Westfield Insurance Company v. Chico et al
Filing
27
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' COUNTER-MOTION FOR SUMMARY JUDGMENT: It is ORDERED that Westfield's 19 Motion for Summary Judgment is GRANTED and DECLARES that i t has no duty to defend or indemnify Shefhard or Derrico on the underlying claims and Shephard and Derrico's 23 Motion for Summary Judgment is DENIED. The Clerk is DIRECTED to enter a separate judgment order. Signed by District Judge Irene M. Keeley on 8/31/16. (cnd)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
WESTFIELD INSURANCE COMPANY,
Plaintiff,
v.
//
CIVIL ACTION NO. 1:15CV116
(Judge Keeley)
SAMUEL A. CHICO, III, CHICO
ENTERPRISES, INC., REGINA CHICO
SHEPHARD, and JOANN DERRICO,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Pending before the Court are the competing motions for summary
judgment
filed
by
the
plaintiff,
Westfield
Insurance
Company
(“Westfield”) (dkt. no. 19), and the defendants, Regina Chico
Shephard (“Shephard”) and Joann Derrico (“Derrico”) (dkt. no. 23).
Finding no coverage, the Court GRANTS Westfield’s motion and DENIES
the counter-motion of the defendants.
I. BACKGROUND
Westfield filed this action seeking a declaratory judgment
that various policies it issued to Shephard and Derrico do not
provide
coverage
for
claims
asserted
against
them
by
the
defendants, Samuel A. Chico, III, and Chico Enterprises, Inc.
(“Claimants”).
Samuel A. Chico, Jr. (“Samuel, Jr.”) and Ida D. Chico (“Ida”)
had six children, Samuel A. Chico, III (“Samuel, III”), Regina
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Chico Shephard (“Shephard”), Joann Derrico (“Derrico”), Julia
Abbitt (“Abbitt”), Monica Bonasso (“Bonasso”), and Connie Merandi
(“Merandi”). On October 1, 1991, Samuel, Jr. set up two irrevocable
inter
vivos
trusts
designated
as
the
Samuel
A.
Chico,
Jr.
Irrevocable Inter Vivos Insurance Trust (“IVIT”) and the Samuel A.
Chico,
Jr.
Irrevocable
Joint
Life
Insurance
Trust
(“JLIT”)
(collectively “the Trusts”). The Trusts were established for the
benefit of Ida during her lifetime, with the remainder to be
divided among the six Chico children upon Ida’s death (dkt. no. 191 at 1). Jordan C. Pappas was named as the initial trustee for each
of those Trusts.1 In addition to the IVIT and JLIT, Samuel, Jr.
established the Samuel A. Chico Revocable Trust (“the Revocable
Trust”) on September 30, 2003. Apparently, Abbitt and Merandi were
serving as co-trustees of the Revocable Trust at the time the
underlying complaint was filed.
As of August 7, 2005, the IVIT owned two insurance policies on
the life of Samuel, Jr., and the JLIT owned four insurance policies
on the joint lives of Samuel, Jr. and Ida. The underlying complaint
1
Both of the Trusts explicitly provided that, should Jordan
Pappas be unable or unwilling to serve as trustee, Gary Marano was
to serve as successor trustee. And, in the event that Gary Marano
would be unable or unwilling to serve as trustee, Keith Pappas was
to serve as successor trustee
2
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
filed in state court by the Claimants alleges that the IVIT did not
authorize the appointment of any beneficiary, including Shephard
and Derrico, as a successor trustee (dkt. no. 19-1 at 4-5). It
further alleges that neither Trust authorized the appointment of
any of the Chico daughters as successor trustees. Id. at 5.
Despite this, on August 8, 2005, Abbitt, who is a lawyer,
submitted change of ownership and change of beneficiary forms to
John Hancock Contract Services (“John Hancock”), the issuer of the
six (6) subject life insurance policies (dkt. no. 19-1 at 5). Those
forms requested that John Hancock change both the ownership and
designated beneficiary of the subject policies to Chico Girls II,
LLC, whose members are the five daughters of Samuel, Jr. and Ida
Chico (dkt. no. 19-1 at 5). John Hancock honored the request and
processed the forms. Id. at 6. Samuel, Jr., Ida, Samuel, III, and
Chico Enterprises have no ownership or beneficial interest in Chico
Girls II, and allegedly were never informed of the changes in
ownership and designated beneficiary of the subject policies (dkt.
no. 19-1 at 5-6).
