Audrey Kenney v. Independent Order of Foresters

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1788
AUDREY DIANNE KENNEY,
Plaintiff – Appellant,
v.
THE INDEPENDENT ORDER OF FORESTERS,
Defendant - Appellee.
Appeal from the United States District Court for the Northern
District of West Virginia, at Martinsburg. Gina M. Groh,
District Judge. (3:12-cv-00123-GMG)
Argued: December 11, 2013 Decided: March 10, 2014
Before AGEE, KEENAN, and FLOYD, Circuit Judges.
Reversed and remanded by published opinion. Judge Floyd wrote
the opinion, in which Judge Agee and Judge Keenan joined.
ARGUED: Don C.A. Parker, SPILMAN, THOMAS & BATTLE, PLLC,
Charleston, West Virginia, for Appellant. Robert Lawrence
Massie, NELSON MULLINS RILEY & SCARBOROUGH LLP, Huntington, West
Virginia, for Appellee. ON BRIEF: Glen A. Murphy, SPILMAN,
THOMAS & BATTLE, PLLC, Charleston, West Virginia, for Appellant.
S. Taylor Hood, NELSON MULLINS RILEY & SCARBOROUGH LLP,
Huntington, West Virginia, for Appellee.
FLOYD, Circuit Judge:
At least three times during the past two decades, federal
courts in our Circuit have called upon West Virginia’s highest
court to answer certified questions regarding the West Virginia
Unfair Trade Practices Act (WVUTPA). Each time, the Supreme
Court of Appeals of West Virginia determined that actions
pursuant to the WVUTPA sound in tort and not in contract.
Taylor v. Nationwide Mut. Ins. Co., 589 S.E.2d 55 (W. Va. 2003);
Wilt v. State Auto. Mut. Ins. Co., 506 S.E.2d 608 (W. Va. 1998);
Poling v. Motorists Mut. Ins. Co., 450 S.E.2d 635 (W. Va. 1994). 1
This Court, too, has decided a case under that same framework,
albeit in an unpublished opinion. Yost v. Travelers Ins. Co.,
181 F.3d 95 (4th Cir. 1999) (unpublished table decision). In
view of the want of published authority from this Court and the
frequency with which the WVUTPA is litigated in federal court,
we take this opportunity to clarify the law for district courts,
unless and until the Supreme Court of Appeals of West Virginia
rules to the contrary.
For the reasons that follow, we hold that actions brought
pursuant to the WVUTPA sound in tort and not in contract. We
further hold that West Virginia law governs the underlying
1
Each of the cited cases were before the Supreme Court of
Appeals of West Virginia on certification from the U.S. District
Court for the Northern District of West Virginia.
2
lawsuit and that the complaint states a claim upon which relief
can be granted. Accordingly, we reverse the district court’s
dismissal of the complaint and remand for further proceedings.
I.
Audrey Kenney’s husband, Ronald Kenney, passed away on
September 19, 2011, leaving Mrs. Kenney as the sole beneficiary
of a life-insurance policy (the “policy”) issued by The
Independent Order of Foresters (IOF), a Canadian corporation.
At the time of Mr. Kenney’s passing in 2011, the Kenneys were
residents of West Virginia and had resided there since 2003. At
the time that IOF issued the policy to Mr. Kenney in 1984,
however, the Kenneys resided in Virginia. The policy contains a
choice-of-law provision that states as follows: “The rights or
obligations of the member or anyone rightfully claiming under
this certificate will be governed by the laws of the State in
which this certificate is delivered.”
On September 21, 2011, Mrs. Kenney filed a claim with IOF
to collect the policy benefits, which she believed to be
$130,000; IOF, however, responded that the policy was worth only
$80,000. In fact, although the policy was worth only $80,000
when Mr. Kenney took out the policy in 1984, Mr. Kenney
subsequently applied for and received a $50,000 increase in
coverage in 1994.
3
When IOF refused to pay $130,000 to Mrs. Kenney, she filed
a complaint with the West Virginia Office of the Insurance
Commissioner (the “Commissioner”) on November 1, 2011. IOF
responded to Mrs. Kenney’s complaint on or around December 7,
2011, and maintained that the policy was worth only $80,000.
