Opinion
No. 22-0155
11-17-2022
Greg Allen BALL, Petitioner, v. UNITED FINANCIAL CASUALTY COMPANY, Milton Hardware, LLC, Builders Discount, LLC, and Rodney Perry, Respondents
Stephen B. Farmer, Esq., R. Chad Duffield, Esq., Jennifer D. Roush, Esq., Farmer Cline & Campbell, PLLC, Charleston, West Virginia, Counsel for Petitioner Jeffrey A. Holmstrand, Esq., Grove Holmstrand & Delk PLLC, Wheeling, West Virginia, Ancil G. Ramey, Esq., Steptoe & Johnson PLLC, Huntington, West Virginia, Dallas F. Kratzer III, Esq., Steptoe & Johnson PLLC, Columbus, Ohio, Counsel for Amicus Curiae Defense Trial Counsel of West Virginia Susan R. Snowden, Esq., Jackson Kelly PLLC, Martinsburg, West Virginia, Counsel for Respondent United Financial Casualty Company
Stephen B. Farmer, Esq., R. Chad Duffield, Esq., Jennifer D. Roush, Esq., Farmer Cline & Campbell, PLLC, Charleston, West Virginia, Counsel for Petitioner
Jeffrey A. Holmstrand, Esq., Grove Holmstrand & Delk PLLC, Wheeling, West Virginia, Ancil G. Ramey, Esq., Steptoe & Johnson PLLC, Huntington, West Virginia, Dallas F. Kratzer III, Esq., Steptoe & Johnson PLLC, Columbus, Ohio, Counsel for Amicus Curiae Defense Trial Counsel of West Virginia
Susan R. Snowden, Esq., Jackson Kelly PLLC, Martinsburg, West Virginia, Counsel for Respondent United Financial Casualty Company
HUTCHISON, Chief Justice:
This case is before this Court on a certified question from the United States Court of Appeals for the Fourth Circuit concerning the amount of motor vehicle liability insurance coverage, if any, that United Financial Casualty Company ("United Financial") must provide to a non-employee permissive user of an insured vehicle who caused personal injuries to an employee of a named insured under a standard commercial automobile insurance policy issued by United Financial ("the policy"):
When an exclusion in an automobile liability insurance policy violates West Virginia Code § 33-6-31(a) because it would deny coverage to a permissive user of an insured automobile, must the insurance policy provide the permissive user with the full liability coverage available under the policy or the minimum liability coverage required by the Motor Vehicle Safety Responsibility Law, West Virginia Code § 17D-1-1 et seq. ?
The Fourth Circuit has determined that an Employee Indemnification and Employer's Liability's exclusion in United Financial's policy is void and unenforceable under the mandatory omnibus requirements of West Virginia Code § 33-6-31(a) [2015]. Upon review of the parties’ briefs, appendix record, oral argument, and applicable legal authority, and for the reasons stated below, we find the void exclusion may not be invoked to limit the amount of liability insurance coverage available to a permissive user of a vehicle insured by United Financial's policy. We conclude that United Financial must afford the permissive user with coverage up to the full limits of liability coverage available under the insurance policy for any damages proven.
The Employee Indemnification and Employer's Liability exclusion is the exclusion relevant to the certified question; it provides as follows:
PART I – LIABILITY TO OTHERS
....
EXCLUSIONS
....
Coverage under this Part I, including our duty to defend, does not apply to:
....
5. Employee Indemnification and Employer's Liability Bodily Injury to:
a. An employee of any insured arising out of or within the course of:
(i) That employee's employment by any insured ;
or
(ii) Performing duties related to the conduct of any insured's business; or
....
This exclusion applies:
a. Whether the insured may be liable as an employer or in any other capacity....
I. Factual and Procedural Background
In its published order, United Financial Casualty Company v. Ball , 31 F.4th 164 (4th Cir. 2022), the Fourth Circuit set forth the undisputed relevant facts and procedural history as follows:
On October 25, 2016, employees of Milton Hardware, LLC, were performing construction work at the home of Rodney Perry in Milton, West Virginia. At one point during the work, Milton Hardware's owner authorized Perry to move one of Milton Hardware's trucks, which was blocking the driveway. As Perry was moving the truck in reverse, however, he accidentally struck Greg Ball, a Milton Hardware employee, temporarily pinning him between the truck Perry was driving and another Milton Hardware truck. As a result, Ball sustained serious injuries that required hospitalization.
At the time of the accident, Milton Hardware had a commercial automobile liability insurance policy issued by United Financial Casualty Company, which provided $1 million in liability coverage to Milton Hardware and to any person using Milton Hardware's vehicles with its permission. Based on this provision, Ball demanded that United Financial indemnify him for the injuries that he claimed were caused by Perry's negligence. United Financial denied coverage and commenced an action in [the United States District Court for the Southern District of West Virginia] against the named insureds, Milton Hardware and Builders Discount, LLC, as well as Perry and Ball, seeking a declaratory judgment that it had no obligation to cover Perry's liability to Ball. It asserted that coverage for Perry's liability to Ball was barred by two exclusions in the policy—a "Worker's Compensation" exclusion
West Virginia Code § 33-6-31(h) provides that "[t]he provisions of subsections (a) and (b) of this section do not apply to any policy of insurance to the extent that it covers the liability of an employer to his or her employees under any workers’ compensation law."
and an "Employee Indemnification and Employer's Liability" exclusion. Ball filed a crossclaim against Perry, seeking damages for his negligence, and a counterclaim against United Financial for a declaratory judgment that, among other things, the Worker's Compensation exclusion did not apply and that the Employee Indemnification and Employer's Liability exclusion violated West Virginia Code § 33-6-31(a). Ball also sought money damages from United Financial, alleging breach of contract, breach of the covenants of good faith and fair dealing, unfair trade practices, and common law bad faith.
