Horkulic v. Galloway

concerns based on ... cross-examination about, prej- among things, other harassment HORKULIC, Jeffrey Rebecca A. Hor A. issues, udice, the witness’ confusion Wife, Jeffrey Horkulic, kulic, His and or safety, interrogation repetitive that is Legal Guardian of Natural Parent and v. Van only marginally relevant.” Delaware Benjamin Stephanie and Hor Horkulic Arsdall, 673, 679, 106 S.Ct. 475 U.S. Minors, Below, kulic, Appel Plaintiffs L.Ed.2d 674 lees factually strong and must be evidence v. substantial, qualitatively quantita- and both GALLOWAY, Galloway Law William O. any tively, permit cross-examination Offices, Cambridge Professional Liabili prior regarding her sexual con- child victim Services, Virgi ty and Acordia of West strong substantial duct. such and Without Unknown, nia, Inc., De and John Does Appellant showing, permitting the to cross- Below, fendants minor about her sexual examine the victim defy spirit conduct the letter and would and say rape shield statute. This is not to our Company, TIG Insurance Defendant rebut that evidence could not be offered to Below, Appellant. an inference that the defendant’s conduct hickeys body. In- caused the on the victim’s Company, Petitioner TIG Insurance deed, appropriate believe that when an we made, adequate proffer a defendant is regarding introduce entitled to evidence Recht; Arthur M. William The Honorable prior child’s sexual conduct to rebut such Galloway Offices; Galloway, Law O. However, case, types of inferences. Cambridge Liability Professional Ser- present- inadequate proffer because Unknown; Jeffrey vices and John Does ed, we find no abuse of discretion below. Horkulic; Horkulic, A. Rebecca A. his correctly excluded such evi- The circuit Wife, Jeffrey Horkulic, as Natural dence. Legal Stephanie Parent and Guardian Benjamin Horkulic, Mi-

Horkulic and nors, Respondents. IV.

Nos. 33353. CONCLUSION Supreme Appeals Court reasons, For the Circuit Court of these Virginia. West County calculating Putnam did not err in Submitted Jan. 2008. served, Appellant’s time or in de- credit nying present Appellant’s motion to evi- Decided Feb. 2008. prior sexual conduct. dence of the victim’s Concurring Opinion of Justice Accordingly, the circuit court’s December Davis Feb. 2008. 2006, sentencing hereby affirmed. order is Affirmed. Flaherty, Tammy Harvey,

Thomas R. V. Flaherty, Sensabaugh & Jaclyn Bryk, A. Bo- nasso, Charleston, PLLC, Appellant. for the PLLC, Kunz, Joseph Selep, W. Zimmer PA, Pittsburgh, Appellees, O. for the William Galloway Galloway and Law Offices.: Fitzsimmons, Robert J. Fitzsim- Robert P. Offices, mons, Wheeling, Fitzsimmons Law Makricostas, Dittmar, and Dean G. David N. Taylor & Makri- Taylor, Daniel P. Dittmar costs, PLLC, Weirton, Appellees, Jeffrey for wife, Horkulic; Horkulic, his A. Rebecca A. Jeffrey Horkulic, Natural and as Parent and Benja- Stephanie and Guardian of Horkulic Horkulic, min Minors.

