Beatty et al v. Esurance Property and Casualty Insurance Company et al

Filing 57

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47 ] AND DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49 ]: The Court: 1) GRANTS the defendants' motion for summary judgmen t (Dkt. No. 47 ); 2) DENIES the plaintiffs' motion for partial summary judgment (Dkt. No. 49 ); 3) DECLARES that the Beattys' policy does not provide underinsured motorist coverage; and 4) DISMISSES the plaintiffs' remaining claims AS MOOT. The Court directs the Clerk to enter a separate judgment order. Signed by Senior Judge Irene M. Keeley on 7/17/2018. (wrr)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
VIRGIL BEATTY and
MELISSA BEATTY,
Plaintiffs,
v.

//

CIVIL ACTION NO. 1:16CV91
(Judge Keeley)

ESURANCE PROPERTY AND CASUALTY
INSURANCE COMPANY and ESURANCE
INSURANCE SERVICES, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
The question presented by the parties’ pending motions for
summary judgment is whether the defendants are obligated to provide
underinsured motorist coverage to the plaintiffs with regard to
damages incurred during a May 2015 vehicle accident. Concluding
that they are not, the Court GRANTS the defendants’ motion for
summary judgment (Dkt. No. 47), and DENIES the plaintiffs’ motion
for partial summary judgment (Dkt. No. 49).
I.
Many of the facts in this case are not in dispute. In late
2014, the plaintiffs, Virgil and Melissa Beatty (collectively, “the
Beattys”), began searching for a new automobile insurance carrier
to replace their existing policy with National General that was set
to expire on December 25, 2014 (Dkt. No. 48-1 at 45-46). After
obtaining quotes from several companies, on December 24, 2014, Mrs.

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
Beatty began an online application with the defendants, Esurance
Property and Casualty Insurance Company and Esurance Insurance
Services, Inc. (collectively, “Esurance”). Id. at 27, 48. During
the online application, Mrs. Beatty provided the Beattys’ driver’s
license numbers, driving histories, and vehicle information. She
also created an online account using her e-mail address, which she
intended to use again to renew the policy. Id. at 47-50. At some
point during the application process, Mrs. Beatty placed Mr.
Beatty’s electronic signature on a Credit Card Authorization, which
authorized a charge for $522.86 and acknowledged that “Esurance
will notify me via email of the dates and amount of any future and
renewal payments” (Dkt. Nos. 48-1 at 54-57; 48-4).
That same day, Mr. Beatty called an Esurance representative to
discuss the quote that the Beattys had received online (Dkt. No.
48-3).

After

speaking

with

Mrs.

Beatty

about

the

additional

information he received from the representative, Mr. Beatty called
again to complete the application and pay for the policy by
telephone (Dkt. No. 48-2 at 65). The coverage that Mr. Beatty
purchased included “uninsured and underinsured motorist bodily
injury

limits

of

100,000

per

person,

300,000

per

accident;

uninsured motorist property damages limits of 50,000 per accident
2

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
with a 300 deductible; [and] underinsured motorist property damages
limits of 50,000 per accident.” Id. at 75-78.
The

Esurance

representative

provided

Mr.

Beatty

with

a

temporary password and instructed him “to go onto [the Esurance]
website, just so [he could] accept the terms and the conditions of
[the] policy and also any West Virginia state required forms.” Id.
at 81-82. The representative also specifically advised Mr. Beatty
that he would be receiving “an e-mail from [Esurance] about [his]
uninsured/underinsured motorist form that [he would] need to . . .
print and sign and return to [Esurance] within 30 days.” Id. at 8384. At the conclusion of the call, the Esurance representative
confirmed that the Beattys’ insurance policy would go into effect
at 12:01 A.M. on December 25, 2014, and reminded Mr. Beatty to fill
out the requisite forms within 30 days. Id. at 85.
Thereafter, the Beattys received an email from Esurance that
thanked them “for becoming an Esurance policyholder” and provided
their “policy documents” (Dkt. No. 48-5).1 On December 26, 2014,
Esurance sent the Beattys another email that provided as follows:
1

