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State ex rel. Universal Underwriters Insurance Co. v. Wilson

Supreme Court of West Virginia

March 8, 2019

STATE OF WEST VIRGINIA ex rel. UNIVERSAL UNDERWRITERS INSURANCE COMPANY AND ZURICH AMERICAN INSURANCE COMPANY, Petitioners
v.
THE HONORABLE PATRICK N. WILSON, JUDGE OF THE CIRCUIT COURT OF MARION COUNTY, WEST VIRGINIA, CHRISTINA M. VARVEL, ADMINISTRATRIX OF THE ESTATE OF DAVID RALPH ALLEN, DECEASED, SALVATORE CAVA, DAN'S CAR WORLD, LLC, DAN CAVA'S TOYOTA WORLD, AND DANIEL A. CAVA, Respondents

          Submitted: February 5, 2019

         Petition for Writ of Prohibition WRIT GRANTED

          Arie M. Spitz, Esq. Jill C. Rice, Esq. Dinsmore & Shohl, LLP Charleston, West Virginia Attorneys for Petitioners

          Dino S. Colombo, Esq. Travis T. Mohler, Esq. Colombo Law Morgantown, West Virginia Attorneys for Respondent, Christina M. Varvel

          SYLLABUS BY THE COURT

         1. "With respect to insurance contracts, the doctrine of reasonable expectations is that the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations." Syllabus point 8, Nat'l Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987), overruled on other grounds by Parsons v. Halliburton Energy Servs., Inc., 237 W.Va. 138, 785 S.E.2d 844 (2016) and Potesta v. U.S. Fid. & Guar. Co., 202 W.Va. 308, 504 S.E.2d 135 (1998).

         2. As a general rule, in order for the doctrine of reasonable expectations to be applicable to an insurance contract, there must be an ambiguity regarding the terms of that contract. However, an exception to this general rule occurs when reliable and relevant evidence, extrinsic to the insurance contract, casts a reasonable doubt as to whether coverage was provided by an otherwise unambiguous policy.

         3. Pursuant to Rule 30(b)(7) of the West Virginia Rules of Civil Procedure, an organization is required to designate a deponent(s) who must testify as to matters known or reasonably available to the organization that were designated for the deposition. Generally, if the deponent testifies that he or she has no information on a matter that comes within the scope of the areas designated for the deposition, the organization may not, for summary judgment purposes, proffer new or different information that could have been provided at the time of the Rule 30(b)(7) deposition. The information may, however, be proffered if the organization can show that the information was not known or was inaccessible at the time of the deposition.

         4. "Judicial estoppel bars a party from re-litigating an issue when: (1) the party assumed a position on the issue that is clearly inconsistent with a position taken in a previous case, or with a position taken earlier in the same case; (2) the positions were taken in proceedings involving the same adverse party; (3) the party taking the inconsistent positions received some benefit from his/her original position; and (4) the original position misled the adverse party so that allowing the estopped party to change his/her position would injuriously affect the adverse party and the integrity of the judicial process." Syllabus point 2, W.Va. Dep't of Transp., Div. of Highways v. Robertson, 217 W.Va. 497, 618 S.E.2d 506 (2005).

         5. For summary judgment purposes, judicial estoppel may be applied against a litigant to prevent the litigant from using deposition testimony of a nonparty that is not consistent with a position taken by the deponent in a previous case, or with a position taken earlier in the same case. Application of this principle should be rare and only when the integrity of the judicial process is clearly undermined.

          HUTCHISON, JUSTICE

         This matter was brought under the original jurisdiction of this Court as a petition for a writ of prohibition, by Universal Underwriters Insurance Company and Zurich American Insurance Company (hereinafter "Petitioners").[1] The Petitioners seek to have this Court prohibit enforcement of a ruling by the Circuit Court of Marion County that denied their motion for summary judgment against the Respondent, Christina M. Varvel, administratrix of the estate of David Ralph Allen. Upon careful review of the briefs, the appendix record, the arguments of the parties, and the applicable legal authority, we grant the writ.

         I. FACTUAL AND PROCEDURAL HISTORY

         On May 30, 2014, in the town of Bridgeport, West Virginia, Salvatore Cava pulled out of the parking lot of a McDonald's restaurant and collided with a motorcycle being driven by David Ralph Allen. Mr. Allen sustained injuries and was taken to a hospital. He died several days later. The car that was driven by Salvatore Cava was owned by an auto dealership called Dan's Car World. Salvatore Cava's father, Dan Cava (Mr. Cava), owned the auto dealership.[2] Petitioners provided an insurance policy for Dan's Car World. Under Part 500 of the policy, entitled Garage Operations and Auto Hazard, a limit of $300, 000 in liability coverage was provided. Part 980 of the policy, entitled Commercial Umbrella, provided up to $5, 000, 000 in liability coverage.

