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IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2005 Term
PAUL LUIKART, AS ADMINISTRATOR FOR THE ESTATE
OF THE DECEDENT, PAUL TRAVIS LUIKART,
Plaintiff Below, Appellant,
VALLEY BROOK CONCRETE & SUPPLY, INC.,
Defendant Below, Appellant.
MOTORISTS MUTUAL INSURANCE COMPANY,
A MUTUAL INSURANCE COMPANY,
Plaintiff Below, Appellee,
VALLEY BROOK CONCRETE AND SUPPLY, INC., AND
PAUL LUIKART, AS ADMINISTRATOR FOR THE
ESTATE OF DECEDENT, PAUL TRAVIS LUIKART,
Defendants Below, Appellants.
Appeal from the Circuit Court of Putnam County
Honorable Edward Eagloski, Judge
Civil Action Nos. 99-C-283 and 00-C-257
Submitted: February 22, 2005
Filed: May 10, 2005
Thomas R. Goodwin Diana
Richard D. Owen
A. Ruley, Jr.
Johnny M. Knisely II Pullin,
Fowler & Flanagan, PLLC
Raymond S. Franks II Beckley,
Goodwin & Goodwin, LLP Attorneys
for the Appellee,
Charleston, West Virginia Motorists
Mutual Insurance Company
Attorneys for the Appellants,
Paul Luikart, as Administrator
for the Estate of the Decedent,
Paul Travis Luikart, and as
assignee of the rights of Valley
Brook Concrete and Supply, Inc.
The Opinion of the Court was delivered PER CURIAM.
SYLLABUS BY THE COURT
1. A circuit court's entry of summary
judgment is reviewed de novo
. Syllabus point 1, Painter v. Peavy
192 W. Va. 189, 451 S.E.2d 755 (1994).
2. An insurer wishing to avoid liability
on a policy purporting to give general or comprehensive coverage must make exclusionary
clauses conspicuous, plain, and clear, placing them in such a fashion as to make
obvious their relationship to other policy terms, and must bring such provisions
to the attention of the insured. Syllabus point 10, National Mutual
Insurance Co. v. McMahon & Sons, Inc.
, 177 W. Va. 734, 356 S.E.2d
488 (1987), abrogated on other grounds by Potesta v. United States Fidelity & Guaranty
, 202 W. Va. 308, 504 S.E.2d 135 (1998).
3. 'Where the provisions of an insurance
policy contract are clear and unambiguous they are not subject to judicial construction
or interpretation, but full effect will be given to the plain meaning intended.'
Syllabus, Keffer v. Prudential Ins. Co.
, 153 W. Va. 813, 172 S.E.2d
714 (1970). Syllabus point 2, West Virginia Fire & Casualty Co.
, 216 W. Va. 40, 602 S.E.2d 483 (2004).
4. 'With respect to insurance contracts,
the doctrine of reasonable
expectations is that the objectively reasonable expectations of applicants
and intended beneficiaries regarding the terms of insurance contracts will
be honored even though painstaking study of the policy provisions would have
negated those expectations.' Syllabus Point 8, National Mut. Ins. Co. v.
McMahon & Sons, Inc.
, 177 W. Va. 734, 356 S.E.2d 488 (1987). Syllabus
point 9, Murray v. State Farm Fire & Casualty Co.
, 203 W. Va.
477, 509 S.E.2d 1 (1998).
Paul Luikart (hereinafter referred to as Mr.
Luikart), as administrator for the estate of his deceased son, Paul Travis
Luikart (hereinafter referred to as Travis), and as assignee of the
claims of Valley Brook Concrete and Supply, Inc. (hereinafter referred to as Valley
Brook), appeals from an order entered January 12, 2004, (See
footnote 1) by the Circuit Court of Putnam County. By that order,
the circuit court found that no coverage existed under the exclusionary language
of the commercial general liability insurance policy issued to Valley
Brook by Motorists Mutual Insurance Company (hereinafter referred to as Motorists).
On appeal, Mr. Luikart argues that the exclusions are void because they were
not disclosed and that Motorists had a duty to offer stop gap insurance.
