Brian Frye v. Erie Insurance Company (Chief Justice Armstead, dissenting) ( 2024 )

FILED
June 12, 2024
No. 22-0378, Brian Frye v. Erie Insurance Company released at 3:00 p.m.
C. CASEY FORBES, CLERK
ARMSTEAD, Justice, dissenting: SUPREME COURT OF APPEALS
OF WEST VIRGINIA
I respect the majority’s desire to abide by the general provisions of Rule 24(c)
of the West Virginia Rules of Civil Procedure (“Rule 24(c)”), and do not dispute that notice
to the Attorney General and the potential participation of the Board of Risk and Insurance
Management (“BRIM”) in this action may be helpful in resolving the matter before us.
However, I am concerned with the majority’s remand of this matter to require such notice
at this late stage of the proceedings when no party timely and affirmatively raised a
constitutional question. I believe that imposing such requirement, following a grant of
summary judgment and denial of a motion pursuant to Rule 59(e) of the West Virginia
Rules of Civil Procedure (“Rule 59(e)”), is not required by the rule, and I fear it will set a
concerning precedent.
Following entry of summary judgment against him, Mr. Frye filed a Motion
to Alter or Amend Judgment, pursuant to Rule 59(e). In that motion, he asserted for the
first time that the circuit court had failed to address the constitutionality of the statutory
scheme established by our Legislature regarding the role BRIM, a non-party, takes in the
claims process for mine subsidence claims. In that motion, he advanced no argument that
the West Virginia Attorney General should be given notice of this constitutional question
pursuant to the provisions of Rule 24(c). Instead, the question of whether such notice is
required was first raised by Respondent, Erie Insurance Company (“Erie”), in its response
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to the Motion to Alter or Amend Judgment. A reading of the transcript of the pretrial
hearing, where these issues were discussed, shows that Mr. Frye made the conscious choice
not to assert any claims against BRIM. Because Mr. Frye decided what claims to assert,
and he plainly decided to not assert any allegation against BRIM, challenge the
constitutionality of the claims process, or seek intervention by the West Virginia Attorney
General, the retroactive application of Rule 24(c) at the appellate stage of the action is
untimely. Therefore, I dissent.
At the pretrial conference, it was the circuit court that raised the potential
issue regarding the constitutionality of BRIM’s involvement in the process of adjusting
mine subsidence claims. Prior to that hearing, the record before this Court shows the
parties briefed neither the constitutional issue nor the application of Rule 24(c). There was
limited discussion of the potential constitutional issue at the pretrial hearing. However,
Mr. Frye’s counsel, even following the discussion at that hearing, did not request that notice
be given to the Attorney General and had not directly raised the issue in any pleading, prior
to the grant of summary judgment. Indeed, Mr. Frye clearly had the opportunity at the
conclusion of the pretrial hearing to raise the constitutional issue and the application of
Rule 24(c) prior to the circuit court’s entry of summary judgment. He did not do so.
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Moreover, no party raised the constitutional issue in their written memoranda
addressing Erie’s motion for summary judgment. Again, it was at the pretrial hearing that
the circuit court first raised the constitutional issue. During this discussion at the pretrial
hearing, it is clear that counsel for Mr. Frye was aware of the constitutional conundrum yet
chose to not pursue it. The circuit court began its discussion by simply raising a question
about the process through which mine subsidence claims are processed:
THE [CIRCUIT] COURT: You’re saying – by that
statement, to me it sounds almost like a constitutional
argument, is what you’re arguing, that the legislature could not
authorize by statute a delegation, constitutionally, of an
insurer’s duty of fair dealing with its insured, by handing some
adjustment over to a separate outfit like BRIM.
[Counsel for Mr. Frye]: I think that’s part of it, I think
that’s one prong of it, Your Honor, and one reason that they
can’t. But the other is that the code specifically provides for
the insurer to handle and settle the claim in the customary
manner. But the other is that the code specifically provides for
the insurer to handle and settle the claim in the customary
manner. And that’s where the difficulty is. They specifically
say we’re a reinsurer. That’s why they have insurance
companies do it, Your Honor, to be quite frank.
