ALPS Property & Casualty Insurance Company v. Bowles Rice LLP et al

Filing 48

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (DKT. NO. 24 ). The Court GRANTS ALPS' 24 Motion for Summary Judgment; DENIES First American's 22 Motion for Summary Judgment and DENIES Bowles Rice's 33 Cross Motion for Summary Judgment. The Clerk is directed to enter a separate judgment order in this matter. Signed by Senior Judge Irene M. Keeley on 7/31/18. (Attachments: # 1 Exhibit A - Chronology of Events)(mh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
ALPS PROPERTY & CASUALTY
INSURANCE COMPANY,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:18CV29
(Judge Keeley)

BOWLES RICE, LLP; and FIRST
AMERICAN TITLE INSURANCE COMPANY,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
In November 2016, First American Title Insurance Company
(“First American”) filed suit against Bowles Rice, LLP (“Bowles
Rice”), a law firm with offices, among others, in Charleston and
Morgantown, West Virginia. First American’s complaint alleges that
Bowles Rice breached several agency agreements in connection with
the issuance of a $775 million title insurance policy (“Underlying
Case”). Pursuant to a Lawyers Professional Liability Insurance
Policy (“the Policy”), ALPS Property & Casualty Insurance Company
(“ALPS”)

has

defended

Bowles

Rice

against

First

American’s

allegations in the Underlying Case since its inception.
ALPS now seeks a declaration that coverage for the Underlying
Case is subject to the $5 million per claim limit of the Policy,
rather than the $10 million aggregate limit. Pursuant to the
language of the Policy, only one claim is at issue if First
American’s

allegations

constitute

one

“demand

for

money

or

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
services” or multiple demands “arising out of the same, related or
continuing professional services.”
Although the parties dispute many matters in the Underlying
Case, the Court concludes that no material factual disputes affect
its determination of the coverage issues in this action. Even
accepting as true all of First American’s allegations in the
Underlying Case and related litigation, ALPS is entitled to a
declaration that the plain language of its Policy provides only $5
million in coverage due to the “each Claim” limit.
I. FACTUAL AND PROCEDURAL BACKGROUND1
The Court recites the factual and procedural background in the
light most favorable to Bowles Rice and First American. Mellen v.
Bunting, 327 F.3d 355, 363 (4th Cir. 2003). The relevant facts find
their genesis in the execution of a contract nearly 25 years ago.
In 1994, First American and Bowles Rice entered into a Limited
Agency Agreement in which First American appointed the Bowles Rice
office in Charleston to act as its agent throughout West Virginia
(“the 1994 Agency Agreement”) (Dkt. No. 1-3 at 1). Carl Andrews, a
partner at the office in Charleston, executed the agreement on
Bowles Rice’s behalf. Id. at 7. When the parties amended the
1

The Court has attached a chronology of the relevant events
as Exhibit A to this Memorandum Opinion and Order.
2

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
agreement in 2003 to cover Kentucky as well as West Virginia,
Charles Dollison (“Dollison”), another partner in the Charleston
office, executed the addendum for Bowles Rice. Id. at 8. In
relevant part, the 1994 Agency Agreement granted Bowles Rice
authority to solicit, originate, and execute First American’s title
commitments and policies, and to underwrite associated risks up to
$500,000 without First American’s approval. Id. at 1.
In 2006, First American and Bowles Rice entered into a
separate Agency Agreement in which First American appointed the
Bowles Rice office in Morgantown, West Virginia, to act as its
agent throughout the state (“the 2006 Agency Agreement”) (Dkt. No.
1-4 at 1). Charles Wilson (“Wilson”), a partner in the firm’s
Morgantown office, executed that agreement for Bowles Rice. Id. at
12. Much like the 1994 Agency Agreement, the 2006 Agency Agreement
gave Bowles Rice the authority to “sign, countersign, and issue
commitments, title guaranties and insurance policies, endorsements
and other forms of title evidence authorized by First American.”
Id. at 1. It also limited Bowles Rice’s authority to insure risks
above

$500,000

unless

it

first

received

approval

from

First

American. Id. at 5. Both the 1994 and 2006 Agency Agreements

3

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
required Bowles Rice to carry at least $1 million of liability
insurance (Dkt. Nos. 1-3 at 4; 14 at 3).2
In the mid-2000s, Bowles Rice began providing legal work for
Longview

Power,

LLC

(“Longview”)

in

connection

with

its

construction of a $2 billion coal-fired power plant on the border
of

Monongalia

County,

West

Virginia,

and

Greene

County,

Pennsylvania (Dkt. Nos. 27-1 at 7; 27-2 at 8). During the initial
stages of the project, sometime prior to 2006, Bowles Rice attorney
and partner Leonard Knee (“Knee”) began working to obtain the
necessary environmental permits and approvals on Longview’s behalf
(Dkt. No. 27-3 at 4). In December 2006, Dollison, also a partner,
became involved in the project to assist with “real estate and
related issues,” including the issuance of title insurance policies
as First American’s agent (Dkt. No. 27-1 at 7).
As the project progressed, Longview and Bowles Rice worked to
obtain financing for a significant portion of the power plant
construction costs. That financing ultimately was secured, in part,
by

a

credit

line

deed

of

trust

in

favor

of

Union

Bank

of

California, N.A. (“Union Bank”), which was recorded in Monongalia

2

In 2007, Bowles Rice and First American executed an agency
agreement that superseded and consolidated the 1994 and 2006 Agency
Agreements (Dkt. No. 27-1 at 4-5, 16).
4

