*1 Morgan failing report in negligent was S.E.2d attack. MILLER, John Paul Plaintiff below, Appellee,
Likewise, there factual we find to be issues Armstrong raised as to whether trainmaster day negligent, was of the incident at Aaron P. FLUHARTY and Susan issue, failing appellant’s in to advise crew not below, Fluharty, Defendants Duty crossing. to block Branch Road Appellant gone previously had to the tracks by Ferrell’s home after Ferrell called com- Mutual Automobile Insurance idling plain about locomotives left on the Company, company, an insurance only tracks to discover that Ferrell had tres- Wilson, individually William and in the upon property pull passed railroad fuel capacity agent of an of State Farm Mu- incidents, light in cutoffs. These viewed Company, tual Automobile Insurance complaints addition to Ferrell’s other below, Appellants. Defendants complaints Duty numerous of other No. 23993. residents, Branch Road lead us to conclude that, FELA, appellant has raised a Supreme Appeals Court of jury question toas whether the railroad was Virginia. West negligent blocking Duty Branch Road Sept. Submitted 1997. crossing negligence, and whether such part, appellant’s injuries. whole or in caused Dec. Decided Gardner, syl. pt. Appellant See supra. has Dissenting Maynard Opinion of Justice further shown circumstances which raise fac- 19, 1997. Dec. whether, tual issues as to the exercise of care, due reasonably the railroad could have creating potential
foreseen as for harm. McGinn, 300;
See Peyton, 102 F.3d at
F.2d at 833. It was therefore error for the summary judgment
circuit enter court to
favor of the railroad.
IV. herein, May
For the reasons discussed court, granting 1996 order the circuit summary judgment
the railroad’s motion for hereby and this is reversed case remand-
ed.
Reversed and remanded. J.,
MAYNARD, deeming disquali- himself
fied, participate in did not decision
case.
687
I. Background Facts and 3, 1994, September 18-year- On the then passenger old was a front-seat Fluharty, vehicle owned Sharon and driv- Fluharty’s 17-year-old son, en Ms. then Fluharty.1 Aaron The record indicates that Fluharty Aaron lost control of the vehicle driving high while speed and slid off of the road, hitting flipping a hill and the vehicle onto its roof. Romano, David J. Law Offices of David J. that, accident, suggests The record in the
Romano, Clarksburg, Appellee. for the gone through hand have Munster, Varner, D. Catherine James A. passenger dragged side window and Schillace, McNeer, Gregory Highland, H. along pavement. sustained Varner, Clarksburg, McMunn Ap- fingers tendons; & for the several broken and torn he pellants. required multiple surgeries reconstructive *5 hand,
repair damage right the to his accom- panied by substantial amounts of rehabilita- STARCHER, Justice: therapy. ultimately tive tip He lost the right finger. his little The accident also appeal This from the Circuit Court of Har- injuries plaintiffs caused to the nerves the County by policy- rison an concerns action hand, right leaving plaintiff the with inter- against holder his insurance carrier to recov- pain mittent which interferes with the use of fees, costs, attorney’s er prejudgment and his hand. litigation proceeds interest for over the of an Defendant State Farm issued two automo- policy. underinsured motorist The circuit policies potentially covering bile insurance granted summary judgment court poli- injuries. plaintiffs the The first is a cyholder plaintiff-appellee, and Paul John $100,000.00 liability policy pur- insurance Miller, holding substantially that Mr. Miller by Fluhartys, chased the which included prevailed in against an action his insurance $5,000 payments coverage. in medical The company, defendant-appellant State Farm policy, ap- second insurance issue this Company Mutual Automobile Insurance peal, is an underinsured motorist is- (“State Farm”). The circuit court awarded plaintiffs family, sued the also with a plaintiff his fees and $100,000.00 $10,- policy provided limit. This expenses, prejudgment as well as interest payments coverage. 000 in medical expenses. those fees and accident, adjust- Within one week of the carefully record, reviewing After briefs plaintiff er for State Farm2 wrote to the parties, and exhibits filed we affirm (who yet attorney) advising had not hired an grant summary judg- the circuit court’s $5,000.00 plaintiff that he was entitled to plaintiff, pursuant ment to the and to our coverage medical benefits under “State holding Hayseeds, Inc. State Farm Fire applicable policy,”3 Farm’s Cas., (1986), & coverage that his “underinsured motorist affirm we the award of fees and may applicable.” requested be The letter However, expenses. plaintiff sign we reverse and set that the and return an enclosed authorization, prejudgment thereby allowing aside the award of interest. medical State Fluhartys coverage appar- 1. The have settled all claims with the 3.This statement about medical ently Fluhartys’ referred to the automobile in- plaintiff. policy. surance The letter did not advise the $10,000.00 plaintiff that he also had in medical Wilson, adjuster, 2. The William was sued individ- payments coverage available under Millers’ ually agent and as an of State Farm for bad faith. policy. State Farm automobile insurance any plaintiffs plaintiff The lawsuit copies of of the filed this Farm to obtain Fluhartys Farm on appears State March It medical records. form, plaintiff alleged that Aaron Flu signed and that State and returned harty proximately