State ex rel. Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Hummel

Decision Date19 October 2020
Docket NumberNo. 19-0978,19-0978
Citation850 S.E.2d 680,243 W.Va. 681
CourtWest Virginia Supreme Court
Parties STATE of West Virginia, EX REL. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.; Allianz Global Risks US Insurance Company; Ace American Insurance Company; Zurich American Insurance Company; Great Lakes Insurance SE; XL Insurance America, Inc.; General Security Indemnity Company of Arizona; Aspen Insurance UK Limited; Navigators Management Company, Inc.; Ironshore Specialty Insurance Company ; Validus Specialty Underwriting Services, Inc. ; and HDI-Gerling America Insurance Company, Petitioners v. The Honorable David W. HUMMEL, Jr., Judge of the Second Judicial Circuit, and Axiall Corporation, and Westlake Chemical Corporation, Respondents

Debra Tedeschi Varner, Esq., James A. Varner, Sr., Esq., Varner & Van Volkenburg PLLC, Clarksburg, West Virginia, Myles A. Parker, pro hac vice, Alexandra F. Markov, pro hac vice, Carroll, Warren & Parker, Jackson, Mississippi, Counsel for Petitioners.

Jeffrey V. Kessler, Esq., Berry, Kessler, Crutchfield, Taylor & Gordon, Moundsville, West Virginia, Travis L. Brannon, Esq., Thomas C. Ryan, Esq., John M. Sylvester, pro hac vice, Paul C. Fuener, pro hac vice, David R. Osipovich, pro hac vice, Sarah M. Czypinski, pro hac vice, K&L Gates LLP, Pittsburgh, Pennsylvania, Counsel for Respondents.

Armstead, Chief Justice:

In this petition for writ of prohibition, both parties agree that this Court should grant the requested relief to the extent that it prohibits the circuit court from enforcing its sua sponte order dismissing Count III of Axiall Corporation ("Axiall") and Westlake Chemical Corporation's ("Westlake") (collectively, "Respondents") complaint and finding that West Virginia law applied to all of Respondents’ bad faith claims. Petitioners argue, and Respondents disagree, that this Court should extend the writ to order that Georgia law – and only Georgia law – applies to all claims raised in the underlying complaint.

For the reasons set forth below, we agree that the circuit court exceeded its legitimate authority by sua sponte dismissing Count III of the complaint and finding that West Virginia law applied to all bad faith claims, as that issue had not been briefed, argued, or developed by the parties. However, we decline to extend the writ to find that Georgia law applies to the entire dispute, as a writ of prohibition is not the proper avenue for such relief.


On August 27, 2016, a chlorine tank train car ruptured at the Natrium Plant located in Proctor, West Virginia. This rupture caused damage to the Natrium Plant, which is owned and operated by Westlake. Axiall is a wholly-owned indirect subsidiary of Westlake.

Axiall sought coverage under its insurance policies for damages caused by the leak. Among them, Petitioners issued thirteen separate policies in which each Petitioner subscribed to certain "quota-shares" of the insurance for the Natrium Plant. These policies, subject to their conditions, endorsements, and exclusions, provided coverage for all risks of direct physical loss or damage to the insured property.

On April 9, 2019, over two-and-a-half years after the claim was first made, Petitioners denied coverage pointing to exclusions in the policies for faulty workmanship, corrosion, and contamination. That same day, Petitioners filed a declaratory judgment action in the State of Delaware to determine their rights and responsibilities under the policies.1 The next day, April 10, 2019, Respondents filed the underlying complaint asserting five separate counts: (1) declaratory judgment; (2) breach of contract; (3) bad faith under Georgia law; (4) bad faith under West Virginia law; and (5) statutory bad faith under the West Virginia Unfair Trade Practices Act.

