Martin et al v. State Farm Mutual Automobile Insurance Company et al
Filing
173
MEMORANDUM OPINION AND ORDER granting in part and denying in part 128 MOTION for Summary Judgment; denying 130 MOTION to Certify Class. Signed by Judge Robert C. Chambers on 8/22/2011. (cc: attys; any unrepresented party) (dcm)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
JEFFREY A. MARTIN, and JUANITA FLEMING
as Executrix of the Estate of Arch Fleming,
and BARBARA GANDEE, both individually
and on behalf of Others Similarly Situated,
Plaintiff,
v.
CIVIL ACTION NO. 3:10-0144
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, a foreign corporation;
and SHANNON CAZAD,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court are Defendants’ Motion for Summary Judgment (ECF 128) and
Plaintiffs’ Motion for Class Certification (ECF 130). The issues have been fully briefed and are ripe
for disposition. For the following reasons, the motion for summary judgment is GRANTED in part
and DENIED in part and the motion for class certification is DENIED.
I.
BACKGROUND
This case, originally filed on December 29, 2009, in the Circuit Court of Mason County,
West Virginia, is a class action suit concerning underinsured motorist (“UIM”) coverage. Plaintiffs
Jeffrey A. Martin, Juanita Fleming, Executrix of the Estate of Arch Fleming, and Barbara Gandee
assert claims against State Farm Mutual Automobile Insurance Company (“State Farm”) and one
named State Farm Agent, Shannon Cazad.1 Plaintiff Martin, Plaintiff Fleming’s decedent, and
Plaintiff Gandee were each injured in car accidents, in 2005, 2009, and 2007, respectively, where
the damages incurred by each plaintiff greatly exceeded the liability coverage of the party at fault.
At the time of their respective accidents, the named plaintiffs were insured under automobile
insurance policies issued by State Farm. None of the policies carried UIM coverage. Consequently,
State Farm did not provide UIM coverage to any of the plaintiffs following their respective accidents
(i.e., State Farm did not cover any portion of the difference between the plaintiffs’ actual damages
and the at-fault-party’s liability coverage limits).
Plaintiffs filed suit, alleging that State Farm unlawfully denied them underinsured motorist
coverage. Under West Virginia law, an automobile insurer has a legal obligation to make a
commercially reasonable offer of UIM coverage to each insured. Plaintiffs contend that State Farm
failed to comply with this requirement when issuing policies to each plaintiff. As a result, Plaintiffs
assert that their policies must be reformed to include underinsured motorist coverage up to the limits
of the liability insurance provided in their respective policies. Plaintiffs further claim that, in
addition to failing to comply with its legal duty to make a commercially reasonable offer of UIM
coverage, State Farm, through its agent Shannon Cazad, acted unlawfully during the claims process.
Specifically, Plaintiffs allege that State Farm knew that the selection/rejection forms it used to make
an offer of UIM coverage to Plaintiffs were defective and yet it has refused (and continues to refuse)
1
Initially Plaintiffs were Jeffrey Martin and Juanita Fleming, and Defendants also included
an additional State Farm Agent, Angela Cooke. This Court dismissed Ms. Cooke and several of Ms.
Fleming’s claims in its September 30, 2010 Memorandum Opinion and Order granting, in part,
Defendants’ Motion to Dismiss. ECF 33. Subsequently, Plaintiffs added Ms. Gandee as an
additional plaintiff.
-2-
to reform the relevant policies and match the available liability and uninsured motorist coverage
limits pursuant to Bias v. Nationwide Mutual Insurance Co., 365 S.E.2d 789 (W. Va. 1987).
Plaintiffs’ specific claims are as follows. In Count I, Plaintiffs seek a declaratory judgment
providing that, because the forms used by State Farm to offer UIM coverage to its insureds did not
comply with West Virginia Code § 33-6-31d, State Farm failed to make commercially reasonable
offers to each plaintiff and their policies must be reformed to carry UIM coverage in an amount
equal to the respective policy’s liability coverage limits. In Count II, Plaintiffs allege a breach of
contract claim, arguing State Farm breached its duty under Plaintiffs’ policies when it refused their
demands for the payment of UIM coverage, despite its legal obligation to reform the policies and
offer such coverage. In Count III, Plaintiffs allege bad faith, arguing that State Farm’s refusal to pay
Plaintiff’s UIM coverage claims amounts to common-law bad faith as recognized in Hayseeds v.
State Farm Fire and Casualty Co., 352 S.E.2d 73 (W. Va. 1986). In Count IV,2 Plaintiffs allege
multiple violations of the Unfair Trade Practices Act (“UTPA”), W.V. Code § 33-11-4, on the part
of State Farm and Cazad. Finally, in Count V, Plaintiffs seek class certification.
