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Mine Temp, LLC v. Wells Fargo Insurance Services of West Virginia, Inc.

Supreme Court of Appeals of West Virginia

November 4, 2019

Mine Temp, LLC, Plaintiff Below, Petitioner
v.
Wells Fargo Insurance Services of West Virginia, Inc., Defendant Below, Respondent

          (Barbour County 10-C-23)

          MEMORANDUM DECISION

         Petitioner Mine Temp, LLC ("Mine Temp"), by counsel Timothy J. LaFon, appeals the July 26, 2018, order of the Circuit Court of Barbour County that granted the motion for summary judgment filed by Respondent Wells Fargo Insurance Services of West Virginia, Inc. ("Wells Fargo"), on Mine Temp's claim for negligent procurement of appropriate insurance. Wells Fargo, by counsel Gerard R. Stowers, filed a response in support of the circuit court's order.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the order of the circuit court is appropriate under Rule 21 of the Rules of Appellate Procedure.

         Pursuant to an independent contractor agreement that was entered into in 2007, Mine Temp provided apprentice miners to a coal mine operated by ICG/Wolf Run Mining ("Wolf Run"). The agreement, among other things, required Mine Temp to obtain commercial general liability ("CGL") insurance with a combined single limit of $1, 000, 000.00 and also required Mine Temp to indemnify, defend, and save harmless Wolf Run from claims resulting from or arising out of Mine Temp's performance of the work, as that term is defined in the agreement. The agreement, by its terms, expired on April 30, 2008.

         Mine Temp contacted Respondent Wells Fargo for the purpose of obtaining insurance in order to satisfy the requirements of Mine Temp's agreement with Wolf Run. After Wells Fargo presented Mine Temp with quotes from three insurance companies, Mine Temp chose to purchase a CGL policy from Chubb Custom Insurance Company ("Chubb") commencing in 2006. The policy was renewed in 2007 and 2008, with the most recent policy in effect from March 22, 2007, to June 15, 2008. The CGL policy provided coverage for any "damages that the insured becomes legally obligated to pay by reason of liability: imposed by law; or assumed in an insured contract . . . ." Notably, the policy included two relevant exclusions. The first was an Employer's Liability Exclusion that provided that "[t]his insurance does not apply to bodily injury to an employee of the insured arising out of and in the course of: 1. employment by the insured; or 2. performing duties related to the conduct of the insured's business. . . . This exclusion does not apply to the liability for damages assumed by the insured in an insured contract." (Emphasis added). The second exclusion, an Employer's Liability, Total Exclusion, applied to the General Liability coverage in the policy and stated that "[t]he following exclusion is added to this policy and replaces any similar exclusion contained therein." (Emphasis added).[1]

         On May 30, 2008, a Mine Temp employee, Adam Lanham, was fatally injured when a Wolf Run employee backed over him with an end loader while Mr. Lanham was working at a mine owned and operated by Wolf Run. Mr. Lanham's estate filed a workers' compensation claim against Mine Temp. The estate also filed a civil action in the Circuit Court of Barbour County against Mine Temp, alleging deliberate intent, and against Wolf Run and its foreman, John Jackson, alleging negligence.[2] In that action ("the Lanham action"), Wolf Run filed a cross-claim against Mine Temp based upon the indemnity provision in the independent contractor agreement between Wolf Run and Mine Temp.

         Mine Temp reported the claims to its respective insurance carriers through Wells Fargo. While Mine Temp's workers' compensation carrier covered the workers' compensation claim, Chubb denied coverage for Wolf Run's cross-claim for indemnification against Mine Temp. In a letter dated March 25, 2009, Chubb advised Mine Temp that, based upon the policy's Employer's Liability, Total Exclusion, it would neither defend nor indemnify Mine Temp in the Lanham action. See n. 1.

         Mine Temp thereafter filed the instant declaratory judgment action against Chubb and Wells Fargo alleging that it was entitled to coverage for all claims asserted against it in the Lanham action. Mine Temp also alleged that "Wells Fargo had a duty to act with reasonable care and prudence in obtaining the appropriate insurance for" Mine Temp and, "[i]n the event that coverage is not provided in said policy, then the Defendant Wells Fargo was negligent in its procurement of the appropriate insurance."

         In the declaratory judgment action, Chubb filed a motion for summary judgment based upon the CGL's Employer's Liability, Total Exclusion. By order entered on May 23, 2011, the circuit court granted Chubb's motion for summary judgment concluding that the Employer's Liability, Total Exclusion excluded coverage for the claims of the Lanham estate. It does not appear that Mine Temp appealed this order.

         Thereafter, in the Lanham action, the circuit court granted summary judgment in favor of Mine Temp as to Wolf Run's cross-claim for contractual indemnity. In its December 7, 2015, order, the circuit court found that the independent contractor agreement between Mine Temp and Wolf Run expired by its own terms on April 30, 2008, before the accident that caused the death of Adam Lanham, and that there was no evidence showing that the parties had a "meeting of the minds" to continue with the agreement after it expired. It does not appear that either Mine Temp or Wolf Run appealed this ruling.

         In the present action, Wells Fargo filed a motion for summary judgment against Mine Temp alleging that, given that (1) the independent contractor agreement between Wolf Run and Mine Temp was found, in the Lanham action, to have expired prior to the accident that killed Adam Lanham and (2) any duty Mine Temp had to indemnify Wolf Run was extinguished by the expiration of that agreement, then any alleged negligent failure of Wells Fargo to place coverage for the indemnity contained in the expired agreement must also fail as a matter of law. Alternatively, Wells Fargo argued that (as an "agent" for Chubb in placing the coverage) it is immune from suit in tort or contract by the insured, Mine Temp, under existing West Virginia law. In its response to Wells Fargo's motion for summary judgment, Mine Temp argued that it had a special relationship with Wells Fargo under which Wells Fargo represented to Mine Temp that it had procured the proper insurance required by the indemnity provision in Mine Temp's independent contractor agreement with Wolf Run.

         By order entered on July 26, 2018, the circuit court granted Wells Fargo's motion for summary judgment. The court held, "as a matter of law, that since the [independent contractor] [a]greement expired before the date of the fatal accident, any claim for alleged negligence by Wells Fargo in the placement of the CGL policy fails as a matter of law, since the failure to place coverage for the 'insured contract' could not be the proximate cause of any loss suffered by the Plaintiff, Mine Temp." Further, the court found that "any claim for alleged negligence by Wells Fargo in the placement of the CGL policy [also] fails as a matter of law, since the claim for failure to place coverage for an expired 'insured contract' is moot as a matter of law."[3] Finally, to the extent Mine Temp argued that it had a special relationship with Wells Fargo such that Wells Fargo had a duty to advise Mine Temp that it was adequately insured for the risk flowing from the independent contractor agreement and the indemnity provision therein, the circuit court agreed with Wells Fargo that, under West Virginia law, licensed insurance agents, acting within the scope of their employment for the insurer, cannot be sued by an insured in either tort or contract. It is from this order that Mine Temp now appeals.

         This Court reviews the circuit court's summary judgment order de novo. See Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). In conducting our de novo review, we apply the same standard for granting summary judgment that is applied by the circuit court. Under that standard,

"'[a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law.' Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York,148 W.Va. 160, 133 S.E.2d 770 (1963)." Syllabus ...

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