Republic Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 20 April 1976
• Docket Number: Civ. A. No. 73-340-CH.
• Citation: 413 F. Supp. 649
• Court: U.S. District Court — Southern District of West Virginia
• Parties: REPUBLIC MUTUAL INSURANCE COMPANY, a corporation, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation et al., Defendants.

413 F. Supp. 649

REPUBLIC MUTUAL INSURANCE COMPANY, a corporation, Plaintiff, v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation et al., Defendants.

Civ. A. No. 73-340-CH.

United States District Court, S. D. West Virginia, Charleston Division.

April 20, 1976.

Charles E. Hurt, Charleston, W. Va., for plaintiff.

Robert J. Louderback, Charleston, W. Va., for defendants.

OPINION

DENNIS R. KNAPP, District Judge.

Plaintiff instituted this declaratory judgment action asking this court to declare and determine the rights and liabilities of the parties to this action under certain policies of automobile liability insurance.The facts germane to the issue involved in this case are not in dispute.

On July 9, 1971, defendantRobert Ray Jones, while driving a 1962 Plymouth automobile owned by defendantMona E. Fleshman, collided with an automobile operated by Verna Lilly.As a result of the accident, Verna Lilly was killed.

At the time of the accident, Fleshman was a named insured under a policy of automobile liability insurance issued by State Farm.That policy was issued in January, 1971 and covered a 1971Ford Maverick automobile, the only automobile then owned by Fleshman.The plymouth vehicle was purchased on June 22, 1971.At the same time, Jones was a named insured under a policy of automobile liability insurance issued to him by Republic which covered a vehicle owned by him.

Fleshman did not notify State Farm of either the accident or the purchase of the Plymouth until October 18, 1971.However, State Farm did learn about the accident on July 30, 1971, at which time an investigation was commenced.State Farm's knowledge of the accident came about as a result of its being notified by one of its agents, Roy E. Price, who had issued a State Farm policy to Verna Lilly.Republic was notified of the accident "shortly after July 9, 1971"(presumably by its insured Jones) and it too began an investigation.Upon learning that the Plymouth vehicle involved in the accident was owned by a State Farm insured, Republic called upon State Farm to assume the insurance on the claim then being made by the administrator of the estate of Verna Lilly.State Farm refused to do so, denying to Republic any coverage under the policy issued to Fleshman.On May 19, 1972, a civil action was commenced in the Common Pleas Court of Kanawha County, West Virginia by the administrator of the estate of Verna Lilly against Robert Jones and Mona Fleshman asking for damages for the death by wrongful act of Verna Lilly.

At the time the wrongful death action was commenced, and prior thereto, Fleshman had requested State Farm to provide her with a defense to the claim and the resulting civil action brought against her.State Farm denied to Fleshman coverage of the Plymouth automobile under the policy of insurance.Thereafter, Republic, under protest and after advising State Farm that State Farm's coverage was primary and that State Farm would be liable for all costs and expenses, defended the action and made a settlement with the administrator in the amount of $13,868.95.

The instant action followed with Republic seeking a declaratory judgment that State Farm is primarily liable for the amount paid in settlement of the death claim and other costs incident to the defense of the action.

In its initial answer, the sole defense State Farm raised was that the Plymouth did not qualify for coverage under the policy by virtue of the "newly acquired automobile" clause.However, some eight months later, State Farm amended its answer and asserted the defense of failure of Fleshman to comply with the "notice" provision of the policy.Thereafter, Republic moved the Court for summary judgment on the issues of coverage and the lack of notice by Fleshman.In ruling on the motion, however, this court only considered the "coverage" issue.That issue was decided adverse to Republic and Republic appealed.The Fourth Circuit Court of Appeals reversed, holding that the Plymouth vehicle was covered under the State Farm policy issued to Fleshman.Republic Mutual Insurance Co. v. State Farm Mutual Automobile Insurance Co.,527 F.2d 1002(4th Cir.1975).

