778 S.E.2d 677
W. Va.2015Background
- Nationwide insured Hlad under a commercial general liability (CGL) policy; Nelsons sued Hlad for breach of contract, torts, and negligent construction.
- Nelsons allege Hlad withdrew $257,200 from their construction loan, failed to pay subs, lied about funds, and performed defective workmanship.
- Underlying amended complaint includes nine counts: breach of contract, breach of good faith, defamation, unfair/deceptive acts, fraud, conversion, unconscionability, injunctive relief, and negligence (defective workmanship).
- Circuit court held defective workmanship could be an occurrence and Nationwide had a duty to defend and indemnify for all damages; Nationwide sought writ of prohibition.
- This Court held Nationwide has no duty to defend or indemnify; only two counts triggered policy coverage (defective workmanship and defamation), and both were precluded by exclusions; writ granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does defective workmanship constitute an occurrence under Coverage A? | Nationwide: defective workmanship is an occurrence; insurer must indemnify for damages arising from it. | Hlad: only certain claims may trigger coverage, and eight non-defective-work claims do not. | Only defective-work claim is an occurrence; exclusions bar coverage |
| Does defamation trigger Coverage B for personal and advertising injury? | Nationwide: defamation can be covered under Coverage B. | Hlad: defamation claims should be excluded if based on knowing falsity. | Defamation claim is precluded by exclusion for publication with knowledge of falsity |
| Do exclusions preclude coverage for the two triggering counts? | Nationwide: exclusions may preclude coverage depending on the facts. | Hlad: exclusions apply to bar coverage for the asserted damages. | Both triggering counts are precluded by clear exclusions; no duty to defend or indemnify |
Key Cases Cited
- Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714 (1970) (plain meaning controls when policy terms are clear)
- Columbia Cas. Co. v. Westfield Ins. Co., 217 W.Va. 250, 617 S.E.2d 797 (2005) (perspective of insured governs accident determination)
- Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W.Va. 470, 745 S.E.2d 508 (2013) (defective workmanship can be an occurrence; pure workers excluded)
- Bruceton Bank v. U.S. Fid. & Guar. Ins. Co., 199 W.Va. 548, 486 S.E.2d 19 (1997) (duty to defend depends on allegations reasonably susceptible to coverage)
- State Auto Mut. Ins. Co. v. Alpha Eng’g Serv., Inc., 208 W.Va. 713, 542 S.E.2d 876 (2000) (selection of claims determines exclusions applicability)
- Butts v. Royal Vendors, Inc., 202 W.Va. 448, 504 S.E.2d 911 (1998) (defamation insulation under policy)