Professional Documents
Culture Documents
No. 13-1517
ROBERT E. GRAHAM,
Plaintiff Appellant,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA,
Defendant Appellee.
Appeal from the United States District Court for the Southern
District of West Virginia, at Bluefield. David A. Faber, Senior
District Judge. (1:10-cv-00453)
Argued:
Decided:
February 3, 2014
PER CURIAM:
This appeal presents two questions of West Virginia law
pertaining to the enforcement of insurance contracts.
The first
The
alternative
resultant
need
representation
of
leads
the
to
insured
the
to
second
obtain
question:
of
Pittsburgh,
$278,273.56.
Pennsylvania,
Three-quarters
of
for
the
the
judgment
reduced
was
sum
awarded
of
to
liability
action,
with
the
balance
intended
to
2012,
Graham
asserted
entitlement
to
the
aforementioned
inconvenience.
for
summary
judgment,
and,
by
its
Memorandum
See
Graham v. Natl Union Ins. Co. of Pittsburgh, Pa., No. 1:10-cv00453 (S.D. W. Va. Mar. 7, 2013) (the Opinion). 1
On March 14,
conclude
that,
the
district
court
correctly
denied
We therefore
I.
Graham
nonprofit
was
the
Executive
corporations
that
Director
used
state
of
two
and
West
federal
Virginia
funds
to
County,
maintaining
that
Graham
had
manipulated
the
salaries
and
benefits.
That
alleged
malfeasance,
of
the
corporations,
Council
on
Aging,
Inc.,
was
For an
to
elected
[a]ny
or
appointed
official,
executive
officer,
13-5, at 6.
Council on Aging notified National Unions claims agent of
the
State
refused
litigation,
to
tender
but
the
defense.
insurer
Graham
denied
thus
coverage
defended
and
himself
The
Graham
and
prohibit
his
future
involvement
in
their
on
at
last
March
3,
in
hand,
2010,
in
Graham
the
filed
Circuit
the
Court
underlying
of
Mercer
County, alleging that National Union had breached its duty under
the insurance contract to provide him with a defense to the
State action.
District
of
Virginia,
where,
on
February
17,
2011,
the
coverage.
Our
reversal
of
that
judgment
engendered
the
in
the
1332(a)(1).
district
court
pursuant
to
28
U.S.C.
II.
The facts of record in this diversity proceeding are not in
dispute, with the result that the issues on appeal are confined
strictly to the proper interpretation of West Virginia law.
such, our review of the final judgment below is de novo.
As
See
Mort Ranta v. Gorman, 721 F.3d 241, 250 (4th Cir. 2013).
III.
A.
1.
The
body
of
law
developing
the
remedies
afforded
West
to
determine
whether
it
6
was
obliged
to
defend
its
insured,
Pitrolo,
who
had
been
sued
in
three
separate
Aetna denied
the
underlying
matters
and
reimburse
him
for
his
attorney fees.
On review of the circuit courts order, the Supreme Court
of Appeals of West Virginia (the Court) determined that Aetna
was liable not only for the attorney fees relating to the three
negligence proceedings, but also for the fees Pitrolo incurred
in the declaratory judgment action.
and
inconvenience,
circumstance
seized
upon
by
National
Union
in
support
of
its
position
that
the
district
We do not
ascribe
result
great
significance
to
this
aspect
of
the
in
At issue in
to
relinquish
the
policy
proceeds
refused
to
pay,
maintaining
that
after
the
the
husband-and-wife
in
attorney
fees
and
other
consequential
damages,
Hayseeds, 352
Id.
