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

• Decision Date: 16 November 2012
• Docket Number: No. 11–1142.,11–1142.
• Citation: 737 S.E.2d 229,230 W.Va. 201
• Court: West Virginia Supreme Court
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Defendant Below, Petitioner v. Jill F. SCHATKEN and Steven N. Schatken, Plaintiffs Below, Respondents.

230 W.Va. 201

737 S.E.2d 229

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Defendant Below, Petitioner

v.Jill F. SCHATKEN and Steven N. Schatken, Plaintiffs Below, Respondents.

No. 11–1142.

Supreme Court of Appeals of West Virginia.

Submitted Oct. 23, 2012.

Decided Nov. 16, 2012.

Syllabus by the Court

1. “ ‘ “The interpretation of an insurance contract[ ] ... is a legal determination that, like a lower court's grant of summary judgement [sic], shall be reviewed de novo on appeal.” Syllabus point 2, Riffe v. Home Finders Associates, Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999).’ Syllabus point 2, Horace Mann Insurance Co. v. Adkins, 215 W.Va. 297, 599 S.E.2d 720 (2004).” Syl. Pt. 3, in part, Certain Underwriters at Lloyd's, London v. Pinnoak Resources, LLC, 223 W.Va. 336, 674 S.E.2d 197 (2008).

2. “[T]he amount of such tortfeasor's motor vehicle liability insurance coverage actually available to the injured person in question is to be deducted from the total amount of damages sustained by the injured person, and the insurer providing underinsured motorist coverage is liable for the remainder of the damages, but not to exceed the coverage limits.” Syl. Pt. 4, in part, State Automobile Mut. Ins. Co. v. Youler, 183 W.Va. 556, 396 S.E.2d 737 (1990).

3. “It is generally recognized that there can be only one recovery of damages for one wrong or injury. Double recovery of damages is not permitted; the law does not permit a double satisfaction for a single injury.” Syl. Pt. 7, in part, Harless v. First Nat'l Bank in Fairmont, 169 W.Va. 673, 289 S.E.2d 692 (1982).

4. A “non-duplication” of benefits provision in an underinsured motorist policy which permits an insurer to reduce an insured's damages by amounts received under medical payments coverage does not violate the “no sums payable” language of W. Va.Code § 33–6–31(b), insofar as it does not serve to reduce the underinsured motorist coverage available under the insured's policy.

5. “ ‘Courts are not constituted for the purpose of making advisory decrees or resolving academic disputes. The pleadings and evidence must present a claim of legal right asserted by one party and denied by the other before jurisdiction of a suit may be taken.’ Mainella v. Board of Trustees of Policemen's Pension or Relief Fund of City of Fairmont, 126 W.Va. 183, 185–86, 27 S.E.2d 486, 487–88 (1943).” Syl. Pt. 2, Harshbarger v. Gainer, 184 W.Va. 656, 403 S.E.2d 399 (1991).

6. “The rights, status, and legal relations of parties to a proceeding under the Uniform Declaratory Judgments Act depend upon facts existing at the time the proceeding is commenced. Future and contingent events will not be considered.” Syl. Pt. 2, Town of South Charleston v. Board of Ed. of Kanawha County, 132 W.Va. 77, 50 S.E.2d 880 (1948).

E. Kay Fuller, Esq., Michael M. Stevens, Esq., Martin & Seibert, L.C., Martinsburg, WV, for Petitioner.

Laura C. Davis, Esq., Stephen G. Skinner, Esq., Andrew C. Skinner, Esq., Skinner Law Firm, Charles Town, WV, for Respondents.

J. Michael Benninger, Benninger Law, Morgantown, WV, Christopher M. Turak, Gold Khourey & Turak, LC, Moundsville, WV, for Amicus Curiae, West Virginia Association of Justice's.

WORKMAN, Justice:

Petitioner/defendant below, State Farm Mutual Automobile Insurance Company (hereinafter “petitioner” or “State Farm”), appeals the July 7, 2011, order of the Circuit Court of Jefferson County, granting partial summary judgment to respondents/plaintiffs below, Jill and Steven Schatken, (hereinafter “respondents” or “Schatkens”) on their declaratory judgment action. The circuit court found that both the “non-duplication” provision and reimbursement provision in State Farm's underinsured motorist policy violate W. Va.Code § 33–6–31(b) (Repl. Vol. 2011). For the reasons set forth more fully below, we reverse the circuit court's order awarding partial summary judgment.

