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   Since 1908
                                        Martin & Seibert, L.C.                         ON THE LAW
                                                                                                               July 2011/Vol. 18 No. 2

                                                                             Court Upholds Recalled Products
Debt Collectors Subject to Action.......................2
                                                                              Exclusion in Baby Crib Death
Court Retains Jurisdiction...................................2
Punitives on Circumstantial Evidence.................3                       In a case successfully litigated by this firm, the U.S.
No UIM for Friendly Fire Death.........................3            District Court for the Northern District of West Virginia has
DRI Bad Faith Compendium..............................4             granted summary judgment to James River Insurance Company
e-Discovery Decision.........................................4      finding no coverage and no duty to defend either the manufacturer
Farrell Appointed Judge.....................................5       or seller of a recalled baby crib in Geiser v. Simplicity, Inc., et al.,
Loss of Consortium Claim Dismissed...............5                  (Civil Action No. 5:10-cv-21, N.D.W.Va., filed June 10, 2011).
In Forma Pauperis Decision................................5                 The case involves a products liability claim alleging
Jury Verdict 97 Times Meds................................6         wrongful death of an infant as a result of a defective crib made by
Agency Dismissed..............................................6     Simplicity, sold at Wal-Mart, which was the subject of a safety
Representative Standing.....................................7       recall. Simplicity’s commercial general liability policy issued
Co-Defendant Must Pay Settlement..................7                 by James River contained a “Recalled Products Exclusion.”
2011 Legislative Enactments...............................8
Notable Verdicts and Settlements...................10                      Applying Pennsylvania law where the contract was
Defunct Companies Can Be Sued.......................12              made, the District Court held the exclusion was “plain, simple
                                                                    and easy to understand.” The exclusion precluded coverage for
CongressAmends Rule 56..................................12
                                                                    any product manufactured, sold, handled or distributed by any
In Memoriam....................................................13
                                                                    insured for all products recalled prior to December, 2007. The
Subpoena Issued From Wrong Court................13
                                                                    Court held the crib was a “product” covered by the exclusion
Martin & Seibert Super Lawyers......................14
No Med Pay in Employer’s Car.......................15                       The crib was the subject of a “voluntary recall” in
Arbitration Challenge Too Late........................15            September, 2007. Simplicity issued “recalls” and “notices”
Negligence and Causation for Jury..................16               permitting customers to obtain a repair kit to replace defective
Wages, Salary, Benefits Exclusion....................16             hardware. The plaintiffs argued that because customers could
Coverage for Hospital.......................................17      repair the product, it was not recalled and therefore outside the
Venue for Breach of Contract Limited..............18                exclusion which the District Court rejected stating: “It strains
Lightning Claims Exceed $1 Billion in 2010......18
                                                                    the definition of recall for the parties to contend that for a recall
                                                                    to be an “actual” recall, a party must return the entire product…
Revised Adjuster Rule......................................18
                                                                    directly to the manufacturer rather than obtaining replacement
Removal Period Not Reset...............................19
                                                                    parts.” The Court also rejected plaintiff’s argument that the
No John Doe Claims For Defendants............19                     death was unrelated to the recall.
Medical Malpractice Damages Cap..................20
No Duty to Warn...............................................20            Because there was no coverage, the Court also found
Court Limits Release........................................21      no duty to defend Simplicity or Wal-Mart, a co-defendant
Qualified Reporter’s Privilege..........................21          and potential additional insured under the James River policy.
Cline Retires, Riley Appointed..........................22          Finally, the Court rejected any argument that the exclusion
Mediation Confidential.....................................22       violated public policy.
Forum Non Conveniens....................................22               Susan Snowden represented James River Insurance
Collateral Estoppel Inapplicable......................23            Company.
Life Insurance Rescission.................................23
         UPDATE ON THE LAW


                  Debt Collectors Now Subject to Private Cause of Action


      Answering a certified question, the West Virginia Supreme Court of Appeals has held the West Virginia
Consumer Credit Protection Act provides consumers a private cause of action against a professional debt collec-
tor.

        In Barr v. NCB Services, Inc., et al. (No. 35709, W.Va., filed June 14, 2011), the Court found the Act,
W.Va. Code § 46A-5-101, et seq., vague because the term “creditor” is not defined. Although finding that pro-
fessional debt collectors are not creditors under the literal definition of the term, the Court reasoned that a literal
interpretation is not in accord with the purpose of the Act.

        Writing for a unanimous Court, Justice Robin Davis applied the term “broadly and liberally” to find that
a professional debt collector qualifies as a creditor. The Court held that where a collector is hired by a creditor
to perform debt-collection services, the collector becomes an agent of the creditor. In bought debt situations, the
Court found the collector “has stepped into the shoes of the creditor” and becomes the creditor as the debt is now
owed to the collector. Under either scenario, the collector is then classified as a creditor, subject to the Act and,
therefore exposed to a private cause of action.




                     Court Can Retain Jurisdiction Following Settlement



       Answering a certified question, the West Virginia Supreme Court has held that a federal court which ap-
proved a class action and retained jurisdiction over the settlement is the only court in which a subsequent claim
can be pursued. Therefore, a West Virginia state court did not have jurisdiction.

         The issue arose in Huston v. Mercedes-Benz USA, LLC, (No. 35702, W.Va., filed June 14, 2011), when
plaintiffs who were members of a class action against Mercedes attempted to sue again in Kanawha County to
enforce the settlement agreement. The Supreme Court noted the federal court expressly retained jurisdiction in its
final dispositional order. Issuing a new syllabus point of law, the Court held that a court must express its intention
to retain continuing jurisdiction over a settlement agreement in its final order approving of the parties’ settlement.
To retain such jurisdiction, the court must either (1) include in its final approval order an express provision retain-
ing jurisdiction over the parties’ settlement agreement or (2) incorporate in its final approval order the precise
terms of the parties’ settlement agreement.

       Because of its ruling on the first certified question, Justice Robin Davis, writing for the majority, deter-
mined the Court did not have jurisdiction and could not consider the second certified question because to do so
would be an improper advisory opinion.

        While concurring in the resolution of the jurisdiction question, Chief Justice Margaret Workman dissented
against the creation of a new syllabus point of state law based upon federal law arguing that the opinion should
only be limited to deciding the jurisdictional questioning by applying federal law and without creating new state
law as well.

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             July 2011
                                                                             UPDATE ON THE LAW


                             Court Upholds Punitive Damages Based
                                   On Circumstantial Evidence

        In reviewing a punitive damages award in a pricing discrimination case between two cable companies,
the West Virginia Supreme Court has created a new syllabus point of law which states: “A plaintiff relying on
circumstantial evidence to establish the cause of a harm is not required to eliminate all other possible causes of
the harm. A plaintiff is only required to submit evidence from which the jury can conclude, by a preponderance
of the evidence, that the defendant’s conduct caused the harm. The fact that there may be other causes of the harm
does not preclude liability.”

        While rendered in the discrimination case, the syllabus point, however, can be used in other civil litigation.
The new point of law was created in Community Antenna Service, Inc. v. Charter Communications VI, LLC, (No.
35703, W.Va., filed June 23, 2011). The appeal stems from a $4 million jury verdict in Wood County with findings
of discrimination, tortious interference with business and punitive damages.

       The verdict was affirmed in a decision authored by Justice Menus Ketchum who found reading the Cable
Television Systems Act permits a private cause of action.

        Rejecting the defendant’s attack on the quality of plaintiff’s evidence, the Court found civil and criminal
verdicts can be returned solely on circumstantial evidence and, therefore, a plaintiff relying on circumstantial
evidence to establish defendant’s conduct caused a harm is not required to exclude all other possible causes.