II.
LEGAL STANDARD
A.
Standard for Summary Judgment
To obtain summary judgment, the moving party must show that there is no genuine issue as
to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(a). In considering a motion for summary judgment, the Court will not “weigh the evidence
2
In the Amended Complaint, Plaintiffs continue to list Ms. Cooke as an individual defendant.
She has been, and continues to be, dismissed from this case.
-3-
and determine the truth of the matter[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
Instead, the Court will draw any permissible inference from the underlying facts in the light most
favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574, 587–88 (1986). Although the Court will view all underlying facts and inferences in the light
most favorable to the nonmoving party, the nonmoving party nonetheless must offer some “concrete
evidence from which a reasonable juror could return a verdict in his [or her] favor[.]” Anderson, 477
U.S. at 256. Summary judgment is appropriate when the nonmoving party has the burden of proof
on an essential element of his or her case and does not make, after adequate time for discovery, a
showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of
evidence” in support of his or her position. Anderson, 477 U.S. at 252.
B.
Standard for Class Certification
Rule 23 of the Federal Rules of Civil Procedure governs certification of class actions. Rule
23 requires the party to satisfy the requisites of a two-step test to be eligible for class action
certification. United Bhd. of Carpenters & Joiners of Am., Local 899 v. Phoenix Assocs., Inc., 152
F.R.D. 518, 521 (S.D. W. Va. 1994). As a first step, the action must satisfy all four requirements
of subsection (a), namely (1) numerosity of parties such that joinder of all members is impracticable;
(2) questions of legal and factual issues common to the class; (3) typicality of claims and defenses
of class representatives; and (4) the class representatives can fairly and adequately protect the
interests of the class. Id.; Fed. R. Civ. P. 23(a).
If the four requirements of Rule 23(a) have been met, the next step demands that the action
fit within at least one of the three categories of actions set forth in subsection (b). The action may
-4-
qualify under Rule 23(b)(1), the first of the categories, if individual adjudication of the controversy
would prejudice either the party opposing the class or the class members themselves. Zimmerman
v. Bell, 800 F.2d 386, 389 (4th Cir. 1986). The second category, set forth in Rule 23(b)(2), covers
suits for classwide injunctive and declaratory relief. United Bhd. of Carpenters & Joiners of Am.,
Local 899, 152 F.R.D. at 521. Rule 23(b)(3), the third category, applies if there are issues of law
or fact common to the class that predominate over individual issues and if a class action offers a
superior method of fairly and effectively disposing of the controversy. Id.
The party seeking certification under Rule 23 bears the burden of proving that its
requirements are satisfied. Black v. Rhone-Poulenc, Inc., 173 F.R.D. 156, 159 (S.D. W. Va. 1996);
see also Windham v. Am. Brands, Inc., 565 F.2d 59, 65 (4th Cir. 1977). Generally, in considering
a motion for class certification, the Court does not assess the merits of the underlying claim and
looks only to whether the requirements of Rule 23 have been met. Eisen v. Carlisle & Jacquelin,
417 U.S. 156, 177–78 (1974). This analysis must, however, be “rigorous.” Gen. Tel. Co. of Sw. v.
Falcon, 457 U.S. 147, 161 (1982). Thus, the examination may “entail some overlap with the merits
of the plaintiff’s underlying claim[,]” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2552 (2011),
as the issue of “[c]ommonality requires the plaintiff to demonstrate that the class members ‘have
suffered the same injury.’” Id. (quoting Falcon, 457 U.S. at 157). Nevertheless, the Court is to give
Rule 23 a liberal, rather than a restrictive, construction and apply a standard of flexibility that will
“best serve the ends of justice for the affected parties and . . . promote judicial efficiency.” Gunnells
v. Healthplan Servs., Inc., 348 F.3d 417, 424 (4th Cir. 2003).
III.
DISCUSSION
-5-
A.
Defendants’ Motion for Summary Judgment
Defendants move for summary judgment on two grounds. First, Defendants assert that they
are entitled to the statutory presumption contained in W. Va. Code § 33-6-31d. Second, if the Court
does determine that the State Farm UIM forms are materially different from those provided by the
Commissioner, Defendants contend that they are nonetheless entitled to summary judgment with
respect to Plaintiffs Martin and Fleming under the common law Bias standard.
1.
