Ross et al v. Erie Insurance Property & Casualty Company

Filing 63

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS 24 MOTION FOR SUMMARY JUDGMENT. The defendants motion for summary judgment is GRANTED as to the claims for common law bad faith (Count II) and punitive damages (Count IV) and DENIED as to the claims for violations of the Unfair Trade Practices Act (Count I) and damages (Count III). Signed by Senior Judge Frederick P. Stamp, Jr on 7/1/2019. (copy to counsel via CM/ECF) (nmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MANUELA M. ROSS and
DAVID A. ROSS,
Plaintiffs,
v.

Civil Action No. 5:18CV101
(STAMP)

ERIE INSURANCE PROPERTY
AND CASUALTY COMPANY,
Defendant.

MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
I.

Background

This is a bad faith action arising out of an underlying claim
for uninsured motorist benefits.

The plaintiffs, Manuela M. Ross

and David A. Ross (“plaintiffs”), originally filed this civil
action in the Circuit Court of Marshall County, West Virginia. The
defendant, Erie Insurance Property and Casualty Company (“Erie”),
removed the case to this Court citing diversity of citizenship.
ECF No. 1.

Plaintiffs allege repeated violations of the West

Virginia Unfair Trade Practices Act (“UTPA”) and the West Virginia
Insurance

Commissioner’s

Regulations

in

handling

plaintiffs’

claims, including their uninsured motorist claim (“UM”) under the
Erie policy which provided up to $100,000.00 in uninsured motorist
coverage.

ECF No. 1-1 at 8.

ECF No. 26-2.

Plaintiffs further

allege in Count II that defendant engaged in common law insurance
bad faith.
to

recover

ECF No. 1-1 at 9.
both

Plaintiffs allege they are entitled

compensatory

and

punitive

damages

against

defendant.

ECF No. 1-1 at 10.

In

No.

plaintiffs

repeated

1-1),

allege

Count I of their complaint (ECF
violations

of

the

West

Virginia Unfair Trade Practices Act and the West Virginia Insurance
Commissioner’s

Regulations

insureds’ claims.

in

handling

ECF No. 1-1 at 8.

plaintiffs’

and

other

Plaintiffs further allege in

Count II that defendant engaged in common law insurance bad faith.
ECF No. 1-1 at 9.

In Counts III and IV, plaintiffs allege they are

entitled to recover both compensatory and punitive damages against
defendant.

ECF No. 1-1 at 10.
II.

Facts

On September 15, 2014, plaintiff Manuela Ross was involved in
a motor vehicle accident with an uninsured driver, Kevin Strope.
ECF No. 26-1 at 2 (Ex. A at ¶ 1).

On September 23, 2014, Erie

representative and medical claims handler, Diane Lapinski, sent
medical authorizations to plaintiff to obtain medical insurance or
employment information.

ECF No. 26-1 at 3 (Ex. A at ¶ 10).

On

October 3, 2014, plaintiff signed the authorization to obtain
medical, insurance, and/or employment information (ECF No. 28-7)
(Ex.

G

at

000328)

and

Erie

received

the

signed

medical

authorization and provider list from Manuela Ross on October 16,
2014.

ECF No. 26-1 at 4 (Ex. A at ¶ 13).

On November 18, 2014,

Erie’s representative, Eric Paugh, left a message for Manuela Ross
explaining that uninsured motorist coverage will apply in the
underlying accident (ECF No. 26-1 at 4) (Ex. A at ¶ 16), and Erie
opened a claim for UM benefits on plaintiff’s behalf. ECF No. 26-3

2

at 70 (Ex. C at 001866).