ALBRIGHT, Justice: upon this Court an This matter is before (hereinaf- appeal by Company TIG Insurance “TIG”) “Appellant” from an ter or Hancock Court of order of the Circuit Compel En- County granting a Motion to Agree- Compromise Settlement forcement of Jeffrey Horkul- by Appellees, filed ment ic, Horkulic, Jeffrey Horkulic as and Rebecca Stepha- legal guardian of parent natural and (herein- Benjamin Horkulic nie Horkulic and “Horkulies”). TIG also “Appellees” after from an order requests prohibition of a writ assessing practice attorney of the lower court action and award hired William D. against fees TIG. Galloway. Wilmoth defend Mr. Mr. Gallo- way private also continued to retain his own appeal compelling On of the order enforce- attorney, Jason Cuomo. agreement, ment of a settlement main- TIG permit tains that the failure to lower eourt’s 27, 2003, Appellees On October amend- 30, 2006, participate May ple- TIG to in the complaint third-party ed their assert bad nary hearing on compel the motion to consti- TIG, against Cambridge faith claim Profes- process rights tutes a violation of TIG’s due Services, Liability sional and Acordia of West prevent being by and should TIG from bound Virginia. bifurcated, The bad faith claim was holdings the ultimate of the court to lower discovery against Cambridge and TIG and holdings may ultimately the extent that such stayed, pending legal was the outcome of the rights pending affect TIG’s bad faith malpractice against Galloway. action Mr. petition claim TIG. The for a writ of TIG, prohibition, prevent filed seeks to May Wilmoth, On Mr. as counsel enforcing from lower court an order re- Galloway, Mr. po- for discussed settlement quiring pay attorney TIG to fees associated tentials Appellees, with counsel for the Mr. litigation Appellees’ with motion to Rap- Robert P. Fitzsimmons. Mr. Mark S. compel. ponotti, TIG, Analyst Senior Claims for Upon thorough arguments review of the telephone also in a involved conversation be- counsel, briefs, record, applicable prece- and tween Mr. Wilmoth and Mr. Fitzsimmons. dent, appeal this Court consolidates the and authority TIG asserts that settlement request prohibition for a writ of $250,000.00 had been Rap- extended Mr. affirms the determination of the ponotti to Mr. Wilmoth at the time of those parties into entered a valid and pro- initial conversations.2 The settlement agreement. enforceable settlement We also posal allegedly parties selected includ- grant requested prohibition, writ following pertinent provisions: ed the TIG moulded, fees, on the issue pay policy $500,000.00, would limits of minus relitigation remand this matter costs; Galloway Mr. judgment would confess issue of the Horkulics’ entitlement to attor- million; in the amount of TIG would ney $1.5 fees. consent to the order and the con- History I. Factual and Procedural judgment; fessed agree the Horkulics would initially presented This matter was as a against Galloway not to execute Mr. and legal malpractice by Appel- action filed the judgment; would not record the a dismissal against attorney, lees their former Mr. Wil- order would be entered of Mr. favor Gallo- Galloway Galloway liam 0. Law Offices. way; and the Horkulics would receive one- original complaint alleged The that Mr. Gal- any recovery Galloway third of Mr. would loway legal malpractice by failing committed against Cambridge. have TIG or to applicable observe a statute of limitations Appellees’ to the automobile accident claims.1 TIG, Rapponotti, Mr. of thereafter Galloway Mr. through lawyers was insured authority extended Mr. Wilmoth’s to settle professional liability policy by Ap- issued the legal TIG, malpractice portion the of pellant, the case for liability with limits of $500,000.00. However, $500,000.00. Rapponotti spe TIG Mr. undertook the defense of Galloway underlying legal cifically Mr. in the mal- declined to consent to a confessed allegedly 1. The automobile accident occurred on Novem- Horkulic sustained medical bills of 19, 1999, legal $256.00. ber and the services of Mr. Gallo- way by were terminated the Horkulics on Janu- 30, 2002, ary after the statute of limitations had 2. The record that reflects two alternatives for expired. alleged underlying The tortfeasor in the initially settlement were discussed. One alterna- liability policy tive, automobile accident has with by parties, not selected the would have $100,000.00. allegedly limits of Mr. required Horkulic pay the defendants to the Horkulics $1,000,000.00 approximately sustained medical bills of exchange in cash in for a release $30,000.00 $4,022.49. wages and lost of Mrs. and dismissal order. among primary disagreement The the judgment by Galloway.3 Mr. ment. of million $1.5 correspondence Additional from TIG contin- inclusion of parties apparently was the the any objection ued to to confess- assert TIG’s by judgment million Mr. confessed for $1.5 judgment Galloway portion ed Mr. as of 10, 2005, Galloway. On “the August Horkul- did, agreement. TIG the settlement howev- Compel Enforcement ics filed Motion to of er, $500,000.00. agree policy limits of pay to Compromised Agreement.” Settlement Fitzsimmons Mr. Wilmoth Mr. maintain 18, 2005, among call conference they agree- into a settlement entered attorneys parties, for the TIG reiterated that 9, 2005, May understanding on the ment with agreed pay policy it had the of to limits portion that TIG to the not consent of would $500,000.00 not on claim but would con- the Galloway Mr. settlement which con- judgment entry to the of a confessed of sent in the amount of mil- judgment fessed $1.5 Galloway. right The million of Mr. $1.5 Further, according lion.4 to the settlement objection file an the confession TIG to to of agreement, Galloway Mr. would all waive judgment during that confer- was discussed attorney-client he privileges which enti- was ence call.5 regal'd tled to to raise with documents and records. May On the lower held a plenary hearing the Horkulics’ motion to months, on

Throughout ensuing Mr. Fitz- compel. permitted partici- to TIG not repeatedly simmons contacted Mr. Wilmoth despite the fact pay- pate hearing, to ascertain the of the status settlement Galloway's policy requires malpractice limits, policy his 3. Mr. with TIG him within con- claim settlement, Plaintiffs’, any possibility sent of as well TIG to as consent and without the or matter, any reaching insured for settlement claim. entity’s other for that his assets, personal go immediately.” forward should 4. The record reflects that counsel for the Horkul- By hearing, May the time of the Mr. ics, Fitzsimmons, originally sought ap- Mr. TIG’s Galloway specifi- had Wilmoth testified that Mr. proval However, judgment. $1.5 million confessed cally consented to the settlement. Mr. Mr. Fitzsimmons and Wilmoth al- Mr. Wilmoth The lower court found that had lege eventually agreed that it was that the con- authority speak Galloway. Mr. to on behalf of included, specific fessed would be with authority, regard With this Court's to objections. right reference cording to file Ac- to TIG’s consistently decisions have held follows: Wilmoth, as well as to Mr. documents attorney appears representing “When an in court Horkulics, filed this resolution was con- strong presumption there clients is a his au Mr. firmed a conversation between Wilmoth clients, thority represent and the such burden Rapponotti. representative, and TIG’s Mr. Mr. authority upon party denying clearly Galloway Wilmoth contacted Mr. also to discuss authority.” Syl. the want Pt. show Mirano Galloway and learned that Mr. resolution Parson, sky agreement. consented to the entire Moreover, regarding any questions Mr. degree some record also reveals of confu- Galloway’s authority Mr. Wilmoth’s to address regarding Galloway's Mr. sion the status of con- formally consent should have been raised proposed sent throughout settlement court, syllabus point if at all. As two of appears negotiations. It that Mr. instructs, Miranosky question of the "The attor Galloway's principal pro- consideration was the ney’s authority represent want of clients must Thus, personal tection own assets. before his petition immediately by raised a motion be Galloway object Mr. that TIG would learned accompanied by affidavits.” agreement portions of the settlement and had rights August letter written 2005, reservation of in 18, 2005, August ap- call 5.The conference Galloway apparently to the Mr. consented attorneys, parently including TIG’s initiated September In a without hesitation. settlement 29, Zerman, Berger Ruberry, and Beth Ed Thomas 2005, letter, Mr. Wilmoth communicated Mr. Fitzsimmons, Flaherty. Mr. as counsel for the Galloway's consent to settlement. The issue of Horkulics, joined the conference was later Galloway’s Mr. consent was also in a discussed again that it was call. Mr. Wilmoth testified 9, 2005, hearing before December the lower agreed Galloway would file a that Mr. confessed During hearing, Galloway’s per- Mr. court. that liability damages $ of 1.5 million Cuomo, of and counsel, it sonal Jason indicated that objection. By file its and that TIG could then understanding Galloway Mr. was his that had However, September Mr. Fitzsimmons letter dated not the settlement. in a consented to Wilmoth, confirming agree- 20, 2005, Mr. wrote to from Mr. December letter Wilmoth September responded Mr. on ment. Wilmoth Rapponotti, Mr. Mr. Wilmoth reiterated Mr. Gal- 29, 2005, indicating per- Mr. Fitzsimmons’ negotiated that loway’s "position that the settlement behalf, ception was correct. have on his which would resolved the

