Farm Family Cas. Ins. Co. v. Elwood

523 F.Supp.3d 875

FARM FAMILY CASUALTY INSURANCE COMPANY, Plaintiff,

v.John K. ELWOOD, a/k/a Jack Elwood, Betty Elwood, John Kevin Elwood, Stephen Lee Diblasi, Deborah Grace Elliot-Smith, Ruth Eugenia Whitner Laura Ann Dinert, Nancy Sue Elwood Edward J. Sea, Personal Representative of Tyrone N. Sea and Administrator of his Estate, Edward J. Sea, Personal Representative of Andromena K. Kesner and Administrator of her Estate, Edward J. Sea and Rachel Kesner, individually and as guardians and next friends of J.K., a minor, Defendants.

CIVIL ACTION NO. 5:19-cv-00892

United States District Court, S.D. West Virginia, at Beckley.

Signed March 3, 2021

David L. Wyant, Bailey & Wyant, Jason P. Pockl, Dinsmore & Shohl, Wheeling, WV, for Plaintiff.

Jeffrey S. Rodgers, Lewisburg, WV, W. Mark Burnette, Ocala, FL, for Defendants Edward J. Sea, Tyrone N. Sea, Andromeda K. Kesner, Rachel Kesner, A Minor.

MEMORANDUM OPINION AND ORDER

Frank W. Volk, United States District Judge Pending are Plaintiff Farm Family Casualty Insurance Company's ("FFCIC") Motion for Summary Judgment [Doc. 15] and Defendants Edward J. Sea and Rachel Kesner's¹ (collectively "Defendants") Motion for Summary Judgment [Doc. 17]. The matters have been fully briefed and are ready for adjudication.

I.

This declaratory judgment action involves a May 11, 2019, house fire at 7th Avenue in Hinton. [Docs. 18 at 2, 19 at 1]. Two of Edward J. Sea and Rachel Kesner's children died in the fire. Mr. Sea and another child received burns. [Id. ]. Three liability insurance policies putatively cover the house, all issued by FFCIC. [Docs. 18 at 3–4, 19 at 2]. Only two of the policies are here at issue.

The first policy is a Special Farm Package 10 Policy ("SFP Policy"), with limits of $2 million in the aggregate and $1 million per occurrence. [Docs. 18 at 3, 19 at 2]. The second insurance policy is a Commercial Policy, with limits of $1 million in the aggregate and $1 million per occurrence. [Docs. 18 at 4, 19 at 2]. The Commercial Policy also contains an anti-stacking endorsement which provides as follows:

The following condition is added to SECTION IV CONDITIONS OF THE:

COMMERCIAL GENERAL LIABILITY COVERAGE PART; and LIQUOR LIABILITY COVERAGE PART

Two or More Coverage Forms of Policies Issued By Us

If any "occurrence" or offense covered under this policy is also covered in whole or in part under any other coverage form of policy issued to you by us or any of our affiliates including but not limited to prior policies issued to you by us or any of our affiliates, the total limit of the companies’ liability under all such coverage forms and policies covering the "occurrence" or offense, combined, is the single highest applicable limit of liability of one of the policies which cover the "occurrence" or offense. This provision does not apply to policies written by us or any of our affiliates as insurance that specifically applies in excess of this insurance.

All other provisions of the policy remain unchanged.

[Doc. 1-10 at 20 (capitalization in original)]. FFCIC and Defendants agree that whether the anti-stacking endorsement applies is a question of law involving no contested issues of material fact. [Docs. 13, 14].

FFCIC and Defendants moved for summary judgment on July 16, 2020. FFCIC offers three contentions. First, it asserts the anti-stacking endorsements are valid and enforceable. [Doc. 16 at 5–6 (citing Gov't Employees Ins. Co. v. Sayre , 239 W. Va. 300, 302–303, 800 S.E.2d 886, 888–89 (2017) (holding anti-stacking language valid in underinsured motorist context))]. Second, FFCIC claims the anti-stacking endorsement is clear and unambiguous and applies here. [Id. at 8]. Third, it notes that numerous courts have upheld anti-stacking language. [Id. at 9–11].

Defendants respond that policy provisions are only enforceable when not contrary to a statute, regulation, or public policy. [Doc. 20]. The Supreme Court of Appeals of West Virginia has held that insurance policies, as contracts of adhesion, must be scrutinized to ensure that both parties receive the benefit of the bargained-for exchange. [Id. at 6–7]. Defendants claim that the only appropriate cost of a policy providing no additional coverage would be nothing. [Id. at 15]. Defendants also assert that the underinsured motorist coverage cases cited by FFCIC are inapplicable here. [Id. at 7–8]. They additionally contend that some of the underinsured motorist cases are "wrongly decided" and "clearly against public policy." [Id. at 11].