Samuel, Jr. passed away on February 7, 2013, at which time
John Hancock paid the proceeds of three of the subject policies to
3
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Chico Girls II.2 Chico Girls II continues to be the owner and
designated beneficiary of the three remaining joint life insurance
policies.
On February 8, 2015, Samuel, III and Chico Enterprises3 sued
all five Chico daughters individually and also in their capacities
as trustees for the trusts. They also sued Jackson Kelly, PLLC,
John Hancock, and Chico Girls II (dkt. no. 19-1). The underlying
complaint asserts four causes of action against Shephard and
Derrico, the relevant defendants in this declaratory action. These
include (1) breach of fiduciary duty and self-dealing, (2) tortious
interference
with
an
expectancy,
(3)
fraud,
and
(4)
unjust
enrichment. Essentially, the claimants allege that Shephard and
Derrico, together with the other Chico daughters, intentionally and
2
Although it appears clear that John Hancock would have paid
proceeds on the two policies covering the life of Samuel, Jr., it
is unclear why they would have paid proceeds of a third policy that
was ostensibly on the joint lives of Samuel, Jr. and Ida. Whatever
the reason, that issue is not before the Court.
3
It appears that the basis for Chico Enterprises’ claims
against the Chico daughters stems from an agreement that Samuel,
Jr. and Chico Enterprises, Inc. allegedly entered into on February
1, 1990, under which Samuel, Jr. would reimburse the company for
any insurance premiums it paid on his behalf, which at his death
totaled $670,140.00. According to the Claimants, they were unaware
of these facts until after Samuel, Jr. died.
4
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
improperly diverted the proceeds of the insurance policies from
them.
At all times relevant to the issues here, Westfield insured
Shephard and her husband under a homeowner’s policy, HOP 7579065
(the “Shephard policy”). Westfield also insured Derrico and her
husband under a homeowner’s policy, Wespak Policy No. WNP-5545692
(the “Derrico Wespak policy”), and also under Westfield Personal
Liability Umbrella Policy No. UXP-4085408 (the “Umbrella Policy”).4
Westfield filed its complaint in this Court on July 13, 2015
(dkt. no. 1), seeking a declaration that the subject policies do
not cover Shephard or Derrico for any of the claims asserted
against them in the underlying action, and that it therefore has no
duty to defend or indemnify them in connection with that case.
Shephard and Derrico answered the complaint on August 18, 2015
(dkt. no. 10). On January 15, 2016, Westfield moved for summary
judgment (dkt. no. 19), arguing that there is no issue of material
fact in dispute regarding whether its policies afford coverage for
the underlying claims against Shephard and Derrico. Specifically,
Westfield contends: (1) there is no claim for “bodily injury,”
4
When discussing all three policies collectively, the Court
will refer to them as the “subject policies.”
5
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
“personal injury,” or “property damage,” which is required to
trigger coverage; (2) none of the claims or losses arise from an
“occurrence” as defined and required in the policies; (3) even if
coverage existed, the Expected or Intended Injury Exclusion clause
(“intentional acts clause”) would operate to exclude it; and (4)
even if there was coverage, the business exclusion clause of the
policies would operate to exclude coverage.
Shephard and Derrico also filed a motion for summary judgment
(dkt. no. 23), arguing that the policies provide coverage because
the underlying claims fall under the policies’ definition of
“personal injury,” and the diverted insurance proceeds qualify as
“tangible property,” therefore falling within coverage provided for
“property damage” as defined by the policies. Shephard and Derrico
also dispute whether either the intentional acts or business
exclusions operate to exclude coverage. These motions are fully
briefed and ripe for review.
II.
Summary
documents,
judgment
STANDARD OF REVIEW
is
electronically
declarations,
stipulations
appropriate
where
the
stored
information,
.
,
.
.
admissions,
“depositions,
affidavits
or
interrogatory
answers, or other materials” establish that “there is no genuine
6
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed R. Civ. P. 56(a), (c)(1)(A).
When ruling on a motion for summary judgment, the Court reviews all
the evidence “in the light most favorable” to the nonmoving party.
