Catching Up with the Fall 2009 Term

Where does the time go? I posted in July, went to London and forgot to update this blog. This week, I learn that one of the all time great bloggers, Mark Herrmann is leaving the Drug & Device Blog because he is going in house. I decided to get back at it. So, here are the hits from the Fall 2009 Term of the Supreme Court of Appeals of West Virginia.

The Court held a one year statute of limitations applied to statutory and common law bad faith actions in Noland v. Virginia Reciprocal.

The Court upheld an arbitration provision in an employment contract, finding the FAA did not preempt judicial review to determine whether an agreement is valid and enforceable under state law. While finding boilerplate contract to be one of adhesion, it was not unconscionable and therefore enforceable. State ex rel Crites v Clawges.

Under Leslie Equipment v. Wood Resources, service by certified mail under Rule 4 does not itself establish personal jurisdiction over an out of state defendant. Warner v Wingfield is a rare opinion affirming Rule 11 sanctions against a party for a filing and pursuing a case, without performing any investigation.

The third time being the charm, the Court, on remand from SCOTUS, again reversed a $50M verdict in Caperton v. Massey: "Based upon our thorough consideration of the parties’ arguments, the relevant case law, and the record on appeal, this Court concludes, based upon the existence of a forum-selection clause contained in a contract that directly related to the conflict giving rise to the instant lawsuit, that the circuit court erred in denying a motion to dismiss filed [defendants]."

Another rare one was Jones v. Setser which reversed a defense verdict because of argument by counsel, using a cartoon, that plaintiff and his expert would make a malpractice claim regardless of the defendant physician's actions.

No preemption of state law claims over formaldehyde exposure in modular homes under Manufactured Home Construction and Safety Standards Act, 42 U.S.C. §§ 5401– 5426, or promulgated regulations. Harrison v. Skyline Corp.

The Court overruled longstanding statute of limitations precedent in Dunn v. Rockwell, establishing a new five step test for the application of the discovery rule and eliminating the element of defendant fault: 1. identify applicable SOL; 2. identify when the requisite elements of the cause of action occurred; 3. determine when the statute of limitation began to run by determining when the plaintiff knew, or by the exercise of reasonable diligence should have known, of the elements of a possible cause of action; 4. if plaintiff is not entitled to the benefit of the discovery rule, then determine whether the defendant fraudulently concealed facts that prevented the plaintiff from discovering or pursuing the cause of action; 5. the court or the jury should determine if the statute of limitation period was arrested by some other tolling doctrine. "Only the first step is purely a question of law; the resolution of steps two through five will generally involve questions of material fact that will need to be resolved by the trier of fact."

More to come.....

End of Term - Statute of Limitations

Stuyvesant v. Preston Cty Comm'n affirms the dismissal of a complaint as barred by the statute of limitations. Plaintiff's decedent hung himself in the county jail. Suit was filed over two years later, but the complaint asserted it was within two years of the family first learned that the decedent had medical treatment before his suicide. The Supreme Court found there was no allegation that a wrongful act related to the medical care caused the death:

More specifically, as per the fourth part of the Bradshaw test, the appellant failed to make even the barest of allegations in his complaint, or in any of his subsequent filings below, "that [a] wrongful act, neglect or default of that person or entity [had] a causal relation to the decedent's death." In that regard, the appellant's complaint did not allege, even upon information and belief, that the Sheriff fraudulently concealed or misrepresented material facts surrounding the death of [the decedent]. In that regard, the appellant states that the discovery of the invoice during the month after [the decedent's] death, in and of itself, caused the appellant to "doubt the Sheriff's assertion that [the decedent] committed suicide." Such a broad and disconnected allegation is woefully insufficient to allow for the statute of limitations to be tolled in this case. Had the appellant alleged any causal connection or nexus between his perception of the evasive reaction by the Sheriff in response to questions about the invoice and Mr. Daft's subsequent death by hanging, the result of this case may have been different. However, that is not the situation before this Court. Thus, the circuit court did not commit error in finding that there was no factual basis to permit application of the discovery rule.

This opinion is interesting for the Court's close focus (perhaps a la Twombly/Iqubal?) on what the pleadings state. I have argued several statute of limitations cases in our Court, and have advanced the argument that in "discovery rule" situations, plaintiffs should have to plead the facts required to excuse the late filing. This opinion comes the closest.

End of Term - Jury Selection

State v. Newcomb, a criminal case, discusses jury selection, clarifying that a clear statements of bias by a juror require disqualification; however, responses to general questions are not enough and require further inquiry.