On cross-motions for summary judgment, the district court granted United Financial's motion. The court concluded that because Ball "sustained his injuries while he was working within the course of his employment with Milton Hardware," his injuries fell within the scope of the Worker's Compensation exclusion and "that, as a result, he [was] barred from liability coverage under the policy." The court also rejected Ball's argument that West Virginia Code § 33-6-31(a) required United Financial to extend liability coverage to Perry as a permissive user of an insured automobile, reasoning that the exception in § 33-6-31(h) applied to eliminate this requirement. See W. Va. Code § 33-6-31(h) (providing that subsection (a) does "not apply to any policy of insurance to the extent that it covers the liability of an employer to his or her employees under any workers’ compensation law"). The court dismissed all of Ball's counterclaims against United Financial, including his state law claims for damages, and it declined to exercise supplemental jurisdiction over Ball's state law tort claim against Perry.
On Ball's appeal, [the United States Court of Appeals for the Fourth Circuit] vacated the district court's judgment and remanded for further proceedings. United Financial Casualty Co. v. Ball , 941 F.3d 710 (4th Cir. 2019). [The Fourth Circuit] held first that "because Ball's negligence claim against Perry was a claim against a third party, rather than a claim against his employer for workers’ compensation, the [policy's] Worker's Compensation exclusion did not apply." Id. at 712. [The Fourth Circuit] also "conclude[d] that the policy's broader exclusion for Employee Indemnification and Employer's Liability, which on its face would apply to exclude coverage for Perry's liability to Ball, was inoperable because its limitation of coverage contravened West Virginia Code § 33-6-31." Id. Specifically, United Financial had argued that " § 33-6-31 (a) [did] not apply because of the workers’ compensation exception in subsection (h)," but [the Fourth Circuit] explained that because "Ball's claim against Perry [was] not a workers’ compensation claim, but rather a third-party common law tort claim, the exception in § 33-6-31 (h) [did] not apply, and § 33-6-31(a) continue[d] to override the restrictions of the Employee Indemnification and Employer's Liability exclusion." Id. at 716. As [the Fourth Circuit] summarized,
At bottom, [the court] conclude[s] that while the language of the Employee Indemnification and Employer's Liability
West Virginia Code § 33-6-31(a) provides, in relevant part, as follows:
No policy or contract of bodily injury liability insurance , or of property damage liability insurance, covering liability arising from the ownership, maintenance or use of any motor vehicle, may be issued or delivered in this state to the owner of such vehicle, or may be issued or delivered by any insurer licensed in this state upon any motor vehicle for which a certificate of title has been issued by the Division of Motor Vehicles of this state, unless it contains a provision insuring the named insured and any other person , except a bailee for hire and any persons specifically excluded by any restrictive endorsement attached to the policy, responsible for the use of or using the motor vehicle with the consent, expressed or implied, of the named insured or his or her spouse against liability for death or bodily injury sustained or loss or damage occasioned within the coverage of the policy or contract as a result of negligence in the operation or use of such vehicle by the named insured or by such person[.]
(Emphasis added).
exclusion, considered alone, is sufficiently broad to deny Perry coverage for his liability to Ball, such a limitation of coverage for a permissive user of an insured vehicle contravenes West Virginia Code § 33-6-31(a) and thus renders the exclusion unenforceable. See Universal Underwriters Ins. Co. v. Taylor , 185 W. Va. 606, 408 S.E.2d 358, 363 (1991) (recognizing "that any provision in an insurance policy which attempts to contravene W. Va. Code, 33-6-31(a) is of no effect" (cleaned up)); see also Burr [v. Nationwide Mut. Ins. Co. ], 178 W.Va. 398], 359 S.E.2d [626, 631 (W. Va. 1987) ]. Accordingly, [the court] hold[s] that the Employee Indemnification and Employee's Liability exclusion cannot operate to deny Perry coverage under United Financial's policy for his liability to Ball.
Id. at 717. Thus "conclud[ing] that United Financial may not deny liability coverage to Perry by reason of either the Worker's Compensation exclusion or the Employee Indemnification and Employer's Liability exclusion," [the Fourth Circuit] remanded "for further proceedings as to any unresolved issues raised by the parties." Id.
On remand to the district court, the parties disagreed on what level of coverage United Financial was required to provide in view of [the Fourth Circuit's] holding that the Employee Indemnification and Employer's Liability exclusion was unenforceable. And this dispute brought into play West Virginia Code § 17D-4-2(b) (requiring minimum liability coverage of $25,000 for bodily injury to a person injured in a motor vehicle accident), as well as [the Fourth Circuit's] prior holding under West Virginia Code § 33-6-31(a). United Financial argued that while the exclusion was unenforceable up to the $25,000 minimum liability coverage required by § 17D-4-2(b), it remained enforceable as to any amount above that statutory minimum. Ball and Perry, by contrast, argued that the exclusion was entirely unenforceable under § 33-6-31(a) and that therefore United Financial was required to provide Perry with coverage of up to the full $1 million afforded by the policy.
The district court entered summary judgment upholding United Financial's position in a memorandum opinion and order dated March 31, 2020. J.A. 484-92 .... [I]t held that the policy's Employee Indemnification and Employer's Liability exclusion was "unenforceable up to the minimum insurance coverage [of $25,000] required by state law but operative as to any amount above the state's mandatory minimum limits." J.A. 492.
As part of the Motor Vehicle Safety Responsibility Law, West Virginia Code § 17D-4-12(b)(2) [2015] provides that a motor vehicle liability policy shall
insure the person named therein and any other person, as insured, using any such vehicle or vehicles with the express or implied permission of such named insured , against loss from the liability imposed by law for damages arising out of the ownership, operation, maintenance or use of such vehicle or vehicles within the United States of America or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each such vehicle, in the amounts required in section two of this article.
(Emphasis added); see Ball , 31 F.4th at 167. West Virginia Code § 17D-4-2, "in turn, specifies the minimum amount of liability coverage that must be provided pursuant to [§ 17D-4-12(b)(2) ’s] requirement – $25,000, as relevant here." Ball , 31 F.4th at 168 ; see W. Va. Code § 17D-4-2(b)(2), in part (" ‘proof of financial responsibility’ means proof of ability to respond in damages for liability, on account of accident occurring subsequent to the effective date of the proof, arising out of the ownership, operation, maintenance, or use of a motor vehicle, trailer or semitrailer in the amount of $25,000 because of bodily injury to or death of one person in any one accident").