plaintiffs had caused the Farm used this medical authorization to later injuries through negligent cond or reckless request plaintiffs copies of the medical rec- Furthermore, complaint alleged uct.4 providers. ords from his medical agree that because State Farm refused December, By 1994 the had re- protect confidentiality plaintiffs of the attorney represent him in tained an his records, medical State Farm had breached thereafter, Shortly dealings Farm. with State duty fairly good its to deal and in faith. The attorney plaintiffs requested that State plaintiff sought damages Farm from State agreement protect Farm execute an statutory under theories of common-law and confidentiality plaintiffs medical rec- concerning bad faith for its the Flu conduct confidentiality agreement ords. This would hartys’ liability policy.5 Farm, attorneys, physicians allow or State 4,1995, August On the circuit court held a any representative to other use records scheduling which conference was attended any purposes plaintiffs related to the plaintiff, counsel for the counsel for the Flu- case; however, agreement prohibited hartys, attorney representing and an State disseminating computer- State Farm from hearing Farm. At that the circuit court or- use, any izing the medical records for other any that “[i]f dered of the defendants destroy State the rec- per- wish[ed]” to have a medical examination ords at conclusion of the case. The plaintiff, formed on the that examination had plaintiffs attorney copies refused to forward completed by to be December 1995. All medical records to discovery completed May was to be agreement Farm without an on confi- 1996; trial was scheduled for the week of *6 dentiality. attorney The if stated that the 8,1996. July agreement signed, was not then a lawsuit appears August It that at the 1995 sched- implementation to would be filed force the conference, uling plaintiff the asked the cir- confidentiality provisions proposed the of the protecting cuit court to enter an order the agreement. confidentiality plaintiffs of the medical rec- Farm, 1, February receiving parties,
State letter dated ords. After briefs from the 1995, 16, any confidentiality January refused to enter into on 1996 the circuit court entered agreement, stating 14-page protective that it was “aware of required no order6 which client(s) legal your sound plaintiff sign basis which entitles the to an authorization for the Confidentiality Agreement records, to a in order to release of medical but which also provide medical records.” keep State Farm to confidential all dispute allegations 4.When an uninsured or underinsured defendant nor does it that these were Virginia requires motorist is West law put sufficient to State Farm on notice that its sued. policyholder intending rely upon to uninsured or obligations plaintiff's the underinsured coverage underinsured motorist triggered. motorist were copy complaint serve a of the summons and upon company providing the insurance the cov- 4, 1995, By August order dated the trial court erage sought though company as the insurance negli- bifurcated the bad faith claims from the party were a named defendant. The insurance' gence action. See ex State rel. State Farm Fire & company pleadings then file take Madden, 155, Cos. Co. v. 192 W.Va. 451 S.E.2d action in the name of the uninsured or underin- (1994). W.Va.Code, 33-6-31(d) sured defendant. See [1995]; 1, Syllabus Point Postlethwait v. Boston 13, 1995, Fluhartys 6. On October the counsel for 532, Colony Old Ins. 189 W.Va. 432 S.E.2d plaintiff’s deposition. deposition, took the (1993). However, carrier, At this the insurance if it plaintiff’s chooses, attorney produced copies the of the appear so is entitled to and defend in its 4, plaintiff’s pursuant medical records and bills own name. Point State ex rel. State subpoena plaintiff's attorney duces tecum. The Canady, Farm Mut. Auto. Ins. Co. v. 107, previously orally noted that the circuit court had State Farm does dispute copy preserve not that it received a of the com- ordered that State Farm the confiden- plaint allegations against Fluhartys, tiality plaintiff's with the records. 12, 1996, day, March counsel for regarding it The next information obtained medical circuit court found that “the plaintiff. plaintiff The wrote to counsel for State Farm information, $100,000.00 are entitled to the again demanding payment Defendants totally probably of which' will most be some plaintiffs limit of the underinsured motorist irrelevant, upon obtaining that this infor- but stating policy proceeds policy, and that if the are restricted how mation the Defendants days,8 paid were not within 15 he would also they they use it and to whom disseminate the seek fees and costs. information....” March counsel for On State February counsel for the On Smith, Farm, plain- G. Thomas wrote to pay Farm plaintiff demanded that State $30,000.00 offering tiff an additional settle Fluhartys’ liability policy limits of both the claim. In his let- the underinsured motorist plaintiffs underinsured motorist ter, attorney plaintiff Smith accused the negotiations place policy. Thereafter took “attempting] keep Farm in the State representative between a claims for State providing plaintiffs all dark” attorney, plaintiffs Farm and the and on records, plain- medical asked the Smith February representative 1996 the claims attorney “remaining provide tiffs med- “very that Farm much” wanted wrote State requested, ical records.” The letter also liability insurance claim to settle alternative, sign plaintiff that the an “ad- Fluhartys liability policy limits for the ditional” records release. medical $100,000.00. 