Defendants Are Not Entitled to the Statutory Presumption
Under West Virginia Code § 33-6-31(b), every automobile insurance agency
shall provide an option to the insured with appropriately adjusted premiums to pay
the insured all sums which he shall legally be entitled to recover as damages from the
owner or operator of an uninsured or underinsured motor vehicle up to an amount not
less than limits of bodily injury liability insurance and property damage liability
insurance purchased by the insured.
W. Va. Code § 33-6-31(b). To fulfill its obligations under this statute, an insurer must make an
effective offer of the optional UIM coverage. In Bias v. Nationwide Mutual Insurance Co., 365
S.E.2d 789 (1987), the West Virginia Supreme Court of Appeals defined this as an offer “made in
a commercially reasonable manner, so as to provide the insured with adequate information to make
an intelligent decision. The offer must state, in definite, intelligible, and specific terms, the nature
of the coverage offered, the coverage limits, and the costs involved.” Bias, 365 S.E.2d at 791
(citations omitted). In any litigation challenging an insurance company’s offer, “the insurer has the
burden of proving that an effective offer [of optional coverage] was made, and that any rejection of
said offer by the insured was knowing and informed[.]” Id. at Syl. Pt. 1. If an insurance company
failed to meet its evidentiary burden, such optional coverage “is included in the policy by operation
-6-
of law when the insurer fails to prove an effective offer and a knowing and intelligent rejection by
the insured.” Id. at Syl. Pt. 2.
Following Bias, the West Virginia Legislature enacted West Virginia Code § 33-6-31d. This
provision explains, in more detail, the requirements of a “commercially reasonable” offer of UIM
coverage. The statute states, in pertinent part:
Optional limits of uninsured motor vehicle coverage and underinsured motor vehicle
coverage required by section thirty-one of this article shall be made available to the
named insured at the time of initial application for liability coverage and upon any
request of the named insured on a form prepared and made available by the insurance
commissioner. The contents of the form shall be as prescribed by the commission
and shall specifically inform the named insured of the coverage offered and the rate
calculation therefor, including, but not limited to, all levels and amounts of such
coverage available and the number of vehicles which will be subject to the coverage.
The form shall be made available for use on or before the effective date of this
section. The form shall allow any named insured to waive any or all the coverage
offered.
W. Va. Code § 33-6-31d(a). If an insurer offers optional UIM coverage on a form described in this
section, any election or rejection by an insured pursuant to that form “shall create a presumption that
such applicant and all named insureds received an effective offer of the optional coverages . . . and
that such applicant exercised a knowing and intelligent election or rejection, as the case may be, of
such offer as specified in the form.” W. Va. Code § 33-6-31d(b).
In response to this statutory directive, the West Virginia Insurance Commissioner issued two
West Virginia Informational Letters regarding the prescribed form insurers are to use: No. 88 and
No. 121. Informational Letter No. 88 was issued in July 1983. Pls.’ Ex. 3, ECF 147, at 32. It
outlined an automobile insurer’s obligations under § 33-6-31d and provided the prescribed forms
for insurers to use. Informational Letter No. 121 was issued in July 2000, and “replace[d]
-7-
Informational Letter No. 88 in its entirety.”3 Pls.’ Ex. 4, ECF 147, at 44. The forms provided with
each informational letter are substantially the same, with two sections irrelevant to the instant action
removed from the forms issued with Informational Letter No. 121.
Plaintiffs’ argument is based on the premise that the duty to comply with the prescribed
Insurance Commissioner’s forms is an absolute duty—no variations from the forms are allowed.
Defendants counter, arguing that so long as State Farm’s forms contain all the required information,4
the fact that the forms also include additional information does not preclude State Farm from
qualifying for the statutory presumption. The Court does not agree with Plaintiffs that any deviation
from the Insurance Commissioner’s forms automatically disqualifies an insurer from the statutory
presumption. However, it does conclude that the deviations contained in State Farm’s forms
preclude it from qualifying for the statutory presumption.
Letter No. 121 explains what constitutes compliance with § 33-6-31d, stating:
Statutory compliance in the reproduction of the forms contained herein necessary to
create a presumption of an effective offer of optional coverages and a knowing and
intelligent election or rejection is achieved so long as the reproduced forms provide
ALL the information set forth within the Insurance Commissioner promulgated
forms. It is not necessary that the reproduced forms be exact replicas of the
Commissioner forms in size and shape. However, a minimum 10 point font size and
a commonly used font face are required. Additionally, the portions of the Insurance
Commissioner promulgated forms which appear in bold font style must likewise
appear in bold on the insurer reproduced forms.
3
The various offers of UIM insurance to Martin and Fleming’s decedent occurred both preand post-2000. Accordingly, the language contained in both letters is relevant to the instant case.