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
County, West Virginia, on February 28, 2007 (Dkt. No. 1-1 at 3; 1-5
at 5). Dollison brought First American into the transaction for the
purpose of issuing four title insurance policies to insure the
priority of Union Bank’s deed of trust (Dkt. No. 27-1 at 7).
As Longview’s efforts to finance the project drew to a close,
on February 13, 2007, several parties filed suit in this Court
against Longview and its contractors, alleging that they were
constructing the power plant without a valid permit required by the
Clean Air Act (“the Jamison litigation”) (Civil No. 1:07cv20, Dkt.
No. 1). Knee responded to the Jamison litigation on behalf of
Longview and, together with the contractors, advised the Court that
construction activities had commenced, including “preliminary site
establishment

activities

such

as

clearing

and

grubbing

of

vegetation, grading for placement of construction offices and an
access road, [and] placement of stone base material on the access
road and parking area” (Civil No. 1:07cv20, Dkt. No. 12-2 at 9).
Around the same time, Dollison and Knee were involved in preparing
an opinion letter for Union Bank, representing that the actions
taken

by

Longview

constituted

“commencing

construction”

for

purposes of the Clean Air Act permit (Dkt. No. 27-1 at 15).
When Union Bank’s financing closed on February 28, 2007, First
American issued “[a]n owner’s policy and lender’s policy for West
5

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Virginia and an owner’s policy and a lender’s policy for the
Pennsylvania properties” (Dkt. No. 27-1 at 8-9). At issue in the
Underlying Case is the $775 million lender’s policy for West
Virginia, effective March 9, 2007, which Dollison signed on behalf
of First American (“Lender’s Title Policy”) (Dkt. No. 1-5).3 At
Union Bank’s request, Bowles Rice sought coverage from First
American for mechanic’s lien risks (Dkt. No. 27-1 at 10), as a
consequence of which First American authorized inclusion of the
following endorsement in the Lender’s Title Policy:
The Company hereby insures the owner of the indebtedness
secured by the mortgage referred to in paragraph 4 of
Schedule A against loss which the insured shall sustain
by reason of the establishment of priority over the lien
of the insured mortgage upon the estate or interest
referred to in Schedule A of any statutory lien for labor
or material arising out of any work of improvement under
construction or completed at Date of Policy.
(Dkt. No. 1-5 at 51). First American reinsured portions of its
liability for the Lender’s Title Policy with Old Republic Title
Insurance Company (“Old Republic”) and Stewart Title Insurance
Company (“Stewart”) (Dkt. Nos. 1-1 at 3; 27-1).
3

Dollison also signed the owner’s policy for West Virginia,
but First American itself issued the policies for Pennsylvania
inasmuch as neither Dollison nor Wilson was a licensed title
insurance agent in Pennsylvania (Dkt. No. 27-1 at 9). First
American alleges, however, that it contracted with Wilson to
perform title searches for the Pennsylvania properties (Dkt. No.
27-5 at 6).
6

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
The mechanic’s lien endorsement has potentially significant
implications in the Underlying Case because mechanic’s liens attach
“as of the date such labor, material, machinery or other necessary
equipment shall have begun to be furnished.” W. Va. Code § 38-2-17.
In the Underlying Case, First American alleges that Bowles Rice
violated the 1994 and 2006 Agency Agreements when it sought the
mechanic’s lien endorsement without informing First American of its
knowledge that “[c]onstruction had commenced on the Power Plant
prior to the recording of the Credit Line Deed of Trust on February
28, 2007," thus “jeopardizing the priority of the Credit Line Deed
of Trust” (Dkt. No. 1-1 at 6).
Several years after First American issued the Lender’s Title
Policy with the mechanic’s lien endorsement, while construction of
the Longview facility was ongoing, Bowles Rice also assisted with
financing for the construction of a water treatment system on
Longview’s property by Dunkard Creek Water Treatment Systems, LLC
(“Dunkard Creek”) (Dkt. No. 27 at 10). In 2009, First American
issued title insurance policies in the amount of $130 million
regarding an easement to Dunkard Creek (Dkt. No. 27-2 at 11).
Although Wilson was not involved in title searches or issuing the
title insurance policies for the Dunkard Creek project, he advised
First American and Longview regarding a mechanic’s lien that had
7

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
been

filed

by

Longview’s

contractors.

Id.

at

11-12.

Wilson

recommended that Longview pay the amount of the lien into escrow as
a way to satisfy the risk that First American would incur by
issuing title insurance policies for the Dunkard Creek project
while mechanic’s liens on the property were pending. Id. at 12.
First American argues in the pending action that this violated the
2007 Agency Agreement because Wilson never advised it of Bowles
Rice’s actual knowledge that construction had commenced on the
Longview site before Union Bank’s financing closed in February 2007
(Dkt. No. 27 at 11-12). Notably, First American makes no such
allegation in the Underlying Case (Dkt. No. 1-1).
The Court has previously recognized that “few parties involved
with construction of the power plant escaped the project unscathed”
(Civil No. 1:16cv219, Dkt. No. 128 at 2). Eventually, disputes
arose among Longview and its contractors, and the contractors filed
mechanic’s liens totaling in excess of $335 million in February
2012 (Dkt. Nos. 1-1 at 4; 1-6 at 5-6; 27-4 at 34). The contractors
claimed their liens held priority over Union Bank’s deed of trust
because construction had commenced on Longview’s property prior to
the closing of Union Bank’s financing on February 28, 2007. As a
result of the mechanic’s liens, in April 2013, Union Bank made a
claim on First American under the Lender’s Title Policy issued for
8

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
the West Virginia property (Dkt. Nos. 1-5; 1-7 at 6, 9; 1-9 at 1).
Longview then filed for Chapter 11 bankruptcy protection in August
2013 in the District of Delaware (“Bankruptcy Court”) (Dt. No. 1-7
at 4).
Sometime after the contractors filed their mechanic’s liens,
“a majority of [Longview’s] indebtedness was transferred to a
successor group known as the ‘Backstoppers,’” who claimed “to hold
approximately 65% of the indebtedness . . . for which Union Bank
act[ed] as collateral agent” (Dkt. No. 1-6 at 4-5). On November 21,
2013,

the

Backstoppers

Bankruptcy
to

Court

provide

entered

debtor

in

an

order

possession

allowing

the

financing

for

Longview. Id. at 8. Following on this, Longview filed an adversary
proceeding against the contractors on December 11, 2013, in which
it sought a determination regarding the “maximum potential extent”
of the mechanic’s liens. Id. On March 6, 2014, at the parties’
request, the Bankruptcy Court ordered Longview, the contractors,
and the Backstoppers to participate in mediation. Id. at 8-9.4

