The Town of Anmoore v. Scottsdale Indem. Co.

• Decision Date: 09 August 2022
• Docket Number: Civil Action 1:21CV142
• Parties: THE TOWN OF ANMOORE, WEST VIRGINIA, Plaintiff, v. SCOTTSDALE INDEMNITY COMPANY, Defendant.
• Court: U.S. District Court — Northern District of West Virginia

THE TOWN OF ANMOORE, WEST VIRGINIA, Plaintiff,
v.
SCOTTSDALE INDEMNITY COMPANY, Defendant.

Civil Action No. 1:21CV142

United States District Court, N.D. West Virginia

August 9, 2022

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

IRENE M. KEELEY UNITED STATES DISTRICT JUDGE

Pending before the Court is the defendant's motion for summary judgment on the plaintiff's breach of contract claim (Dkt. No. 40). For the reasons that follow, the Court GRANTS the defendant's motion.

I. Background

For purposes of summary judgment, courts “view the evidence in the light most favorable to the non-moving party” and refrain from “weighing the evidence or making credibility determinations.” Lee v. Town of Seaboard, 863 F.3d 323, 327 (4th Cir. 2017) (quoting Jacobs v. N.C. Admin. Off. of the Cts., 780 F.3d 562, 568-69 (4th Cir. 2015)). Here, the underlying facts of the case are largely undisputed.

In the fall of 2018, pursuant to a fraud examination, the Office of the State Auditor discovered that, between

1

September 1, 2011, and October 22, 2013, two utility clerks employed by the plaintiff, the Town of Anmoore, West Virginia (“Anmoore”), embezzled at least $145,385.54 (Dkt. No. 1-2 at 18-22). Anmoore subsequently filed a claim for the entire loss under its public entity insurance policy issued by the defendant, Scottsdale Indemnity Company (“Scottsdale”), which included coverage for employee dishonesty (Dkt. No. 40-6). In response, Scottsdale paid the 2012-2013 policy limit of $50,000, less a $250 deductible (Dkt. No. 40-8 at 1).

Anmoore thereafter requested that Scottsdale evaluate whether the embezzlement losses that had occurred during the 2011-2012 policy period also should be covered (Dkt. No. 40-7).^[1] Following that evaluation, Scottsdale denied coverage for the 2011-2012 losses after determining that multiple acts of embezzlement constitute one occurrence and policy limits do not cumulate year to year (Dkt. No. 40-8).

After Scottsdale's denial, Anmoore filed this lawsuit alleging (1) breach of contract/breach of the contractual duty of

2

good faith and fair dealing, (2) insurance bad faith, and (3) vicarious liability for the acts of adjustors and agents (Dkt. No. 1-2 at 1-12). Scottsdale subsequently moved for summary judgment on Anmoore's breach of contract claim (Dkt. No. 40). At the Court's direction, the parties filed simultaneous opening and response briefs (Dkt. Nos. 41, 42, 43, 44).

Scottsdale argues that there is no coverage under its policy for acts committed during 2011-2012 policy period, echoing its previously stated reasons for the denial of coverage (Dkt. Nos. 41, 43). Anmoore contends that Scottsdale's policy is ambiguous regarding coverage for occurrences that span multiple policy years (Dkt. Nos. 42, 44). The parties' arguments raise two related legal issues: (1) whether the insurance coverage at issue constitutes one continuous policy or multiple separate policies; and (2) whether the definition of occurrence in the policies is ambiguous.

II. Standard of Review

Under Fed.R.Civ.P. 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “A dispute is genuine if a reasonable jury could

3

return a verdict for the nonmoving party,” and “[a] fact is material if it might affect the outcome of the suit under the governing law.” Jacobs, 780 F.3d at 568 (quoting 10A Charles A. Wright et al., Federal Practice & Procedure § 2728 (3d ed. 1998)).

Courts may grant summary judgment where the nonmoving party fails to make a showing sufficient to establish the existence of an essential element of his claim or defense upon which he bears the burden of proof. Celotex v. Catrett, 477 U.S. 317, 323 (1986). The existence of a mere scintilla of evidence supporting the nonmovant's position is insufficient to create a genuine issue; rather, there must be evidence on which a jury could reasonably find for the nonmovant. Anderson v. Liberty Lobby, 477 U.S. 242, 252 (1986).