4
There is no dispute that the forms relevant to the specific cases of the named plaintiffs
contain all the information required by the statute and the Insurance Commissioner. Instead, what
is being contested is the addition of information to the forms.
-8-
Pls.’ Ex. 4, ECF 147, at 46. The above language suggests that the forms are a compliance “floor”,
and that an insurer’s inclusion of additional information on the forms may yet comply with the
requirements of § 33-6-31d. However, a closer review of the Informational Letters reveals that the
Insurance Commissioner provided only a limited flexibility in the forms, thereby constricting what
additional information is allowed—that is, so long as insurers hope to be entitled to the statutory
presumption.
Both letters state that “[t]he blank spaces near the bottom of the per person, per accident, and
property damage columns are provided to allow the insurer some flexibility in completing the form.”
See, e.g., Pls.’ Ex. 4, ECF 147 at 47. This language indicates that while strict compliance with the
form is not required, the Insurance Commissioner did not leave much room for variation outside of
differences in formatting and the empty spaces provided on the form. This conclusion is supported
by the frequently asked questions section contained in Letter No. 88.5 The first question asks
whether insurers can break the coverage premiums down, rather than providing the premium as an
aggregate of the bodily injury per person, bodily injury per accident, and property damage
coverages. The Insurance Commissioner responded in the negative, stating that “[t]he form is
designed with simplicity in mind and it was felt that breaking the coverages down any further would
make the form too crowded and complicated.” Pls.’ Ex. 3, ECF 147, at 35.
The forms utilized by State Farm do not achieve this goal of simplicity. A comparison of
the Insurance Commissioner’s forms and the forms utilized by State Farm for Plaintiffs Martin and
Fleming illustrates. The Insurance Commissioner forms contain five columns. The first three list
5
The Court recognizes that Letter No. 121 has replaced No. 88. Nonetheless, the Court finds
the information contained in No. 88 informative in ascertaining whether alterations to the prescribed
form nonetheless qualify for the statutory presumption.
-9-
the optional coverage limits for bodily injury per person, bodily injury per accident, and property
damage. The fourth column is blank, allowing the insurer to list the aggregate premium for each
level of coverage. The fifth column is where the insured either rejects the optional coverage or
marks the level of optional coverage he or she selects. In contrast, State Farm’s forms contain six
or eight columns. The first three columns are the same as the Insurance Commissioners’ forms.
However, in direct contradiction with the goal of simplicity prescribed by the Insurance
Commissioner, State Farm’s forms contain two or four columns, listing premiums per coverage
level. Thus, rather than having one premium for each level of coverage like the Insurance
Commissioner forms, State Farm’s forms instead list either two or four different premiums that are
dependent on whether the insured qualifies for a multi-vehicle discount, and/or whether the insured
has collision insurance. Thus, any insured marking “select” next to a coverage level has no idea,
based on the face of the UIM form, which premium he or she will be paying. Instead, the insured
must refer to external information contained elsewhere in the policy in order to ascertain exactly
which premium is applicable to him or her.
The additional information contained in State Farm’s forms clearly “make the form too
crowded and complicated.” Defendant State Farm nonetheless urged the Court, during oral
argument, to conclude that State Farm’s policy of face-to-face meetings between the insured and a
State Farm agent overcomes the confusion created by the multiple premiums included on each form.
The Court disagrees. Even clarifying discussions with an agent do not render a form compliant to
entitle the insurer to the benefit of the statutory presumption—the presumption is expressly tied to
the sufficiency of the form. The history of Bias and the later clarification provided by § 33-6-31d
and the Informational Letters establish that the primary goal of the Insurance Commissioner’s forms
-10-
is to simplify and clarify the offering of the optional insurance coverage. Bias created the standard
of a “commercially reasonable offer” and the forms are the statutorily mandated manifestation of
what constitutes a “commercially reasonable offer.” Thus, relying on the external information
provided during a face-to-face insured-agent meeting does not bring the State Farm forms within
the statutory presumption. Accordingly, the Court FINDS that State Farm is not entitled to the
statutory presumption.
2.
Without the Statutory Presumption, Common Law and Bias Control
Plaintiffs vociferously argue that § 33-6-31d superseded Bias and the common law that, prior
to the statute’s enactment, governed what actions by an insurer complied with the requirements of
§ 33-6-31(b). To support this contention, Plaintiffs point to the mandatory nature of the directives
contained in § 33-6-31d. Plaintiffs also place heavy emphasis on four cases, Westfield v . Bell, 507
S.E.2d 406 (W. Va. 1998) (per curiam), Ammons v. Transportation Insurance Co., 219 F. Supp. 2d
885 (S.D. Ohio 2002), Burrows v. Nationwide Insurance Co., 600 S.E.2d 565 (W. Va. 2004), and
Luikart v. Valley Brook Concrete & Supply, Inc., 613 S.E.2d 896 (W. Va. 2005).
