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"The Supreme Court of Appeals of West Virginia Issues a Favorable Decision for West Virginia's Insurance Industry: American States Ins. Co. v. Surbaugh (No. 11-0086)"
On February 6, 2013, the Supreme Court of Appeals of West Virginia issued its opinion in American States Ins. Company v. Surbaugh ("Surbaugh"). The Court issued a new syllabus point, concluding that "the issue of whether an insurer has brought a policy exclusion to the attention of an insured is to be resolved by the trial court." This is an excellent decision for the insurance industry in West Virginia!
In Surbaugh, Plaintiff's son, who was an employee at a gun shop, was shot and killed on June 6, 1997, when a fellow employee accidently discharged a firearm while demonstrating to a customer how to load the firearm. Plaintiff entered into a settlement with the fellow employee and the gun shop owner for $1.5 million. Plaintiff agreed not to execute, in exchange for an assignment of Defendants' potential claims against insurer, American States.
Plaintiff argued that the "employee exclusion" provision in the policy was ambiguous, not conspicuous, and/or not properly communicated to the owner. During discovery, the evidence revealed that the gun shop owner received his policy in October 1995, and renewed his policy for the period October 1996 to October 1997. The gun shop owner testified he was never verbally told about the exclusions.
The trial court denied motions for summary judgment, finding that the "employee exclusion" in the policy was not ambiguous or conspicuous, but that there was a question of fact as to whether the exclusionary language was brought to the attention of the insured. At trial, the jury concluded that the exclusionary language was not brought to the attention of the insured, and rendered a verdict in favor of Plaintiff.
The Supreme Court of Appeals of West Virginia reversed. The Court authored a new Syllabus Point:
As a general rule, the issue of whether an insurer has brought a policy exclusion to the attention of an insured is to be resolved by the trial court.
(See attached Surbaugh decision at p. i)
The Court agreed with the trial court's conclusion that the exclusionary language was unambiguous. The Supreme Court noted that this policy language was not new, and had been found unambiguous by other courts. (Surbaugh, p. 16).
The Court agreed with the trial court's conclusion that the exclusionary language was conspicuous. The Court rejected, among other things, plaintiff's argument that the exclusionary provision was not conspicuous because the policy did not contain a table of contents. (Surbaugh, p. 18).
The Court disagreed with the trial court's conclusion that a jury had to decide whether the exclusionary language was brought to the attention of the insured. The Court explained that while it is true that, under McMahon, an insurer seeking to invoke an exclusion "must bring such provisions to the attention of the insured," this issue will remain, as a general rule, a question for the trial court:
It is clear to this Court that Luikart's application of Syllabus point 10 of McMahon, that an insurer bring exclusionary language to the attention of an insured, did not remotely suggest that this was a mandatory jury question. In fact, we wish to make clear, and so hold, that, as a general rule, the issue of whether an insurer has brought a policy exclusion to the attention of an insured is to be resolved by the trial court.
(Surbaugh, p. 11). Examining the facts of the case, the Court noted:
In the instant proceeding, there is nothing "deceptive or misleading" in the plain and unambiguous exclusions in the policy. Consequently, there is no basis to suggest that American States had to do more than demonstrate that it communicated in writing to Mr. Grimmett that he should read the policy and its exclusions and contact American States if he had concerns.
(Surbaugh, p. 24). The Court further explained:
In other words, American States fulfilled its obligation to bring the exclusion to the attention of Mr. Grimmett, but Mr. Grimmett failed to carry out his duty to read the policy. The law of this State is clear in holding that "[a] party to a contract has a duty to read the instrument."
(Surbaugh, p. 25)(citations omitted).