Ball , 31 F.4th at 165-67 (footnotes and emphasis added). Ball appealed the district court's ruling.
A crossclaim and certain counterclaims remain pending in the district court and have been stayed. See Ball , 31 F.4th at 167.
On Ball's second appeal to the Fourth Circuit, the issue thus concerned the amount of liability coverage, if any, United Financial is obligated to provide Perry with respect to Perry's liability (as a permissive user under the Milton Hardware policy) to Ball, a Milton Hardware employee. See id. at 167. Finding no controlling West Virginia precedent to definitively answer the question, the Fourth Circuit certified the following question to us:
The question as to what amount of coverage United Financial was required to provide to Perry was first raised before the district court on remand. See id. at 168.
When an exclusion in an automobile liability insurance policy violates West Virginia Code § 33-6-31(a) because it would deny coverage to a permissive user of an insured automobile, must the insurance policy provide the permissive user with the full liability coverage available under the policy or the minimum liability coverage required by the Motor Vehicle Safety Responsibility Law, West Virginia Code § 17D-1-1 et seq. ?
We accepted the certified question by order entered April 14, 2022.
II. Standard of Review
This case presents a certified question from the United States Court of Appeals for the Fourth Circuit. Our review is plenary. See Syl. Pt. 1, Bower v. Westinghouse Elec. Corp. , 206 W. Va. 133, 522 S.E.2d 424 (1999) ("This Court undertakes plenary review of legal issues presented by certified question from a federal district or appellate court.").
III. Discussion
Although the Fourth Circuit found that application of the Employee Indemnification and Employer's Liability exclusion to permissive users of an insured vehicle contravened West Virginia Code § 33-6-31(a) and was, therefore, unenforceable, Ball , 31 F.4th at 166, we are being asked to determine to what degree, if any, the exclusion nonetheless applies to limit the amount of liability coverage available to Perry, the non-employee permissive user of Milton Hardware's vehicle who allegedly negligently caused injuries to Ball, a Milton Hardware employee.
United Financial has never appealed the Fourth Circuit's conclusion that the policy's Workers’ Compensation exclusion does not apply to exclude coverage to Perry, a non-employee, for injuries caused to Ball, an employee of the insured, and that conclusion is not at issue in the question certified to this Court.
West Virginia Code § 33-6-31(a) plainly requires all motor vehicle insurance policies to insure permissive users of insured vehicles "against liability for death or bodily injury sustained ... within the coverage of the policy ... as a result of negligence in the operation or use of such vehicle by" the permissive user. Id. (emphasis added). Without addressing the "within the coverage of the policy" requirement of the statute, United Financial argues that West Virginia Code § 33-6-31(a) and § 17D-4-2, the latter of which sets the minimum financial requirements for motor vehicle liability policies, work in tandem "to define minimum motor vehicle coverage in West Virginia" and that, based upon existing precedent, the Employee Indemnification and Employer's Liability exclusion is unenforceable only up to the minimum "proof of ability to respond in damages for liability" of $25,000 for bodily injury to a person in a motor vehicle accident, as set forth in West Virginia Code § 17D-4-2(b). Above this statutory minimum, United Financial contends, the exclusion is enforceable.
In contrast, Ball argues that this Court has never held that an exclusion that violates West Virginia Code § 33-6-31(a) is enforceable above the mandatory minimum limits set forth in West Virginia Code § 17D-4-2. According to Ball, our case law clearly supports a finding that the Employee Indemnification and Employer's Liability exclusion, which has already been determined to be inoperable, has no effect on the amount of liability coverage available in this case; rather, pursuant to the plain language of West Virginia Code § 33-6-31(a), both the availability and amount of available coverage under the policy depend upon the status of the user of the insured vehicle and not the status of the injured party – in other words, the statute requires that a permissive user such as Perry be insured against liability for negligently causing bodily injury "within the coverage of the policy" regardless of the injured party's status as an employee of the named insured. Accordingly, United Financial must provide Perry with insurance coverage in an amount of up to $1 million, as provided in the policy. We agree with Ball.
Turning first to the language of West Virginia Code § 33-6-31(a), we reiterate that the statute requires all motor vehicle insurance policies to insure permissive users of insured vehicles "against liability for death or bodily injury sustained ... within the coverage of the policy ... as a result of negligence in the operation or use of such vehicle by" the permissive user. Id. We have held that
[t]he mandatory omnibus requirements imposed by W. Va. Code, 33-6-31(a) , indicate that the legislature has demonstrated a clear intent to afford coverage to anyone using a vehicle with the owner's permission as a means of giving greater protection to those who are involved in automobile accidents. The statute should be liberally construed to effect coverage.
Although West Virginia Code § 33-6-31(a) has since been amended, the amendment does not affect our decision in this case.
Syl. Pt. 3, Burr v. Nationwide Mut. Ins. Co. , 178 W. Va. 398, 359 S.E.2d 626 (1987) (footnote added); see Universal Underwriters Ins. Co. v. Taylor , 185 W. Va. 606, 611-12, 408 S.E.2d 358, 363-64 (1991) ("[T]he legislature's enactment of the omnibus clause [ West Virginia Code 33-6-31(a) ] evinces an unmistakable intent to maximize insurance coverage for the greater protection of the public and that effectuation of such intent requires a broad interpretation of the statute."). "Any provision in an insurance policy which attempts to contravene W. Va. Code, 33-6-31(a), is of no effect." Syl. Pt. 2, Burr , 178 W. Va. at 399, 359 S.E.2d at 627.