The next day, Erie representative,

liability specialist Eric Paugh, wrote to plaintiff Manuela Ross
and

requested

information

injury

and

ECF No. 26-4 at 42 (Ex. D at 001429).

treatment status.

regarding

plaintiff’s

On

November 25, 2014, Eric Paugh spoke with plaintiff Manuela Ross by
telephone call and plaintiff told Eric Paugh that she was not ready
to discuss settlement of her claim as she was continuing with her
medical treatment.
this

time,

from

ECF No. 26-1 at 5. (Ex. A at ¶ 20).
November

2014

through

January

2015,

During
Erie’s

representative Diane Lapinski, also received and reviewed medical
bills from Anthony Ricci and from Wano Chiropractic (ECF No. 26-1)
(Ex. A), and issued partial payment and an exhaustion letter
indicating that the bills from Wano Chiropractic exceeded the
remaining Medpay limit.

ECF No. 26-1 at 6 (Ex. A at ¶ 25).

On

December 27, 2014, Erie’s initial adjuster Eric Paugh noted in the
claim file “Kevin Strope is 100% negligent in this loss.”
28-23

(Ex.

W

at

001499).

On

December

29,

2014,

ECF No.
Erie’s

representative, Eric Paugh, wrote a letter to Manuela Ross asking
her to provide injury/treatment status.

ECF No. 26-1 at 5 (Ex. A

at ¶ 22).
On February 2, 2015, Erie’s representative, Eric Paugh, wrote
to Manuela Ross requesting that Mrs. Ross provide “a status of
[her] injury and medical treatment.”
¶ 26).

ECF No. 26-1 at 6 (Ex. A at

Two days later, Erie was notified, through representative

Eric Paugh, that plaintiffs had retained counsel, attorney Brittani

3

Hassen at the Kontos Mengine Law Group, to represent them with
regard to their UM claim.
No.

26-3

at

representative,

44

(Ex.

Eric

ECF No. 26-1 at 6 (Ex. A at ¶ 28), ECF
C

Paugh,

at

001840).

called

Thereafter,

Manuela

Ross’s

Erie’s

attorney,

Brittani Hassen of Kontos Mengine, to acknowledge and discuss
counsel’s letter of representation and plaintiffs’ counsel Brittani
Hassen indicated that she would send materials “in support of Mrs.
Ross’s damages” when Mrs. Ross is ready to settle her uninsured
motorist claim.

ECF No. 26-1 at 6 (Ex. A at ¶¶ 29, 30).

On March

11, 2015, Eric Paugh wrote to plaintiffs’ counsel and requested
information regarding plaintiff’s injury and treatment status. ECF
No. 26-4 at 41 (Ex. D at 001400).
On April 16, 2015, Erie’s representative, Eric Paugh, received
a voice mail from attorney Ronald Wm. Kasserman of Kasserman Law
Offices, indicating that he would be representing Manuela Ross.
ECF No. 26-1 at 7 (Ex. A at ¶ 32).

On April 21, 2015, new counsel

for plaintiffs, attorney Ron Kasserman, sent a letter to Eric Paugh
stating that he was “gathering the medicals and specials, along
with developing the lost wages so that we may work on trying to
resolve this claim without litigation.”

ECF No. 26-4 at 32 (Ex. D

at 000329). After receiving correspondence from attorney Kasserman
advising he was sole counsel for Manuela and David Ross, (ECF No.
26-1 at 7) (Ex. A at ¶ 33), Eric Paugh wrote to plaintiffs’ counsel
and requested information regarding plaintiff Manuela Ross’s injury
and treatment status.

ECF No. 26-4 at 40, 29 (Ex. D at 001398,

4

000273).

On June 3, 2015, plaintiffs’ counsel wrote to Eric Paugh

stating that he is agreeable to waive receipt of status letters and
adding “when [Manuela Ross] has reached her maximum degree of
medical improvement, I will provide you with all of her medical
records and bills so that we can attempt to amicably resolve the
claim without litigation.”
On

October

29,

2015,

ECF No. 26-4 at 33 (Ex. D at 000366).

Erie’s

representative,

Diane

Lapinski,

received correspondence from attorney Kasserman requesting copies
of all chiropractic bills and records Erie had on file, whether
paid or unpaid.