Mrs. Beatty testified that she thinks she also received
policy and insurance cards by U.S. mail sometime before January
2015 (Dkt. No. 48-1 at 90). At that time, she reviewed
declarations page, which reflected the uninsured motorist
underinsured motorist coverages listed above. Id. at 94.
3

the
24,
the
and

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
West Virginia requires us to send you the attached
documents regarding your underinsured and uninsured
motorist coverages. Please read the forms carefully and
select limits for both coverages. Then, sign and date the
forms and return them to us by email, mail, or fax within
the next 30 days.
(Dkt. No. 48-6 at 2; 48-7 at 9). The attached documents explained
uninsured

motorist

(“UM”)

and

underinsured

motorist

(“UIM”)

coverage, and offered the Beattys an opportunity to select optional
limits for each type of coverage (“selection/rejection forms”)
(Dkt. No. 48-6 at 4-5). The documents were not sent by U.S. mail
(Dkt. No. 48-7 at 9).
The Beattys also received several emails from Esurance during
the following months, advising them to log on and accept the terms
of their policy in order “[t]o maintain electronic delivery of
policy docs” (Dkt. Nos. 48-9; 48-10; 48-11; 48-12). Although the
Beattys received these e-mails at the address they provided, they
did not open or review many of the communications until after the
May 2015 accident (Dkt. Nos. 48-1 at 59-60; 48-15 at 2). In fact,
Mrs. Beatty testified that she “[p]retty much” disregarded e-mails
from Esurance (Dkt. No. 48-1 at 63).
“[I]f a customer does not log onto their policy and accept
terms and conditions” within 30 days, Esurance updates the delivery

4

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1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
method from electronic to paper (Dkt. No. 48-7 at 11, 14). When the
Beattys did not accept the terms and conditions, on January 24,
2015, Esurance changed the Beattys’ “policy document delivery
method” to U.S. mail (Dkt. No. 48-19). Esurance also removed a
paperless discount that had been applied to the Beattys’ policy and
sent an e-mail advising that it would charge their credit card an
additional $7.52 on February 3, 2015 (Dkt. Nos. 48-19 at 2; 48-17).
Mrs. Beatty reviewed this e-mail, but did not inquire about the
charge (Dkt. No. 48-1 at 60).2
The Beattys did not return the selection/rejection forms
within 30 days. Id. at 72, 125. As a result, on January 26, 2015,
Esurance mailed the Beattys’ an amended policy declarations page,
effective January 28, 2015, which reflected that Esurance had
removed UIM coverage and drastically reduced UM coverage (Dkt. Nos.
48-14 at 9-10; 48-16). The Beattys did not review the amended
declarations page (Dkt. No. 48-1 at 97). In fact, Mrs. Beatty
testified that she does not read renewal declarations pages because
she assumes that her coverage will remain the same. Id. at 95. At
this time, Esurance also issued a refund for the UIM premium (Dkt.

2

The Beattys did not log in and accept the policy terms until
May 22, 2015, following the accident (Dkt. No. 48-15 at 2).
5

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
No. 48-14 at 9). Mrs. Beatty received an e-mail regarding the
refund, but she did not inquire why Esurance issued it (Dkt. No.
48-1 at 114-15).
From that point forward, Esurance was of the opinion that it
did not provide UIM coverage to the Beattys. On May 18, 2015, Mr.
Beatty was involved in a head-on collision with one Sharlotta
Wilson (“Wilson”) while traveling on U.S. Route 50. Wilson was
cited for failing to maintain control of her vehicle and driving
the wrong way on a one-way road (Dkt. No. 1 at 3). Mrs. Beatty made
a claim with Esurance on May 19, 2015 (Dkt. No. 48-1 at 278).
Esurance denied the Beattys’ claim for UIM coverage because it had
been canceled when they failed to return the selection/rejection
forms in January 2015. Id. at 278-302.
In May 2016, the Beattys filed this action against Esurance,
alleging

three

claims:

1)

declaratory

relief,

2)

breach

of

contract, and 3) bad faith (Dkt. No. 1 at 3-8). Following a
scheduling conference, the Court directed the parties to submit
cross briefs on the threshold question of whether the policy
provided coverage (Dkt. No. 14). After receiving several extensions
of time in which to do so (Dkt. Nos. 30; 34; 54), the parties filed

6

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
and briefed their competing motions for summary judgment, which are
now ripe for review (Dkt. Nos. 47; 49).
II.
Summary
documents,

judgment

is

electronically

appropriate
stored

where

the

information,

“depositions,
affidavits

or

declarations, stipulations (including those made for purposes of
the motion only), admissions, interrogatory answers, or other
materials” establish that “there is no genuine 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

of

establishing

the

nonexistence of genuine issues of fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once the moving party has made the
7

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
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

trier

of

fact

could

reasonably find for the nonmoving party. Id. at 248–52.
III.
“A federal court exercising diversity jurisdiction is obliged
to apply the substantive law of the state in which it sits.” Volvo
Const. Equip. N. Am. v. CLM Equip. Co., Inc., 386 F.3d 581, 599-600
(4th Cir. 2004) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79
(1938)). Typically, in West Virginia, “[d]etermination of the
proper coverage of an insurance contract when the facts are not in
dispute is a question of law.” Syl. Pt. 1, Tennant v. Smallwood,
568 S.E.2d 10 (W. Va. 2002). Although the policy in place at the
time of the accident did not provide UIM coverage, the Beattys
contend that it should nonetheless be applied due to Esurance’s
failure to comply with requirements of West Virginia law.

8

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
A.
The parties first contest whether Esurance made an appropriate
offer of UIM coverage. In West Virginia, a policy or contract of
insurance

“covering

liability

arising

from

the

ownership,

maintenance or use of any motor vehicle” may not be issued unless
the insurer provides the insured with the option to purchase
certain amounts of UM and UIM coverage. W. Va. Code Ann. § 33-631(a), (b) (West 2014).3 These optional limits of coverage “shall
be made available to the named insured at the time of initial
application for liability coverage and upon any request of the
named

insured

on

a

form

prepared

and

made

available

by

the

insurance commissioner.” Id. § 33-6-31d(a). Insurers may provide
the form to applicants by either “delivering the form to the
applicant or by mailing the form to the applicant together with the
applicant’s initial premium notice.” Id. § 33-6-31d(b).
If the applicant signs and returns the form, it “shall create
a presumption that such applicant and all named insureds received
an effective offer of the optional coverages . . . and that such
applicant

exercised

a

knowing

3

and

intelligent

election

or

The current version of the statute did not become effective
until June 8, 2015, after the accident at issue.
9

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
rejection, as the case may be, of such offer as specified in the
form.” Id. In addition, if the applicant fails to return the form
within 30 days, it is presumed that he “received an effective offer
of the optional coverages” but “exercised a knowing and intelligent
rejection of such offer.” Id. § 33-6-31d(d).
If an insurer is not entitled to rely on these presumptions for instance, because it failed to use the proper forms - it bears
the burden to establish that “(1) it made a commercially reasonable
offer of coverage to the insured, and (2) the insured’s rejection
of such coverage was knowing and intelligent.” Thomas, 751 S.E.2d
278. An offer is commercially reasonable if it provides “adequate
information

to

make

an

intelligent

decision”

by

stating

“in

definite, intelligible, and specific terms, the nature of the
coverage offered, the coverage limits, and the costs involved.”
Bias v. Nationwide Mut. Ins. Co., 365 S.E.2d 789, 791 (W. Va.
1987). If the insurer fails to establish a commercially reasonable
offer and adequate rejection, the coverage “is included in the
policy by operation of law.” Id.
Here,

it

is

undisputed

that

Esurance

emailed

the

selection/rejection forms to the Beattys and canceled UIM coverage
when they failed to return the forms within 30 days (Dkt. Nos. 4810