First, the Court notes that the West Virginia Legislature, unlike in numerous other instances,
did not clearly express an intent to displace the governing common law. Defendants point to W. Va.
Code § 33-6-30 as an example. There, the Legislature stated that the provision was “specifically
intended to clarify the law and correct [the] . . . misapplication” of the law in a West Virginia
Supreme Court of Appeals holding. There is no similar intent expressed with respect to § 33-6-31d
and its interaction with Bias.
-11-
Second, while the Court agrees that this statute mandates the use of the Insurance
Commissioner’s forms to make offers of the optional UIM coverage, the effect of these mandatory
directives is tempered by the following language contained in the statute:
The contents of a form described in this section which has been signed by an
applicant shall create a presumption that such applicant and all named insureds
received an effective offer of the optional coverages described in this section and that
such applicant exercised a knowing and intelligent election or rejection, as the case
may be, of such offer as specified in the form.
W. Va. Code § 33-6-31d(b) & (c) (emphasis added).
If an insurer complies with every aspect
of the Informational Letters, it is still entitled to no more than a presumption that it has complied
with the requirements laid out in Bias. A presumption is “[a] legal inference or assumption that a
fact exists, based on the known or proven existence of some other fact or group of facts.” Black’s
Law Dictionary (9th ed. 2009). The creation of the presumption is only given meaning when
examined within the context of Bias. There, the West Virginia Supreme Court of Appeals concluded
that the insurer bears the evidentiary burden of proving that an effective offer of the optional
insurance was made. Bias, 365 S.E.2d 789 at Syl. Pt. 1. Without the imposition of the evidentiary
burden in Bias, the need for the statutory presumption created by § 33-6-31d would be nonexistent.
Further, Bias is still relied on by both West Virginia courts and the federal courts in interpreting and
applying § 33-6-31d. For example, in Burrows, the West Virginia Supreme Court stated that “[t]he
statute and our decision in Bias v. Nationwide Mut. Ins. Co. [ ] encourage insurance companies to
make a real effort to inform customers about the opportunity for underinsured motorist coverage.”
Burrows, 600 S.E.2d at 571. Bias did not become obsolete when the West Virginia legislature
passed § 33-6-31d. It is still a guidepost for determining what is necessary to provide a
“commercially reasonable” offer pursuant to § 33-6-31(b). And it is what guides courts in analyzing
-12-
the facts of a specific offer of the optional coverage when an insurer is not entitled to the statutory
presumption.
Moreover, the cases cited by Plaintiffs are distinguishable. Plaintiffs argue that in Bell, the
West Virginia Supreme Court of Appeals clearly held that an insurer is required to use the exact
forms promulgated by the Insurance Commissioner. The Court disagrees with this interpretation.
The form at issue in Bell had been issued to the insured in between the date of passage of § 33-6-31d
and the promulgation and adoption of Informational Letter No. 88 and the Commissioner’s form.
Bell, 507 S.E.2d at 410. Accordingly, the court’s review was limited to the circumstances in front
of it—the period before the form had been created by the Insurance Commissioner and the narrow
certified questions presented. Any statement or conclusion referencing Bias’ interaction with § 336-31d is therefore merely dicta. Furthermore, its one statement with respect to an insurer’s
obligations after the promulgation of the Insurance Commissioner’s forms states that the insurer
must comply with the statute and the Insurance Commissioner’s guidelines, rather than requiring
an exact replication of the Insurance Commissioner form. Id. In addition, the case in Bell also
involved offers made to the insured after Informational Letter No. 88 went into effect. These forms
did not strictly comply with the statute or the Insurance Commissioner’s forms as they failed to offer
coverage up to the limits required by § 33-6-31(b). Yet, the Court nonetheless—in dicta—indicated
that it was considered a commercially reasonable offer and that the insured’s rejection was valid.
Id. at 410 n.5. Considering the varying inferences that can be read into the Bell decision, the Court
cannot conclude that it stands for what Plaintiffs argue.
Next, Plaintiffs point the Court to Ammons, a case decided by the Southern District of Ohio.
