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IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2005 Term
_____________
No. 32048
_____________
WILLIAM E. JONES,
Plaintiff Below, Appellant,
v.
STEVEN L. SANGER AND STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY,
Defendants Below, Appellees
______________________________________________________
Appeal from the Circuit Court of Fayette County
Honorable Charles M. Vickers, Judge
Civil Action No. 94-C-12
AFFIRMED
_______________________________________________________
Submitted: May 11, 2005
Filed: July 7, 2005
Ralph C. Young, Esq.
Hamilton Burgess Young Pollard Hewitt & Salvatore, PLLC
Fayetteville, West Virginia
Attorney for Appellant
| Gary E. Pullin, Esq.
Woody A. Trent, Esq.
Pullin, Fowler & Flanagan, PLLC
Charleston, West Virginia
Attorneys for Appellees |
The Opinion of the Court was delivered PER CURIAM.
JUSTICE DAVIS concurs and reserves the right to file a separate opinion.
JUSTICE MAYNARD concurs and reserves the right to file a separate opinion.
CHIEF JUSTICE ALBRIGHT dissents and reserves the right to file a separate opinion.
JUSTICE STARCHER dissents and reserves the right to file a separate opinion.
SYLLABUS
1. “'“A
trial court is vested with a sound discretion in granting or refusing leave
to amend pleadings in civil actions. Leave to amend should be freely given
when justice so requires, but the action of a trial court in refusing to grant
leave to amend a pleading will not be regarded as reversible error in the absence
of a showing of an abuse of the trial court's discretion in ruling upon a motion
for leave to amend.” Syl. Pt. 6, Perdue v. S.J. Groves and Sons Co.,
152 W. Va. 222, 161 S.E.2d 250 (1968).' Syl. Pt. 5, Poling v. Belington
Bank, Inc., 207 W. Va. 145, 529 S.E.2d 856 (1999).” Boggs v. Camden-Clark
Memorial Hosp. Corp., 216 W. Va. 656, 609 S.E.2d 917 (2004).
2. “Whenever
a policyholder substantially prevails in a property damage suit against its insurer,
the insurer is liable for: (1) the insured's reasonable attorneys' fees in vindicating
its claim; (2) the insured's damages for net economic loss caused by the delay
in settlement, and damages for aggravation and inconvenience.” Syl. Pt.
1, Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323, 352 S.E.2d
73 (1986). See, Syl. Pt. 2, McCormick v. Allstate Ins. Co., 197
W. Va. 415, 475 S.E.2d 507 (1996); Syl. Pt. 1, Miller v. Fluharty, 201
W. Va. 685, 500 S.E.2d 310 (1997); Syl. Pt. 1, Richardson v. Kentucky Nat.
Ins. Co., 216 W. Va. 464, 607 S.E.2d 793 (2004).
3. “When
a policyholder of uninsured or underinsured motorist coverage issued pursuant
to W. Va. Code, 33-6-31(b) substantially prevails in a suit involving such coverage
under W. Va. Code, 33-6-31(d), the insurer issuing such policy is liable for
the amount
recovered up to the policy limits, the policyholder's reasonable attorney fees,
and damages proven for aggravation and inconvenience.” Syl. Pt. 6, Marshall
v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994).
4. “An
insured 'substantially prevails' in a property damage action against his or her
insurer when the action is settled for an amount equal to or approximating the
amount claimed by the insured immediately prior to the commencement of the action,
as well as when the action is concluded by a jury verdict for such an amount.
In either of these situations the insured is entitled to recover reasonable attorney's
fees from his or her insurer, as long as the attorney's services were necessary
to obtain payment of the insurance proceeds.” Syl. Pt. 1, Jordan v. National
Grange Mut. Ins. Co., 183 W. Va. 9, 393 S.E.2d 647 (1990). See, Syl.
Pt. 2, Hadorn v. Shea, 193 W. Va. 350, 456 S.E.2d 194 (1995); Syl. Pt.
3, Burgess v. Porterfield, 196 W. Va. 178, 469 S.E.2d 114 (1996); Syl.
Pt. 2, Miller v. Fluharty, 201 W. Va. 685, 500 S.E.2d 310 (1997); Syl.