Let’s look at this from a practical standpoint, though. If
BRIM was truly the ones that – if the insurance company had
no authority to do anything, there would be no reason to
involve the insurance companies. There would just be a fund
set up by the state, and you would make a claim to that fund
when you have mine subsidence, and then BRIM would make
a decision, and you either get money from the state or you
wouldn’t.
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The discussion of the BRIM statutory process turned to whether insureds
have a remedy:
[Counsel for Erie]: What I’m saying, Your Honor, is
that when a mine subsidence claim is submitted, the carrier is
statutorily obligated to assign to BRIM the investigation and
coverage determination of that mine subsidence claim. In this
case Erie did that. Erie hired its own engineer to investigate
whether there were any other possible covered causes or
whether it was mine subsidence, and Erie sent the delay letter
every month to Mr. Frye, telling him his claim was still being
investigated by BRIM for mine subsidence coverage. And
when Erie got BRIM’s engineer’s report, Erie issued a denial
letter. So it’s not as if Erie just sent it to BRIM and did
nothing.
....
THE [CIRCUIT] COURT: [P]otentially its bad faith if
– and again, I’m throwing this word out loosely – [Erie is] not
immune in a mine subsidence case. The way I’m reading this
potentially is – and I’m not making this finding yet – once a
claim is made under mine subsidence and they refer it to
BRIM, I don’t think they have a duty to keep you informed of
squat, potentially, as unfair as that may seem.
[Counsel for Mr. Frye]: Well, and that comes to my
third point, which is if the law is to be interpreted that way,
then you have a whole bunch of West Virginians with no
remedy.
THE [CIRCUIT] COURT: I agree.
[Counsel for Mr. Frye]: And that’s a problem. That’s
clearly not what was intended by the statute is that, look, you
know, hey, you can go purchase mine subsidence coverage all
you want, and BRIM—
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THE [CIRCUIT] COURT: Can do whatever it wants
and you’re screwed.
[Counsel for Mr. Frye]: Yeah, BRIM can do whatever
it wants and you got no remedy.
THE [CIRCUIT] COURT: Even in first party. It seems
completely crazy to me, which goes back to my constitutional
suggestion. Are you actually maybe suggesting that the
manner in which this was written is unconstitutional, which is
why I think [Counsel for Erie] is saying, hey, let’s pull the reins
in here, I’m not arguing complete immunity, I’m trying to pin
all this and keep the argument much more sustainable on
appeal than what you guys are maybe throwing out.
Counsel for Erie then appeared to take the position that the lack of a remedy
was irrelevant because Erie followed the Legislative construct:
[Counsel for Erie]: I’ll take them backwards. In regard
to West Virginia being without a remedy, Your Honor, I don’t
really feel that that is – while [Counsel for Mr. Frye] may have
a valid point, that is not the legislative scheme that is in place.
The legislative scheme was put in place because no insurance
carriers would write mine subsidence coverage. So[,] the State
of West Virginia developed a plan to collect premiums, create
a fund, investigate and pay out valid mine subsidence claims.
That’s the West Virginia legislature that created that plan. Erie
followed it to a T.
THE [CIRCUIT] COURT: Okay. And forgive my
ignorance. Is there actually a remedy in administrative
appeals, or no?
[Counsel for Erie]: Your Honor, I don’t know that
answer to that, to tell you the truth. I will tell you in this case
when Mr. Frye complained, BRIM came back out two years
later and hired a second consultant, this time a geologist. Three
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people from EEI Geophysical came out. They again two years
later independently concluded no evidence of mine subsidence.
So[,] there is some kind of procedure that BRIM was willing
to hire a second consultant to come out and review, but the
results were the same, no mine subsidence.
Counsel for Mr. Frye, however, maintained that his only remedy was a
breach of contract claim against the insurer, Erie, and the issue of whether there was mine
subsidence was a jury question:
[Counsel for Mr. Frye]: Without question, without
question, regardless of how it’s set up, whether it’s because of
a statutory scheme or whatever, Erie issued a contract, a policy
of insurance to my client, and my client has to be able to – you
asked a good question. So what’s my client supposed to do?