On June 27, 2012, the Commissioner scheduled an administrative
hearing to be held on August 1, 2012, regarding Mrs. Kenney’s
claim. Then, on July 20, 2012—nearly ten months after Mrs.
Kenney first contacted IOF and just twelve days before the
administrative hearing was scheduled to take place—IOF reversed
course and agreed to pay $130,000 to Mrs. Kenney. Without
further explanation, IOF provided the following reasoning for
the sudden departure from its prior position on Mrs. Kenney’s
claim: “There are some inconsistencies within the file that lead
us to the conclusion that Mr. Kenney would have assumed the face
amount of the insurance certificate . . . at the increased
coverage amount of $130,000. Based on this information, we will
honour the death claim for that amount.” 2 In its brief on
appeal, IOF now reveals that Mr. Kenney allegedly “failed to
2
We quote from Mrs. Kenney’s opening brief and not the
original letter sent from IOF to Mrs. Kenney, as it appears that
the letter was not included in the Joint Appendix. In answering
Mrs. Kenney’s complaint—which recites an only slightly different
version of the IOF letter quoted above—IOF did not deny the
contents of the letter as set forth by Mrs. Kenney, but instead
stated that “the letter referenced speaks for itself.”
4
sign and return the offer form before its expiration date,” and
thus the offer for the increase in coverage had lapsed. This
explanation, however, was never provided to Mrs. Kenney during
the nearly year-long period that she was denied the benefit of
the increased coverage.
Mrs. Kenney sued IOF in West Virginia state court on
September 19, 2012, pursuant to the WVUTPA. Specifically, Mrs.
Kenney acknowledged in her complaint that she “substantially
prevailed in obtaining the coverage to which she was always
lawfully entitled”; she alleged, however, that IOF’s “conduct
. . . in connection with its handling” of her claim constituted
an unlawful settlement practice prohibited by the WVUTPA. See,
e.g., W. Va. Code § 33-11-4(9)(f) (unlawful to “[n]ot attempt[]
in good faith to effectuate prompt, fair and equitable
settlements of claims in which liability has become reasonably
clear”). IOF removed the case to the district court below and
thereafter moved to dismiss for failure to state a claim upon
which relief can be granted. The district court granted IOF’s
motion to dismiss and Mrs. Kenney appealed. 3 This Court has
jurisdiction pursuant to 28 U.S.C. § 1291.
3
Prior to appealing, Mrs. Kenny moved pursuant to Federal
Rules of Civil Procedure 59 and 60 to, inter alia, correct
certain factual inaccuracies recited by the district court in
the memorandum opinion granting IOF’s motion to dismiss. These
5
II.
This appeal presents three issues that we must address in
series. First, whether Mrs. Kenney’s lawsuit pursuant to the
WVUTPA sounds in tort or in contract. In re Bankers Trust Co.,
752 F.2d 874, 881 (3d Cir. 1984) (“The initial step in any
choice of law analysis involves the characterization of the
subject matter of or the issues in the case (e.g., tort or
contract) and of the nature of each issue and whether it raises
a problem of procedural or substantive law.” (citing E. Scoles &
P. Hay, Conflict of Laws 50–51 (1984)). Second, whether West
Virginia law or Virginia law governs the outcome of the suit
pursuant to West Virginia’s choice-of-law rules. See Acme
Circus Operating Co. v. Kuperstock, 711 F.2d 1538, 1540 (11th
Cir. 1983). And finally, whether the complaint’s factual
allegations sufficiently state a claim upon which relief can be
granted. This Court reviews de novo the district court’s
dismissal of a complaint for failure to state a claim pursuant
inaccuracies pertained primarily to the length of time that the
Kenneys resided in West Virginia prior to Mr. Kenney’s passing.
The district court granted Mrs. Kenney’s motion and subsequently
issued an amended memorandum opinion and order that dismissed
Mrs. Kenney’s complaint. This amended memorandum and order is
the order on appeal, and it contains the same substantive legal
reasoning for dismissal as the district court’s first order
granting IOF’s motion to dismiss.
