Audrey Kenney v. Independent Order of Forester

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 3:12-cv-00123-GMG. [999311947]. [13-1788]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 13-1788

AUDREY DIANNE KENNEY,
Plaintiff – Appellant,
v.
THE INDEPENDENT ORDER OF FORESTERS,
Defendant - Appellee.

Appeal from the United States District Court for the Northern
District of West Virginia, at Martinsburg.
Gina M. Groh,
District Judge. (3:12-cv-00123-GMG)

Argued:

December 11, 2013

Decided:

March 10, 2014

Before AGEE, KEENAN, and FLOYD, Circuit Judges.

Reversed and remanded by published opinion.
Judge Floyd wrote
the opinion, in which Judge Agee and Judge Keenan joined.

ARGUED: Don C.A. Parker, SPILMAN, THOMAS & BATTLE, PLLC,
Charleston, West Virginia, for Appellant.
Robert Lawrence
Massie, NELSON MULLINS RILEY & SCARBOROUGH LLP, Huntington, West
Virginia, for Appellee.
ON BRIEF: Glen A. Murphy, SPILMAN,
THOMAS & BATTLE, PLLC, Charleston, West Virginia, for Appellant.
S. Taylor Hood, NELSON MULLINS RILEY & SCARBOROUGH LLP,
Huntington, West Virginia, for Appellee.

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FLOYD, Circuit Judge:
At least three times during the past two decades, federal
courts in our Circuit have called upon West Virginia’s highest
court to answer certified questions regarding the West Virginia
Unfair Trade Practices Act (WVUTPA).
Court

of

pursuant

Appeals
to

the

of

West

WVUTPA

Virginia

sound

in

Each time, the Supreme
determined

tort

and

that

not

in

actions
contract.

Taylor v. Nationwide Mut. Ins. Co., 589 S.E.2d 55 (W. Va. 2003);
Wilt v. State Auto. Mut. Ins. Co., 506 S.E.2d 608 (W. Va. 1998);
Poling v. Motorists Mut. Ins. Co., 450 S.E.2d 635 (W. Va. 1994). 1
This Court, too, has decided a case under that same framework,
albeit in an unpublished opinion.

Yost v. Travelers Ins. Co.,

181 F.3d 95 (4th Cir. 1999) (unpublished table decision).

In

view of the want of published authority from this Court and the
frequency with which the WVUTPA is litigated in federal court,
we take this opportunity to clarify the law for district courts,
unless and until the Supreme Court of Appeals of West Virginia
rules to the contrary.
For the reasons that follow, we hold that actions brought
pursuant to the WVUTPA sound in tort and not in contract.
further

hold

that

West

Virginia

1

law

governs

the

We

underlying

Each of the cited cases were before the Supreme Court of
Appeals of West Virginia on certification from the U.S. District
Court for the Northern District of West Virginia.

2

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lawsuit and that the complaint states a claim upon which relief
can be granted.

Accordingly, we reverse the district court’s

dismissal of the complaint and remand for further proceedings.

I.
Audrey

Kenney’s

husband,

Ronald

Kenney,

passed

away

on

September 19, 2011, leaving Mrs. Kenney as the sole beneficiary
of

a

life-insurance

policy

(the

“policy”)

issued

by

The

Independent Order of Foresters (IOF), a Canadian corporation.
At the time of Mr. Kenney’s passing in 2011, the Kenneys were
residents of West Virginia and had resided there since 2003.

At

the time that IOF issued the policy to Mr. Kenney in 1984,
however, the Kenneys resided in Virginia.

The policy contains a

choice-of-law provision that states as follows: “The rights or
obligations of the member or anyone rightfully claiming under
this certificate will be governed by the laws of the State in
which this certificate is delivered.”
On September 21, 2011, Mrs. Kenney filed a claim with IOF
to

collect

the

policy

benefits,

which

she

believed

to

be

$130,000; IOF, however, responded that the policy was worth only
$80,000.