                      Officer Killed by Friendly Fire During a Traffic Stop
                                  Not Entitled to UIM Coverage


        The U.S. District Court for  injury and the underinsured motor          the Court held, was not within the
the Southern District of West Vir-   vehicle that is absent in this case.”      ordinary, customary or normal use
ginia has granted summary judg-      The case arose when a police offi-         of a motor vehicle. Additionally,
ment to Erie Insurance upholding     cer was shot and killed by another         the police officers' firing of their
the ownership or use clause in an    officer during a traffic stop follow-      weapons in response to the driver’s
underinsured motorist endorsement    ing a hit-and-run. The motorist was        unusual use of the truck was not a
and affirming an exclusion that pro- attempting to run over an officer          natural or reasonable consequence
hibits coverage arising from the ac- when two other officers on opposite        of the use of a motor vehicle. “In
cidental or intentional use of any   sides of the vehicle began firing and      short, Officer Jones's injuries were
weapon.                              one officer was killed by friendly         not forseeably identifiable with the
                                     fire. Relying upon state case law,         normal use of a vehicle,” the Court
        In Erie Ins. Prop & Cas. Co. Judge Goodwin found the owner-             held.
v. Jones, (Civil Action No. 2:10-cv- ship or use phrase “must be more
479, S.D.W.Va., filed May 6, 2011), than incidental, fortuitous or but                 The Court further held that
District Judge Joseph Goodwin for. The injury must be forseeably                the weapon exclusion was applica-
found the clause connotes a “cer- identifiable with the normal use of           ble and would preclude coverage.
tain causal relationship between the the vehicle." The use of the truck,

                                                                                                                  3
                                                                                               July 2011
         UPDATE ON THE LAW



                                    Martin & Seibert Contributes to
                                     DRI Bad Faith Compendium


        Martin & Seibert, L.C. was recently selected by Defense Research Institute to submit a summary of bad
faith law in West Virginia for its Bad Faith Compendium. The Compendium is intended for professionals repre-
senting insurers in the defense of bad faith and other extra-contractual claims covering all states and territories of
the United States as well as Canada.

        The Compendium provides a detailed analysis of statutory and common law principles and provides
practitioners procedural, technical and legal guidelines for defense of extra-contractual claims. It is intended to
provide a template for analysis to develop strategy and assess exposure.

        The West Virginia submission provides the cognizable causes of action, recoverable damages, elements of
proof, procedural and evidentiary requirements, recognized defenses and counterclaims and the issues unique to
the jurisdiction. A copy of the West Virginia chapter is available on the firm's website at: www.martinandseibert.
com.




                           Judge Chides Lawyers In e-Discovery Case


         Judge Shira A. Scheindlin, the preeminent judge on electronic discovery, has issued another e-discovery
opinion. In a case of first impression, Judge Scheindlin held that the federal government must include metadata
in Freedom of Information Act productions, finding that certain key metadata fields are an integral part of public
records. National Day Laborer Organizing Network v. U.S. Immigration and Customs Enforcement Agency, 10
Civ. 3488, (S.D.N.Y., entered Feb. 7, 2011). While some state courts have ruled on this issue under sunshine laws,
this is the first ruling under federal FOIA law.

       The Judge again stressed the need for cooperation among counsel stating:

        “Once again, this Court is required to rule on an e-discovery issue that could have been avoided had the
parties had the good sense to ‘meet and confer,’ ‘cooperate’ and generally make every effort to ‘communicate’
as to the form in which ESI would be produced. The quoted words are found in opinion after opinion and yet
lawyers fail to take the necessary steps to fulfill their obligations to each other and to the court. While certainly
not rising to the level of a breach of an ethical obligation, such conduct certainly shows that all lawyers – even
highly respected private lawyers, Government lawyers, and professors of law – need to make greater efforts to
comply with the expectations that courts now demand of counsel with respect to expensive and time-consuming
document production. Lawyers are all too ready to point the finger at the courts and the Rules for increasing the
expense of litigation, but that expense could be greatly diminished if lawyers met their own obligations to ensure
that document production is handled as expeditiously and inexpensively as possible. This can only be achieved
through cooperation and communication.”


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            July 2011
                                                                            UPDATE ON THE LAW


                                  Paul Farrell, Sr. Appointed Judge

        Paul Farrell, Sr. has been     practiced with his two brothers. He    Unemployment          Compensation
appointed judge in Cabell County.      focused his practice on the defense    Division, assistant prosecuting
He was appointed January 21 by         of healthcare providers, public and    attorney for Cabell County and an
Acting Governor Earl Ray Tomblin       private employers and criminal         assistant U.S. attorney.
to fill the vacancy in the Sixth       defendants.
                                                                                     Farrell is a graduate of
Judicial Circuit created by last
                                               His past career experience     Xavier University and West Virginia
year’s retirement of Judge Dan
                                       includes serving as an assistant       University College of Law. He has
O’Hanlon.
                                       state attorney general, counsel for    served on the Board of Govenors
      A     long-time   litigator      the West Virginia Senate, counsel to   of the West Virginia State Bar and
at Farrell, Farrell, and Farrell       the Senate President, administrative   the Defense Trial Counsel of West
in Huntington, the new judge           law judge for the West Virginia        Virginia.


                               Loss of Consortium Claim Dismissed

        In a memorandum opinion issued May 2, 2011, the West Virginia Supreme Court upheld dismissal of a
loss of consortium claim after the plaintiff died during the pendency of his personal injury action.

         A unanimous Court upheld a dismissal entered by the Circuit Court of Kanawha County in McElhinny
v. The Kanawha County Public Library, et al., (No. 101541, W.Va., filed May 2, 2011). The action arose from a
fall at the Dunbar Public Library. The injured plaintiff sued for his personal injuries and his wife joined the suit
alleging loss of consortium. Plaintiff died and no party was substituted. When plaintiff’s claims were dismissed so
too were the wife’s derivative claim which the Circuit Court characterized as “purely derivative of the underlying
tort claim of her deceased husband.”


                         Clerk Must Make In Forma Pauperis Decision


       Granting a writ of mandamus against Morgan           may the application and financial affidavit be reviewed
County Circuit Judge John Yoder, the West Virginia          by a judge.
Supreme Court has ruled that it is the circuit clerk, not
judge, who makes the determination if a party meets the             In Deblasio, however, the clerk forwarded the
requirements to pursue a civil case in forma pauperis.      application to Judge Yoder who denied the application.
                                                            In his initial order, the Judge gave no reason for the
        In State ex rel. Deblasio v. Yoder, (No. 35701,     denial. In the appeal, however, Judge Yoder advised
W.Va., filed Jan. 27, 2011), the Court held the clerk is    he denied the application because he found the suit to
required to review an affidavit pursuant to the State’s     be vexatious and frivolous. Writing for the majority,
Financial Guidelines for Determining Eligibility for        Justice Menus Ketchum overruled Judge Yoder’s
Waiver of Fees, Costs or Security in Civil Cases. If        actions because he sua sponte concluded the suit was
the financial affidavit meets the Guidelines, the clerk     frivolous or vexatious without affording the pro se
is required to file the civil action. Only if the clerk     litigant the opportunity to be heard. Those acts, the
determines the application does not meet the Guidelines     Court held, carried constitutional implications.

                                                                                                                5
                                                                                            July 2011
         UPDATE ON THE LAW


                                          Jury Returns Verdict 97 Times Medical Bills

                              A Lincoln County jury has returned a verdict against a lawyer/defendant in a motor
                              vehicle accident 97 times the plaintiff's medical specials.

                              Hudson v. Lester arose from a dispute as to where the point of impact occurred. Upon
                              initial investigation, the investigating officer did not interview the plaintiff and attrib-
                              uted fault to the plaintiff. At trial, plaintiff disputed this assessment and also called an
                              eyewitness who testified the point of impact occurred in the plaintiff's lane of travel.

                            Plaintiff, a construction worker, sustained a broken collar bone in the collision and
incurred $3,357.57 in medical bills. At trial, he testified as to the limitations his injury has caused on his ability to
work construction jobs. The jury found 100% negligence against the defendant and awarded $326,957.57 which
included $50,000 for past pain and suffering; $150,000 for future pain and suffering; $50,000 for future loss of
enjoyment of life; and $20,000 for loss of consortium.