attorneys for TIG had In reviewing challenges findings notice of the to the present court, during and were the room and conclusions of the circuit we hearing. Attorney apply two-prong William Wilmoth was the deferential standard of only parties. witness called The Hor- review. We review the final order and the exhibits, disposition kulics also introduced seventeen as ultimate under an abuse of dis- standard, correspondence evidence of the various re- cretion and we review the circuit garding underlying settlement discussions. Mr. Gallo- findings court’s factual under a Cuomo, way’s personal attorney, clearly Mr. did not Questions erroneous standard. of present any hearing. subject witnesses at the On are to a law de novo review. 25, 2006, court lower entered an specific regard request With to the granting order the Horkulics’ motion to com- prohibition, Virginia ed writ West Code pel the agree- enforcement of the settlement (1923) § (Repl.Vol.2000) 53-1-1 provides that specifically recognized ment. That order prohibition writ of shall lie “[t]he as matter right object admissibility TIG’s to the right usurpation in all eases of and abuse judgment, the confessed “OR- follows: power, when the inferior court has not [including DERED that defendants TIG] jurisdiction subject matter contro object admissibility shall be entitled to or, versy, having jurisdiction, such exceeds judgment por- into evidence of the confessed legitimate powers.” its This Court has been tion of during the settlement the Unfair prohibition “restrictive the use of as a Claims Settlement Act Practices claim ... remedy.” Virginia State ex rel. West Fire & previously stayed which and been [sic] Karl, Casualty Co. v. 199 W.Va. bifurcated.” (1997). S.E.2d This Court has held appeal Court, On to this TIG contends that “[p]rohibition only that lies to restrain inferi- improperly court language included proceeding or courts from in causes over indicating granted order that TIG had they jurisdiction, or, which, which have no authority broad to enter into the settlement. having jurisdiction, they exceeding are their Further, TIG maintains that the lower court legitimate powers may not be used as a entering findings erred in of fact and conclu- petition substitute for ... appeal] [a or sions of law TIG that are central to Syl. Taylor, certiorari.” Pt. Crawford subsequently the issues which be will ad- 138 W.Va. This separate dressed in the litigation of the bad syllabus point also held as follows four faith claims asserted the Horkulics. TIG of Berger, State ex rel. Hoover v. also that contends the lower court erroneous- (1996): S.E.2d ly permitted Galloway’s the inclusion of Mr. determining whether to entertain and injunctive motion for relief on the issue of prohibition issue the writ for cases not protection personal assets; of his that involving jurisdiction an absence of but permitting court erred in waiver of Mr. Gal- only it is where claimed that the lower loway’s attorney-client privileges; and that legitimate powers, tribunal exceeded its permitted the court hearsay testimony by (1) this Court will examine five factors: regard Mr. nego- Wilmoth with to settlement party seeking whether the has no writ request prohibi- tiations. In the for a writ of means, adequate other ap- such as direct tion, alleges TIG also the lower court (2) peal, relief; to obtain the desired erroneously by paid awarded fees to petitioner damaged whether bewill by TIG and fees were prejudiced way in a that is not correctable excessive. appeal; on whether the lower tribunal’s II. Standard of Review clearly order is erroneous as a matter of (4) law;

In this Court’s review of a decision whether the lower tribunal’s order court, three-part of a circuit a repeated standard of per- is oft error or manifests consistently applied, review has disregard been as ex procedural sistent for either pressed syllabus (5) in point law; of two Walker v. substantive and whether the lower Commission, Virginia West Ethics 201 tribunal’s order important raises new and (1997): 108, 492 problems W.Va. S.E.2d 167 impres- or issues of law of first