Providence Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846,
850 (4th Cir. 2000). The Court must avoid weighing the evidence or
determining
its
truth
and
limit
its
inquiry
solely
to
a
determination of whether genuine issues of triable fact exist.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court
of
the
basis
for
the
motion
and
nonexistence of genuine issues of fact.
of
establishing
the
Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once the moving party has made the
necessary showing, the non-moving party “must set forth specific
facts showing that there is a genuine issue for trial.”
Anderson,
477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the nonmoving party will not prevent the entry of summary judgment; the
evidence
must
be
such
that
a
rational
reasonably find for the nonmoving party.
7
trier
of
fact
Id. at 248–52.
could
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
III. APPLICABLE LAW
As
a
declaratory
judgment
action
based
on
diversity
jurisdiction, the Court must apply West Virginia substantive law,
as it is the state in which the subject policies were issued. See
Beckley Mechanical, Inc. v. Erie Ins. & Cas. Co., 374 Fed. Appx.
381, 383, n. 1 (4th Cir. 2010) (citing Erie R.R. v. Tompkins, 304
U.S. 64 (1938)).
Under
West
Virginia
law,
liability
insurance
policies
establish two main duties on the part of the insurer, the duty to
defend and the duty to indemnify. See e.g., Aetna Cas. & Sur. Co.
v.
Pitrolo,
342
S.E.2d
156,
160
(W.Va.
1986);
Donnelly
v.
Transportation Insurance Co., 589 F.2d 761, 765 (4th Cir. 1978). An
insurer’s
duty
to
defend
is
normally
triggered
when
“the
allegations in the plaintiff’s complaint are reasonably susceptible
of an interpretation that the claim may be covered by the terms of
the insurance policy.” Pitrolo, 342 S.E.2d at 160; see also Syl.
Pt. 2, Farmers and Mechanics Mut. Ins. Co. of West Virginia v.
Cook, 557 S.E.2d 801, 802 (W.Va. 2001). If any of the claims
against the insured might trigger coverage, the insurer must defend
against all the claims asserted. See Horace Mann Ins. Co. v.
Leeber, 376 S.E.2d 581, 584 (W.Va. 1988) (citing Donnelly, 589 F.2d
8
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
at 765). Nevertheless, the insurer need not provide a defense if
the claims against the insured are “entirely foreign to the risk
insured against.” Air Force Ass’n v. Phoenix Ins. Co., 1990 WL
12677, at *2 (4th Cir. 1990) (citing Donnelly, 589 F.2d at 765)
The specific wording of an insurance policy determines whether
it
provides
coverage
for
a
particular
claim.
See
Beckley
Mechanical, 374 Fed. Appx. at 383; Cherrington v. Erie Ins.
Property and Cas. Co., 745 S.E.2d 508, 524 (W.Va. 2013). Indeed,
“[l]anguage in an insurance policy should be given its plain,
ordinary meaning.” Syl. Pt. 8, Cherrington, 745 S.E.2d at 511
(internal quotations and citations omitted). Courts should not
endeavor to interpret policy provisions unless they are unclear or
ambiguous. Id. Instead, courts must give terms and provisions their
meaning in the “plain, ordinary and popular sense, not in a
strained or philosophical sense.” Polan v. Travelers Ins. Co., 192
S.E.2d 481, 484 (W.Va. 1972); see also Syl. Pt. 9, Cherrington, 745
S.E.2d at 511.
A term is ambiguous if it “‘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, . . .’”
Allstate Ins. Co. v. Ashley, 1994 WL 580090, at *2 (4th Cir. 1994)
9
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
(quoting Syl. Pt. 1, Surbaugh v. Stonewall Cas. Co., 283 S.E.2d
859, 860 (W.Va. 1981) (quoting in turn Syl. Pt. 1, Prete v.
Merchants Property Ins. Co. of Ind., 223 S.E.2d 441 (W.Va. 1976))).
Courts should resolve any ambiguity in favor of the insured. See
Jenkins v. State Farm Mut. Auto. Ins. Co., 632 S.E.2d 346, 350
(W.Va. 2006) (quoting Leeber, 376 S.E.2d at 584). Moreover, when
the ambiguous language is exclusionary in nature, it should be
“strictly construed against the insurer in order that the purpose
of providing indemnity not be defeated.” Jenkins, 632 S.E.2d at 346
(quoting Syl. Pt. 5, National Mut. Ins. Co. v. McMahon & Sons,
Inc., 356 S.E.2d 488 (W.Va. 1987)).
