State v. Nibert

• Decision Date: 13 February 2017
• Docket Number: No. 16-0884,16-0884
• Court: West Virginia Supreme Court
• Parties: STATE OF WEST VIRGINIA EX REL. ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Petitioner v. THE HONORABLE DAVID W. NIBERT AND TAMARA HARDMAN, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF EMILY ELIZABETH-ANNE HARDMAN, Respondents

STATE OF WEST VIRGINIA EX REL.ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Petitioner v. THE HONORABLE DAVID W. NIBERT AND TAMARA HARDMAN,INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OFEMILY ELIZABETH-ANNE HARDMAN, Respondents

No. 16-0884

STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS

February 13, 2017

MEMORANDUM DECISION

This is a writ of prohibition proceeding filed under the original jurisdiction of this Court by Petitioner, Erie Insurance Property & Casualty Company (hereinafter "Erie"), through counsel, James D. Lamp and Matthew J. Perry. Erie seeks to have this Court prohibit enforcement of an order by the Circuit Court of Jackson County that granted class action certification to the Respondents, Tamara Hardman individually and as administratrix of the estate of Emily Elizabeth-Anne Hardman (hereinafter "the Respondents"). The Respondents, through counsel, Brent K. Kesner and Ernest G. Hentschel, contend that the writ should be denied because class action certification met all the requirements of Rule 23 of the West Virginia Rules of Civil procedure.

This Court has considered the parties' briefs, the appendix submitted, and the parties' oral arguments. Upon consideration of the standard of review, the Court grants the writ of prohibition. In view of prior precedent on the dispositive issue presented in this case, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate Procedure.

The underlying facts of this case are not complicated. It appears that on or about October 1, 2006, Emily Elizabeth-Anne Hardman was killed in an automobile accident in Jackson County, West Virginia. Emily was a passenger in a car driven by Samuel Postlethwaite, when the car struck a solid rock embankment.¹ Emily's estate recovered the policy limits from Mr. Postlethwaite's insurer, Nationwide Insurance Company. The estate sought underinsured motorist coverage from a policy maintained by Emily's parents with Erie. That policy provided underinsured motorist coverage in the amounts of $20,000 per person; $40,000 per occurrence; and $10,000 for property damage. However, the estate sought the liability limits under the policy on the theory that Erie's underinsured motorist coverage election/rejection forms did not comply with the West Virginia Insurance Commissioner's form. The liability limits under the policy were $100,000 per person; $300,000 per occurrence; and $50,000 for property damage. Erie refused to tender the liability limits. Instead, at some point, Erie tendered the per person underinsured motorist limit under the policy, $20,000, to "Tamara Hardman, on behalf of the Estate of Emily . . . by way of interpleader."

The Respondents eventually filed a declaratory judgment action against Erie seeking a determination of the amount of benefits available under the policy.² The complaint initially was amended to add claims for breach of contract, bad faith, and unfair settlement practices. A second amendment to the complaint was made that included allegations in support of a class action involving the use of election/rejection forms for underinsured motorist coverage that did not comply with the Insurance Commissioner's form. The circuit court eventually certified a class in an order entered on November 12, 2010. Erie filed a petition for a writ of prohibition with this Court to prohibit enforcement of the class action certification order. This Court issued an unpublished Memorandum Decision on June 14, 2011, granting the writ as moulded, which required the circuit court to enter an order certifying the class in compliance with the findings required by our precedents. While the case was pending in the circuit court, it appears the Respondents filed a third amended complaint on June 8, 2016. The third amended complaint set out a class action claim "seeking declaratory relief as to the validity of . . . Erie's selection/rejection forms." On July 13, 2016, the circuit court entered an order certifying a class "who were insureds under any Erie policy and who were injured by or suffered property damage caused by an act of an underinsured motorist, and who did not receive underinsured motorists coverage benefits at least equal to the liability limits stated in the policy declarations[.]"³ Erie thereafter filed the instant proceeding seeking to prohibit enforcement of the class action certification order.

This Court has "previously recognized that '[w]rits of prohibition offer a procedure . . . preferable to an appeal for challenging an improvident award of class standing.'" State of West Virginia ex rel. Chemtall Inc. v. Madden, 216 W. Va. 443, 450, 607 S.E.2d 772, 779 (2004) (quoting McFoy v. Amerigas, Inc., 170 W. Va. 526, 532, 295 S.E.2d 16, 22 (1982)). It also has been held that "[t]his Court will review a circuit court's order granting or denying a motion for class certification pursuant to Rule 23 of the West Virginia Rules of Civil Procedure [1998] under an abuse of discretion standard." Syl. pt. 1, In re West Virginia Rezulin Litig., 214 W. Va. 52, 585 S.E.2d 52 (2003).⁴

The standard for certifying a class action has been succinctly set out in Syllabus point 8 of Rezulin as follows:

Before certifying a class under Rule 23 of the West Virginia Rules of Civil Procedure [1998], a circuit court must determine that the party seeking class certification has satisfied all four prerequisites contained in Rule 23(a)-numerosity, commonality, typicality, and adequacy of representation-and has satisfied one of the three subdivisions of Rule 23(b). As long as these prerequisites to class certification are met, a case shouldbe allowed to proceed on behalf of the class proposed by the party.