4

First American alleges that it first received notice of this
mediation on February 20, 2014 (Dkt. No. 1-6 at 9). According to
the record in the Bankruptcy Court, it participated in each
mediation session (Bankr. D. Del., No. 13-12211, Dkt. No. 1184 at
6). The sessions took place on “March 27 and 28, 2014, May 5 and
May 6, 2014, July 8 and 9, 2014, August 29, 2014, and December 10,
2014" (Dkt. No. 1-9 at 12).
9

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
After several mediation sessions, on May 10, 2014, Longview
sought approval from the Bankruptcy Court of an amended plan that
1) vested jurisdiction in the Bankruptcy Court to decide what was
covered under the Lender’s Title Policy, 2) assigned the proceeds
of the Lender’s Title Policy from Union Bank to a trust for
Longview’s benefit, and 3) provided those proceeds to satisfy the
contractors’ mechanic’s lien claims. Id. at 9. Confirmation of the
plan was contingent upon Longview obtaining a determination by the
Bankruptcy Court that the Lender’s Title Policy proceeds were
“available for assignment and distribution in accordance with the
Plan” (Bankr. D. Del., No. 13-12211, Dkt. No. 1184 at 7).5
On May 16, 2014, First American sought declaratory relief in
California state court regarding its obligations under the Lender’s
Title Policy (Dkt. No. 1-6). Shortly thereafter, on May 23, 2014,
Longview filed another adversary proceeding in the Bankruptcy
Court, this time against First American, seeking a declaration that
the contractors’ mechanic’s liens were covered by the Lender’s

5

The Bankruptcy Court ultimately approved the conditional
assignment of proceeds of the Lender’s Title Policy from Union Bank
to Longview on July 15, 2014 (Bankr. D. Del., No. 13-12211, Dkt.
No. 1379-1), but that assignment was contingent on confirmation of
the amended plan by December 31, 2014, and a Bankruptcy Court
determination that the contractors’ mechanic’s liens held priority
over Union Bank’s deed of trust. Id. at 3.
10

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Title Policy (Bankr. D. Del., No. 13-12211, Dkt. No. 1184).
Significantly, the Lender’s Title Policy was the only insurance
policy at issue in either litigation. Id. at 4-5. On June 19, 2014,
the Bankruptcy Court stayed First American’s California state court
action (Bankr. D. Del., No. 13-12211, Dkt. No. 1296).6 First
American then filed its own adversary proceeding against Longview
in September 2014, seeking a declaration from the Bankruptcy Court
that the contractors’ mechanic’s liens did not have priority over
Union Bank’s deed of trust (Dkt. No. 1-7). On October 20, 2014, the
Bankruptcy Court scheduled Longview’s adversary proceeding for
trial on January 20, 2015 (Bankr. D. Del., No. 14-50369, Dkt. No.
91).
Ultimately, in December 2014, First American settled its
obligations related to Union Bank’s deed of trust - and secured the
cancellation of all eight insurance policies connected to the
Longview project (Dkt. No. 37-1 at 10-11) - by contributing $41
million as part of a global settlement in the Bankruptcy Court
(Bankr. D. Del., No. 13-12211, Dkt. No. 1665). The parties noted in
their settlement agreement that the adversary proceedings, as well
6

Union Bank then removed First American’s California state
court action to the Central District of California, where it
remained stayed due to Longview’s bankruptcy proceedings in
Delaware (Dkt. No. 37-1 at 5).
11

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
as First American’s California state court action, had “resulted in
numerous contested hearings, discovery, and substantial motion
practice before both the Bankruptcy Court and the District Court”
(Dkt. No. 37-1 at 5).
First American then sought to recoup a portion of this loss
through its reinsurance carriers, but Old Republic and Stewart
contested their liability due to alleged omissions by Bowles Rice,
First American’s agent (Dkt. No. 1-1 at 4). As in the adversary
proceedings, the Lender’s Title Policy issued to Union Bank for the
West Virginia property was the only title insurance policy at issue
in the reinsurance litigation (Dkt. Nos. 1-9 at 1; 1-11 at 14).
During 2015 and 2016, First American settled its reinsurance claims
for less than the face value of those policies (Dkt. No. 27 at 14).
Thereafter,
Underlying

Case

in

November

against

2016,

Bowles

First

Rice

in

American
this

filed

Court,

the

seeking

indemnification for the full $41 million it had paid as part of the
Longview

global

settlement

in

Bankruptcy

Court

(Civil

No.

1:16cv219, Dkt. No. 1). First American contends that, pursuant to
the 1994 and 2006 Agencies Agreements, Bowles Rice must indemnify
it for the amount of the loss it incurred under the Lender’s Title
Policy as a consequence of Bowles Rice’s failure to advise it that

12

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1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
construction had commenced on Longview’s property prior to the
execution of Union Bank’s deed of trust (Dkt. No. 1-1).
Bowles

Rice

has

vigorously

contested

liability

in

the

Underlying Case. It contends that it has no duty to indemnify First
American, and that First American had valid defenses to liability
and should not have settled the claim. There are pending motions
for summary judgment in that case (Civil No. 1:16cv219, Dkt. Nos.
168; 170), which is scheduled for trial beginning on August 20,
2018 (Civil No. 1:16cv219, Dkt. No. 25).
On February 12, 2018, ALPS filed suit against First American
and Bowles Rice, seeking a declaration that the Underlying Case
triggers only $5 million in coverage under its Policy because it
constitutes only one claim against Bowles Rice, rather than the $10
million aggregate limit for two claims (Dkt. No. 1). The parties’
cross-motions for summary judgment are fully briefed and ripe for
review (Dkt. Nos. 22; 24; 33).
II. STANDARD OF REVIEW
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

13

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
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 cross-motions for
summary judgment are submitted to a district court, . . . the facts
relevant to each must be viewed in the light most favorable to the
non-movant.” Mellen, 327 F.3d at 363; see also 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
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 find for
the nonmoving party. Id. at 248–52. Nor can the non-movant “create
14