I. FACTS AND PROCEDURAL HISTORY

On December 19, 2008, the Schatkens were injured when their vehicle was struck by a vehicle driven by 19–year–old Ida Trayter. Trayter was insured by Nationwide and carried $25,000.00 in liability coverage. Respondent Jill Schatken incurred $29,368.47 in medical expenses as a result of her injuries. The Schatkens were insured by State Farm and carried a policy which contained $5,000.00 in medical payments coverage, as well as $250,000.00 in underinsured motorist coverage. Nationwide tendered its liability limits of $25,000.00, to which State Farm consented and waived subrogation. The Schatkens exhausted the $5,000.00 in medical payments coverage in partial payment of Jill Schatken's medical bills.

Settlement negotiations then began between the Schatkens' counsel and State Farm for Jill Schatken's underinsured motorist claim.¹ At some point during negotiations, the claims adjuster advised the Schatkens' counsel that she was basing her settlement offers on the “net” value of the claim after reduction of the $25,000.00 liability limits and $5,000.00 medical payments already received by Ms. Schatken from the full settlement value, pursuant to the “non-duplication” provision in the State Farm policy, which provides:

The most we will pay for all damage resulting from bodily injury to any one insured injured in any one accident, including all damages sustained by other insureds as a result of that bodily injury is the lesser of:

1. the limit shown under “Each Person”; or

2. the amount of all damages resulting from that bodily injury, reduced by:

* * *

c. any damages that have already been paid or that are payable as expenses under Medical Payments Coverage of this policy, the medical payments coverage of any other policy, or other similar vehicle insurance.

(second emphasis added). The Schatkens took the position that such “reduction” of the offers made by State Farm by the amounts paid under the medical payments coverage violated W. Va.Code § 33–6–31(b), which states, in part:

That such policy or contract shall provide an option to the insured with appropriately adjusted premiums to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured or underinsured motor vehicle up to an amount not less than limits of bodily injury liability and property damage liability insurance purchased by the insured without setoff against the insured's policy or any other policy.... No sums payable as a result of underinsured motorists' coverage shall be reduced by payments made under the insured's policy or any other policy.

(emphasis added). As a result, the Schatkens filed suit against State Farm, its claims adjuster, and the adjuster's unidentified supervisors, alleging personal injury of Jill Schatken and loss of consortium of Steven Schatken pursuant to the underinsured motorist coverage, breach of contract and bad faith, violation of the Unfair Trade Practices Act, and seeking a declaratory judgment that the non-duplication provision in State Farm's policy violated W. Va.Code § 33–6–31(b).

Shortly after filing suit, the Schatkens moved for partial summary judgment on their declaratory judgment action regarding the non-duplication provision. In their response in opposition to the Schatkens' motion for summary judgment, State Farm mentioned as part of its “Statement of Facts” that the policy also contained “reimbursement” language as well. The reimbursement provision states:

12. Our Right to Recover Our Payments

* * *

b. Reimbursement.

If we make payment under this policy and the person to or for whom we make payment recovers or has recovered from another party, then that person must:

(1) hold in trust for us the proceeds of any recovery; and

(2) reimburse us to the extent of our payment.

After citing this provision, State Farm stated in its brief that “because Mrs. Schatken received payment from Ida Traytor and her liability insurer, Nationwide, she is required to reimburse State Farm the $5,000.00 it paid in medical payments coverage.” As a result of this statement in State Farm's brief, in their reply, the Schatkens argued that the reimbursement provision likewise violated W. Va.Code § 33–6–31(b) and that they were entitled to declaratory relief as to that provision as well. State Farm moved to strike that portion of the Schatkens' brief seeking declaratory relief as to the validity of the reimbursement language, arguing that the reimbursement provision was not originally plead in the declaratory judgment complaint and had not been invoked as to Jill Schatken's claim. The Schatkens responded that by virtue of the statement in their brief, State Farm had made the reimbursement provision an issue.

The circuit court granted partial summary judgment as to the non-duplication provision, denied the motion to strike, and established a new briefing schedule for the reimbursement issue. State Farm argued that the reimbursement provision had been specifically upheld in Ferrell v. Nationwide Mut. Ins. Co., 217 W.Va. 243, 617 S.E.2d 790 (2005), but alternatively argued: 1) that the provision did not constitute a “justiciable issue” in the instant action as it had not been invoked; and 2) it did not intend to invoke the reimbursement provision in this case. The circuit court found that the reimbursement provision was invoked by State Farm, creating a justiciable claim, and granted summary judgment to the Schatkens, finding that the reimbursement provision likewise violated W. Va.Code § 33–6–31(b).

As to the circuit court's rationale, it found that the non-duplication provision violated the plain language of W Va.Code § 33–6–31(b) which prohibits reduction of “sums payable” under underinsured motorist coverage by payments made under the insured's policy. In particular, the court concluded that the non-duplication provision “seeks to reduce available underinsured motorist benefits by Plaintiffs' medical payments coverage” and therefore violates the public policy of full compensation articulated in several...