*1
ERIE INSURANCE PROPERTY AND COMPANY, Plaintiff
CASUALTY
below, Appellee, PIZZA, JTS, INC.,
STAGE SHOW a West
Virginia corporation, Defendant
below, Appellee, Harvey,
John Paul Defendant
below, Appellant.
No. 28482.
Supreme Appeals Court of Virginia.
West March
Submitted 2001. July
Decided *3 Robinette,
Jeffrey Esq., L. Robinette Law Office, Morgantown, Appellee Erie Insur- Property Casualty Company. ance II, Curry, Esq., Curry, Arden J. Arden J. Schwirian, Esq., Esq., Pauley, David K. Cur- Vanderford, Charleston, ry, Sturgeon & Appellant Harvey. Paul John Mann, Mann, Esq., Lynch, Kimberly G. Bibb, Berkley, Appellee Stage Smith & Pizza, JTS, Show Inc.
STARCHER, Justice. appeal
In this from the Circuit Court of Raleigh County, are asked to we examine declaratory judgment finding that there was injured liability coverage no “employers’ liability” insur- at work under employer. policy purchased ance As below, forth we reverse the circuit court’s set declaratory judgment.
I. Background Facts & 6, 1997, February appellant On John Paul employed by Harvey was the defendant be- Pizza, JTS, low, Stage (“Stage Show Inc. Pizza”),1 Raleigh County, West Vir- proper spelling rec- 1. We are unclear as to the Show Pizza. At various times employment, ap- any obligation you for which or course of his ginia. Harvey was involved an accident pellant insurer become liable under spilled appel- grease compensation, unemployment hot where lant, injuries. causing him serious compensation, disability benefits law similar law. subsequently sued negligence, al- Pizza for common law subsequently filed a motion for sum- leging compen- it had failed mary judgment seeking to avoid its obli- premiums, and had therefore lost sation gations upon based Virginia’s immunity provided West work- exclusion. compensation laws. The also 31, 2000, January In an order dated alleged Virginia’s in violation of West granted circuit court Erie’s motion for sum- *4 statute, W.Va.Code, intention” “deliberate mary judgment. The circuit court concluded [1994], Stage Pizza had inten- 23-4-2 Show appellant’s “deliberate intention” specific a tionally exposed appellant to of action and his action working condition which violated both unsafe “obligation[s] Stage for which” be industry safety generally accepted standards “may Pizza Show become liable under provisions of specific the United States compensation” law. Erie Occupational Safety and Health Administra- therefore from its released regulations. tion’s Stage contract with Piz- the insurance Show injuries, At the time of the za. Stage poli- Pizza a was insured under Show appeals now the circuit cy by appellee, Erie issued Insurance court’s order. (“Erie”). Casualty Property Company Stage to Pizza a com- Erie had sold Show general policy mercial insurance II.
that,
parties agree, specifically excluded
Standard
Review
by
coverage
employees.2
from
lawsuits filed
of
policy
sepa-
a
also contained
We review de novo the circuit
liability”
“employers’
rate
enti-
endorsement
declaratory judgment
court’s
interpret
order
“Employers Liability' Stop Gap
tled
Cover-
—
ing
policy.
previ
Erie’s insurance
We have
$1,000,000
age”
per person
with limits
ously
entry
stated
circuit court’s
per
heading
accident. Under
“Our
novo,
declaratory judgment
a
is reviewed de
Promise,”
provides
Erie’s
that:
endorsement
principal purpose
declaratory
of a
since the
damages
bodily
We will
because
judgment
legal questions.
action is to resolve
injury
your employees
to
for which
Syllabus
3,
Amick,
Point
Cox v.