ECF No. 26-1 at 7 (Ex. A at ¶ 35).

On May 18,

2016, attorney Kasserman contacted Erie’s representative, Eric
Paugh, via correspondence to indicate that Manuela Ross continued
to seek treatment and sent a Medical Specials Index to bodily
injury adjuster Eric Paugh.

ECF No. 26-1 at 7 (Ex. A at ¶ 37); ECF

No. 28-26 at 1-4 (Ex. W at 001997-002000).

On June 10, 2016,

Erie’s representative, Eric Paugh, indicated via correspondence
that Erie was awaiting the “damage supports from [Mrs. Ross] when
[Mrs. Ross is] ready to discuss settlement of [her] bodily injury
claim.”

ECF No. 26-1 at 8 (Ex. A at ¶ 39).

Thereafter, on July 5,

2016, Manuela and David Ross filed suit against Kevin L. Strope and
Erie Insurance in the Circuit Court of Marshall County, West
Virginia.

ECF No. 26-1 at 8 (Ex. A at ¶ 41).

As of the date Erie

first received notice of the suit against it and Kevin L. Strope
filed in the Circuit Court of Marshall County, West Virginia,
counsel for David and Manuela Ross had not provided Erie a demand

5

or demand packet.

ECF No. 26-1 at 9 (Ex. A at ¶ 48).

After the

underlying suit was filed, on February 14, 2017, plaintiffs’
counsel provided defense counsel in the underlying claim with
plaintiff’s

first

settlement

request

by

letter

stating:

“We

respectfully request that to settle this case, Erie Insurance
Company pay its uninsured motorists policy limits of $100,000.00.”
ECF No. 26-1 at 10 (Ex. A at ¶¶ 51, 52) (See ECF No. 26-4 at 35,
Ex. D at 000403).

On March 1, 2017, counsel for Erie wrote to

plaintiffs’ counsel that Erie had received plaintiffs’ demand and
was reviewing the information that had been provided and would be
in touch within the next couple of weeks following the review. ECF
No. 26-4 at 31. (Ex. D at 000307).

On April 19, 2017, counsel for

Erie wrote to plaintiffs’ counsel regarding record collection and
depositions in order to assist with a response to plaintiffs’
demand.

ECF No. 26-4 at 39 (Ex. D at 001391).

Thereafter, on May

25, 2017, mediation was scheduled to occur before September 29,
2017.

ECF No. 26-4 at 9 (Ex. D at 000198).

On September 22, 2017,

in anticipation of mediation, plaintiffs’ counsel made a settlement
proposal of approximately $135,383.33.
at ¶ 58).

ECF No. 26-1 at 11 (Ex. A

On September 25, 2017, plaintiffs’ counsel provided

Erie’s counsel an email containing plaintiff Manuela Ross’s updated
medical special damages totaling over $43,000.00.
at 11 (Ex. A at ¶ 55).

ECF No. 26-1

On September 26, 2017, plaintiffs agreed to

settle the underlying uninsured motorist claim for $75,000.00. ECF
No. 26-1 at 11 (Ex. A at ¶ 59) (See Ex. I, ECF No. 26-9).

6

Thereafter, on December 20, 2017, a bench trial was held
before David W. Hummel, Jr., Judge of the Circuit Court of Marshall
County, West Virginia, as to the open claim remaining against
uninsured

tortfeasor

Kevin

Strope.

The

Court

found

that

plaintiffs’ total damages were $449,287.63, including $368,663.73
in future medical expenses, and after giving Kevin L. Strope a
deduction for the $75,000.00 settlement with Erie Insurance, Judge
Hummel awarded judgment to plaintiffs against Kevin L. Strope for
$374,287.63.1

ECF No. 28-1 (Ex. A, J. Order).