In remanding this case, Judge Field stated:

". . . It appears that in view of its action on the coverage issue the district court did not find it necessary to address itself to the defense that Fleshman failed to give State Farm timely notice.Upon remand, therefore, the district court should consider and dispose of this remaining issue."

I

The State Farm policy contained the following provision:

"1.Notice.In the event of an accident or loss, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, and the names and addresses of injured persons and available witnesses, shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable.If claim is made or suit is brought against the insured, he shall immediately forward to the company every demand, notice, summons or other process received by him or his representative."

The purpose of this provision in an automobile liability policy is to give the insurer an opportunity to make a timely and adequate investigation of the circumstances surrounding the event which resulted in the claim being made against an insured.Ragland v. Nationwide Mutual Ins. Co.,146 W.Va. 403, 120 S.E.2d 482(1961).Compliance with such a provision has been held to be a condition precedent to recovery.Id.

It must be remembered, however, that State Farm's defense of failure to comply with this provision was only asserted as against Fleshman.It was not asserted with respect to Jones who was undisputedly an additional insured under the State Farm policy.SeeState Farm Mutual Automobile Ins. Co. v. Allstate Ins. Co.,154 W.Va. 448, 175 S.E.2d 478(1970).As such, Jones too was entitled to the benefits of the policy.Even assuming Fleshman's not giving notice was fatal to her rights under the policy, the rights of Jones as an additional insured are not to be barred by the conduct of the named insured Fleshman.SeeEngland v. American Southern Insurance Co.,380 F.2d 137(4th Cir.1967).

II

In applying West Virginia law, the court in Travelers Indemnity Co. v. American Cas. Co. of Reading, Pa.,226 F.Supp. 354(S.D.W.Va.1964), held that the question of lack of prejudice was immaterial as to issues involving the question of delay in giving notice.

However, the West Virginia Supreme Court of Appeals has recently altered this rule.In Willey v. Travelers Indemnity Co., W.Va., 193 S.E.2d 555(1972), the plaintiff individually and as administrator of the estate of Helen L. Willey instituted an action to recover $10,000 allegedly due under the terms of a personal automobile insurance policy issued to him in his individual capacity because of the death of his wife, Helen L. Willey, on August 15, 1967, as a result of an automobile accident which occurred on June 9, 1967.Travelers denied liability under the policy on the grounds that plaintiff had failed to file with Travelers a written proof of claim as provided for in the policy which plaintiff admitted was the case and that the automobile accident was not the proximate cause of the death of Mrs. Willey.

The evidence in that case was, however, that Travelers was fully aware of the accident and the resulting death, as evidenced by the fact that a physician employed by Travelers was present at the autopsy performed on the exhumed body of Mrs. Willey on September 20, 1967.

The purpose of filing a proof of claim is the same as that of giving notice.As the court stated at 193 S.E.2d at p. 558:

"The proof of claim requirement is included as a condition of a policy for the benefit of the insurer.Its purpose is to allow such insurer to acquire information upon which it can form an intelligent estimate of its liabilities and to afford it an adequate opportunity for investigation of the claim. . . ."

The Court went on to hold at 193 S.E.2d at pp. 558-559:

". . . In this circumstance and considering the purpose of a proof of claim . . . how was the defendant in any manner prejudiced?The obvious answer is that it was not. . . .By reason of its knowledge of the death and by its conduct in participating in the autopsy it is clear that it had the means of being fully informed as to the cause of death.It had every opportunity to prepare its defense against the claim of the plaintiff.The insurer, in the circumstances of this case, would be in no better position had it been furnished a written proof of claim by the defendant."

In Higginbotham v. City of Charleston, W.Va., 204 S.E.2d 1(1974), this state's highest court again addressed itself to the "prejudice" question, this time in a case involving the non-compliance of giving notice to a municipality of a claim against that municipality as required by its charter.

In Higginbothamthe plaintiff wife brought an action against the city alleging negligence on its part proximately causing her injuries and damages.Her husband also joined in the action as a partyplaintiff to recover damages for medical costs expended as a result of his wife's injuries and for...