III. Discussion

Under West Virginia law,^[2] the specific wording of an insurance policy determines whether it provides coverage for a particular claim. See Beckley Mech., Inc. v. Erie Ins. Prop. & Cas. Co., 374 Fed.Appx. 381, 383 (4th Cir. 2010); Cherrington v. Erie Ins. Prop. & Cas. Co.,

4

745 S.E.2d 508, 524 (W.Va. 2013). Indeed, “[l]anguage in an insurance policy should be given its plain, ordinary meaning.” Syl. Pt. 8, Cherrington, 745 S.E.2d at 511 (internal quotations and citations omitted). Courts should not endeavor to interpret policy provisions unless they are unclear or ambiguous. Id. Instead, courts must give terms and provisions their meaning in the “plain, ordinary[,] and popular sense, not in a strained or philosophical sense.” Polan v. Travelers Ins. Co., 192 S.E.2d 481, 484 (W.Va. 1972); see also Syl. Pt. 9, Cherrington, 745 S.E.2d at 511.

A. One Continuous Policy

Before addressing whether Anmoore can recover under its insurance policy for acts of embezzlement committed prior to the 2012-2013 policy period, the Court must first determine whether the parties intended Anmoore's public entity insurance policy to be one continuous policy or multiple separate policies. The parties do not specifically argue this point, but Scottsdale frames the policy as one continuous policy (Dkt. No. 41 at 3), while Anmoore posits the policy is in fact one of multiple separate policies (Dkt. No. 42 at 3-3-4).

5

The question whether the public entity policy is one continuous policy or multiple separate policies appears to be one of first impression under West Virginia law. Couch on Insurance provides helpful guidance on this question, however, stating that “[w]hether the renewal of a policy constitutes a new and independent contract or continuation of the original contract primarily depends upon the intention of the parties as ascertained from the instrument itself.” 12 Couch on Ins. § 29:33 (3d ed. 2022); see Auto Club Prop. Cas. Ins. Co. v. Moser, 874 S.E.2d 295 (W.Va. 2022) (favorably citing Couch on Insurance). “A change in policy limits does not preclude a finding that the new policy is a renewal policy, nor does a difference in number, and premium and necessity of a new physical examination, where parties have agreed that the renewal is a continuation.” Id. § 29:35.

Here, it is clear from the policy language that the parties intended the public entity insurance policy to be one continuous policy. The declaration page of the 2012-2013 policy form expressly states that it is a renewal of PEI0005657, the policy number on the 2011-2012 policy form (Dkt. No. 40-4 at 6). This pattern continues back to the 2006-2007 policy form where the declaration

6

page states that the policy is new (Dkt. Nos. 42-1 at 6, 42-2 at 6, 42-3 at 6, 42-4 at 6, 42-5 at 6, 42-6 at 6). Moreover, the employee dishonesty coverage at issue in this case has remained the same since the 2006-2007 policy (Dkt. Nos. 42-1 at 59-60, 422 at 59-60, 42-3 at 59-60, 42-4 at 62-63, 42-5 at 59-60, 42-6 at 57-58, 42-7 at 59-60). And Anmoore has not pointed to any language, nor is this Court aware of any, indicating that previous policies were cancelled or terminated.

Anmoore asserts that each policy form lists a different policy number, policy premium, West Virginia insurance surcharge, and policy term (Dkt. No. 42 at 3-4). But “a difference in [policy] number, and premium” “does not preclude a finding that the new policy is a renewal policy . . . where parties have agreed that the renewal is a continuation.” 12 Couch on Ins. § 29:35. And despite minor differences year to year, the evidence establishes that the parties intended the policy renewals to be a continuation of Anmoore's employee dishonesty coverage.

Accordingly, there is no genuine dispute of material fact that the public entity insurance policy at issue was one continuous policy.

7

B. Definition of Occurrence

The Court must...