In its amended reply, FFCIC claims there is no statute, regulation, or public policy which contradicts the anti-stacking endorsement. [Doc. 28 at 3]. FFCIC notes the Supreme Court of Appeals has concluded that anti-stacking language in liability policies is not contrary to law. [Id. at 4 (citing State Auto. Mut. Ins. Co. v. Youler , 183 W. Va. 556, 565, 396 S.E.2d 737, 746 (1990) )]. FFCIC also claims that second guessing the value obtained though the Commercial Policy is inappropriate inasmuch as insurance is purchased for security and peace of mind and not financial gain. [Id. at 5]. Furthermore, FFCIC claims that the SFP Policy and the Commercial Policy are complimentary; although both policies cover three of the same properties, including the property in this case, each policy covers different additional properties. [Id. at 6].

In its cross-motion for summary judgment, Defendants claim that the anti-stacking endorsement is ambiguous and in violation of West Virginia public policy. [Doc. 18]. Based upon their assertion that the anti-stacking endorsement is an amendment to the Commercial Policy, they additionally contend that an ambiguity results when reading the policy as a whole. [Id. at 16 (referencing provisions in Doc. 1-10 at 2)]. Defendants also claim that inasmuch as FFCIC failed to provide a discount for the Commercial Policy, the exclusion of coverage is inconsistent with the premium charged. [Doc. 18 at 17–18]. If true, this would violate West Virginia public policy as a premium would have been paid for no additional coverage. [Id. at 18–19]. Finally, Defendants assert that "stacking" is not at issue here as there are two different policies covering the same property for the same risk at the same time. [See id. at 10–11 (admitting there is no state case providing direct guidance but analogizing from underinsured motorist cases)].

In its amended response,² FFCIC asserts that the plain language of the anti-stacking endorsement controls regardless of whether Defendants actually aim to "stack" coverage. [Doc. 29-1 at 4–5]. FFCIC also argues that the contract, even read in its entirety, lacks any ambiguity. [Id. at 10–11]. Finally, FFCIC claims the lack of a discounted premium does not bar stacking, as the policies do not only cover identical properties or contain identical coverages. [Id. at 12–13].

In reply, Defendants reiterate that the anti-stacking endorsement is irrelevant as there are two policies for which separate premiums were paid. [Doc. 22 at 2]. Defendants then reassert that a policy which provides no additional coverage yet has a non-zero cost violates public policy. [Id. at 6]. Defendants then claim that an ambiguity arises because other insurance language conflicts with the anti-stacking endorsement. [Id. at 7–8]

II.

A. Governing Standards

Title 28 U.S.C. § 2201(a) provides for the institution of declaratory judgment actions in federal court:

In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

28 U.S.C. § 2201(a). District courts have "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States." 28 U.S.C. § 1332(a)(1). Federal courts are generally obliged "to insure that, in all cases where a federal court is exercising jurisdiction solely because of ... diversity ..., the outcome of the litigation in the federal court should be substantially the same ... as it would be if tried in a State court." Guar. Trust Co. of N.Y. v. York , 326 U.S. 99, 109, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) (discussing Erie R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ).

Federal Rule of Civil Procedure 56 provides that summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The burden is on the nonmoving party to show that there is a genuine issue of material fact for trial. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The nonmoving party must do so by offering ‘sufficient proof in the form of admissible evidence’ rather than relying solely on the allegations of her pleadings." Guessous v. Fairview Prop. Invs., LLC , 828 F.3d 208, 216 (4th Cir. 2016) (quoting Mitchell v. Data Gen. Corp. , 12 F.3d 1310, 1316 (4th Cir. 1993) ). The Court must "view the evidence in the light most favorable to the [nonmoving] party." Tolan v. Cotton , 572 U.S. 650, 657, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014) (internal quotation marks omitted); Variety Stores, Inc. v. Wal-Mart Stores, Inc. , 888 F.3d 651, 659 (4th Cir. 2018).

When faced with cross-motions for summary judgment, the Court applies the above standard and must consider "each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law." Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003) (internal quotation marks omitted). "The court ... cannot weigh the evidence or make credibility determinations." Jacobs v. N.C. Admin....