Thereafter, on May

17, 2018, Manuela and David Ross instituted a bad faith lawsuit
against Erie in the Circuit Court of Marshall County, West Virginia
(ECF No. 26-1 at 12) (Ex. A at ¶ 61) (See ECF No. 1-1), and that
civil action was removed to this Court on June 15, 2018.

ECF

No. 1.
III.

Contentions of the Parties

Erie filed a motion for summary judgment pursuant to Federal
Rule of Civil Procedure 56.

ECF No. 24.

also filed a concise statement of facts.

In support, defendant
ECF No. 26.

In its

memorandum in support of summary judgment (ECF No. 25), defendant

1

This Court finds that the judgment entered against the
tortfeasor, Kevin Strope, in the underlying action occurred after
Erie’s settlement with the plaintiffs, as the result of a bench
trial to which Erie was not a party, and accounted for a deduction
in the amount of $75,000.00 as a result of plaintiffs’ settlement
with Erie. Thus, contrary to the position taken by plaintiffs in
their response brief (ECF No. 28), this Court finds that the total
amount of the entry of judgment entered against Kevin Strope is
irrelevant to this Court’s analysis of whether or not plaintiffs
substantially prevailed in their uninsured motorist claim against
Erie.
7

contends that “[i]n a bad faith action arising out of an underlying
claim for uninsured motorist (“UM”) benefits where the insureds
neither provided any documentation of their claim nor provided a
demand before filing a lawsuit — despite their repeated promises to
do so — Erie is entitled to summary judgment as the insured did not
‘substantially prevail’ on the UM claim and Erie did not otherwise
engage in bad faith.”

ECF No. 25 at 1.

Defendant asserts that Erie opened a claim for UM benefits on
plaintiffs behalf on November 18, 2014, after learning that the
other driver involved in the September 15, 2014 accident did not
have any automobile insurance which provided liability coverage.
ECF No. 25 at 2.

Defendant further states that at no time prior to

November 18, 2014 did plaintiffs request that an UM claim be
opened.

Id.

promised

to

Defendant further states that plaintiffs’ counsel
provide

information

for

Erie’s

evaluation

when

plaintiffs were ready to discuss settlement without litigation, but
did not provide any documentation regarding their UM claim before
filing the instant lawsuit.

ECF No. 25 at 4.

Erie asserts that

once plaintiffs’ UM claim was evaluated, it was resolved for
substantially less than plaintiffs’ demand.

ECF No. 25 at 5.

Defendant contends that plaintiffs cannot establish that “but for”
the attorney’s services they would not have received payment of the
insurance proceeds, nor can they establish that the filing of the
lawsuit was necessary.

Rather, defendant asserts that the record

is clear that plaintiffs retained counsel and filed a lawsuit

8

against Erie before providing any documentation to Erie to support
their claim — despite the fact that they and their counsel had
informed Erie that they were not prepared to discuss settlement
while plaintiff was treating and that they would seek to “amicably
resolve the claim without litigation.”
plaintiffs

cannot

be

said

to

have

Thus, defendant contends,
“substantially

prevailed.”

Further, defendant states that there is no evidence to support a
claim that Erie violated the UTPA in this case, much less a general
business practice.
that

Erie

is

ECF No. 25 at 13.

entitled

to

summary

Lastly, defendant asserts
judgment

with

respect

to

plaintiffs’ claim for punitive damages because plaintiffs cannot
establish the existence of malice. ECF No. 25 at 16. Accordingly,
defendant Erie requests that this Court grant summary judgment in
its favor.
Plaintiffs filed a response in opposition to defendant’s
motion for summary judgment.

ECF No. 28.

Plaintiffs state their

own counter-statement of material facts regarding the common law
bad faith claim and contend that they have substantially prevailed
in the underlying unisured motorists claim and that they have
carried their burden of showing a general business practice of
violations of the UTPA, done willfully as Erie knew the claim was
valid assessing 100% liability to the uninsured tortfeasor on
December 27, 2014, then ignoring its affirmative statutory duties
to offer a prompt, fair, reasonable settlement.

