State ex rel. State Farm Fire & Cas. Co. v. Madden

Decision Date28 October 1994
Docket NumberMID-OHIO,22351,Nos. 22350,s. 22350
Citation192 W.Va. 155,451 S.E.2d 721
CourtWest Virginia Supreme Court
PartiesSTATE ex rel. STATE FARM FIRE & CASUALTY COMPANY and Nancy S. Barry, Petitioners, v. The Honorable John T. MADDEN, Judge of the Circuit Court of Marshall County, West Virginia and Larry Thompson, Respondents. STATE ex rel.RESTAURANTS, INC., d/b/a Wendy's Eastern Management Group and Wendy's International Inc., d/b/a Wendy's Old Fashioned Hamburgers Company, Petitioners, v. The Honorable John T. MADDEN, Judge of the Circuit Court of Marshall County, West Virginia and Larry Thompson, Respondents.

Syllabus by the Court

1. Under Rule 18(b), WVRCP [1978], an insurer may be joined as a defendant with the insured by an injured plaintiff alleging various claims of bad faith and unfair insurance practices.

2. Under rule 18(b), WVRCP [1978], as long as the claims against the insurer are bifurcated from those against the insured, and any discovery or proceedings against the insurer are stayed pending resolution of the underlying claim between the plaintiff and the insured, there is no undue prejudicial impact on a jury of joining in an original pleading or amending a pleading to assert bad faith or unfair insurance practices counts against an insurer in an original action against insured.

3. To the extent Jenkins v. J.C. Penney Cas. Ins. Co., 167 W.Va. 597, 280 S.E.2d 252 (1981), Davis v. Robertson, 175 W.Va. 364, 332 S.E.2d 819 (1985), Robinson v. Continental Cas. Co., 185 W.Va. 244, 406 S.E.2d 470 (1991), or Russell v. Amerisure Ins. Co., 189 W.Va. 594, 433 S.E.2d 532 (1993) imply that an action against an insurer for bad-faith and unfair settlement practices cannot be joined in the same complaint as the underlying personal injury suit against the insured, they are overruled.

Landers P. Bonenberger, Michael G. Gallaway, McDermott, Bonenberger, McDermott & Gallaway, Wheeling, WV, for petitioner State Farm.

David A. Mohler, James W. Gabehart, Campbell, Woods, Bagley, Emerson, McNeer & Herndon, Charleston, WV, for petitioner Mid-Ohio.

Arthur M. Recht, Frank X. Duff, Sandra K. Law, Schrader, Recht, Byrd, Companion & Gurley, Wheeling, WV, for respondents.

NEELY, Justice:

This case arises from two separate petitions, one by State Farm Fire and Casualty Company and Nancy Barry, the other by Mid-Ohio Restaurants and Wendy's International Inc., both seeking writs of prohibition based on the same underlying facts.

State Farm Fire and Casualty Company ("State Farm") and Nancy Barry ask this Court to prohibit appellee Judge John T. Madden of the Circuit Court of Marshall County from allowing their joinder as defendants and to prohibit further proceedings against them in a currently pending civil action by appellee Larry Thompson. In July 1992, Larry Thompson filed a personal injury action alleging permanent and disabling soft tissue injury from a slip and fall incident on the snow outside of a Wendy's Restaurant in Benwood, West Virginia.

In the original complaint, Wendy's International and Mid-Ohio Restaurants (hereinafter jointly referred to as "Wendy's"), were named as defendants. These defendants have also filed a separate writ of prohibition involving unrelated interlocutory orders of Judge Madden in the same action. Specifically, Wendy's seeks a writ of prohibition against Judge Madden's 1 June 1994 order denying a motion to bifurcate the personal injury claim in Count I of the amended complaint from Counts II through VIII involving claims arising out of the adjustment and investigation of Mr. Thompson's suit against Wendy's. 1

In addition, Wendy's petitions to prohibit enforcement of Judge Madden's 28 April 1994 order regarding designation of Wendy's expert witnesses, barring certain depositions, and seeking answers to interrogatories submitted to Mr. Thompson's experts. Wendy's is also seeking to vacate the 8 September 1993, and 21 September 1993 orders prohibiting testimony of private investigator, Charles A. Sysak, and prohibiting cross-examination of Mr. Thompson regarding alleged work activities. These issues will simply be addressed seriatim.