Based upon the parties' arguments, the record designated for our consideration,
and the pertinent authorities, we affirm the decision of the circuit court.
FACTUAL AND PROCEDURAL HISTORY
The case before us follows the circuit court's
grant of summary judgment in a declaratory judgment action based on exclusions
in an insurance policy. To understand the present posture of the case and the
parties' relationships, it is necessary to have a familiarity with the facts
of the wrongful death action that preceded the filing of the declaratory judgment
A. Wrongful Death Action
is a seller of concrete and related items. An essential part of its business
is the delivery of its products to its customers. Travis Luikart was employed
by Valley Brook as a truck driver. On August 28, 1999, Travis was killed in
a single vehicle accident (See
while delivering concrete within the scope of his employment
for Valley Brook. Mr. Luikart, as the administrator of Travis' estate, filed
a wrongful death action against Valley Brook in the Circuit Court of Putnam
County, wherein he claimed a deliberate intent violation under the West Virginia
Workers' Compensation Act. See
W. Va. Code § 23-4-2(c)(2) (1913) (Repl.Vol. 1994). (See
In this suit, Mr. Luikart alleged that the truck's
suitability for operation had dangerously deteriorated, (See
and that Valley Brook had deliberately and intentionally
exposed Travis to an unsafe working condition. At the time of the accident,
Valley Brook had a commercial general liability policy through Motorists, (See
and tendered defense of the wrongful death action to
its insurer. This wrongful death action was eventually consolidated with a
subsequently-filed declaratory judgment action.
B. Declaratory Judgment Action
Upon receipt of the possible
claim under the policy, Motorists sent a letter dated October 4, 1999, to Brent
Clark, President of Valley Brook. The letter acknowledged
receipt of the wrongful death action and stated an intention to defend based
on a reservation of rights. In June 2000, Motorists filed a declaratory judgment
action seeking a determination that it had no duty to defend against the claim
made by Mr. Luikart or to indemnify Valley Brook. Motorists based its position
on the policy's exclusions for (1)
expected or intended injury; (2) workers' compensation laws; and (3) employer's
liability. Specifically, the policy provides:
COMMERCIAL GENERAL LIABILITY
COVERAGE FORM CG 0001 (07-98)
provisions in this policy restrict coverage. Read the entire policy carefully
to determine rights, duties and what is and is not covered . . . .
SECTION I - COVERAGES
COVERAGE A BODILY INJURY
AND PROPERTY DAMAGE LIABILITY
. . . .
insurance does not apply to:
Expected Or Intended Injury
injury or property damage expected or intended from the standpoint
of the insured. This exclusion does not apply to bodily injury resulting
from the use of reasonable force to protect persons or property.
. . .
Workers['] Compensation And Similar Laws
obligation of the insured under a workers' compensation, disability benefits
or unemployment compensation law or any similar law.
(1) An employee of
the insured arising out of and in the course of:
by the insured; or
duties related to the conduct of the insured's business; or
spouse, child, parent, brother or sister of that employee as a consequence
of Paragraph (1) above.
the insured may be liable as an employer or in any other capacity; and
any obligation to share damages with or repay someone else who must pay damages
because of the injury[.]
C. Consolidation of the Actions
Thereafter, the circuit court consolidated
the wrongful death action with the declaratory judgment action. The matter was
mediated, and Motorists did not offer any settlement monies. However, Valley
Brook and Mr. Luikart entered into a Settlement Agreement. The terms of the agreement
were such that Valley Brook confessed judgment in the amount of three million
dollars; Valley Brook assigned its rights under the insurance policy to Mr. Luikart;
and Mr. Luikart agreed not to execute the judgment against Valley Brook.
The circuit court approved the Settlement
Agreement of the wrongful death action and dismissed the same from the docket,
leaving only the declaratory judgment action for further resolution. Mr. Luikart,
on behalf of the estate and as assignee of Valley Brook's rights, then filed
amended counterclaims in the declaratory judgment action against Motorists seeking
payment for the Settlement Agreement reached with Valley Brook. Motorists moved
to dismiss the counterclaims, and further moved for summary judgment on the coverage
issue. The circuit court granted summary judgment to Motorists on the coverage
issue and dismissed Mr. Luikart's claims. By order entered January 12, 2004,
the circuit court found in favor of Motorists on the basis that the insurance
policy afforded no coverage under the clear and unambiguous exclusions set forth
in the policy. From this adverse ruling, Mr. Luikart appeals to this Court.