9

ECF No. 28 at 22.

Defendant filed a reply to plaintiffs’ response in opposition
to its motion for summary judgment (ECF No. 29) and again asserts
that plaintiffs did not provide documentation of their UM claim to
Erie before filing the lawsuit.
that

it

is

implausible

to

ECF No. 29 at 1.
now

suggest

Defendant states
that

plaintiffs

“substantially prevailed” or that Erie acted in bad faith by not
making any offers prior to the filing of the lawsuit based solely
on the information that it obtained for purposes of the medical
payment benefit claim.

ECF No. 29 at 3.

Defendant again contends

that plaintiffs did not substantially prevail in the litigation and
that Erie’s conduct was reasonable.

Id.

Defendant states that

Erie moved promptly to investigate and process the plaintiffs’ UM
claim once plaintiffs ultimately provided information in November
2016 and February 2017.

ECF No. 29 at 4.

Lastly, defendant again

asserts that there is no evidence to support a claim that Erie
violated the UTPA in this case, much less as a general business
practice.

ECF No. 29 at 5.

This Court ordered supplemental briefing by the parties to be
filed simultaneously on June 3, 2019 on the issue of determining
whether or not plaintiffs “substantially prevailed” is an issue for
the Court to decide as a matter of law or whether the issue can be,
in certain instances, a question for the jury to decide.
51 at 1-2.
respectively.

ECF No.

Thereafter, the parties filed supplemental briefs,
ECF Nos. 54 and 55.

10

Now before the Court is defendant’s pending motion for summary
judgment (ECF No. 24), which has been fully briefed and is ripe for
decision.
IV.

Applicable Law

Under Rule 56(c) of the Federal Rules of Civil Procedure:
A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the
record, including depositions, documents, electronically
stored
information,
affidavits
or
declarations,
stipulations . . . admissions, interrogatory answers, or
other materials; or
(B) showing that the materials cited do not
establish the absence or presence of a genuine dispute,
or that an adverse party cannot produce admissible
evidence to support the fact.
Fed. R. Civ. P. 56(c).

The party seeking summary judgment bears

the initial burden of showing the absence of any genuine issues of
material fact.
(1986).

See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

“The burden then shifts to the nonmoving party to come

forward with facts sufficient to create a triable issue of fact.”
Temkin v. Frederick County Comm’rs, 945 F.2d 716, 718 (4th Cir.
1991), cert. denied, 502 U.S. 1095 (1992) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). However, as the
United States Supreme Court noted in Anderson, “Rule 56(e) itself
provides that a party opposing a properly supported motion for
summary judgment may not rest upon the mere allegations or denials
of his pleading, but . . . must set forth specific facts showing
that there is a genuine issue for trial.”

Anderson, 477 U.S. at

256. “The inquiry performed is the threshold inquiry of determining

11

whether there is the need for a trial—whether, in other words,
there are any genuine factual issues that properly can be resolved
only by a finder of fact because they may reasonably be resolved in
favor of either party.”

Id. at 250; see also Charbonnages de

France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979) (“Summary
judgment ‘should be granted only in those cases where it is
perfectly clear that no issue of fact is involved and inquiry into
the facts is not desirable to clarify the application of the law.’”
(citing Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th
Cir. 1950))).
In Celotex, the Supreme Court stated that “the plain language
of Rule 56(c) mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who
fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party
will bear the burden of proof at trial.”

Celotex, 477 U.S. at 322.

In reviewing the supported underlying facts, all inferences must be
viewed in the light most favorable to the party opposing the
motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986).
V.