State Farm is the liability insurer for Wendy's. Nancy Barry is an adjuster with State Farm. One issue concerns Mr. Thompson's second amended complaint of 2 December 1993, in which Judge Madden allowed joinder of State Farm and Nancy Barry as defendants for the torts of bad faith and unfair insurance settlement practices arising out of the adjusting and investigation of Mr. Thompson's personal injury claim against Wendy's. The amended complaint added claims that Charles A. Sysak, the private investigator hired by Wendy's original counsel in May of 1993, engaged in unethical and illegal surveillance tactics while acting as an agent of Wendy's and State Farm. During the course of surveillance, Mr. Sysak allegedly witnessed Mr. Thompson working at National Auto Paint Company in contradiction of Mr. Thompson's claims of total disability.

Count I of the amended complaint contained the original personal injury claim against Wendy's. Counts VII and VIII were directed to State Farm and Nancy Barry, alone, or in conjunction with Wendy's. Following joinder, Mr. Thompson filed several requests for production of documents seeking State Farm claims file materials relating to Mr. Thompson's slip and fall claim, as well as information about State Farm's adjusting procedures, use of investigators, and surveillance methods.

State Farm filed a motion to dismiss claims against it and a motion to prohibit discovery asserting that precedent prohibits direct actions against liability insurers before resolution of the underlying claim against the insured. The circuit court denied both motions by order dated 13 April 1994. On 28 April 1994, the circuit court denied State Farm's informal written request for review of the decision permitting State Farm's joinder by certified question to the Supreme Court of Appeals. However, the court did order that Mr. Thompson's claims of unfair settlement practices in violation of W.Va.Code 33-11-4(9) [1985] be bifurcated from the other claims, and stayed discovery relating to those claims until "further order of the court". 2 The other claims against State Farm were allowed to proceed. State Farm then petitioned this court for a writ of prohibition.

I.

We find that the circuit court did not abuse his discretion by granting the motion to amend. Under Rule 18(b), WVRCP [1978], an insurer may be joined as a defendant with the insured by an injured plaintiff alleging claims of bad faith and unfair insurance practices. However, the circuit court erred by failing to grant State Farm's motion to prohibit discovery. To prevent undue prejudice to Wendy's--the insured in Mr. Thompson's personal injury suit--any discovery or additional actions against the insurer, State Farm, must be stayed pending resolution of the underlying suit. For this reason, we grant as moulded State Farm's petition for writ of prohibition.

State Farm objected to joinder based upon Syl.Pt. 2, Davis v. Robertson, 175 W.Va. 364, 332 S.E.2d 819 (1985), modified, Postlethwait v. Boston Old Colony Ins. Co., 189 W.Va. 532, 432 S.E.2d 802 (1993) 3 holding that "[a]n injured plaintiff may not join the defendant's insurance carrier in a suit for damages filed against the defendant arising from a motor vehicle accident, unless the insurance policy or a statute authorizes such a direct action." [Emphasis added.] Although there is no express statutory or contractual authorization for joinder in this case, this case, unlike Davis, does not involve interpretations of the West Virginia uninsured motorist statute.

In Davis, we specifically rejected the possibility of joinder in reliance on another motor vehicle accident case, Jenkins v. J.C. Penney Cas. Ins. Co., 167 W.Va. 597, 280 S.E.2d 252 (1981), where we concluded that a direct action for unfair insurance practices under W.Va.Code 33-11-4(9) [1985], could be brought by the injured party against the insurer; however, "such implied private cause of action cannot be maintained until the underlying suit is resolved." Syl.Pt. 2, Jenkins. The rationale behind both Jenkins and Davis was to continue the long-standing policy of avoiding unnecessary mention of insurance coverage at trial because of the possibly prejudicial impact on the jury. Jenkins, 167 W.Va. at 608 n. 11, 280 S.E.2d at 259 n. 11 (1981); Davis, 175 W.Va. at 368, 332 S.E.2d at 823 (1985).

Today, however, we conclude that merely allowing the joinder of the insurer with the insured would not necessarily inject insurance issues into all such cases. As long as the claims against the insurer are bifurcated from those against the insured, and any discovery or proceedings against the insurer are stayed pending resolution of the underlying claim between the plaintiff and the insured, there should be no undue prejudicial impact on a jury of joining in an original pleading or amending a pleading to assert bad faith or unfair insurance practices counts against an insurer in an original action against an insured. To the extent that the majority of states follow the rule that a party bringing a personal injury action against an insured may not sue the insurer until after having obtained judgment against the insured, we are consciously taking a step in a different direction. 4

Our holding in this regard is based upon Rule 18(b) of the WVRCP [1978], which provides:

(a) Joinder of claims--A party asserting a claim to relief as an original claim, counterclaim, crossclaim, or third-party claim, may join, either as independent or as alternate claims, as many claims, legal or equitable, as he has against an opposing party.

(b) Joinder of remedies; fraudulent conveyances.--Whenever a claim is one heretofore cognizable only after another claim has been prosecuted to a conclusion, the two claims may be joined in a single action; but the...

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