David A. Jividen, Esq.
Bordas, Bordas & Jividen
Wheeling, West Virginia
Attorney for the Plaintiff
Charles D. Bell, Esq.
J. P. McMullen, Jr., Esq.
Wellsburg, West Virginia
Attorneys for the Defendant
JUSTICE NEELY delivered the Opinion of the Court.
CHIEF JUSTICE BROTHERTON did not participate.
RETIRED JUSTICE MILLER sitting by temporary assignment.
1. A settlement of an underlying claim in a bad faith
practices case against an insurance carrier is an ultimate
resolution of a cause of action within the meaning of Jenkins v.
J.C. Penny Cas. Ins., Co., 167 W. Va. 597, 280 S.E.2d 252 (1981).
2. A cause of action for insurance bad faith may arise
even if there has been a settlement and release of the underlying
case against the tortfeasor so long as the release does not cover
the insurer and the insurer is, or should be, aware of the
possibility of a bad faith action at the time it agrees to the
3. Punitive damage awards in insurance bad faith cases
are not prohibited under W. Va. Code, 33-11-4(9) .
4. Violation of W. Va. Code, 33-11-4(9)  is
tortious conduct that may give rise to a cause of action by a
spouse for loss of consortium.
This case presents three certified questions from the
United States District Court for the Northern District of West
Virginia that concern insurance bad faith. Because it appears to
the federal court that there is no controlling precedent on these
issues, the federal court requests that the following questions be
(1) Whether the settlement of the underlying tort case against the tortfeasor precludes a separate and independent recovery against the tortfeasor's insurer arising out of its alleged bad faith insurance practices when the third-party plaintiff made a voluntary settlement of a disputed personal injury claim and settles the property damage claim for the sum demanded which includes a sum for inconvenience.
(2) Whether West Virginia Code §33-11- 4(9) authorizes the recovery of punitive damages given the situation described in Question 1.
(3) Whether the wife of the plaintiff has a separate cause of action against the tortfeasor's insurer for loss of consortium arising out of the insurer's alleged bad faith insurance practices.
We answer "no" to question one and "yes" to the second and third
The plaintiff in this case, Jeffrey W. Poling, was driving his pick-up truck on West Virginia State Route 2 when it was hit from the rear by an automobile driven by William M. Bonar, and insured by the defendant, Motorists Mutual Insurance Company. At the time of the accident, Mr. Bonar was drunk and was arrested at the scene for driving under the influence of alcohol. The automobile Mr. Bonar was driving was apparently borrowed from his father without permission or knowledge. Further, Mr. Bonar did not have a valid driver's license at the time of the accident. As a result of the accident, Mr. Poling's pick-up truck was forced off the road where it flipped over and traveled 300 feet down an embankment. Consequently, the Poling vehicle was a total loss.
After the accident, Mr. Poling was transported to
Wheeling Hospital where he was treated for neck and back pain, as
well as abrasions to his back, ribs and ankle. Mr. Poling's
condition required follow-up visits to Dr. Thomas Romano, a
rheumatologist and pain management specialist. Dr. Romano
diagnosed Mr. Poling as suffering from severe myofascial pain
syndrome and prescribed medications and bed rest. The parties
disagree on the full extent of Mr. Poling's injuries. Mr. Poling
contends that he remained unable to return to work for six months
and lost wages for that period. Motorists' expert, on the other
hand, contends that Mr. Poling's injuries were not as severe as he claims and that Mr. Poling could have gone back to work soon after
the accident. The property damages were, however, never disputed.
Mr. Poling avers that only after twelve months of
repeated attempts to resolve the property damage to his pick-up
truck and his personal injuries was the matter settled. Shortly
before the suit between Mr. Poling and the Bonars was to go to
trial, Motorists Mutual agreed to pay Mr. Poling the policy limits
of $100,000 for personal injury and $6,300 for property damage.
The settlement was made, checks drafted, and a release tendered
that contained a release of the tortfeasor and Motorists Mutual.
Although Mr. Poling was willing to release the tortfeasor, he
refused to release Motorists. Motorists sought to compel
settlement, but the circuit judge ruled that there was no meeting
of the minds with respect to releasing Motorists. Motorists agreed
to pay the agreed settlement despite the fact that it was not
included in the release. The plaintiff subsequently brought suit
in the United States District Court for the Northern District of
West Virginia against Motorists Mutual for bad faith insurance
Motorists Mutual argues that the settlement of the
underlying tort claim precludes an unfair claim settlement
practices suit against it. In reaching this conclusion, Motorists
relies on language in Jenkins v. J.C. Penny Cas. Ins., Co., 167 W. Va. 597, 280 S.E.2d 252 (1981) stating that a cause of action must
be "ultimately resolved" before a bad faith action can be brought.
More specifically, Motorists argues that our holding in Jenkins
that a cause of action for statutory bad faith under W. Va. Code,
33-11-4(9)  accrues when the underlying case is "ultimately
resolved," means that there must be underlying litigation that has
concluded in a judicial determination. Motorists' main contention
is that a voluntary settlement is not a judicial determination and
thus not an ultimate resolution of the cause of action. We
disagree. Although a voluntary settlement is not a judicial
determination, it is an ultimate resolution of a cause of action.
