Mirandy v. Allstate Insurance

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
TIMOTHY D. MIRANDY; SUZANNE C.
MIRANDY,
Plaintiffs-Appellants,
No. 97-1966
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of West Virginia, at Wheeling.
Frederick P. Stamp, Jr., Chief District Judge.
(CR-96-72-5)
Argued: March 5, 1998
Decided: June 1, 1998
Before MICHAEL and MOTZ, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
_________________________________________________________________
Affirmed in part and reversed in part by unpublished per curiam opin-
ion. Senior Judge Phillips wrote a concurring opinion.
_________________________________________________________________
COUNSEL
ARGUED: Ronald William Kasserman, SEIBERT & KASSER-
MAN, L.C., Wheeling, West Virginia, for Appellants. Brent Karleton
Kesner, KESNER & BRAMBLE, Charleston, West Virginia, for
Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Timothy and Suzanne Mirandy filed this action in West Virginia
state court against their insurer, Allstate Insurance Company, which
timely removed the case to federal court on the basis of diversity of
citizenship. The Mirandys allege that Allstate (1) violated the West
Virginia Unfair Claims Settlement Practices Act and (2) acted in bad
faith under the common law. Both causes of action stem from All-
state's asserted bad faith failure to settle, within policy limits, a suit
brought against the Mirandys by Carol Thoburn. After a full trial in
the underlying suit, Thoburn prevailed, winning a jury verdict of
$229,500, well exceeding the limits of the Mirandys' policy. Allstate
ultimately paid the entire judgment -- even the amount in excess of
policy limits.
Nevertheless, the Mirandys sought declaratory relief as to their lia-
bility for the excess verdict, compensatory damages in the amount of
$250,000, an unspecified amount of punitive damages, attorney fees,
and costs. Allstate moved for summary judgment on all claims, which
the district court granted. See Mirandy v. Allstate Ins. Co., C.A. No.
5:96CV72 (N.D. W. Va. Feb. 10, 1997). Subsequently, the court also
denied the Mirandys' motion to lift a confidentiality order that the
magistrate judge had imposed on discovery materials produced by
Allstate and the attorney Allstate hired to represent the Mirandys in
Thoburn's suit against them. The Mirandys appeal both rulings. We
affirm in part and reverse in part.
I.
The district court set forth most of the relevant facts in its memo-
randum opinion granting Allstate's motion for summary judgment. Id.
We will not repeat them here but will simply refer to critical facts as
we address the legal issues.
2
We review the district court's order granting summary judgment de
novo. Summary judgment is proper when no genuine issue of material
fact exists and, taking the evidence in the light most favorable to the
nonmovant, the movant is entitled to judgment as a matter of law. See
M & M Medical Supplies & Servs., Inc. v. Pleasant Valley Hosp.,
Inc., 981 F.2d 160, 162-63 (4th Cir. 1992).
II.
The Mirandys initially claimed that Allstate violated two portions
of West Virginia's Unfair Claims Settlement Practices Act. See W.
Va. Code §§ 33-11-4(f) and (n) (Michie 1996) (UCSPA).1 That statute
provides in pertinent part:
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1 A private cause of action exists under the UCSPA for both insureds
and third-parties. See Maher v. Continental Cas. Co., 76 F.3d 535, 542-
43 (4th Cir. 1996); Romano v. New England Mut. Life Ins. Co., 362
S.E.2d 334, 337 n.3 (W. Va. 1987); Jenkins v. J.C. Penney Cas. Ins. Co.,
280 S.E.2d 252, 258 (W. Va. 1981), overruled in part on other grounds
by State ex rel. State Farm Fire & Cas. Co. v. Madden, 451 S.E.2d 721,
724-25 (W. Va. 1994). However, in the cases decided under the statute
to date, the plaintiff, whether first-party insured or third-party benefi-
ciary, was also the claimant. The Mirandys, of course, did not claim ben-
efits (other than defense and liability coverage) from Allstate. In the
district court, Allstate asserted that for this reason the Mirandys could not
bring an action under the UCSPA. The company has not repeated that
argument before us. Thus, Allstate appears to recognize that it is proba-
bly doomed.
Although the statute provides relief for those negotiating a claim set-
tlement with the insurer -- i.e., claimants -- it also contemplates forcing
the insurer to consider and protect the interests of insureds. See, e.g.,
§ 33-11-4(9)(k) and (l) (speaking of both"insureds or claimants").
Improper settlement conduct by an insurer affects the interests of the
insured whether the insured is the actual claimant or merely the object
of a third-party suit. The effect is simply less direct in the latter case: the
insurer's bad faith settlement conduct improperly exposes the insured to
risk of liability to a third party in the event of an excess verdict. In both
situations, permitting a cause of action would seem to be equally "consis-
tent with the underlying legislative purpose, which is to prevent improper
settlement practices." Jenkins, 280 S.E.2d at 258.
3
No person shall commit or perform with such frequency as
to indicate a general business practice any of the following:
....
(f) Not attempting in good faith to effectuate
prompt, fair and equitable settlements of claims in
which liability has become reasonably clear;
....
(n) Failing to promptly provide a reasonable expla-
nation of the basis in the insurance policy in rela-
tion to the facts or applicable law for denial of a
claim or for the offer of a compromise settlement.