In fact, although the policy was worth only $80,000

when

Kenney

Mr.

subsequently

took

applied

out

for

the

and

policy

received

coverage in 1994.

3

in
a

1984,

$50,000

Mr.

Kenney

increase

in

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When IOF refused to pay $130,000 to Mrs. Kenney, she filed
a

complaint

with

the

West

Virginia

Commissioner

(the

“Commissioner”)

Office

on

of

November

the
1,

Insurance

2011.

IOF

responded to Mrs. Kenney’s complaint on or around December 7,
2011, and maintained that the policy was worth only $80,000.
On June 27, 2012, the Commissioner scheduled an administrative
hearing to be held on August 1, 2012, regarding Mrs. Kenney’s
claim.
Kenney

Then, on July 20, 2012—nearly ten months after Mrs.
first

contacted

IOF

and

just

twelve

days

before

the

administrative hearing was scheduled to take place—IOF reversed
course

and

agreed

to

pay

$130,000

to

Mrs.

Kenney.

Without

further explanation, IOF provided the following reasoning for
the sudden departure from its prior position on Mrs. Kenney’s
claim: “There are some inconsistencies within the file that lead
us to the conclusion that Mr. Kenney would have assumed the face
amount

of

the

insurance

certificate

.

.

.

at

the

increased

coverage amount of $130,000.

Based on this information, we will

honour

that

the

death

claim

for

amount.” 2

In its

brief

on

appeal, IOF now reveals that Mr. Kenney allegedly “failed to
2

We quote from Mrs. Kenney’s opening brief and not the
original letter sent from IOF to Mrs. Kenney, as it appears that
the letter was not included in the Joint Appendix. In answering
Mrs. Kenney’s complaint—which recites an only slightly different
version of the IOF letter quoted above—IOF did not deny the
contents of the letter as set forth by Mrs. Kenney, but instead
stated that “the letter referenced speaks for itself.”

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sign and return the offer form before its expiration date,” and
thus the offer for the increase in coverage had lapsed.

This

explanation, however, was never provided to Mrs. Kenney during
the nearly year-long period that she was denied the benefit of
the increased coverage.
Mrs.

Kenney

sued

IOF

in

West

Virginia

state

court

on

September 19, 2012, pursuant to the WVUTPA.

Specifically, Mrs.

Kenney

she

acknowledged

prevailed

in

in

her

complaint

obtaining

the

coverage

that
to

which

“substantially
she

was

always

lawfully entitled”; she alleged, however, that IOF’s “conduct
. . . in connection with its handling” of her claim constituted
an unlawful settlement practice prohibited by the WVUTPA.

See,

e.g., W. Va. Code § 33-11-4(9)(f) (unlawful to “[n]ot attempt[]
in

good

faith

to

effectuate

prompt,

fair

and

equitable

settlements of claims in which liability has become reasonably
clear”).

IOF removed the case to the district court below and

thereafter moved to dismiss for failure to state a claim upon
which relief can be granted.

The district court granted IOF’s

motion to dismiss and Mrs. Kenney appealed. 3

This Court has

jurisdiction pursuant to 28 U.S.C. § 1291.

3

Prior to appealing, Mrs. Kenny moved pursuant to Federal
Rules of Civil Procedure 59 and 60 to, inter alia, correct
certain factual inaccuracies recited by the district court in
the memorandum opinion granting IOF’s motion to dismiss. These

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II.
This appeal presents three issues that we must address in
series.

First, whether Mrs. Kenney’s lawsuit pursuant to the

WVUTPA sounds in tort or in contract.

In re Bankers Trust Co.,

752 F.2d 874, 881 (3d Cir. 1984) (“The initial step in any
choice

of

law

analysis

involves

the

characterization

of

the

subject matter of or the issues in the case (e.g., tort or
contract) and of the nature of each issue and whether it raises
a problem of procedural or substantive law.” (citing E. Scoles &
P. Hay, Conflict of Laws 50–51 (1984)).