         In December of 2014, Respondent brought a civil action initially against Salvatore Cava and Dan's Car World. The Respondent also asserted a declaratory judgment action against Petitioners to determine the amount of insurance coverage available. The complaint was eventually amended in January of 2016, to add Mr. Cava as a defendant. The Petitioners offered to settle the matter for $300, 000, the limit under the garage coverage provision of the policy. The Petitioners took the position that the umbrella coverage part of the policy did not cover the Respondent's claims against Salvatore Cava, because he was not a designated person under that provision. The Respondent rejected the settlement offer and argued that the umbrella portion of the policy provided additional liability coverage for the claims asserted against Salvatore.

         In March of 2016, Mr. Cava, Salvatore Cava and Dan's Car World filed individual cross-claims against the Petitioners, asserting bad faith, breach of contract and other claims. Petitioners filed a motion to dismiss the cross-claims. The circuit court denied the motion. The Petitioners filed a writ of prohibition with this Court challenging the denial of its motion to dismiss. This Court granted Petitioners relief in that proceeding, after it was determined that the circuit court lacked subject matter jurisdiction over the cross-claims because those claims were not ripe.[3] See State ex rel. Universal Underwriters Ins. Co. v. Wilson, 239 W.Va. 338, 801 S.E.2d 216 (2017).

         After our decision in Wilson, the Petitioners filed a motion for summary judgment in the declaratory judgment case.[4] Mr. Cava and Dan's Car World also filed a motion for summary judgment on the tort claims. In an opinion letter dated May 29, 2018, the circuit court denied Petitioners' motion for summary judgment on the coverage issue.[5]The circuit court denied summary judgment based upon two dispositive factors. First, it was found that a material issue of fact was in dispute regarding the reasonable expectation of coverage for Salvatore Cava under the umbrella provision of the policy. Second, the court found that judicial estoppel could not be invoked by Petitioners to preclude Mr. Cava from testifying about an alleged conversation he had with Petitioners' agent regarding umbrella coverage for Salvatore Cava. Petitioners filed the instant matter after the circuit court denied their motion for summary judgment in the opinion letter. [6]

         II. STANDARD OF REVIEW

         This case comes to this Court as a petition for a writ of prohibition. We have long held that "[t]he writ of prohibition will issue only in clear cases, where the inferior tribunal is proceeding without, or in excess of, jurisdiction." Syllabus, State ex rel. Vineyard v. O'Brien, 100 W.Va. 163, 130 S.E. 111 (1925). See Syl. pt. 2, State ex rel. Peacher v. Sencindiver, 160 W.Va. 314, 233 S.E.2d 425 (1977) ("A writ of prohibition will not issue to prevent a simple abuse of discretion by a trial court. It will only issue where the trial court has no jurisdiction or having such jurisdiction exceeds its legitimate powers. W.Va. Code 53-1-1."). In Syllabus point 4 of State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996), we set forth the following standard for issuance of a writ of prohibition when it is alleged a lower court is exceeding its authority:

In determining whether to entertain and issue the writ of prohibition for cases not involving an absence of jurisdiction but only where it is claimed that the lower tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the party seeking the writ has no other adequate means, such as direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent disregard for either procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression. These factors are general guidelines that serve as a useful starting point for determining whether a discretionary writ of prohibition should issue. Although all five factors need not be satisfied, it is clear that the third factor, the existence of clear error as a matter of law, should be given substantial weight.

         With the foregoing in mind, we turn to the parties' arguments.

         III. DISCUSSION

         The Petitioners argue that the circuit court erred as a matter of law in denying their motion for summary judgment on the grounds that (1) the umbrella coverage provision of the policy was ambiguous therefore the doctrine of reasonable expectations applied, and (2) the doctrine of judicial estoppel did not apply. The Respondent takes the position, as it did below, that summary judgment was properly denied because the doctrine of reasonable expectations applied for two reasons: (1) ambiguity existed as to whether Endorsement No. 043 applied to the umbrella coverage provision; and (2) because of the conflicting evidence as to whether Petitioners' agent informed Mr. Cava that Salvatore was covered under the umbrella provision of the policy. The Respondent also argues that Petitioners failed to satisfy the elements of the doctrine of judicial estoppel.

         We begin by setting out the legal principles that guide our resolution of the issue of the application of the doctrine of reasonable expectations to this case. This Court has defined the doctrine of reasonable expectations as follows:

With respect to insurance contracts, the doctrine of reasonable expectations is that the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.

