Strahin v. Sullivan

Citation647 S.E.2d 765
Decision Date21 February 2007
Docket NumberNo. 33091.,33091.
CourtSupreme Court of West Virginia
PartiesDaniel R. STRAHIN, Plaintiff Below, Appellant v. Earl SULLIVAN and Farmers & Mechanics Mutual Insurance Company, Defendants Below, Appellees.
Dissenting Opinion of Justice Starcher June 29, 2007.

Dissenting Opinion of Justice Albright July 12, 2007.

Concurring Opinion of Justice Davis July 19, 2007.

Concurring Opinion of Justice Benjamin July 25, 2007.

Syllabus by the Court

1. "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." Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).

2. "A circuit court's entry of summary judgment is reviewed de novo." Syllabus Point 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

3. "Where the issue on an appeal from the circuit court is clearly a question of law . . . we apply a de novo standard of review." Syllabus Point 1, in part, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).

4. "Wherever there is a failure on the part of an insurer to settle within policy limits where there exists the opportunity to settle and where such settlement within policy limits would release the insured from any and all personal liability, the insurer has prima facie failed to act in its insured's best interest and such failure to so settle prima facie constitutes bad faith toward its insured." Syllabus Point 2, Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990).

5. "It will be the insurer's burden to prove by clear and convincing evidence that it attempted in good faith to negotiate a settlement, that any failure to enter into a settlement where the opportunity to do so existed was based on reasonable and substantial grounds, and that it accorded the interests and rights of the insured at least as great a respect as its own." Syllabus Point 3, Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990).

6. "In assessing whether an insurer is liable to its insured for personal liability in excess of policy limits, the proper test to be applied is whether the reasonably prudent insurer would have refused to settle within policy limits under the facts and circumstances, bearing in mind always its duty of good faith and fair dealing with the insured. Further, in determining whether the efforts of the insurer to reach settlement and to secure a release for its insured as to personal liability are reasonable, the trial court should consider whether there was appropriate investigation and evaluation of the claim based upon objective and cogent evidence; whether the insurer had a reasonable basis to conclude that there was a genuine and substantial issue as to liability of its insured; and whether there was potential for substantial recovery of an excess verdict against its insured. Not one of these factors may be considered to the exclusion of the others." Syllabus Point 4, Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990).

7. "In the matters of negligence, liability attaches to a wrongdoer . . . because of a breach of duty which results in an injury to others." Syllabus Point 2, in part, Sewell v. Gregory, 179 W.Va. 585, 371 S.E.2d 82 (1988).

8. "`A chose in action may be validly assigned.' Syl. pt. 2, Hartman v. Corpening, 116 W.Va. 31, 178 S.E. 430 (1935)." Syllabus Point 3, Boarman v. Boarman, 210 W.Va. 155, 556 S.E.2d 800 (2001).

9. In order for an insured or an assignee of an insured to recover the amount of a verdict in excess of the applicable insurance policy limits from an insurer pursuant to this Court's decision in Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990), the insured must be actually exposed to personal liability in excess of the policy limits at the time the excess verdict is rendered.

10. "Summary 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." Syllabus Point 4, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

Paul T. Farrell, Jr., Esq., Greene, Ketchum, Bailey, Walker, Farrell & Tweel, Huntington, Stephen D. Annand, Esq., The Cochran Firm, Washington, D.C., Leonard T. Kelley, Esq., Kelley Legal Services, Philippi, for Daniel R. Strahin.

James A. Varner, Sr., Esq., Tiffany R. Durst, Esq., Debra Tedeschi Herron, Esq., McNeer, Highland, McMunn & Varner, L.C., Clarksburg, for Farmers & Mechanics Mut. Ins. Co.

MAYNARD, Justice.