Second, whether West

Virginia law or Virginia law governs the outcome of the suit
pursuant

to

West

Virginia’s

choice-of-law

rules.

See

Acme

Circus Operating Co. v. Kuperstock, 711 F.2d 1538, 1540 (11th
Cir.

1983).

And

finally,

whether

the

complaint’s

factual

allegations sufficiently state a claim upon which relief can be
granted.

This

Court

reviews

de

novo

the

district

court’s

dismissal of a complaint for failure to state a claim pursuant

inaccuracies pertained primarily to the length of time that the
Kenneys resided in West Virginia prior to Mr. Kenney’s passing.
The district court granted Mrs. Kenney’s motion and subsequently
issued an amended memorandum opinion and order that dismissed
Mrs. Kenney’s complaint.
This amended memorandum and order is
the order on appeal, and it contains the same substantive legal
reasoning for dismissal as the district court’s first order
granting IOF’s motion to dismiss.

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to Federal Rule of Civil Procedure 12(b)(6).

Ballard v. Bank of

Am., N.A., 734 F.3d 308, 310 (4th Cir. 2013).

A.
When hearing a case on appeal for which federal subject
matter jurisdiction was proper in the district court pursuant to
28 U.S.C. § 1332 (diversity jurisdiction), this Court applies
the

choice-of-law

rules

of

the

state

of

the

district

court

below, Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., 386
F.3d 581, 599–600 (4th Cir. 2004)—in this case, West Virginia.
The

proper

choice-of-law

analysis

in

West

Virginia

varies

depending on how a claim is characterized, e.g., as a tort claim
or as a contract claim.

Choice of law in contracts cases is

governed by the rule of lex loci contractus, see Johnson v.
Neal, 418 S.E.2d 349, 351–52 (W. Va. 1992), and choice of law in
torts

cases

is

generally

governed

by

the

rule

of

lex

loci

delicti, see Vest v. St. Albans Psychiatric Hosp., Inc., 387
SE.2d 282, 283 (W. Va. 1989).
The district court did not take a position on whether Mrs.
Kenney’s WVUTPA claim sounds in tort or in contract because it
concluded that Virginia law applied in either case.

Similarly,

IOF contends that characterization of the WVUTPA claim as either
a tort claim or a contract claim is “wholly irrelevant” because
“the result is the same under both analyses.”

7

Because we are

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firm in our conviction that Mrs. Kenney’s WVUTPA claim sounds in
tort, as explained in detail below, it is unnecessary to conduct
a contracts analysis.

That being said, we are reluctant to

agree with IOF that the applicable law would be the same under
both

analyses

based

on

the

choice-of-law

provision

contained

within the policy.
IOF

cites

to

several

nonbinding

federal

cases

that

are

split as to whether WVUTPA claims are properly characterized as
contract or tort claims.

See, e.g., Yost, 181 F.3d 95 (stating

that duties arising under the WVUTPA are “quasi-tort, extracontractual,”

but

applying

choice-of-law

analysis

for

a

tort

claim); Pen Coal Corp. v. William H. McGee & Co., 903 F. Supp.
980, 983 (S.D. W. Va. 1995) (characterizing bad-faith and WVUTPA
claims as “part-contract and part-tort,” but applying choice-oflaw analysis for a contract claim).

Mrs. Kenney, on the other

hand, cites to West Virginia state cases for the proposition
that WVUTPA claims sound in tort.

See, e.g., Wilt, 506 S.E.2d

at 609 (characterizing a violation of the WVUTPA as “tortious
conduct” (quoting Poling, 450 S.E.2d at 638) (internal quotation
marks omitted)).

Although Mrs. Kenney’s WVUTPA claim would not

exist but-for the policy, her claim is not predicated on the
terms

of

the

policy

itself;

rather,

Mrs.

