SER Universal Underwriters Insurance v. Hon. Patrick N. Wilson, Judge
239 W. Va. 338
| W. Va. | 2017Background
- May 30, 2014 motor vehicle collision: 19‑year‑old Salvatore Cava (driving a company‑owned 2014 RAV4 with his father’s permission) collided with David Allen, who later died; suit followed.
- Dan’s Car World (owner of RAV4) purchased a Zurich policy with Part 500 (garage liability, $300,000) and Part 980 (commercial umbrella, $5,000,000); Zurich provided defense but disputed umbrella coverage.
- Plaintiff (Administratrix Varvel) sued Salvatore and Dan’s Car World and filed a declaratory judgment action against Zurich to determine coverage; Zurich defended the insureds and itself, retaining separate counsel where conflicts existed.
- Cava defendants (Salvatore, Daniel A. Cava, Dan’s Car World) filed cross‑claims against Zurich alleging breach of contract, common‑law bad faith, UTPA violations, and wrongful litigation conduct based on Zurich’s defense strategy and refusal to pay beyond $300,000.
- Zurich moved to dismiss cross‑claims as premature; circuit court denied dismissal and bifurcated the bad‑faith claims; Zurich petitioned this Court for a writ of prohibition.
- Supreme Court of Appeals held the Cava defendants’ cross‑claims are not ripe (indemnity/damages contingent on declaratory judgment and underlying verdict), so the circuit court lacked subject‑matter jurisdiction and the writ was granted; cross‑claims dismissed without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insureds may pursue first‑party bad‑faith/UTPA and related claims while insurer continues to defend and indemnity is unresolved | Cavas: their insurer’s defense strategy and alleged undermining caused foreseeable harm and justify immediate bad‑faith and UTPA claims | Zurich: duty to indemnify has not ripened, no excess judgment or accrued damages, claims are premature; intervention is interlocutory | Claims are unripe; no subject‑matter jurisdiction; dismissal without prejudice required |
| Whether litigation conduct allegations defeat insurer’s defense privilege or create immediate recoverable harm | Cavas: wrongful litigation conduct (e.g., delaying inspections, contesting employment status) caused litigation‑related injury | Zurich: defending itself and retaining independent counsel is proper; defense counsel’s independent professional judgment cannot be imputed to insurer | Court did not adjudicate privilege issue; held premature and unnecessary to reach because claims are unripe |
| Whether a writ of prohibition is appropriate to prevent further proceedings on cross‑claims | Zurich: extraordinary relief warranted because circuit court lacks jurisdiction and continued proceedings could prejudice Zurich’s defense in declaratory action | Cavas: writ is an improper interlocutory appeal; ordinary appellate process suffices | Writ granted as moulded because circuit court lacked jurisdiction due to ripeness defect |
| Whether emotional‑distress and litigation‑strain damages suffice to make claim ripe absent indemnity/excess judgment | Cavas: litigation stress and related harms are compensable and justify immediate suit | Zurich: litigation‑induced stress is generally not recoverable and economic damages are speculative until indemnity/excess judgment | Court found such damages speculative and insufficient to establish ripeness; claims premature |
Key Cases Cited
- State ex rel. Peacher v. Sencindiver, 160 W.Va. 314 (1977) (writ of prohibition standard: issues of jurisdiction vs. abuse of discretion)
- State ex rel. York v. W.Va. Office of Disciplinary Counsel, 231 W.Va. 183 (2013) (application of prohibition standard)
- In re Boggs' Estate, 135 W.Va. 288 (1951) (court may take notice of lack of jurisdiction at any stage)
- Christian v. Sizemore, 181 W.Va. 628 (1989) (injured plaintiff may bring declaratory action against insurer to resolve coverage before judgment)
- State ex rel. Allstate v. Gaughan, 203 W.Va. 358 (1998) (distinguishing first‑ and third‑party bad‑faith actions)
- Light v. Allstate Ins. Co., 203 W.Va. 27 (1998) (bifurcation/stay discretion in first‑party bad‑faith suits)
- Barefield v. DPIC Cos., Inc., 215 W.Va. 544 (2004) (insurer cannot be liable for independent defense counsel’s tactical choices absent ratification)
- State Farm Mut. Auto. Ins. Co. v. Schatken, 230 W.Va. 201 (2012) (ripeness doctrine prevents adjudication of contingent, speculative claims)