State v. Honorable Judge Tera Salango, No. 21-0169

CourtSupreme Court of West Virginia
Writing for the CourtWALKER, Justice
Citation866 S.E.2d 74
Decision Date16 November 2021
Docket NumberNo. 21-0169
Parties STATE of West Virginia EX REL. WEST VIRGINIA MUTUAL INSURANCE COMPANY, Petitioner v. The Honorable Judge Tera SALANGO, Judge of the Circuit Court of Kanawha County, and Michael Covelli, M.D., Respondents

866 S.E.2d 74

STATE of West Virginia EX REL. WEST VIRGINIA MUTUAL INSURANCE COMPANY, Petitioner
v.
The Honorable Judge Tera SALANGO, Judge of the Circuit Court of Kanawha County, and Michael Covelli, M.D., Respondents

No. 21-0169

Supreme Court of Appeals of West Virginia.

Submitted: October 6, 2021
Filed: November 16, 2021


Michael J. Farrell, Esq., J. Ben Shepard, Esq., Farrell, White & Legg PLLC, Huntington, West Virginia, Counsel for Petitioner.

Scott H. Kaminski, Esq., Ray, Winton & Kelley, PLLC, Charleston, West Virginia, Counsel for Respondent Covelli.

WALKER, Justice:

A jury awarded Dominique Adkins $5,788,977 on her medical malpractice claim against Michael Covelli, M.D.—well above the limits of his medical malpractice insurance. But Dr. Covelli's insurer, West Virginia Mutual Insurance Company (Mutual), settled Ms. Adkins's suit within policy limits before the circuit court reduced the verdict to judgment. After observing publicity of Ms. Adkins's large jury award, a second patient sued Dr. Covelli for malpractice. Mutual settled that claim within policy limits, too. Dr. Covelli then sued Mutual for common law bad faith under Shamblin v. Nationwide Mutual Insurance Company .1 After the circuit court denied Mutual's motion for summary judgment on Dr. Covelli's claims, Mutual petitioned this Court for extraordinary relief from the circuit court's order.

866 S.E.2d 77

Mutual has demonstrated that the writ of prohibition it seeks is appropriate under the third factor of State ex rel. Hoover v. Berger .2 A critical element of a Shamblin "excess judgment"3 claim—personal liability in excess of policy limits—is indisputably missing in this case; Dr. Covelli faces no personal liability on either patient's medical malpractice claims. And, the circuit court erroneously disregarded State ex rel. State Auto Property Insurance Companies v. Stucky4 and allowed Dr. Covelli's claims under the Unfair Trade Practices Act (UTPA)5 to proceed. For those reasons, we grant the writ.

I. FACTUAL AND PROCEDURAL BACKGROUND

Ms. Adkins sued Dr. Covelli for medical malpractice that occurred while THS Physician Partners, Inc. (THS) employed Dr. Covelli. Mutual provided group insurance coverage to THS and covered Dr. Covelli for up to $2 million for each medical malpractice claim. Mutual hired defense counsel and authorized settlement of the claim for up to $150,000, but Ms. Adkins demanded a minimum of $300,000. The case went to trial after the parties failed to settle.

Dr. Covelli sent Mutual two letters before trial demanding that Mutual settle within the $2 million policy limit. But Mutual proceeded to trial, and the jury returned a verdict of almost $5.8 million against Dr. Covelli. Local newspapers, the Charleston Gazette and West Virginia Record , published articles that mentioned the verdict amount. Mutual settled for $950,000 several weeks after the verdict but before the circuit court entered the judgment order.

Shelby Pomeroy, another former patient of Dr. Covelli during his time with THS, learned about the verdict from the publicity, retained Ms. Adkins's trial counsel, and sued Dr. Covelli for medical malpractice. Mutual received Ms. Pomeroy's notice of claim on October 13, 2017, and Dr. Covelli sent Mutual two letters demanding that Mutual settle the suit within policy limits. Mutual received the first letter on November 14, 2017, and the second on January 5, 2018. Ms. Pomeroy filed suit on January 8, 2018, and Mutual settled for $300,000 just over one month later on February 21, 2018.

Although both suits were settled within policy limits, Dr. Covelli produced an expert report by a West Virginia University economics professor, Clifford Hawley, Ph.D., estimating that Mutual caused Dr. Covelli between approximately $1.2 and $1.5 million in actual damages by failing to settle the suits sooner. Dr. Covelli alleges that reporting the $1.25 million in total settlements to the National Practitioner's Data Bank and the adverse publicity from the jury verdict in Ms. Adkins's case caused the damages.

Dr. Covelli alleges, specifically, that part of the damages occurred when he withdrew a work application from Charleston Area Medical Center (CAMC) after CAMC learned of Ms. Pomeroy's then-pending claim. Mutual argues that Dr. Covelli withdrew the application when CAMC learned he withheld the claim from his application. But Dr. Covelli insists that he forgot to report it. The circuit court found that it did not matter why Dr. Covelli withdrew the application, because "had [Mutual] settled the Adkins claim prior to the public verdict ... there would have been no Pomeroy claim for Dr. Covelli to report to CAMC."

Dr. Covelli alleged two counts in his complaint against Mutual. In Count I, he asserted Shamblin common law bad faith claims for Mutual's alleged failure to settle both Ms. Adkins's and Ms. Pomeroy's suits. In Count II, he alleged that Mutual violated certain portions of the UTPA.6 Dr. Covelli sought compensatory damages for, among other things, his alleged "net economic losses," annoyance,

866 S.E.2d 78

inconvenience, and emotional distress. He also requested punitive damages. Mutual filed its writ of prohibition after the circuit court denied its motion for summary judgment on both counts. Mutual argues that the circuit court clearly erred by permitting 1) Dr. Covelli's Shamblin claims when he had no excess judgment to recover, 2) Dr. Covelli to move forward under a bad faith theory since Mutual acted reasonably, and 3) Dr. Covelli's UTPA claims since Stucky clarified that he lacks standing under the provisions he alleged.

II. STANDARD OF REVIEW

When we take up a petition for a writ of prohibition, it is well settled that

[i]n 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.[7 ]

"In determining the third factor, the existence of clear error as a matter of law, we will employ a de novo standard of review, as in matters in which purely legal issues are at issue."8

III. ANALYSIS

Mutual's petition arises from the denial of a motion for summary judgment. We have previously found that prohibition may lie in the context of a denial of a motion for summary judgment

to correct substantial, clear-cut legal errors plainly in contravention of a clear statutory, constitutional, or common law mandate which may be resolved independently of any disputed facts and only in cases where there is a high probability that the trial will be completely reversed if the error is not corrected in advance.[9 ]

Likewise, we acknowledge that "[a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law."10 But "[s]ummary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove."11 In observing the standard for a writ of prohibition in conjunction with that of summary judgment, we find that no factual inquiry is necessary to answer either question germane to our determination of whether a writ of prohibition is appropriate in this case. It may be resolved on two legal inquiries: whether a Shamblin claim exists when a plaintiff has no personal liability

866 S.E.2d 79

for an excess judgment and whether an insured has standing to sue for violations of sections 33-11-4(9)(b)-(d) and (f) of the UTPA.12

A. Existence of a Shamblin Claim Without an Excess Judgment to Recover

Shamblin presented an issue of first impression in West Virginia, and this Court used the case to establish the "standard of proof ... applicable in future actions against insurers by their insureds for failure to settle ... claims against them within policy limits."13

In Shamblin , Nationwide Insurance insured Shamblin's business vehicles.14 Employees of Shamblin, driving cars insured under the Nationwide policy, were involved in a...

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