6, 1996, On March State officially Farm offered the limits of $30,- plaintiff The refused State Farm’s Fluhartys’ liability policy plaintiff, 3,1996, April 000.00 offer on and said that the day. accepted an offer which was the next plaintiff full would seek to recover underin- However, right reserved his pro- coverage through court sured motorist $100,000.00 pursue proceeds available ceedings. that indicated State policy. through his underinsured motorist discovery Farm had “available to it all of the settlement, days Fluharty Four after the do whatever it deemed neces- mechanisms to 11, 1996, appears March it that for the case,” sary deposi- such as to evaluate Fluhartys, appar- first time counsel expert medi- tions or reviews of Farm, acting ently on behalf of State wrote a records, cal but indicated physician requesting that a be allowed letter plain- had to use these avenues. The refused to conduct a medical examination of the *7 failed tiff that if State Farm had stated plaintiffs attorney objected plaintiff. The records, any plaintiffs the medical obtain of request was this examination because through its own fault.” “it has failed to do so three months after the circuit court’s made 22, attorney response, April In on 15, an ex- December 1995 deadline for such attorney saying plaintiffs to the amination, Smith wrote plaintiffs con- and the only “representad] Farm in that he State Fluhartys’ why counsel was fusion as to you al- to the extent that have appears matter making request.7 It that leged violations of the Un- never conducted. bad faith examination was and/or representing during age A fifth law firm is counsel, 7. Plaintiff’s the settlement pro- dispute. Farm in this State over cess, appeal. repeatedly expressed uncertainty nego- was which or claims lawyer representative tiating Farm's behalf. It that on State Virginia Code appears series 14 of the West 114, 8. Title (“CSR ”) State Farm’s five law firms represented Regulations State separate establishes certain ~ one firm interests in this action: represented and methods of settlement minimum standards State one firm Farm claims. Fluhartys; represented for both first- and insurance third-party concerning the the bad faith claims an liability poli- The violation of these standards can constitute W.Va.Code, one firm to have State 33-11-1 unfair represented trade cy; appears practice generic sense, 114 CSR in a on the bad in his 14.5, Farm to -10. cited partially plaintiff acknowledge, matters and within letter, faith and unfair trade insurers practice par- requires coverage motorist dis- communication on the underinsured days, receipt any tially the insur firm, with the and the last claimant which appar- reasonably apprises pute plaintiff; might give an which State ance carrier of occurrence retained in March ently represented rise under an insurance in the underinsured motorist cover- policy. Farm liability solely $1,766.80 costs, plus Act.” fair Trade Practices Smith indicated fees and attorney filing ap- prejudgment would be interest on those fees and costs. that a new pearance Farm as “on behalf State carrier,” and stated that all
underinsured
II.
relating
correspondence
future
to the under-
policy should be directed to
insured motorist
Discussion
attorney.
the new
Smith noted that
appeals
State Farm
the circuit court’s
plaintiff
provided
had not
State Farm with a
summary judgment
grounds.
order on two
“request-
medical authorization or
First,
Farm
that the
State
contends
items,” and
that
Farm could
ed
said
State
“substantially
prove
prevailed”
failed to
he
a medical examina-
not determine whether
proceeds
his action to recover the
of his
“necessary
tion was
or warranted at this
underinsured motorist
he
because
point.”
failed to make a demand
that
Therefore,
before
filed a
24, 1996,
he
lawsuit.
State
Subsequently, May
the new
argues
summary judgment
Farm
should
attorney representing
Farm in
un-
State
granted
plaintiff,
not have been
to the
but
coverage dispute
derinsured motorist
filed a
instead,
granted
should have either been
appearance
notice of
with the circuit court.
Farm,
alternatively,
altogeth-
State
or
denied
day,
attorney
That same
the new
filed a
disputed
er because the record contains
is-
deposition
plaintiffs treating
notice of
for the
“wrong-
sues of fact as whether
Farm
physician,
Gregg
O’Malley;
depo-
Dr.
State
M.
fully”
“unreasonably” delayed
payment.
originally
May
sition was
scheduled for
Second,
(one
challenges
day
State Farm
the award of
before the cut-off
for
date
prejudgment
plaintiff,
interest
discovery),
postponed by
agreement
but was
prejudgment
contends that
interest in
to a later date.
excess
policy may
of an
limits
never
Documents
the record indicate that the
be recovered.
plaintiff and State Farm settled all bad faith
12, 1996, leaving only
claims on June
A.
claim for underinsured motorist benefits to
later,
days
be
Four
resolved.
on June
Summary Judgment on Whether
deposi-
Farm
counsel
State
took the
Substantially
the Plaintiff
O’Malley.
day,
tion of Dr.
The next
Prevailed
tendered,
accepted,
As we stated
Point 1 of Painter
$100,000.00
limits of the
under-
Peavy,
192 However,
policy.
insured motorist
in the
(1994),
entry
we review a circuit court’s
release,
plaintiff specifically
settlement
summary judgment under W.Va.R.Civ.P.
right
pursue attorney’s
reserved the
fees
costs for the
regarding
under-
Rule 56
[1978]
de novo.
