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IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2000 Term
DONNA DRAKE GANDEE,
Plaintiff below, Appellee,
ALLSTATE INDEMNITY COMPANY,
Defendant below, Appellant.
Appeal from the Circuit Court of Roane County
Honorable Charles E. McCarty, Judge
Civil Action 98-C-72
REVERSED AND REMANDED
September 19, 2000
Filed: December 5, 2000
L. David Duffield, Esq.
M. Love, III, Esq.
Chad S. Lovejoy, Esq.
L. Harvey, Esq.
The Duffield Law Firm
Huntington, West Virginia
Graff & Love, P.L.L.C.
Attorneys for Appellee
The Opinion of the Court was delivered PER CURIAM.
JUSTICE McGRAW dissents and reserves the right to file a dissenting opinion.
A notice of cancellation
of insurance must be clear, definite and certain. While it is not necessary that
the notice be in any particular form, it must contain such a clear expression
of intent to cancel the policy that the intent to cancel would be apparent to
the ordinary person. All ambiguities in the notice will be resolved in favor of
the insured. Syllabus, Staley v. Municipal Mutual Insurance Co. of West
Virginia, 168 W.Va. 84, 282 S.E.2d 56 (1981).
This is a declaratory judgment
action filed against an insurance company to determine whether a cancellation
notice mailed to a policyholder was effective to terminate various coverages
under an automobile insurance policy.
The Circuit Court of Roane County
found that the insurance company had not effectively cancelled the insurance
policy, holding that the cancellation notice mailed to the policyholder was
ambiguous and did not indicate a clear intent by the insurance company to cancel
the policy. The circuit court therefore held that the policyholder was entitled
to coverage under the policy, and was entitled to recover attorney's fees and
costs from the insurance company.
As set forth below, we agree
with the insurance company that the cancellation notice was not ambiguous, and
was effective to terminate coverage. We therefore reverse the circuit court's
On March 17, 1998, appellee
Donna Drake Gandee purchased an automobile insurance policy from appellant Allstate
Indemnity Company (Allstate). The policy provided liability coverage
of $50,000.00 per person up to $100,000.00 per accident, and $25,000.00 in property
damage coverage. The policy also provided the same limits of uninsured motorist coverage and underinsured motorist coverage. Lastly, the
appellee purchased medical payments coverage with a limit of $5,000.00 per person.
The Allstate policy covered
the period from March 18, 1998, through September 18, 1998, and had a total
premium of $1,216.00. The appellee paid $198.46 on March 17, and agreed to pay
the remaining premium on a monthly basis.
On March 30, 1998, Allstate
mailed a bill to the appellee indicating that the appellee was required to make
her first monthly premium payment of $213.44 by April 18, 1998. It is undisputed
that the appellee did not make any payments to Allstate by that date.
Pursuant to the terms of the
insurance policy, on April 28, 1998, Allstate sent the appellee a document entitled
AUTOMOBILE CANCELLATION NOTICE FOR NON- PAYMENT OF PREMIUM. The
cancellation notice was delivered to and accepted by the appellee via certified
mail. This cancellation notice contained, in bold text, the following warning:
The insurance afforded under
your policy will be terminated effective at 12:01 a.m. Standard Time on June
Additionally, the cancellation notice set forth in a separate block the Cancel
Date and Time of June 6, 1998 at 12:01 a.m. The notice states that the
reason for the cancellation was the appellee's failure to pay her monthly insurance
The appellee did not respond
to Allstate's April 28, 1998 cancellation notice. On June 12, 1998, 6 days after
Allstate contends that the policy was cancelled, the appellee's husband, Karl Gandee, was a passenger in a vehicle driven by Sean Taylor.
Mr. Taylor swerved to avoid another vehicle, lost control of his vehicle, and
Mr. Gandee was killed.
The appellee subsequently filed
a claim against the Allstate policy seeking uninsured motorist coverage, underinsured
motorist coverage, and medical payments coverage for the death of her husband.
Allstate denied the claim, alleging that the policy had been cancelled on June
6, 1998, because of the appellee's failure to pay her monthly premium.
Allstate and the appellee attempted
to negotiate the appellee's claims, and eventually entered into a written contract
indicating that the parties would submit the sole issue of the validity of the
cancellation notice to a circuit court for review. The instant declaratory judgment
action was then filed in the circuit court.
After receiving briefs and motions
for summary judgment from the parties, on July 26, 1999, the circuit court entered
an order granting summary judgment to the appellee. The circuit court found
that the Allstate cancellation notice mailed to the appellee reflected an Amount
Past Due, and concluded that the inclusion and placement of these words
in the notice was intended to induce the appellee to send money to Allstate.
The circuit court therefore concluded that the cancellation notice was ambiguous,
and did not effectively cancel the policy on June 6, 1998. In sum, the circuit
court held that the appellee's claims for her husband's death on June 12, 1998,
would be covered by the policy.
Several weeks later, on August
19, 1999, the circuit court entered a second order compelling Allstate to pay
the appellee's attorney's fees and costs. The circuit court concluded that because
the appellee was successful in her declaratory judgment action against her insurer,
she was lawfully entitled to recover her reasonable attorney's fees and costs
arising from the litigation. See Aetna Cas. & Sur. Co. v. Pitrolo,
176 W.Va. 190, 342 S.E.2d 156 (1986).
Allstate now appeals the circuit
court's two orders.