6
to Federal Rule of Civil Procedure 12(b)(6). Ballard v. Bank of
Am., N.A., 734 F.3d 308, 310 (4th Cir. 2013).
A.
When hearing a case on appeal for which federal subject
matter jurisdiction was proper in the district court pursuant to
28 U.S.C. § 1332 (diversity jurisdiction), this Court applies
the choice-of-law rules of the state of the district court
below, Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., 386
F.3d 581, 599–600 (4th Cir. 2004)—in this case, West Virginia.
The proper choice-of-law analysis in West Virginia varies
depending on how a claim is characterized, e.g., as a tort claim
or as a contract claim. Choice of law in contracts cases is
governed by the rule of lex loci contractus, see Johnson v.
Neal, 418 S.E.2d 349, 351–52 (W. Va. 1992), and choice of law in
torts cases is generally governed by the rule of lex loci
delicti, see Vest v. St. Albans Psychiatric Hosp., Inc., 387
SE.2d 282, 283 (W. Va. 1989).
The district court did not take a position on whether Mrs.
Kenney’s WVUTPA claim sounds in tort or in contract because it
concluded that Virginia law applied in either case. Similarly,
IOF contends that characterization of the WVUTPA claim as either
a tort claim or a contract claim is “wholly irrelevant” because
“the result is the same under both analyses.” Because we are
7
firm in our conviction that Mrs. Kenney’s WVUTPA claim sounds in
tort, as explained in detail below, it is unnecessary to conduct
a contracts analysis. That being said, we are reluctant to
agree with IOF that the applicable law would be the same under
both analyses based on the choice-of-law provision contained
within the policy.
IOF cites to several nonbinding federal cases that are
split as to whether WVUTPA claims are properly characterized as
contract or tort claims. See, e.g., Yost, 181 F.3d 95 (stating
that duties arising under the WVUTPA are “quasi-tort, extra-
contractual,” but applying choice-of-law analysis for a tort
claim); Pen Coal Corp. v. William H. McGee & Co., 903 F. Supp.
980, 983 (S.D. W. Va. 1995) (characterizing bad-faith and WVUTPA
claims as “part-contract and part-tort,” but applying choice-of-
law analysis for a contract claim). Mrs. Kenney, on the other
hand, cites to West Virginia state cases for the proposition
that WVUTPA claims sound in tort. See, e.g., Wilt, 506 S.E.2d
at 609 (characterizing a violation of the WVUTPA as “tortious
conduct” (quoting Poling, 450 S.E.2d at 638) (internal quotation
marks omitted)). Although Mrs. Kenney’s WVUTPA claim would not
exist but-for the policy, her claim is not predicated on the
terms of the policy itself; rather, Mrs. Kenney’s complaint
makes clear that her cause of action stems from IOF’s allegedly
8
bad-faith “handling” of her claim for proceeds on the policy.
This distinction is important.
The Supreme Court of Appeals of West Virginia explained the
distinction noted above in Wilt. There, injured plaintiffs sued
the defendant–insurer in federal court pursuant to the WVUTPA
for unfair settlement practices after they were involved in an
automobile accident. Id. at 609. The district court then asked
the Supreme Court of Appeals of West Virginia to determine the
proper statute of limitations applicable to the plaintiffs’
claim—one year (for torts) or ten years (for written contracts).
Id. In concluding that the plaintiffs’ WVUTPA claim sounded in
tort, the Wilt court contrasted the facts before it with the
facts of Plumley v. May, 434 S.E.2d 406 (W. Va. 1993):
In Plumley, this Court held that a claim by
an insured to recover underinsurance
benefits from his/her insurance carrier is
governed by the statute of limitations
applicable to contract actions. That
action, as opposed to the [Plaintiffs’]
pending claim . . . , involved the direct
attempt by an insured to recover policy
benefits from the carrier with whom he/she
entered into a contract for underinsurance.
In contrast to the instant case that was
brought to recover damages for unfair
settlement practices, Plumley was a direct
suit against the insurer to obtain insurance
benefits. Given this critical distinction,
Plumley is clearly inapposite authority for
Plaintiffs’ contention that unfair
settlement claims are contractual in origin.