        The defendant is now pursuing a first party bad faith claim against his liability insurer.



                   Agency Dismissed From Declaratory Judgment Action


       An insurance agency sued after additional insureds were not added to a policy has been dismissed because
an agency cannot make coverage decisions.

         In Mulvey Construction, Inc., et al. v. Bituminous Cas. Corp., et al., (Civil Action No. 1:07-cv-634,
S.D.W.Va., filed March 30, 2011), One Beacon Insurance Company filed a declaratory judgment action against
Bituminous and also named the Brown & Brown agency. Brown & Brown issued certificates of insurance for
McDonald’s and Mulvey Construction to add them as insureds to a policy issued by Bituminous to subcontractor
DCI/Shires arising from the construction of a McDonald’s in Bluefield, West Virginia. During construction,
a sewer trench collapsed killing a worker. His estate filed suit and Bituminous refused to defend Mulvey and
McDonald’s because they were not identified as additional insureds on the policy. One Beacon, Mulvey’s insurer,
settled the wrongful death suit and pursued a declaratory judgment action against Bituminous and the agency.

         The agency, however, argued it did not make any coverage decisions and, therefore, could not be held
liable if incorrect coverage decisions were made. Brown & Brown also argued it was not a party to the Bituminous
policy so any declarations of rights or responsibilities would not affect the agency. Applying Virginia law, District
Judge David Faber also found that the statute of limitations on any oral contract made by the agency to the
potential additional insureds expired before the declaratory judgment action was filed.

        The following day, Judge Faber partially granted Bituminous’ motion for summary judgment upholding
language of a disclaimer on the certificate of insurance stating the certificate did not amend, extend or alter
coverage. The Court found that any reliance on the certificate of insurance was unwarranted given the clear
notice the certificate could not be relied upon for coverage. The Court stayed a ruling concerning the insured
contract issue pending arbitration. However, the Court found that Bituminous’ actions in denying coverage to
the purported additional insureds was a “reasonably debatable” position and thus dismissed the bad faith claims.

 6
            July 2011
                                                                             UPDATE ON THE LAW


                           Court Recognizes Representative Standing
                                   To Organizations To Sue

        The West Virginia Supreme Court will permit an organization representative standing to sue on behalf of
its members when the organization proves that: (1) at least one of its members would have standing to sue in their
own right; (2) the interests it seeks to protect are germane to the organization’s purpose; and (3) neither the claim
asserted nor the relief requested requires the participation of individual members in the lawsuit.

       In The Affiliated Construction Trades Foundation v. WV Dept. of Transportation, (No. 35742, W.Va., filed
June 22, 2011), the Court considered whether the Trades Foundation could pursue a declaratory judgment action
challenging a Department of Highways construction contract that was entered into without public bidding and
which did not require the contractor to pay a prevailing wage.

        In recognizing the doctrine, the Court also held that in declaratory judgment actions it is not essential that
a party have a personal legal right or interest, rather only a justiciable controversy must exist when a legal right
is claimed by one, denied by another. Finding that the Trades Foundation’s members interested in bidding on the
project were ostensibly denied a claimed legal right, the Foundation, representing those members, had standing
to pursue a declaratory judgment action. The majority opinion was authored by Justice Menus Ketchum. Justice
Brent Benjamin dissented.



                            Co-Defendant Must Pay Settlement When
                                   Chrysler Files Bankruptcy


         The West Virginia Supreme Court of Appeals, reversing the Circuit Court of Kanawha County, has ordered
a settling co-defendant to pay the full amount of a settlement when the other co-defendant filed bankruptcy. In
Haynes v. DaimlerChrysler Corp., et al. (No. 101151, W.Va., filed June 17, 2011), a wrongful death suit against
Chrysler and Autoliv, a seat belt manufacturer, settled at mediation for $150,000.00. The handwritten settlement
agreement did not contain an apportionment of payments from the two defendants, although the defendants
agreed to split payment obligations. However, the check submitted by Chrysler was returned for insufficient
funds because it filed for bankruptcy.

        The plaintiff thereafter sought                                    to collect the entire settlement amount
from the co-defendant, Autoliv.                                            Autoliv asserted the doctrine of accord
and satisfaction arguing it was only                                       responsible for the portion of the
settlement it paid. In a per curiam                                        opinion, the Court found the settlement
agreement clear and unambiguous with                                       no apportionment stated. The Court
further held Autoliv could not demonstrate that its tender of a portion of the settlement was made upon the
condition that it be accepted as payment in full, a condition necessary to establish an accord and satisfaction.
The case was, therefore, remanded with instructions to the circuit court to direct Autoliv to “fulfill its contractual
obligations” and pay the plaintiff the remainder of the settlement.

       Justice Brent Benjamin concurred in the ruling and reserved the right to file a separate concurring opinion.


                                                                                                                  7
                                                                                              July 2011
        UPDATE ON THE LAW




                               2011 Legislative Enactments

                                                     - Company documents confidential

                                      During its 2011 regular session, the West Virginia Legislature passed leg-
                                  islation that impacts insurance operations and civil jurisprudence in West Vir-
                                  ginia. With respect to insurance companies, the Legislature amended W.Va.
                                  Code §33-4-14 which grants confidentiality to certain information produced to
                                  the Insurance Commissioner. Actuarial reports, work papers, and summaries
                                  submitted by insurers in conjunction with annual financial statements are now
                                  deemed confidential and privileged. These documents are not subject to dis-
                                  closure under the state’s Freedom of Information Act nor subject to subpoena.
                                  They are also not subject to discovery or admissible as evidence in any civil
                                  action. However, the statute specifically states that the information may be
                                  discoverable in civil litigation when requested directly from insurers.

                                             - Administrative review for manufactured housing

         The West Virginia Legislature amended W.Va. Code §21-9-11a expanding to 90 days the time for the West
Virginia Manufactured Housing Construction and Safety Board to investigate purported defects before the pur-
chaser or owner of a manufactured home may file a civil action seeking monetary damages. This change in the
statute applies to claims of defective manufacture, acquisition, sale or installation. Filing of a complaint under
this article of the Code tolls the applicable statute of limitations during the 90-day administrative review period

       This period of exclusive administrative authority does not apply to equitable claims or to claims seeking
to prevent or address immediate risk of personal injury or property damage.

                            - Limits on out-of-state failure to warn drug suits

        Due to a recent West Virginia Supreme Court opinion permitting suits against drug manufacturers for
failure to warn, the West Virginia Legislature enacted W.Va. Code §55-8-16. The new code section states it is
West Virginia public policy that the doctrine of lex loci delecti applies to a product liability claim brought by a
nonresident against manufacturers or distributors of a prescription drug for failure to warn. The new code section
applies to civil suits filed on or after July 1, 2011.

                                     - Reporter’s privilege recognized

        The Legislature also enacted a reporter’s privilege prohibiting members of the news media from being
compelled to disclose sources or documentation obtained in the course of reporting. Enacting W.Va. Code §57-
3-10, the privilege applies to testimony in any civil, criminal, administrative or grand jury proceeding and applies
to sources, unless the testimony is necessary to prevent imminent death or serious bodily injury.




 8
            July 2011
                                                                            UPDATE ON THE LAW




                                      - Meth lab clean-up fee increased

       The Legislature also increased to $10,000.00 the amount the State will pay for the clean-up of real prop-
erty damage caused by a methamphetamine lab under the Crime Victims Award Program, W.Va. Code §14-2A-3.

                                    - Civil immunity for first responders

        In enacting House Bill 3105, the Legislature created W.Va. Code §55-7-26, which grants immunity from
civil and criminal liability to first responders who use forced entry in response to a 911 call. The new legislation
grants immunity so long as the first responder:

       1) is responding to a documented 911 call for emergency medical assistance;
       2) has made reasonable efforts to summon an occupant of the home, business or structure by knocking
       or otherwise notifying the occupant(s) of his or her presence;
       3) has not received a response from an occupant within a reasonable period of time; and
       4) has a good faith belief that it is necessary to make a forcible entry for the purposes of rendering
       emergency medical assistance or preventing imminent bodily harm.