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
a genuine issue of material fact through mere speculation or the
building of one inference upon another.” Runnebaum v. NationsBank
of Md., N.A., 123 F.3d 156, 164 (4th Cir. 1997).
III. APPLICABLE LAW
“A federal court exercising diversity jurisdiction is obliged
to apply the substantive law of the state in which it sits.” Volvo
Constr. Equip. N. Am. v. CLM Equip. Co., Inc., 386 F.3d 581, 599600 (4th Cir. 2004) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64,
79 (1938)). The Court must therefore apply West Virginia law. See
Beckley Mech., Inc. v. Erie Ins. & Cas. Co., 374 F. App’x 381, 383
n.1 (4th Cir. 2010) (unpublished decision) (citing Erie, 304 U.S.
64). Generally, there are two duties that arise from an insurance
policy: the duty to defend and the duty to indemnify.
“An insurance company has a duty to defend an action against
its insured if the claim stated in the underlying complaint could,
without amendment, impose liability for risks the policy covers.”
Bowyer v. Hi-Lad, Inc., 609 S.E.2d 895, 912 (W. Va. 2004). “[A]n
insurer’s duty to defend is tested by whether 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.” Aetna Cas. & Sur. Co. v. Pitrolo, 342 S.E.2d

15

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
156, 160 (W. Va. 1986). If any of the claims against the insured
might trigger coverage, the insurer must defend against all the
claims. Horace Mann Ins. Co. v. Leeber, 376 S.E.2d 581, 584 (1988)
(citing Donnelly v. Transp. Ins. Co., 589 F.2d 761, 765 (4th Cir.
1978)). Therefore, “it is generally recognized that the duty to
defend an insured may be broader than the obligation to pay under
a particular policy.” Butts v. Royal Vendors, Inc., 504 S.E.2d 911,
914 (W. Va. 1998) (quoting Silk v. Flat Top Constr., Inc., 453
S.E.2d 356 (W. Va. 1994)).
“The duty to indemnify, by contrast, refers to an insurer’s
responsibility to pay a monetary award when its insured has become
liable for a covered claim.” Perdue Farms, Inc. v. Travelers Cas.
& Sur. Co. of Am., 48 F.3d 252, 257-58 (4th Cir. 2006). The duty is
only triggered by “claims that actually fall within the terms of
the policy.” State ex rel. Nationwide Mut. Ins. Co. v. Wilson, 778
S.E.2d 677, 682 (W. Va. 2015) (emphasis in original) (quoting 3
Jeffrey E. Thomas, New Appleman on Insurance Law Library Edition
§ 18-1 (LexisNexis)). The duty to indemnify thus depends on
resolution of the facts alleged in the complaint. See Penn-America
Ins. Co. v. Coffey, 368 F.3d 409 (4th Cir. 2004).

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
IV. DISCUSSION
A.

Actual Controversy
At

the

outset,

the

Court

must

address

First

American’s

contention that this action is not ripe for adjudication prior to
disposition

of

the

Underlying

Case

(Dkt.

No.

27

at

15-19).

According to First American, ALPS is impermissibly attempting to
obtain an advisory ruling regarding its duty to indemnify Bowles
Rice. Id.
Under the Declaratory Judgment Act, “[i]n a case of actual
controversy within its jurisdiction, . . . any court of the United
States . . . may declare the rights and other legal relations of
any interested party seeking such declaration.” 28 U.S.C. § 2201.
Therefore, “a federal court may properly exercise jurisdiction in
a declaratory judgment proceeding when three essentials are met:
(1) the complaint alleges an ‘actual controversy’ between the
parties ‘of sufficient immediacy and reality to warrant issuance of
a declaratory judgment;’ (2) the court possesses an independent
basis for jurisdiction over the parties (e.g., federal question or
diversity jurisdiction); and (3) the court does not abuse its
discretion in its exercise of jurisdiction.” Volvo Const. Equip.,
386 F.3d at 592 (quoting 28 U.S.C. § 2201).

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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
The first prong requires that a case “presents a controversy
that qualifies as an actual controversy under Article III of the
Constitution.”

Id.

Because

"Article

III

gives

federal

courts

jurisdiction only over ‘Cases' or ‘Controversies' . . . judicial
power may be exercised only where conflicting contentions of the
parties . . . present a real, substantial controversy between
parties having adverse legal interests, a dispute definite and
concrete, not hypothetical or abstract." Ostergen v. Cuccinelli,
615 F.3d 263, 287 (4th Cir. 2010) (internal quotation and citation
omitted).

As

the

Fourth

Circuit

has

explained,

this

bedrock

principle forms the basis of the doctrine of ripeness:
"[I]ts basic rationale is to prevent the courts, through
avoidance of premature adjudication, from entangling
themselves in abstract disagreements . . . ." We assess
ripeness by "balanc[ing] the fitness of the issues for
judicial decision with the hardship to the parties of
withholding court consideration." Because "[t]he doctrine
of ripeness prevents judicial consideration of issues
until a controversy is presented in clean-cut and
concrete form," "problems such as the inadequacy of the
record . . . or ambiguity in the record . . . will make
a case unfit for adjudication on the merits."
Id. at 288 (internal citation omitted).
In other words, "[a] claim is not ripe for adjudication if it
rests

upon

contingent

future

events

that

may

not

occur

as

anticipated, or indeed may not occur at all." Texas v. United
States, 523 U.S. 296, 300 (1998); see also State ex rel. Universal
18

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Underwriters Ins. Co. v. Wilson, 801 S.E.2d 216 (W. Va. 2017).
"Whether an indemnification issue is ripe for adjudication depends
on the facts and circumstances of the case under consideration,"
but an "important factor" is "whether resolution of the tendered
issue is based upon events or determinations which may not occur as
anticipated." Camden-Clark Mem’l Hosp. Corp. v. St. Paul Fire &
Marine Ins. Co., 717 F. Supp. 2d 529, 539 (S.D.W.Va. 2010) (quoting
A/S J. Ludwig Mowinckles Rederi v. Tidewater Constr. Corp., 559
F.2d 928, 932 (4th Cir. 1977)).
The second prong under the Declaratory Judgment Act requires
courts

to

have

an

independent

basis

for

subject

matter

jurisdiction, such as federal question or diversity. Volvo Const.
Equip., 386 F.3d at 592. The third prong obliges a court “to rule
on the merits of a declaratory judgment action when declaratory
relief ‘will serve a useful purpose in clarifying and settling the
legal relations in issue,’ and ‘will terminate and afford relief
from uncertainty, insecurity, and controversy giving rise to the
proceeding.’” Id. (quoting Aetna Cas. & Sur. Co. v. Quarles, 92
F.2d 321, 325 (4th Cir. 1937)). Nonetheless, courts have “great
latitude” in this determination. Id. (quoting United Capitol Ins.
Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998)).