Despite the plain language of West Virginia Code § 33-6-31(a), and without acknowledging that the statute unambiguously requires that permissive users be insured against liability for injuries caused while negligently operating an insured vehicle "within the coverage of the policy," United Financial contends that West Virginia Code § 33-6-31(a) should be interpreted so as to limit the liability coverage available to the permissive user to the statutory minimum requirement set forth in West Virginia Code § 17D-4-2(b) (which, in this case, is $25,000). However, the case upon which United Financial primarily relies, Jones v. Motorists Mutual Insurance Company , 177 W. Va. 763, 356 S.E.2d 634 (1987) (abrogated by W.Va. Code §§ 33-6-31h [2015] ), is readily distinguishable from the issue presented here and, in fact, along with other decisions from this Court, warrants that we hold that the policy must insure Perry against liability for the bodily injury alleged to have been negligently caused to Ball within the full limits of the policy.
In Jones , the insured purchased an automobile liability insurance policy that specifically excluded her teenage son from the policy's coverage. The son subsequently drove the car and wrecked it in a single car collision, damaging the vehicle and the property of third parties. See id. at 764, 356 S.E.2d at 635. The Court relied on the language of West Virginia Code § 33-6-31(a) that expressly "authorizes potential users of an automobile to be specifically excluded from an automobile liability policy by a restrictive endorsement[,]" but also found there to be a "lack of harmony between this omnibus statute and the specific requirements of Chapter 17D of the Code concerning financial responsibility and minimum levels of insurance." 177 W. Va. at 766, 356 S.E.2d at 637. Ultimately, for third-party liability purposes, the Court held the "named driver exclusion" endorsement to be enforceable, but only beyond the mandatory minimum required by West Virginia Code § 17D-4-2. 177 W. Va. at 765, 766, 356 S.E.2d at 736, 637. Critically, the statute clearly permitted the exclusion at issue in Jones – that is, West Virginia Code § 33-6-31(a) authorized an automobile liability insurance policy to exclude from coverage any specific "persons ... by any restrictive endorsement attached to the policy[,]" and so the policy at issue in Jones , which specifically excluded the insured's teenage son, did not violate (and, in fact, comported with) the requirements of the statute. See id.
The Court in Jones made clear, however, that "the named driver exclusion endorsement is effective as against any claim made by [the insured] herself for damage to her own automobile or other personal property owned by her or her son." Id. at 765, 356 S.E.2d at 636.
In comparison, the Employee Indemnification and Employer's Liability exclusion at issue in this case clearly violates West Virginia Code § 33-6-31(a) by attempting to exclude coverage for a broad category of permissive users whose negligence may cause death or bodily injury as a result of the operation or use of the insured vehicle. Given this significant distinction, United Financial's reliance on Jones for the proposition that the Employee Indemnification and Employer's Liability exclusion is enforceable beyond the statutory minimum limits set forth in West Virginia Code § 17D-4-2 is misplaced.
United Financial also briefly argues that our decisions in Dotts v. Taressa J.A. , 182 W. Va. 586, 390 S.E.2d 568 (1990), and Imgrund v. Yarborough , 199 W. Va. 187, 483 S.E.2d 533 (1997), dictate that the Employee Indemnification and Employer's Liability exclusion be enforced above the minimum requirements of West Virginia Code § 17D-4-2. However, these cases are likewise distinguishable from the case before us.
In Dotts , we considered whether an insurance company was required to provide coverage under a policy it had issued to the Fairmont Marion County Transit Authority to one of its employee drivers for damages resulting from his sexual assault of a passenger. Id. at 587, 390 S.E.2d at 569. The policy included what was deemed to be exclusionary language that was "generally designed to exclude coverage for an intentional tort such as sexual assault." Id. at 589, 390 S.E.2d at 571. The plaintiff in Dotts argued that the exclusion was invalid "with respect to the mandatory insurance provisions of our" financial responsibility laws. Id. at 589, 390 S.E.2d at 571. Observing that our financial responsibility statute was not intended to exclude coverage for an intentional tort, id. at 590-91, 390 S.E.2d at 572-73, we held that "an intentional tort exclusion in a motor vehicle liability insurance policy is precluded under our [financial responsibility law] up to the amount of the minimum insurance coverage required therein. [However,] [t]he policy exclusion will operate as to any amount above the statutory minimum." Id. at 587, 390 S.E.2d at 569, syl. pt. 4.
We note, first, that Dotts was decided strictly with respect to the exclusion's invalidity under the financial responsibility law and not West Virginia Code § 33-6-31(a). Second, we observe that, in any event, the statute requires that named insureds and permissive users be insured against liability for death or bodily injury sustained or loss or damage occasioned "as a result of negligence in [their] operation or use of" the insured vehicle. Id. (emphasis added). It is thus logical to conclude that, because West Virginia Code § 33-6-31(a) does not require that named insureds and permissive users be similarly insured for death, bodily injury, loss, or damage caused as a result of intentional torts committed in their operation or use of the insured vehicle, an intentional tort exclusion would not violate West Virginia Code § 33-6-31(a) and, therefore, would be enforceable beyond the mandatory minimum limits of West Virginia Code § 17D-4-2. Contrary to the intentional torts exclusion in Dotts , in this case, an exclusion that excludes coverage for a permissive but negligent user of an insured vehicle violates West Virginia Code § 33-6-31(a) and is, thus, inoperable even beyond the mandatory statutory minimum limits.
Our holding in Imgrund is likewise distinguishable from the case at bar. That case involved whether an "owned but not insured" exclusion could preclude a driver of a motorcycle involved in a collision with an uninsured motorist from obtaining uninsured motorist coverage under his parent's policy where no premium was paid by the insureds for that vehicle. See W. Va. Code § 33-6-31(b) (requiring motorists to have uninsured motorist coverage in minimum amounts established by West Virginia Code § 17D-4-2 ). We held that "[a]n ‘owned but not insured’ exclusion to uninsured motorist coverage is valid and enforceable above the mandatory limits of uninsured motorist coverage required by W. Va. Code §§ 17D-4-2 ... and 33-6-31(b)[,]" but that such an exclusion is ineffective and void to the extent it "attempts to preclude recovery of statutorily mandated minimum limits of uninsured motorist coverage." 199 W. Va. at 188, 483 S.E.2d at 534, syl. pt. 4, in part. Imgrund is distinguishable from the present case because (1) an "owned but not insured" exclusion does not violate West Virginia Code 33-6-31(a), see W. Va. Code § 17D-4-12(b)(1) (requiring a motor vehicle liability policy to "designate ... all vehicles with respect to which coverage is thereby to be granted"), and (2) West Virginia Code § 33-6-31(a) very clearly requires that permissive users of insured vehicles must be insured "against liability for death or bodily injury sustained ... within the coverage of the policy [.]" Id. , in relevant part (emphasis added).