        Nothing in the new statute affects the standard of care a first responder must employ when rendering aid
after gaining entry.

                            - Misdemeanor penalty for funeral demonstrators

        The Legislature also created W.Va. Code §61-8-15, creating a criminal offense for picketing or disrupting
funerals or memorial services. Demonstrations may not be conducted within 500 feet of the cemetery or building
utilized for the funeral or memorial service beginning 60 minutes before and ending 60 minutes after the service.
Violation of the new code section is a misdemeanor carrying a jail sentence of not more than one year and a fine
of $200 to $500.

         In March, the Supreme Court of the United States held the First Amendment shields demonstrators from
tort liability picketing on matters of public rather than private concern. The Court, in upholding the rights of
Westboro Baptist Church demonstrations at military funerals, did not address statutes such as that now passed in
West Virginia setting time, place or manner restrictions in Snyder v. Phelps, (No. 09-571, decided March 2, 2011).

                                         - Judicial salaries increased

        Judicial salaries were also increased in a bill passed the last night of the legislative session. The state’s
five Supreme Court justices’ salaries increased to $150,000. Circuit judges will now receive $138,000; family
court judges will be paid $111,000. County magistrates are currently paid based upon population. The bill will
equalize all magistrate salaries at $62,169.00. The raises became effective July 1.




                                                                                                                 9
                                                                                              July 2011
        UPDATE ON THE LAW


                           Notable Verdicts and Settlements
                                  - $27 million wrongful death settlement from fatal workplace fire

                                       Three families received a $27 million settlement in Marshall County in
                               April during a trial arising from a fatal fire in an emissions stack at an American
                               Electric Power plant. One man was killed and two were trapped at the top of a 976
                               foot stack for several hours after a 2006 fire during construction.

                                   The fire occurred while crews were installing a fiberglass lining in the
                           smokestack and required air rescue for the two survivors. Plaintiffs were seeking
                           punitive damages because the plant had no evacuation plan and knew that using
                           fiberglass, while cheaper, was also more combustible. Plaintiffs were represented
by Robert Fitzsimmons, Don Kresen and James Villanova.

                           - $12 million wrongful death verdict in Ohio County

        On June 23, 2011, an Ohio County jury has awarded $12 million in a wrongful death case of a 16-year-
old girl who died in a 2008 motorcycle crash. Bob Fitzsimmons and his son, Clayton, represented the plaintiff.

        Devron Lunsford was the passenger on the motorcycle driven by Lauren Decker when the motorcycle
collided with a car. Both were ejected and Lunsford died 19 days later. The motorcycle operator was sentenced
to four years in jail after pleading no contest to aggravated vehicular homicide. She also had her driving privileges
revoked for life. The defendant served less than two years of her sentence before her release but was subsequently
re-jailed due to a positive drug test while on probation. Before trial, Decker and the owner of the motorcycle both
admitted liability

       The verdict was:

       To the estate: $750,000 for physical pain and suffering; $750,000 for emotional pain and suffering;
$314,588 for medical bills; $28,014.20 for funeral bills; and $1.583 million for lost income.

       To Lunsford's parents and brother: $600,000 for sorrow; $1 million for mental anguish; $600,000 for sol-
ace; $300,000 for loss of society; $1 million for loss of companionship and comfort; $600,000 for loss of guidance
and advice; $300,000 for loss of kindly offices; and $300,000 for loss of services, protection, care and assistance.

       Punitives: $4.5 million against both defendants, totaling $12, 625,602.00.

                                   - $5.6 million deliberate intent verdict

       An Ohio jury has awarded an employee of Ohio Power Company $5.6 million for a shoulder injury arising
from a 2007 explosion at a power plant.

      The jury found Ohio Power Company acted with a deliberate intent in causing harm to its employee. The
two-week trial included testimony from numerous experts, including compressed gas experts, since the explosion



10
            July 2011
                                                                             UPDATE ON THE LAW



was caused by a hydrogen tank. Evidence was introduced of a similar explosion at another Northern Panhandle
plant a year earlier, but took no steps to correct the problem.

       The jury awarded $1.571 million to the employee and $100,000 to his wife as well as $4 million in puni-
tive damages. The jury also determined the plaintiffs should be entitled to recover their reasonable attorney fees
in an amount that will be determined by the Court. Plaintiffs were represented by Bordas & Bordas.

                                      -$3 million brain injury settlement

        A brain injury case recently netted a partial settlement of nearly $3 million in Kanawha County in a drunk
driving case. Plaintiff Billy J. Berkhouse, 32, was a pedestrian on Capitol Street in downtown Charleston in June,
2008 when a drunk driver drove onto the sidewalk and struck him.

         The defendant had been drinking at the Charleston Moose Lodge which funded the settlement through its
liability insurer, Great American Insurance Company. The defendant had also visited the Impulse nightclub, but
was not served any alcohol there. Therefore, Impulse was dismissed. The impact caused a brain injury which left
the plaintiff comatose for a short while. Because he lacked health insurance, family and friends sponsored ben-
efits and set up a website for donations to pay plaintiff's medical bills. The defendant plead guilty to DUI causing
injury, second offense DUI, and driving without insurance, and was sentenced to a year in prison and a year of
home confinement.

       Additional coverage from Great American remains contested with plaintiff's counsel Bobby Warner alleg-
ing another $5 million in coverage is available.

                                           - $2.69 million DUI verdict

        A Wayne County jury awarded the families of four people killed in a drunk driving accident $2.69 million
during a recent trial. In Boone v. Frazier, et al., Civil Action No. 08-C-316, plaintiff alleged the defendant stole a
truck from an auto dealership in Kentucky when the dealership left the keys in the ignition. The Defendant drove
to a bar in West Virginia where he became intoxicated and thereafter drove the truck in Wayne County. While
driving, he encountered another driver who was under the influence of cocaine in which three passengers were
riding. Plaintiff alleged concurrent negligence of the defendant driving the stolen truck while drunk and the other
driver operating a vehicle while under the influence of drugs. The collision killed the driver of the truck alleged
to have been using cocaine and his three passengers, two of whom were minors.

        The jury found 80% negligence on the drunk driver and 20% negligence on the dealership. In addition to
the civil suit, Frazier plead guilty to four counts of drunken driving causing death and was sentenced to 26 years
in prison. Plaintiff was represented by Charles M. Hatcher, Jr. and Jennifer D. Ransbottom.

                                     - Kanawha jury awards $1.4 million

         A Kanawha County jury awarded a $1.4 million verdict, including $500,000 in punitive damages against
Orkin on May 20. In Mosier v. Denny and Orkin, LLC, Civil Action No. 10-C-383, plaintiff alleged permanent
injuries after her vehicle was struck by an Orkin vehicle. Plaintiff underwent three back surgeries and an expert
testified she would need a spinal cord stimulator in the future.


                                                                                                                 11
                                                                                              July 2011
         UPDATE ON THE LAW



       Plaintiff, represented by Bobby Warner, was awarded in excess of $123,000 in past medical expenses;
$426,000 for future medical expenses; $100,000 for past pain and suffering; $25,000 for future pain and suffering;
$100,000 for past mental anguish; $25,000 for future mental anguish; $100,000 for past loss of enjoyment of life
and $25,000 for future loss of enjoyment of life. The jury then awarded $500,000 in punitive damages finding
that Orkin acted recklessly in allowing a driver with a poor safety record to operate one of its vehicles.

       In reaching its verdict, the jury disregarded defense evidence that plaintiff did not begin complaining of
low back pain until six weeks after the accident and after she took a several hundred mile motorcycle trip.


                        Defunct Companies Can Still be Served and Sued


       A federal magistrate judge in the U.S. District Court for the Northern District of West Virginia has recom-
mended denial of a motion to dismiss filed by a defunct limited liability company which argued it could not be
sued or served after it dissolved.