19

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Here, ALPS’s action is appropriate under the Declaratory
Judgment Act because all three prongs of 28 U.S.C § 2201 are
satisfied. First, the case presents an “actual controversy” for
resolution under Article III. As First American aptly contends,
assuming that an insurer has a duty to defend, ripeness concerns
typically foreclose a ruling on its duty to indemnify. Camden-Clark
Mem’l Hosp. Corp., 717 F. Supp. 2d at 539. And district courts
routinely stay a decision on an insurer’s duty to indemnify until
liability in the underlying suit has been resolved. See, e.g.,
Darwin Nat’l Assurance Co. v. Matthews & Megna LLC, 36 F. Supp. 3d
636, 655-56 (D.S.C. 2014); Arch Specialty Ins. Co. v. Hendrick
Auto. Grp., No. 1:10-cv-2791-TLW-PJG, 2012 WL 12551253, at *2
(D.S.C. Feb. 2, 2012) (collecting cases).
In this litigation, however, ALPS concedes its duty to defend
and indemnify Bowles Rice against the allegations in the Underlying
Case (Dkt. No. 35 at 15). It seeks only to resolve a related but
critically

distinct

question:

against

how

many

claims

is

it

defending? There are no ripeness concerns with answering this
question because it is not contingent on a future event. Regardless
of whether Bowles Rice is found liable in the Underlying Case, the
question would remain how many claims under the Policy were at
issue in the litigation. Cf. Liberty Ins. Underwriters, Inc. v.
20

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Camden Clark Mem’l Hosp. Corp, No. 6:08-cv-01219, 2009 WL 4825199,
at *3-*4 (S.D.W.Va. Dec. 8, 2009) (addressing whether allegations
in a lawsuit implicated one claim).
Second, the Court has an independent basis for jurisdiction
over the action due to diversity. 28 U.S.C. § 1332. The parties are
completely diverse and the amount in controversy exceeds $75,000
(Dkt. Nos. 1 at 1-2; 30 at 1; 40 at 1-2).
Third,

the

Court

is

within

its

discretion

to

exercise

jurisdiction over the case because deciding how many claims are at
issue “‘will serve a useful purpose in clarifying and settling the
legal relations in issue,’ and ‘will terminate and afford relief
from uncertainty, insecurity, and controversy giving rise to the
proceeding.’” Volvo Const. Equip., 386 F.3d at 592 (quoting Aetna
Cas. & Sur. Co., 92 F.2d at 325). As the Fourth Circuit has
recognized, a coverage determination “in advance of a judgment” is
beneficial because “a liability insurer’s indemnification agreement
carries with it not only an obligation to pay judgments against the
insured but also, in the real world, to pay settlement amounts.”
Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 376 (4th
Cir. 1994) (quoting AcandS, Inc. v. Aetna Cas. & Sur. Co., 666 F.2d
819, 823 (3d Cir. 1981)). Determining how many claims are at issue

21

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
thus may assist the parties in “shaping a settlement strategy and
thereby avoiding unnecessary costs.” Id.
In sum, contrary to First American’s vigorous contentions, it
is entirely appropriate for the Court to entertain this action
before trial in the Underlying Case. The question presented by ALPS
is ripe, there is an independent basis for jurisdiction, and the
parties will be afforded relief from substantial uncertainty and
controversy in the Underlying Case.
B.

The Policy Language
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). The wording of an insurance policy determines
whether it provides coverage for a particular claim. See Beckley
Mech., 374 F. App’x at 383; Cherrington v. Erie Ins. Prop. & 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,

citations

omitted).

745

S.E.2d

Courts

508

should

(internal

not

quotations

endeavor

to

and

interpret

unambiguous policy provisions. Id. Instead, courts must give terms
and provisions their meaning in the “plain, ordinary and popular

22

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
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 508.
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,

37

F.3d

1492,

at

*2

(4th

Cir.

1994)

(unpublished table decision) (quoting Syl. Pt. 1, Surbaugh v.
Stonewall Cas. Co., 283 S.E.2d 859, 860 (W. Va. 1981)). 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).
In this case, the Policy has a $5 million limit of liability
for “each claim,” which is defined as “all claims arising out of
the same, related or continuing professional services” (Dkt. No. 12 at 1). In turn, a “claim” is defined as “a demand for money or
services, including but not limited to the service of suit or
institution of arbitration proceedings against the Insured.” Id. at
8. Therefore, all demands for money or services “arising out of the
same, related or continuing professional services” are subject to
the $5 million per claim limit of liability.

23

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Importantly, no matter how many “claims” are made, the “each
claim” limit of liability remains the same. “All Claims that arise
out of or in connection with the same or Related Professional
Services, whenever made, and without regard to the number of Claims
or claimants, or the number of Insureds, shall be considered
together as a single Claim . . . and shall be subject to the same
single ‘Each Claim’ Limit of Liability.” Id. at 14. As explained
below, after a thorough review of the language of the Policy, the
Court concludes that the allegations at issue in the Underlying
Case are properly considered both the same and related professional
services.
1.

