Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

General Assurance of America, Inc. v. Arch Insurance Company

United States District Court, S.D. West Virginia, Huntington Division

December 12, 2018

GENERAL ASSURANCE OF AMERICA INC., a Virginia Corporation, Plaintiff,
v.
ARCH INSURANCE COMPANY, a Missouri Corporation, Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS UNITED STATES DISTRICT JUDGE

         Pending before the Court is a Motion for Partial Dismissal by Defendant Arch Insurance Company (Arch). ECF No. 29. For the following reasons, the Court GRANTS the motion.

         Plaintiff General Assurance of America, Inc. (GAA) filed this action on December 28, 2017, alleging inter alia that Arch breached its fiduciary duties and tortuously interfered with GAA's business relationships and dealings. See Compl. at ¶¶ l, m, ECF No. 1, at 9. Arch argues these particular claims are barred by West Virginia's two-year statute of limitations and, therefore, must be dismissed. In response, GAA asserts that Missouri's five-year statute of limitations applies under a choice-of-law provision in an Agency Agreement entered into by the parties. In the alternative, GAA contends that, even if the Court determines West Virginia law applies, the statute of limitations did not begin to run until April 30, 2016 and, thus, the Complaint was timely filed.

         Although a complete recitation of the history of this case is unnecessary for purposes of the current motion, an abbreviated synopsis of the facts is valuable. The current case is round two of litigation in this Court arising from complex and contentious litigation involving the denial of an insurance claim for damage that occurred to a commercial building owned by Frederick Management Company, LLC (Frederick Management). See Frederick Mgmt. Co. v. Gen. Assurance of Am., Inc., 3:12-3019 (S.D. W.Va. 2012) (original action). When the damage occurred, First Community Bank, which had a security interest in the building, had a forced-placed insurance policy on the property issued by Arch. After insurance issues arose, Frederick Management filed suit against First Community Bank, Arch, GAA, and Compass Claim Service, Inc. Frederick Management alleged that GAA was an agent of First Community Bank and Arch in handling the claim. During that litigation, Arch filed a cross-claim against GAA, demanding that GAA defend and indemnify it. Ultimately, Arch settled with Frederick Management and dismissed its cross-claim against GAA. The settlement agreement between Frederick Management and Arch provided that the parties were to bear “their own costs and attorneys' fees.” Ex. 4 to the Compl., at 1, ECF No. 1-2, at 21 (Partial Dismissal Order, 3:12-3019, ECF No. 311). Likewise, in the Order voluntarily dismissing Arch's cross-claim against GAA, the parties stipulated to “bear their own costs and attorneys' fees.” Ex. 7 to the Compl., at 1, ECF No. 1-2, at 32 (Voluntary Order of Dismissal of Cross-Cl., 3:12-3019, ECF No. 317).

         In this action, GAA asserts that Arch breached these agreements because Arch paid for its attorneys' fees and costs and for its settlement with Frederick Management by wrongfully withholding the commissions GAA had earned by selling insurance policies for Arch. Arch also terminated its business relationship with GAA, which resulted in GAA suffering a loss of a business with, but not limited to, First Community Bank. As relevant here, GAA claims that these actions breached the fiduciary duties Arch owed to it and interfered with its business relationships. Arch denies these claims but, irrespective of whether GAA's claims are meritorious, Arch argues that GAA's claims for breach of fiduciary duties and tortious interference with business relationships are barred by West Virginia's two-year statute of limitations for torts. Arch further argues that the Missouri choice-of-law clause in the Agency Agreement does not apply because these are extra-contractual claims and, therefore, are not controlled by the choice-of-law provision.

         As this Court's jurisdiction is based upon diversity pursuant to 28 U.S.C. § 1332, the Court must apply West Virginia's choice-of-law rules in determining what law applies. Kenney v. Indep. Order of Foresters, 744 F.3d 901, 905 (4th Cir. 2014). Under West Virginia law, the Court must first decide how the claim at issue is characterized. Id. If the claim sounds in contract, the Court generally applies the rule of lex loci contractus, [1] although contractual choice-of-law provisions are presumptively valid and are typically enforced. Id.; Blackrock Capital Inv. Corp. v. Fish, 799 S.E.2d 520, 527 ( W.Va. 2017) (recognizing “the presumptive validity of a choice of law provision” (citations and internal quotation marks omitted)).[2] If the claim sounds in tort, the Court generally applies the rule of lex loci delecti.[3] Kenney, at 905 (citations omitted).