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
6; 48-19). The Beattys, however, contend that Esurance is not
entitled to the statutory presumption that it made an effective
offer of UIM coverage. After careful consideration, the Court
concludes that none of the Beattys’ arguments is persuasive.
First, the Beattys posit that Esurance failed to make UIM
coverage available “at the time of the initial application” as
required by W. Va. Code § 33-6-31d(a) (Dkt. No. 50 at 8-9). The
Beattys apparently contend that Esurance could only have satisfied
the “at the time” requirement by providing the selection/rejection
forms electronically or placing them in transit during the online
and telephone application (Dkt. No. 56 at 7).
As other courts have recognized, however, “this argument is
untenable” because it is inconsistent with the statute, which
expressly allows the selection/rejection forms to be sent with the
applicant’s first premium notice. Massey v. 21st Century Centennial
Ins. Co., No. 2:17-cv-01922, 2018 WL 1023108, at *5 (S.D.W.Va. Feb.
22, 2018); see also W. Va. Code Ann. § 33-6-31d(b) (West 2014).
Read as a whole, the statute does not require that UIM coverage be
offered the instant a person applies for liability coverage to be
“at the time of the initial application.”

11

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1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
Second, the Beattys contend that Esurance failed to comply
with W. Va. Code § 33-6-31d(b) by “mailing the form . . . together
with the . . . initial premium notice” (Dkt. No. 50 at 9). That
section also allows Esurance to comply by “delivering the form to
the

applicant,”

however,

and

it

is

undisputed

that

Esurance

delivered the selection/rejection forms by email two days after the
Beattys’ purchase. Although the Beattys contend that there is no
way “to determine how long after obtaining coverage” an insured has
to send a UIM offer (Dkt. No. 56 at 6), delivery in this case was
well within the period of time contemplated by the statute.
Esurance delivered the forms to the Beattys by email during the
same time that it would have taken to send them by U.S. mail with
an initial premium notice. Therefore, Esurance provided the forms
in compliance with W. Va. Code § 33-6-31d(b).
Third, the Beattys contend that Esurance improperly sent the
selection/rejection forms by e-mail because it “did not have an
express agreement to send documents electronically” (Dkt. No. 50 at
9-11). Under the Uniform Electronic Transactions Act (“UETA”),
electronic records and signatures have the same legal effect as do
non-electronic ones. W. Va. Code § 39A-1-7. Furthermore, “if
parties agree to conduct a transaction by electronic means and a
12

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1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
law requires a person to provide, send or deliver information in
writing to another person, the requirement is satisfied if the
information is provided, sent or delivered, as the case may be, in
an electronic record.” Id. § 39A-1-8(a). “Whether the parties agree
to conduct a transaction by electronic means is determined from the
context and surrounding circumstances, including the parties’
conduct.”

Id.

§

39A-1-5(b).

The

West

Virginia

Insurance

Commissioner has confirmed that selection/rejection forms may be
“presented, completed and returned electronically in compliance
with the provisions of the UETA” (Dkt. No. 48-21).
Here, the context and surrounding circumstances indicate that
the Beattys consented to do business electronically. Although the
Beattys contend that “Ms. Beatty informed Esurance that she wanted
to receive policy documents via U.S. Mail” (Dkt. No. 50 at 10),
they mischaracterize the evidence. Mrs. Beatty may have testified
that she “asked [Esurance] to communicate with [her] through the
U.S. mail” (Dkt. No. 48-1 at 49), but this statement is largely
nullified by her subsequent concession that she “just believe[s]
that that’s what [she] would’ve selected.” Id. at 76. Indeed, there
is no documentary evidence supporting the Beattys’ contention other
than a screenshot of their delivery preference that was not taken
13

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
until

after

the

accident

(Dkt.

Nos.

48-1

at

76;

48-15).