We also look to our decision in Burr , which involved an accident caused by the driver of a pickup truck that had been borrowed for the driver's personal use from the insured, a motor vehicle dealership owner. Among other issues, the Court addressed the applicability of the insurance policy's "dealer plates" endorsement exclusion, which stated that "[a]ny auto you own while used with ... [dealer plates] ... is a covered automobile ... but only while the auto is: (A) Used in your garage business, or (B) Rented to a customer...." 178 W. Va. at 403 n.9, 359 S.E.2d at 631 n.9. The insurance company argued that this exclusion comported with West Virginia Code § 33-6-31(a) and should be equated with the statute's language "that enables an exclusion for ‘any person specifically excluded by any restrictive endorsement.’ " 178 W. Va. at 403, 359 S.E.2d at 631. This Court rejected that argument, concluding that the "statutory phrase ‘person[ ] specifically excluded’ " cannot be "interpreted to include a category which refers to no specified person" as contained in the "dealer plates" endorsement. Id. at 404, 359 S.E.2d at 632. To conclude otherwise, the Court reasoned, would be contrary to the plain meaning of West Virginia Code § 33-6-31(a) ; therefore, we held that, to be effective under the omnibus clause, "an exclusion must specifically designate by name the individual or individuals to be excluded. Since the ‘dealer plates’ endorsement in [the] ... policy did not so designate [the specific driver involved in the accident], it was null and void as to him." Id. at 404-05, 359 S.E.2d at 633 (footnote omitted). Thus, we concluded in Burr that the "dealer plates" endorsement exclusion was void and unenforceable in toto because it failed to comport with the plain requirements of West Virginia Code § 33-6-31(a).
Finally, this Court has held that provisions that purport to "limit, reduce or nullify" the liability coverage mandated by West Virginia Code § 33-6-31(a) are likewise void and unenforceable in their entirety. In Gibson v. Northfield Insurance Company , 219 W. Va. 40, 631 S.E.2d 598 (2005), the Court addressed the validity of a "defense within limits" provision in an automobile liability insurance policy purchased by the City of Charleston. In such a provision, "all costs of defense are chargeable against, and thereby erode or reduce, the indemnification policy limits" such that "[w]hen the policy limits are exhausted – whether through the payment of claims to third parties or the payment of defense costs – the insurance company's obligation to provide coverage and a defense terminates[.]" Id. at 42, 631 S.E.2d at 600. The Court in Gibson observed that, of "the required elements of a motor vehicle insurance policy" sold in West Virginia, as set forth in West Virginia Code § 33-6-31(a), "[n]otably absent ... is any requirement that an automobile liability insurance policy ... expend the policy limits to protect the named insured against the fees and expenses incurred ... in defending claims" such as what was provided for in the defense within limits provision of the City's policy. Finding that such a provision violates West Virginia Code § 33-6-31(a) and the intent of the Legislature, we held:
In Gibson , one of the plaintiffs was injured and the other's decedent was killed when their motorcycles collided with an ambulance owned by the City of Charleston. 219 W. Va. at 43, 631 S.E.2d at 601. The City had purchased an insurance policy with a $1 million limit for automobile liability coverage. Id. Many months after a complaint was filed against the City, the plaintiffs learned that over thirty percent of the $1 million coverage had been consumed by defense litigation expenses, "and that the amount of insurance coverage continued to be reduced by ongoing defense attorney fees and costs." Gibson , 219 W. Va. at 44, 631 S.E.2d at 602 (footnote omitted). The parties ultimately settled for the amount that remained, with one of the parties reserving the right to seek declaratory relief as to the validity of the "defense within limits" provision and the amounts "spent by the insurance company on defense costs to the date of the settlement." Id.
Id. at 47, 631 S.E.2d at 605.
Id. at 47, 631 S.E.2d at 605.
W.Va. Code, 33-6-31(a) [1998] expressly requires that a motor vehicle insurance policy contain a provision insuring the named insured and any other person responsible for the use of or using the motor vehicle against liability to another for death, bodily injury, loss or damage sustained as a result of negligence in the operation or use of such vehicle. Any additional provision in a motor vehicle insurance policy which tends to limit, reduce or nullify that ... liability coverage ... is void and ineffective as against public policy.
Gibson , 219 W. Va. at 41, 631 S.E.2d at 599, syl. pt. 3, in part. Because the "defense within limits" provision violated West Virginia Code § 33-6-31(a), it was void and ineffective in its entirety.
Based upon all of the foregoing, and in light of West Virginia Code § 33-6-31(a) ’s clear and unambiguous language requiring motor vehicle liability insurance policies to insure permissive users against liability for death or bodily injury sustained or loss or damage occasioned within the coverage of the policy as a result of the permissive user's negligence in operating or using an insured vehicle, we now hold that when an exclusion in a motor vehicle liability insurance policy violates West Virginia Code § 33-6-31(a) because it would deny coverage to a permissive user of an insured vehicle, the exclusion is void, and the insurance policy must provide coverage to the permissive user up to the full limits of liability coverage available under the policy.
IV. Conclusion
The certified question having been answered, we remand this case to the United States Court of Appeals for the Fourth Circuit for further proceedings.
Certified Question Answered.
JUSTICE WALKER concurs and reserves the right to file a concurring opinion.
JUSTICE ARMSTEAD dissents and reserves the right to file a dissenting opinion.
JUSTICE BUNN, deeming herself disqualified, did not participate in the decision of the case.
JUDGE SADLER, sitting by temporary assignment.