         Under West Virginia laws, the Court finds that GAA's claims for breach of fiduciary duty and for tortious interference with business relationships are considered torts, subject to West Virginia's two-year statute of limitations. See West Virginia Code § 55-2-12 (setting forth the statute of limitations);[4] Starcher v. Pappas, No. 16-1160, 2017 WL 5157366, at *5 ( W.Va. Nov. 7, 2017) (holding “an action for breach of fiduciary duty is governed by a two-year statute of limitations” (citation omitted)); Blyler v. Matkovich, Nos. 14-0760 & 14-1335, 2015 WL 7628843, at *3 ( W.Va. Nov. 23, 2015) (stating West Virginia law “is also clear that the tort[] of . . . breach of fiduciary duty . . . [is] governed by the two-year statute of limitation in West Virginia Code § 55-2-12”); Syl. Pt. 6, Garrison v. Herbert J. Thomas Mem'l Hosp. Ass'n, 438 S.E.2d 6, 7 ( W.Va. 1993) (stating “[a]n individual's right to conduct a business or pursue an occupation is a property right. The type of injury alleged in an action for tortious interference with business relationship is damage to one's business or occupation. Therefore, the two-year statute of limitations governing actions for damage to property, set forth under W.Va. Code, 55-2-12 [1959], applies to an action for tortious interference with business relationship”). GAA argues, however, the Court should apply Missouri law because applying West Virginia law is inconsistent with Arch's representation in the underlying action that Missouri law applies and GAA had agreed that “the Agency Agreement between GAA and Arch was governed by the laws of the State of Missouri.” Resp. on Behalf of GAA to Arch's Mot. for Partial Dismissal, at 1, ECF No. 38. In its Reply, Arch does not deny Missouri law applied to its cross-claims for breach of contract and contractual indemnity in the underlying action, but Arch insists the provision does not apply to the extra-contractual claims at issue here.

         Upon consideration, the Court agrees with Arch. In fact, GAA points to no language in the Agency Agreement, or the choice-of-law provisions contained therein, that it believes is broad enough to govern non-contractual tort claims. See Cavcon, Inc. v. Endress Hauser, Inc., 557 F.Supp.2d 706, 720 (S.D. W.Va. 2008) (finding that a choice-of-law provision applied to a breach of contract claim, but not a claim for tortious interference or other tort or quasi-tort claims); Work While U-Wait, Inc. v. Teleasy Corp., Civ. Act. No. 2:07-00266, 2007 WL 3125269, at *6 (S.D. W.Va. Oct. 24, 2007) (stating, where a choice-of-law provision is narrow and applies only to governing and construing the agreement itself, and does not purport to govern all disputes between the parties, the choice-of-law provision does not apply to a fraud claim that sounds in tort); see also FDIC Corp. v. British-Am. Corp., 755 F.Supp. 1314, 1325 (E.D. N.C. 1991) (“A contractual choice-of-law provision selecting the law to govern the construction or interpretation of the contract has no impact on the law which governs claims unrelated to the construction or interpretation of the contract.” (citations omitted)). Accordingly, the Court shall apply West Virginia's two-year statute of limitations to the claims at issue here.

         GAA further argues that, even if West Virginia's two-year statue of limitations applies, its claims are not barred by the statute of limitations. Specifically, GAA states that Arch did its final accounting of the commissions on April 30, 2016, and it was at that point it became clear that Arch would not refund the commissions it deducted from the account. Therefore, GAA argues its claims were timely filed as of December 28, 2017.

         Arch rebuts this argument, however, by pointing to the Complaint itself. Arch argues that nowhere in the Complaint does GAA mention the final accounting. In fact, GAA attached several documents to its Complaint, demonstrating that the claims accrued-at the latest-on February 13, 2014. Specifically, GAA attached to its Complaint an Affidavit from Ronald H. Vassar, President of GAA, dated March 24, 2014, in which he states, in part:

4. In the onset of GAA's relationship with Arch, Arch established a Contingency Loss Reserve Fund (CLRF) of cumulative earned premiums on business produced by GAA in the amount of $250, 000. The CLRF has been retained by Arch and according to the contract “The Insurer may deduct from the CLRF any amount the Agent fails to pay the Insurer when due under the terms of the agreement.”
5. Without seeking the permission or agreement of GAA, and over strenuous objection of GAA, Arch Insurance Company has included what GAA believes to be every legal fee paid by Arch to its attorneys concerning this [the underlying] civil action, as well as what is believed to be the settlement paid by Arch to Frederick Management in their CLRF.
6. Arch Insurance Company has charged all FM legal fees to General Assurance of America under the pretense of Incurred Loss Adjustment Expenses. A total of $143, 967.60 has been deducted from GAA's CLRF under Incurred Loss Adjustment Expenses.
7. Arch Insurance Company has charged what we believe to be the FM settlement back to GAA under the pretense of Net Incurred Losses. A total of $120, 000 has deducted from GAA's CLRF under Net ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.