreement that we had the day before, not at all. He said, "No, I decided to go forward as against Liberty, Miss Murray and Miss Caprio,"
Q. And then what else was said?
A. "I told him, I said, That's not my understanding of our conversation yesterday."
And he said he had changed his mind. That's exactly what he said.
Id. at pp. 122-23. Bruneau was "flabbergasted" by this turn of events. Id. at p. 129. He informed O'Dell that the $15,000 was off the table inasmuch as the deal was different than that discussed the day before. Id. at p. 123.
On September 2, 2003, O'Dell sent a letter to Bruneau concerning the conversations of August 28 and 29, 2003. Pl.'s Resp. Mot. Dismiss Pl.'s Countercl. at Ex. D. Of the August 28, 2003, conversation, O'Dell wrote:
You called me again on August 28, 2003, and we spoke regarding the above-referenced claim. At that time, you inquired as to whether the plaintiff is willing to settle her case for Fifteen Thousand Dollars ($15,000). I advised you that the plaintiff is willing to settle her underlying claim for the amount of Fifteen Thousand Dollars, but that the plaintiff is not willing to dismiss the West Virginia UTPA claims as part of that settlement.
Id. Concerning the August 29, 2003, conversation, O'Dell stated:
On August 29, 2003, you contacted me by telephone and indicated that Liberty Mutual was willing to pay Fifteen Thousand Dollars in order to settle the entire case, including the direct claims against Liberty Mutual and its claims adjusters. I advised you once again that my client is willing to settle the underlying claim for Fifteen Thousand Dollars in return for a release of Sears d/b/a NTB Tire, and the Sears employees who are referenced in Count I of the Complaint. You indicated to me that if the plaintiff is not willing to dismiss the entire case in return for a settlement of Fifteen Thousand Dollars, including the direct claims against Liberty Mutual and the claims adjusters, then Liberty Mutual is not willing to pay Fifteen Thousand Dollars to the plaintiff.
Id. O'Dell reiterated that his client was willing to accept $15,000 in settlement of her underlying claims.
On September 3, 2003, Bruneau contacted O'Dell and accepted the offer of settlement concerning Liberty Mutual's insureds.2 Pl.'s Reply Mot. S.J. on Def.'s Countercl. at Ex. F. Of that conversation, Bruneau testified as follows:
Q. On September 3rd of 2003, we obviously had a meeting of the minds, did we not?
A. Another one, yes.
Q. On September 3rd, 2003, both sides knew what they were getting, didn't they; there was no question?
A. Yes.
Q. That the underlying claim was being settled for $15,000 and that the plaintiff was going to go [forward] with her bad faith claim, correct?
A. Correct.
Q. And you understood that?
A. Yes.
On September 5, 2003, a check in the amount of $15,000 was issued by Liberty Mutual and made payable to Berthold Tiano & O'Dell and Miller. Pl.'s Mot. S.J. on Def.'s Countercl. at Ex. C. On September 12, 2003, Joanna I. Tabit of the law firm of Steptoe & Johnson filed an answer to Miller's complaint on behalf of Liberty Mutual, Murray and Caprio.
On September 23, 2003, W. Michael Moore, counsel for Sears and Adkins, forwarded a "Complete Release and Settlement Agreement" to O'Dell. Id. at Ex. A. By letter dated September 24, 2003, O'Dell indicated to Moore that he had reviewed the proposed agreement, offering the following criticism:
I believe the language in your proposed Release is too broad, and is therefore unacceptable. The Release even goes as far as to discharge any claims against Sears' insurer, which was not agreed to by the plaintiff in this case. In fact, claims against Liberty Mutual and its adjuster[s] were specifically reserved.
Id. at Ex. B. O'Dell...
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