Kenney’s

complaint

makes clear that her cause of action stems from IOF’s allegedly

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bad-faith “handling” of her claim for proceeds on the policy.
This distinction is important.
The Supreme Court of Appeals of West Virginia explained the
distinction noted above in Wilt.

There, injured plaintiffs sued

the defendant–insurer in federal court pursuant to the WVUTPA
for unfair settlement practices after they were involved in an
automobile accident.

Id. at 609.

The district court then asked

the Supreme Court of Appeals of West Virginia to determine the
proper

statute

of

limitations

applicable

to

the

plaintiffs’

claim—one year (for torts) or ten years (for written contracts).
Id.

In concluding that the plaintiffs’ WVUTPA claim sounded in

tort, the Wilt court contrasted the facts before it with the
facts of Plumley v. May, 434 S.E.2d 406 (W. Va. 1993):
In Plumley, this Court held that a claim by
an
insured
to
recover
underinsurance
benefits from his/her insurance carrier is
governed by the statute of limitations
applicable
to
contract
actions.
That
action, as opposed to the [Plaintiffs’]
pending claim . . . , involved the direct
attempt by an insured to recover policy
benefits from the carrier with whom he/she
entered into a contract for underinsurance.
In contrast to the instant case that was
brought
to
recover
damages
for
unfair
settlement practices, Plumley was a direct
suit against the insurer to obtain insurance
benefits. Given this critical distinction,
Plumley is clearly inapposite authority for
Plaintiffs’
contention
that
unfair
settlement claims are contractual in origin.

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Wilt,

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506

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S.E.2d

at

609

Pg: 10 of 22

(emphasis

added)

(footnote

omitted)

(citation omitted).
The Supreme Court of Appeals of West Virginia employed the
same reasoning used in Wilt in the analogous case of Hall v.
Nichols, 400 S.E.2d 901 (W. Va. 1990).

In Hall, the appellants

sued their attorney for legal malpractice, and the trial court
dismissed

the

action

as

time-barred

based

on

the

statute

limitations applicable to torts, as opposed to contracts.
at 902–03.

of
Id.

Despite recognizing that legal-malpractice claims

sound in both tort and contract, the appeals court affirmed the
lower court and also characterized the action as one in tort.
Specifically,

the

court

noted

that,

“[n]otwithstanding

the

inclusion of the term ‘contractual’ in the amended complaint,
the

essence

of

the

appellants’

cause

of

action

is

various

breaches of duties implied by law and not by contract.”
at 904.

Id.

The Hall court employed (and quoted in its entirety)

the reasoning from Pancake House, Inc. v. Redmond, 716 P.2d 575
(Kan. 1986), which states:
Where the act complained of is a breach of
specific terms of the contract without any
reference to the legal duties imposed by law
upon the relationship created thereby, the
action is contractual. Where the essential
claim of the action is a breach of a duty
imposed by law upon the relationship of
attorney/client and not of the contract
itself, the action is in tort.

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Id. at 578 (emphasis added); see Hall, 400 S.E.2d at 904 (“Only
when

the

breach

pertains

specifically

to

the

‘terms

of

the

contract without any reference to the legal duties imposed by
law upon the [attorney/client] relationship . . .’ is the cause
of

action

contractual

in

nature.”

(alterations

in

original)

(quoting Redmond, 716 P.2d at 578)).
Here, it is uncontested that Mrs. Kenney’s claim does not
directly involve the policy terms or benefits; as noted above,
Mrs. Kenney conceded in her complaint that she “substantially
prevailed

in

lawfully

obtaining

entitled.”

the

coverage

Rather,

like

to

which

in

Wilt

she
and

was

always

Hall,

Mrs.

Kenney’s lawsuit is based on IOF’s allegedly unlawful “conduct
. . . in connection with its handling” of her claim.