9
Wilt, 506 S.E.2d at 609 (emphasis added) (footnote omitted)
(citation omitted).
The Supreme Court of Appeals of West Virginia employed the
same reasoning used in Wilt in the analogous case of Hall v.
Nichols, 400 S.E.2d 901 (W. Va. 1990). In Hall, the appellants
sued their attorney for legal malpractice, and the trial court
dismissed the action as time-barred based on the statute of
limitations applicable to torts, as opposed to contracts. Id.at 902–03. Despite recognizing that legal-malpractice claims
sound in both tort and contract, the appeals court affirmed the
lower court and also characterized the action as one in tort.
Specifically, the court noted that, “[n]otwithstanding the
inclusion of the term ‘contractual’ in the amended complaint,
the essence of the appellants’ cause of action is various
breaches of duties implied by law and not by contract.” Id.
at 904. The Hall court employed (and quoted in its entirety)
the reasoning from Pancake House, Inc. v. Redmond, 716 P.2d 575(Kan. 1986), which states:
Where the act complained of is a breach of
specific terms of the contract without any
reference to the legal duties imposed by law
upon the relationship created thereby, the
action is contractual. Where the essential
claim of the action is a breach of a duty
imposed by law upon the relationship of
attorney/client and not of the contract
itself, the action is in tort.
10
Id. at 578 (emphasis added); see Hall, 400 S.E.2d at 904 (“Only
when the breach pertains specifically to the ‘terms of the
contract without any reference to the legal duties imposed by
law upon the [attorney/client] relationship . . .’ is the cause
of action contractual in nature.” (alterations in original)
(quoting Redmond, 716 P.2d at 578)).
Here, it is uncontested that Mrs. Kenney’s claim does not
directly involve the policy terms or benefits; as noted above,
Mrs. Kenney conceded in her complaint that she “substantially
prevailed in obtaining the coverage to which she was always
lawfully entitled.” Rather, like in Wilt and Hall, Mrs.
Kenney’s lawsuit is based on IOF’s allegedly unlawful “conduct
. . . in connection with its handling” of her claim. In other
words, notwithstanding the repeated references to the policy (a
contract) in the complaint, the “essential claim” underlying
Mrs. Kenney’s lawsuit is IOF’s allegedly tortious conduct. See
Hall, 400 S.E.2d at 904 (quoting Redmond, 716 P.2d at 578)
(internal quotation marks omitted).
We can further reason that Mrs. Kenney’s action is one in
tort—as opposed to contract—based on the type of damages
available under the WVUTPA and the type of relief prayed for in
the complaint. The Wilt court noted that a successful plaintiff
suing pursuant to the WVUTPA may recover attorney’s fees and
punitive damages and, “[because] punitive damages, as a rule,
11
are not available in contract cases, the damages awarded in
connection with a violation of the [WVUTPA] are clearly not
typical of damages awarded in contract cases.” 506 S.E.2d
at 610 (citation omitted). Here, Mrs. Kenney seeks, among other
relief, punitive damages and attorneys’ fees and costs.
Notably, however, she does not seek damages based on the terms
of the policy itself, but instead references the policy only
when describing the damages that she incurred “as a result of
[IOF]’s improper refusal to honor her claim.”
For the foregoing reasons, we hold that Mrs. Kenney’s
WVUTPA claim sounds in tort and not in contract. We now proceed
to determine which state’s laws apply to the substantive tort
claim.
B.
The district court, when it assumed arguendo that Mrs.
Kenney’s claim sounds in tort, employed the Restatement (Second)
of Conflict of Laws (“Restatement”) choice-of-law approach and
concluded that Virginia law applies. The parties dispute this
result: Mrs. Kenney argues that the district court erred by not
using the lex loci delicti choice-of-law approach and that West
Virginia courts usually apply; IOF, on the other hand, contends
that the district court was correct in both its methodology and
conclusion. Both parties are justified in their positions: as
12
noted above, West Virginia traditionally applies the lex loci
delicti approach to torts, see Vest, 387 SE.2d at 283, but has
in certain circumstances shown a willingness to apply the
Restatement approach “to resolve particularly thorny conflicts
problems,” e.g., Oakes v. Oxygen Therapy Servs., 363 S.E.2d 130,
131–32 (W. Va. 1987).