195 W.Va.
you responsible
recovery
per-
is
holds
608,
course,
On June the instant Erie filed the determination of an issue declaratory judgment against Stage action issue be tried and determined a appellant Harvey, seeking Pizza Show judge jury in the same manner as issues declaration that Erie had no to of fact are tried and civil determined other provide Stage coverage a defense or to Any actions. [1941]. appellant. Pizza for filed of fact determinations made the circuit action, support In argued of its Erie that an jury reaching court or its ultimate resolu employers’ liability policy exclusion pursuant clearly tion are reviewed to erro precluded coverage. That exclusion states: Cox, 612, 195 neous standard. W.Va. at 466 We do not cover: at 463. Show,” times, "Stage [B]odily injury employees anyone pro- ord it is called and at other we "Stageshow.” arising employment by anyone it is referred to as tect out of their anyone protect protect we for which we Policy" Package
2. The "Ultraflex issued Erie held liable as an or in other capacityf.] excluded for: In “pay this case we are asked to review ised to Show Pizza that it would interpretation bodily your court’s of an insur because of the circuit hand, employees” yet Syllabus contract. Point of ance the other Erie ex- — Riffe Associates, Inc., bodily injuries coverage any Finders 205 W.Va. cludes from Home (1999) yre 216, employees “in S.E.2d 313 stated the course contract, interpretation anof employment” “[t]he their covered with including question of whether con Pizza. 23-4-1 [1989].3 legal ambiguous, appellant argues tract is poli- determination The that under Erie’s that, grant summary cy, claiming like lower court’s provide employers is, judgement, employee injuries, shall be reviewed de novo on with but appeal.” proper through cov policy,” “Determination an exclusion “buried erage always excluding employee injuries contract when facts from cov- question dispute erage. are not of law.” Co.,
Murray v.
Farm Fire &
State
Cas.
contends
therefore
(cita
509 S.E.2d
Erie’s insurance
should be construed
omitted).
tions
provide coverage
injuries
compensable through
which are
causes of
III.
action outside of the workers’
*5
system namely,
injuries
those
caused
—
Discussion
employers
immunity
who have lost their
be-
In the instant case we are
asked
they
pay premiums
failed to
into the
interpret
policy
an
con
insurance
exclusion
compensation system,
workers’
in-
those
“employers’ liability”
in an
policy.
tained
juries
by employers
caused
who lose their
carefully any policy
“[W]e scrutinize more
pursuant
to the “deliberate inten-
language
excluding
an
has the effect of
provisions
tion”
of
23-4-2.
from coverage.”
insured
v. Home
Riffe
Inc.,
states,
Associates,
222,
many
companies
In
205
insurance
Finders
W.Va. at
types
at
offer businesses three
of
Syllabus
517 S.E.2d
319. As we held in
insurance cov
erage:
general liability coverage;
5 of
commercial
Point
National Mut. Ins. Co. v. McMa
Sons, Inc.,
734,
compensation coverage;
“stop
177
workers’
hon &
W.Va.
356 S.E.2d
(1987),
gap” employers’ liability coverage. A
policy
in
com
language
“[w]here
488
the
general
liability policy protects
mercial
exclusionary,
strictly
volved
will be
con
against
liability
kinds of
against
in
business
numerous
strued
the insurer
order that the
claims,
generally accepted
it is
purpose
providing indemnity
de
but
the
not be
policy
provide coverage
policy provision
large
standard
does not
for
feated.” Where a
will
brought by
employee against
ly nullify
purpose of
claim
an
indemnifying
the
insured,
employer arising out of
his or her
the em
application
provision
of that
will
severely
ployment.
restricted.
v. Home Find
Riffe
Associates, Inc.,
222,
workers’
statute
the em
accident, casualty
through industrial
or dis-
subject
ployee is not
to the workers’ com
ease,
possess
the common characteris-
pensation
Generally, these
kinds
law.
two
providing
compensation
tic
regard-
of
mutually
Most
are
exclusive.
less of fault and
accordance with a definite
employers’ liability policies
limit
upon
impairment
based
loss or
schedule
for which the
is held
insured
wage-earning power.”
1
worker’s
Couch
employer.
liable as an
(3d Ed.1997).
§
on
1:36
Insurance
Dairy Delivery
Sentry
v.
Ins.
Producers
Co.
occasionally
courts are
Federal
asked to
Co.,
558, 565,
903,
41
Cal.Rptr.
Cal.3d
if a lawsuit arises “under
determine
(citations
(1986)
920,
718 P.2d
omit-
compensation
of a
law”
state
Jolla,
ted).
also,
Beach
La
& Tennis
if
order to ascertain
the court can exercise
Club,
Co.,
Indemnity
jurisdiction.
Inc. v.