In other

words, notwithstanding the repeated references to the policy (a
contract)

in

the

complaint,

the

“essential

claim”

underlying

Mrs. Kenney’s lawsuit is IOF’s allegedly tortious conduct.
Hall,

400

S.E.2d

at

904

(quoting

Redmond,

716

P.2d

See

at 578)

(internal quotation marks omitted).
We can further reason that Mrs. Kenney’s action is one in
tort—as

opposed

to

contract—based

on

the

type

of

damages

available under the WVUTPA and the type of relief prayed for in
the complaint.

The Wilt court noted that a successful plaintiff

suing pursuant to the WVUTPA may recover attorney’s fees and
punitive damages and, “[because] punitive damages, as a rule,

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are

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not

available

connection
typical

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of

with

in

a

contract

violation

damages

awarded

at 610 (citation omitted).
relief,

punitive

damages

Pg: 12 of 22

cases,

of

the

in

the

damages

[WVUTPA]

contract

are

awarded
clearly

cases.”

506

in
not

S.E.2d

Here, Mrs. Kenney seeks, among other
and

attorneys’

fees

and

costs.

Notably, however, she does not seek damages based on the terms
of the policy itself, but instead references the policy only
when describing the damages that she incurred “as a result of
[IOF]’s improper refusal to honor her claim.”
For

the

foregoing

reasons,

we

hold

that

WVUTPA claim sounds in tort and not in contract.

Mrs.

Kenney’s

We now proceed

to determine which state’s laws apply to the substantive tort
claim.

B.
The

district

court,

when

it

assumed

arguendo

that

Mrs.

Kenney’s claim sounds in tort, employed the Restatement (Second)
of Conflict of Laws (“Restatement”) choice-of-law approach and
concluded that Virginia law applies.

The parties dispute this

result: Mrs. Kenney argues that the district court erred by not
using the lex loci delicti choice-of-law approach and that West
Virginia courts usually apply; IOF, on the other hand, contends
that the district court was correct in both its methodology and
conclusion.

Both parties are justified in their positions: as

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noted above, West Virginia traditionally applies the lex loci
delicti approach to torts, see Vest, 387 SE.2d at 283, but has
in

certain

circumstances

shown

a

willingness

to

apply

the

Restatement approach “to resolve particularly thorny conflicts
problems,” e.g., Oakes v. Oxygen Therapy Servs., 363 S.E.2d 130,
131–32 (W. Va. 1987).
Regardless,

as

the

proper

choice-of-law

approach

is

an

issue of state law and, as we explain below, the outcome is the
same under either approach, this Court need not determine which
approach West Virginia courts would apply here.

See Chawla v.

Transam. Occidental Life Ins. Co., 440 F.3d 639, 648 (4th Cir.
2006) (“[C]ourts should avoid deciding more than is necessary to
resolve a specific case.”).
West

Virginia

courts

fact-intensive area.

to

Rather, we prefer to leave it up to

develop

West

Virginia’s

law

in

this

For the reasons set forth below, we hold

that West Virginia law applies pursuant to the lex loci delicti
approach and the Restatement approach.

1.
Under the lex loci delicti choice-of-law approach, courts
apply the “law of the place of the wrong.”

Although conduct

that causes harm can occur in one state and the resulting injury
to

a plaintiff

can

occur

in

another

state,

“the

substantive

rights between the parties are determined by the law of the

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injury.”

West

Pg: 14 of 22

Virginia

ex

rel.

Chemtall

Inc.

v.

Madden, 607 S.E.2d 772, 779–80 (W. Va. 2004).
Here,

IOF

asserts

that

the

effects

of

its

allegedly

unlawful conduct (and thus Mrs. Kenney’s injury) would have been
felt by Mrs. Kenney in Virginia, as the state where the policy
was issued and where Mr. Kenney applied for the $50,000 increase
in coverage.
from

This argument rings hollow.

Virginia

to

West

Virginia

in

The Kenneys moved

2003

and

lived

continuously until Mr. Kenney passed away in 2011.

there

Mrs. Kenney

filed her claim on the policy with IOF from West Virginia and
remains

a

West

Virginia

resident.