The traditional stan-
*8
granting
dard
summary judgment
for
was
insured motorist benefits.
Syllabus
established in
Point 3 of Aetna Cas.
parties
Both
submitted motions for sum-
York,
& Sur. Co. v. Federal Ins. Co. Newof
mary judgment
to the circuit court on the
160,
(1963)
148 W.Va.
693
Youler,
556,
52,
(1995);
2,
Syllabus
v.
183
insurance carrier towards a
who
erage, contemplates recovery, up to cover-
purchased an
or underinsured
has
uninsured
limits,
insurer,
age
from one’s own
full
of
type
policy, or
other
of first-
motorist
compensation
damages
compensat-
for
not
party
policy,
insurance
and who has sus-
by
negligent
ed
a
tortfeasor who at the
by
policy.
tained a loss covered
that
oper-
time of the
accident was
owner or
An underinsured motorist
insurance
of an
ator
uninsured or underinsured mo-
policy,
purchased by the
such as the one
Accordingly,
tor vehicle.
of
amount
case,
party”
in this
is “first
insur
liability
such
motor vehicle
in-
tortfeasor’s
ance which is
to be offered to liabili
coverage actually
surance
available to the
ty
policyholders by law.
insurance
See
injured person
question
in
is to be deduct-
W.Va.Code, 33-6-31(b) [1995],
party
“First
damages
ed from the total amount of
sus-
insurance means that the insurance carrier
by
injured person,
in-
tained
and the
directly
has
contracted with the insured to
providing
surer
underinsured motorist
coverage
provide
and to reimburse the in
coverage is liable for the remainder of the
damages up
policy
sured for his or her
damages,
coverage
but not to exceed the
Saseen,
94,
limits.” Marshall v.
192 W.Va.
limits.
(1994).
450 S.E.2d
The rela
pay
an insurance carrier refuses to
When
tionship
policyholder
between the
and the
any type
first-party
(including
of
claim
carrier
from a mutual ex
insurance
arises
benefits),
poli
claim for underinsurance
consideration, ie.,
change
cyholder may
compelled
participate in
be
premiums
exchange
mo
for underinsured
lengthy, costly litigation
in
to recover the
coverage,
performance
with
torist
policy proceeds.
in Hay
surance
We noted
parties
by
controlled
the written terms and
seeds,
“disparity
bargain
supra, that the
policy.9
conditions contained
the insurance
ing power
company
between [an insurance]
(often
and [its]
exacerbated
An underinsured motorist
insur
dynamics
of the settlement bureaucra
ance
is activated when the amount of a
cy)
substantially
make insurance contracts
liability
tortfeasor’s motor vehicle
different
from other
commercial
con
actually
injured policyholder
available to an
at
traets[J”
S.E.2d
damages
is less than the total amount of
disparity,
78.10 Because of this
we stated
policyholder, regardless
sustained
policyholders
lawsuits between
liability
comparison
between such
insur
their
insurance carriers are “one of the
actually
ance
limits
available
under-
instances where the American
prominent
coverage
insured motorist
limits.
attorneys’
concerning
rule
fees works bad
part,
Ins.
Point
Pristavec Westfield
ly.” Id.
that,
Hayseeds
coverage
designed
motorist
We therefore held
Underinsured
first-party policyholder substantially
if
compensate
policyholder,
within
limits,
prevails against
carrier in liti
compensated
the insurance
recoup
liability policy.
gation,
is entitled to
tortfeasor’s
As we stated
resulting
consequential damages
Syllabus Point 4 of
Auto. Mut. Ins. Co. his or her
*9
may incorporate any
disparity
apparent
in
fact that
10. This
is
9. An insurance carrier
terms,
spend
and exclusions into an automo-
companies
$
conditions
1 billion annu
over
policy may
as
be consistent with
bile insurance
the
against policyholders.
ally in
battles
premiums charged,
long
so
as the terms of
Gold,
Eugene
See
R. Anderson and Joshua
Recov
spirit
do not conflict with the
and
erability Corporate Counsel Fees in Insurance
of
intent
the uninsured and underinsured motor-
of
1,
Coverage Disputes, 20 Am.J.Tr.Ad.
3 fn. 5
See,
Meador,
e.g.,
statutes.
Adkins v.
201
ist
(1996).
148,
(1997); Deelv.
from the insurance
party
concerning
un-
Syllabus
claim.
stated in
claims
uninsured and
payment of the
in
coverage
derinsured motorist
Marshall v.
supra:
Hayseeds,
Point 1 of
Saseen,
(1994).