Plaintiffs assert that in Ammons, the court concluded that the West Virginia Supreme Court of
-13-
Appeals has held that an insurer must comply with § 33-6-31d and the Insurance Commissioner’s
guidelines. Ammons, 219 F. Supp. 2d at 894. Plaintiffs also point to Burrows and Luikart, as in
each case the West Virginia Supreme Court of Appeals cited Ammons with approval. These cites
provide minimal support for Plaintiffs’ reliance on Ammons. In a footnote in Burrows, the court
quotes from Ammons to describe the Insurance Commissioner form; the court makes no reference
to the Ammons court’s conclusion as to the effect of the statute on Bias. Burrows, 600 S.E.2d at 570
n.10. Similarly, in a footnote in Luikart, the court refers to the Ammons case, citing its recognition
of the supersession of Bias by § 33-6-31d. Luikart, 613 S.E.2d at 903 n.11. However, the
Ammons’s court limited the superseding effect of the statute to “the portion of Bias that sets forth
the information that must be contained in an offer of optional coverage for it be effective [as it is]
superceded by the requirements set forth in § 33-6-31d.”6 Ammons, 219 F. Supp. 2d at 894 (citing
Foutty v. Porterfield, 450 S.E.2d 802, 804 n.5 (W. Va. 1994)). Foutty discussed the limited nature
of the statute’s effect on Bias, noting in a footnote five that it merely “altered the Bias case by
setting out in detail how an offer . . . should be made.” Moreover, Ammons explicitly recognizes
that insurers have to comply with the guidelines of Bias, § 33-6-31d, and the Insurance
Commissioner’s Informational Letters. Id. at 893. Further, the court’s conclusion that the insurer
failed to comply with the West Virginia requirements was based on the insurer’s, Allstate’s, failure
to “set forth a premium breakdown showing the cost of each optional coverage limit.” Id. at 895.
6
This Court in Webb v. Shafer, 694 F. Supp. 2d 497 (S.D. W. Va. 2010) compared the
required content for an “effective offer” as outlined in Bias to that mandated in § 33-6-31d. The
Court concluded directives contained in the statute and in the Insurance Commissioner’s
Informational Letters are “consistent with Bias and the subsequent, related case law. This is because
. . . the Letter [and statute] do[] not alter the underlying qualitative standard by which an offer of
underinsured motorist coverage must be judged.” Webb, 694 F. Supp. 2d at 503–04.
-14-
Thus, unlike in the instant case, Allstate’s forms did not include all the required information. In
contrast, here, State Farm’s forms do include all the required information; they just include
additional information as well.
Against this backdrop of very narrow descriptions, in dicta, of the effect of the statute on
Bias, Plaintiffs advocate a result that defies logic: compliance with the statute creates merely a
presumption while noncompliance is deemed to impose coverage. Thus, the authorities cited by
Plaintiffs do not convince the Court that the statute has superseded the previously controlling
common law. Rather, the Court concludes that the statute and the Insurance Commissioner
Informational Letters were promulgated in order to clarify the standard first established in Bias.
This Court has previously held that when the statutory presumption does not apply, Bias and its
progeny control. Webb v. Shaffer, 694 F. Supp. 2d 497 (S.D. W. Va. 2010). Plaintiffs have provided
no reason for the Court to alter its decision.
3.
State Farm Made Commercially Reasonable Offers to Plaintiffs Fleming & Martin
The remaining issue with respect to Defendant’s motion for summary judgment is whether
or not Defendant State Farm made a commercially reasonable offer to the individual plaintiffs.
Defendant only moves for summary judgment with respect to Plaintiffs Martin and Fleming, as there
is an issue of disputed material fact with respect to Plaintiff Gandee.
Reviewing the facts before it, the Court concludes that State Farm did make a commercially
reasonable offer to Plaintiffs Martin and Fleming. In Bias, the West Virginia Supreme Court of
Appeals stated that in order for an insurer to meet its evidentiary burden of proving that an effective
offer was made, the insurer must establish several key facts. First, “that any rejection of said offer
by the insured was knowing and informed.” Bias, 365 S.E.2d 789 at Syl. Pt. 1. Second, that the
-15-
offer included specified information. Id. at 791. The required content was expanded upon in § 33-631d, and now, for an offer to be “commercially reasonable”, an insurer must include the following
information in its offer: “the coverage offered and the rate calculation therefor, including, but not
limited to, all levels and amounts of coverage available and the number of vehicles which will be
subject to the coverage.” W. Va. Code § 33-6-31d(a); see also Pls.’ Ex. 3, ECF 147 at 33–34; Pls.’