        In First United Bank & Trust v. The Square at Falling Run, LLC (Civil Action No. 1:11-cv-31, N.D. W.Va.,
filed March 31, 2011), the defendant filed a special appearance and moved to dismiss the case challenging the
court’s jurisdiction. However, Magistrate John Kaull found that service of process against a dissolved corporation
may be served upon the same person who might have been served before dissolution, including the West Virginia
Secretary of State, for dissolved limited liability companies pursuant to W.Va. Code §31B-1-111.

      Finding that the suit was filed within five years of receiving notice of dissolution, the magistrate recom-
mended that the motion to dismiss be denied as a matter of law.


                                 Congress Amends Rule 56 of the
                                 Federal Rules of Civil Procedure


	        Effective December 1, 2010, Congress enacted             The Rule also carries a new subdivision (c) that
revisions to Rule 56 of the Federal Rules of Civil        establishes procedure for the manner of addressing
Procedure. The most significant change is the return      material facts not genuinely disputed.
of the term “shall” to the Rule’s standard which was
                                                                   Another key change is that a formal affidavit
changed in 2007. The Rule restores the statement that
                                                          is no longer required. Written unsworn declarations,
district courts “shall” grant summary judgment if the
                                                          certificates, verifications or statements subscribed in
movant shows that there is no genuine dispute as to any
                                                          proper form as true are now acceptable support.
material fact and the movant is entitled to judgment as
a matter of law.                                                  Sanctions under subdivision (h) are no longer
                                                          mandatory, but are discretionary. Finally, authority to
       Congress also changed subdivision (a) to require
                                                          impose other appropriate sanctions also is recognized
the court to state on the record the reasons for granting
                                                          in the revised Rule.
or denying a motion for summary judgment.


    12
            July 2011
                                                                              UPDATE ON THE LAW



                                                In Memoriam

                                   Fourth Circuit Justice Michael Dies

	      U.S. Court of Appeals for the Fourth Circuit Justice M. Blane Michael died on March 25, 2011. Michael
served on the Fourth Circuit 17 years. At the time of his appointment, he was the first federal judge appointed by
a Democratic president since Ronald Reagan. Justice Michael began his judicial service October 12, 1993.

         A native of Grant County, Justice Michael, was a 1965 gradate of West Virginia University where he was
student body president. Michael graduated from New York University School of Law in 1968. Following a brief
stint in private practice in New York, he became an Assistant U.S. Attorney for the Southern District of New York.
He then returned to West Virginia in 1972 as special Assistant U.S. Attorney in the Northern District of West
Virginia. Michael later served as Counsel to Governor John D. Rockefeller, IV and returned to private practice
before his judicial appointment. While in private practice, he also managed the re-election campaign of Senator
Robert C. Byrd.



                                  Former Judge Madden Passes Away

      Former Circuit Court Judge John Thomas Madden passed away March 20, 2011, at the age of 78. Judge
Madden sat in the Second Judicial Circuit comprised of Marshall, Wetzel, and Tyler Counties in the Northern
Panhandle of West Virginia.

       Madden was a 1954 graduate of Lafayette College and a 1958 graduate of the West Virginia University
College of Law. He practiced law in Marshall County from 1958 to 1991 and served as a circuit judge from 1991
to 2008. He was also a member of the West Virginia House of Delegates from 1963 to 1967 and was a Fellow of
the West Virginia Bar Foundation.


                           Subpoena to Insurer Issued From Wrong Court

                            The U.S. District Court for the Northern District of West Virginia has quashed a subpoena
                     duces tecum served upon a non-party insurer for lack of jurisdiction. In Small v. Ramsey,
                      (Civil Action No. 1:10-cv-121, N.D.W.Va., filed March 21, 2011), plaintiff’s counsel issued a
                       subpoena duces tecum to Continental Casualty Company which insures two defendants in a
                        motor vehicle accident seeking contents of the insurer’s claim file. Plaintiff’s counsel issued
                         the subpoena duces tecum from the Northern District of West Virginia where the case is
                          pending and served Continental Casualty through the West Virginia Secretary of State.

                              Magistrate Judge John Kaull found the subpoena duces tecum facially invalid under Rule
            45(a)(2)(C) of the Federal Rules of Civil Procedure and quashed it for lack of jurisdiction. The Court
    found that Rule 45(a)(2)(C ) requires a subpoena to issue from the court for the district where the production or
    inspection is to be made. Because the subpoena was directed to Continental Casualty in Chicago, the Court found
    the subpoena was issued from the wrong court.
                                                                                                                  13
                                                                                                July 2011
         UPDATE ON THE LAW



                                Five Martin & Seibert Lawyers Chosen
                                       as 2011 Super Lawyers




     Clarence E. Martin, III   Walter M. Jones, III   Susan R. Snowden      E. Kay Fuller       Michael M. Stevens




       In the last several years, members of Martin & Seibert, L.C. have been recognized in national publications
and have received much individual recognition. This year, Clarence E. Martin, III, Walter M. Jones, III, Susan
R. Snowden, and E. Kay Fuller were again selected for inclusion in the national publication of Super Lawyers,
a national magazine that honors attorneys in each state based upon nomination by their peers and through
independent research. Michael M. Stevens, a new shareholder with the Firm and a member of the Litigation
Department, was again selected to appear in Rising Stars, a selection of the state’s top up-and-coming attorneys.

        Mr. Martin and Mr. Jones were recognized for their accomplishments in the defense of mass torts and class
actions. Both attorneys have over 30 years of legal experience and have been involved in some of the largest state
and national cases involving insurance, financial products, pollution, and consumer fraud.

       Ms. Fuller was selected for her excellence in appellate advocacy, having argued many cases of first
impression before the Supreme Court of Appeals of West Virginia. Ms. Fuller is currently working on an
appeal to the Supreme Court of the United States on a privacy issue that will have national implications for all
companies that store electronic data. Mrs. Snowden was selected for inclusion in a specialty publication for her
accomplishments in employment litigation and advice to businesses. Mrs. Snowden has published and spoken
nationally to industry leaders on employment related issues.

        Mr. Martin, Mr. Jones, Ms. Fuller and Mrs. Snowden have been selected for inclusion in Super Lawyers
for each consecutive year since 2007. This recognition is only available for the top 5% of the lawyers in the state.
The attorneys and staff of Martin & Seibert, L.C. have also been honored as a “Go-To” law firm for the nation’s
“Leading Financial Services Companies” and “At the Top 500 Companies,” and the firm was recognized in a
feature on West Virginia in U.S. News and World Report.

         The firm has attorneys who are licensed to practice law in many states and the firm accepts clients in
litigation and business matters primarily in the states of Maryland and West Virginia and the Commonwealth
of Virginia. The firm also has a department that specializes in the management of bad debt and it focuses its
practice primarily in the health care industry, representing over 2,200 clients. Martin & Seibert, L.C. was rated
by Collections & Credit Risk magazine as one of the top 10 law firms in the nation.




14
              July 2011
                                                                             UPDATE ON THE LAW


                                   Med Pay Coverage Not Available
                                    When Driving Employer’s Car

       The West Virginia Supreme Court has upheld medical payments exclusionary language in a State Farm
auto policy. In Witt v. Sutton, (No. 35698, W.Va., filed April 14, 2011), plaintiff appealed summary judgment
granted to State Farm in the Circuit Court of Kanawha County.

         A dispute arose when plaintiff was injured while driving his employer’s vehicle. Plaintiff sought medical
payments coverage from his personal auto policy issued by State Farm. The State Farm policy, however, only
provides medical payments coverage if the insured is operating or occupying a vehicle also covered under the
liability section of the policy or if the insured is struck as a pedestrian by a motor vehicle or trailer. Liability
coverage is extended under the policy to the policyholder’s personal vehicle, a newly acquired car, a temporary
substitute car or a non-owned car. The policy lists examples of what does not qualify as a non-owned car which
includes vehicles owned, registered or leased by an employer. The Witt Court affirmed summary judgment
finding that the provisions of the policy are not contrary to statute, regulation or public policy.