Same Professional Services

The parties contest whether the allegations in the Underlying
Case involve the same professional services (Dkt. Nos. 25 at 18; 39
at 14-16). Both First American and Bowles Rice contend that the
Policy’s

definition

of

“Professional

Services”

is

ambiguous,

thereby precluding a ruling that Dollison and Wilson provided the
same services (Dkt. Nos. 27 at 19-23; 37 at 20-22; 39 at 23). The
Policy language, however, unambiguously places the services of both
partners in the same category.

24

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
The per claim limit of liability under the Policy applies to
demands for money arising out of the “same . . . Professional
Services” (Dkt. No. 1-2 at 14). The word “same” is not defined in
the Policy, but its plain and ordinary meaning is “identical or
equal; resembling in every relevant respect.” Same, Black’s Law
Dictionary (10th ed. 2014). Under ALPS’s form policy, “Professional
Services” means a number of things, including “services as an
Attorney researching or certifying title to real estate,” but not
acting as a title insurance agent unless specifically endorsed
(Dkt. No. 1-2 at 11). The Policy at issue includes a title agent
endorsement that amends the Policy by adding the following language
to

the

definition

of

“Professional

Services”:

“Professional

Services means and includes services as an attorney in researching
and certifying title to real estate, including services as a title
insurance agent acting on behalf of a title insurance company.” Id.
at 23.
Contrary to the defendants’ assertions, the form policy’s
exclusion

of

title

insurance

agent

services

does

not

render

ambiguous the endorsement’s plain inclusion of those same services.
The endorsement makes clear that title insurance agent services are
not distinct from researching and certifying title, but rather a

25

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
subset of the professional service. The word “include” means “[t]o
contain as part of something.” Include, Black’s Law Dictionary
(10th ed. 2014). If “researching and certifying title to real
estate” is a professional service that “include[s] services as a
title insurance agent acting on behalf of a title insurance
company,”

acting

as

a

title

insurance

agent

necessarily

is

contained within the professional service of “researching and
certifying title to real estate” (Dkt. No. 1-2 at 11).
Given the unambiguous definition of the relevant professional
service, Dollison and Wilson undoubtedly were providing the same
professional services on Bowles Rice’s behalf to First American in
2007.7 Both were engaged in “researching and certifying title to
real estate,” including title insurance agent services, for the
Longview

project.

Even

though

the

two

partners

are

separate

attorneys and agents, they both provided professional services
under the same category to the same principal regarding the same
project.8 In fact, First American alleges that Bowles Rice is
7

As discussed later, the services that Wilson provided on the
Dunkard Creek project are not at issue in the Underlying Case and
thus are not relevant to this coverage dispute. See infra Part
IV.B.2.
8

First American and Bowles Rice argue at length that Dollison
and Wilson could not have been providing the same services because
Bowles Rice itself cannot be licensed as a title insurance agent.
26

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
liable for indemnification because both attorneys committed the
same

critical

omission

when

they

failed

to

advise

it

that

construction had commenced on the Longview project before Union
Bank’s financing closed. Their professional services are the “same”
under the Policy because they are “identical or equal” and resemble
each other in each of these “relevant respect[s].”

Same, Black’s

Law Dictionary (10th ed. 2014). Because the services at issue are
the “same,” the “Each Claim” limit of liability applies.
2.

Related Professional Services

Even assuming that the allegations in the Underlying Case
against Dollison and Wilson did not involve the same professional
services, the services are related. The Policy defines “Related
Professional Services” as “Professional Services that are connected
temporally,

logically

or

causally,

by

any

common

fact,

circumstance, situation, transaction, event, advice or decision,

Rather, Dollison and Wilson were separately licensed agents with
duties under separate agency agreements (Dkt. Nos. 37; 39 at 15)
(citing W. Va. Code §§ 33-1-12, 33-12-2, 33-12-18). While the Court
does not question the defendants’ premise, the ALPS Policy issued
to Bowles Rice simply does not define professional services with
reference to who in the firm can or cannot act as a title insurance
agent. Notably, First American has not made a claim against the
individual attorneys in the Underlying Case, but has named Bowles
Rice, the only party to its agency agreements, as the sole
defendant.
27

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
including but not limited to work that is part of the same or
continuing Professional Services” (Dkt. No. 1-2 at 11).
As

an

initial

matter,

the

numerous

cases

cited

by

the

defendants involving claims by multiple clients against an insured
attorney are unpersuasive. See, e.g., Scott v. Am. Nat’l Fire Ins.
Co., 216 F. Supp. 2d 689 (N.D. Ohio 2002); St. Paul Fire & Marine
Ins. Co. v. Chong, 787 F. Supp. 183 (D. Kan. 1992); Beale v. Am.
Nat’l Lawyers Ins. Reciprocal, 843 A.2d 78 (Ct. App. Md. 2004).9
The instant action does not involve claims by multiple clients, but
rather allegations by a principal against an agent for breaches of
an agent’s duties under various agreements. Longview and Union Bank
have not asserted claims against Bowles Rice in the Underlying
Case. The decisive determination is whether the allegations by
First American against Bowles Rice are subject to the “each Claim”

9

Moreover, these cases and many others cited by the parties
are not helpful because they interpret the word “related” in
isolation. See, e.g., Liberty Ins. Underwriters, Inc. v. Camden
Clark Mem’l Hosp. Corp., No. 6:08-cv-01219, 2009 WL 4825199, at *4
(S.D.W.Va. Dec. 8, 2009); Lexington Ins. Co. v. Lexington
Healthcare Grp., Inc., No. X07CV064023116, 2009 WL 1218784 (Conn.
Sup. Ct. Apr. 13, 2009); Bay Cities Paving & Grading, Inc. v.
Lawyers’ Mut. Ins. Co., 855 P.2d 1263 (Cal. 1993). The Policy in
this case, by contrast, includes a definition of “Related
Professional Services.”
28