94,
192 W.Va.
4(9)(e) It is unfair for an insur- also [1985]. loss, proof to holder submitted of a has pay a claim “with- company ance to refuse to investigation promptly a reasonable conduct investigation conducting a out reasonable upon all policyholder’s of the loss based avail upon all based available information.” inves able information. On basis of that 11—4(9)(d) Code, Legislature [1985]. 33— liability has tigation, if to that it is an unfair has further established clear, reasonably carri become the insurance company for an practice trade insurance equitable prompt, er must make a fair and good attempt[] “not in faith to effectuate If the finds settlement offer. circuit court equitable fair and settlements of prompt, has failed evidence that the insurance carrier liability become claims in which has reason- poli properly promptly investigate 33-ll^(9)(f) W.Va.Code, ably [1985]. clear.” claim, may cyholder’s then circuit court determining in wheth consider that evidence have, jurisdictions applying various Other substantially pre er the has reasoning, of also concluded that the forms vailed action to enforce the insurance an investigate an carrier to failure insurance contract. investigate a adequately, a claim or to claim time, properly within a consti- reasonable light principles, evalu- In of these we now tutes a breach of the insurance contract.14 arguments why plain- ate State Farm’s The Supreme Court of California stated the summary judgment tiffs should motion for duty a manner: denied, reason for such summary judg- why have been and granted ment should have either been policyholder’s protect To interest [a altogether. denied State Farm or peace security and from the pur- of mind policy] of a it is essential that an chase policy- contends that before State Farm fully inquire possible insurer into bases and holder can recover fees costs might support insured’s claim. that Hayseeds, an carrier from insurance recognize Although distinguishing we that policyholder must that he made a show legitimate from claims oc- fraudulent filing claim prior demand to settle casionally ... be difficult for insurers an argues that be- of a lawsuit. State reasonably in good insurer cannot he filed cause the waited until after deny payments faith to its insured without Fluhartys against the to make a his lawsuit thoroughly investigating the foundation for against his motorist demand underinsured its denial. recovering attor- policy, precluded he from fees, consequential ney’s costs other Co., 24 Egan Mutual Ins. Cal.3d Omaha of damages resulting from over State 691, 695-96, Cal.Rptr. 620 P.2d non-payment Farm’s the underinsured stated, in a 145-46 One commentator policy proceeds. motorist carrier’s review of cases an insurance Alternatively, argues that duty investigate, an insurer with State Farm “[i]f that any de- questions exist over first-party of a claim in a case of fact whether holds facts, policy proceeds lay payment of the understanding it based on primarily plaintiffs fault. straight Farm was get had its facts first.” Ste- State better needed for additional time is CSR 14.6.5 states forth the reason of notice of claim. 114 notify first-party investigation." carrier must that an insurance writing days receipt within 15 claimant proof needed to "deter- of loss that more time is By jurisdictions least hold 14. count at our party should be ac- whether first claim mine cepted carrier the failure investigation re- or denied.... If competent investigation promptly of a perform a incomplete, the shall send to such mains insurer policyholder's claim constitutes a breach (30) thirty days within calendar from claimant Ashley, Stephen See S. Bad insurance contract. eveiy thirty the date of the initial notification (1984), § Faith 5:08 footnote Actions thereafter, (30) days setting a letter calendar *11 696 demand, promptly respond argues that the facts show that ther meet that or
State Farm
why
resolving
policyholder
with a statement
any delay in
the claim was the
supported
a demand is not
the avail-
plaintiffs
on the con-
such
result of the
insistence
able information. The insurance carrier’s
fidentiality
records15—and did
of his medical
promptly respond
failure to
is a factor for
Farm’s failure to inves-
not result from State
deciding
courts to consider in
whether the
tigate
plaintiffs
through
claim
available
the
substantially
policyholder
prevailed
has
Additionally,
discovery
Farm
devices.
State
contract,
enforcing the
and there-
insurance
argues
questions of fact exist over
that
fore,
whether
insurance carrier is liable
“unreasonably”
Farm
whether
or
State
policyholder’s consequential damages
delayed
“wrongfully”
payment.
Hayseeds, supra,
progeny.
and its
reject
positions.
both of State Farm’s
We
recognize
holding today
that our
con-
First,
agree
we
with State Farm
language
with
flicts
of several of our
Hayseeds,
that in the factual situation of
prior opinions. Accordingly, to
extent
subsequent
Hayseeds,
cases decided under
Syllabus
that
Point 1 of
v. National
Jordan
pre-suit
a
demand had been made. Howev
Co.,
Grange Mut. Ins.
183 W.Va.
393
er,
prior
hinged
a
none of our
cases has
(1990); Syllabus
2
S.E.2d 647
Point of Thom-
requirement
first-party policyholder
that a
State Farm Mut. Auto. Ins.