Regardless, as the proper choice-of-law approach is an
issue of state law and, as we explain below, the outcome is the
same under either approach, this Court need not determine which
approach West Virginia courts would apply here. See Chawla v.
Transam. Occidental Life Ins. Co., 440 F.3d 639, 648 (4th Cir.
2006) (“[C]ourts should avoid deciding more than is necessary to
resolve a specific case.”). Rather, we prefer to leave it up to
West Virginia courts to develop West Virginia’s law in this
fact-intensive area. For the reasons set forth below, we hold
that West Virginia law applies pursuant to the lex loci delicti
approach and the Restatement approach.
1.
Under the lex loci delicti choice-of-law approach, courts
apply the “law of the place of the wrong.” Although conduct
that causes harm can occur in one state and the resulting injury
to a plaintiff can occur in another state, “the substantive
rights between the parties are determined by the law of the
13
place of injury.” West Virginia ex rel. Chemtall Inc. v.
Madden, 607 S.E.2d 772, 779–80 (W. Va. 2004).
Here, IOF asserts that the effects of its allegedly
unlawful conduct (and thus Mrs. Kenney’s injury) would have been
felt by Mrs. Kenney in Virginia, as the state where the policy
was issued and where Mr. Kenney applied for the $50,000 increase
in coverage. This argument rings hollow. The Kenneys moved
from Virginia to West Virginia in 2003 and lived there
continuously until Mr. Kenney passed away in 2011. Mrs. Kenney
filed her claim on the policy with IOF from West Virginia and
remains a West Virginia resident. Accordingly, insofar as
Mrs. Kenney’s cause of action stems from IOF’s handling of her
claim on the policy and she was a West Virginia resident at all
times during resolution of her claim—on September 21, 2011, when
she filed the claim with IOF; on November 1, 2011, when she
filed a complaint with the Commissioner; and on July 20, 2012,
when IOF agreed to pay to Mrs. Kenney the full $130,000—the
injury to Mrs. Kenney undoubtedly occurred in West Virginia, not
Virginia. See Yost, 181 F.3d 95 (concluding that “the worry,
annoyance, and economic hardship of the delay in receiving
compensation” (i.e., the injury) in an unfair-settlement claim
is suffered in the state where the plaintiff resides).
Accordingly, we hold that West Virginia law applies to Mrs.
Kenney’s claim pursuant to the lex loci delicti choice-of-law
14
approach. We turn now to the Restatement choice-of-law approach
that the district court employed.
2.
Section 145(1) of the Restatement provides as follows: “The
rights and liabilities of the parties with respect to an issue
in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to
the occurrence and the parties under the principles stated in
§ 6” (which we explain below). Section 145(2) then lists four
contacts to consider when determining the most significant
relationship: “(a) the place where the injury occurred; (b) the
place where the conduct causing the injury occurred; (c) the
domicil, residence, nationality, place of incorporation and
place of business of the parties; and (d) the place where the
relationship, if any, between the parties is centered.”
Restatement (Second) of Conflict of Laws § 145(2) (1971).
As determined above in our analysis of the lex loci delicti
approach, contact (a) points to West Virginia as the state where
the injury to Mrs. Kenney occurred. As to contact (b), despite
IOF’s contention that “the alleged misrepresentations . . . took
place in Virginia,” the letter denying the full benefit of the
15
policy to Mrs. Kenney was sent (presumably) from IOF’s Toronto,
Canada office. 4 As to contact (c), Mrs. Kenney is currently a
West Virginia resident and IOF is headquartered in Canada. As
to contact (d), even though the relationship between Mr. Kenney
and IOF began in Virginia when he first took the policy out in
1984 and later applied for the increase in coverage in 1994, the
relationship between Mrs. Kenney—who is the party to the
lawsuit—and IOF is centered in West Virginia, where Mrs. Kenney
sought to collect, and was denied, policy benefits. In sum,
none of the contacts point to Virginia, and three of the four
contacts point to West Virginia, with the fourth contact being
split between Canada and West Virginia (an outcome that we would
expect in a diversity suit).