STANDARD OF REVIEW
case is before this Court on appeal from the circuit court's order granting summary
judgment in favor of Motorists. A circuit court's entry of summary judgment
is reviewed de novo. Syl. pt. 1, Painter v. Peavy, 192 W. Va.
189, 451 S.E.2d 755 (1994). Thus, in undertaking our de novo review, we
apply the same standard for granting summary judgment that is applied by the
motion for summary judgment should be granted only when it is clear that there
is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify the application
of the law.' Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal
Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963). Syllabus
Point 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d 247
Syl. pt. 2, Painter, 192 W. Va. 189, 451 S.E.2d 755. Moreover,
judgment is appropriate where the record taken as a whole could not lead a rational
trier of fact to find for the nonmoving party, such as where the nonmoving party
has failed to make a sufficient showing on an essential element of the case that
it has the burden to prove.
Syl. pt. 4, Painter, id. We are also cognizant that [t]he circuit
court's function at the summary judgment stage is not to weigh the evidence
and determine the truth of the matter, but is to determine whether there is
a genuine issue for trial. Syl. pt. 3, Painter, id. Mindful
of these applicable standards, we now consider the substantive issues raised
On appeal to this Court, Mr. Luikart assigns
error to the circuit court's determination that the policy language acts to exclude
coverage for the incident involving Travis' death. Mr. Luikart concedes that
the policy language is clear and unambiguous, but, nonetheless, sets forth two
basic arguments: (See footnote
(1) the exclusions were never disclosed to
Valley Brook and are, therefore, unenforceable; and (2) Motorists had a duty
to offer stop gap coverage (See
to Valley Brook.
Motorists responds that the exclusionary
language was placed in boldface print in a conspicuous place in the insurance
policy, and further, Valley Brook's representative testified that he read the
terms and conditions of coverage. Therefore, Motorists urges that because the
exclusionary language is clear and unambiguous as agreed to by the parties, and
because the exclusions were conspicuous within the document, they operate as
written and exclude coverage for Travis' fatal accident. Motorists also argues
that there is no duty to offer stop gap coverage. We will now focus our discussion
on the disclosure issue, then turn our attention to the duty to provide stop
A. Disclosure of Exclusions
West Virginia jurisprudence
imposes a duty to make exclusionary language conspicuous, plain, and clear,
and further imposes a duty to bring such exclusions to the attention of the
insured. In this regard, we have held:
insurer wishing to avoid liability on a policy purporting to give general or
comprehensive coverage must make exclusionary clauses conspicuous, plain, and
clear, placing them in such a fashion as to make obvious their relationship to
other policy terms, and must bring such provisions to the
attention of the insured.
Syl. pt. 10, National Mut. Ins. Co. v. McMahon & Sons, Inc., 177
W. Va. 734, 356 S.E.2d 488 (1987), abrogated on other grounds by Potesta
v. United States Fid. & Guar. Co., 202 W. Va. 308, 504 S.E.2d
135 (1998). Moreover, [a]n insurance company seeking to avoid liability
through the operation of an exclusion has the burden of proving the facts necessary
to the operation of that exclusion. Syl. pt. 7, McMahon, 177 W. Va.
734, 356 S.E.2d 488.
Both parties agree that the exclusionary
language of the policy is clear and unambiguous and that, if applied, it prevents
coverage in this situation. 'Where the provisions of an insurance policy
contract are clear and unambiguous they are not subject to judicial construction
or interpretation, but full effect will be given to the plain meaning intended.'
Syllabus, Keffer v. Prudential Ins. Co.