Accordingly,

insofar

as

Mrs. Kenney’s cause of action stems from IOF’s handling of her
claim on the policy and she was a West Virginia resident at all
times during resolution of her claim—on September 21, 2011, when
she filed the claim with IOF; on November 1, 2011, when she
filed a complaint with the Commissioner; and on July 20, 2012,
when IOF agreed to pay to Mrs. Kenney the full $130,000—the
injury to Mrs. Kenney undoubtedly occurred in West Virginia, not
Virginia.

See Yost, 181 F.3d 95 (concluding that “the worry,

annoyance,

and

economic

hardship

of

the

delay

in

receiving

compensation” (i.e., the injury) in an unfair-settlement claim
is suffered in the state where the plaintiff resides).
Accordingly, we hold that West Virginia law applies to Mrs.
Kenney’s claim pursuant to the lex loci delicti choice-of-law

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approach.

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We turn now to the Restatement choice-of-law approach

that the district court employed.

2.
Section 145(1) of the Restatement provides as follows: “The
rights and liabilities of the parties with respect to an issue
in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to
the occurrence and the parties under the principles stated in
§ 6” (which we explain below).
contacts

to

consider

when

Section 145(2) then lists four

determining

the

most

significant

relationship: “(a) the place where the injury occurred; (b) the
place where the conduct causing the injury occurred; (c) the
domicil,

residence,

nationality,

place

of

incorporation

and

place of business of the parties; and (d) the place where the
relationship,

if

any,

between

the

parties

is

centered.”

Restatement (Second) of Conflict of Laws § 145(2) (1971).
As determined above in our analysis of the lex loci delicti
approach, contact (a) points to West Virginia as the state where
the injury to Mrs. Kenney occurred.

As to contact (b), despite

IOF’s contention that “the alleged misrepresentations . . . took
place in Virginia,” the letter denying the full benefit of the

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policy to Mrs. Kenney was sent (presumably) from IOF’s Toronto,
Canada office. 4

As to contact (c), Mrs. Kenney is currently a

West Virginia resident and IOF is headquartered in Canada.

As

to contact (d), even though the relationship between Mr. Kenney
and IOF began in Virginia when he first took the policy out in
1984 and later applied for the increase in coverage in 1994, the
relationship

between

Mrs.

Kenney—who

is

the

party

to

the

lawsuit—and IOF is centered in West Virginia, where Mrs. Kenney
sought to collect, and was denied, policy benefits.

In sum,

none of the contacts point to Virginia, and three of the four
contacts point to West Virginia, with the fourth contact being
split between Canada and West Virginia (an outcome that we would
expect in a diversity suit).
As stated in section 145(1), the section 145(2) contacts must
be

analyzed

which,

inter

against
alia,

several
include:

factors
“the

set

forth

relevant

in

section

policies

of

6,
the

forum”; “the relevant policies of other interested states and
4

As previously noted, the parties did not include in the
Joint Appendix copies of the letters from IOF to Mrs. Kenney
first asserting that the policy was worth only $80,000 and then
subsequently agreeing that Mrs. Kenney should receive $130,000.
See supra note 2. IOF concedes, however, that “[t]he adjusting
of Mrs. Kenney’s claim occurred mostly in [IOF’s] Toronto,
Canada office,” and there is nothing in the record to indicate
that IOF sent letters to Mrs. Kenney from Virginia or otherwise
resolved her claim on the policy from Virginia.
We also note
that neither of the parties has advocated for this Court to
apply Canadian law.

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the relative interests of those states in the determination of
the

particular

issue”;

“the

protection

of

justified

expectations”; and “the basic policies underlying the particular
field

of

(Second)

law.”
of

See

Conflict

Yost,
of

181

Laws

F.3d

95

(quoting

§ 6(2)(b)–(e)

Restatement

(1971))

(internal

quotation marks omitted) (listing the foregoing factors as the
“meat of the Restatement test”).