Petitioners subsequently filed a motion titled "DefendantsMotion to Dismiss or Stay In Favor of First-Filed Foreign Action." In that motion, Petitioners sought to either dismiss or stay the West Virginia proceeding because (1) the Delaware action was filed earlier; (2) West Virginia was not a convenient forum; and (3) West Virginia was not the proper venue for this action. The circuit court held a hearing on the motion to dismiss on September 5, 2019, and denied the motion. However, the circuit court, sua sponte , without anyone moving, briefing, or seeking such relief, dismissed2 Count III – Bad Faith – Violation of Georgia Code § 33-4-6, finding:

It is further ORDERED that Count III of Plaintiffs’ Complaint, titled "Bad Faith – Violation of Georgia Code § 33-4-6," is hereby DISMISSED . The Court FINDS that while Georgia law governs the coverage issues pled in Count II, Plaintiffs’ bad-faith claims against Defendants are governed by West Virginia law, and therefore Count III of Plaintiff's Complaint pled under Georgia law cannot be maintained simultaneously with Counts IV and V pled under West Virginia law. The Court acknowledges that this issue has not been briefed or argued before the Court.

On October 25, 2018, Petitioners filed the instant petition, and by order of this Court entered on January 30, 2020, a rule to show cause issued.


In Syllabus Point Four of State ex rel. Hoover v. Berger, 199 W. Va. 12, 483 S.E.2d 12 (1996), this Court explained:

In determining whether to entertain and issue the writ of prohibition for cases not involving an absence of jurisdiction but only where it is claimed that the lower tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the party seeking the writ has no other adequate means, such as direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent disregard for either procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression. These factors are general guidelines that serve as a useful starting point for determining whether a discretionary writ of prohibition should issue. Although all five factors need not be satisfied, it is clear that the third factor, the existence of clear error as a matter of law, should be given substantial weight.

With this standard in mind, we turn to the issues raised in this writ.


The parties agree that the circuit court exceeded its lawful authority when it sua sponte dismissed Count III of the complaint and held that West Virginia law applies to Respondents’ bad faith claims. A second issue – on which the parties strenuously disagree – is whether the choice-of-law provision contained in the parties’ insurance contract applies to the entire dispute below. We will examine each issue in turn.

1. Sua Sponte Dismissal of Count III and Ruling On West Virginia Law

We believe that the circuit court committed clear error as a matter of law by sua sponte dismissing Count III. The parties appeared for argument on Petitionersmotion to dismiss or stay on September 5, 2019. The parties briefed and argued the issues raised in that motion. No party asked the circuit court to dismiss Count III of the complaint. No party asked the circuit court to find that West Virginia law applied to the bad faith claims pled in the complaint. No party briefed these issues and no party argued for or against such relief.

Although this issue arises from the sua sponte grant of a motion to dismiss, we believe that this Court's prior rulings on sua sponte granting of summary judgment are persuasive. In that context, we have held that "[o]rdinarily, in the absence of a written motion for summary judgment by one of the parties, the court is not authorized sua sponte to grant a summary judgment." Syllabus Point 2, Gavitt v. Swiger , 162 W. Va. 238, 248 S.E.2d 849 (1978). In this same context we have held that:

As a general rule, a trial court may not grant summary judgment sua sponte on grounds not requested by the moving party. An exception to this general rule exists when a trial court provides the adverse party reasonable notice and an opportunity to address the grounds for which the court is sua sponte considering granting summary judgment.

Syllabus Point 4, Loudin v. Nat'l Liab. & Fire Ins. Co. , 228 W. Va. 34, 716 S.E.2d 696 (2011). Likewise, in the context of a sua sponte dismissal we have reasoned:

As we stated in Litten v. Peer, 156 W. Va. 791, 797, 197 S.E.2d 322, 328 (1973), "[i]t has always been the policy of this Court to protect each litigant's day in court." It is equally true, of course, that "the fundamental requirement of due process is an opportunity to be heard upon such notice and proceedings as are adequate to safeguard the right for which the constitutional

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