Discussion

Following its review of the fully briefed motion for summary
judgment, the memoranda and exhibits submitted by the parties, and
in reviewing the supported underlying facts in the light most
favorable to the plaintiffs, this Court finds that, for the reasons

12

set forth below, the defendant’s motion for summary judgment must
be granted in part and denied in part.
In Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323,
352 S.E.2d 73 (1986), the West Virginia Supreme Court of Appeals
held: “Whenever a policyholder substantially prevails in a property
damage suit against its insurer, the insurer is liable for: (1) the
insured’s reasonable attorneys’ fees in vindicating its claim; (2)
the insured’s damages for net economic loss caused by the delay in
settlement, and damages for aggravation and inconvenience.” Id. at
Syl.

Pt.

1,

352

S.E.2d

73.

In

determining

whether

or

not

plaintiffs substantially prevailed, this Court finds the decision
in Bailey v. Bradford, 12 F. Supp. 3d 826 (S.D. W. Va. 2014), to be
useful.

Indeed,

in

the

Hayseeds

context,“[a]n

insured

‘substantially prevails’ in a property damage action against his or
her insurer when the action is settled for an amount equal to or
approximating the amount claimed by the insured immediately prior
to the commencement of the action, as well as when the action is
concluded by a jury verdict for such an amount.”

Syl. Pt. 1,

Jordan v. Nat’l Grange Mut. Ins. Co., 183 W. Va. 9, 393 S.E.2d 647
(W. Va. 1990) (in part).
In Marshall v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994),
the West Virginia Supreme Court extended the holding in Hayseeds to
permit a policyholder to obtain consequential damages from an
uninsured or underinsured motorist carrier upon a showing that the
policyholder had substantially prevailed in a dispute with the

13

insurer.

Bailey at 835.

As the court in Bailey stated, “once a

demand is unmet by an insurance carrier, a policyholder need only
prove he or she has substantially prevailed.”

Id. (citing Miller

v. Fluharty, 201 W. Va. 685, 500 S.E.2d 310, 320–21 (1997)).
Settlement is not a bar to recovery under Hayseeds and its progeny
provided that the insured substantially prevailed.
To

determine

whether

a

policyholder

has

Bailey at 835.
substantially

prevailed, a court must consider the standard as stated in syllabus
point 4 of Miller v. Fluharty, 201 W. Va. 685, 500 S.E.2d 310
(1997):
When examining whether a policyholder has substantially
prevailed against an insurance carrier, a court should
look at the negotiations as a whole from the time of the
insured event to the final payment of the insurance
proceeds. If the policyholder makes a reasonable demand
during the course of the negotiations, within policy
limits, the insurance carrier must either meet that
demand, or promptly respond to the policyholder with a
statement why such a demand is not supported by the
available information. The insurance carrier’s failure
to promptly respond is a factor for courts to consider in
deciding whether the policyholder has substantially
prevailed in enforcing the insurance contract, and
therefore, whether the insurance carrier is liable for
the policyholder’s consequential damages under Hayseeds,
Inc. v. State Farm Fire & Cas., 177 W. Va. 323, 352
S.E.2d 73 (1986) and its progeny.
The West Virginia Supreme Court summarized the development of
the “substantially prevailed” standard in Slider v. State Farm Mut.
Auto. Ins. Co., 557 S.E.2d 883, 889 (W. Va. 2001), and reiterated
that “when examining whether a policyholder has substantially
prevailed against an insurance carrier, a court should look at the
negotiations as a whole from the time of the insured event to the

14

final payment of the insurance proceeds.” Although Miller expanded
the range of evidence that is relevant to a determination of
whether a policyholder has substantially prevailed in a dispute
with an insurer, the West Virginia Supreme Court of Appeals at the
same time reaffirmed in Slider that a policyholder is not required
to prove bad faith or other misconduct to recover consequential
damages

under

Hayseeds.

Bailey

at

836

(internal

quotations

omitted).
Here, plaintiffs did not provide Erie with a demand before
filing a lawsuit, and upon review of the facts supported by the
record, this Court finds that after the underlying suit was filed,
on February 14, 2017, plaintiffs’ counsel provided defense counsel
in the underlying claim plaintiffs’ first settlement request by
letter stating: “We respectfully request that to settle this case,
Erie Insurance Company pay its uninsured motorists policy limits of
$100,000.00.”