You can’t just go to the state and say, hey, give me this money.
The only thing you can do is go to Erie. So regardless of
whether they think they can be held in bad faith or whether the
decision’s like, hey, our hands are tied because of BRIM, those
are all defenses to a bad faith claim.
But the breach of contract claim, the only thing my
client can do is file a claim for those benefits with Erie. They
can’t file it directly with the state. File it with Erie, and if those
aren’t paid, file a breach of contract claim. And that’s the
initial thing here, which is that my client still hasn’t been paid
his benefits or had an opportunity to have that heard. And we
have an expert to testify --
THE [CIRCUIT] COURT: Which is why this is about
immunity. You guys can couch it any way you want, this is
about immunity. The argument is the same for both. There is
no breach of contract claim, [Counsel for Mr. Frye], if they
have no duty to adjust and investigate and make a decision on
whether the claim is valid.
[Counsel for Mr. Frye]: I disagree, Your Honor.
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THE [CIRCUIT] COURT: How could you?
[Counsel for Mr. Frye]: Because with respect to – that
goes to the bad faith. You don’t even need a duty for a breach
of contract. You know, we’re talking about tort, you know, in
terms of the duty. But a contractual relationship says, hey, you
pay this, I’ll do this in exchange. And the contract was you pay
premiums, you have mine subsidence, we’ll pay you the
benefits.
THE [CIRCUIT] COURT: If it’s covered, yeah.
[Counsel for Mr. Frye]: If it’s covered. But this is my
client’s only mechanism for determining whether that’s
covered. My client didn’t get to have a hearing in front of
BRIM or present anything in front of BRIM. And my client has
no contract with BRIM.
THE [CIRCUIT] COURT: No. But [Counsel for
Erie’s] position is that her client didn’t have a chance to even
weigh in on whether it was covered or not. So[,] I understand
both arguments, believe me. I understand [Mr. Frye] didn’t
have a chance, and I think it’s unfair, but I have to make a
determination as the court to figure out if [Erie] even had a
chance to weigh in legally on whether they breached the
contract. And if [Erie]’s hands are now tied, how is it fair that
you can sue them for breach of contract?
[Counsel for Mr. Frye]: And I can answer that.
THE [CIRCUIT] COURT: I think this whole scheme
seems to be a little screwed up.
[Counsel for Mr. Frye]: Perhaps. I would tend to agree
with that, that it’s a screwed up scheme. But given the scheme
that it is, the fact of the matter is that there was a contract
between Erie and [Mr.] Frye.
THE [CIRCUIT] COURT: No doubt.
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[Counsel for Mr. Frye]: Under any contract, any
contract, all right, the question is, all right, are you doing your
part, basically. I’ll summarize it in simple terms. My client
clearly paid his premiums. Nobody disputes that. The only
question now is, all right, was there mine subsidence. And
that’s a jury question, that’s absolutely a jury question as to
whether there was mine subsidence. If there was mine
subsidence they owe that money to him, right?
THE [CIRCUIT] COURT: So now we’re going to let
the jury decide whether BRIM made the appropriate decision?
[Counsel for Mr. Frye]: Not really. The jury is going to
decide whether there was mine subsidence.
(emphasis added).
As illustrated by this colloquy during the pretrial conference, it is clear that
counsel for Mr. Frye was aware at that time that there could possibly be a constitutional
issue in this case. The remaining portions of the transcript of the pretrial hearing indicate
that he was also aware of the potential for filing a declaratory judgment action to address
this issue and was aware of the possibility of certifying a question to this Court, all as
avenues to place the constitutional issue squarely into question. Yet, counsel for Mr. Frye
took no steps to formally raise the constitutional question. Instead, he waited until the
circuit court entered summary judgment against Mr. Frye. It was then, for the first time,
that he raised the constitutional issue in his Motion to Alter and Amend Judgment. Even
still, counsel for Mr. Frye made no suggestion of the application of Rule 24(c). It was Erie
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who raised the potential applicability of Rule 24(c) in its response to the Rule 59(e) motion,
alleging that Mr. Frye had waived its application.