Pt. 4, Richardson v. Kentucky Nat. Ins. Co., 216 W. Va. 464, 607 S.E.2d
793 (2004).
5. “Where
an insured has previously brought a claim for consequential damages under Marshall
v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994), and a final judgment has
been entered with respect to such claim, the insured is not thereby precluded
under principles of res judicata or claim preclusion from bringing a subsequent
action asserting causes of action predicated upon a defendant insurer's alleged
bad faith or other intentional misconduct in the course of settling the insured's
policy claim.” Syl. Pt. 5, Slider v. State Farm Mut. Auto. Ins. Co.,
210 W. Va. 476, 557 S.E.2d 883 (2001).
6. “The
liberality allowed in the amendment of pleadings pursuant to Rule 15(a) of the
West Virginia Rules of Civil Procedure does not entitle a party to be dilatory
in asserting claims or to neglect his or her case for a long period of time.
Lack of diligence is justification for a denial of leave to amend where the delay
is unreasonable, and places the burden on the moving party to demonstrate some
valid reason for his or her neglect and delay.” Syl. Pt. 3, State ex
rel. Vedder v. Zakaib, No. 32226, 2005 WL 1208709 (W. Va., May 16, 2005).
Per Curiam:
This
matter is before the Court on appeal from the March 5, 2004, Order of the Circuit
Court of Fayette County denying Plaintiff's Motion for Award of Attorney Fees
and Plaintiff's Motion for Leave to Amend the Complaint. This Court has before
it the petition for appeal, the response to the petition for appeal, the briefs
of the parties, and all matters of record. Following the arguments of the parties
and a review of the record herein, this Court finds that existing case law supports
the position of the Appellee over that of the Appellant. Accordingly, we affirm
the March 5, 2004, Order of the circuit court denying Plaintiff's Motion for
Award of Attorney Fees and Plaintiff's Motion for Leave to Amend the Complaint.
I.
FACTS
On
January 21, 1992, Appellant William E. Jones was a guest passenger in the back
seat of a vehicle owned and operated by his father, Woodrow W. Jones. William's
mother, Edith Jones, was a passenger in the front seat of the vehicle. The
Jones vehicle was proceeding in an easterly direction on West Virginia Route
612 in Fayette County while a vehicle driven by Appellee Steven L. Sanger was
proceeding in a westerly direction on the same road. Sanger crossed the center
line and struck the Jones vehicle head-on after losing control of his vehicle.
Edith
Jones died while trapped in the vehicle. William and Woodrow Jones were also
trapped in the vehicle, and each suffered injuries. Specifically, William Jones'
knee caps were shattered. William Jones, who was 39 years old at the time of
the accident, has suffered from cerebral palsy all of his life and lived with
his parents, who cared for him. Up until the time of the accident, William's
legs were atrophied such that his knees were locked in a semi-flexed position.
After his knee caps were shattered in the accident, William's legs were locked
in an even more flexed position. He required extensive care and was confined
to his home for a period of months. His medical bills and attendant care expenses
were $4415.80.
Sanger,
who was insured by Aetna, had a $50,000 single limit liability policy. A settlement
was reached, and that money was apportioned between William Jones, Woodrow Jones,
Woodrow Jones as the administrator of the estate of Edith Jones, and a guest
passenger in Sanger's car. Each party received $12,500. State Farm, the Joneses'
insurer and carrier of their underinsured motorist coverage policy, waived subrogation.
The Joneses
and State Farm engaged in settlement talks beginning in December of 1992 when
the Joneses made a demand for the policy limits of $850,000. State Farm asserts
that it understood the demand to include all claims by the Jones family, including
those of William Jones for his personal injuries. State Farm eventually made
an offer of
$287,500 to settle the wrongful death case and $62,500 to settle both the personal
injury claims of Woodrow and William Jones. The Joneses rejected the offer.
Woodrow
Jones eventually settled his individual claim and his claim on behalf of the
estate of Edith Jones for underinsured motorist benefits with State Farm. William
Jones (hereinafter “Jones”) was not able to reach a settlement agreement
with State Farm, however, and he filed suit in the Circuit Court of Fayette County
on January 18, 1994, naming Sanger and State Farm as defendants. He sought $250,000
in damages.
