Poling v. Motorists Mut. Ins. Co.
| Decision Date | 28 October 1994 |
| Docket Number | No. 22135,22135 |
| Court | West Virginia Supreme Court |
| Parties | Jeffrey W. POLING and Wendy Poling, his Wife, Plaintiffs, v. MOTORISTS MUTUAL INSURANCE CO., Defendant. |
SYLLABUS BY THE COURT
1. A settlement of an underlying claim in a bad faith practices case against an insurance carrier is an ultimate resolution of a cause of action within the meaning of Jenkins v. J.C. Penney Cas. Ins., Co., 167 W.Va. 597, 280 S.E.2d 252 (1981).
2. A cause of action for insurance bad faith may arise even if there has been a settlement and release of the underlying case against the tortfeasor so long as the release does not cover the insurer and the insurer is, or should be, aware of the possibility of a bad faith action at the time it agrees to the settlement.
3. Punitive damage awards in insurance bad faith cases are not prohibited under W.Va.Code, 33-11-4(9) [1985].
4. Violation of W.Va.Code, 33-11-4(9) [1985] is tortious conduct that may give rise to a cause of action by a spouse for loss of consortium.
David A. Jividen, Bordas, Bordas & Jividen, Wheeling, for plaintiffs.
Charles D. Bell, J.P. McMullen, Jr., Wellsburg, for defendant.
This case presents three certified questions from the United States District Court for the Northern District of West Virginia that concern insurance bad faith. Because it appears to the federal court that there is no controlling precedent on these issues, the federal court requests that the following questions be answered:
(1) Whether the settlement of the underlying tort case against the tortfeasor precludes a separate and independent recovery against the tortfeasor's insurer arising out of its alleged bad faith insurance practices when the third-party plaintiff made a voluntary settlement of a disputed personal injury claim and settles the property damage claim for the sum demanded which includes a sum for inconvenience.
(2) Whether West Virginia Code § 33-11-4(9) authorizes the recovery of punitive damages given the situation described in Question 1.
(3) Whether the wife of the plaintiff has a separate cause of action against the tortfeasor's insurer for loss of consortium arising out of the insurer's alleged bad faith insurance practices.
We answer "no" to question one and "yes" to the second and third questions.
The plaintiff in this case, Jeffrey W. Poling, was driving his pick-up truck on West Virginia State Route 2 when it was hit from the rear by an automobile driven by William M. Bonar, and insured by the defendant, Motorists Mutual Insurance Company. At the time of the accident, Mr. Bonar was drunk and was arrested at the scene for driving under the influence of alcohol. The automobile Mr. Bonar was driving was apparently borrowed from his father without permission or knowledge. Further, Mr. Bonar did not have a valid driver's license at the time of the accident. As a result of the accident, Mr. Poling's pick-up truck was forced off the road where it flipped over and traveled 300 feet down an embankment. Consequently, the Poling vehicle was a total loss.
After the accident, Mr. Poling was transported to Wheeling Hospital where he was treated for neck and back pain, as well as abrasions to his back, ribs and ankle. Mr. Poling's condition required follow-up visits to Dr. Thomas Romano, a rheumatologist and pain management specialist. Dr. Romano diagnosed Mr. Poling as suffering from severe myofascial pain syndrome and prescribed medications and bed rest. The parties disagree on the full extent of Mr. Poling's injuries. Mr. Poling contends that he remained unable to return to work for six months and lost wages for that period. Motorists' expert, on the other hand, contends that Mr. Poling's injuries were not as severe as he claims and that Mr. Poling could have gone back to work soon after the accident. The property damages were, however, never disputed.
Mr. Poling avers that only after twelve months of repeated attempts to resolve the property damage to his pick-up truck and his personal injuries was the matter settled. Shortly before the suit between Mr. Poling and the Bonars was to go to trial, Motorists Mutual agreed to pay Mr. Poling the policy limits of $100,000 for personal injury and $6,300 for property damage. The settlement was made, checks drafted, and a release tendered that contained a release of the tortfeasor and Motorists Mutual. Although Mr. Poling was willing to release the tortfeasor, he refused to release Motorists. Motorists sought to compel settlement, but the circuit judge ruled that there was no meeting of the minds with respect to releasing Motorists. Motorists agreed to pay the agreed settlement despite the fact that it was not included in the release. The plaintiff subsequently brought suit in the United States District Court for the Northern District of West Virginia against Motorists Mutual for bad faith insurance practices.
Motorists Mutual argues that the settlement of the underlying tort claim precludes an unfair claim settlement practices suit against it. In reaching this conclusion, Motorists relies on language in Jenkins v. J.C. Penney Cas. Ins. Co., 167 W.Va. 597, 280 S.E.2d 252 (1981) stating that a cause of action must be "ultimately resolved" before a bad faith action can be brought. More specifically, Motorists argues that our holding in Jenkins that a cause of action for statutory bad faith under W.Va.Code, 33-11-4(9) [1985] accrues when the underlying case is "ultimately resolved," means that there must be underlying litigation that has concluded in a judicial determination. Motorists' main contention is that a voluntary settlement is not a judicial determination and thus not an ultimate resolution of the cause of action. We disagree. Although a voluntary settlement is not a judicial determination, it is an ultimate resolution of a cause of action.
Nowhere in Jenkins did this Court state that "ultimately resolved" means a judgment was obtained rather than a settlement. A settlement is one of many ways in which a case may be ultimately resolved. The important fact of this case is that Mr. Poling did not release Motorists in the settlement. By not releasing Motorists in the settlement and by bringing that fact to Motorists' attention, Mr. Poling reserved his right to bring a bad faith action against Motorists. The insurer, Motorists, was obviously aware of the potential for a bad faith action in this case...
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