Finally, interpretation of an insurance contract, including
whether language contained within it is ambiguous, is a question of
law and subject to de novo review. See Syl. Pt. 2, Cook, 557 S.E.2d
at 802.
IV. RELEVANT POLICY LANGUAGE
The subject policies all contain identical definitions of the
following policy terms:
Occurrence means an accident, including continuous or repeated
exposure to substantially the same general harmful conditions,
which results, during the policy period, in:
a.
Bodily injury; or
b.
Property damage.
10
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Bodily injury means bodily harm, sickness or disease,
including required care, loss of services and death that
results.
Property damage means physical injury to, destruction of, or
loss of use of tangible property.
Dkt. No. 19-2 at 17-18; Dkt. No. 24 at 2-3 (emphasis in originals).
The Shephard policy contains the following personal liability
coverage provision:
Coverage E - Personal Liability
If a claim is made or a suit is brought against an
insured for damages because of bodily injury or property
damage caused by an occurrence to which this coverage
applies, we will:
1.
Pay up to our limit of liability for the damages
for which an insured is legally liable. . . . ; and
2.
Provide a defense at our expense by counsel of our
choice, even if the suit is groundless, false or
fraudulent. . . .
Dkt. No. 19-2 at 34 (emphasis in original). In addition, the
Shephard policy includes an endorsement that broadens its coverage
by redefining bodily injury to include “personal injury.” See Dkt.
No. 24 at 6. Under that endorsement:
“Personal injury” means injury arising out of one or more
of the following offenses:
(1) False arrest, detention or imprisonment, or
malicious prosecution;
(2) Libel, slander or defamation of character;
(3) Invasion of privacy, wrongful eviction or
wrongful entry.
11
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Id. (emphasis in original).
Similarly, the Derrico Wespak policy contains the following
personal liability provision defining when the duties to defend and
indemnify are triggered:
Coverage E - Personal Liability
If a claim is made or a suit is brought against an
insured for damages because of bodily injury, property
damage, or personal injury caused by an occurrence to
which this coverage applies, we will:
1.
Pay up to our limit of liability for the damages
for which an insured is legally liable. . . . ; and
2.
Provide a defense at our expense by counsel of our
choice, even if the suit is groundless, false or
fraudulent. . . .
Dkt. No. 24 at 9 (emphasis in original). The Derrico Wespak
policy’s definition of personal injury is identical to that found
in the Shephard policy. See Dkt. No. 24 at 9.
Finally, the Derrico Umbrella Policy provides that:
[Westfield] will pay damages, in excess of the retained
limit, for:
1.
2.
Bodily injury or property damage for which an
insured becomes legally liable due to an
occurrence to which this insurance applies;
and
Personal injury for which an insured becomes
legally liable due to one or more offenses
listed under the definition of personal injury
to which this insurance applies.
12
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Dkt. No. 24 at 12 (emphasis in original). Further, “[i]f a claim is
made or a suit is brought against an insured for damages because of
bodily injury or
property damage
caused by an
occurrence
or
personal injury caused by an offense to which this policy applies,
we . . . [w]ill provide a defense.” Id.
The Umbrella Policy goes on to define personal injury as
injury arising out of one or more of the following
offenses, but only if the offense was committed during
the policy period:
1.
2.
3.
4.
5.
False arrest, detention or imprisonment.
Malicious prosecution;
The wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a
room, dwelling or premises that a person occupies,
committed by or on behalf of its owner, landlord or
lessor;
Oral or written publication of material that
slanders or libels a person or organization or
disparages a person’s or organization’s goods,
products or services; or
Oral or written publication of material that
violates a person’s right of privacy.
Dkt. No. 24 at 11-12.
V. LEGAL ANALYSIS
The threshold question is whether coverage was triggered by an
occurrence as defined under the subject policies. If so, it raises
the secondary question of whether the intentional acts or business
exclusions operate to deny that coverage.
13
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
A.
Coverage
1.