        In a footnote, the Court noted it would not address issues concerning the circuit court’s exclusion of
plaintiff’s expert proffered to provide history on medical payments coverage stating that expert opinion may be
proper even in a declaratory judgment action when a contract is ambiguous and expert testimony on the history
of policy language may assist the trier of fact in interpreting the contract.



                        Hartford Challenges Arbitration Award Too Late


        A party waives its right to challenge the arbitrability of a claim when it brings the challenge for the first
time after the arbitration award against it has been issued. So held the U.S. District Court for the Southern District
of West Virginia in Hartford Ins. Co. of the Midwest v. Erie Ins. Prop. & Cas. Co., (Civil Action No. 5:10-cv-320,
S.D.W.Va., filed May 17, 2011).

       A dispute arose when Hartford paid to Erie one of three arbitration claims arising from a stolen vehicle
claim. Erie subsequently withdrew only the property damage arbitration claim upon Hartford’s payment. Hartford,
however, presumed all claims were withdrawn and therefore did not attend the arbitration on the remaining
medical payments and uninsured motorist claims. When Erie prevailed on the remaining claims, Hartford pursued
a declaratory judgment action in federal court. In its declaratory judgment action, Hartford alleged the claims
were not proper for arbitration, an argument District Judge Irene Berger rejected.

        “Although the Court is cognizant that there were internal problems and misunderstandings underlying
Hartford’s actions in failing to object to or participate in any way in the arbitration proceedings, that does not
excuse the fact that Hartford was informed on at least two occasions that three claims were proceeding against it,
and only one had been withdrawn. Allowing Hartford to proclaim an arbitrability challenge now, fourteen months
after arbitration proceedings began and ended without objection, essentially provides it with an indirect path to
evoke judicial review of an unfavorable arbitration award, where direct paths to judicial review are limited and
narrow.” Erie successfully argued that Hartford had not timely filed an objection under the Federal Arbitration
Act which is three months.

                                                                                                                 15
                                                                                                July 2011
        UPDATE ON THE LAW



                             Questions of Negligence and Causation
                                      For Jury To Resolve

       The West Virginia Supreme Court has again held that questions of negligence and proximate cause –
regardless of how marginal – are jury questions.

        The issue arose following a $1.9 million mining injury verdict in Boone County. In Stevenson v.
Independence Coal Co., Inc., (No. 35592, W.Va., filed April 28, 2011), plaintiff’s wrist was injured in a mantrip
which he was attempting to repair underground. Plaintiff alleged Independence Coal Company failed to provide
him a safe workplace thus proximately causing his injury although he could not provide any evidence as to how
the injury actually occurred.

        The defendant argued in its summary judgment motion, at trial and in post-trial motions that any proximate
cause link was broken because the plaintiff failed to follow instructions and attempted to repair the brakes on the
mantrip himself, thus causing his own injury. The defendant, therefore, argued the injury was unforeseeable and
“negligence in the air” which the seminal case of Palsgraf v. Long Island R. Co., 248 N.Y.339, 341, 162 N.E. 99,
99 (1928), held is not actionable.

        Although agreeing plaintiff’s evidence of negligence and proximate cause was marginal, the Court in its
per curiam opinion held: “It is not our job to weigh the evidence . . . or to disregard stories that seem hard to
believe. Those tasks are for the jury.” The Court cited varying inferences as to the cause of the plaintiff’s injury
concluding it was appropriate for the circuit court to let the questions of negligence and proximate cause go to
the jury. When the material facts are disputed, the Stevenson Court held, resolution of the issue is for the jury.
Therefore, the Supreme Court refused defendant’s motions for judgment as a matter of law or, alternatively, for
a new trial.



                         Wages, Salary and Benefits Exclusion Upheld

                                       The U.S. District Court for the Southern District of West Virginia has
                               granted summary judgment to National Union upholding its “wages, salary and
                               benefits exclusion.” In Graham v. Nat’l Union Ins. Co. of Pittsburgh, PA., (Civil
                               Action No. 1:10-cv-453, S.D.W.Va., filed Feb. 17, 2011), insured Robert Graham
                               sued to recoup legal fees he incurred to defend himself in a suit brought by the
                               State of West Virginia against him in his capacity as executive director of the
                                Council on Aging, Inc. and All Care Home and Community Services, Inc. The
                                State alleged Graham collected excess compensation and benefits related to his
                                employment. Although Graham tendered his defense to National Union, it denied
                                coverage. Graham paid his own legal fees and prevailed in the underlying suit.
               He then sued National Union to recoup his fees and alleged improper denial of coverage.

       Applying the wages, salary, and benefits exclusion, District Judge David Faber found the exclusion was
plain and unambiguous, that National Union had correctly denied coverage and, therefore, granted the insurer
summary judgment.

       Plaintiff has appealed the ruling to the Fourth Circuit Court of Appeals.

16
            July 2011
                                                                             UPDATE ON THE LAW



             Federal Judge Finds Coverage For Hospital in Multiple Claims


                                  - D&O policy applicable for $25 Million Verdict

        The U.S. District Court for the Southern District of West Virginia has granted summary judgment to
Charleston Area Medical Center against its directors, officers, and trustees liability insurer following a $25 million
verdict and subsequent settlement against the hospital by a discharged physician.

        In Executive Risk Indemnity, Inc. v. Charleston Area Med. Ctr., et al., (Civil Action No. 2:08-cv-810,
S.D.W.Va., filed May 12, 2011), Judge Joseph Goodwin held coverage existed because the verdict was premised
on a defamation and invasion of privacy claim, both of which are covered under the policy’s definition of “loss.” In
the underlying litigation, the jury found CAMC breached its duty by communicating that a self-insured physician
lacked adequate insurance, had not justified his self-insured plan and, therefore, rescinded his clinical privileges.

        Executive Risk argued there was no coverage because the verdict and subsequent settlement was predicated
on fraudulent or dishonest conduct based on the jury’s award of punitive damages. “Because Dr. Hamrick never
pressed a cause of action that was predicated on fraudulent or dishonest conduct, the jury could not possibly have
found for him on such a claim. Moreover, Executive Risk cannot identify any particular dishonest or fraudulent
act or omission on the part of CAMC,” the Court held. The Executive Risk policy contained a Punitive Damages
Endorsement which provided coverage. Executive Risk argued the Dishonest/Fraudulent Acts exclusion applied
which the Court rejected finding no colorable argument that defamation or invasion of privacy claims fit within
the exclusion as either dishonest or fraudulent acts.

        Because sufficient coverage was found under the Executive Risk policy, reinsurance issued by ERC was
not triggered and ERC was granted summary judgment against CAMC.



                                - Coverage for sexual assaults under D&O policy

        Judge Goodwin also found coverage for CAMC under a Directors and Officers policy issued by National
Union to cover two settlements to patients who were sexually molested by a CAMC employee in 2008. In
Charleston Area Med. Ctr. v. Nat’l Union Fire Ins., (Civil Action No. 2:09-cv-573, S.D.W.Va., filed June 1,
2011), the Court analyzed claims of two patients alleging negligent supervision. The hospital settled the claims
for $2.55 million.

        National Union denied coverage arguing D&O policies are not designed to provide general liability
coverage and that negligent supervision claims cannot be used to trigger insurance coverage which Judge Goodwin
rejected finding the policy specifically covered actual or alleged wrongful acts of the organization. “Wrongful
act” was defined in pertinent part as “any breach of duty, neglect, error, misstatement, misleading statement,
omission or act by or on behalf of the organization.” Judge Goodwin found the negligent training claim to be
neglect and a breach of duty, thus triggering coverage. He further found neither the bodily injury nor employment
practices liability exclusions applied.




                                                                                                                 17
                                                                                                July 2011
        UPDATE ON THE LAW


                          Venue for Breach of Contract Claims Limited

       In a dispute between law firms over attorney’s fees, the West Virginia Supreme Court has issued a narrow
venue ruling holding that venue for breach of contract claims arise in the county in which the contract is made or
in which the breach or damages from the breach occurred.