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
limit of the Policy, not how many entities may have claims against
either party.10
Although
interpret

the

West

Virginia

Policy’s

courts

definition

have
of

not

had

“Related

occasion

to

Professional

Services,” persuasive authority informs the Court’s analysis.
Particularly

helpful

is

the

district

court’s

decision

in

Professional Solutions Ins. Co. v. Mohrlang, No. 07-cv-02481-PABKLM, 2009 WL 321706 (D. Col. Feb. 10, 2009).
In Mohrlang, the insured attorney provided legal services to
multiple clients whose interests became adverse. He represented
“Harry and Lenora Mohrlang in their individual capacities,” various
trusts for which Bruce Mohrlang became trustee, and the Mohrlang
family business. Id. at *1. The insured helped negotiate and
facilitate the sale to a third party of the Mohrlang and trust
interests in the family business, but “[t]he shortcomings of the
documents that the Insured negotiated or approved offered [them]
insufficient security and ultimately precluded them from collecting
on or effectively revoking the sale” to the third party. Id. To
10

Although Bowles Rice relies heavily on the Southern District
of West Virginia’s interpretation and application of an occurrencebased policy, Brotherhood Mut. Ins. Co. v. Bible Baptist Church,
No. 2:16-cv-00341, 2017 WL 6061979 (S.D.W.Va. Dec. 7, 2017), it
offers no helpful explanation for its contention that the reasoning
in that case “applies equally to this case” (Dkt. No. 37 at 19).
29

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
make matters worse, after the sale, “the Insured caused Harry
Mohrlang to sign documents releasing [a] $715,000 promissory note
and deed of trust against” the family business. Id. at *2.
Ultimately, Harry Mohrlang and the trusts filed separate
malpractice suits against the insured. Id. The insurance policy at
issue provided coverage on a claims-made basis, which included a
limit of $500,000 for “related claims.” Under the policy, “related
claims [were] those claims arising out of a single act or omission
or arising out of related acts or omission in the rendering of
professional services.” “[R]elated acts or omissions” were defined
as “all acts or omissions in the rendering of professional services
that are temporally, logically or causally connected by any common
fact,

circumstance,

situation,

transaction,

event,

advice

or

decision.” Id. at *3 (internal quotation and emphases omitted).
Based on this language, the carrier argued that the inadequate sale
documents and the release of the promissory note were “related”
such that only one claim was at issue in the lawsuits. Id. at *4.
After analyzing the language of the policy, the district court
disagreed with the carrier.
The court first noted “that acts or omission may be connected
in any of the three ways, or any combination therefore,” and that
use of the connecting word “by” meant the acts “must be linked to
30

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
one or more shared element.” Id. at 10. Importantly, the court also
reasoned that, because the policy set forth three specific types of
connection, other “perceivable or conceivable connection[s]” were
excluded from consideration. Id. The district court analyzed the
three connectors as follows:
In common usage, “temporally connected” means connected
to a particular time or through the sequence of time. In
other words, for two things to be temporally connected,
they must either occur at the same time or one must
follow the other sequentially, that is, in a continuous
or connected series.
. . .
In common usage, “logically connected” means connected by
an inevitable or predictable interrelation or sequence of
events. Therefore, for two things to be logically
connected, one must attend or flow from the other in an
inevitable or predictable way.
. . .
In common usage, “causally connected” means connected
where one person or things brings about the other.
Therefore, for two things to be causally connected, one
must bring about the other. Moreover, the common
understanding of causation requires more than a “but-for”
relationship between two things . . . .
Id. at *10-*11 (citing Merriam-Webster’s Collegiate Dictionary
(11th ed. 2007)); see also Berry & Murphy, P.C. v. Carolina Cas.
Ins. Co., 586 F.3d 803, 810-14 (10th Cir. 2009) (applying the
Mohrlang definitions of these terms).

31

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Under this rubric, the insured’s acts could not be “temporally
connected” because they did not occur at the same time, and the
promissory note was not released in sequence to the sale. They
could not be “logically connected” because the promissory note
release was “in no way an inevitable or predictable outcome of the
sale.” Mohrlang, No. 07-cv-02481-PAB-KLM, 2009 WL 321706, at *11.
And they could not be “causally connected” because the sale “did
not cause the Insured to breach his fiduciary duties to Harry
Mohrlang

concerning

the

promissory

note

in

a

direct

and

uninterrupted way.” Id. at *12. As a result, the district court
concluded that the claims regarding sale of the family business and
release of Harry Mohrlang’s promissory note were not related, and
thus the aggregate limit of the policy applied. Id. at *13.
Much like the contract at issue in Mohrlang, the Policy here
defines “Related Professional Services” but does not define exactly
how

such

services

become

“connected

temporally,

logically

or

causally, by any common fact, circumstance, situation, transaction,
event, advice or decision.” Under West Virginia law, however, these
common terms “should be given [their] plain and ordinary meaning,”
and dictionary definitions may be instructive in that regard. Syl.
Pt. 9, Nat’l Union Fire Ins. Co. of Pittsburgh v. Miller, 724
S.E.2d 343, 352 (W. Va. 2012). Based on a review of various
32

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
definitions from Black’s Law Dictionary

and Merriam-Webster’s

Collegiate Dictionary, the Court concludes that Mohrlang sets forth
an accurate recitation of the “plain and ordinary meaning” of how
professional services are “connected temporally, logically or
causally, by any common fact, circumstance, situation, transaction,
event, advice or decision” (Dkt. No. 1-2 at 11), and will apply it
in the analysis of the facts here.
The professional services at issue in the Underlying Case
undoubtedly were connected temporally. During late 2006 and early
2007,

two

partners

at

Bowles

Rice

allegedly

conducted

title

research and certification for First American under two Agency
Agreements. First American alleges that both Dollison and Wilson
knew or should have known that construction had commenced on the
Longview site, but failed to fulfill their contractual duty to
advise it of that fact. According to First American, Dollison
requested that First American approve a mechanic’s lien endorsement
for the Lender’s Title Policy despite having knowledge that the
endorsement could present a significant risk. Meanwhile, Wilson
“stayed silent” about the Jamison litigation and did not inform
First American of what was happening at the Longview site.
Therefore, in the months preceding issuance of the Lender’s
Title

