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United Services Automobile Association v. Lucas

United Services Automobile Association v. Lucas

Case No. 
12-1500
Opinion Date: 
2/05/2014
Opinion Author: 
Justice Ketchum
Decision 
Affirmed
Vote: 
Unanimous
Facts 

This case arose out of a tragic car wreck in October, 2007.  The tortfeasor, Francis McComas, Jr., hydroplaned on a slick highway, veered left of center and collided head-on with the plaintiff, Kimberly Lucas.  The plaintiff, who was seriously injured, brought suit against McComas and included a claim for declaratory relief against his insurer, USAA.

 The facts surrounding USAA’s policy were critical to the court’s analysis.  The policy was issued in 2004 to Felicity Cooper.  In February, 2006, she and McComas were married.  McComas was then added to the policy as an “operator.”  The two separated 18 months later.  Felicity contacted USAA, advised that she and McComas were getting a divorce, and asked to have McComas removed from the policy.  USAA did so immediately. 

 It is undisputed that USAA never notified McComas of the cancellation and never provided notices per W.Va. Code 33-6-36 that he could purchase a policy of his own with the same coverages.  The trial court found that W.Va. Code 33-6-36 applied, and that USAA’s failure to provide the notice required thereunder meant that coverage remained in effect.

Issue 

Whether, under W.Va. 33-6-36, an insurer must provide notice to an insured's spouse that coverage under an insurance policy is being cancelled, including notice of the right to purchase a policy in the spouse's own name with the same coverages?

Analysis 

W.Va. Code 33-6-36 provides special protection where the named insured under a policy dies, divorces or legally separates.  Where the named insured or spouse has been “covered by a motor vehicle liability policy for a period of two or more years,” the insurer must give notice of these protections.  Furthermore, upon request, the named insured or spouse may be issued an individualized policy providing the same coverage as the original policy.  The question here is how to apply this two year provision.  The plaintiff contended that W.Va. Code 33-6-36 applies as long as the policy itself has been in effect for two or more years.  USAA contended that the statutory protections only apply if the spouse has been covered for the two year time period.  In this case, McComas had only been on the policy for 18 months and, therefore, under its view, was not entitled to notice.

The trial court concluded that W.Va. Code 33-6-36 was remedial in nature and should be applied to any policy in effect for two years.  Thus, USAA was obligated to provide the statutory notice regarding coverage.  Having failed to do so, USAA was required to provide liability coverage.

 The Supreme Court affirmed.  Because the parties offered “dueling, but reasonable interpretations” of the statutory language, the Supreme Court concluded that it was ambiguous.  To interpret the language the Supreme Court applied an oft-cited principle:  “Where a statute is of doubtful meaning, the contemporaneous construction placed thereon by the officers of government charged with its execution is entitled to great weight.”  Evans vs. Hutchinson, 158 W.Va. 359, 214 S.E.2d 453 (1975).  The insurance commissioner had adopted a rule addressing this issue.  114 C.S.R. 38.5.  This rule applied the protections of W.Va. Code 33-6-36 to “all policies which have been in existence for a continuous period of two full years.”  Furthermore, the insurance commissioner’s rule was approved by the Legislature in 1994.  Under West Virginia law:

 Once a disputed regulation is legislatively approved, it has the force of a statute itself.  Being an act of the West Virginia Legislature, it is entitled to more than mere deference; it is entitled to controlling weight.  W.Va. Healthcare Cost Review Authority vs. Boone Memorial Hospital, 196 W.Va. 326, 472 S.E.2d 411 (1996).

 The Supreme Court, therefore, adopted the interpretation from the insurance commissioner’s rule and stated its holding in two new syllabus points:

 "4. When a motor vehicle liability policy has been in existence for a continuous period of two or more years, W.Va. Code §33-6-36 [1993] requires an insurer to notify a named insured and the spouse of a named insured, upon any change or termination in coverage, of the right of the named insured or spouse to request a separate policy in the event of either:  (1) the named insured’s death; (b) the legal separation of the named insured and spouse; or (c) the termination of the named insured and spouse’s marital relationship.

 5. When a motor vehicle liability policy has been in existence for a continuous period of two or more years. W.Va. Code §33-6-36 [1993] requires an insurer, upon request, to issue a separate policy to a named insured or the spouse of a named insured when either:  (1) the named insured has died; (b) the named insured and spouse have legally separated; or (c) the named insured and spouse have terminated their marital relationship.  The named insured or spouse must request their own separate policy within 30 days of the expiration or termination of the policy."

 The case law already dictated what happens in situations where an insurer illegally cancels a policy: “the policy remains in effect until the end of its term or until a valid cancellation notice is perfected, whichever event first occurs.”  Dairyland Ins. Co. vs. Conley, 218 W.Va. 252, 624 S.E.2d 599 (2005).  Thus, USAA’s cancellation was ineffective and the policy remained in full force and effect at the time of the October, 2007 car wreck.

Commentary 

This case will not have any sweeping effect.  It is, however, a good reminder of the principles governing statutory construction and the legal effect given to administrative rules that have gone through the legislative approval process.

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