When a prospective juror makes a clear statement of bias during voir dire, the prospective juror is automatically disqualified and must be removed from the jury panel for cause. However, when a juror makes an inconclusive or vague statement that only indicates the possibility of bias or prejudice, the prospective juror must be questioned further by the trial court and/or counsel to determine if actual bias or prejudice exists. Likewise, an initial response by a prospective juror to a broad or general question during voir dire will not, in and of itself, be sufficient to determine whether a bias or prejudice exists. In such a situation, further inquiry by the trial court is required. Nonetheless, the trial court should exercise caution that such further voir dire questions to a prospective juror should be couched in neutral language intended to elicit the prospective juror's true feelings, beliefs, and thoughts and not in language that suggests a specific response, or otherwise seeks to rehabilitate the juror. Thereafter, the totality of the circumstances must be considered, and where there is a probability of bias the prospective juror must be removed from the panel by the trial court for cause.

More End of Term

In Murphy v. Eastern Ass. Coal, the Court overrules a three year old case, Savilla v. Speedway SuperAmerica, LLC, 219 W. Va. 758, 639 S.E.2d 850 (2006). "Although this Court is loathe to overturn a decision so recently rendered, it is preferable to do so where a prior decision was not a correct statement of law."

Savilla had limited the persons who can sue employers for "deliberate intention" under West Virginia Code § 23-4-2(c) (2005), to widows and widowers, children, and dependents as set forth in the statute. Murphy rereads the statute's reference to the "employee" to mean the "estate" of the employee can bring a claim for wrongful death, thereby increasing the beneficiaries to those listed in the wrongful death statute. Justice Workman, who wrote the decision, was plaintiff's counsel in Savilla. Essentially, the Savilla dissent penned by Justice Davis' is now the majority opinion with the new court. Savilla was law for less than three years, I believe.

End of Term Report - Insurance Coverage Case

Catching up after a busy June with a couple of posts on opinions issued by the WV Supremes.

Boggs v. Camden Clark, an opinion by Justice Benjamin, answers certified questions from the United States District Court regarding insurance coverage for a verdict in a medical negligence case of $6.5 million, including $3 million in punitive damages. The defendant hospital had an insurance policy with St. Paul which provided $1M coverage for medical negligence claims, with a $2M self insured retention (SIR), and excess coverage of $15M. St. Paul had issued a reservation of rights, and contested payment of the verdict because the findings of the jury included intentional conduct not covered under the policy , as well as conduct excluded under these provisions. The hospital filed a declaratory judgment action, and the US District Court certified two questions to the Supreme Court of Appeals of West Virginia. The Court's answers are in bold, and are the two new syllabus points in the decision.

1. Under West Virginia law, when an insured is found liable for a tort, and the complaint indicates that the tort could be based on conduct that the insurance policy covers, on conduct that the insurance policy does not cover, or both, and when the jury verdict does not specify which conduct gave rise to the insured's liability, does the insured bear the burden of proving that the liability was based on covered conduct, or does the insurer bear the burden of proving that the liability was based upon non-covered conduct?

Answer: Where a policy of insurance does not impose a duty to defend upon the insurer and the insured has controlled the defense of the underlying claims, if a court determination regarding allocation of a jury verdict between the claims covered by the terms of the policy and the claims not covered by the terms of the policy is sought, the insured has the burden of proof to establish proper allocation.

2. Under West Virginia law, when a jury awards punitive damages against an insured, and the punitive damages could be based on a claim covered by the insurance policy, on a claim not covered by an insurance policy, or both, does the insured bear the burden of proving that the punitive damages were based upon a covered claim, or does the insurer bear the burden of proving that the punitive damages were based on a non-covered claim?

Answer: In order to obtain indemnification under a policy of insurance which does not exclude punitive damages and under which there is no duty to defend, an insured who has controlled the defense in a case resulting in a punitive damage award and who seeks a court determination regarding allocation of the award has the burden of proving that the claim or claims on which the punitive damage award is based is covered by the terms of the policy.

The court's also discusses the need to submit special interrogatories to the jury in the underlying tort litigation to clarify which claims are covered and which are not.