Ex. 4, ECF 147 at 45–46. There is no dispute that Defendant State Farm provided the mandatory
information to both Plaintiffs Martin and Fleming’s decedent. Instead, Plaintiffs focus on several
inaccuracies contained on each form, arguing that they prevented a knowing and intelligent rejection
by Martin and Fleming’s decedent.
Fleming’s decedent, Arch Fleming, purchased automobile insurance from State Farm in
1996. At that time, he opted to purchase UIM coverage, with limits of $100,000 per person,
$300,000 per accident, and $10,000 for property damage (“$100/300/10"). Defs.’ Ex. 1, ECF 128-1
at 1. Subsequently, in 2003, Mr. Fleming, during an in person meeting with a State Farm agent,
elected to remove his UIM coverage by signing State Farm’s UIM offer form rejecting UIM
coverage. Defs.’ Ex. 3, ECF 128-1 at 9. At such meetings in person, it was the standard practice
of the agent, Daniel McPherson, and his staff to explain the optional coverage and to recommend
purchasing coverage with limits of $100/300/10. Mr. McPherson stated that during the 2003
meeting, Mr. Fleming “express[ed] his desire to remove the [UIM] coverage from his policy because
he wished to reduce his premium.” Defs.’ Ex. 2 at ¶ 10, ECF 128-1 at 4.
The facts with respect to Plaintiff Martin’s UIM coverage are similar. Martin initially
purchased automobile insurance in October 1997. This insurance was purchased following an in
person meeting with a State Farm agent, Charles Romine, during which Mr. Romine explained UIM
-16-
coverage, the available limits and their associated premiums, and the Important Notice required
under § 33-6-31d. Defs.’ Ex. 4 ¶¶ 5, 9–10, ECF 128-1 at 11, 12. Martin elected to purchase UIM
coverage with limits of $100/300/10. Id. ¶ 11; Defs.’ Ex. 5, ECF 128-1 at 16. Like Fleming’s
decedent, Martin subsequently rejected the UIM coverage. In another face-to-face meeting with
Agent Romine a mere six months later in April 1998, Martin signed a UIM offer form in which he
rejected the coverage. Defs.’ Ex. 6, ECF 128-1 at 17.
Plaintiffs various arguments as to why the offers were not commercially reasonable fail to
convince the Court. Plaintiffs argue that the forms provided to Martin and Fleming’s decedent were
deficient, and therefore the rejections were not knowing and intelligent. First, with respect to
Martin, at the top of the April 1998 forms, State Farm failed to indicate whether the rates included
or did not include a multi-car discount. Id. The form at issue had two columns listing alternate
premiums, depending on whether a multi-car discount applied or not. Thus, Plaintiffs argue, the
form was too confusing for Martin to be able to make an informed decision. This Court has
previously found this to be insufficient grounds to conclude that offer was deficient. Ingles v. State
Farm Mut. Auto. Ins. Co., 265 F. Supp. 2d 655, 659 (S.D. W. Va. 2003). It concludes so again.
Second, again with respect to Martin, Plaintiffs argue that the inclusion in the April 1998
form of Martin’s then-current level of UIM coverage ($100/300/10) was overly confusing, thereby
preventing a knowing and intelligent rejection of UIM coverage. Martin stated in his affidavit that
the inclusion of this information on the selection/rejection form led him to believe that he would
maintain this coverage unless he opted for a different insurance level on the form. Pls.’ Ex. 34 at
¶ 2, ECF 148-3 at 17. Therefore, he selected nothing during the April 1998 meeting and, further,
-17-
he denies making the mark on the offer form indicating his rejection of all UIM coverage. Id. at ¶
3; Pls.’ Ex. 10 at 21–22, ECF 148 at 38–39
However, Mr. Martin signed the UIM offer form, which contained the following attestation
language above the signature block: “I have been given the opportunity to select or reject limits of
UNDERinsured motor vehicle coverage listed above and have selected the coverage that matches
the box I have checked.” See, e.g., Defs.’ Ex. 6, ECF 128-1 at 17. This language significantly
undermines Martin’s contention that he believed he was maintaining his prior coverage of
$100/300/10, as well as his assertion that he did not make the mark indicating rejection. Martin does
not challenge the validity of his signature; thus, the Court concludes that he was being truthful when
he signed the form.7 In addition, the form on which he selected “reject” listed as a possible coverage
level his then-present coverage of $100/300/10, with the same premium he was then paying. The
Court cannot accept the proposition that Martin, reviewing the language of the attestation clause and
seeing that his previously selected coverage level was listed as a possible selection on the April 1998
UIM offer form, believed that he could select nothing and still maintain his prior coverage level.
He is bound by his attestation.
