Thomas v. William Ray Mcdermitt & State Farm Mut. Auto. Ins. Co.

• Citation: 751 S.E.2d 264,232 W.Va. 159
• Decision Date: 26 November 2013
• Docket Number: No. 12–0688.,12–0688.
• Parties: Daniel W. THOMAS, Angela Y. Thomas, individually and Angela Y. Thomas, as mother and next friend of Luke D. Thomas, an infant, Petitioners v. William Ray McDERMITT and State Farm Mutual Automobile Insurance Company, Respondents.
• Court: Supreme Court of West Virginia

232 W.Va. 159

751 S.E.2d 264

Daniel W. THOMAS, Angela Y. Thomas, individually and Angela Y. Thomas, as mother and next friend of Luke D. Thomas, an infant, Petitioners

v.William Ray McDERMITT and State Farm Mutual Automobile Insurance Company, Respondents.

No. 12–0688.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 11, 2013.

Decided Oct. 7, 2013.

Dissenting Opinion of Justice Davis

Nov. 26, 2013.

Syllabus by the Court

1. “The appellate standard of review of questions of law answered and certified by a circuit court is de novo.” Syl. Pt. 1, Gallapoo v. Wal–Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996).

2. “Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.” Syl. Pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).

3. “Where an offer of optional coverage is required by statute, the insurer has the burden of proving that an effective offer was made, and that any rejection of said offer by the insured was knowing and informed.” Syl. Pt. 1, Bias v. Nationwide Mut. Ins. Co., 179 W.Va. 125, 365 S.E.2d 789 (1987).

4. “When an insurer is required by statute to offer optional coverage, it is included in the policy by operation of law when the insurer fails to prove an effective offer and a knowing and intelligent rejection by the insured.” Syl. Pt. 2, Bias v. Nationwide Mut. Ins. Co., 179 W.Va. 125, 365 S.E.2d 789 (1987).

5. “ ‘ “Where a statute is of doubtful meaning, the contemporaneous construction placed thereon by the officers of government charged with its execution is entitled to great weight, and will not be disregarded or overthrown unless it is clear that such construction is erroneous.” Syllabus point 7, Evans v. Hutchinson, , 214 S.E.2d 453 (1975).’ Syllabus point 8, Smith v. State Workmen's Compensation Commissioner, 159 W.Va. 108, 219 S.E.2d 361 (1975).” Syl. Pt. 3, State ex rel. ACF Indus., Inc. v. Vieweg, 204 W.Va. 525, 514 S.E.2d 176 (1999).

6. “Interpretations of statutes by bodies charged with their administration are given great weight unless clearly erroneous.” Syl. Pt. 4, Sec. Nat'l Bank & Trust Co. v. First W. Va. Bancorp, Inc., 166 W.Va. 775, 277 S.E.2d 613 (1981).

7. “A cardinal rule of statutory construction is that significance and effect must, if possible, be given to every section, clause, word or part of the statute.” Syl. Pt. 3, Meadows v. Wal–Mart Stores, Inc., 207 W.Va. 203, 530 S.E.2d 676 (1999).

8. “ ‘The common law, if not repugnant of the Constitution of this State, continues as the law of this State unless it is altered or changed by the Legislature. Article VIII, Section 21 of the Constitution of West Virginia; Chapter 2, Article 1, Section 1, of the Code of West Virginia.’ Syllabus Point 3, Seagraves v. Legg, 147 W.Va. 331, 127 S.E.2d 605 (1962).” Syl. Pt. 3, State ex rel. Van Nguyen v. Berger, 199 W.Va. 71, 483 S.E.2d 71 (1996).

9. “ ‘ “The common law is not to be construed as altered or changed by statute, unless legislative intent to do so be plainly manifested.” Shifflette v. Lilly, 130 W.Va. 297, 43 S.E.2d 289 [ (1947) ].’ Syllabus Point 4, Seagraves v. Legg, 147 W.Va. 331, 127 S.E.2d 605 (1962).” Syl. Pt. 4, State ex rel. Van Nguyen v. Berger, 199 W.Va. 71, 483 S.E.2d 71 (1996).

10. “ ‘It is well established that the word “shall,” in the absence of language in the statute showing a contrary intent on the part of the Legislature, should be afforded a mandatory connotation.’ Syllabus Point 1, Nelson v. West Virginia Public Employees Insurance Board, 171 W.Va. 445, 300 S.E.2d 86 (1982).” Syl. Pt. 1, E.H. v. Matin, 201 W.Va. 463, 498 S.E.2d 35 (1997).

11. “As a general rule, where a statute directs certain proceedings to be done in a certain way, and the form does not appear essential to the judicial mind, the law will be regarded as directory, and the proceedings under it will be held valid, though the command of the statute as to form has not been strictly obeyed, the manner not being the essence of the thing to be done.” Syl. Pt. 11, Calwell's Ex'r v. Prindle's Adm'r, 19 W.Va. 604 (1882).