Nowhere in Jenkins did this Court state that "ultimately
resolved" means a judgment was obtained rather than a settlement.
A settlement is one of many ways in which a case may be ultimately
resolved. The important fact of this case is that Mr. Poling did
not release Motorists in the settlement. By not releasing
Motorists in the settlement and by bringing that fact to Motorists'
attention, Mr. Poling reserved his right to bring a bad faith
action against Motorists. The insurer, Motorists, was obviously
aware of the potential for a bad faith action in this case when it
agreed to the settlement because it petitioned the court in the
underlying tort case to compel settlement after the plaintiff
refused to release it. Therefore, we find that a cause of action
for insurance bad faith may arise even if there has been a settlement and release so long as the release does not cover the
insurer and the insurer is, or should be, aware of the possibility
of a bad faith action at the time it agrees to the settlement.
The second question posed here is whether W. Va. Code, 33-11-4(9)  authorizes the recovery of punitive damages. We see no reason why this Court should carve out an exception to punitive damage awards in bad faith cases. Punitive damages are designed to punish and deter malicious and mean-spirited conduct. TXO Production v. Alliance Resources, 187 W. Va. 457, 419 S.E.2d 870, 887 (1992). As this Court noted in Garnes v. Fleming Landfill Inc., 186 W. Va. 656, 413 S.E.2d 897, 903 (1991):
Another function of punitive damages is to encourage good faith efforts at settlement. Often in lawsuits, there is a disparity of bargaining power between the plaintiff and defendant. In most cases, the defendant has a resource advantage over the plaintiff and is able to draw out a trial into a prolonged blizzard of mindless motions, countless continuances, and dreadful delay.
The mere fact that after months of delay and hassle the insurance company deigns to speak to the injured party and settles the case for the policy limits after realizing that the plaintiff is not going to accept some outlandish low-ball offer, does not automatically preclude the plaintiff from later bringing a bad faith action that includes a request for punitive damages.
Furthermore, there are good policy reasons for permitting
a bad faith action that may include a count for punitive damages
after an egregiously untimely settlement that go to this Court's
efforts to keep insurance premiums within reasonable bounds. As
the facts of the case before us indicate, many hours of lawyer time
went into incompetently handling this case-- a case that ultimately
ended in the payment of the full policy limits. Yet everyone knows
that early settlements are cheap settlements. Without the
possibility of bad faith claims, hourly billing schemes will
encourage lawyers to mine every seam of fool's gold from every
possible motion, deposition opportunity, interrogatory exchange,
declaratory judgment action, and occasion justifying a petition for
extraordinary relief, leaving the policy holders paying the
freight. Thus, without the possibility of bad faith actions to
call the attention of senior company management to the abuses that
hourly billing inherently generate, premiums will go through the
roof and insurance will become unaffordable to the average person.
For these reasons, we hold that punitive damages are
recoverable in insurance bad faith cases despite the fact that
there may have been a settlement of the underlying tort action.
With that said, the plaintiff in this case must still show that
punitive damages are appropriate in this particular case. That is,
the plaintiff must show that Motorists knew Mr. Poling's claim was
proper and willfully, maliciously, and intentionally delayed payment in order to attempt to obtain a less than just settlement.
Berry v. Nationwide Mut. Fire Ins. Co., 181 W. Va. 168, 381 S.E.2d
The final question is whether the wife of a plaintiff in an insurance bad faith case may recover damages for loss of consortium. Consortium is a right, arising from the marital union, to have performance by a spouse of all the duties and obligations assumed by the marriage relationship, including the right to society, companionship and services. King v. Bittinger, 160 W. Va. 129, 231 S.E.2d 239 (1976). At common law "consortium" was defined as consisting of (1) services, (2) society and (3) sexual relations, and the husband was entitled to recover damages from a tortfeasor when one or more of these elements of the relationship with his wife were lost or impaired due to an injury to her. Belcher v. Goins, 184 W. Va. 395, 400 S.E.2d 830 (1990). W. Va. Code, 48-3-19a  states that "[a] married woman may sue and recover for loss of consortium to the same extent and in all cases as a married man." Therefore, either spouse may be entitled to consortium damages if the other is injured by a tortfeasor.
Violation of W. Va. Code, 33-11-4(9)  is tortious
conduct that may give rise to a cause of action by a spouse for
loss of consortium. In such a case, however, the spouse must show that the loss of consortium flows from the insurer's delay and not
from the original injury suffered by the other spouse. The
defendant argues that the Polings were in the process of obtaining
a divorce. This is an issue for the jury to consider when arriving
at the proper amount of damages for loss of consortium; it does
not, however, in and of itself, preclude a cause of action for loss
In answering these questions this Court is not passing
upon the merits of this particular case. The Polings still need to
prove that there was indeed a bad faith settlement, that Motorists'
conduct was so outrageous that punitive damages are justified, and
that Mrs. Poling deserves a monetary award for loss of consortium.
Accordingly, the certified questions having been
answered, this case is ordered dismissed from the docket of this
Certified questions answered.