, 153 W. Va. 813, 172 S.E.2d
714 (1970). Syl. pt. 2, West Virginia Fire & Cas. Co. v. Stanley
216 W. Va. 40, 602 S.E.2d 483 (2004). This Court's review must necessarily
turn to the issues of conspicuousness and disclosure. If the language was both
conspicuous and disclosed, then the plain language of the exclusions must be
In our review of the insurance policy, we
must first consider the conspicuity of the exclusionary language. The term conspicuous is
defined as clearly visible or obvious . . . . [w]hether a printed clause
is conspicuous as a matter of law . . . depends on the
size and style of the typeface. Black's Law Dictionary
2004). In the present case, the exclusionary language was set apart from the
other language by an emboldened subheading entitled Exclusions. Therefore,
the only conclusion that can be reached by the use of the boldface language
is that it was, indeed, conspicuous.
Mr. Luikart maintains that the boldface print
was meaningless because the exclusions were buried within a voluminous document
that consisted of the entire insurance policy. We reject this assertion. Our
examination of the entire document reveals that a portion entitled Schedule
of Forms and Endorsements was included with the policy and served as a
table of contents. The relevant section regarding commercial general liability
coverage was set apart and separately numbered within the document. The table
of contents also delineated the separate sections within the general liability
policy, including the coverage contained therein and the declarations page. Consequently,
while the document as a whole was large, there was sufficient guidance to locate
Mr. Luikart next argues that the exclusions
were not disclosed to Valley Brook; therefore, Mr. Luikart states that Motorists
violated the requirement that, in order for exclusionary language to apply, an
insurer must bring such provisions to the attention of the insured. Syl.
pt. 10, in part, McMahon
, 177 W. Va. 734, 356 S.E.2d 488. We have
also stated that the insurer may avoid liability by proving that the
insured read and understood
the language in question
, or that the insured indicated his understanding
through words or conduct. McMahon
, 177 W. Va. at 742, 356
S.E.2d at 496 (emphasis added) (internal citations omitted); see also Mitchell
, 208 W. Va. 36, 49 n.24, 537 S.E.2d 882, 895 n.24 (2000)
(Methods by which insurers may effectively communicate an exclusion to
an insured to secure his/her awareness thereof may include, but are not necessarily
limited to, reference to the exclusion and corresponding premium adjustment
on the policy's declarations page or procurement of the insured's signature
on a separate waiver signifying that he/she has read and understood the
.) (emphasis added) (internal citations omitted), superseded
by statute as recognized in
Syl. pt. 7, Findley v. State Farm Mut. Auto.
, 213 W. Va. 80, 576 S.E.2d 807 (2002).
In light of the evidence presented to this
Court, we are of the opinion that the exclusionary language was properly disclosed
to Valley Brook. Brent Clark, the President of Valley Brook, and the representative
who contracted for the insurance coverage, (See
testified that he read the terms and conditions of the
coverage. During his deposition, Mr. Clark testified:
Okay. Now, prior to the filing of the lawsuit on behalf of the Luikart estate,
had you ever had occasion to read the policy of insurance which the corporation
had acquired from Motorists Insurance? Just actually sat down and read through
Ma'am, it's two inches think, and I get lost after about seven or eight pages.
What I focus in on are two things, the amounts of my coverages and bodily injury,
collision, comprehension, make sure I have liability coverage. Then I go to my
vehicle listing[ (See
footnote 9) ]
to make sure my vehicles are completely covered
in all three of those areas.
it gets into the terms of when Workers' Comp and when liability takes over, okay, it's
out of my ball court.
I understand your frustration with the length of the policy, Mr. Clark, but do
I understand from your answer that, from the standpoint of reading the terms
and conditions of the insurance, you personally have not done that?
terms and conditions of the coverage, I have.
The complete coverage, cover
to cover, I have not read it cover to cover.
(emphasis supplied) (footnote added). From this testimony, it is apparent that
Mr. Clark read and understood [t]he terms and conditions of the coverage provided
by Valley Brook's policy with Motorists. Moreover, the policy's coverage section
clearly stated that it was subject to various exclusions. The portion of the
insurance policy titled Commercial General Liability Coverage Form, which
contains the relevant exclusionary language, cautions in its first sentence
that [v]arious provisions in this policy restrict coverage. Read the
entire policy carefully to determine rights, duties and what is and is not
Accordingly, we conclude that Motorists sufficiently disclosed the exclusions
to Valley Brook.
