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State ex rel. Owners Ins. Co. v. McGraw

State ex rel. Owners Ins. Co. v. McGraw

Case No. 
13-1153
Type of Proceeding: 
Original Prohibition
Issues: 

In this case, the issue is whether jurisdiction may be exercised over an insurer that issued a policy (1) covering an Ohio contractor who worked exclusively for a West Virginia corporation, and (2) listing the corporation as an additional insured.  There are also issues involving choice of law and whether the corporation, as an additional insured, is a “first party” for bad faith purposes. 

 

Background: 

Paul Kerns is an Ohio contractor.  During the relevant time period, Kerns worked exclusively for Morlan Enterprises, a West Virginia corporation.

 The plaintiff was injured while working on high power lines.  The plaintiff sued several contractors, including Morlan, who in turn filed a third party complaint against Kerns.  Morlan sought to have Kerns’ insurer, Owners Insurance Company, provide it with a defense.  Owners refused, prompting Morlan to file a complaint for declaratory judgment.  Owners moved to dismiss, however, alleging that it did not have sufficient contacts with West Virginia to support jurisdiction.

 The trial court found that jurisdiction was appropriate under the long arm statute, specifically W.Va. Code 31D-15-1501(d), because Owners issued a policy covering a “person, property or risk located” in this state.  Furthermore, the trial court found that Owners had sufficient West Virginia contacts to satisfy due process.  In subsequent orders, the trial court applied West Virginia law to the coverage dispute and also determined that Morlan was a “first party” for purposes of prosecuting any bad faith claims.

Positions of the Parties: 

Petitioner:

 Regarding the jurisdictional issue, Owners argues that it issued a policy of insurance to an Ohio resident and that there is no proof the policy was intended to insure any risk located in West Virginia.  Owners also argues that Ohio law should apply in interpreting the policy.  Furthermore, Owners says that the trial court erred in applying Marlin vs. Wetzel County Bd. of Educ., 212 W.Va. 215, 569 S.E.2d 462 (2002) and that Morlan was not a first party insured for bad faith purposes.

 Respondent:

 Morlan argues that Owners has sufficient contacts to warrant jurisdiction.  First of all, Owners specifically included a West Virginia corporation, Morlan, as an additional insured.  Furthermore, it should have been obvious to Owners that Kerns had substantial operations in West Virginia and, therefore, could be called upon to defend a claim arising in West Virginia.  Morlan also argues that West Virginia law applies because the critical issue focuses on Morlan’s inclusion as an additional insured.  With regard to coverage, Morlan argues that Marlin is controlling and that Morlan is a first party entitled to all bad faith remedies available under West Virginia law.

Probable Impact: 

This case is on the Rule 19 docket.  Therefore, it is unlikely to produce any new law.  Nevertheless, the Supreme Court’s opinion will likely provide helpful guidance regarding the jurisdictional issue and the definition of a “first party.”

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