9 diversity
Industrial
In Arthur v. E.I. Du-
(4th
Co.,
Cal.Rptr.2d
All Act, is, therefore, Compensation men’s pay premiums into the to subscribe to and fund, deprived of which he ... and who of certain defenses advantage prior premiums could have taken pay to and into do not subscribe However, passage act. of that even since compensation fund as re- the workers’ act, passage by chapter, having ... or so of that one who does not quired elected, in advantage in take of it is not liable dam- shall be default subscribed ages every sustained his em- ... payment in of same shall be liable ployés. basis of such an action is ... all to them negligence, negligence injuries and unless some personal sus- suffered reason employer traced to the there is no cause of employment course of caused tained act, negligence may wrongful neglect action. This be some de- by the or default by any working place, fect in or be some improper doing personal representative method of the work employee or injured thereof, employé’s not avail him- some fellow ser- such defendant shall vants, but unless there is some failure following common-law defenses: self of the rule; upon part of the to do some- of the fellow-servant The defense risk; assumption thing employé’s which should do for or the he defense safety, contributory negligence; act the commission of some defense him shall not avail himself of de- or his servants results further injury, recovery. can no negligence question there fense that the pre- that of duties are someone whose Piz- The record indicates scribed statute.... za was default of its specifically reserves to fund for failure to plaintiff premiums in- a common-law the date the repeatedly jured.7 Accordingly, appears of action. we have held 7. The record pensation Division issued a "Notice of Default behind on its workers’ Workers' month, Pizza, and Termination of on delinquent However, her A claimant is entitled to recover benefits from the Fund. ployee may only benefits. To be entitled to benefits from the its account. Fund February employment show he or she has sustained a regardless stating *8 in the course of and and at the time of the W.Va.Code,23-2-5(g) on on its workers’ It still recover workers' suggests April that the apparently paid 6, 1997, for a West Coverage” business was employer’s compensation premiums Stage Fund, compensation Stage Virginia employer. plaintiff's Show Pizza was a few dollars [1995]. Show Pizza fell Workers’ status claimant Stage from his or default personal account. accident with the Com- need pensation night midnight of your end of the the Workers’ default ployer that declaration is stated, gations has been declared to be in default of that its occurs.” 23-2-6 and resolve that We have W.Va.Code,23-2-5(d) failure to cure the of the last "in default.” The statute states that by employer’s account Syllabus Accordingly, Division the Workers’ plainly delinquency, 23-2-8] shall quarter delinquent 02/01/96. Compensation day binding upon fund, Point of State ex rel. Frazier held that when an liability for which the of the month Your default is a result of "in delinquency. [1995] and the choose to Compensation then the Workers’ Com- be default, beginning duties to the work- retroactive to Stage [under specifies Division declared trial courts. We place following Show ...” delinquency W.Va.Code, employer that if an Division, the em- fails to Pizza, "[t]he mid- obli- at Show Pizza lost its under the ex- fault on its obli- remedy W.Va.Code, 23-2-6; provision, clusive gations, against employer to a suit for common-law dam- prevented asserting from certain common- ages; W.Va.Code, 23-2-8, and under could W.Va.Code, by 23-2-8, law defenses is not an not assert the common-law defenses of com- employer of an under a workers’ parative negligence, risk, assumption of the purposes law for interpret- and the fellow-servant doctrine. ing an policy.8 We therefore be- lieve that the circuit court in finding erred Simply put, is seek there was no for this ing to recover damages through common-law action. negligence common-law action. do not We believe that a negligence cause of ac brought second cause of tion, merely permitted because it as a alleges Stage result of defaulting Show Pizza’s on its subjected Pizza can for violat the workers’ fund, ing provisions of our is a “deliberate intention” arising cause of action under West statute, W.Va.Code, Virginia’s Compensation 23-4-2. In a Act. A deliberate action, cause of action intention if an employ employee is able to employee injured er employer establish that course acted with con scious, and as a employment, subjective result of his that is not deliberation and intention immunity provisions barred ally exposed specific to a un Code, 23-2-6 employer’s because of the condition,9 de- working safe employer then the ment.”) delinquency not resolved in accordance with the or 5(h)(1) time of the accident. shall not law, comply appear 2-5(d), action which has accrued as a result the instant a footnote to its order that: In that: All ments were ule standing za remained in time of the supplied in a sioner’s is to seek review of the appellate process same absence of a final sioner er is in pensation Compensation Act. Stageshow Hrko, light death which occurred Under binding upon not in directly indications, from our [1995] issue, subsequent proceeding with the of the clear 203 W.Va. has made a final default, deprive any ruling may of [1990], as a to this W.Va.Code, good standing Commissioner, this Pizza worked out a and the apparently accident. with the Fund to ("The provisions subscribing employer. in default under the Workers' terms of the reading then the article, Show Pizza court, good standing a trial the circuit court indicated in ruling by language established not be Fund, individual of employer’s 23— Although premium are that or 510 S.E.2d also, W.Va.Code, deposition of the record it would ruling Commissioner’s during any court. The with the Fund at the 2—5(d) a trial court subsequent collaterally at least ruling through always timely paid, was, the Workers’ Com- repayment agree- considering the that an if the Commis- payment with the Work- Stageshow of this section proper [1986], as a matter of stay anof W.Va.Code, during transcripts period failure to Commis- cause of attacked employ- remedy (1998), sched- in the injury ruling 23-2- good pay- find Piz- 23- of 8. Our decision is ployer ways tions. in the instant ployers' liability policy the for the well both the business and its wise ers' the into the Workers' er's failure to company’s provision decision as cluding paying past native to ums. An condone 3-24e [1999] suit 5a(a) seizure of business expeditious chase an could a short term existence Compensation face substantial sanctions for such conduct—in- W.Va.Code, In such However, parties. employer's agree, penalties, comply obviously concerns do not acted with concerns the Workers’ employers' liability policy. (c) [1995]; paying premiums that it would be sanctioning situations, employer’s —an with workers’ we believe 23-4-2(c)(2) employee may forego complying Fund. While the conduct. W.Va.Code, are contend, *9 company subjective Compensation workers' laws not, and have not been raised could, property, Compensation due implicated by and criminal might as a less an insurance failure to appear owners, W.Va.Code, premiums plus sets forth two different conceivably, compensation regula- compensation premi- 23-2-5(0(1); against public policy with a view towards purchase deliberation and in- would instead believe it would be prove support into the Workers’ significant public to be expensive Fund, way, with our work- for an pay premiums an insurance Division, penalties Court that an em- these and insure implicated of an em- meant company or other- read our employ- interest a civil public might 23-2- alter- pur- 61- judicial compensation immunity “promote prompt resolution of the its workers’ loses damages subjected to a suit for of a suit ... or is may question be whether not Compensation Act “had prohibited by immunity” as if the Workers’ the created in 23-4-2(b) W.Va.Code, W.VaCode, not been enacted.” Id. 23-2-6. added): (with emphasis states our attention to Bell v. Vecel Erie directs any employ- injury If or death results Inc., Grogan, lio & of his intention or from the deliberate ee support argument as for its injury produce or employer to such her an obli that a deliberate intention action is widow, widower, death, the employee, imposed by gation a workers’ employee has dependent child or of Bell, In statute. we were asked to examine a chapter, and privilege to take under this question employee conflicts of where against employ- a has cause of employer alleged Virginia of a West that he enacted, er, chapter had not been this if deliberately intentionally had been in over the amount excess jured by employer Maryland. his Our chapter. this received or receivable under intention stat examination the deliberate statute, enacting By intention the deliberate integral determining ute Bell was 4—2(c) W.Va.Code, spe Legislature 23— rights adju employee’s be whether the to create cifically that it “intended a stated Virginia Maryland or dicated under West for loss of that immuni legislative standard interpretation Our law. of the deliberate 23-2-6. To ty” established in the Bell case intention statute centered Legislatm-e accomplish goal, the set question, upon a conflicts of law and not its mandatory specific elements forth “more upon impact for deliber concept system law tort than the common against employers. ate intention claims willful, and reckless and standard of wanton Bell, that a misconduct,” we ruled deliberate inten used in standards conduct right tion cause of action is a held each employer if statute has to determine W.Va.Code, employee Virginia to the West Work with intention. acted deliberate 23-4-2(c). creating specific a Act. concluded that By standard We statute, sought Legislature’s Legislature under the enactment of (B) tent, thereby causing subjective employer to lose That