B. Stop Gap Coverage
Mr. Luikart next argues
that Motorists had a duty to offer stop gap coverage to Valley
Brook. A stop gap employers' liability policy exists to cover claims
made against a business by injured employees whose claims are not generally
compensable under the workers' compensation system. See Erie
Ins. Prop. & Cas. Co. v. Stage Show Pizza, JTS, Inc.
, 210 W. Va.
63, 68, 553 S.E.2d 257, 262 (2001). The policy exists to 'fill the gaps'
between workers' compensation coverage and an employers' general liability
In short, Mr. Luikart argues that Motorists had a
duty to offer such coverage, and that had such coverage been in place, the
death of Travis Luikart would have been afforded coverage under such policy. (See
In analyzing Mr. Luikart's argument, we first
note that an insurer has no
statutory duty to offer stop gap insurance coverage. (See
In spite of the lack of a statutory duty to offer
such stop gap coverage, Mr. Luikart argues, in essence, that it was reasonable
to expect coverage for the type of accident experienced by Travis. We have
respect to insurance contracts, the doctrine of reasonable expectations is that
the objectively reasonable expectations of applicants and intended beneficiaries
regarding the terms of insurance contracts will be honored even though painstaking
study of the policy provisions would have negated those expectations. Syllabus
Point 8, National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W. Va.
734, 356 S.E.2d 488 (1987).
Syl. pt. 9, Murray v. State Farm Fire & Cas. Co., 203 W. Va.
477, 509 S.E.2d 1 (1998). The application of the doctrine of reasonable expectations
has resulted in a relaxation of our earlier-stated rule that a party to a contract
has a duty to read the instrument. See McMahon, 177 W. Va.
at 741 n.6, 356 S.E.2d at 495 n.6 (rejecting portion of Soliva v. Shand,
Morahan & Co., Inc., 176 W. Va. 430, 345 S.E.2d 33 (1986), which
is based on the general rule that
a party to a contract has a duty to read the contract).
Generally, we have noted that, [i]n
West Virginia, the doctrine of reasonable expectations is limited to those instances
. . . in which the policy language is ambiguous. McMahon, 177 W. Va.
at 742, 356 S.E.2d at 496 (internal citations omitted). [T]he doctrine
of reasonable expectations is essentially a rule of construction, and unambiguous
contracts do not require construction by the courts. McMahon, 177
W. Va. at 742 n.7, 356 S.E.2d at 496 n.7 (internal citations omitted).
Despite this general rule, we note that while
the doctrine of reasonable expectations originally was considered a canon of
construction and thus applied to only ambiguous contracts, a line of cases has
extended the scope of the doctrine beyond circumstances involving ambiguous policy
language. In limited circumstances, the doctrine of reasonable expectations may
be applied even in cases where the policy language is clear and unambiguous. See
American Equity Ins. Co. v. Lignetics, Inc., 284 F. Supp. 2d 399 (N.D.
W. Va. 2003) (applying West Virginia law and recognizing that the doctrine
of reasonable expectations may be applied in cases of clear and unambiguous language).
In Romano v. New England Mutual Life Insurance Co., 178 W. Va. 523,
362 S.E.2d 334 (1987), this Court refused to apply a policy exclusion when promotional
materials provided to the insured did not alert him to the exclusion and, on
the contrary, led him to a reasonable belief
that he was covered under the policy. Romano, 178 W. Va. at 529,
362 S.E.2d at 340. This Court has also found that the doctrine of reasonable
expectations may apply in a situation where an insurer attempts to deny coverage
based on an exclusion that was not communicated to the insured, or where there
is a misconception about the insurance purchased. See Keller v. First Nat'l
Bank, 184 W. Va. 681, 403 S.E.2d 424 (1991) (explaining that, after
a bank's offer to insure was accepted with consideration, the bank had created
an expectation of credit life insurance in the insured even though the bank's
offer had been extended by mistake, and the bank could not deny coverage).