IOF argues that, based on

Oakes, the section 6 factors lead to applying Virginia law.

In

Oakes, the plaintiff, a West Virginia resident, worked for a
Maryland

company

pursuant

to

an

employment

designated that Maryland law would govern.
31.

that

363 S.E.2d at 130–

The plaintiff was injured on the job in Maryland, filed a

Maryland
fired.
in

contract

compensation

Id. at 131.

West

argued

worker’s

Virginia
that,

claim,

and

was

subsequently

The plaintiff then sued his former employer
state

because

he

court

for

was

a

retaliatory

patient

at

a

discharge
West

and

Virginia

hospital when he received the news of his discharge, the tort of
retaliatory discharge occurred in West Virginia and therefore
West Virginia law should apply.

See id.

The Supreme Court of

Appeals of West Virginia applied the Restatement choice-of-law
approach

and

considering
particular

determined

the

section

attention

to

that
6
the

Maryland

factors,
“the

expectations” factor:

17

the

law

applied.

Oakes

protection

court
of

In
paid

justified

Appeal: 13-1788

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Filed: 03/10/2014

Pg: 18 of 22

The parties specifically agreed in their
contract that the employment relationship
would be governed by the laws of the State
of Maryland.
It is mere happenstance that
the [plaintiff] was in a West Virginia
hospital when he received news of the
termination of his employment. [Plaintiff]’s
claim for “retaliatory discharge” arises
from
his
filing
a
Maryland
workers’
compensation claim and not a West Virginia
workers’ compensation claim.
Id. at 132.

Importantly, the court subsequently stated that,

“Had [the plaintiff] filed a West Virginia workers’ compensation
claim,

the

criteri[on]

of

§

6[(2)](b),

namely,

the

policies of the forum, would have become operative.”

relevant

Id.

In contrast to the plaintiff in Oakes, who filed a claim in
the

nonforum

Commissioner
Virginia.

state,
in

West

Thus,

the

Mrs.

Kenney

Virginia—not
relevant

filed
an

a

claim

with

the

entity

in

Virginia

are

analogous

policies

of

West

operative, and its public policy should be “vindicated.”
id.

See

It is well settled that West Virginia law, and the WVUTPA

specifically, allows plaintiffs to recover for unfair settlement
practices

independent

of

any

claim

on

a

policy

or

contract.

See, e.g., Taylor, 589 S.E.2d at 59–60 (citing Jenkins v. J.C.
Penney Cas. Ins. Co., 280 S.E.2d 252 (W. Va. 1981), overruled on
other grounds, State ex rel. State Farm Fire & Cas. Co. v.
Madden, 451 S.E.2d 721 (W. Va. 1994)) (insurance claims adjuster
with whom the plaintiff had no contract may be held personally
liable, independent from insurer, pursuant to the WVUTPA); Wilt,
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506 S.E.2d at 609 (analyzing plaintiffs’ WVUTPA claim against
insurer

where

personal-injury

following injury).

award

had

already

been

paid

By contrast, courts that have interpreted

Virginia’s analogous statute—Virginia Code section 38.2-209—have
declined to recognize a separate cause of action in tort for
bad-faith dealing over an insurance contract.

See, e.g., A & E

Supply Co. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669, 676
(4th Cir. 1986); Adolf Jewelers, Inc. v. Jewelers Mut. Ins. Co.,
No. 3:08-CV-233, 2008 WL 2857191, at *5 (E.D. Va. July 21, 2008)
(citing U.S. Airways, Inc. v. Commonwealth Ins. Co., No. 03-587,
2004 WL 1094684, at *9 (Va. Cir. Ct. May 14, 2004)); see also
Taylor,

589

S.E.2d

at

60

n.10

(“Unlike

West

Virginia,

the

majority of states do not recognize a right to bring a private
cause of action under their unfair claim settlement practices
statutes.”).
IOF argues that “[t]he mere fact that Virginia’s laws may
differ

slightly

from,

or

be

less

favorable

[to

Mrs.

