Patterson v. Westfield Ins. Co.

• Citation: 516 F.Supp.3d 557
• Decision Date: 29 January 2021
• Docket Number: Civil Action No. 5:19-CV-17
• Court: U.S. District Court — Northern District of West Virginia
• Parties: Charles Howard PATTERSON, Plaintiff, v. WESTFIELD INSURANCE COMPANY, Defendant.

516 F.Supp.3d 557

Charles Howard PATTERSON, Plaintiff,

v.WESTFIELD INSURANCE COMPANY, Defendant.

Civil Action No. 5:19-CV-17

United States District Court, N.D. West Virginia, Wheeling.

Signed January 29, 2021

Erica A. Conti, James G. Bordas, III, Bordas & Bordas, PLLC, Wheeling, WV, for Plaintiff.

Brent K. Kesner, Tanya M. Kesner, Kesner & Kesner PLLC, Charleston, WV, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING RENEWED MOTION FOR SUMMARY JUDGMENT

JOHN PRESTON BAILEY, UNITED STATES DISTRICT JUDGE

Pending before this Court is defendant Westfield Insurance Company's Renewed Motion for Summary Judgment [Doc. 103]. Plaintiff Charles Patterson filed a Response in Opposition [Doc. 104], and defendant filed a Reply [Doc. 105]. Having been fully briefed, this matter is now ripe for adjudication. For the reasons contained herein, this Court will grant the Motion.

BACKGROUND

Defendant, Westfield Insurance Company, is an insurance carrier who issued a homeowner's insurance policy to plaintiff, Charles Patterson. [Doc. 1-1 at 3]. In September 2017, plaintiff discovered property damage to his home, and reported said property damage to defendant on September 26, 2017. [Id. at 4]. At the time, plaintiff believed an underlying factor of the property damage could have potentially been mine subsidence, and plaintiff's policy included a Mine Subsidence Endorsement. [Id. at 3]. On October 6, 2017, defendant sent plaintiff two pieces of correspondence–the first advising that an adjuster had been assigned to plaintiff's homeowner's claim and the second advising that plaintiff's mine subsidence claim had been submitted to the West Virginia Board of Risk and Insurance Management ("BRIM"). [Id. at 4]. On December 7, 2017, an inspection of plaintiff's property was conducted by defendant through Jerome D. Polick, P.E., of Rudick Forensic Engineering, Inc. [Id.; Doc. 12-1 at 8].

By letter dated January 19, 2018, defendant denied plaintiff's claim for the property damage sustained to his home under plaintiff's homeowner's policy, stating that the damage to plaintiff's home was caused by a number of factors that are excluded from plaintiff's policy, such as earth movement and water damage. [Doc. 12-1 at 1–5]. This denial correspondence stated the following:

Based on our investigation and the review of the applicable policy language, we must advise you that coverage will not be applicable for your client's loss or damage....

You have previously reported that you and/or your client feel that the damage is the result of underground mine subsidence activity in your area. Your client's policy includes ... Coal Mine Subsidence Coverage ... which provides coverage consideration for mine subsidence related damages. Mine subsidence claims are investigated by the West Virginia Department of Administration, Board of Risk and Insurance Management (BRIM). Westfield Insurance Company has notified the West Virginia Board of Risk and Insurance Management of your client's claim for mine subsidence damage. You will be contacted by a representative of WV BRIM if you have not already to coordinate their investigation.

[Id. at 4].

Almost a year later, plaintiff filed this suit on January 11, 2019, claiming that since the January 19, 2018, denial letter was sent, defendant "has made no attempt to further resolve, investigate or otherwise adjust Plaintiff's claim, including the claims presented under the mine subsidence endorsement of Plaintiff's homeowner's insurance policy." [Doc. 1-1 at 5]. Plaintiff's suit alleges that defendant's denial of plaintiff's claim constitutes a breach of contract, and also alleges that defendant violated the West Virginia Unfair Trade Practices Act, West Virginia Code § 33-11-1 et seq. , and the corresponding Insurance Commissioner's Regulations, as well as the implied covenant of good faith and fair dealing. [Id. at 5–9]. Plaintiff states that the "basis for the allegations against [defendant] stem not only from the denial of Plaintiff's claim under his homeowner's insurance policyand [defendant's] conduct in the handling of the claim brought under the policy, but also, [defendant's] conduct as it relates to the mine subsidence claim of the Plaintiff." [Doc. 15 at 3]. Specifically, plaintiff's Complaint states the following, in pertinent part:

(14) [Defendant] has an obligation to conduct a reasonable investigation of all claims arising under insurance policies, including all applicable endorsements.