459 dens, Inc., 91, 784 general guidelines 152 W.Va. 159 S.E.2d sion. These factors are (1968); Mononga also Board Educ. starting point for see that serve as a useful of of Starcher, 388, County v. 343 lia 176 W.Va. determining discretionary a whether writ Co., (1986); Daily Inc. v. S.E.2d 673 Gazette prohibition Although should issue. all 249, Canady, 332 S.E.2d 262 satisfied, 175 W.Va. factors need not be it is clear five (1985); Vapor Corporation v. State ex rel. factor, that the third the existence of clear Narick, 770, 173 W.Va. 320 S.E.2d 345 law, given error as a matter of should be (1984). weight. substantial primary presently in the issue case applicable With the standards of review as findings before this Court is whether the guidance, presented we address the matters fact and conclusions of law contained in this case. 2006, 25, court’s order be lower will III. Discussion binding upon subsequent in deemed TIG the Binding A. Nature of the Order in the During argument of bad faith action. oral Subsequent Bad Faith Action matter, represented this counsel for TIG that consistently necessarily attempting This Court has held that TIG not to dis- authority agreement; entire it a circuit court has the to enforce a mantle the settlement agreed payment agreement through party’s has to the of the settlement settlement mo $500,000.00 paid limits of and has in fact such compel tion to enforcement. As this Court Suttmiller, amount, notwithstanding objection its found Moreland v. 188 W.Va. by Mr. Gal- (1990), million confessed $1.5 where the under loway. simply protection It from the seeks lying provides record sufficient evidence underlying far-reaching effects of the order agreements intent to enter into settlement may findings that be so, to the extent such attorneys and authorization to to do deemed to TIG in the bad faith action bind agreement decision to enforce the court’s will yet litigated. to be not be overturned. The Moreland Court whole, explained as “On the be follows: we pred analysis Our of this issue is that lieve the evidence shows settlement upon principle that the to be icated issues agreements ap were culminated between the faith action addressed the bifurcated bad pellants appellees. and both We base our only in separate questions, dependent are part conclusion on the Morelands’ written by part upon underlying facts found and oral communications with their counsel aptly recognized by court. As and the court.” Id. at 397 S.E.2d at 914. Bridges Bridges v. Bent Kansas court (D.Kan. ley by Bentley, F.Supp. 1389 indicating the culmination Evidence 1989), “a the bad faith cause of action is suit negotiations of settlement was also addressed litigating the exis involving party new this Court F.S. & P. Coal Co. v. Inter- liability.” F.Supp. at tence of a new Coals, Inc., Mountain estoppel principles obvious 1392. Collateral R, In F.S. & Court S.E.2d 638 this However, ly application of remain in effect. “no in the record to contra found evidence party principles improper such is where ruling dict the circuit court’s that the com they are asserted did not have whom promise and settlement entered opportunity litigate a full and fair binding parties into was a valid and explained in issues involved. As this Court at contract of settlement.” 179 W.Va. Miller, syllabus point v. one State axiom, guiding 366 S.E.2d at 640. As a Court has held law favors “[t]he if estoppel bar a claim encourages the resolution of controversies Collateral will (1) The issue compromise rath four conditions are met: contracts of and settlement identical to the one by litigation; policy previously and it decided is er than (2) question; in the action in uphold presented and enforce such contracts the law to adjudication final on the merits they fairly if made and are not in contra there is a are action; party against public policy.” Syl. prior of some law or vention party doctrine is invoked was Memorial whom the Pt. Sanders Roselaum Gar- action; privity party prior or in with a to a indeed constitute admissible evidence in the action, but it party against the the doc- bad faith does not foreclose his whom insurer, TIG, challenging from opportu- a full and fair that issue or trine is raised had part its relevance in or in in the bifur- nity litigate prior in whole to the issue the action. properly cated bad faith action. TIG re- See also Holloman v. Nationwide right object the to served to the consent Co., Mut. Ins. 217 W.Va. 617 S.E.2d 816 limits, judgment beyond policy and the lower (2005); Grill, Inc., Big Haba v. Arm Bar and recognized incorporated right court that object findings to into the stated of the order. syllabus point eight Conley Spillers, right An challenge judgment insurer’s to this Court an to which insured has confessed was ad- emphasized: process “A fundamental due Appeals dressed the Colorado Court of in point relating to the utilization of collateral Co., Republic Ross v. Old Insurance 134 P.3d estoppel any person against is that whom (Colo.App.2006).6 The court found that estoppel collateral is asserted must have had challenge prohibited such was not as an im- prior opportunity litigated to have his proper collateral attack. The Ross ex- claim.” insurer, plained the in that similar to TIG case, present In the not TIG was instance, party this not a to the was confess- permitted participate to in the settlement judgment agreed ed and had not to be bound enforcement and thus cannot be judgment. the The Ross court held as opportuni deemed to have had a full and fair follows: ty litigate specifically, to the issue. More the judgment distinguishable A consent is question expressly order in that declares TIG respects judgment some from resulting opportunity challenge mil have litigation from contested carried to conclu- judgment by million confessed Mr. Gal $1.5 by judicial sion determination. A consent loway. presents tripar This case the classic judgment judicial not a is determination of configuration party tite to a bifur which any litigated right, judg- and it is not the party cated bad faith action was not a in the court, except ment of the that sense action, underlying despite reality that go upon the court it to allows the record entity such furnished counsel for the defen force judg- and have the and effect of a underlying dant in that action. The fact re ment. Wilmoth, that mains Mr. as counsel for Mr. judgment 134 P.3d at 511. The consent TIG, Galloway through pro hired was not par- Ross was also entered into without the tecting compa of the interests insurance ticipation parties protect with incentive to TIG, ny, negotiation while the settlement the insurer’s interests. The Ross court rec- being litigated in matters were the lower ognized: solely court. His duties counsel ran as dealing judgments, When with consent Galloway. interests Mr. courts must ensure circumstantial entertaining guarantees find that the court We of trustworthiness exist con- required cerning genuineness bifurcated bad faith action be underlying- will admissibility judgment. determine the The real concern 25.2006, appeal. may order at If actually represent issue settlement not forum, any length admitted in that the order and aim’s determination of the worth TIG, part subject challenge plaintiffs of it will be claim. When the insured specifically actually pays stated the order. The fact for the settlement of the defendant, Galloway, willing fully that the Mr. litigated, claim or when the case is judgment may to confess 1.5 million judgment the amount of the settlement or $ granted by Supreme 6. Certiorari was Court whether the settlement constituted an Republic judgment against of Colorado in Old Insurance Co. v. enforceable the defendant com- Ross, (Colo.2006), apart pany 2006 WL 2942523 on limited which existed from the confessed present stipulated. issues not relevant to the discussion of to which it Certiorari was issues, holdings. granted only opinion yet the Ross Certiorari was denied on all other and no has regarding prejudgment on issues interest and been issued.