This case is before this Court for a second time. The initial complaint was filed in February 1999 after Daniel R. Strahin, the appellant and plaintiff below, was shot in the arm by Robert Cleavenger in 1998 while he was a guest on property owned by Earl Sullivan. In Strahin v. Cleavenger, 216 W.Va. 175, 603 S.E.2d 197 (2004) (hereinafter "Strahin I"), this Court upheld a jury verdict in favor of Mr. Strahin against Mr. Cleavenger and Mr. Sullivan in the amount of $1,060,556.00. Following the jury verdict but prior to the issuance of this Court's opinion in Strahin I, Mr. Strahin amended his complaint to assert, inter alia, a claim against Farmers & Mechanics Mutual Insurance Company (hereinafter "Farmers & Mechanics"), the appellee and defendant below, pursuant to this Court's decision in Shamblin v. Nationwide Mutual Insurance Co., 183 W.Va. 585, 396 S.E.2d 766 (1990), which had been assigned to him by Mr. Sullivan before trial. At the time of the incident, Mr. Sullivan had a homeowners' policy issued by Farmers & Mechanics with liability limits of $100,000.00. Farmers & Mechanics answered the amended complaint and moved for summary judgment with regard to the Shamblin claim. The circuit court granted the motion for summary judgment by order dated June 17, 2005, which Mr. Strahin now appeals.

Mr. Strahin contends that the circuit court erred by finding that his Shamblin claim was barred because Mr. Sullivan's personal assets were not at risk as a result of a Covenant Not to Execute signed by Mr. Strahin and Mr. Sullivan prior to trial. This Court has before it the petition for appeal, the designated record, and the briefs and argument of counsel. For the reasons set forth below, the final order is affirmed.

I. FACTS

In February 1999, Daniel R. Strahin and his parents, James and Willa Strahin, filed suit against Robert Cleavenger, his parents, Larry and Mary Cleavenger, and Earl Sullivan as a result of a shooting incident which occurred in Barbour County on May 31, 1998. Daniel Strahin was shot in the arm by Robert Cleavenger while he was a passenger in a car owned and operated by Earl Sullivan. Daniel Strahin's sister, Marissa Strahin, was also a passenger in the car. Ms. Strahin was living with Mr. Sullivan but was pregnant with Mr. Cleavenger's child. Mr. Cleavenger was jealous of the relationship between Ms. Strahin and Mr. Sullivan, and there had been previous physical confrontations between Mr. Cleavenger and Mr. Sullivan. Mr. Cleavenger shot at the car with a high-powered rifle as it was leaving property owned by Mr. Sullivan.1

The complaint filed by the Strahins alleged, inter alia, that Mr. Cleavenger's actions were foreseeable by Mr. Sullivan, and therefore, Daniel Strahin's injuries were proximately caused by Mr. Sullivan's negligence. As noted above, at the time of the incident, Mr. Sullivan was insured by a homeowners' policy issued by Farmers & Mechanics with policy limits of $100,000.00. On April 5, 2000, and September 19, 2000, the Strahins, by counsel, made formal demands for the policy limits in exchange for a full and final release of Mr. Sullivan. Farmers & Mechanics refused both offers of settlement.

Prior to trial, the Strahins, Mr. Sullivan and Mr. Sullivan's automobile insurer, Erie Insurance Company, entered into an Assignment and Covenant Not to Execute (hereinafter referred to as "Assignment" or "Covenant"). Pursuant to the Assignment, the Strahins received $25,000.00 which represented the limits of the bodily injury liability coverage under the Erie policy of insurance issued to Mr. Sullivan. In addition, Mr. Sullivan assigned to

Plaintiffs, their heirs, all representatives and assigns, all of his rights, presently existing or which might hereafter arise, whether in contract or tort, to seek compensation indemnity, defense, compensatory damages, punitive damages, relating to or arising from the Farmers & Mechanics Policy, including but not limited to all claims based on unfair settlement practices, Bad Faith, or refusal to provide defense and/or indemnity.

In exchange, the Assignment stated that,

Plaintiffs, their heirs, legal representatives and assigns, promise, covenant and agree to not execute upon any of the personal assets of Earl Sullivan to recover payments to satisfy any judgment which may hereinafter be acquired by them against Earl Sullivan; and Plaintiffs release and discharge for themselves, their heirs, legal representatives and assigns, Erie Insurance Company and its assigns, from any and all further liability or obligations, claims and demands, or executions whatsoever, in law or in equity, which Plaintiffs ever had or might now have by virtue of any after acquired judgment against Earl Sullivan.

The Assignment further provided that, "Any judgment which may hereinafter be acquired by plaintiffs against Earl Sullivan, shall not be at any time recordable by any party nor at any time become recordable in any county clerk's office in West Virginia or in any other place where it would become a public document[.]" The Assignment was approved by the circuit court by order...

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