751 S.E.2d 735
W. Va.2013Background
- Wayne and Mary Lemasters sued their insurer, Nationwide, after a 2004 car accident and disputed UIM (underinsured motorist) benefits; they settled the UIM claim for the $50,000 policy limit in 2007.
- After settlement, the Lemasterses pursued a bad-faith/UTPA claim against Nationwide; a jury returned verdicts awarding compensatory and punitive damages on the bad-faith/UTPA claims.
- The circuit court awarded $30,108.71 in attorney fees, costs, and interest under Hayseeds/Marshall for substantially prevailing on the underlying UIM contract claim.
- The Lemasterses sought an additional ~$953,087 in fees and costs tied to prosecuting the Jenkins-type/UTPA (bad-faith) action and other theories (Sally-Mike/equitable fees, vexatious conduct, automatic fee award when punitive damages found).
- The circuit court denied fees for the Jenkins/UTPA litigation, declined to extend Hayseeds damages through the bad-faith litigation, rejected a Sally-Mike award based on Nationwide’s conduct, and declined to adopt an automatic-fees rule tied to punitive damages.
- The Supreme Court affirmed, holding the trial court did not err in denying the additional fee awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs can recover attorney fees for litigating the Jenkins/UTPA bad-faith claim separate from Hayseeds recovery | Lemasters: McCormick and Jenkins allow recovery of fees "for vindicating" a Jenkins-type claim, so fees for prosecuting the UTPA action should be awarded | Nationwide: Hayseeds (and controlling precedent) limit recoverable fees to those necessary to obtain the underlying contract proceeds; no authority for extending Hayseeds fees through separate bad-faith litigation | Court: Affirmed trial court — no authority to award the requested fees for the Jenkins/UTPA litigation; McCormick not read to expand fee entitlement beyond established precedent (Dodrill) |
| Whether Hayseeds damages continue to accrue through related bad-faith litigation | Lemasters: Fees should include continued work to collect Hayseeds damages; insurer should not benefit from forcing continued expense on insured | Nationwide: Hayseeds fees are limited to services necessary to obtain payment of insurance proceeds and do not continue through separate bad-faith litigation | Court: Denied—no jurisprudential support that Hayseeds damages continue through bad-faith litigation; trial court appropriately awarded fees tied to obtaining the UIM payment only |
| Whether equitable fees (Sally-Mike) are warranted because Nationwide acted vexatiously/bad-faith during litigation | Lemasters: Nationwide’s conduct (discovery abuses, attacks on counsel, jury findings of malice/UTPA general business practice) justifies equitable fees under Sally-Mike | Nationwide: Conduct did not rise to the high standard required for equitable fee-shifting | Court: Affirmed discretionary denial—trial court, having presided over proceedings, did not abuse discretion in finding conduct not warranting extraordinary equitable relief |
| Whether a bright-line rule should require fee awards whenever punitive damages or a finding of actual malice are made | Lemasters: Court should adopt automatic rule awarding attorney fees when punitive damages/actual malice are found | Nationwide: Opposes automatic rule; fee awards should remain discretionary and fact-specific | Court: Rejected bright-line rule; affirmed discretion of trial courts and cited Midkiff rejecting automatic linkage between punitive damages and fee awards |
Key Cases Cited
- Hayseeds, Inc. v. State Farm Fire & Cas., 177 W.Va. 323, 352 S.E.2d 73 (1986) (awarding reasonable attorneys’ fees and delay damages where policyholder substantially prevails in contract-based insurance claims)
- Jenkins v. J.C. Penney Cas. Ins., 167 W.Va. 597, 280 S.E.2d 252 (1981) (recognized implied private cause of action under UTPA; requires showing of a general business practice)
- McCormick v. Allstate Ins. Co., 197 W.Va. 415, 475 S.E.2d 507 (1996) (distinguished Hayseeds and Jenkins claims; allowed Jenkins claims to proceed even when plaintiff did not substantially prevail in underlying action)
- Dodrill v. Nationwide Mut. Ins. Co., 201 W.Va. 1, 491 S.E.2d 1 (1996) (clarified recovery of attorney fees related to collection from tortfeasor/underlying action and discussed scope of fee recoveries)
- Marshall v. Saseen, 192 W.Va. 94, 450 S.E.2d 791 (1994) (Hayseeds rule applied specifically to uninsured/underinsured motorist claims)
- Sally-Mike Properties v. Yokum, 179 W.Va. 48, 365 S.E.2d 246 (1986) (equitable authority to award prevailing litigant reasonable attorney’s fees when losing party acted in bad faith, vexatiously, wantonly, or oppressively)
- Midkiff v. Huntington Nat’l Bank W. Va., 204 W.Va. 18, 511 S.E.2d 129 (1998) (rejected automatic awarding of attorney’s fees whenever punitive damages are awarded)