In August
of 1994, State Farm offered $12,500 to settle all claims with Jones, including
any bad faith or unfair settlement practices claims. On December 19, 1994, counsel
for Jones inquired by letter as to whether the offer for $12,500 was to settle
Jones' personal injury claims or his personal injury claims and any claims for
bad faith and unfair settlement practices. State Farm replied that the offer
was made to settle all claims. Jones countered that he wished to entertain an
offer to settle his personal injury claim only. On January 5, 1995, State Farm
offered $12,500 to settle Jones' personal injury claim. The offer was not accepted.
State Farm was eventually dismissed as a defendant to the suit.
The case
against Sanger proceeded to trial on May 7, 1996, following which a verdict was
entered in favor of Sanger. Jones thereafter filed a motion for a new trial,
but the motion was denied. Jones then appealed, and on December 15, 1998, this
Court reversed
and remanded the case for a new trial, finding multiple errors which included
the dismissal of State Farm as a defendant.
(See
footnote 1) The case was not tried a second time, however, because
the parties embarked upon extensive settlement talks.
On November
9, 1999, Jones and State Farm entered into their first mediation, which failed.
On February 19, 2002, State Farm issued a check in the amount of $25,000 made
payable to Jones. The note accompanying the check made it clear that the payment
was to be applied to any future settlement of the underinsured motorist claim.
A second
mediation began on June 2, 2003. Jones initially demanded $150,000 in addition
to the $25,000 previously paid to him by State Farm. State Farm offered $64,000,
which Jones and the mediator believed to be “new money” in addition
to the previously paid $25,000, but which State Farm intended to include the
previously paid $25,000. Jones accepted what he believed to be the offer of $64,000
in addition to the $25,000 previously paid. He indicated that he intended for
the settlement only to resolve his personal injury claims. The mediation broke
down, however, when State Farm asserted that it had not intended to offer the
$64,000 as new money after all. Jones filed a Motion to Compel Settlement on
June 16, 2003. Jones asserts that the trial court rejected the motion finding
that
there had been no meeting of the minds.
(See
footnote 2) The mediator thereafter submitted a letter to the circuit
court suggesting that a settlement conference with the court might be helpful
to resolve the matter, but no such conference ever took place. Nonetheless,
Jones and State Farm eventually settled Jones' personal injury claim for a
total of $76,500, which represented the $25,000 previously paid by State Farm
to Jones plus $51,500 in new money.
Thereafter,
on September 2, 2003, Jones filed Plaintiff's Motion for Award of Attorney Fees
and Plaintiff's Motion for Leave to Amend the Complaint. Jones asserted in his
motion that he had substantially prevailed in the matter, thereby entitling him
to attorney fees in the presumptive amount of one-third of the amount paid under
the policy, plus costs. He further asked that he be allowed to amend his complaint
to include claims for consequential damages, such as annoyance, aggravation,
and inconvenience; unfair claims settlement practices; and breach of the duty
of good faith and fair dealing.
State
Farm argued that given the totality of negotiations dating back to 1992, Jones
did not substantially prevail. State Farm made no objection in its response to
the Motion for Leave to Amend the Complaint.
A hearing
regarding the motions was conducted on September 29, 2003. During that hearing,
State Farm stated that, under the standard that leave to amend should be freely
given, it had no objection to Jones amending the complaint. The court then expressly
stated, “All right. The plaintiff has the court's approval to amend the
complaint. It will be addressed after it's amended and counsel knows what it
is.”
An order
addressing the motions was not issued until March 5, 2004. In that order, the
court concluded that under Jordan v. National Grange Mutual Ins. Co.,
183 W. Va. 9, 393 S.E.2d 647 (1990) and Miller v. Fluharty, 201 W. Va.
685, 500 S.E.2d 310 (1997), Jones had not substantially prevailed in the case
and, therefore, was not entitled to recover attorney fees. The court then found
that because Jones had not substantially prevailed in the case, the claims which
he sought to assert in an amended complaint were moot. Accordingly, the court
denied Plaintiff's Motion for Award of Attorney Fees and Plaintiff's Motion for
Leave to Amend the Complaint.