Walker, Justice, concurring:
I concur with the reasoning of the majority opinion. I write to amplify the distinction between the question certified by the Fourth Circuit and that answered by my dissenting colleague.
"When the language of an insurance policy is contrary to statute and therefore void, the policy should be construed to contain the coverage required by West Virginia law." So, I ask which language in the United Financial policy violates which statute ? The Fourth Circuit answered that question when it held that a provision in the United Financial policy that would operate to exclude Mr. Perry—a permissive user—from liability coverage for Mr. Ball's injuries violates West Virginia Code § 33-6-31(a) (2015). "Any provision in an insurance policy which attempts to contravene W.Va.Code, 33–6–31(a), is of no effect," so the offending provision is now inoperable as to Mr. Perry.
Adkins v. Meador , 201 W. Va. 148, 153, 494 S.E.2d 915, 920 (1997).
Syl. Pt. 2, Burr v. Nationwide Mut. Ins. Co. , 178 W. Va. 398, 359 S.E.2d 626 (1987).
Under West Virginia Code § 33-6-17 (1957),
[a]ny insurance policy ... issued and otherwise valid which contains any condition or provision not in compliance with the requirements of [Chapter 33 of the West Virginia Code], shall not be thereby rendered invalid but shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy ... been in full compliance with this chapter.
Applied here, § 33-6-17 means that the lawful terms of the United Financial policy remain in effect, and the policy is to be applied according to those terms. Those terms make $1,000,000 of liability coverage available to Mr. Perry, an amount far greater than the minimums set by the Motor Vehicle Safety Responsibility Law, W. Va. Code §§ 17D-1-1 to 17D-6-7 (the MVSRL). The valid policy terms do not violate the MVSRL, so I see no need to construe the policy vis à vis that law rather than simply apply the policy's lawful terms.
The cases cited by the dissent do not dictate otherwise. As the majority explains, in Jones v. Motorist Mutual Insurance Co. , the named-driver exclusion didn't violate § 33-6-31(a) ; it violated § 17D-4-2(b). That's why this Court held that the named-driver exclusion was inoperable only "up to the limits of financial responsibility required by" § 17D-4-2 —the exclusion wasn't voided by § 33-6-31(a) so it remained effective after the coverage mandated by the MVSRL was read into the policy. Dotts v. Taressa J.A. , Ward v. Baker , and Dairyland Ins. Co. v. East follow the same pattern: the exclusions passed muster under § 33-6-31(a) but not the MVSRL. That is not the pattern the Fourth Circuit has asked us to address, here.
See Jones v. Motorists Mut. Ins. Co. , overturned due to legislative action , 177 W. Va. 763, 766, 356 S.E.2d 634, 637 (1987) ("But beyond the mandatory twenty thousand dollar bodily injury for one person, forty thousand dollar bodily injury for two or more persons, and ten thousand dollar property damage minimum coverage requirements, Code 33–6–31(a) [1982] allows an insurer and an insured to agree to a ‘named driver exclusion’ endorsement.")
Syl. Pt. 3, in part, id.
See Syl. Pt. 4, Dotts v. Taressa J.A. , 182 W. Va. 586, 390 S.E.2d 568 (1990) ("An intentional tort exclusion in a motor vehicle liability insurance policy is precluded under our Motor Vehicle Safety Responsibility Law, W.Va.Code, 17D–2A–1 , et seq., up to the amount of the minimum insurance coverage required therein. The policy exclusion will operate as to any amount above the statutory minimum." (emphasis added)).
See Syl. Pt. 3, Ward v. Baker , 188 W. Va. 569, 425 S.E.2d 245 (1992) ("Where a valid named driver exclusion is present in an insured's insurance policy pursuant to West Virginia Code § 33–6–31(a) (1982) and where a third party personal injury claim arises against the insured under a family purpose doctrine theory of liability from an automobile accident where the named excluded driver was operating the vehicle without the insured's consent, the insured's insurer need only provide the minimum mandatory liability coverage set forth in West Virginia Code § 17D–4–2 (1991)." (emphasis added)).
See Syl. Pt. 2, Dairyland Ins. Co. v. East , 188 W. Va. 581, 425 S.E.2d 257 (1992) ("A named insured exclusion endorsement is invalid with respect to the minimum coverage amounts required by the West Virginia Motor Vehicle Safety Responsibility Law, West Virginia Code §§ 17D-1-1 to 17D-6-7 (1991 & Supp. 1992). Above the minimum amounts of coverage required by West Virginia Code § 17D-4-12 (1992), however, the endorsement remains valid.").
Imgrund v. Yarborough , 199 W. Va. 187, 193–94, 483 S.E.2d 533, 539–40 (1997), follows the same pattern—an exclusion that is valid and enforceable but cannot be used to deny the requisite, minimum amount of uninsured motorist coverage.
I am not swayed by the dissent's reference to West Virginia Code § 33-6-31(k) and Syllabus Point 3 of Deel v. Sweeney . Syllabus Point 3 explicitly relates to first-party coverage; it states that "[i]nsurers may incorporate ... exclusions in an automobile insurance policy as may be consistent with the premium charged, so long as any such exclusions do not conflict with the spirit and intent of the uninsured and underinsured motorists statutes. " Further, in Deel , after detailing the history of § 33-6-31(k), this Court observed that "[t]he optional underinsured motorist coverage and paragraph (k) of Code, 33–6–31 appear to go hand-in-hand." So, I disagree with my dissenting colleague that § 33-6-31(k) connects § 33-6-31(a) —requiring coverage for the insured's and permissive user's liability to third parties—to the mandatory, minimum liability coverage required by the MVSRL, and so caps the liability coverage otherwise available to Mr. Perry.
Syl. Pt. 3, Deel v. Sweeney , 181 W. Va. 460, 383 S.E.2d 92 (1989).
Id.
Id. at 463, 383 S.E.2d at 95 (emphasis added).