By

contrast, the record of policy activity demonstrates that delivery
by U.S. mail was not selected until January 24, 2015, after
Esurance sent the selection/rejection forms (Dkt. No. 48-19).
Moreover, despite the fact that the Beattys did not execute a
consent to transact business electronically until June 19, 2015
(Dkt. No. 48-7 at 6), they consented by their conduct during the
application process. During the course of procuring insurance
through Esurance, the Beattys completed an online application,
created an online account, and electronically signed a credit card
authorization that referenced email communications (Dkt. No. 48-1
at 48-57). By Mrs. Beatty’s own testimony, she intended to use the
online account to pay her premium when it came time to renew the
policy. Id. at 49. Critically, when repeatedly informed by an
Esurance

representative

that

he

would

be

receiving

the

selection/rejection forms by e-mail, Mr. Beatty did not protest
electronic delivery (Dkt. No. 48-2 at 83-86). Therefore, the
uncontested context and circumstances of this case are more than

14

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1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
sufficient to evidence that the Beattys consented to conduct
business electronically. See W. Va. Code § 39A-1-5(b).4
In sum, the Beattys are incorrect that Esurance failed to
comply with the requirements for offering UIM coverage at the time
of their application. Therefore, Esurance is entitled to the
statutory presumption that it provided an effective offer of UIM
coverage, and that the Beattys exercised a knowing and intelligent
rejection. W. Va. Code § 33-6-31d(b).
B.
The Beattys nonetheless contend that they can overcome the
statutory presumption because they were not required to return the
selection/rejection form (Dkt. No. 50 at 11). The form is addressed
as follows:
TO:

PROPOSED POLICYHOLDERS (APPLICANT):

4

The Supreme Court of Appeals of West Virginia has not dealt
with this situation, but the Court’s conclusion is consistent with
a number of decisions that apply similar statutes. See, e.g.,
Progressive Advanced Ins. Co. v. Corekin, No. CV DKC 16-1340, 2017
WL 4122821, at *9 (D. Md. Sept. 18, 2017) (“[A] person who
initiates a transaction electronically, signs a standard form
electronically, and conducts all business electronically can later
be bound to conduct business electronically because the facts and
circumstances demonstrate an agreement to conduct transactions
electronically.”); Traynum v. Scavens, 786 S.E.2d 115, 120-21 (S.C.
2016) (“Traynum agreed to interact with Progressive electronically
by choosing to purchase insurance through Progressive’s website.”).
15

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
IF YOU DO NOT RETURN THIS FORM TO YOUR INSURER WITHIN
THIRTY (30) DAYS IT MEANS YOU HAVE DECIDED NOT TO BUY
OPTIONAL UNDERINSURED COVERAGES OR OPTIONAL LIMITS OF
UNINSURED MOTORIST COVERAGE ABOVE THAT REQUIRED BY LAW.
OR
PRESENT POLICYHOLDERS:
IF YOU DO NOT RETURN THIS FORM TO YOUR INSURER WITHIN
THIRTY (30) DAYS IT MEANS YOUR COVERAGE WILL STAY THE
SAME AS IT IS NOW. THIS IS AN OPPORTUNITY TO CHANGE THE
COVERAGE YOU PRESENTLY HAVE.
(Dkt. No. 48-6 at 3). The Beattys argue that they were “present
policyholders” when they received the selection/rejection form, and
thus were not required to return it in order to maintain the UIM
coverage they initially had selected (Dkt. No. 50 at 13).
The Southern District of West Virginia addressed a similar
argument in Bailey v. Geico General Insurance Co., No. 2:05-0806,
2010 WL 2643380 (S.D.W.Va. June 29, 2010) (Copenhaver, J.). There,
the insured purchased automobile insurance that included UM and UIM
coverage.
insured

a

Following
“new

his

business

telephone
package”

purchase,
that

GEICO

included

mailed
his

the

“as-yet

ineffective insurance policy,” his initial premium notice, and
selection/rejection forms. Id. at 7. When the insured did not
return the selection/rejection form within 30 days, GEICO adjusted
his UM coverage and premium to the mandatory minimum limits. Id. at
16