Under the Shephard and Derrico Wespak Policies
Based on the unambiguous language of the policies, coverage is
triggered by an occurrence that results in bodily injury, property
damage, or personal injury. The Court looks to the allegations in
the underlying complaint to determine whether Westfield has a duty
to defend or indemnify under the policies. See West Virginia Fire
& Cas. Co. v. Stanley, 602 S.E.2d 483, 490 (W.Va. 2004) (“In other
words, an insurer has a duty to defend an action against its
insured only if the claim stated in the underlying complaint could,
without amendment, impose liability for risks the policy covers.”).
There is no dispute that the underlying complaint makes no
claims for bodily injury as defined under the subject policies. See
Dkt. No. 19-1 at 1-17. In addition, it appears that the underlying
complaint asserts no claims for property damage in the traditional
sense because the gravamen of the action is the diversion of life
insurance proceeds. Id.
Shephard and Derrico, nevertheless, argue that the insurance
proceeds are cash and qualify as tangible property under the
property damage definition (dkt. no. 24 at 22-23). Further, they
assert that the torts specifically enumerated under the personal
14
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
injury definitions in the subject policies do not explicitly
exclude other torts. From that, they reason that the definitions of
personal
injury
Westfield,
are
trigger
ambiguous
coverage
and,
for
when
the
construed
claims
alleged
against
in
the
underlying complaint.
These arguments, however, miss the mark.
The determinative
issue is whether any of the alleged injuries resulted from an
“occurrence.” Under the subject policies, an occurrence is “an
accident including continuous or repeated exposure to substantially
the same general harmful conditions . . . .” The Supreme Court of
Appeals
of
West
Virginia
has
recently
defined
“accident”
as
follows:
In determining whether under a liability insurance policy
an occurrence was or was not an ‘accident’ or was or was
not deliberate, intentional, expected, desired, or
foreseen — primary consideration, relevance, and weight
should ordinarily be given to the perspective or
standpoint of the insured whose coverage under the policy
is at issue. Furthermore, an accident is never present
when a deliberate act is performed unless some additional
unexpected, independent and unforeseen happening occurs
which produces the damage.
State ex rel. Nationwide Mut. Ins. Co. v. Wilson, 778 S.E.2d 677,
683
(W.Va.
citations
2015)
omitted);
(emphasis
see
also
added)
(internal
Cherrington,
745
quotations
S.E.2d
at
and
520
(defining an occurrence as an accident that “‘was not deliberate,
15
WESTFIELD INS. CO. V. CHICO, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
intentional, expected, or foreseen’” (quoting Syl. pt. 1, Columbia
Casualty Co. v. Westfield Insurance Co., 617 S.E.2d 797 (W.Va.
2005))).
In Wilson, the Supreme Court confronted a definition of
occurrence identical to the one in the subject policies and
determined that claims for breach of contract, defamation, fraud,
and conversion, among others, in the underlying complaint were
either intentional or contractual in nature. Id. at 683-84. It went
on to hold that “[i]ntentional misconduct is not an ‘accident’
under the terms of the [] policy.” Id. at 684. Finally, it noted
that its holding comported with West Virginia’s public policy
against allowing coverage for intentional torts. Id.
The complaint in the underlying case unambiguously alleges
claims against Shephard and Derrico for (1) breach of fiduciary
duty
and
self-dealing,
(2)
tortious
interference
with
an
expectancy, (3) fraud, and (4) unjust enrichment. See Dkt. No. 19-1
at 8-11. Even a cursory review of the complaint makes clear that
all of the misconduct alleged was purposefully undertaken with the
intent to channel the insurance proceeds away from Samuel, III,
Ida, and Chico Enterprises.
16
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Because the underlying complaint alleges only intentional
misconduct, the claims against Shephard and Derrico do not arise
from an accident or occurrence as defined under the subject
policies, and no coverage exists that would indemnify them under
the relevant policies.
2.
Under the Umbrella Policy
Although there was no occurrence under the Shephard policy or
Derrico Wespak policy that would trigger coverage for bodily
injury, property damage, or personal injury, the Derrico Umbrella
Policy presents a slightly different question. Under that policy,
the requirement that an injury must result from an occurrence only
applies to bodily injury and property damage:
[Westfield] will pay damages, in excess of the retained
limit, for:
1.
2.