the had a real- W.Va.Code, 23-4-2(c)(2) statutory immunity. appreciation ization and an of the existence of states, part: specific working such unsafe condition and of provided high strong from suit degree probabil- of risk and the [W.Va.Code, may only lost if 23-4-6] ity injury presented or death serious such liability person against or whom condition; working specific unsafe with "deliberate intention”. asserted acted This (C) specific working That such unsafe condi- only requirement if: be satisfied safety a tion was a violation of statute, state or federal (i) person proved It is that such or regulation, rule or whether cited or with is asserted acted a whom not, commonly accepted or a and well- consciously, subjectively deliberately industry safety known standard within or specific produce formed result intention statute, rule, employer, business of such which injury employee. death to an This stan- or regulation specifically applica- or standard actual, requires showing specific dard a of an working particular ble to work condi- by allegation intent proof be satisfied or involved, statute, tion as contrasted with a (A) produces which conduct result rule, regulation generally requir- or standard intended; (B) specifically that was not conduct ing workplaces, equipment working safe or negligence, which gross no matter how constitutes conditions; willful, (C) aggravated; or or wanton or (D) notwithstanding That the existence of misconduct; reckless or (A) determines, subparagraphs (ii) the facts set forth of fact trier either hereof, (C) through through findings specific made nevertheless of fact through employee specif- jury, exposed court in trial without a or thereafter to such interrogatories jury special jury intentionally; in a working ic unsafe condition trial, following proven: (E) facts are all of exposed That such so suffered (A)That specific working unsafe condition injury proxi- serious or death as a direct and workplace presented existed in high degree specific working mate result of such unsafe strong probability of risk and condition. death; serious *10 “represents 23-4-2 the wholesale abandon coverage construed to find for his deliberate concept agree. ment the common law tort of a intent of action. cause We deliberate intention cause action an carefully reading After policy, the Erie we employee against employer, an to be re cannot coverage conclude that it excludes for placed by statutory a direct cause of action a deliberate intent cause of action.10 The employee against an an ex purpose “Employers’ Liability— Erie’s pressed compensation within the workers’ Stop Gap” policy plain pay on its face: to system.” Syllabus Point Bell. We subse damages Show Pizza for “because of quently employee, held that who was bodily injury your employees to for which the subject Virginia's compen West workers’ you responsible recovery holds laws, pursue sation could his action under permitted by Coverage law.” for Virginia West law. clearly excluded from Erie’s the com- general liability policy mercial sold to Bell, argues that under this Court Pizza; just clearly we believe was conclusively that a ruled deliberate intention employers’ liability included endorse- purely cause of action a statutory direct ment general policy. attached to that expressed of action cause within the workers’ compensation system argues therefore —and We finding therefore hold that a any liability imposed against policy- a that an employer pursuant is liable holder as a of a result deliberate intention provisions deliberate intent liability arising entirely lawsuit is under a impose upon does not compensation law. benefits, statutory obligation fixed however, appellant, argues regard The that an without any party, to the fault of for employer subjected injuries, to a deliberate work-related and is intent therefore not an obligation action under Bell does become under workers’ sanction, statutory compensation but purposes instead becomes law for of insurance damages coverage. liable common law over and We therefore believe that cir beyond any compensation finding cuit court benefits erred there was no received an employee, coverage “as if [the Workers’ for this cause of action as Compensation Act] had not well. enacted[.]” been words,
In other while the deliberate intention specifies necessary statute the evidence IV. extinguish employer’s immunity under the Conclusion Act, only the statute exposes to an policy under After a careful examination of the law, namely, damages provisions the common involved the instant we injuries proximately employ- grant- caused conclude that the circuit court erred er’s conduct. ing declaratory As a deliberate intent judgment to Erie. The results which are not causes of action filed benefits,” appel- “workers’ not create argues policy
lant
the Erie
should be
law such that
appears possible
gation
It
to exclude
for which the
...
insured
be held
types
example,
these
of claims. For
Black
liable under
workmen’s
Girl
Diamond
Scout Council v. St. Paul Fire &
law[.]”