12. 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).

Brent K. Kesner, Esq., Kesner & Kesner, PLLC, Charleston, WV, Anthony J. Majestro, Esq., Powell & Majestro, PLLC, Charleston, WV, for Petitioners.

R. Carter Elkins, Esq., Campbell Woods, PLLC, Huntington, WV, for Respondents.

Andrew R. Pauley, Esq., Office of the West Virginia Insurance Commissioner, Charleston, WV, for Amicus Curiae.

Michael D. Riley, West Virginia Insurance Commissioner, Jill C. Rice, Esq., Mychal S. Schulz, Esq., Dinsmore & Shohl, LLP, Charleston, WV, for Amicus Curiae West Virginia Insurance Federation.

WORKMAN, Justice:

The Circuit Court of Mason County, West Virginia has certified the following question to this Court relating to a civil action filed as a result of injuries sustained in an automobile accident:

Whether an insurance company's failure to use the West Virginia Insurance Commissioner's prescribed forms pursuant to W. Va.Code § 33–6–31d results in underinsured motorists coverage being added to the policy as a matter of law in the amount the insurer was required to offer or merely results in the loss of the statutory presumption and a reversion to the lower standards expressed in Bias, which existed at common law prior to the enactment of W. Va.Code § 33–6–31d [2011].

The circuit court answered the certified question by finding “that an insurance company's failure to use the West Virginia Insurance Commissioner's prescribed forms pursuant to W. Va.Code § 33–6–31d results in underinsured motorists coverage being added to the policy as a matter of law....” Based upon this Court's thorough evaluation of the briefs, arguments of the parties, ¹ the record provided to this Court, and applicable precedent, this Court answers the certified question 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).

I. Factual and Procedural History

On May 4, 2007, Angela Thomas visited an agent for State Farm Mutual Automobile Insurance Company (hereinafter “State Farm”) in Point Pleasant, West Virginia. Mrs. Thomas purchased a liability policy from State Farm which provided insurance coverage limits of $100,000 per person, $300,000 per occurrence for bodily injuries. The agent also offered Ms. Thomas underinsured motorist (hereinafter “UIM”) coverage and explained the purpose of UIM coverage, the limits available for purchase, and the cost of each available limit.² Mrs. Thomas declined to purchase UIM coverage and signed a form indicating (1) she read and understood the notice regarding coverage, (2) she understood UIM coverage, and (3) she was exercising her right to reject such coverage.

On August 16, 2009, Mrs. Thomas, her husband Daniel Thomas, and their son, Luke Thomas, were involved in a motor vehicle accident in which William Ray McDermitt negligently crossed the center line and collided with the Thomas vehicle. All three members of the Thomas family sustained serious injuries in the accident. Because the injuries sustained by the Thomas family exceeded the available liability coverage under Mr. McDermitt's automobile liability policy, the Thomas family (hereinafter “petitioners”) filed an underinsured motorist claim with their insurer, State Farm, despite Mrs. Thomas' purported rejection of such coverage in May 2007.

Based upon the absence of underinsurance coverage in the petitioners' policy, State Farm denied coverage for this automobile accident. In August 2011, the petitioners filed a civil action against Mr. McDermitt and State Farm, alleging that: (1) they were injured as a result of Mr. McDermitt's negligence; (2) Mr. McDermitt was an underinsured motorist; (3) the State Farm policy must be reformed to include UIM coverage; and (4) State Farm's refusal to provide UIM benefits constituted a breach of the insurance contract. The petitioners asserted that a “knowing and intelligent” waiver of underinsurance coverage had not occurred.

On April 24, 2012, the circuit court granted the petitioners' motion for partial summary judgment, concluding that State Farm's UIM selection/rejection form did not precisely comply with the Insurance Commissioner's prescribed form. The parties agree that State Farm's underinsurance offer/rejection form, signed by Mrs. Thomas, did include all the elements required by the Insurance Commissioner. The only difference between State Farm's form and the Insurance Commissioner's prescribed form is State Farm's inclusion of additional elements that arguably render the form difficult to understand and more complicated than necessary. The forms for rejection of underinsured and uninsured motorist coverage signed by Mrs. Thomas, for instance, contain seven columns of information concerning pricing of coverage in differing amounts to be selected by the insured. The Insurance Commissioner's prescribed forms contain only four columns of optional coverage choices available to an insured.³

The circuit court certified the above-quoted question to this Court pursuant to West Virginia Code § 58–5–2 (2012).⁴ The circuit court answered the certified question as follows: “An insurance company's failure to use the West Virginia Insurance Commissioner's prescribed forms pursuant to W. Va.Code § 33–6–31d results in underinsured motorists coverage being added to the policy as a matter of law....”

II....