181
a
make
demand on the insurance carrier
(1989);17
786
S.E.2d
Instead,
prior
litigation.
to the initiation of
Hayseeds,
Point 1 of
Inc. v. State
public policy
Hayseeds
established in
Cas.,
Farm Fire &
352 S.E.2d
progeny
encourage
speedy pay
is to
(1986),
relying upon Hayseeds,
and eases
policyholder’s
ment on the
insurance con
that,
imply requirement
a
in order to recover
tract, regardless
policy
of when and how the
consequential damages for an
car-
holder makes a claim.16 We can discern no
delay,
first-party policyholder
rier’s
a
must
why policyholder
pre
reason
who makes a
against
make a demand
his or her insurance
protected
suit demand should be
from his
prior
initiating litigation against
carrier
delay,
own insurance carrier’s
while a simi
tortfeasor,
third-party
hereby
those cases are
larly
policyholder
post-
situated
who makes a
policyholder
modified. Whether a
has sub-
suit demand should not.
stantially prevailed
by looking
is determined
totality
policyholder’s negotia-
at the
Accordingly,
examining
when
carrier,
merely
tions with the insurance
substantially pre
whether a
has
negotiations
the status of
before and after a
carrier,
vailed
an insurance
a court
lawsuit is filed.
negotiations
should look
as a whole
Second,
from
time of the insured event to the
apparent
it is
from the rec
proceeds.
final
of the insurance
If
ord in this
case
did not
prompt,
makes a reasonable
thorough investigation
demand
conduct a
during
negotiations,
the course of the
within
claim for benefits under his
limits,
policy.
insurance carrier must ei- underinsured motorist
Aside from
parties
vigorously dispute
17.Syllabus
15. The
also
whether a
Point of Thomas states:
confidentiality
can insist on the
his
question
of whether an insured has sub-
her medical records. We do not reach the mer-
stantially prevailed against
compa-
his insurance
question
directly
its of this issue as the
is not
ny
property damage
on a
claim is determined
implicated by the facts in this case.
negotiations
the status of the
between the insured
Hayseeds,
policyholder’s
16. Under
conse-
prior
and the insurer
to the institution of the
quential damages
upon
are based
the insurance
company
lawsuit. Where the insurance
has of-
settlement;
delay
carrier’s
do not
materially
damage
fered an amount
below the
begin to accrue until after the insurance carrier
insured,
jury
estimates submitted
policyholder making
is on notice that the
approximating
awards the insured an amount
Hence,
claim.
if the first notice that an insur-
estimates,
damage
the insured's
the insured has
filing
ance carrier has of a claim is the
of a
substantially prevailed.
lawsuit, then that is the date the insurance carri-
duty
promptly investigate
er’s
gins.
the claim be-
*12
attorney
asking
plaintiff provide
began
aggressively investigate
that the
State Farm
copies of
plaintiffs
question
with
records on his medical condi-
attempt
claim and
tion, the record indicates that
Farm
depose
State
plaintiffs physicians.
or
investigation
failed to conduct a full
of the
State
actions in
Farm’s
this case are simi-
plaintiffs claim for benefits under his under-
Hayseeds, supra,
lar to those in
where we
May
motorist
until
insured
though
policyholder
found that even
had
filed,
months after the lawsuit was
but less
authorized the insurance carrier to obtain
settling.
than
month before
one
support
policyhold-
records which would
nothing
suggest
There is
that State
position,
er’s
the insurance carrier “did not
requested
Farm
medical records from the
complete
undertake
examination” of the
plaintiffs
providers
medical
itas was allowed policyholder’s position.
177 W.Va. at
confidentiality
to do under the circuit court’s
Furthermore, State Farm did not seek to
first-party
Farm is that a
insurance carrier
plaintiff
by physician
have the
examined
only
pay
policyhold
should
be
funds,
choosing, paid
its own
for from its own
they
er’s
fees and costs when
are
15, 1995,
prior
pursuant
to December
by “wrongful withholding”
necessitated
or
scheduling
circuit court’s
order.
Farm
State
delay”
payment
in the
“unreasonable
of the
suggest
declined to even
that such an exami- policyholder’s claim.
It appears that State
performed
nearly
nation be
until
three
argument
Farm’s
is based on our one-sen
deadline,18
months after the circuit court’s
Hayseeds
tence discussion in dicta in
and seven weeks later State Farm
jurisdictions
admitted
approach other
take to first-
that it could not determine whether a medi-
party
disputes,
where we stated:
plaintiff
cal examination of the
was “neces-
majority
It is now the
rule in American
Also,
sary
point.”
or
warranted
this
State
wrongfully
Courts that when an insurer
sought
Farm never
from
relief
the schedul-
unreasonably delays payment
or
withholds
ing
order at
time thereafter.
claim,
of an insured’s
the insurer is liable
importantly,
More
it was not until
two
foreseeable, consequential damages
for all
plaintiff
months after the
demanded the lim-
See,
naturally flowing
delay.
from the
An
policy,
its of the underinsured motorist
not.
18. We also do not understand
when the
indicates the
had ac-
record
Fluhartys requested
cepted
7,
Fluhartys’
representing the
March
this medi-
settlement offer on
11, 1996,
cal examination
letter dated March
Unfortunately,
consequential
substantially prevailed.
awards of
she has
Once that is
jurisdictions] currently
damages
proven,
[in other
is entitled to recover
judicial
interpretation of
fees,
turn on
such
consequential
his or her
dam-
easily manipulated concepts
malleable
ages and other net economic losses caused
“reasonable,” “unreasonable,” “wrong-
settlement,
delay
as well as
faith,”
ful,” “good
and “bad faith.” We
aggravation
and inconvenience.