Jones
now appeals the court's ruling, arguing that the court erred in finding that
he did not substantially prevail such as would entitle him to recover his attorney
fees and that the court erred by denying the motion to amend the complaint after
initially granting the motion.
II.
STANDARD OF REVIEW
This
Court has indicated that it will review a trial court's determination of whether
a plaintiff has “substantially prevailed” in an insurance claim,
such as the one presently before the Court, under an abuse of discretion standard. See
generally, Syl. Pt. 4, Burgess v. Porterfield, 196 W. Va. 178, 469
S.E.2d 114 (1996). This Court has also held that “'“[a] trial court
is vested with a sound discretion in granting or refusing leave to amend pleadings
in civil actions. Leave to amend should be freely given when justice so requires,
but the action of a trial court in refusing to grant leave to amend a pleading
will not be regarded as reversible error in the absence of a showing of an
abuse of the trial court's discretion in ruling upon a motion for leave to
amend.” Syl. Pt. 6, Perdue v. S.J. Groves and Sons Co., 152 W.
Va. 222, 161 S.E.2d 250 (1968).' Syl. Pt. 5, Poling v. Belington Bank, Inc.,
207 W. Va. 145, 529 S.E.2d 856 (1999).” Boggs v. Camden-Clark Memorial
Hosp. Corp.,
216 W. Va. 656, 609 S.E.2d 917 (2004). Accordingly, we will review this case
respecting that the trial court's decision is “protected by the parameters
of sound discretion.” Parker v. Knowlton Construction Company, Inc.,
158 W. Va. 314, 329, 210 S.E.2d 918, 927 (1975).
III.
DISCUSSION
Jones'
first assignment of error is that the trial court erred in finding that he
did not “substantially prevail” such as would entitle him to recover
his attorney fees in the
prosecution of his underinsured motorist claim. “Whenever a policyholder
substantially prevails in a property damage suit against its insurer, the insurer
is liable for: (1) the insured's reasonable attorneys' fees in vindicating
its claim; (2) the insured's damages for net economic loss caused by the delay
in settlement, and damages for aggravation and inconvenience.” Syl. Pt.
1, Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323, 352
S.E.2d 73 (1986). See, Syl. Pt. 2, McCormick v. Allstate Ins. Co.,
197 W. Va. 415, 475 S.E.2d 507 (1996); Syl. Pt. 1, Miller v. Fluharty,
201 W. Va. 685, 500 S.E.2d 310 (1997); Syl. Pt. 1, Richardson v. Kentucky
Nat. Ins. Co., 216 W. Va. 464, 607 S.E.2d 793 (2004). More particularly,
the Court has ruled:
When
a policyholder of uninsured or underinsured motorist coverage issued pursuant
to W. Va. Code, 33-6-31(b) substantially prevails in a suit involving such coverage
under W. Va. Code, 33-6-31(d), the insurer issuing such policy is liable for
the amount recovered up to the policy limits, the policyholder's reasonable attorney
fees, and damages proven for aggravation and inconvenience. Syl. Pt. 6, Marshall
v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994).
The first
hurdle to clear is whether Jones substantially prevailed in the settlement of
his claim. This Court has held that:
[a]n
insured 'substantially prevails' in a property damage action against his or her
insurer when the action is settled for an amount equal to or approximating the
amount claimed by the insured immediately prior to the commencement of the action,
as well as when the action is concluded by a jury verdict for such an amount.
In either of these situations the insured is entitled to recover reasonable attorney's
fees from his or her insurer, as long as the attorney's services were necessary
to obtain payment of the insurance proceeds. Syl. Pt. 1,
Jordan v. National
Grange Mut. Ins. Co., 183 W. Va. 9, 393 S.E.2d 647
(1990).