Co.,
(S.D.W.Va.
F.Supp.
Marine Ins.
The court ruled that a deliberate intention
1985),
camp
of a Girl Scout
Virginia
cause of action arose outside of the West
working
swimming pool.
electrocuted while
on a
workers'
scheme.
employee's
The
estate filed
suit
em-
company
court
indicated that
the insurance
ployer
under the deliberate intention
easily
policy language
specific
could
have
used
superseded
of a now
version of
23-4-
claim,
Industries, Inc.,
stating
exclude
for the
"an
2. See Mandolidis v. Elkins
company merely
bodily
employ-
has to exclude
74 benefits, solely regard employer the here without because defaulted receive fixed any party, allegedly for his in payment fault workers’ to the the injuries. reading the premiums. holding implies Our majority work-related suggests Stage had a that Show Pizza employer that and insurer record the the contem- expectation by that lawsuits filed plated employer reasonable in that the would default the covered Erie’s employees would be under payment premiums. majority of those Liability Stop Gap Coverage” “Employers employee’s right to holding finds that the sue — endorsement. negligence in an employer the action for at law, free and of the common clear several court’s therefore reverse the circuit We employer deprived which the defenses of order, January and this case remand having payment in the because defaulted proceedings. for further compensation premiums, did and Remanded. Reversed arise “under law.” ALBRIGHT, Justice, concurring part in dissenting part. in deep pocket to find a its effort from might Plaintiff below the recover fully judgment I concur in the of this negligence slam-dunk verdict for in a trial in “Employers’ Liability-Stop the Court (and insurer) which the its is de- general Gap” of the commercial defenses, prived of several common law the policy at issue in this ac insurance majority agreement of has twisted the the provided coverage for in tion the deliberate parties something blithely into not and Stage brought against Piz tent Show underlying public policy the dismissed issues JTS, za, by Inc. Paul the John by opinion reciting the Court’s raised Harvey. stop-gap coverage Unless that blindly, public blandly, if not that “these provide in coverage construed to the ease policy implicat- not appear concerns do to be a deliberate intent action which the work in ed the instant and have not been employers provides no im parties.” Simply put, raised it is munity, policy provisions those must be seen wrong from to shift here to its essentially illusory meaningless. as placed by burden law on insurer the Such a construction would be absurd. More timely fully its failure to
over,
history
development
of the
of W.Va.
pay
compensation payments.
23-4-2(c)(2)
That
§
emergence
Code
purpose
is not
for which this
marketing
“stop-gap”
of such
insurance cov
purchased
public policy
this insurance. That
erage in this
track
state
each other rather
clearly implicated
most
concern is
here and
nicely. This tends to confirm that the con
certainly
parties
was
raised
as an
majority
regard
reached
in
clusion
integral
appealed.
part of the action here
coverage for
the deliberate intent action
parties
consonant with
of the
the intent
Justice,
MAYNARD,
part
concurring
contract,
expressed by
the insurance
part.
dissenting
language
“stop gap” portion
in the
of the
issue,
policy
though
at
even
majority’s
I concur with the
determination
parties
update
language
have
failed
finding
court
the circuit
erred
there
our
since
decision Bell v. Vecellio & Gro
was
no insurance
Inc.,
gan,
negligence
common law
cause of action. As
(1996),
appellee
afforded the
com
majority,
noted
the record indicates
pany
argue
“stop
an occasion
Pizza
default
its
gap” coverage
longer
no
extended
to the workers’
purpose
designed
for which it was
and mar
fund
premiums
for failure
on the date
keted.
result,
injured.
As a
However, I
strongly
con-
Pizza lost its
dissent
under W.Va.
majority
§
parties
clusion
in- Code
and was
to a
damages. Accordingly,
tended to afford
of the common-law suit
for common
ease,
action in this
which is viable Erie
has
*12
provide coverage
Show Pizza for the
cause of action and “is
within
woven
fabric
appellant’s
State[.]”
common law action.
Bell,
knowledged by majority, this Court ruled Inc., Grogan,
in Bell v. Vecellio &
197 W.Va.
intention is a held
each Virginia to the West Act. We made clear statutory that a Bell deliberate intention supersedes
cause of action a common law