*13
par-
that the interests of both the
believe
argues
policyholder
State Farm
that if a
is
judicial system would
ties and the
be bet-
required
prove
to
the insurance carrier’s
clear,
by the enunciation of a
ter served
“unreasonable,”
“wrongful”
actions were
or
governing
bright line standard
the avail-
every
might
then
insurance carrier
as well
ability
consequential damages
proper-
in
pay
policyholder
policy
the
the limits of the
ty damages
Accordingly,
insurance eases.
(causing in-
the moment a demand is made
today
policyholder
we hold
that when a
skyrocket),
gamble
surance costs to
or
substantially prevails
property
in a
dam-
go
every
to trial with
claim made. State
insurer,
age
policyhold-
an
the
suit
every potential plaintiff
Farm contends that
damages
er is entitled to
for net economic
negotiations
will obstruct settlement
with his
settlement,
by
delay in
loss
the
as
caused
insurer,
delay
intentionally
or her own
will
aggravation
well as an award for
and in-
settlement, and will then later demand the
convenience.
payment
first-party policy
of the limits of the
W.Va.
To be we do not mean must today demand, our statements insurance carri- fy his or change her initial pay limits of insur- er demand to conform the available informa ance the moment a tion; makes Hadorn, otherwise, supra, case, In a claim. limited its policyholder may be unable to show that “but claim, investigation thereby services, for” an he or she would delaying payment claim. There is no get not have been able that an doubt insurance carrier is allowed a trial, carrier to settle before and will not be investigate certain amount of time entitled to reimbursement from the insur claim, process expense, at its own but once ance carrier for the fees. due, it becomes clear that the benefits are delaying payment is often the same as not In this it is unquestionably case paying at all. *14 plaintiff clear that substantially pre the W.Va.Code, public policy in set forth vailed. State Farm for settled the exact 33-11-4(9) [1985]is that an insurance carrier plaintiff, amount demanded the albeit four duty a promptly has conduct its own inves- months plaintiffs after the demand. State tigation, expense, policy- its own when a argues lapse Farm that time the was incon proof holder submits of a loss. The insur- sequential, but we conclude otherwise. In consequential carrier ance becomes liable for months, intervening plaintiff those the was delays when it the settlement of a depositions, forced to conduct settlement ne liability proper claim where is reasonably trial, gotiations, prepare generally for policyholder substantially clear. When a engage litigation in that he would not have prevails pursue in a lawsuit to promptly had to ifdo State Farm had met its proceeds, presume a court that the lia- responsibilities. statutory contractual and bility of reasonably the insurer was clear. Any consequential damages incurred The circuit court found that no material jury resolution, because of the insurance carri- issues of fact for remained delay, attorney’s fees, litigation er’s such as agree and we with the circuit court’s conclu- costs, aggravation (and inconvenience gave gives) Farm sion. State still no accompany dispute can which a with an in- $30,000.00 why rationale as to offer it company, liability surance become made March a fair offer 1996 was policyholder. insurance carrier and Further, the circumstances. State Farm of- support position. fered no of affidavits its negotiations regard Settlement jury cannot see court We how the circuit or a are, course, ing first-party policy a of built on could have concluded that State had two-way a street. As said in Hadorn v. we investigated plaintiffs promptly claims. Shea, 350, 354, 194, 198 193 456 W.Va. S.E.2d agree holding with the circuit court’s (1995), negotiate^]” “[i]t takes two to For a that: attorney’s to recover reasonable carrier, from an fees there must be unlikely [I]t is that affidavit which proof attorney’s necessary “the services were persuade State provide Farm could would obtain pro of the insurance inability Farm’s Court that State part, ceeds.” Point Jordan v. injuries, evaluate if in the Plaintiffs fact Grange supra. National Mut. Ins. As inability, there was such an was due to above, stated an we insurance carrier has a anything more than State Farm’s refusal duty promptly investigate claims made necessary through information obtain policyholders, promptly attempt its discovery procedures available to it in upon fair resolution of those claims based all this case. However, of available information. if an Accordingly, we affirm the circuit court’s making has met of insurer its burden rea summary judgment plain- granting of for the upon sonable offer based all of the available tiff, information, summary judgment explained and the denial of and the insurer has policyholder’s reluctance to meet Farm. de- State
700 compensatory damages intended to make