The majority opinion cites to a Supreme Court of Tennessee case in footnote
23 for the proposition that the circuit court is a gatekeeper for enforcing the requirements
of Rule 24(c). See In re Adoption of E.N.R., 42 S.W.3d 26 (Tenn. 2001). In doing so, the
majority cited the statement of the Tennessee court that “the trial court functions as a
‘gatekeeper to inquire whether notice has been provided to the Attorney General by the
challenger and to suspend proceeding on the constitutional challenge until such notice has
been provided and a response from the Attorney General received.’” Maj. Op. n 23. A
full review of the discussion contained in the E.N.R. opinion, however, reveals that a key
factor of a court’s gatekeeper function is a determination of the timeliness of the request to
invoke Rule 24(c). As the majority states, the court in E.N.R. found:
Nevertheless, the court is required, pursuant to Tenn. R.
Civ. P. 24.04,[1] to ensure that notice of the constitutional
challenge has been provided to the Office of the Attorney
1
Tennessee Rule of Civil Procedure 24.04 is substantially similar to the
provisions of West Virginia Rule of Civil Procedure 24(c). The Tennessee Rule provides:
When the validity of a statute of this state or an
administrative rule or regulation of this state is drawn in
question in any action to which the State or an officer or agency
is not a party, the court shall require that notice be given the
Attorney General, specifying the pertinent statute, rule or
regulation.
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General. This rule makes it clear that the trial court sits as
gatekeeper to inquire whether notice has been provided to the
Attorney General by the challenger and to suspend proceeding
on the constitutional challenge until such notice has been
provided and a response from the Attorney General received.
Id., at 33 (emphasis in original). This language is followed by important limiting language.
The majority dismisses the additional language contained in the E.N.R. decision as only
“being part of the separate issue of whether the appellant had waived his constitutional
argument.” However, the paragraph immediately following the excerpt cited by the
majority specifically states that the untimeliness of the “mention” that the statute in that
case might be unconstitutional obviated any duty on the part of the trial court to provide
the notice required under Rule 24.04:
The trial court in this case did not err, however. It is
unreasonable to expect a trial court to suspend a proceeding
upon the untimely mention by counsel that a statute is
unconstitutional. A court is obligated to ensure compliance
with the notification rules only after the question of
constitutionality has been put properly at issue by the
challenger. Because the challenge in this case was not timely
raised, the trial court had no obligation under Tenn. R. Civ. P.
24.04.
Id., at 33-34 (emphasis added). This qualifying language expressly limits the court’s duty
under Rule 24 when the parties fail to timely raise a constitutional issue. Indeed, the issues
of the constitutionality of the statute and the notice required to be given the Attorney
General are inextricably intertwined. It is the question of constitutionality that triggers the
Rule’s application and the duty to timely raise the issue rests upon the party asserting the
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question of constitutionality.2 In E.N.R., the constitutional challenge was not raised until
closing argument at trial. See id., at 29. Because of such delay in raising the issue, the
Tennessee Supreme Court concluded that the challenge was not preserved for appeal:
The record shows that the constitutional challenge in
this case was late-raised, minimally addressed, characterized
by counsel as mentioned only for the purpose of preserving it
for appeal, and perhaps was simply a last ditch effort to
overcome the court’s preliminary findings in favor of the
opposition. To now rely upon the importance of this issue as
grounds for appellate review is near hypocrisy given the short
shrift it received at trial where it could have, and should have,
been fully adjudicated.
Id., at 32. Further, following E.N.R., Tennessee courts have consistently held that notice
to the Attorney General is not required when the request for Attorney General involvement
is untimely:
2
Another Tennessee case cited in footnote 23 of the majority opinion is
distinguishable from the present case. See Shelby Cnty. v. Delinq. Taxpayers 2018, No.