461 However, by attorney to defend insured hiring assumed to be realistic. sured can be and, thus, rights, con- under reservation of judg- in a consent the settlement amount had no judgment against the insured sent to execute is ment a covenant not with judgment in credi- estoppel collateral effect suspect. more insurer, against the garnishment action tor’s Id. at 511-12. “[pjarties litigation cannot holding that to conflicting The Ross court examined the agreeing to a declaration of concoct a scheme parties agreement, the interests of the to $300,000judgment and then negligence and a reasoning as follows: company to be bound expect the insurance parties, none of had an incen- whom [T]he being by able to that without Republic’s represent protect to Old tive liability.”). against the defend itself interests, amount of determined the the foregoing, upon Based the we against Old judgment to be collected Re- judgment hold that a consent or confessed judgment by a public. Unlike a entered binding on against party an insured is not finder, judgment neutral fact the consent subsequent litigation party’s that in insurer by parties here entered incen- was whose against the insurer where the insurer was pursue against to an action Old tive was in the party proceeding not a to the which party Republic, which was not the entered, judgment or confessed was consent judgment. agreed expressly the insurer to be unless (internal omitted). quotations Id. at 512 Therefore, judgment. the an at bound explained “[Ijegal court that maneuver Ross judgment the or confessed tack on consent ing, stipulation under the becomes a which subsequent litigation an insurer who accomplish judgment, permit should not judgment expressly agree not to such did could ment indirection of that which not direct, collateral, attack on permissible not directly.” (quoting Marsh v. be done Id. judgment. In the the consent or confessed Warren, 825, 126 248 P.2d 828 Colo. case, court bifurcated present since the lower (1952)); see also Insurance Co. North underlying claim portion of (Fla.Dist. bad faith of the Whatley, 558 So.2d 120 America litigation that yet not entered into and has App.1990) (holding that factual determina matter, province of this it is not within during prior adjudication are not tions made matters Court to address additional which subsequent adjudica binding on insurer in pertinent in the bad faith might become concerning coverage, tion where interests primary to be resolved in claim.7 The issue antagonistic specific and insurer are initial appeal insured extent to this is the which adjudication party); inquiry may Davin v. tort with third under be order Park, against 32 Kan. TIG the bifurcated bad Athletic Club Overland utilized when Thus, ultimately litigated.8 (holding 691 faith claim is App.2d 96 P.3d opinion, the subsequent filing of this liability privity with in- insurer severed Sullivan, that the lower court erred 647 8. TIG also contends 7. In Strahin v. 220 addressing Galloway’s alternative motion for Mr. princi- Court discussed S.E.2d 765 this protection injunctive relief the issue of the on party’s attempt ples to recover relevant to a third providing personal notice that assets without his pur- against policy limits an insurer in excess of In Court’s would be addressed. this such issue judgment which included a suant to a consent however, record, appears it that the review of the against insured. not to execute covenant Galloway's personal protection assets was of Mr. Strahin, assignee injured party was the necessarily addressed within an issue that was rights also In re Tutu Water of the insured. See negotiations. It on the settlement F.Supp.2d Litigation, Contamination Wells Galloway's integral component Mr. 1999) (indicating (D.Virgin Islands designed incentive to enter into settlement however, ”[r]esearch, only revealed a hand- has Thus, necessary protection. it was a his own seeking parties, third ful of cases which hearing on the for inclusion within the issue a consent which included enforce compel enforcement of the settlement motion to agreement. insured, against have not to execute covenant We do not find that the lower an insurer regard been entitled recover entering with to that erred in conclusions Co., limits.”); Court, was, Mfg. policy Inc. v. excess of Lida inex- which in the view of issue Co., N.C.App. tricably fundamental mat- Fire Ins. intertwined with the U.S. ters at issue. progress product lower court forward on the rule attach to documents contained will set, dissolving stay previously litigation course it the in an insured claim file and file. discovery proceeding Syllabus point explained: on the bad of Brison with seven faith claim. Where the interests of an insured and claim, litigation company his or her insurance are in con-