The Court has reached this conclusion before. In Webb, the plaintiff likewise provided an
affidavit asserting that he believed he had purchased UIM coverage. The Court concluded:
this affidavit is not sufficient to create a triable issue. First and foremost, all of the
forms submitted by the parties and represented to be the underinsured motorist offer
form presented to [plaintiff] are signed and the box labeled “Reject” is checked.
7
The case of Martin differs greatly from that of Plaintiff Gandee. There, the dispute is over
whether the signature was itself legitimate. Thus, the validity of the form as a whole is in question.
Here, in contrast, Martin recognizes the validity of his signature, and therefore the attestations above
the signature block are accepted as true by this Court.
-18-
Viewed alone, these forms present substantial, concrete evidence that [plaintiff]
knowingly and intelligently rejected such coverage at that time.
Webb, 694 F. Supp. 2d at 505. Further, as in this case, the plaintiff in Webb had elected, and later
rejected, UIM coverage. This Court found this to be a compelling argument in Webb that the
rejection was knowing and intelligent, and it concludes the same here. Id.
Plaintiffs also argue that neither Martin nor Fleming’s decedent received the mandatory
Important Notice. Plaintiffs assert that because State Farm only “strongly recommended” that its
agents include the Important Notice, and because State Farm does not maintain copies of the
Important Notice in the insureds’ files, there is no proof that State Farm did, in fact, provide these
notices. Moreover, Martin attested that he does not remember receiving the Important Notice. Pls.’
Ex. 34 at ¶ 3, ECF 148-3 at 17. This argument has no merit. Both individuals signed forms that
stated, immediately above their signatures: “I have read the IMPORTANT NOTICE attached, on
UNDERinsured motor vehicle coverage and understand how this coverage works.” See, e.g., Defs.’
Ex. 6, ECF 128-1 at 17. In addition, Martin’s State Farm agent attested that the standard practice
of his office was to provide the Important Notice. Defs.’ Ex. 4 ¶¶ 9–10, ECF 128-1 at 12.
With respect to Fleming’s decedent, Plaintiffs assert that the affidavit submitted by his agent
is barred as hearsay and under W. Va. Code § 57-3-1, the “Dead Man’s Act.” As to the first
argument, the agent’s affidavit recalling the agent’s conversation with Mr. Fleming in 2003 is
admissible as a party admission. Fed. R. Evid. 801(d)(2). As to the second, the West Virginia
Supreme Court of Appeals dispensed with that argument in Cross v. State Farm Mutual Automobile
Insurance Co., 387 S.E.2d 556, 563 (W. Va. 1989) (holding that the Dead Man’s Statute “does not
bar the testimony of an insurer’s agents that they orally informed the decedent of various levels of
-19-
uninsured motorist coverage, where the only assertion is that the insurer’s agents are incompetent
witnesses by virtue of their interests as agents”).
In light of the signed affidavits by State Farm agents stating that the UIM optional coverage
was explained to both Martin and Fleming’s decedent, and the fact that both men had previously
elected to purchase such coverage, only to later reject it, the Court concludes that their rejection of
the UIM coverage was knowing and intelligent. Therefore, Defendants are GRANTED summary
judgment with respect to Plaintiffs Martin and Fleming.
B.
Plaintiffs’ Motion for Class Certification
While Plaintiffs’ Motion for Class Certification is mooted by the dismissal of two of
Plaintiffs’ named plaintiffs, the Court nonetheless addresses the impact of its foregoing conclusions
on the viability of class certification with respect to this action. By finding that Bias controls where
the statutory presumption does not apply, the Court is now confronted with a proposed class of State
Farm insureds, the resolution of whose cases require individual fact-finding under the Bias standard.
The United States Supreme Court in the recent case Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541
(2011), stated that commonality requires that a class’s “claims must depend upon a common
contention . . . of such a nature that is capable of classwide resolution—which means that
determination of its truth or falsity will resolve an issue that is central to the validity of each one of
the claims in one stroke.” Wal-Mart, 131 S. Ct. at 2551. Here, the varying claims presented by the
proposed class will require an intensive, individual fact-finding, as demonstrated by the Court’s
discussion of Martin’s and Fleming’s decedent’s claims. Accordingly, the class proposed by
Plaintiffs fails to meet the commonality requirement under Rule 23(a) of the Federal Rules of Civil
Procedure. The Court therefore DENIES Plaintiffs’ motion for class certification.
-20-
IV.
CONCLUSION
For the foregoing reasons, Defendants’ motion is GRANTED in part and Plaintiffs’ motion
is DENIED. The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.
ENTER:
August 22, 2011
ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE
-21-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?