In a subsequent opinion discussing Keller, this Court stated that procedures
which foster a misconception about the insurance to be purchased may be considered
with regard to the doctrine of reasonable expectation of insurance. Costello
v. Costello, 195 W. Va. 349, 352-53, 465 S.E.2d 620, 623-24 (1995)
In the present case, both parties agree that
the exclusionary language is clear and unambiguous on its face. While we recognize
that the doctrine of reasonable expectations can apply in such a situation, we
conclude that it does not apply under the facts of this case. The exclusions
were communicated to the insured. Significantly, the testimony of the President
of Valley Brook illustrates that the terms and conditions of coverage, including
the exclusions, were not only disclosed, but were read by the insured. Therefore,
the doctrine of reasonable expectations does not apply, and Motorists was under
no duty to
provide stop gap coverage.
Accordingly, this Court concludes that the
exclusionary language of the insurance policy was conspicuous due to its emboldened
type letter, and further that it was disclosed to the insured by virtue of a
table of contents and by the testimony of the insured's representative that he
read the terms and conditions of coverage. Moreover, the exclusions were communicated
to the insured and there was no misconception about the insurance purchased.
Further, the doctrine of reasonable expectations does not apply and Motorists
had no duty to offer stop gap coverage. For the foregoing reasons, we affirm
the January 12, 2004, order of the Circuit Court of Putnam County.
The Circuit Court of Putnam
County filed two orders: (1) an Order Granting Summary Judgment and
(2) an order filed contemporaneously therewith titled Findings of Fact
and Conclusions of Law. The latter order contains two different date
stamps, one for January 12, 2004, and one for January 13, 2004. Because the
first order contains only the date stamp of January 12, 2004, we will assume
that date is the correct entry date for both orders.
The record indicates that
the argument was advanced during the early stages of the case that an unidentified
vehicle might have been involved in causing or contributing to the crash. This
fact is relevant insofar as it could trigger the application of other available
insurance coverage. However, this argument was abandoned as the accident investigation
continued and the facts were more fully developed.
The relevant portion of
the statute has been redesignated as W. Va. Code 23-4- 2(d) (2003), without
Mr. Luikart claimed that
the truck's brakes had not been properly maintained. Subsequent to the accident,
the truck was inspected, and it was discovered that one rear brake was totally
inoperable and that the other was critically deficient. The investigation also
revealed that both of these conditions existed at the time of the fatal accident.
We note that the agent
who sold this policy and handled the claim for Motorists was formerly the president
of Valley Brook and is the current president's father.
We recognize that additional
arguments were raised by the parties. However, the manner in which we resolve
this case disposes of our need to address those other issues.
The concept of stop gap
coverage is discussed infra
at Section III, B.
As previously noted, Motorists'
representative was Mr. Clark's father. See infra
The Business Auto
Coverage Form, included as part of the insurance policy, also contains
the same exclusions as does the commercial general liability section of the
We recognize that the trial
court, in its January 12, 2004, order, found that even if the stop gap provision
had been in effect, Motorists still would not be obligated to pay under the
endorsement because there was never an actual trial and final judgment and
Motorists did not consent to the Settlement Agreement between Mr. Luikart and
Valley Brook. However, because we ultimately conclude that there was no duty
on the part of Motorists to offer stop gap coverage, we decline to comment
on this conclusion made by the trial court.
We have recognized that
insurers are statutorily required to offer certain coverage benefits in the
context of automobile insurance. See Bias v. Nationwide Mut. Ins. Co.,
179 W. Va. 125, 365 S.E.2d 789 (1987) (holding that if insurer fails to
comply with statutory duty to offer optional underinsured and uninsured motorist
coverage in commercially reasonable manner, such coverage is included in policy
by operation of law), superceded by statute as recognized in Ammons v. Transportation
Ins. Co., 219 F. Supp. 2d 885 (S.D. Ohio) (recognizing promulgation
of W. Va. Code § 33-6-31d (1993), outlining manner in which insurer
must offer optional uninsured motorist coverage). However, it has been recognized
that, even in the face of such a mandate, [n]o insurer is required to
. . . notify any person of the availability of such optional coverages authorized
by this section except as required by this section. See Burrows
v. Nationwide Mut. Ins. Co., 215 W. Va. 668, 674, 600 S.E.2d 565,
571 (2004) (discussing W. Va. Code § 33-6-31d(e) and reiterating
that the duty to offer optional coverage is limited to those specific circumstances
contained within the statutory language).