Id.
whenever
breach
is
proved
of
the
insurers
duty
to
predicate
proceeding
(usually
an
adjudication
of
the
for
fees
incurred
to
enforce
the
policy
against
the
like
the
insured
in
Hayseeds,
notwithstanding
the
policy:
either
by
unjustifiably
refusing
to
10
to
authorize
an
award
for
item
of
consequential
denying
inconvenience,
category.
which
We
are
therefore
recovery
merely
conclude
for
other
aggravation
items
that,
in
in
the
West
and
same
Virginia,
district
court
reached
the
contrary
result
by
type
insurance,
(at
issue
Opinion
13,
here
and
and
the
Pitrolo)
latter
type
third-party
(discussed
in
Justice Benjamin
First-party
the
insured
from
its
own
actual
losses
and
expenses
plaintiffs
had
sufficient
contractual
(first-party)
Auto. Ins. Co., 504 S.E.2d 893, 897 (W. Va. 1998) ([T]he common
law duty of good faith and fair dealing . . . runs between
insurers
and
insureds
and
contractual relationship.
is
based
on
the
existence
of
a common law duty of good faith and fair dealing on the part of
insurance carriers toward third-party claimants.).
Here, by contrast, Graham is an acknowledged insured in
privity with National Union under the latters liability policy;
he
is
no
presented
stranger
is
to
the
considerably
contract.
more
Moreover,
narrow
than
in
the
question
Loudin,
i.e.,
ordinarily
contract proceeding.
available
to
the
insured
in
breach-of-
See also Marshall v. Saseen, 450 S.E.2d 791, 797 (W. Va.
1994) (First party insurance means that the insurance carrier
has directly contracted with the insured to provide coverage and
to reimburse the insured for his or her damages up to the policy
limits.).
12
on
the
characterization
third-party.
of
the
of
the
insurance
as
first-party
or
remedies
obtainable
in
bad-faith
action
against
an
as
whether
the
circuit
court
properly
in
Loudin
was
asked
to
categorized
the
The
determine
the
insurers
duties
typical
third-party
claimant,
seeking
recompense
for
the
him/her
injury,
the
policyholder
is
first-party
poses
an
impediment
13
to
the
consequential
damages
Graham seeks.
opportunity
aggravation
and
to
develop
inconvenience
and
present
his
in
connection
evidence
with
the
of
breach
already established.
B.
West
Virginia
law
authorizes
an
award
of
prejudgment
Special damages
expenses,
damages
to
tangible
adjudged
mandatory.
1989).
within
the
personal
Id.
statute,
property
and
If an item of damages
prejudgment
interest
is
defending
against
the
State
lawsuit
are
similar
enough
to
40
(W.
prejudgment
expenses
Va.
interest
deemed
1993),
on
the
a
reimbursable
Court
county
from
affirmed
officials
the
public
the
denial
legal
of
defense
fisc.
In
so
ruling, the Court observed that [w]e are not convinced that the
lower court erred in determining that the [attorney fees] did
not
constitute
similar
out-of-pocket
14
expenditures
and
Id. at 44.
Court
reversed
an
award
holding
particularly
was
those
its
of
prejudgment
interest
on
earned
on
that
attorney
contingency
fees,
basis,
are
Only
after
the
circuit
court
approves
the
Id. at 325.
noted that, because the insured is not typically liable for the
contingent fees until after the verdict or settlement is paid by
the insurer, such expenses are not out-of-pocket as set forth
in the statute.
Graham
notes
Virginia
case,
in
correctly
authorities
that
are
Chafin
attorney
was
that
both
factually
not
fees
an
of
the
pertinent
distinguishable
insurance
incurred
in
case
from
and
litigation
West
his
Miller
involved
only
with
the
insurer.
his
prejudgment
interest
15
claim.
Further,
as
Graham
aspect
attorneys
of
in
Grahams
the
State
private
lawsuit,
fee
it
arrangement
is
apparent
with
that
his
Graham
entry
of
unliquidated
judgment.
beyond
the
Nevertheless,
entry
of
the
judgment
claim
remained
until,
on
remand
We conclude that,
exclude
damages
attorney
fees
from
reach
the
even
of
those
the
West
sustained
Virginia
as
direct
prejudgment
interest statute.
IV.
Pursuant
affirmed
to
the
insofar
as
foregoing,
the
the
court
judgment
below
on
appeal
declined
to
is
award
The judgment is
vacated,
was
however,
opportunity
to
to
prove
the
extent
that
consequential
Graham
damages
in
denied
the
form
the
of
court
for
further
proceedings
consistent
with
this
opinion.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED
17