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
*2. The Southern District subsequently rejected the insured’s
argument that he had been a “present policyholder” when he received
the forms. It reasoned that the insured was an “applicant” because
he did not have an effective insurance policy and had not tendered
any payment to GEICO. Id. at *7. Therefore, the court concluded
that the insured had not overcome the statutory presumption. Id.
Here, the Beattys already had an effective insurance policy
for

which

they

had

paid

Esurance

when

they

received

the

selection/rejection form. Viewed in isolation, these facts make it
understandable that the Beattys might have believed that they were
present policyholders when they received the form. See Bailey, 2010
WL 2643380, at *7. However, an Esurance representative expressly
advised the Beattys during the application process that they needed
to review and return additional forms related to UM and UIM
coverage (Dkt. No. 48-2 at 83-86). Under these circumstances, there
can be no doubt that the forms were part of the application
process, which the Beattys simply chose to ignore.
C.
In the alternative, the Beattys contend that UIM coverage
should apply under the doctrine of reasonable expectations (Dkt.
No. 50 at 14-16). More specifically, they argue that Esurance
17

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
“fostered

confusion

and

misconceptions”

by

sending

multiple

selection/rejection forms, as well as “spam mail,” over the life of
the policy. Id. at 16. The Beattys’ reliance on the doctrine of
reasonable expectations is misguided.
“With
reasonable

respect

to

expectations

insurance
is

contracts,

that

the

the

doctrine

objectively

of

reasonable

expectations of applicants and intended beneficiaries regarding the
terms

of

insurance

contracts

will

be

honored

even

though

a

painstaking study of the policy provisions would have negated those
expectations.” Syl. Pt. 6, New Hampshire Ins. Co. v. RRK, Inc., 736
S.E.2d 52 (W. Va. 2012) (quoting Syl. Pt. 8, Nat’l Mut. Ins. Co. v.
McMahon & Sons, Inc., 356 S.E.2d 488 (1987), overruled on other
grounds by Potesta v. U.S. Fid. & Guar. Co., 504 S.E.2d 135
(1998)). Typically, the doctrine “is limited to those instances .
. . in which the policy language is ambiguous.” Jenkins v. State
Farm Mut. Auto. Ins. Co., 632 S.E.2d 346, 352 (W. Va. 2006)
(quoting Nat’l Mut., 356 S.E.2d at 496).
Even

when

the

policy

language

is

unambiguous,

however,

“procedures which foster a misconception about the insurance to be
purchased

may

be

considered

with

regard

to

the

doctrine

of

reasonable expectations.” Costello v. Costello, 465 S.E.2d 620, 623
18

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
(W. Va. 1995) (quoting Keller v. First Nat’l Bank, 403 S.E.2d 424
(W. Va. 1991)). In other words, the doctrine applies to cases “in
which a policy provision on which denial of coverage is based
differs from the prior representations made to the insured by the
insurer.” New Hampshire Ins. Co., 736 S.E.2d at 58.
In New Hampshire Insurance, Co. v. RRK, Inc., for example, the
insured sought coverage for “a floating barge and two strings of
docks.” When the insured asked for “a copy of the coverage forms of
the proposed policy,” the insurer faxed the insured a 17-page
document that it called “the coverage forms.” Id. at 55. After
reviewing the coverage forms, the insured completed his application
and purchased insurance. The policy that then issued in September
2007

included

an

exclusion

for

“wear,

tear,

and/or

gradual

deterioration” that was not listed on the coverage forms, and it
also failed to list the barge and its contents as insured property.
Id.
Although the insured received a copy of the policy by mail, he
did not review it. In April 2008, the insurance agent realized that
the insurer had failed to list the barge as covered property, at
which time he communicated this error to the insurer and assured
the insured that it would be corrected. Id. at 55-56. In September
19

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
2008, however, the insurer issued a renewed policy that again
failed to list the barge as covered property, and also included the
“wear-and-tear

exclusion”

present

in

the

initial

policy.