Within the of the bad faith attorney-client privilege regard flict to a claim for underin- the issue will be with appeal, coverage In sured motorist and the insurance addressed. this TIG contends counsel, by approving company represented that the lower court erred in is the portion bringing first-party of a related faith permitted of the settlement which bad Galloway rights by action the insured not automatical- Mr. waive his to assert his does attorney-client privilege. ly TIG concerned result in a of the insurance com- is waiver might interpreted pany’s attorney-client privilege concerning that the order be thereby attorney-client privilege to also waive TIG’s the underinsurance claim. pre-settlement to certain documents. This Court also examined the nature of attorney-client privilege conflicts within the In State ex rel. Allstate Insur Virginia bad faith context State West ex 358, Gaughan, ance Co. v. 203 W.Va. Madden, rel. Allstate Ins. Co. v. (1998), explained S.E.2d 75 this Court that an case, In this may quasi attorney-client priv insurer assert recognized Court that even the materials “[i]f ilege to communications the insured’s file sought protected to be from disclosure do not third-party in a bad faith action even where satisfy necessary the criteria for the asser- signed an insured has a release of his claim attorney-client they privilege, tion of the “All file. communications in an insured’s may discovery nonetheless be insulated from generated filing- claim file on and after the product resort the work doctrine.” 215 third-party’s complaint against date of a an W.Va. at at 34. S.E.2d insured, quasi presumptively attorney- are privilege client communications.” 203 W.Va. This Court finds that the waiver of quasi at 508 S.E.2d at 90. “The attor attorney-client privilege to which the order ney-client insurer, privilege belongs to the impacts only privilege refers Mr. Gallo insured, may only by not the be waived way would be entitled to assert on his own the insurer.” Id. at 508 S.E.2d at 89.9 It rights behalf. will not affect TIG’s Kaufman,

In State ex any attorney-client privilege rel. Brison v. assert belonging protect attorney-client product this to TIG or to that, may Court decided within the context of a independently to the extent that TIG first-party Moreover, bad faith rights. action an insur assert such the lower er, attorney-client privilege may, upon proper application, require and work court 9. TIG also asserts that the lower court order No error in either the admission or the ex- permitted hearsay testimony by Mr. Wilmoth re- clusion of evidence and no error or defect garding Specifically, settlement discussions. any ruling anything or order in done or omit- TIG contends that Mr. Wilmoth submitted hear- by any parties ted court or of the is say testimony regarding telephone conversation ground granting setting for a new trial or for Rapponotti May with Mr. on Mr. Wil- 2005. vacating, modifying a verdict aside or for or perceived meeting moth testified that he of the order, disturbing otherwise un- regard minds with Rapponotti to settlement because Mr. appears less refusal to take such action "okay” discussing said when the al- justice. inconsistent with substantial legedly potential. chosen settlement We find no every stage proceeding The court at of the reversible error admission of Mr. Wil- disregard any pro- must error or defect in the testimony regarding moth's that conversation. ceeding which does not affect the substantial wrongly hearsay Even where a court evi- admits rights parties. dence, appellate court will not disturb a re- Additionally, hearsay testimony the admission of order, alone, sulting on that basis where the generally considered to be harmless error ap- admission constitutes harmless pellate and the error question where the information is cumulative reasonably court is assured that the error legally showing of other admissible evidence rights parties. did not affect the substantial same fact. Virginia Rule 61 of the West Rules Civil Proce- provides: dure describing paid fees should be privilege log to be filed the nature forced and causing delay or communications which party of the documents resolution. may privileged, fees, be deemed and the court approving the award of may properly applicability explained: “Having then assess that a Court determined alleged privilege. made, valid settlement we do not believe the circuit court abused its discre- Request