ECF No. 26-1 at 10 (Ex. A at ¶¶ 51, 52) (See ECF No.

26-4 at 35, Ex. D at 000403).

The next apparent demand was on

September 22, 2017, in anticipation of mediation, when plaintiffs’
counsel made a settlement proposal of approximately $135,383.33.
ECF No. 26-1 at 11 (Ex. A at ¶ 58).
plaintiffs’

demand

of

$135,383.33,

Several days after the
on

September

26,

2017,

plaintiffs agreed to settle the underlying uninsured motorist claim
for $75,000.00.

ECF No. 28 at 18; ECF No. 26-1 at 11 (Ex. A at

¶ 59) (See Ex. I, ECF No. 26-9).

15

The negotiation, as stated in

plaintiffs’ response brief, proceeded as follows:2 Eries’ offer —
$25,000.00;

plaintiffs’

demand

—

$125,000.00;

Eries’

offer

—

$35,000.00;

plaintiffs’

demand

—

$115,000.00;

Eries’

offer

—

$42,000.00;

plaintiffs’

demand

—

$110,000.00;

Eries’

offer

—

$50,000.00;

plaintiffs’

demand

—

$105,000.00;

Eries’

offer

—

$55,000.00; plaintiffs’ demand — $98,000.00; Erie’s final offer —
$75,000.00.

ECF No. 28 at 19.3

Given the totality of the circumstances and in consideration
of the negotiations as a whole, as well as the fact that plaintiffs
settled

the

underlying

claim

for

$75,000.00

(approximately

$60,000.00 less than the most recent pre-mediation demand of
$135,383.33, and the exact mid-point between the initial offer and
initial demand on the day of mediation), this Court finds that
plaintiffs cannot be said to have “substantially prevailed” on the

2

While plaintiffs may have used terms such as “requests” or
“proposals” in relaying potential settlement amounts to defendant,
for purposes of determining whether or not plaintiff substantially
prevailed in this particular civil action, this Court finds that
these communications by plaintiffs were tantamount to settlement
demands.
3

For purposes of this Court’s analysis of whether or not the
plaintiffs substantially prevailed, this Court notes that the
judgment entered against the tortfeasor, Kevin Strope, in the
underlying action in the amount of $374,287.63 (ECF No. 28-1)
occurred after Erie’s settlement with the plaintiffs, as the result
of a bench trial to which Erie was not a party, and accounted for
a deduction in the amount of $75,000.00 as a result of plaintiffs’
settlement with Erie.
Thus, contrary to the position taken by
plaintiffs in their response brief (ECF No. 28), this Court finds
that the total amount of the entry of judgment entered against the
tortfeasor in the underlying action is irrelevant to this Court’s
analysis of whether or not plaintiffs substantially prevailed in
their uninsured motorist claim against Erie.
16

UM claim.

Accordingly, Erie is entitled to summary judgment

regarding the plaintiffs’ claim for common law bad faith (Count
II).
As to the plaintiffs’ claims regarding violations of the West
Virginia Unfair Trade Practices Act (“UTPA”), West Virginia Code
§ 33–11–4(9), stemming from Erie’s alleged repeated failure to act
reasonably
coverage,

promptly
this

to

Court

pay
finds

plaintiffs’
that

the

claims
evidence

under

the

UM

presented

is

sufficient to create a triable issue of fact at trial and this
claim must be denied at the summary judgment stage.

Whereas under

Hayseeds it is necessary that a policyholder substantially prevail
on an underlying contract action before he may recover enhanced
damage, under Jenkins v. J. C. Penney Cas. Ins. Co., 167 W. Va.
597, 280 S.E.2d 252 (1981), there is no requirement that one
substantially prevail; it is required that liability and damages be
settled previously or in the course of the Jenkins litigation.
McCormick v. Allstate Ins. Co., 197 W. Va. 415, 427, 475 S.E.2d
507, 519 (1996).