Bodily injury or property damage for which an
insured becomes legally liable due to an occurrence
to which this insurance applies; and
Personal injury for which an insured becomes
legally liable due to one or more offenses listed
under the definition of personal injury to which
this insurance applies.
Dkt. No. 24 at 12 (emphasis in original).
The personal injury clause of the Umbrella Policy does not
require an occurrence before a personal injury as defined by the
17
WESTFIELD INS. CO. V. CHICO, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
policy triggers coverage. Rather, personal injury coverage is
triggered
by
claims
resulting
from
the
following
enumerated
“offenses” defined in the policy:
1.
2.
3.
4.
5.
False arrest, detention or imprisonment.
Malicious prosecution;
The wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a
room, dwelling or premises that a person occupies,
committed by or on behalf of its owner, landlord or
lessor;
Oral or written publication of material that
slanders or libels a person or organization or
disparages a person’s or organization’s goods,
products or services; or
Oral or written publication of material that
violates a person’s right of privacy.
Dkt. No. 24 at 11-12.
Clearly, in the Umbrella Policy, Westfield chose not to
premise coverage for personal injury on an occurrence, but rather
on specific intentional offenses enumerated in the policy. The
underlying complaint, however, asserts none of those claims.
Undeterred, Shephard and Derrico maintain that the claims that
are alleged are covered because the enumerated offenses listed in
the
personal
injury
clause
of
the
Umbrella
“exclusive or exhaustive” (dkt. no. 24 at 19).
ambiguity
exists
that
must
be
“strictly
Policy
are
not
Consequently, an
construed
against
[Westfield] and in favor of [them].” Id. (quoting Syl. Pt. 4,
18
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
McMahon & Sons, 356 S.E.2d at 488). Based on this ambiguity, they
contend the intentional torts alleged against them fall within the
personal injury clause, thus triggering coverage.5 This argument is
unavailing.
Critically, the Umbrella Policy is not ambiguous. No term 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, . . .’” Ashley, 1994 WL 580090, at *2.
“The mere fact that parties do not agree to the construction of a
contract does not render it ambiguous.” American States Insurance
Co. v. Surbaugh, 745 S.E.2d 179, 183 (W.Va. 2013).
Whether a contract is ambiguous is a question of law for the
Court to determine. Id. Shephard and Derrico dispute neither the
meaning of the terms within the personal injury clause nor the
definition of personal injury in the policy. Rather, assuming the
list is not exhaustive, they seek to add by implication the
intentional acts alleged in the underlying complaint.
5
Notably, Shephard and the Derricos have cited no case law or
other support for their contention that Westfield’s enumerated list
must be explicitly exclusive or exhaustive to preclude inclusion of
other, non-enumerated offenses.
19
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
Explicit language making a list exclusive or exhaustive is not
required to limit application to a specific list of enumerated
offenses.
Indeed, that is often the very purpose of enumeration,6
the canon of construction, expressio unius est exclusio alterius,
“hold[s] that to express or include one thing implies the exclusion
of the other, or of the alternative.”7 See Black’s Law Dictionary
(10th ed. 2014). In accord with this canon, one may conclude that
Westfield’s
specific
enumeration
of
the
offenses
triggering
coverage was intended to exclude any other offenses. Furthermore,
6
See, e.g, Fleisher v. Phoenix Life Ins. Co., 18 F.Supp.3d
456, 471 (S.D.N.Y. Apr. 29, 2014) (finding the term “based on” and
other similar language to be “exhaustive, not illustrative,” and
noting that a normal insured would not interpret an enumerated list
as “informational,” rather, he would interpret it as exclusive).
Similarly, the Court finds the language here, that the personal
injury must “arise out of” the enumerated offenses, not simply
informational, but exclusive in nature.
7
Although often thought of as a canon of statutory
construction, expressio unius est exclusio alterius is also a canon
of contract interpretation. See, e.g., 24th Senatorial Dist.
Republican Committee v. Alcorn, 820 F.3d 624, 631 (4th Cir. 2016)
(citing Smith Barney, Inc. v. Critical Health Sys., 212 F.3d 858,
861 (4th Cir. 2000)) (recognizing that expressio unius est exclusio
alterius is a canon of contract interpretation); Bowman Transp.,
Inc. v. Heinsohn, 1995 WL 729507, at *2 (4th Cir. 1995) (same);
Cornell University v. UAW Local 2300, United Auto. Aerospace and
Agr. Implement Workers of America, 942 F.2d 138, 139 (2d Cir. 1991)
(finding that expressio unius est exclusio alterius was applicable
when determining whether enumerated matters subject to arbitration
in a collective bargaining agreement were exclusive).