214 W. Va. 52, 585 S.E.2d 52 (emphasis added). Erie contends that the Respondents failed to satisfy the commonality and typicality requirements of Rule 23(a) and the predominance requirement of Rule 23(b). We need only address the circuit court's findings with respect to the commonality requirement of Rule 23(a).⁵ This is because "[i]f only one prerequisite is not met, class certification is not appropriate." Jones v. Am. Gen. Life & Accident Ins. Co., 213 F.R.D. 689, 699 (S.D. Ga. 2002). See Wiener v. Dannon Co., 255 F.R.D. 658, 664 (C.D. Cal. 2009) ("A court should not grant class certification unless it is satisfied, after a rigorous analysis, that all of the requirements of Rule 23(a) are met." (internal quotations and citation omitted)); McCall v. Drive Fin. Servs., L.P., 236 F.R.D. 246, 249 n.3 (E.D. Pa. 2006) ("[T]he court must be satisfied that the plaintiffs satisfy all four prerequisites of Rule 23(a)."); Noerr v. Greenwood, No. 14320-NC, 2002 WL 31720734, at *2 (Del. Ch. Nov. 22, 2002) ("The plaintiff must satisfy all four requirements of Rule 23(a)."); Rene ex rel. Rene v. Reed, 726 N.E.2d 808, 816 (Ind. Ct. App. 2000) ("To obtain class certification, the students must satisfy all of the requirements of Trial Rule 23(A)."); Jacobsen v. Allstate Ins. Co., 310 P.3d 452, 460 (Mont. 2013) ("[c]lass certification requires that the plaintiff satisfy all four requirements of Rule 23(a)."); In re South Dakota Microsoft Antitrust Litig., 657 N.W.2d 668, 671 (S.D. 2003) ("In order to obtain certification of a class, the plaintiffs must satisfy all the requirements of SDCL 15-6-23 (FRCP 23(a)).");.

To begin we will note that the Respondents' third amended complaint appears to have been motivated by our decision in Thomas v. McDermitt, 232 W. Va. 159, 751 S.E.2d 264 (2013).⁶ The decision in Thomas presented a certified question wherein we were asked todetermine what was the effect of an insurer's failure to use the Insurance Commissioner's underinsured motorist coverage forms pursuant to W. Va. Code § 33-6-31d. We answered the certified question in Syllabus point 12 of Thomas, 232 W. Va. 159, 751 S.E.2d 264, as follows:

An insurance company's failure to use the West Virginia Insurance Commissioner's prescribed forms pursuant to West Virginia Code § 33-6-31d (2011) results in the loss of the statutory presumption and a reversion to the standards enunciated in Bias v. Nationwide Mutual Insurance Co., 179 W. Va. 125, 365 S.E.2d 789 (1987).⁷

(Footnote added). See State ex rel. State Farm Mut. Auto. Ins. Co. v. Cramer, 237 W. Va. 60, ___ n.7, 785 S.E.2d 257, 263 n.7 (2016) ("We made clear in Thomas that an insurer must use the Commissioner's form in order to gain the benefit of the statutory presumption that its offer of uninsured/underinsured coverage was effective, and that the insured's rejection of such coverage was knowing and intelligent.").⁸

The circuit court relied on the holding in Thomas in determining that the Respondents satisfied the commonality requirement of Rule 23(a):

18. The Court finds that there are numerous common questions of law and fact present in this case amongst all of the proposed class members with respect to the validity of Erie's selection/rejection form. Specifically, Erie is alleged to have used the same defective underinsured motorist coverage selection/rejection form with respect to all members of the proposed class and its use of the form presents the same factual scenario in the case of each. Both the Plaintiff and the proposed class must prove that Erie violated W. Va. Code § 33-6-31d by failing to use the selection/rejection form promulgated by the Insurance Commissioner to offer underinsured motorists coverage to its customers and, therefore is not entitled to a statutory presumption under Thomas. The same proof is applicable to the claims of all of the putative class members since it is alleged that Erie used the same form throughout West Virginia over a period of many years (at least the entire time period encompassed by the class). Moreover, the effect of such proof would be the same with respect to each claim since the failure to make a commercially reasonable offer of underinsured motorists coverage using the Commissioner's form in each case would result in the loss of the presumption in

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