       State ex rel. The Galloway Group v. McGraw, (No. 11-0187, W.Va., filed May 16, 2011), arose from a
breach of contract claim against a Kanawha County law firm. However, the suit was filed in Wyoming County.
The Circuit Court maintained venue finding that some of the plaintiffs the two firms represented resided in
Wyoming County and under the long-arm statute.

       In a per curiam opinion, the Court reversed finding no defendant resided in Wyoming County nor did the
breach of contract claim arise in Wyoming County. The Court also concluded that venue must be demonstrated
independent of jurisdiction thus making the long-arm statute inapplicable to the analysis of venue.



                      Cost of Lightning Claims Exceeded $1 Billion Last Year

                                Lightning strikes cost more than $1 billion in insured losses in 2010. The Insurance
                        Information Institute analysis of homeowners insurance data found more than 213,000
                        lightning claims were made last year, up nearly 15%. The average lightning claim cost
                        $4,846.00.

                               The average cost per claim rose nearly 13% from 2009 to 2010, and more than 80%
                       from 2004 to 2010, even as the actual number of claims fell in that period. “The number
of claims is down, but the average cost per claim continues to rise, in part because of the huge increase in the
number and value of consumer electronics in homes,” said Loretta Worters, vice president of III. “Plasma and
high-definition television sets, home entertainment centers, multiple computer households, gaming systems and
other expensive devices—which can all be destroyed by power surges—are having a significant impact on claims
losses.”

                                          Revised Adjuster Rule

        Effective July 1, 2011 revised rules governing insurance adjusters, now including public and crop adjust-
ers, became effective in West Virginia. 114 CSR Series 25 was amended by the Insurance Commissioner and
approved through the legislative rule-making process in the 2011 legislative session.

        The revised rule now defines public adjusters and crop adjusters and includes standards of conduct for all
adjusters.

       Although initially included, the Legislature struck from the proposed rule a carve-out that would have
permitted out-of-state adjusters not licensed in West Virginia the ability to physically enter the state for purposes
of mediation. Because that provision was struck, adjusters who attend mediations in West Virginia must still be
licensed in this state.

18
            July 2011
                                                                             UPDATE ON THE LAW


               Removal Period Not “Reset” Based on Amended Complaint



        In considering how to calculate the one-year period for removal to federal court, the U.S. District Court
for the Southern District of West Virginia has held the time begins to run upon the filing of the initial complaint
and is not “reset” upon an amendment naming a new party or alleging a new
cause of action.

       In Taylor v. Bright, (Civil Action No. 2:10-cv-1300, S.D.W.Va., filed
April 25, 2011), District Judge John Copenhaver found nothing within 28
USC §1446(b) permitted a later date to calculate a removal period.

        The issue arose after a $3.2 million judgment was obtained against
an individual who discharged a firearm at a Kanawha County Board of
Education meeting injuring a Board employee. Suit was originally filed
in 2005 against the tortfeasor. After the verdict was returned, plaintiffs
obtained an assignment from the defendant to pursue a bad faith claim against Erie, his homeowner’s insurer. An
Amended Complaint was filed against Erie in 2010. Erie then sought to remove the case based upon diversity of
citizenship and the assertion of a new cause of action. However, the Court found the case “commenced” in 2005
and thus Erie’s attempted removal five years later, after it was named a defendant, was barred.




                  Defendants Precluded From Asserting John Doe Claim



                                     Defendants are unable to assert a third-party John Doe cause of action against
                             the plaintiff’s uninsured motorist carrier. The U.S. District Court for the Northern
                             District of West Virginia reached this decision in Vetter v. Caracofe (Civil Action No.
                             3:11-cv-2, N.D.W.Va., decided June 13, 2011).

                                     The issue arose from wrongful death litigation involving a steel truck. The
                             driver of the truck swerved left of center and then returned to his lane, but in so doing
                             dumped the load of steel onto an oncoming vehicle. The driver of the steel truck
                             alleged he swerved to avoid a John Doe vehicle backing onto the highway. When the
                             plaintiff’s estate sued the steel company, it filed a third-party complaint against John
Doe serving the plaintiff’s uninsured motorist carrier.

        Granting in part the UM insurer’s motion to dismiss, District Judge John Bailey found that damages
caused by John Doe under W.Va. Code §33-6-31 are limited to plaintiffs seeking recovery under their own UM
policy and that defendants could not assert a John Doe action under the plaintiff’s policy.

      However, the Court did permit the third-party complaint seeking indemnification and contribution against
John Doe as a joint tortfeasor to proceed.


                                                                                                                 19
                                                                                                July 2011
         UPDATE ON THE LAW



                          Cap on Medical Malpractice Damages Upheld

         The cap on noneconomic damages in medical            because the Legislature subsequently lowered the
 malpractice cases has been upheld as constitutional by       cap in 2003. Writing the majority opinion, Chief
 the West Virginia Supreme Court. The Court held the          Justice Margaret Workman wrote: “We find that the
 cap did not violate the right to a jury trial, separation    Legislature could have reasonably conceived to be
 of powers, equal protection, special legislation or the      true to the facts on which the amendments to the Act,
 “certain remedy” provisions of the State Constitution        including the cap on noneconomic damages in W. Va.
 in MacDonald v. City Hospital, et al., (No. 35543,           Code § 55-7B-8, were based. The Legislature could
 W.Va., filed June 22, 2011).                                                have rationally believed that decreasing
        In a 4-1 opinion involving                                           the cap on noneconomic damages would
 two temporary justices, the Court                                           reduce rising medical malpractice
 affirmed the Circuit Court of Berkeley                                      premiums and, in turn, prevent physicians
 County which set aside a $1.5 million                                       from leaving the state thereby increasing
 noneconomic damages jury verdict                                            the quality of, and access to, healthcare
 imposing the $500,000 heightened                                            for West Virginia residents. While one
 cap. W.Va. Code §55-7B-8 provides                                           or more members of the majority may
 a cap of $250,000 with an increase to                                       differ with the legislative reasoning, it
 $500,000 in cases of wrongful death,                                        is not our prerogative to substitute our
 permanent and substantial physical deformity, loss of                       judgment for that of the Legislature,
 use of a limb or bodily organ system, or permanent           so long as the classification is rational and bears a
 physical or mental functional injury that permanently        reasonable relationship to a proper governmental
 prevents independent care.                                   purpose. Further, even though the cap now contained
                                                              in W. Va. Code § 55-7B-8 is significantly less than the
        Although the constitutionality of the cap has         original $1,000,000 amount, we cannot say that it is on
 been previously determined, plaintiff sought review          its face arbitrary or capricious.”



                 Grandfather Owes No Duty to Warn Grandson About ATV


        The U.S. District Court for the Northern District of West Virginia has held a grandfather who owned an
ATV which he permitted his grandson to operate is not liable for any injuries the grandson later sustained. Watson
v. Wilson, (Civil Action No. 5:09-cv-107, N.D.W.Va., filed April 20, 2011).

       The issue arose when a 19-year-old was injured and later sued his grandfather and the ATV manufacturer,
Honda. Finding the threshold question is whether the grandfather owed a duty to the plaintiff, Judge Frederick P.
Stamp, Jr. found the grandfather owed no duty to train or warn and, therefore, was not liable.

        Judge Stamp found the plaintiff was 19 years old at the time of the accident, was a high school graduate,
that the grandfather showed the plaintiff the controls of the ATV in front of plaintiff’s parents and told the plaintiff
to wear a helmet. The plaintiff also testified he had driven an ATV hundreds of times and did not need any
instruction from his grandfather on how to be a good and safe driver or instruction he should wear a helmet. These
and other facts, Judge Stamp held, showed that an ordinary man in the defendant’s position would owe no duty
to the plaintiff.

20
            July 2011
                                                                              UPDATE ON THE LAW



                         Court Limits Release and Permits Second Suit


        The West Virginia Supreme Court of Appeals, interpreting a release, has permitted a second cause of ac-
tion to proceed after execution of a release finding that a “plain reading” of a document only applied to the claim
which was being released and did not apply to a subsequent claim.