W202300446COAR3CV, 2024 WL 1944737 (Tenn. Ct. App. May 3, 2024) (“Shelby
County”). In Shelby County, the issue of notice to the Tennessee Attorney General was
first raised on appeal because of a “recent case decided and filed in the Sixth Circuit Court
of Appeals.” Id. at *2. The lower court completed its review of Shelby County on June 29,
2022. See id. The “recent case” noted in Shelby County was not handed down by the Sixth
Circuit until October 10, 2022, five months after the lower court in Shelby County had
issued its ruling. Compare id. with Hall v. Meisner, 51 F.4th 185, 187 (6th Cir. 2022),
reh'g denied, No. 21-1700, 2023 WL 370649 (6th Cir. Jan. 4, 2023), and cert. denied sub
nom. Meisner v. Tawanda Hall, 143 S. Ct. 2639 (2023), and cert. denied, 143 S. Ct. 2638
(2023). An issue raised for the first time on appeal because of another court’s opinion that
was not in existence at the time a case was before a trial court is dramatically different from
when, as here, the parties were fully aware of an issue and chose not to raise it before the
trial court.
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In the Adoption of E.N.R. opinion, the High Court stated ‘there
is little difference between an issue improperly raised before
the trial court at the last minute and one that was not raised at
all.’ Counsel in the Adoption of E.N.R. case had raised a
question about the constitutionality of a statute only in closing
argument in hope of preserving the issue for appeal. The
Supreme Court held ‘that the Court of Appeals properly
refused to consider the [belated] constitutional challenge.’ The
Court also discussed the inability of the trial court to act ‘as
gatekeeper to inquire whether notice has been provided to the
Attorney General’ when the issue is not properly raised in the
trial court.
Miltier v. Bank of Am., N.A., No. E2010-00537-COA-R3CV, 2011 WL 1166746, at *4
(Tenn. Ct. App. Mar. 30, 2011) (citations omitted) (bracket in original).
In In re Adoption of E.N.R., the defendant never raised the
constitutional issue in a pleading or motion. And after carefully
reviewing the record, the supreme court concluded that the
defendant ‘raised no constitutional challenge whatsoever until
closing argument.’
Yebuah v. Ctr. for Urological Treatment, PLC, No. M201801652COAR3CV, 2020 WL
2781586, at *4 (Tenn. Ct. App. May 28, 2020), rev’d on other grounds, 624 S.W.3d 481(Tenn. 2021) (citation omitted).
Similarly, here there was no legitimate justification for Mr. Frye’s failure to
properly raise the constitutional issue prior to the entry of summary judgment. Mr. Frye
knew of the constitutional dilemma and did nothing. “[T]he party who brings a suit is
master to decide what law he will rely upon. . . .” The Fair v. Kohler Die & Specialty Co.,
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228 U.S. 22, 25 (1913). Here, Mr. Frye chose to bring a breach of contract claim against
Erie, despite having full knowledge of the constitutional issue and BRIM’s role in the
statutory scheme. Moreover, the circuit court effectively invited the parties to raise the
constitutionality of the statute more formally, and Mr. Frye chose, as indicated by the
transcript of the hearing, to simply pursue his breach of contract action against Erie.
The requirements of notice to the Attorney General outlined in Rule 24(c)
are implicated when a constitutional issue is, as the rule expressly provides, “drawn in
question” in a case. Here, the constitutionality of the statutory process was merely
discussed in a passing fashion at the pretrial hearing, and it was neither raised in Mr. Frye’s
complaint, nor was it formally asserted in any pleading prior to the grant of summary
judgment. Under such circumstances, I do not believe the constitutional issue was
adequately “drawn in question” to require the circuit court to provide notice to the Attorney
General.
Notice to the Attorney General is admittedly an important step when the
constitutionality of a statute is properly and timely placed before a court for a determination
of whether such statute is violative of constitutional provisions. However, I believe the
majority’s decision to remand this case for notice to the Attorney General at this late stage,
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based on nothing more than a mere discussion of constitutional concerns at a hearing, takes
this Court down a slippery slope. Therefore, I respectfully dissent.
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