20
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
no reasonable insured would interpret this enumerated list as
merely
informational
rather
than
exclusive.
See
Fleisher,
18
F.Supp. 3d at 471.
Shephard and Derrico contend that there is an irreconcilable
conflict between the Umbrella Policy’s exclusion, purporting to
exclude all intentional acts, and its personal injury clause,
providing coverage for certain enumerated intentional offenses.
They argue that, if the intentional acts exclusion is
interpreted
to apply to the personal injury liability coverage, it would
“swallow” the intentional offenses that Westfield concedes are
specifically covered. Dkt. No. 24 at 18-19. They cite no cases so
holding, but simply declare that the clauses are ambiguous and
therefore must be strictly construed against Westfield.
Contrary to the defendants’ argument, an intentional acts
exclusion does not automatically “swallow” enumerated intentional
offenses explicitly allowed in a personal injury clause. See
Hackett v. American Motorists Ins., Co., 584 S.E.2d 158, 167 (W.Va.
2003) (implicitly finding that personal injury and intentional acts
clauses
identical
to
those
here
could
coexist
and
were
reconcilable). Rather, the personal injury clause may carve out for
21
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
coverage certain acts that the policy would otherwise exclude under
the intentional acts exclusion. See id.
Furthermore, a finding that coverage must extend to claims
resulting from intentional acts not listed as covered in the policy
would produce an absurd result. See Cherrington, 745 S.E.2d at 520
(“An insurance policy should never be interpreted so as to create
an
absurd
result,
interpretation,
(internal
but
instead
consistent
quotation
with
omitted)).
should
the
receive
intent
Indeed,
none
of
of
a
reasonable
the
the
parties.”
subject
policies, including the Umbrella Policy, ever purported to cover
personal injuries beyond those resulting from the listed enumerated
offenses. Any interpretation that the personal injury clause and
intentional acts exclusion are in conflict would result in coverage
far broader than intended, and produce an absurd result. See id.
(“[W]e will not apply a policy’s plain language to obtain illogical
or incongruous results.”).
In sum, the claims alleged in the underlying complaint do not
trigger coverage under either the Shephard policy or Derrico Wespak
policy because they do not arise from an occurrence as defined
under those policies. Nor do they trigger coverage under the
22
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
personal injury clause of the Umbrella Policy because those claims
are not among that clause’s enumerated offenses.8
B.
Intentional Acts and Business Exclusion Clauses
Having determined that there is no coverage under the subject
policies, it is not necessary to further analyze whether either the
intentional acts exclusion or business exclusion would operate to
deny coverage.
VI. CONCLUSION
For the reasons discussed, the Court concludes that the claims
alleged in the underlying complaint do not constitute an occurrence
under the subject policies, and thus no coverage exists under the
Shephard policy and Derrico Wespak policy.
For the same reasons,
there is no coverage for bodily injury or property damage under the
Umbrella Policy. Furthermore, coverage is not triggered under the
personal injury clause of the Umbrella Policy because the offenses
alleged in the underlying complaint are not included in the
intentional acts enumerated in that clause.
Accordingly, the Court GRANTS Westfield’s motion for summary
judgment (dkt. no. 19), and
DECLARES that it has no duty to defend
8
The same analysis would apply to find no coverage exists
under the personal injury clauses of either the Shephard policy or
Derrico Wespak policy, as those clauses also list enumerated
offenses that do not include the intentional torts alleged in the
underlying complaint.
23
WESTFIELD INS. CO. V. CHICO, ET AL.
1:15CV116
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 19] AND DENYING
DEFENDANTS’ COUNTER-MOTION FOR SUMMARY JUDGMENT [DKT. NO. 23]
or indemnify Shephard or Derrico on the underlying claims. Based on
that ruling, the Court also DENIES Shephard and Derrico’s motion
for summary judgment (dkt. no. 23).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this
Memorandum Opinion and Order to counsel of record and to enter a
separate judgment order.
DATED: August 31, 2016.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
24
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