This Court reviews a circuit
court's entry of a declaratory judgment de novo, since the principal
purpose of a declaratory judgment action is to resolve legal questions. Syllabus
Point 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995). When a declaratory
judgment proceeding involves the determination of an issue of fact, that issue
may be tried and determined by a judge or a jury, just as issues of fact are
tried and determined in other civil actions. W.Va. Code, 55-13-9 .
Any determinations of fact made by the circuit court or jury in reaching its
ultimate judgment are reviewed under a clearly erroneous standard. Cox,
195 W.Va. at 612, 466 S.E.2d at 463.
In the instant case, we are
asked to review the sufficiency of a purported cancellation notice which also
informed the policyholder that the policy was being cancelled because of an
amount past due.
We have previously stated that
the purpose of a cancellation notice is to make the insured aware that the
policy is being terminated and to afford the insured the time to obtain other
insurance prior to termination of the existing policy. Conn v. Motorist
Mut. Ins. Co., 190 W.Va. 553, 557, 439 S.E.2d 418, 422 (1993), quoting
Automobile Club Ins. Co. v. Donovan, 550 A.2d 622, 623 (R.I. 1988). To
achieve this goal, the cancellation notice must be clear, and must unambiguously
inform the policyholder that the policy will be cancelled on a future date. As
we held in the sole syllabus point of Staley v. Municipal Mutual Insurance
Co. of West Virginia, 168 W.Va. 84, 282 S.E.2d 56 (1981):
A notice of cancellation of insurance
must be clear, definite and certain. While it is not necessary that the notice
be in any particular form, it must contain such a clear expression of intent to
cancel the policy that the intent to cancel would be apparent to the ordinary
person. All ambiguities in the notice will be resolved in favor of the insured.
In the instant case, the parties dispute the application of Staley, and
dispute whether the April 28, 1998 cancellation notice contain[ed] such
a clear expression of intent to cancel the policy that the intent to cancel would
be apparent to the ordinary person.
Allstate argues that the cancellation
notice was clear, and points to the unequivocal statement, written in bold text,
that The insurance afforded under your policy will be terminated . . .
The cancellation notice also provided the appellee with a date certain when the
insurance coverage would cease -- June 6, 1998 -- and informed the appellee the
date by which she would have to purchase replacement coverage. Allstate lastly
points to the language, written in large, bold-faced capital letters, that appears
at the top of the cancellation notice: AUTOMOBILE CANCELLATION NOTICE FOR NON-PAYMENT OF PREMIUM.
The appellant argues that this language simply states the reason for cancellation:
the policy was being terminated for failure to pay premiums.
The appellee argues that the
inclusion of the language amount past due creates an ambiguity in
the cancellation notice. The appellee asserts that the placement of this language
near the top of the page would suggest to any policyholder that coverage could
be continued if the policyholder merely paid the amount past due.See
footnote 1 1
After carefully reviewing the
cancellation notice, we do not find the language chosen by Allstate to be in any
way ambiguous. The notice mailed to the appellee would clearly communicate to
an ordinary person that the insurance company intended to cancel coverage under
the policy on June 6, 1998. The inclusion of language in the instant cancellation
notice indicating that the policy was being terminated for failing to pay past
due premiums does not, standing alone, render the notice ambiguous.
The circuit court therefore erred
in its finding that the cancellation notice was ambiguous. Additionally, the circuit
court erred in holding that the appellee was entitled to recover her attorney's
fees and costs from Allstate.
For the reasons set forth above,
the circuit court's July 26, 1999 and August 19, 1999 orders are reversed and
this matter is remanded for further proceedings consistent with this opinion.
Reversed and Remanded.
Footnote: 1 1Allstate
argues that the inclusion of the amount past due language in the cancellation
notice was effective under W.Va. Code, 33-6A-3 , which states (with emphasis
In every instance in which a
policy or contract of automobile liability insurance which has been in effect
sixty days or which has been renewed is canceled by the insurer, the insurer or
its duly authorized agent shall, in the notice of cancellation or at the written
request of the named insured, specify the reason or reasons relied upon by the
insurer for the cancellation. These reasons shall be stated in a written notice
and shall, if not provided in the notice of cancellation, be made within thirty
days after the request: Provided, That there shall be no liability on the part
of, and no cause of action shall arise against, any insurer or its agents or its
authorized investigative sources for any statements made with probable cause by
the insurer, agent or investigative source in a written notice required to be
given pursuant to this section. A notice of cancellation for nonpayment of premium
is not void on the grounds that the notice includes the amount of premium due
or the date by which payment was to be paid.
We reject Allstate's arguments for two reasons, and do
not believe that this statute is applicable to the instant case. First, the policy
in question had not been in effect for sixty days when the cancellation
notice was mailed, as required by the statute. Second, the emphasized language
which Allstate seeks to rely upon was added to the statute and did not take effect until June 12, 1998, the same day that Karl Gandee was killed,
and over 6 weeks after Allstate mailed the cancellation notice to the appellee.
See 1998 Acts of the Legislature, ch. 184.
We therefore examine the arguments of the parties under
existing legal principles.