Jenkins instead predicates entitlement to relief

solely upon violation of the UTPA, where such violation arises from
a “general business practice” on the part of the insurer.
Further, Jenkins clarifies that:
proof of several breaches by an insurance company of W.
Va. Code, 33-11-4(9), would be sufficient to establish
the indication of a general business practice. It is
possible that multiple violations of W. Va. Code,
33-11-4(9), occurring in the same claim would be
sufficient, since the term “frequency” in the statute
must relate not only to repetition of the same violation
but to the occurrence of different violations.
17

Id.

167 W. Va. at 610, 280 S.E.2d at 260.
Therefore, plaintiff can prove a general business practice by
showing several unfair settlement practices in the same claim.
Jackson v. State Farm Mut. Auto. Ins. Co., 215 W. Va. 634, 646, 600
S.E.2d 346, 358 (2004) (citing Dodrill v. Nationwide Mut. Ins. Co.,
201 W. Va. 1, 13, 491 S.E.2d 1, 13 (1996)), holding that to
maintain a private action based upon alleged violations of West
Virginia Code § 33–11–4(9) in the settlement of a single insurance
claim, the evidence should establish that the conduct in question
constitutes more than a single violation of West Virginia Code
§ 33–11–4(9), that the violations arise from separate, discrete
acts or omissions in the claim settlement, and that they arise from
a habit, custom, usage, or business policy of the insurer, so that,
viewing the conduct as a whole, the finder of fact is able to
conclude that the practice or practices are sufficiently pervasive
or sufficiently sanctioned by the insurance company that the
conduct can be considered a “general business practice” and can be
distinguished by fair minds from an isolated event.
Accordingly, upon review of the facts supported by the record
in the light most favorable to the plaintiffs, this Court finds
that summary judgment is not appropriate as to the plaintiffs’
claim

for

statutory

bad

faith

arising

from

Erie’s

purported

violations of the West Virginia UTPA (Count I) and related claim
for damages (Count III) in handling of plaintiffs’ underlying UM
claim.

18

As to plaintiffs’ claims for punitive damages, this Court
finds that Erie is entitled to summary judgment because upon review
of the facts supported by the record.

Under West Virginia law, to

recover punitive damages, it must be shown that the conduct of the
insurer was wilful, malicious, and intentional.

McCormick v.

Allstate Ins. Co., 197 W. Va. 415, 423, 475 S.E.2d 507, 515 (1996)
(citing Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323,
352 S.E.2d 73 (1986), and Jenkins v. J. C. Penney Cas. Ins. Co.,
167 W. Va. 597, 280 S.E.2d 252 (1981)).

The moving party has the

burden of establishing that there is no genuine issue as to any
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
This burden can be met by showing that the nonmoving party has
failed to prove an essential element of the nonmoving party’s case
for which the nonmoving party will bear the burden of proof at
trial.

Id. at 322.

If the moving party meets this burden,

according to the United States Supreme Court, “there can be ‘no
genuine issue as to any material fact,’ since a complete failure of
proof concerning an essential element of the nonmoving party’s case
necessarily renders all other facts immaterial.”

Id. at 323.

Here, based upon the record before this Court, plaintiffs cannot
establish that the conduct of Erie was wilful, malicious, and
intentional.

Accordingly, Erie is entitled to summary judgment

regarding the plaintiffs’ claim for punitive damages (Count IV).

19

VI.

Conclusion

For the above reasons, the defendant’s motion for summary
judgment (ECF No. 24) is GRANTED as to the claims for common law
bad faith (Count II) and punitive damages (Count IV) and DENIED as
to the claims for violations of the Unfair Trade Practices Act
(Count I) and damages (Count III).
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

July 1, 2019

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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