As stated in section 145(1), the section 145(2) contacts must
be analyzed against several factors set forth in section 6,
which, inter alia, include: “the relevant policies of the
forum”; “the relevant policies of other interested states and
4
As previously noted, the parties did not include in the
Joint Appendix copies of the letters from IOF to Mrs. Kenney
first asserting that the policy was worth only $80,000 and then
subsequently agreeing that Mrs. Kenney should receive $130,000.
See supra note 2. IOF concedes, however, that “[t]he adjusting
of Mrs. Kenney’s claim occurred mostly in [IOF’s] Toronto,
Canada office,” and there is nothing in the record to indicate
that IOF sent letters to Mrs. Kenney from Virginia or otherwise
resolved her claim on the policy from Virginia. We also note
that neither of the parties has advocated for this Court to
apply Canadian law.
16
the relative interests of those states in the determination of
the particular issue”; “the protection of justified
expectations”; and “the basic policies underlying the particular
field of law.” See Yost, 181 F.3d 95 (quoting Restatement
(Second) of Conflict of Laws § 6(2)(b)–(e) (1971)) (internal
quotation marks omitted) (listing the foregoing factors as the
“meat of the Restatement test”). IOF argues that, based on
Oakes, the section 6 factors lead to applying Virginia law. In
Oakes, the plaintiff, a West Virginia resident, worked for a
Maryland company pursuant to an employment contract that
designated that Maryland law would govern. 363 S.E.2d at 130–
31. The plaintiff was injured on the job in Maryland, filed a
Maryland worker’s compensation claim, and was subsequently
fired. Id. at 131. The plaintiff then sued his former employer
in West Virginia state court for retaliatory discharge and
argued that, because he was a patient at a West Virginia
hospital when he received the news of his discharge, the tort of
retaliatory discharge occurred in West Virginia and therefore
West Virginia law should apply. See id. The Supreme Court of
Appeals of West Virginia applied the Restatement choice-of-law
approach and determined that Maryland law applied. In
considering the section 6 factors, the Oakes court paid
particular attention to the “the protection of justified
expectations” factor:
17
The parties specifically agreed in their
contract that the employment relationship
would be governed by the laws of the State
of Maryland. It is mere happenstance that
the [plaintiff] was in a West Virginia
hospital when he received news of the
termination of his employment. [Plaintiff]’s
claim for “retaliatory discharge” arises
from his filing a Maryland workers’
compensation claim and not a West Virginia
workers’ compensation claim.
Id. at 132. Importantly, the court subsequently stated that,
“Had [the plaintiff] filed a West Virginia workers’ compensation
claim, the criteri[on] of § 6[(2)](b), namely, the relevant
policies of the forum, would have become operative.” Id.
In contrast to the plaintiff in Oakes, who filed a claim in
the nonforum state, Mrs. Kenney filed a claim with the
Commissioner in West Virginia—not an analogous entity in
Virginia. Thus, the relevant policies of West Virginia are
operative, and its public policy should be “vindicated.” See
id. It is well settled that West Virginia law, and the WVUTPA
specifically, allows plaintiffs to recover for unfair settlement
practices independent of any claim on a policy or contract.
See, e.g., Taylor, 589 S.E.2d at 59–60 (citing Jenkins v. J.C.
Penney Cas. Ins. Co., 280 S.E.2d 252 (W. Va. 1981), overruled on
other grounds, State ex rel. State Farm Fire & Cas. Co. v.