See, Syl. Pt. 2,
Hadorn v. Shea, 193 W. Va. 350, 456
S.E.2d 194 (1995); Syl. Pt. 3,
Burgess v. Porterfield, 196 W. Va. 178,
469 S.E.2d 114 (1996); Syl. Pt. 2,
Miller v. Fluharty, 201 W. Va. 685,
500 S.E.2d 310 (1997); Syl. Pt. 4,
Richardson v. Kentucky Nat. Ins. Co.,
216 W. Va. 464, 607 S.E.2d 793 (2004).
See also, Syl. Pt. 2,
Thomas
v. State Farm Mutual Automobile Insurance Company, 181 W. Va. 604, 383
S.E.2d 786 (1989); Syl.,
Bryan v. Westfield Ins. Co., 207 W. Va. 466,
534 S.E.2d 20 (2000).
Miller further explains that “[w]hether a policyholder has substantially
prevailed is determined by looking at the totality of the policyholder's negotiations
with the insurance carrier, not merely the status of negotiations before and
after a lawsuit is filed.”
Miller, 201 W. Va. at 696, 500 S.E.2d
at 321.
Jones
acknowledges that he did not make a demand to settle his claim separate from
his father and the estate of his mother prior to the initiation of this suit.
At that time, counsel for Woodrow Jones, the estate of Edith Jones, and William
Jones made a global demand for the policy limit of the underinsured motorist
coverage, which was $850,000. After the suit was filed, the parties exchanged
global offers and demands for settlement. Eventually, State Farm settled the
claims of Woodrow Jones and the estate of Edith Jones.
(See
footnote 3) State Farm asserts that after the settlement of the claims
of the elder Joneses, William Jones made a demand for the remainder of the policy
limits, or $400,000. Jones disputes that assertion.
Nonetheless,
what is clear is that Jones' complaint contains an
ad damnum clause in
the amount of $250,000. Jones argues, though, that he should not be held to that
figure as a measure of demand. He asserts that this Court does not hold plaintiffs
to an
ad damnum clause for any other reason.
See,
State ex rel
Board of Education v. Spillers, 164 W. Va. 453, 259 S.E.2d 417 (1979)(allowing
an
ad damnum clause to be amended post- verdict to conform with the verdict);
State
ex rel Strickland v. Daniels, 173 W. Va. 576, 318 S.E.2d 627 (1984)(the value
of a law suit is not determined by the
ad damnum clause). However, as
State Farm points out, Jones has clearly overlooked the fact that this Court
has stated, “[T]he purpose of the
ad damnum clause, or the amount
sued for, as contained in the complaint, is merely
to inform the defendant
of the amount of damages demanded and is not considered proof of any injury
or of liability.
Jenkins v. Montgomery, 69 W. Va. 795, 72 S.E. 1087;
Natale
v. Great Atlantic & Pacific Tea Co., 8 A.D.2d 781, 186 N.Y.S.2d 795.”
Ferguson
v. R. E. Ball & Co., 153 W. Va. 882, 887, 173 S.E.2d 83, 86 (1970)(emphasis
added).
The Court
believes, then, that Jones' first demand on his separate and individual claim
under the underinsured motorist coverage was $250,000. The parties agree that
State Farm's first offer was $12,500.
(See
footnote 4) Thereafter, the parties first came together for mediation
in November of 1999. At that time, Jones demanded $150,000 while State Farm
offered $60,000. The parties could not bridge the gap, and the mediation failed.
A second mediation in 2003 likewise failed when Jones demanded $89,000
(See
footnote 5) (for his personal injury claim only) while State Farm
offered only $64,000.
(See
footnote 6) The parties eventually settled Jones' personal injury
claim for $76,500.
Jones
makes a blanket assertion that, given the totality of the circumstances, he substantially
prevailed in the settlement. State Farm counters that Jones did not substantially
prevail considering that it did not have a duty to offer monies for Jones' questionable
claims of special damages, including negligent infliction of emotional distress
(for which there was no medical documentation introduced until the disclosure
of a psychiatrist as a witness in 2002) and medical and attendant care expenses
totaling $4415.80.
We cannot
conclude that the circuit court acted improperly or abused its discretion in
concluding that Jones did not substantially prevail. In the final assessment
of the settlement, the case was not “settled for an amount equal to or approximating
the amount claimed by the insured immediately prior to the commencement of the
action;” therefore,
Jones did not “substantially prevail.”
See, Jordan at
Syl. Pt. 1. Because Jones did not substantially prevail in the settlement of
his claim, he is not entitled to his attorney fees.