At bottom, the Fourth Circuit's question is not as complicated as United Financial would make it. As the majority correctly observes, § 33-6-31(a) plainly states that "all motor vehicle insurance policies [are required] to insure permissive users of insured vehicles ‘against liability for death or bodily injury sustained ... within the coverage of the policy ... as a result of negligence in the operation or use of such vehicle by’ the permissive user." Without the offending coverage exclusion, the remaining terms of the United Financial policy provide liability coverage to Mr. Perry up to $1,000,000—coverage that is not contrary to statute because it exceeds the minimum liability coverage required by the MVSRL. So, the reformed coverage terms are not subject to construction and must be applied as written, including the amount of liability coverage available to permissive users like Mr. Perry. For these reasons, I concur with the majority that application of those policy terms dictates that Mr. Perry is entitled to the full limits of coverage available to him as a permissive user.
Ball v. United Fin. Cas. Co. , 248 W.Va. 164, 887 S.E.2d 597, 602 (2022) (quoting W. Va. Code § 33-6-31(a) ).
Armstead, Justice, dissenting:
In this case, Rodney Perry allegedly backed a truck into, and injured, Greg Ball. The United States Circuit Court of Appeals for the Fourth Circuit has asked us to state whether the vehicle's insurer, United Financial Casualty Company, must provide Mr. Perry either (a) the full amount of coverage available under its automobile liability insurance policy (the "Policy") or (b) the minimum amount of coverage required by the Motor Vehicle Safety Responsibility Law, W. Va. Code §§ 17D-1-1 to 17D-6-7 (the "MVSRL"). In practical terms, the question is whether United Financial is obligated for $1 million of liability coverage or $25,000 of liability coverage.
See W. Va. Code § 17D-4-2(b) (eff. 2015) (defining "proof of financial responsibility" as "proof of ability to respond in damages for liability ... arising out of the ... use of a motor vehicle ... in the amount of $25,000 because of bodily injury to or death of one person in any one accident ...").
Ordinarily, the Policy's terms and conditions would control, but in this case, the Policy includes language that purports to exclude coverage because Mr. Perry was driving a truck belonging to Milton Hardware, LLC , and because Mr. Ball was Milton Hardware's employee. See United Fin. Cas. Co. v. Ball , 941 F.3d 710, 714-15 (4th Cir. 2019) (describing the Policy's "Employee Indemnification and Employer's Liability exclusion" (the "Exclusion")). According to the Fourth Circuit, this Exclusion or "limitation of coverage for a permissive user of an insured vehicle contravenes West Virginia Code § 33-6-31(a) [(eff. 2015)] and ... renders the exclusion unenforceable." United Financial , 941 F.3d at 717. Nevertheless, this conclusion "must be understood in context." United Fin. Cas. Co. v. Milton Hardware, LLC , No. CV 3:17-2002, 612 F.Supp.3d 613, 616 (S.D. W. Va. Mar. 31, 2020) (memorandum opinion and order). "When the language of an insurance policy is contrary to statute and therefore void," that is not the end of the matter. Adkins v. Meador , 201 W. Va. 148, 153, 494 S.E.2d 915, 920 (1997). On the contrary, we must construe "the policy ... to contain the coverage required by West Virginia law." Id. Thus, the question before us is what level of coverage West Virginia law requires when the exclusion, an aspect of the bargain between United Financial and Milton Hardware, cannot be enforced because it contravenes West Virginia Code § 33-6-31(a).
We have answered a similar question in a previous opinion issued by this Court. In the Syllabus of Jones v. Motorists Mut. Ins. Co. , we held that "[a] ‘named driver exclusion’ endorsement in a motor vehicle liability insurance policy in this State is of no force or effect up to the limits of financial responsibility required by W.Va.Code, 17D–4–2 [1979]"; nevertheless, "above those mandatory limits ... a ‘named driver exclusion’ endorsement is valid under W.Va.Code, 33–6–31(a) [1982]." 177 W. Va. 763, 356 S.E.2d 634 (1987), overturned due to legislative action (emphasis added). We applied the same rule in Syllabus Point 4 of Dotts v. Taressa J.A. , 182 W. Va. 586, 390 S.E.2d 568 (1990) (holding that "[a]n intentional tort exclusion ... is precluded under ... [the MVSRL] up to the amount of the minimum insurance coverage required therein" but enforceable "as to any amount above the statutory minimum"); Ward v. Baker , 188 W. Va. 569, 573, 425 S.E.2d 245, 249 (1992) (noting that the insurer had "paid into court the mandatory minimum $20,000 bodily injury coverage" and that, "due to the existence of the valid named driver exclusion, [the insurer] [wa]s not responsible for any damages in excess of the $20,000"); Syllabus Point 2 of Dairyland Ins. Co. v. East , 188 W. Va. 581, 425 S.E.2d 257 (1992) (holding that "[a] named insured exclusion endorsement is invalid with respect to the minimum coverage amounts required by the ... [MVSRL]" but that "[a]bove the minimum amounts of coverage required by West Virginia Code § 17D-4-12 (1992) ... the endorsement remains valid"); and Imgrund v. Yarborough , 199 W. Va. 187, 193–94, 483 S.E.2d 533, 539–40 (1997) (holding "that an ‘owned but not insured’ exclusion to uninsured motorist coverage is valid and enforceable above the mandatory limits of uninsured motorist coverage required by W. Va.Code §§ 17D–4–2 (1979) (Repl. Vol. 1996) and 33–6–31(b) (1988) (Supp. 1991)" but that "[t]o the extent that an ‘owned but not insured’ exclusion attempts to preclude recovery of statutorily mandated minimum limits of uninsured motorist coverage, such exclusion is void and ineffective ..."). The majority appears to go to great lengths in an attempt to distinguish these precedents, many of which were correctly cited by the United States District Court in its decision that is the subject of the current appeal before the Fourth Circuit Court of Appeals. However, we have yet to overrule any of these cases, and I believe they reflect a clear pattern that the Fourth Circuit described more than thirty years ago: "When West Virginia has found that an attempt to exclude or restrict coverage violated state law, it has voided the restriction or exclusion only up to the level of minimum coverage. It has permitted it to operate above this minimum." Nationwide Mut. Ins. Co. v. Cont'l Ins. Co. , 943 F.2d 49, ––––, 1991 WL 181130, at *3 (4th Cir. 1991) (per curiam) (unpublished) (emphasis added). In my view, this is an entirely correct statement of our law, and I see no reason to depart from it in this case. Accordingly, I would hold that United Financial is only obligated to provide Mr. Perry the minimum amount of liability coverage required by the MVSRL (i.e., $25,000), and I would hold that the Exclusion is enforceable above that amount.