       The issue arose in Multiplex, Inc. v. Raleigh County Board of Ed., (No. 35721, W.Va., filed April 28, 2011),
when a contractor sued the Raleigh County Board of Education for construction delays which occurred in 2005.
The claim was settled with a release stating in part: “It is expressly understood and agreed that this Release is
intended to extend to any and all claims, injuries and damages sustained by Multiplex, Inc. without exception…”

        After the 2005 claim was settled, Multiplex filed a second suit against the Board for subsequent construc-
tion delay damages. The Circuit Court of Raleigh County dismissed the second suit due to the language of the first
release. On appeal, however, the Supreme Court reversed finding “a plain reading” of the first release evidenced
the scope of the first release was limited to the 2005 claim. In a per curiam opinion, the Court found the second
suit was based on different factual circumstances constituting a separate cause of action that had not occurred at
the time of the first suit or at the time the first release was executed. The Court wrote: “We have previously held
that a release ordinarily covers only such matters as may fairly be said to have been within the contemplation of
the parties at the time of its execution.”




                          Court Upholds Qualified Reporter’s Privilege




       Confidential and privileged First Amendment information obtained in news gathering has again been
upheld by the West Virginia Supreme Court. In State ex rel. Lincoln Journal, Inc. v. Hustead, (No. 35734, W.Va.,
filed May 2, 2011), the Court reversed the Circuit Court of Cabell County which issued an order compelling a
weekly newspaper to reveal sources of articles concerning an election.

        At issue were the identity of individuals who provided information to the newspaper concerning an ongo-
ing investigation of alleged campaign law violations. Respondents alleged public disclosure of private facts, false
light invasion of privacy, and intentional and/or negligent infliction of emotional distress related to those articles.
In a per curiam opinion, the Court upheld the reporter’s qualified privilege pursuant to the First Amendment to
the United States Constitution. The case was remanded for further specific analysis by the trial court. In a concur-
ring opinion, Justice Menus Ketchum wrote: “speech like that used by the Lincoln Journal is entitled to special
protection in the courts.”




                                                                                                                  21
                                                                                               July 2011
         UPDATE ON THE LAW


                   Insurance Commissioner Cline Retires, Riley Appointed

        Effective June 30, 2011, West Virginia Insurance Commissioner Jane Cline retired from public service.
Cline was West Virginia's Insurance Commissioner for 10 years. Significant insurance reform including the aboli-
tion of third party bad faith, the privatization of workers' compensation and an overhaul of medical malpractice
insurance with the creation of a state-run malpractice insurer were hallmarks of Cline's tenure. She also served
as President of the National Association of Insurance Commissioners.

       Acting Governor Earl Ray Tomblin praised Cline for her leadership stating: "Throughout her tenure,
Jane Cline repeatedly demonstrated her skills as a manager, professional leader and independent problem-solver.
Cline dealt with a number of difficult and significant issues facing West Virginia's insurance industry during her
time as Commissioner. She deserves high praise, gratitude and accolades for her long and dedicated service to
the people of West Virginia."

       Mike Riley has been appointed Acting Insurance Commissioner. He is the former Assistant Commissioner
of Regulation and led the state’s privatization of its workers’ compensation system.



                Court Prohibits Mediation Discussion in Malpractice Action

       Disputes over what transpired at mediation is fueling post-settlement litigation. However, the California
Supreme Court has ruled that all events at mediation are confidential. In Cassel v. Superior Court of Los Angeles,
(No. S178914, decided February 7, 2011), the Court held that confidentiality is necessary to insure the candor
necessary for a successful mediation.

        A dispute arose in Cassel when a plaintiff agreed to a settlement at mediation and later sued his attorneys
for fraud, breach of contract, malpractice, and breach of fiduciary duty. Cassel alleged his attorneys coerced
him to settle for less than his case was worth. Interpreting the mediation statute, the California Court held that
mediation-related discussions are inadmissible in a malpractice action, even if the discussions occurred in private.



                             Forum Non Conveniens Cases Remanded
                                      for Further Analysis


        Applying the doctrine of forum non conveniens, the West Virginia Supreme Court has granted two peti-
tions for writs of prohibition in favor of Mylan Pharmaceuticals when it was twice sued in West Virginia concern-
ing a phentanyl patch it manufactured when they were prescribed and used in other states.

        In State ex rel. Mylan, Inc., et al. v. Zakaib and State ex rel. Mylan, Inc., et al. v. Bailey, (Nos. 11-0392 and
11-0440, W.Va., filed June 23, 2010), the Court revisited W.Va. Code §56-1-1a finding that two judges in the Cir-
cuit Court of Kanawha County failed to set forth findings of fact or conclusions of law in their orders. Therefore,
the cases were remanded with instructions to analyze each of the eight factors in the statute in any subsequent
order to permit a full review on appeal.

 22
             July 2011
                                                                            UPDATE ON THE LAW


                    Issues Not Identical, Collateral Estoppel Not Applied

       In a continuing debate as to the enforceability of a settlement agreement, the West Virginia Supreme Court
has reversed dismissal of a suit against a lawyer arising from a settlement agreement.

        In Abadir, et al. v. Dellinger, et al., (No. 35593, W.Va., filed May 2, 2011), a group of physicians were
represented by a lawyer in a medical malpractice action. The lawyer entered into a settlement agreement on behalf
of the physicians based upon the representations of just one of the physicians. The other physicians then alleged
the lawyer acted without their authority. The Supreme Court in an earlier appeal recognized that when an attorney
appears in court on behalf of clients there is a strong presumption of authority to represent the clients and the
burden is on the party denying the authority to clearly show the want of authority and concluded there was sup-
portive evidence that the lawyer had apparent authority. Thereafter, the other physicians sued the lawyer alleging
his actions created liability for them. The lawyer moved to dismiss based upon the earlier ruling of the Supreme
Court arguing collateral estoppel. The circuit court dismissed the suit.

        The Supreme Court reversed the dismissal finding that collateral estoppel did not apply because earlier
rulings were based upon the issue of apparent authority, not actual authority. Therefore, the issue previously de-
cided was not identical and collateral estoppel could not be applied. In its per curiam opinion, the Court further
noted that whether the lawyer had actual authority is a jury question.


                         Federal Court Rescinds Life Insurance Policy
                                  Due To Misrepresentations

       The U.S. District Court for the Southern District of West Virginia has permitted rescission of a life insur-
ance policy due to misrepresentations made at the time of application.

       In Massachusetts Mut. Life Ins. Co. v. Jordan, (Civil Action No. 3:10-cv-16, S.D.W.Va., filed May 9,
2011), the Court considered whether an applicant’s failure to disclose a heroin overdose one year prior to the
application was a material misrepresentation. The applicant died a year after the policy was issued of a gunshot
wound and his father sought life insurance proceeds.

        MassMutual filed a declaratory judgment action seeking to rescind the policy for misrepresentations.
Analyzing the rescission standard, District Judge Robert C. Chambers held that to rescind, an insurer must estab-
lish the applicant made misrepresentations, omissions, concealments of fact, and incorrect statements that were
either fraudulent, material to the acceptance of the risk or that the insurer would not have in good faith issued the
policy or would not have issued the policy in as large an amount if the true facts had been known per W.Va. Code
§33-6-7(b) and (c).

        The District Court found fraud and a material misrepresentation. Materiality, the Court held, is deter-
mined by an objective test of whether a reasonably prudent insurer would consider a misrepresentation material
to the contract. There is no need for a causal connection between the cause of death and the misrepresentation.

        As a result of rescinding the policy, the Court dismissed a counterclaim alleging breach of contract and
violations of the Unfair Trade Practices Act.

                                                                                                                 23
                                                                                              July 2011
       Martin & Seibert, L.C.
       1453 Winchester Ave.
       Martinsburg WV, 25405

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                                                                                  UPDATE ON THE LAW




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