Jones'
second assignment of error is that the trial court erred by denying his motion
to amend the complaint to allege extra contractual damage claims against State
Farm. In a hearing on Jones' motion for attorney fees and motion to amend the
complaint, the court initially indicated that it would allow Jones to amend the
complaint. However, after ruling that Jones had not substantially prevailed in
the case, the court determined that the motion to amend the complaint was moot.
Jones
argues that the court's finding that he had not substantially prevailed in the
case does not moot all potential first-party claims that he might have. Jones
points out this Court's holding in Syl. Pt. 5,
Slider v. State Farm Mut. Auto.
Ins. Co., 210 W. Va. 476, 557 S.E.2d 883 (2001):
Where
an insured has previously brought a claim for consequential damages under Marshall
v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994), and a final judgment has
been entered with respect to such claim, the insured is not thereby precluded
under principles of res judicata or claim preclusion from bringing a subsequent
action asserting causes of action predicated upon a defendant insurer's alleged
bad faith or other intentional misconduct in the course of settling the insured's
policy claim.
However, the circuit court did not bar an amendment to the complaint on res
judicata or collateral estoppel grounds. Consequently, Slider is not
applicable.
As State
Farm points out, trial courts are given great latitude when it comes to the amendment
of pleadings:
A
trial court is vested with a sound discretion in granting or refusing leave to
amend pleadings in civil actions. Leave to amend should be freely given when
justice so requires, but the action of a trial court in refusing to grant leave
to amend a pleading will not be regarded as reversible error in the absence of
a showing of an abuse of the trial court's discretion in ruling upon a motion
for leave to amend. Syl. Pt. 6, Perdue v. S.J. Groves and Sons Co., 152
W. Va. 222, 161 S.E.2d 250 (1968). See, Syl. Pt. 5, Poling v. Belington Bank,
Inc., 207 W. Va. 145, 529 S.E.2d 856 (1999); Syl. Pt. 1, Boggs v. Camden-Clark
Memorial Hosp. Corp., 216 W. Va. 656, 609 S.E.2d 917 (2004).
Furthermore, while trial courts should be liberal in granting leave to amend
pleadings,
[t]he
liberality allowed in the amendment of pleadings pursuant to Rule 15(a) of the
West Virginia Rules of Civil Procedure does not entitle a party to be dilatory
in asserting claims or to neglect his or her case for a long period of time.
Lack of diligence is justification for a denial of leave to amend where the delay
is unreasonable, and places the burden on the moving party to demonstrate some
valid reason for his or her neglect and delay. Syl. Pt. 3, State ex rel. Vedder
v. Zakaib, No. 32226, 2005 WL 1208709 (W. Va., May 16, 2005).
As Jones points out several times in his brief, this case has been in litigation
for over ten years. Yet Jones waited until after the settlement of his claims
to seek leave to amend his complaint. If there were, in fact, acts of bad faith
or unfair settlement practices on the part
of State Farm, surely Jones is not only just now learning of them. In view
of the delay in this case, we cannot say that the circuit court abused its
discretion pursuant to Rule 15(a) in denying Jones' motion to amend the complaint.
IV.
CONCLUSION
Accordingly,
and respecting that the trial court's decision is “protected by the parameters
of sound discretion,” this Court holds that the trial court did not abuse
its discretion in ruling that Appellant has not substantially prevailed in
this case and in denying his motion for attorney's fees. We further hold that
the trial court did not abuse its discretion in denying Appellant's motion
to amend the complaint to include claims for consequential damages, such as
annoyance, aggravation, and inconvenience; unfair claims settlement practices;
and breach of the duty of good faith and fair dealing.
Jones v. Sanger,
204 W. Va. 333, 512 S.E.2d 590 (1998).
Footnote: 2
No Order of the court to
that effect can be found in the record; however, State Farm does not dispute
Jones' assertion.
Footnote: 3 The estate of Edith Jones
settled for $325,000, and Woodrow Jones settled for $125,000.
Footnote: 4 State Farm's initial offer
of $12,500 was an offer to settle any and all claims.
Footnote: 5 This amount included the
$25,000 payment previously made to Jones by State Farm in February of 2002.
Footnote: 6 This amount also included
the $25,000 payment previously made to Jones by State Farm.