B. of Prohibition Writ Skyline’s by ordering pay tion the Sansons to Attorney on Fee Issue attorney’s incurred to enforce fees and costs 313, at 599 the settlement.” 215 W.Va. Regarding request pro- TIG’s for a writ 736; S.E.2d at see also State ex rel. Bronson issue, attorney hibition on the fee TIG con- Wilkes, 293, v. 216 W.Va. 607 S.E.2d 399 entering in tends that the lower court erred (2004). 4, 2006, evaluating competing In claims requiring its October order TIG to Further, Sanson, in that the pay attorney fees. this Court observed de- TIG contends fully performed their obli- that even if it is determined that an award of fendants had attorney appropriate, gations by tendering fees was the amount of the settlement check is The returned the fees excessive.10 and release. Sansons later, forcing the check three months motion syllabus point Sally- In two of agreement. to enforce the settlement This Yokum, 48, Properties Mike v. 179 W.Va. 365 approved reasoning Court the circuit comb’s (1986), S.E.2d Court a 246 this held: “As that the defendant “should not have to bear general litigant rule each bears his or her [plain- the financial burden caused attorney’s contrary own fees absent a rule of attempt a to rescind valid and enforce- tiffs’] statutory express court or or contractual au agreement.” 215 at able settlement W.Va. thority principle for reimbursement.” This 312, 599 S.E.2d at 735. acknowledged American is as “the rule” and designed “equal is achieve access to the regard specific to insurance With courts for the resolution of bona dis claims, syllabus this held as follows in Comb fide 52, 250; putes.” Id. at 365 S.E.2d at see also point Hayseeds, one of Inc. v. State Farm Virginia Employees Nelson v. Public West 323, Casualty, & 177 352 S.E.2d Fire W.Va. Bd., 445, 86, 450, Ins. 171 300 S.E.2d (1986): W.Va. policyholder 73 sub “Whenever (1982). exceptions 91 Judicial to that rule stantially prevails property damage in a suit noted, consistently recognized have been as insurer, the insurer is liable for: its syllabus point Sally-Mike: in three of (1) attorneys’ in the insured’s reasonable fees authority equity in “There is award to the claim; vindicating the insured’s dam its prevailing litigant his or her reasonable at by the ages for net economic loss caused ‘costs,’ torney’s express (3)] fees as without statu damages delay for [ settlement^] authorization, tory losing party has when aggravation Expanding and inconvenience.” faith, vexatiously, wantonly acted in bad Court, in principle, on that Jordan v. oppressive Co., for reasons.” Grange National Mutual Insurance 183 9, as W.Va. 393 S.E.2d 647 observed potential fees The for award follows: involving breached settlement a case Hayseeds, agreement recently by this The rationale set forth in Aet was addressed Homes, Inc., Surety Brandywine Casualty Pitrolo[ na & Co. v. Court Sanson (1986)] 190, 307, and in 342 S.E.2d 156 215 W.Va. W.Va. Sanson, plaintiffs, subsequent an al- Mutual Automo State Farm Thomas[v. settlement, Co., S.E.2d leged agreement regarding ar- bile 181 W.Va. Ins. (1989)] recovery they granted allowing gued had not formal au- for attorney’s from one’s thority circuit court held a reasonable fees own to settle. The issue, ultimately concluding applicable insurer is whether the insured on the substantially litigation agreement prevails in the as that the settlement should be en- By separate per award of $500.00 entered on October rate of hour for total 10. order also $50,750.00, plus expenses granted in the amount of the lower court fees to the $54.00. hours and set the Horkulics' counsel for 101.5 later, the the set- result of a settlement or as the result of a months Sansons returned ease, check, claiming jury In either “the tlement no verdict. insured at consequential damages had ever been reached.” 215 W.Va. is out his [or her] bar, attorney’s at at fees.” 735. Unlike the case apparently opportunity there minimal (quoting at 393 S.E.2d at 650 Sanson misunderstanding, miseommuni- Hayseeds, at 352 S.E.2d at cation, legitimate question regarding or a 79). parameters contemplated of the settlement case, present In the the lower court stated parties. contrary, present On the in its October order: “this follows examples uncertainty case is littered with hesitancy finding has no that the Court regard precise parameters with delaying implementa- conduct of TIG in settlement, terms, its and the consent of the nearly agreed tion of an settlement for one integral parties. year nothing oppressive.” other than Sanson, court, relying upon Thus, clearly indicated distinguish this case is non-breaching party that not Sanson. Under the the should have from unique able facts by case, financial inequitable to bear the burden caused anoth- it of this we find that was to party’s attempt to or an permit attorney er rescind invalidate an against award of fees TIG agreement. ap- evidentiary enforceable settlement The hearing a full without and the propriate standard for such a determination opportunity participate fully. for TIG to The during an Sally-Mike precept referencing was discussed authority the attorney on the attorney losing issue fees. TIG to par award fees “when the argued precluded ty faith, that because it from vexatiously, has in acted bad wan plenary hearing, in participating tonly the it had oppressive or for reasons” remains via granted opportunity pres- ble, never been an to and an effort must be made to determine pertinent ent issues to a determination of its losing party the extent to which the acted in obligations degree culpability and its in manner. at such 365 S.E.2d at postponement the of a finalized settlement. 249. Specifically, TIG maintained that it had been discussing exceptions In general the “literally sitting waiting on the sidelines” for litigant generally rule” “American that a is authentic, confirmation of an final settlement responsible legal for his own fees and such agreement TIG also asserted that far as “[s]o opposing fees are not recoverable from the oppressiveness, any put I even don’t see fact party statute, court, in the absence of rule of by forth Mr. Fitzsimmons that TIG was act- agreement, jurisdictions or other have also any

ing way. just in bad I’ll term use the recognized indicating that circumstances ob- encompass ‘bad’ to all the different terms duracy may party justify imposi- of one the Sally-Mike that were used the case.” attorney tion of fees. The term “obdurate” response argument

In to dictionary TIG’s that has been defined Webster’s regard, expressly “stubbornly persistent wrongdoing.” the lower addressed think, Sanson opinion the and “I Collegiate Dictionary, stated: Webster’s New 784 (Merriam 1979). frankly, authority, quite if I I had which Webster In the realm of Sansoiir-Brandy- not, discussions, legal that I appears do would take the term to be wirne basically say, anytime you rarely precision. and that are defined with Other substi- enforcing you obduracy a settlement and for the term tutes include such Sally- prevail, you terminology shouldn’t to be burdened as this Court utilized in have Mike, faith, expenses....” vexatiousness, limitation in with those The such as bad wan- however, Court, tonness, argument, oppressiveness, obstreperous- that or Sanson, See, 2503(7) (1978) e.g., specifically § identi- encountered ness. Pa.C.S.A. very simple, uncomplicated (Repl.Vol.2004)(Pennsylvania fied a course of section of Judi- “Skyline fully performed permitting party its obli- cial Code events: to be awarded gations by tendering agree- against the settlement counsel fees as a sanction another party dilatory, ment and release after it was notified that for obdurate vexatious con- action). during pendency accepted the Sansons the settlement. Three duct of an evidentiary hear demonstrating Subsequent to the proper A factual record ob- remand, ing if the court determines duracy Upson on lower must be established. Trustees, against attorney fees should be assessed 124 N.H. 474 A.2d that Board of TIG, the rea (1984), instance, court shall ascertain for the court held syllabus point sonable reference to award attorney could not be fees awarded where Casualty Surety v. Pi four of Aetna & Co. obduracy showing had been no suffi- there trolo, justify A.2d cient to such award. 474 at held as follows: which we underlying Upson action in in- 584. disability apply to for re- volved entitlement attorney’s sought fees are Where plaintiff Holding tirement benefits. that the party, a third the test of what benefits, apply