B. injured plaintiff whole as far as loss of Prejudgment Interest is concerned. use funds point Farm’s second of error is Prejudgment part plaintiffs interest is a of a granting that the circuit court erred pecuni- damages awarded for ascertainable prejudgment losses, interest on the award fully ary compensate and serves “to reviewing injured “In party fees and costs. for the loss of the use of interest, expended.” v. funds that have been Bond prejudgment circuit court’s award of 581, 598, City Huntington, 166 usually apply an abuse of discretion stan we (1981), superseded by S.E.2d statute However, hinges, .... the award dard when Ryder, in Rice v. 184 W.Va. stated part, interpretation on an of our decisional (1990). law, statutory we review de novo that Kirk, analysis.” case, portion perceive v. In Gribben we do not 488, 500, fees and ex 195 W.Va. 466 S.E.2d ascertainable, penses pecuniary, to be out-of- pocket expenditures an award of To determine whether support prejudgment would an award of in prejudgment appropriate, interest “we Mingo terest. State ex rel. Cf. Chafin Virginia first must determine whether West Comm’n, County 434 S.E.2d expressly expressly law allows or forbids the curiam) (1993) (per (attorney’s ap fees *15 awarding of interest.” Id. The of inclusion proved, prejudgment but interest not allowed by prejudgment governed interest is fees). W.Va. on those Code, [1981], provides that if a 56-6-31 which First, Hayseeds, we stated 177 W.Va. at decree, thereof, “judgment any part or or is 352 S.E.2d at that a circuit court below, special damages, for as defined or for may attorney’s assess reasonable fees to the liquidated spe damages, the amount of such policyholder’s attorney and the insur- liquidated damages cial or shall bear interest contingent carrier. ance While reasonable right bring from the date the the same attorney’s presumed fee is to be one-third of (unless “special shall have accrued....” The term recovery the face value of the including wages extremely damages” enormously is defined as “lost is small or income, large), unliquidated that amount is and un- expenses, damages and medical ruling. until settled the circuit court issues its tangible personal property, and similar out- Only approves after the circuit court of-pocket expenses....”20 policyholder’s attorney’s fee does the amount purpose pre We defined the of Hence, liquidated and become established. judgment interest Point available, prejudgment not interest is be- Buckhannon-Upshur County Airport Au attorney’s cause the amount of the fee not is Inc., thority Contracting, v. R R& Coal 186 ascertainable until the circuit court issues (1991), stating S.E.2d ruling. that: Second, Hayseeds, a circuit court interest, Prejudgment according to West may policyholder’s attorney’s shift a reason- (1981) Virginia § Code 56-6-31 litigation expenses able to the insurance car- interpreting However, cases, decisions this Court rier as well. in most those statute, cost, litigation “out-of-pocket expen- is not a but is a form of costs are vided, bear interest from the date thereof, so stated in the from or for money special every Except -W.Va.Code, judgment that if the liquidated damages, entered is for where it is otherwise date the liquidated damages special damages, 56-6-31 judgment by any judgment or decree for the right [1981] court or decree or not: Pro- or thereof, bring the amount of such decree, states: shall bear interest as defined provided by this State shall the same shall whether it be or any part below, law, or shorter have property, medical as one hundred dollars ately sions cial The rate of interest shall be ten dollars determined for a accrued, of law. expenses, damages and similar time, notwithstanding any greater by includes as determined the court. or lesser per out-of-pocket expenditures, lost annum, sum, wages by tangible personal the court. or for a other proportion- income, longer provi- upon Spe- policyholder contemplat- granting summary judgment ditures” to the as is plaintiff, W.Va.Code, 56-6-31, primarily ed because and affirm the award of fees and contingent agreement, policy- under a fee However, costs. we reverse and set aside responsible holder does not become for these prejudgment the circuit court’s award of in- pays costs until after the insurance carrier terest. Accordingly, the verdict or settlement.21 part, part. Affirmed reversed in usually policyholder pre- not recover judgment in- expenses interest attorney.
curred his MAYNARD, Justice, dissenting: case, reviewing After the record in this we (Filed 1997) Dec. conclude that the circuit court erred in awarding plaintiff prejudgment interest I strenuously dissent this case because I on his fees and costs. There is no believe that if a is not evidence in the record that these fees and prove the insurance carrier’s actions were “out-of-pocket expenditures” costs were unreasonable, wrongful or as this decision prejudgment which interest could be award- provides, every might insurance carrier Further, ed. aside from the award of attor- pay well the limits of the costs, ney’s judgment fees and there was no policy the moment the demand is made. concerning the circuit court simply That unfair and will cause insur- upon underinsured motorist benefits which skyrocket. only ance costs to other assessed; prejudgment interest could be option for defendants such as these is to paid benefits were as the result of a gamble go every to trial with claim Accordingly, settlement. we reverse the cir- Further, made. I believe this decision will prejudgment cuit court’s award of interest.22 encourage every potential plaintiff to ob- negotiations struct settlement with his or her III. carrier, intentionally delay set-
Conclusion
tlement,
then to later demand the
above,
first-party policy, plus
For the reasons set forth
the limits of the
attor-
we affirm
6,
September
ney’s
the circuit court’s
1996 order
fees and costs.
carrier,
By
Through
Myers,
Grove
and
Grovev.
181
even when that interest is in excess of
Cf.
(1989)
See,
W.Va.
policy
e.g.,
nothing pay policyholders’ wrong will have fees, attorneys’ consequential losses, net as dam-
other economic as well
ages aggravation It and inconvenience. right
also denies insurance carriers their claims,
investigate defend which will en-
courage fraud abuse. course, pur- the real losers are
Of here pay will
chasers insurance who have