(15) [Defendant] has an obligation under its contract of insurance with the Plaintiff to conduct a reasonable investigation of any and all claims before refusing to pay the claims.

(16) [Defendant's] denial of the Plaintiff's claim constitutes a breach of contract.

(17) The Plaintiff made a timely claim under his homeowner's insurance policy in regard to the property damage sustained to his home.

(18) The Plaintiff reasonably expected that the claim he presented would be paid under his homeowner's insurance policy, including, but not limited to, under his mine subsidence endorsement.

(19) Plaintiff has complied with all requirements and policy provisions outlined in the subject policy issued by [defendant].

(20) [Defendant] has failed to date to issue any decision as to coverage under the Plaintiff's mine subsidence endorsement even though an inspection was completed of the property by an engineer months ago.

(21) [Defendant] has either failed to obtain the results of the inspection set forth in paragraph 20 above or if it did obtain the results, it has not provided them to the Plaintiff in a reasonable and timely manner.

[Doc. 1-1 at 5–6]. Plaintiff further alleges defendant violated § 33-11-4(9) of the West Virginia Unfair Trade Practices Act by:

(a) misrepresenting pertinent facts or insurance policy provisions relating to coverages and issues;

(b) failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under the insurance policy;

(c) failing to adopt and implement reasonable standards for the prompt and proper investigation of claims arising under insurance policies; (d) refusing to pay the claims of [plaintiff] without conducting a reasonable investigation into his claims;

(e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

(f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;

(g) compelling [plaintiff] to file a civil action against Defendant to recover amounts due and owing to him under Policy No. OFH 2801222; and

(h) failing to promptly provide a reasonable explanation for the basis in the insurance policy in relation to the facts or applicable law for denial of the claim.

[Id. at 7].

On July 12, 2019, defendant filed a Motion for Judgment on the Pleadings or, in the Alternative, to Certify Question [Doc. 12]. After being fully briefed, this Court denied that Motion under the standard of review prescribed by Fed. R. Civ. P. 12(c). See [Doc. 24].

On January 31, 2020, defendant filed a Motion for Summary Judgment [Doc. 87]. After being fully briefed, this Court denied the Motion, without prejudice, in light of anticipated new evidence in the form of a report regarding BRIM'S re-evaluation of plaintiff's mine subsidence claim. See [Doc. 96].

On November 12, 2020, following the production of the aforementioned re-evaluation, defendant filed the instant Renewed Motion for Summary Judgment [Doc. 103] and accompanying Memorandum in Support [Doc. 102]. Therein, defendant argues that it is entitled to summary judgment because there is no evidence that any portion of the insurance policy at issue other than the Mine Subsidence Endorsement could provide coverage for plaintiff's alleged damages and because plaintiff's mine subsidence claims were investigated and denied by BRIM. [Doc. 102 at 1]. More specifically, defendant asserts that because West Virginia law mandates that all mine subsidence claim investigations and decisions are statutorily required to be conducted and issued by BRIM, defendant did not breach its insurance contract with plaintiff. [Doc. 102 at 13–14].

Further, defendant argues that it is entitled to summary judgment with respect to plaintiff's common law bad faith claim because, according to defendant, in the absence of a contractual obligation to pay a claim, there can be no common law or statutory cause of action for bad faith. [Id. at 19]. Defendant also moves for summary judgment with respect to plaintiff's claim that it violated West Virginia Unfair Trade Practices Act, arguing that the evidence demonstrates that defendant properly handled plaintiff's claim, timely responded to all communications, and repeatedly advised plaintiff and his counsel as to the status of the pending claim. [Id. at 20]. Finally, defendant argues that it is entitled to summary judgment with respect to plaintiff's claim for punitive damages because plaintiff has failed to demonstrate the requisite showing of "actual malice" to recover punitive damages. [Id. at 23].

In his Response, plaintiff first argues that defendant's failure to pay under the mine subsidence endorsement constitutes a valid breach of contract claim because plaintiff's privity of contract under the subject insurance policy lies with defendant rather than BRIM. [Doc. 104 at 9–10]. Noting a disparity between expert reports concerning the cause of plaintiff's alleged damages to the subject home, plaintiff asserts that summary judgment with respect to the breach of contract claim is not warranted as the issue of the breach of contract should be determined by a jury that is free to determine the credibility of the experts involved in the matter. [Id. at 12].

Moreover, plaintiff asserts that because the breach of contract claim is proper, plaintiff has brought a cognizable claim for bad faith based on defendant's alleged refusal to investigate the insurance claim, failure to address...