Madden, 451 S.E.2d 721 (W. Va. 1994)) (insurance claims adjuster
with whom the plaintiff had no contract may be held personally
liable, independent from insurer, pursuant to the WVUTPA); Wilt,
18
506 S.E.2d at 609 (analyzing plaintiffs’ WVUTPA claim against
insurer where personal-injury award had already been paid
following injury). By contrast, courts that have interpreted
Virginia’s analogous statute—Virginia Code section 38.2-209—have
declined to recognize a separate cause of action in tort for
bad-faith dealing over an insurance contract. See, e.g., A & E
Supply Co. v. Nationwide Mut. Fire Ins. Co., 798 F.2d 669, 676
(4th Cir. 1986); Adolf Jewelers, Inc. v. Jewelers Mut. Ins. Co.,
No. 3:08-CV-233, 2008 WL 2857191, at *5 (E.D. Va. July 21, 2008)
(citing U.S. Airways, Inc. v. Commonwealth Ins. Co., No. 03-587,
2004 WL 1094684, at *9 (Va. Cir. Ct. May 14, 2004)); see also
Taylor, 589 S.E.2d at 60 n.10 (“Unlike West Virginia, the
majority of states do not recognize a right to bring a private
cause of action under their unfair claim settlement practices
statutes.”).
IOF argues that “[t]he mere fact that Virginia’s laws may
differ slightly from, or be less favorable [to Mrs. Kenney]
than, West Virginia’s law does not support a refusal to apply
Virginia law in this case.” Aside from the fact that not a
single section 145(2) contact points to Virginia—thus rendering
the section 6 factor regarding “the relevant policies of other
interested states and the relative interests of those states in
the determination of the particular issue” a nullity—the
difference between West Virginia’s law and Virginia’s law is
19
substantial and a far cry from trivial: one state’s law allows
Mrs. Kenney’s cause of action to proceed and the other state’s
law does not.
West Virginia courts “have long recognized that comity does
not require the application of the substantive law of a foreign
state when that law contravenes the public policy of [West
Virginia].” Paul v. Nat’l Life, 352 S.E.2d 550, 556 (W. Va.
1986) (reversing, on public policy grounds, the lower court’s
decision to apply Indiana’s law as the law of the place of
injury because it conflicted with West Virginia’s law pertaining
to the same subject matter); see Yost, 181 F.3d 95 (stating the
following when analyzing the basic policies in the relevant
field of law: “The purpose of laws like WVUTPA is to ensure fair
play by insurance companies. . . . [T]he character of such laws
is protectionist. In other words, West Virginia’s law is
designed as it is in order to protect the citizens of West
Virginia.” (citing Poling, 450 S.E.2d at 637)). Accordingly,
even assuming that the majority of the section 145(2) contacts
point to Virginia law—which, as analyzed above, they do not—West
Virginia’s favoritism toward laws that align with its own public
policy trumps any comity to Virginia’s law. See Paul, 352
S.E.2d at 556.
For the reasons set forth above, we hold that West Virginia
law applies to Mrs. Kenney’s claim pursuant to the Restatement
20
choice-of-law approach. The district court therefore erred in
determining that Virginia law applies.
C.
Finally, we consider whether Mrs. Kenney’s complaint states
a claim upon which relief can be granted pursuant to West
Virginia law. See Fed. R. Civ. P. 12(b)(6). We note that IOF’s
motion to dismiss, its opposition to Mrs. Kenney’s motion for
reconsideration, and its brief on appeal, each focus nearly
exclusively on resolving the issue of which state’s law applies
and on arguing that Mrs. Kenney’s complaint failed to state a
claim pursuant to Virginia law. Indeed, IOF’s motion to dismiss
is captioned, “Defendant’s Motion to Dismiss Based on Virginia
Law.” (Emphasis added.) IOF never contends, however, that Mrs.
Kenney’s complaint would also fail to state a claim upon which
relief can be granted should West Virginia law apply;
consequently, IOF waived any such argument. See Mayfield v.
Nat’l Assoc. for Stock Car Auto Racing, Inc., 674 F.3d 369,
376-77 (4th Cir. 2012).
Insofar as the Supreme Court of Appeals of West Virginia
has previously entertained questions regarding an action brought
pursuant to the WVUTPA against an insurer subsequent to
settlement, where the cause of action was limited to “unfair
settlement practices,” see Wilt, 506 S.E.2d at 609, we hold that
21
Mrs. Kenney’s complaint therefore states a claim upon which
relief can be granted should she prevail on the merits.
Accordingly, we reverse the district court’s dismissal of the
complaint.
III.
For the reasons set forth above, we reverse the district
court’s dismissal of Mrs. Kenney’s complaint and remand this
case for further proceedings.
REVERSED AND REMANDED
22