Syl. pt. 8, Nat'l Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987), overruled on other grounds by Parsons v. Halliburton Energy Servs., Inc., 237 W.Va. 138, 785 S.E.2d 844 (2016) and Potesta v. U.S. Fid. & Guar. Co., 202 W.Va. 308, 504 S.E.2d 135 (1998). We have also made clear that "[b]efore the doctrine of reasonable expectations is applicable to an insurance contract, there must be an ambiguity regarding the terms of that contract." Syl. pt. 2, Robertson v. Fowler, 197 W.Va. 116, 475 S.E.2d 116 (1996). "When reasonable people can differ about the meaning of an insurance contract, the contract is ambiguous, and all ambiguities will be construed in favor of the insured." Syl. pt. 1, D'Annunzio v. Security-Connecticut Life Insurance Co., 186 W.Va. 39, 410 S.E.2d 275 (1991). See Syl. pt. 1, Prete v. Merchants Prop. Ins. Co. of Indiana, 159 W.Va. 508, 223 S.E.2d 441 (1976) ("Whenever the language of an insurance policy provision is reasonably susceptible of two different meanings or is of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous."). In construing the terms of a policy we have held that "[l]anguage in an insurance policy should be given its plain, ordinary meaning." Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W.Va. 470, 486, 745 S.E.2d 508, 524 (2013) (internal quotation marks and citation omitted). Thus, "[w]here the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended." Syllabus, Keffer v. Prudential Ins. Co. of America, 153 W.Va. 813, 172 S.E.2d 714 (1970).

         As previously stated, the Respondent argues that the policy is ambiguous because it is not clear as to whether Endorsement No. 043 applies to the umbrella provision. The relevant language of the umbrella provision reads as follows:

Who Is An Insured
C. With respect to:
1.any AUTO or watercraft used in YOUR business; or
2.personal use of any AUTO owned or hired by YOU;
any person or organization shown in the declarations for this coverage part as a
Designated Person.
Commercial Umbrella
Endorsements Applicable:
0089 Umbrella Limits Inclusive
0809 Personal Property in Customer's Auto Excluded
Designated Persons:
Dan Cava

         The quoted language from the umbrella provision of the policy is not ambiguous. It clearly only designates "Dan Cava" as an insured under the umbrella provision. The Respondent contends that the language which makes the policy ambiguous is contained in Endorsement No. 043. The language in Endorsement No. 043 provides that an insured under the umbrella provision is "any of YOUR partners, paid employees, directors, executive officers, or stockholders, and members of their households." According to the Respondent Endorsement No. 043 provides umbrella coverage for Salvatore Cava because he was a member of Mr. Cava's household.

         The Respondent asserts that it is unclear as to whether Endorsement No. 043 applies to the policy, therefore the policy is ambiguous. We disagree. The Petitioners point out that the type of policy issued to Dan's Car World is called a Unicover Policy. This type of policy is typically issued to auto dealerships. A Unicover Policy comprises about 200 pages that set out numerous coverage options and endorsements. According to Petitioners "[w]hen a policy is sold to a customer, a Declarations Page(s) is issued to that customer that identifies which of the coverage options and endorsements contained in the booklet the customer has purchased." The Petitioners point out that the policy purchased by Dan's Car World clearly and unambiguously sets out the Endorsements that are applicable to the umbrella provision: Endorsement No. 0089 and Endorsement No. 0809. It is clear to this Court that the Respondent has simply located an Endorsement that was not purchased by Dan's Car World and attempted to use it to argue that the policy is ambiguous. We have made clear that "[a]n insurance policy should never be interpreted so as to create an absurd result, but instead should receive a reasonable interpretation, consistent with the intent of the parties." Syl. pt. 2, D'Annunzio.

         The decision in Universal Underwriters Ins. Co. v. Paradis, 50 Conn.Supp. 486, 940 A.2d 918 (Super. Ct. 2006), aff'd, 285 Conn. 342, 940 A.2d 730 (2008) demonstrates the simplicity of reviewing an umbrella provision of a Unicover Policy to determine who is a named insured. In that case, an auto dealership's employee, Eric Paradis, was sued for causing the death of a person while driving his employer's car. The employer had a Unicover Policy that provided umbrella coverage in the amount of $10 million. The insurer filed a declaratory judgment action seeking a determination that the umbrella coverage did not apply to the employee. The trial court granted summary judgment for the insurer, which was affirmed on appeal, based upon the following reasoning:

Crowley's unicover policy explicitly names the individual insureds for each coverage part separately. . . . Page 1-0 of the policy declarations provides in relevant part: "Umbrella (Part 980) . . . Designated Persons: Kenneth Crowley, Steven Miller, Thomas Moden, Kimberley Marie Crowley, Mark Crowley, James Brooks, Gary Stebbins, Peter Kelly, Thomas Strano, Tom Jasperson [and] Debbie Fregeau." Paradis is not listed. Our Supreme Court in Cantonbury Heights Condominium Assn., Inc. v. Local Land Development, LLC, 273 Conn. 724, 735, 873 A.2d 898 (2005), explained that "[a] contract is unambiguous when its language is clear and conveys a definite and precise intent. . . . The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity. . . . [T]he mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous. . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous." (Internal quotation marks omitted.) Unambiguous contract language is given effect according to its terms. Poole v. Waterbury, 266 Conn. 68, 88, 831 A.2d 211 (2003). The declarations, by their terms, designate by name the business entities and individuals insured under the optional umbrella coverage. The definition of an insured for such coverage has a definite and precise meaning concerning which there is no reasonable basis for a difference of opinion. As a consequence, efforts by Lamont and the estate to assert that Paradis had umbrella coverage must fail.

Paradis, 50 Conn.Supp. at 493-95, 940 A.2d at 923-24.

         The decision in Paradis is consistent with our conclusion that umbrella coverage under Petitioners' Unicover Policy is determined by a review of who has been named in the Designated Persons section of the provision. In the instant proceeding, Mr. Cava is the only person named in the Designated Persons section of the umbrella provision. There is nothing ambiguous about that designation.

         Although we have determined that no ambiguity exists in the relevant language of the umbrella provision of the policy, the Respondent contends that the doctrine of reasonable expectations may still apply because of an alleged conversation between Petitioners' agent and Mr. Cava before the auto accident occurred. "[T]his Court has applied the doctrine of reasonable expectations in select cases not involving ambiguous policy provisions[.]" Cherrington, 231 W.Va. at 493 n.43, 745 S.E.2d at 531 n.43 (2013). We have done so when reliable and relevant evidence, extrinsic to a policy, casts doubt on whether a claim was not covered by an otherwise unambiguous policy. See New Hampshire Ins. Co. v. RRK, Inc., 230 W.Va. 52, 736 S.E.2d 52 (2012) (holding that a jury question was presented as to whether it was reasonable for insured to rely solely on a 17-page fax as containing all of the terms of its insurance contract and in failing to review the actual policy mailed to it on two occasions); Costello v. Costello, 195 W.Va. 349, 465 S.E.2d 620 (1995) (holding that conduct during the application process may have created a reasonable expectation of insurance); Keller v. First Nat'l Bank, 184 W.Va. 681, 403 S.E.2d 424 (1991) (finding that even though offer to insure was extended by mistake it created an expectation of coverage therefore coverage could not be denied); Romano v. New England Mutual Life Insurance Co., 178 W.Va. 523, 362 S.E.2d 334 (1987) (finding unambiguous policy exclusion not applicable because promotional materials provided to the insured led him to a reasonable belief that he was covered under the policy). During oral argument counsel for Petitioners suggested that in Erie Ins. Prop. & Cas. Co. v. Chaber, 239 W.Va. 329, 801 S.E.2d 207 (2017) this Court implicitly disapproved of the line of cases invoking the doctrine of reasonable expectations when a policy was not ambiguous. The decision in Erie did not implicitly reject the principle of law recognized in those line of cases.

         In Erie this Court merely refused to consider the exception to the ambiguity requirement under the specific facts of that case. Had the opinion intended to disapprove of the line of cases recognizing the exception to the ambiguity requirement, we would have done so expressly. In order to bring clarity to the bench and bar, we now expressly hold that as a general rule, in order for the doctrine of reasonable expectations to be applicable to an insurance contract, there must be an ambiguity regarding the terms of that contract. However, an exception to this general rule occurs when reliable and relevant evidence, extrinsic to the insurance contract, casts a reasonable doubt as to whether coverage was provided by an otherwise unambiguous policy. We must now determine whether the facts of this case fall within the narrow exception to the requirement of ambiguity to trigger the doctrine of reasonable expectations.

         To start, before Mr. Cava was brought into the case as a named defendant, the Petitioners sought to depose Dan's Car World under Rule 30(b)(7) of the West Virginia Rules of Civil Procedure.[7] Dan's Car World designated its controller, Tiffany Moine, as the Rule 30(b)(7) deponent for the company.[8] During the deposition, which occurred on June 29, 2015, Ms. Moine testified about a conversation she had with Mr. Cava regarding policy coverage for Salvatore Cava. The relevant part of the deposition testimony was as follows:

Q. All right. Well, are you aware of any communications between Dan's Car World and Zurich or Universal that would be considered a request for coverage in addition to or separate from the coverages that are shown on this dec page?
A. Yes, I am aware of a conversation.
Q. All right. Tell me about that, please.
A. After the incident, Danny had a conversation with me that he was under the--the assumption that after he spoke with a representative with Zurich at some point in time after Salvatore was needing to be put on our policy, that Danny was under the assumption that he had been added to the ...

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