As an initial matter, we note that an insurer who undertakes the defense of a suit against its insured must meet a high standard of conduct. Duke v. Hoch, 468 F.2d 973, 978 (5th Cir.1972); Gay & Taylor, Inc. v. St. Paul Fire & Marine Ins. Co., 550 F.Supp. 710, 714-16 (W.D.Okla.1981). The right to control the litigation carries with it certain duties. Traders & Gen. Ins. Co. v. Rudco Oil & Gas Co., 129 F.2d 621, 627 (10th Cir.1942). One of these is the duty not to prejudice the insured's rights by failing to request special interrogatories or a special verdict in order to clarify coverage of damages. See Gay & Taylor, 550 F.Supp. at 716. The reason for this is that when grounds of liability are asserted, some of which are covered by insurance and some of which are not, a conflict of interest arises between the insurer and the insured. If the burden of apportioning damages between covered and non-covered were to rest on the insured, who is not in control of the defense, the insurer could obtain for itself an escape from responsibility merely by failing to request a special verdict or special interrogatories. Duke, 468 F.2d at 979. The insurer is in the best position to see to it that the damages are allocated; therefore, it should be given the incentive to do so.

The opinion makes clear that its holding is limited to cases where the insured, with a large SIR, hires counsel and controls the defense. Where the carrier has the duty to defend, retains counsel and controls the defense, the answers may well be different. The case now goes back to the District Court for the ultimate determination of coverage.

Mountain Stage

For one of the many great things about West Virginia, I went to Mountain Stage in Princeton on Sunday night. As always, an excellent show. Julie Adams and Larry Groce of the Mountain Stage Band were in fine voice, and the Band was as tight as ever.

I went to see Steve Earle, especially to hear him sing stuff from the new Townes album. It was just Steve and an acoustic guitar to end out the show, and he didn't disappoint, with a talking folk beginning about Townes, followed by Pancho and Lefty, and adding a pretty rousing Copperhead Road. The rest of the show was a real pleasant surprise, with folks I had not heard before. Doyle Lawson & Quicksilver did some classic bluegrass and gospel with some soaring harmonies. I probably liked Sara Watkins the best as she showed some considerable range from her days with Nickel Creek. King Wilkie was sort of interesting with a mix of bluegrass and almost Beatle like songs. The Lovell Sisters were the most surprising with a tight set of fiddle, mandolin and dobro backed by bass and drums.

If you ever get the chance to see Mountain Stage, it is well worth the price of a ticket, which ranges from $12 to 18 bucks.

Recusal after Caperton v. Massey

The United States Supreme Court, in Caperton v. Massey, held that West Virginia Supremre Court Justice Benjamin should have recused himself from hearing the case because of financial support of his campaign of $3 million dollars by the president of the defendant company. Factually, the contributions were to an independent advocacy group which also collected money from others. Due to the "extreme" amount of contributions, the SCOTUS found there was an appearance of impropriety which rose to the level of a denial of due process.

The SCOTUS made it clear that there was no evidence of actual bias by Justice Benjamin. Thus, it is the "appearance of impropriety" or perception of unfairness that drove the ruling. The dissents, by Justice Roberts and Scalia, focused on the questions raised and unanswered by the ruling.

A couple of thoughts on this one. First, disclosure: Massey and its subsidiaries are clients of my law firm.

This opinion reverses one case based on what the Court calls "extreme" facts, particularly the amount of money contributed. Otherwise, it provides no guidance as to what amount of contribution, and by whom, rises to the level of requiring recusal. In this respect, the opinion is reminiscent of Jacobellis v. Ohio, 378 U.S. 184, 197 (1964), where Justice Stewart, describing hard core pornography stated "I shall not today attempt further to define the kinds of material I understand to be embraced . . . [b]ut I know it when I see it...." Future litigants, faced with the issue of contributions, will find little to answer the question of whether due process requires recusal from this opinion. As the dissents note, the opinion raises a host of questions it simply doesn't answer.

What this opinion means is unclear. The WV Court will now rehear the case sans Justice Benjamin. In the future, it appears that litigants will have to consider the issue of recusal in any case where there is a party or counsel who was a significant supporter of a justice in our partisan political elections. Do "bundled" donations - raised from many different people through the efforts of an organization (the dissents note the Trial Lawyers raised $2M in the same election) count toward the due process total? It seems to me that as long as there are partisan political elections, there will be supporters, donors and independent groups who get involved. For me, I agree with the ABA - merit selection with broad based commissions doing the selection in a transparent public way is better than the fistfights we and other states are seeing in our judicial elections. See, ABA Report, "An Independent Judiciary" (1997).
http://www.abanet.org/poladv/documents/indepenjud.pdf

Unfortunately, this is another black eye for the WV Justice system, ironically in a case where the Court finds no actual bias or prejudice on the part of Justice Benjamin.

Anyone interested in this decision should actually read it. Here is the link:

http://www.supremecourtus.gov/opinions/08pdf/08-22.pdf