Policy,

“at

the

same

time,”
33

both

Dollison

and

Wilson

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
allegedly

were

engaged

in

the

same

category

of

professional

service, committing the same omission of which First American
complains. In other words, two attorneys at the same law firm
contemporaneously failed to advise First American of the same fact
they allegedly were obligated to disclose. Therefore, Dollison and
Wilson’s professional services were “connected temporally” by the
common facts and circumstances of the Longview project - the
knowledge that construction had commenced - and their concomitant
failure to advise Bowles Rice’s principal (Dkt. No. 1-2 at 11).11
As is apparent from this analysis, the Court rejects the
defendants’ contention that Wilson’s advice regarding the Dunkard
Creek project bears any relevance to this coverage action. None of
the four Dunkard Creek title insurance policies is at issue in the
Underlying Case. The complaint in the Underlying Case identifies
only the Lender’s Title Policy issued to Union Bank in 2007 as the
source of First American’s damages (Dkt. No. 1-1). In addition, the
complaint alleges that Bowles Rice breached the 1994 and 2006
Agency Agreements, not the 2007 Agency Agreement to which the

11

Dollison and Wilson’s professional services were not
connected logically or causally because there is no allegation that
one’s title research and certification services flowed from the
other or that one was brought about by the other. See Mohrlang, No.
07-cv-02481-PAB-KLM, 2009 WL 321706, at *10-*11.
34

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
Dunkard Creek work was subject and of which First American now
complains. In fact, as the Court indicated during the hearing on
the parties’ motions for summary judgment (Dkt. No. 47), the
Dunkard Creek policies have not been mentioned in the Underlying
Case. That First American was able to secure cancellation of the
Dunkard

Creek

polices

as

part

of

the

global

settlement

of

Longview’s bankruptcy may have been in its best interest, but that
does not affect the allegations at issue in the Underlying Case.
In sum, when the Policy definition of Related Professional
Services

is

properly

interpreted

and

applied,

Bowles

Rice’s

attorneys’ acts and omissions are related based on their temporal
connection.

Because

Professional

Dollison

Services

to

and

First

Wilson

American,

provided
coverage

Related
for

the

allegations in the Underlying Case is subject to the $5 million
limit for “each claim.”
C.

Doctrine of Reasonable Expectations
In

their

respective

motions

for

summary

judgment,

the

defendants contend that Bowles Rice had a reasonable expectation of
coverage for two claims in these circumstances (Dkt. Nos. 27 at 2324; 37 at 22-24). “With respect to insurance contracts, the
doctrine

of

reasonable

expectations

35

is

that

the

objectively

ALPS V. BOWLES RICE, ET AL.

1:18CV29

MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
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 ground 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, 632 S.E.2d at 352 (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
(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.” Id. at 55. When the insured asked for “a copy of the
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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
coverage forms of the proposed policy,” the insurer faxed 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 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. When, in April 2008, the insurance agent
realized that the insurer had failed to list the barge as covered
property, he communicated this error to the insurer and assured the
insured that it would be corrected. Id. at 55-56. In September
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.” Id. at 56. Although the
insurer determined that the barge was covered property, it denied
coverage under the wear-and-tear exclusion. Id.
The insured sued the insurer, arguing that the wear-and-tear
exclusion did not apply because it was not listed in the 17-page
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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 there were 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 regarding whether
the insured was “objectively reasonable in relying solely on the
17-page 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.
Here, neither defendant has offered a convincing argument as
to why, especially in light of the unambiguous language of the
Policy, Bowles Rice might have had a reasonable expectation that
the aggregate limit would be available in the Underlying Case.
Bowles Rice contends that the “Policy distinguishes services as a
title agent from other types of professional services,” and that
Bowles Rice “specifically negotiated the inclusion of a specific
endorsement to cover services as a title insurance agent” (Dkt. No.
37 at 23-24). According to Bowles Rice, ALPS cannot charge it for

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MEMORANDUM OPINION AND ORDER GRANTING
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a title insurance agent endorsement and subsequently limit coverage
involving such services to one claim (Dkt. No. 37 at 24).12
This argument misses the mark. Bowles Rice bargained for and
paid for a policy endorsement that amended the definition of
Professional Services (Dkt. No. 1-2 at 23). As discussed, the
endorsement for title insurance agent services unambiguously places
such services in the same category as researching and certifying
title. See supra Part IV.B.1. Nothing about the endorsement even
suggests that title insurance agent services are not subject to the
“each claim” limit when such services are the same or related, and
there is nothing objectively confusing about charging an additional
premium for additional coverage.
Moreover, unlike the insured in New Hampshire Insurance Co.,
Bowles Rice has not offered any evidence that ALPS made a prior
representation regarding coverage, upon which Bowles Rice relied,
that is inconsistent with the position ALPS has taken in this
litigation. First American and Bowles Rice simply disagree with
ALPS about how the Policy should be interpreted. For these reasons,
12

For its part, First American suggests that Bowles Rice had
a duty to Stewart and Old Republic that it might reasonably have
expected would trigger the aggregate limit under the Policy (Dkt.
No. 27 at 24). First American, however, has offered no authority
for the bare contention that Bowles Rices provided professional
services to First American’s reinsurers.
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MEMORANDUM OPINION AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 24]
the Court concludes that the doctrine of reasonable expectations is
inapplicable in this case.13
V. CONCLUSION
For the reasons discussed, the Court:
1)

GRANTS ALPS’s Motion for Summary Judgment (Dkt. No. 24).

2)

DENIES First American’s Motion for Summary Judgment (Dkt.
No. 22); and

3)

DENIES Bowles Rice’s Cross Motion for Summary Judgment
(Dkt. No. 33).

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.
DATED: July 31, 2018
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

13

In addition, the Court is not convinced by First American’s
argument that summary judgment is inappropriate when “the parties
have not had any opportunity to conduct discovery into the facts
regarding Bowles Rice’s reasonable expectations” (Dkt. No. 27 at
24). As neither defendant has presented a viable argument in
support of applying the doctrine of reasonable expectations, First
American’s mere speculation is insufficient to survive summary
judgment. See Am. Muscle Docks & Fabrication, LLC v. Merco, Inc.,
187 F. Supp. 3d 694, 701 (N.D.W.Va. 2016) (collecting cases).
40