The

insured received but did not review the renewed policy. In February
2009, “the barge sank into the Ohio River.” Although the insurer
determined that the barge was covered property, it denied coverage
under the wear-and-tear exclusion. Id. at 56.
The insured filed suit against the insurer, arguing that the
wear-and-tear exclusion did not apply because it was not listed in
the 17-page document provided prior to purchasing the policy. The
Supreme Court of Appeals acknowledged that the case “involve[d] a
discrepancy between materials provided to [the insured] prior to
purchasing the policy and the policy that was actually issued.”
Id. at 57. Due to this discrepancy, the court found substantial
factual questions regarding whether “the insured had an objectively
reasonable expectation of coverage under the insurance contract,”
and remanded the case for further consideration of whether the
insured was “objectively reasonable in relying solely on the 17page fax as containing all of the terms of their insurance contract
with [the insurer] and in failing to review the actual policy
mailed to it on two occasions.” Id. at 58-59.
20

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
Here, there was no objectively reasonable basis for the
Beattys’ misconception regarding UIM coverage because there was no
“discrepancy between materials provided . . . prior to purchasing
the policy and the policy that was actually issued.” Id. at 57. The
parties do not dispute that the Beattys purchased and paid for UIM
coverage on December 24, 2014. At the same time, however, an
Esurance

representative

advised

Mr.

Beatty

that

he

would

be

receiving the selection/rejection forms by email, and would need to
return them within 30 days (Dkt. No. 48-2 at 83-85). Had the
Beattys reviewed the email and forms as they were instructed to do
during the application process, they would have known that it was
crucial to “read the forms carefully and select limits for both [UM
and UIM] coverages,” and that their failure to return the form
would be interpreted as a rejection of such optional coverage (Dkt.
No. 48-6 at 2-3). When Esurance canceled UIM coverage, it refunded
the related premium and sent the Beattys an amended policy and
declarations page (Dkt. Nos. 48-14 at 9-10; 48-16).
Although the status of the Beattys’ UIM coverage changed
between their initial application and the accident at issue, they
have not pointed to a difference between Esurance’s representations

21

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
and the ultimate lack of UIM coverage. Therefore, the doctrine of
reasonable expectations does not apply in this case.
D.
Finally,

the

Beattys

contend

that

Esurance

is

equitably

estopped from denying UIM coverage (Dkt. No. 50 at 16). In West
Virginia,

the

doctrine

of

equitable

estoppel

applies

in

the

following circumstances:
[T]here must exist a false representation or concealment
of material facts; it must have been made with knowledge,
actual or constructive of the facts; the party to whom it
was made must have been without knowledge or the means of
knowledge of the real facts; it must have been made with
the intention that it should be acted on; and the party
to whom it was made must have relied on or acted on it to
his prejudice.
Syl. Pt. 1, First Am. Title Ins. Co. v. Firriolo, 695 S.E.2d 918
(W. Va. 2010) (quoting Syl. Pt. 6, Stuart v. Lake Washington Realty
Corp., 92 S.E.2d 891 (W. Va. 1956)).
Here, the Beattys’ equitable estoppel argument falters on the
first element because there is no evidence that Esurance made a
false representation or concealed material facts. The Beattys
contend only that Esurance misrepresented that they had purchased
UIM coverage (Dkt. No. 50 at 16). But the parties do not dispute
that the Beattys purchased UIM coverage, and that they initially

22

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
received a declarations page that included the coverage. The
coverage became effective on December 25, 2014, and was canceled
when the Beattys failed to return the selection/rejection forms
within 30 days, at which time Esurance refunded the UIM premium and
forwarded an amended policy and declarations page. See supra Part
I.

That

the

Beattys

believe

this

cancellation

was

legally

inappropriate does not render false Esurance’s representation that
they initially had purchased and paid for UIM coverage.
IV. CONCLUSION
For the reasons discussed, the Court:
1)

GRANTS the defendants’ motion for summary judgment (Dkt.
No. 47);

2)

DENIES

the

plaintiffs’

motion

for

partial

summary

judgment (Dkt. No. 49);
3)

DECLARES

that

the

Beattys’

policy

does

not

provide

underinsured motorist coverage; and
4)

DISMISSES the plaintiffs’ remaining claims AS MOOT.

It is so ORDERED.
The Court directs the Clerk to enter a separate judgment order
and to transmit copies of both orders to counsel of record.

23

BEATTY V. ESURANCE

1:16CV91

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 47] AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO. 49]
DATED: July 17, 2018
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

24