(1) Does an uninsured motorist policy exclusion purporting to exclude coverage for all-terrain vehicles and trailers conflict with the spirit and intent of minimum mandatory property damage coverages contained within West Virginia’s Motor Vehicle Safety Responsibility Law?
(2) When does the one-year statute of limitations for common law insurance bad faith and Unfair Trade Practices claims begin to run?
On September 13, 2013, Respondent, Ricky A. Dolly, was involved in an auto wreck which caused property damage to his vehicle, attached trailer, and an all-terrain vehicle being towed in the trailer. Respondent was struck by an uninsured motorist who was admittedly at fault for all property damages stemming from the wreck. At the time of the wreck, Respondent maintained a policy of auto insurance with Petitioner, Erie Insurance Company, which provided the West Virginia state minimum uninsured motorist coverage: $10,000.
On May 2, 2014, Respondent filed suit in the Circuit Court of Hampshire County, West Virginia, seeking to recover all property damages arising from the wreck. Petitioner accepted coverage for the damages to Respondent’s vehicle under a collision endorsement, but denied coverage for damages to Respondent’s trailer and all-terrain vehicle under the uninsured motorist endorsement. Specifically, Petitioner cited to exclusionary language within the policy that provided as follows: “Uninsured/Underinsured Motorists Coverage is not provided for any “trailer,” whether or not the “trailer” is attached to another “motor vehicle” or “miscellaneous vehicle.” Notably, the policy definition of “miscellaneous vehicle” includes “all terrain vehicle[s] and any similar recreational vehicle[s].”
On March 22, 2016, Respondent amended his complaint to assert statutory and common law bad faith claims against Petitioner. Moreover, Respondent sought declaratory judgment that he was entitled to coverage for the trailer and all-terrain vehicle pursuant to the mandatory minimums outlined within West Virginia’s motor vehicle responsibility statute. Petitioner disagreed, arguing that the bad faith claims violated the applicable one-year statute of limitations, and further, that it was entitled to declaratory judgment of non-coverage under the policy exclusion.
On September 22, 2016, the parties appeared before the Circuit Court of Hampshire County for oral argument on their counter-petitions for declaratory judgment and Petitioner’s Motion to Dismiss.
On July 11, 2016, the Circuit Court issued an Order Denying [Petitioner’s] Motion to Dismiss for Violation of the Statute of Limitations, relying upon the audio recording of oral argument, and requesting that the parties submit memoranda of law on the declaratory judgment issues.
On November 10, 2016, the Circuit Court of Hampshire County issued an Order Granting [Respondent’s] Petition for Declaratory Judgment, finding that the Respondent was entitled to mandatory minimum coverage of $10,000.00 for the property damage to his trailer and all-terrain vehicle under West Virginia’s motor vehicle responsibility statute. The Circuit Court reasoned that the all-terrain vehicle should be considered personal property, rather than a “miscellaneous vehicle”, because it was not registered for use on a public highway. Further, the Circuit Court found that Petitioner’s policy exclusion language was “inconsistent with the spirit and intent of the uninsured and underinsured motorist statute.” Petitioner, Erie Insurance Company, appeals.
Petitioner first argues that the Circuit Court erred by ruling that the exclusion of uninsured motorist coverage for a trailer and an all-terrain vehicle violated the motor vehicle safety responsibility law. Specifically, Petitioner argues that because all-terrain vehicles and trailers are not required to be registered and licensed, they are necessarily exempt from the mandatory minimums of the motor vehicle safety responsibility law. Accordingly, Petitioner contends that its exclusion is proper and does not offend the spirit and intent of the West Virginia’s Motor Vehicle Safety Responsibility Law. Petitioner adds that West Virginia’s insurance commissioner approved the exclusion language at issue.
Second, Petitioner argues that, under Wilt v. State Auto. Mut. Ins. Co., 203 W.Va. 165, 506 S.E.2d 608 (1998), a one-year statute of limitations applies to Respondent’s Unfair Trade Practices Act and common law bad faith claims. Pursuant to West Virginia’s “discovery rule”, Petitioner contends that this statute of limitations begins to run from the initial denial of coverage, not the resolution of the underlying claim.
Respondent (Mr. Dolly):
Respondent argues that West Virginia’s Uninsured Motorist Law requires every contract of insurance to provide certain minimum uninsured motorist coverages. Respondent asserts that uninsured motorist coverage of at least $10,000 for property damage is mandatory, and insurers cannot abdicate themselves of this responsibility through policy exclusions. Because Respondent’s trailer and all-terrain vehicle are personal property, he argues that Petitioner is required to provide coverage up to the statutory minimum coverage limits. Furthermore, Respondent argues that any statute of limitations applicable to common law and statutory bad faith claims only begins to run from the date an insured prevails in an underlying property damage suit.
We can expect the Supreme Court to use this opportunity to clear up any conflicting case law regarding when the statute of limitations begins to run in UTPA and common law bad faith actions. Any ruling on this point will surely have a significant impact on bad faith litigation in West Virginia. With regard to the uninsured motorist exclusion issue, any ruling by the Court is likely to have less impact, because it will focus on the Court’s interpretation of case-specific facts. All parties involved seem to agree that an insurer is allowed to include exclusions within uninsured motorist policies. Further, all parties seem to agree that a statutory minimum of $10,000 of coverage exists for all personal injury and property damages stemming from the negligence of an uninsured motorist. Indeed, the parties even seem to agree that an insurer cannot make exclusions to this mandatory coverage.
The issue before the Court in this matter is whether this particular trailer, and this particular all-terrain vehicle, should be considered personal property or unlicensed/unregistered vehicles. If the Court determines these items to be personal property, they will necessarily find that coverage is proper under the uninsured motorist policy. However, if the Court determines these items to be unlicensed/unregistered vehicles, it will likely find that they are outside the scope of West Virginia’s Motor Vehicle Safety Responsibility Act. Each parties’ respective coverage arguments focus on the proper manner of characterizing these items. On this issue, we can expect the Court to issue a case-specific ruling without broadly declaring all trailers and all-terrain vehicles to be either personal property or unlicensed/unregistered vehicles.