was entitled the court should be considered a reasonable fee is attorney examined the issue of assessment of solely by arrange- determined not the fee fees and found that such fees are to be attorney client. ment and his between necessary litigation had been awarded where attorney’s fees is The reasonableness clearly defined and established secure generally broader factors such based on However, right. (2) the court further found that (1) required; as: the time and labor preclud- (3) of bad faith the absence evidence novelty difficulty questions; ing finding of entitlement to fees legal requisite perform the skill (4) as a matter of law. The court remanded to preclusion properly; of oth- service development of the issue of bad faith. allow employment er due to case; Id. customary acceptance of the (6) fee; the fee is fixed or contin- whether Makar, Similarly, in v. 11 Ohio Oakwood (7) gent; imposed time limitations 46, App.3d 463 N.E.2d 61 the Court of (8) circumstances; client or the the amount attorney Appeals of Ohio found that fees (9) obtained; and the results involved party not to be awarded where mis- were ability experience, reputation, and of the funds, takenly misallocated since no fraudu- (10) undesirability attorneys; purpose accounting for the errors lent was (11) case; length the nature and The Oakwood court held that no evident. client; relationship professional with the showing “express finding” had been made (12) similar eases. awards faith, had in bad the defendant acted wantonly, obdurately, vexatiously, op- or for Conclusion IV. pressive 463 N.E.2d at 66. reasons. “With- 25, 2006, order of the Circuit showing purposes of fraudulent on the out affirmed, County is Court of Hancock attorney appellant, the fees part of award request prohibition on the TIG’s for a writ of Id. is unwarranted.” attorney granted fees is issue of the award as moulded. above, request for writ of As addressed emphasis

prohibition be examined with moulded; will Affirmed; granted as case writ tribunal’s order upon whether “lower remanded. clearly a matter of erroneous as law.”

[was] MAYNARD, 15, Hoover, 15, and Justice at 483 S.E.2d at Chief Justice 199 W.Va. right ease, to file Thus, concur and reserve syl. pt. 4. under the facts of this DAVIS concurring opinions. grant- find that the lower court erred we against TIG ing fees without allow- DAVIS, J., Concurring: evidentiary participate in the ing TIG to 2008) (Filed 21, Feb. addressing pertinent issues cul- hearing major- fully portions of the delays agree I with all of this case. pability for the extensive case. I choose to write prohibi- ity’s decision in this grant to appropriate It writ that, grant- merely point out separately to this matter for a full tion and to remand prohi- petition for writ of ing as moulded the hearing the extent evidentiary to determine fees filed delaying on the issue culpability in the settle- bition of TIG’s (hereinafter Company TIG Insurance ment. “TIG”), question simply no determina- sonable is a fact driven this Court has made respect tion to the reasonableness of with must be assessed under the Pitrolo factors. as TIG denied the those fees. Insofar opportunity participate to Accordingly, majority I concur required attorney’s pay it to

wherein was opinion. I am that Chief authorized state incurred in connection the Horkul- fees with joins Justice MAYNARD in this concurrence. compel ics’ efforts to enforcement of agreement, compromise settlement properly “a

Court has remanded the case for evidentiary hearing

full to determine the ex- culpability delaying

tent of TIG’s the set- 465, Maj. Op.

tlement.” at 665 S.E.2d at See, e.g., Valley Radiologists,

299. Kanawha Bank, N.A., Valley

Inc. v. One 210 W.Va. (2001) (“We

223, 229, 557 S.E.2d determined, previously

have on numerous oc- casions, that a circuit court has erred Abbigail In re FAYE B. party failing oppor- to afford a notice and the tunity prior awarding to be heard attor- No. 33716. fees.”); ney’s Czaja Czaja, v. 208 W.Va. (2000) 75-76, (“In 921-22 Supreme Appeals Court of

failing Appellant’s op- to accord counsel an Virginia. West portunity respond to the lower court’s costs, April assessing Submitted 2008. basis for fees and the most protections judi- all basic of inherent to our May Decided 2008. violated.”); system Daily cial has been Ga- Canady, zette Co. (“‘Like

S.E.2d other sanc-

tions, attorney’s certainly fees should not be lightly or fair notice

assessed without and an ” record.)’ opportunity for a on

(quoting Roadway Express, Piper, Inc. v. 752, 766-67,

447 U.S. 100 S.Ct. (1980)).

L.Ed.2d 501-02

Additionally, properly point this Court has that, in

ed out the event that the lower court

determines fees should be as TIG,

sessed must

evaluate reasonableness of the award

pursuant Syllabus to the factors set out in

point Casualty 4 of Surety Compa Aetna & Pitrolo,

ny v. S.E.2d 156

(1986). Indeed, nothing majority opin concluding

ion should be read as

amount of the fees claimed See, per e.g.,

Horkulics’ is se excessive. Barnhart,

Claypool F.Supp.2d

(S.D.W.Va.2003) $18,000 (awarding in attor

ney’s legal for fees 12.56hours of work based contingency agreement);

on fee Arneault v.

Arneault, $241,034.42 attorneys (awarding experts upon proper proof). based

determination of the fees are rea- whether

Case Details

Case Name: Horkulic v. Galloway

Court Name: West Virginia Supreme Court

Date Published: Feb 21, 2008

Citation: 665 S.E.2d 284

Docket Number: 33352, 33353

Court Abbreviation: W. Va.