See W. Va. Code § 33-6-31h(c) (eff. 2015) (stating that insurers need not "provide any coverage" for "any person ... specifically excluded from coverage under the provisions of a motor vehicle liability policy").
We likewise endorsed this rule in Burr v. Nationwide Mut. Ins. Co. , 178 W. Va. 398, 405 n.10, 359 S.E.2d 626, 633 n.10 (1987) (noting our holding "in Jones that a driver exclusion in an automobile policy is inoperative up to the limits of liability insurance required under W.Va. Code, 17D–4–12" and stating that the "dealer plates" endorsement in question would "also be invalid under the analysis used in Jones .").
The majority opinion, however, adopts a different rule that finds the Exclusion void and ineffective to limit United Financial's obligation to provide Mr. Perry the "full limits" of liability coverage available under the Policy (i.e., $1 million). According to the majority opinion, West Virginia Code § 33-6-31(a) requires this result because it forbids any motor vehicle liability insurance policy to be issued unless it insures permissive users, like Mr. Perry, "against liability for death or bodily injury sustained or loss or damage occasioned within the coverage of the policy ...." Id. (emphasis added).
However, as United Financial points out, West Virginia Code § 33-6-31 also states that it does not "prevent any insurer from incorporating in such terms, conditions and exclusions as may be consistent with the premium charged." Id. § 33-6-31(k) (emphasis added). That is not to say that subsection (k) grants insurers unfettered discretion to eliminate mandatory statutory coverages. It does not. As we held in Syllabus Point 3 of Deel v. Sweeney , "[i]nsurers may incorporate such terms, conditions and exclusions in an automobile insurance policy as may be consistent with the premium charged, so long as any such exclusions do not conflict with the spirit and intent of the uninsured and underinsured motorists statutes." 181 W. Va. 460, 383 S.E.2d 92 (1989) (emphasis added).
The majority opinion holds, based on Syllabus Point 3 of Gibson v. Northfield Ins. Co. , 219 W. Va. 40, 631 S.E.2d 598 (2005), that any provision of a motor vehicle insurance policy that "tends to limit, reduce or nullify" the coverage required by § 33-6-31(a) is altogether "void and ineffective as against public policy." However, Gibson , itself, reveals that, in certain circumstances, § 33-6-31(a) yields to other pertinent statutory provisions. See Gibson , 219 W. Va. at 42, 631 S.E.2d at 600, syl. pt. 5 (holding that an insurance company may incorporate limiting terms and conditions that are inconsistent with the provisions of W. Va. Code § 33–6–31 into an insurance policy where such terms are permitted under W. Va. Code § 29–12A–16(a) ).
Accordingly, though I agree § 33-6-31(a) does not allow United Financial to entirely deny coverage to Mr. Perry as a permissive user, I believe that § 33-6-31(k) makes the Exclusion applicable beyond the statutory coverage limits set forth in Chapter 17D of the Code. I further believe that our previous holding in Jones supports this interpretation of the interplay between these statutory provisions. In Jones , we recognized an apparent "lack of harmony between this omnibus statute [i.e., § 33-6-31(a) and its express authorization to exclude specified persons] and the specific requirements of Chapter 17D of the Code concerning financial responsibility and minimum levels of insurance." Jones , 177 W. Va. at 766, 356 S.E.2d at 637. To reconcile this seeming inconsistency, we adopted "a common sense reading of [the] statutes in their entirety" and reasonably "conclude[d] that the legislature intended in Chapter 17[D] to provide a minimum level of financial security to third-parties who might suffer bodily injury or property damage from negligent drivers"; beyond that amount, we concluded that " Code 33–6–31(a) [1982] allows an insurer and an insured to agree to a ‘named driver exclusion’ endorsement." Id.
The same common sense reasoning applies here. On the one hand, § 33-6-31(k) authorizes "any insurer" to incorporate "such terms, conditions and exclusions as may be consistent with the premium charged." Thus, § 33-6-31(k) would seem to support the Exclusion's complete denial of coverage to Mr. Perry on the facts of this case. On the other hand, § 33-6-31(a) clearly requires that liability policies must include coverage for permissive drivers, and § 17D-4-12(b)(2) (eff. 2015) requires each such policy to provide liability coverage to such permissive users "in the amounts required in" § 17D-4-2. In addition, § 17D-4-2(b) defines "proof of financial responsibility," for relevant purposes, as "proof of ability to respond in damages for liability ... in the amount of $25,000 because of bodily injury to or death of one person in any one accident[.]" Thus, I believe that §§ 33-6-31(a), 17D-4-2(b), and 17D-4-12(b)(2), when read together, require United Financial to extend at least $25,000 of liability coverage to Mr. Perry in his capacity as a permissive user. However, reconciling these statutory provisions, and applying the previous decisions of this Court, I disagree with the majority's conclusion that United Financial is required to provide the full $1 million of liability coverage to Mr. Perry in this case. This is particularly true under the unique facts of this case in which Mr. Perry, and not an employee of Milton Hardware, was driving Milton Hardware's truck when it allegedly struck Mr. Ball, himself a Milton Hardware employee. Instead, I would follow Jones and hold that exclusions envisioned under § 33-6-31(k), but inconsistent with § 33-6-31(a) ’s requirement that permissive drivers be covered, would have no force or effect up to the limits of financial responsibility required by § 17D-4-2(b) ; but above those limits, such exclusions would be enforceable. Because the majority opinion renders the Employee Indemnification and Employer's Liability exclusion entirely void and unenforceable in this case, even beyond the required coverage amounts set forth in W. Va. Code § 17D-4-2(b), I respectfully dissent.