Kenney]

than, West Virginia’s law does not support a refusal to apply
Virginia law in this case.”

Aside from the fact that not a

single section 145(2) contact points to Virginia—thus rendering
the section 6 factor regarding “the relevant policies of other
interested states and the relative interests of those states in
the

determination

of

the

particular

issue”

a

nullity—the

difference between West Virginia’s law and Virginia’s law is

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substantial and a far cry from trivial: one state’s law allows
Mrs. Kenney’s cause of action to proceed and the other state’s
law does not.
West Virginia courts “have long recognized that comity does
not require the application of the substantive law of a foreign
state

when

that

Virginia].”

law

contravenes

the

public

policy

of

[West

Paul v. Nat’l Life, 352 S.E.2d 550, 556 (W. Va.

1986) (reversing, on public policy grounds, the lower court’s
decision to apply Indiana’s law as the law of the place of
injury because it conflicted with West Virginia’s law pertaining
to the same subject matter); see Yost, 181 F.3d 95 (stating the
following

when

analyzing

the

basic

policies

in

the

relevant

field of law: “The purpose of laws like WVUTPA is to ensure fair
play by insurance companies. . . . [T]he character of such laws
is

protectionist.

In

other

words,

West

Virginia’s

law

is

designed as it is in order to protect the citizens of West
Virginia.” (citing Poling, 450 S.E.2d at 637)).

Accordingly,

even assuming that the majority of the section 145(2) contacts
point to Virginia law—which, as analyzed above, they do not—West
Virginia’s favoritism toward laws that align with its own public
policy

trumps

any

comity

to

Virginia’s

law.

See

Paul,

352

S.E.2d at 556.
For the reasons set forth above, we hold that West Virginia
law applies to Mrs. Kenney’s claim pursuant to the Restatement

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choice-of-law approach.

Pg: 21 of 22

The district court therefore erred in

determining that Virginia law applies.

C.
Finally, we consider whether Mrs. Kenney’s complaint states
a

claim

upon

Virginia law.

which

relief

can

be

granted

See Fed. R. Civ. P. 12(b)(6).

pursuant

to

West

We note that IOF’s

motion to dismiss, its opposition to Mrs. Kenney’s motion for
reconsideration,

and

its

brief

on

appeal,

each

focus

nearly

exclusively on resolving the issue of which state’s law applies
and on arguing that Mrs. Kenney’s complaint failed to state a
claim pursuant to Virginia law.

Indeed, IOF’s motion to dismiss

is captioned, “Defendant’s Motion to Dismiss Based on Virginia
Law.”

(Emphasis added.)

IOF never contends, however, that Mrs.

Kenney’s complaint would also fail to state a claim upon which
relief

can

be

granted

should

West

Virginia

consequently, IOF waived any such argument.

law

apply;

See Mayfield v.

Nat’l Assoc. for Stock Car Auto Racing, Inc., 674 F.3d 369,
376-77 (4th Cir. 2012).
Insofar as the Supreme Court of Appeals of West Virginia
has previously entertained questions regarding an action brought
pursuant

to

the

WVUTPA

against

an

insurer

subsequent

to

settlement, where the cause of action was limited to “unfair
settlement practices,” see Wilt, 506 S.E.2d at 609, we hold that

21

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Mrs.

Doc: 31

Kenney’s

relief

can

be

Filed: 03/10/2014

complaint
granted

Pg: 22 of 22

therefore
should

states

she

a

prevail

claim
on

upon
the

which

merits.

Accordingly, we reverse the district court’s dismissal of the
complaint.

III.
For the reasons set forth above, we reverse the district
court’s dismissal of Mrs. Kenney’s complaint and remand this
case for further proceedings.
REVERSED AND REMANDED

22