Id. Allstate's main contention is that the Mirandys suffered "no com-
pensable loss" under the UCSPA because Allstate paid the entire
amount of the excess judgment.
To prevail on a claim under the UCSPA, a party obviously must
suffer injury. See Maher v. Continental Cas. Co. , 76 F.3d 535, 542-
43 (4th Cir. 1996) ("West Virginia recognizes a private cause of
action for damages arising from an insurer's violation of Subsection
(9), whether the injured party is the insured or a third-party claim-
ant")(emphasis added); Romano v. New England Mut. Life Ins. Co.,
362 S.E.2d 334, 337 n.3 (W. Va. 1987) ("a violation of [Subsection
(9)] by an insurer gives rise to a private right of action in favor of an
aggrieved insured or beneficiary") (emphasis added; alteration in
original); Jenkins v. J.C. Penney Cas. Ins. Co. , 280 S.E.2d 252, 258
(W. Va. 1981) ("the right of a person injured as a result of an unfair
settlement practice to recover damages acts as a deterrent against vio-
lations of the act") (emphasis added), overruled in part on other
grounds by State ex rel. State Farm Fire & Cas. Co. v. Madden, 451
S.E.2d 721, 724-25 (W. Va. 1994).
However, several recent West Virginia cases indicate that plaintiffs
can recover compensatory damages and attorney fees under the
UCSPA even when the insurer pays the excess amount of the verdict.
4
In Dodrill v. Nationwide Mut. Ins. Co., 491 S.E.2d 1, 8 (W. Va.
1996), a jury awarded Mr. Dodrill, a third-party claimant, over
$12,000 as compensation for annoyance and inconvenience, attorneys
fees incurred in the underlying action, and punitive damages. The
West Virginia Supreme Court of Appeals concluded that, even though
the insurer paid the entire sum of the underlying verdict to Dodrill,
"a reasonable inference to be drawn from the long sequence of events
leading up to Mr. Dodrill's initial lawsuit against Nationwide is that
he did suffer inconvenience as a result of the failure of Nationwide
to settle his claim." Id. at 13. Similarly, in Poling v. Motorists Mut.
Ins. Co., 450 S.E.2d 635 (W. Va. 1994), another third-party claimant
brought an action against the insurer for bad faith settlement of its
underlying personal injury claim. Again, the West Virginia Supreme
Court of Appeals noted that "a cause of action for insurance bad faith
settlement may arise even if there has been a settlement." Id. at 637.
In McCormick v. Allstate Ins. Co., 475 S.E.2d 507 (W. Va. 1996),
an insured sued his insurer for failure to compensate him adequately
for the loss of his automobile. The West Virginia Supreme Court of
Appeals ruled that the insured could not recover attorney fees or puni-
tive damages under the common law cause of action identified in
Hayseeds, Inc. v. State Farm Fire & Cas., 352 S.E.2d 73 (W. Va. 1986),2
because the insured had not substantially prevailed in the underlying
action against the insurer. McCormick, 475 S.E.2d at 517-18. How-
ever, the court concluded that the insured could maintain an action
under the UCSPA, id. at 520, and stated that"[a] prevailing plaintiff
in [a UCSPA] claim may recover his increased costs and expenses,
including increased attorney fees, resulting from the insurance com-
pany's use of an unfair business practice in the settlement or failure
to settle fairly the underlying claim." Id. at 515.
Likewise, in Maher the insured filed a claim with his insurer for
lost business income resulting from a fire. Maher, 76 F.3d at 539. The
insurer denied coverage and the insured sued, asserting, among other
_________________________________________________________________
2 Hayseeds, which is not central to this suit, held that where an insured
sues his own insurer over a property damage claim and substantially pre-
vails, the insurer may be held liable for consequential damages, including
annoyance and inconvenience, attorney fees, and perhaps punitive dam-
ages, stemming from the insurer's conduct.
5
claims, a violation of the UCSPA. Id. After several years of wran-
gling, and while the issue was before the district court, the insurer
offered a $12,000 settlement, which the insured refused. At trial, the
judge awarded the insured only $5,118, and dismissed his UCSPA
claim because Maher ultimately received less than the settlement
offer. Id. at 540. We reversed, finding that, regardless of the settle-
ment amount, the insured could proceed under the UCSPA. Id. at 543-
44.
These cases indicate that annoyance and inconvenience attributable
to an insurer's underlying settlement conduct constitute compensable
injury in and of themselves under the UCSPA. This proposition com-
ports with the broad purpose of the statutory scheme. The West Vir-
ginia legislature, rather than simply addressing the outcome of
settlement negotiations, sought in the UCSPA "to prevent improper
settlement practices" generally, Jenkins, 280 S.E.2d at 258, including
conduct during settlement negotiations. We therefore conclude that
insureds can maintain a suit against their insurer under the UCSPA to
recover compensation for any annoyance and inconvenience suffered,
as well as attorney fees, despite the fact that their insurer paid the
excess verdict.
The remaining question is whether the Mirandys have presented
sufficient evidence to raise a jury question as to whether they suffered
such damages in this case. Allstate claims that it orally told the
Mirandys prior to the March 1995 trial of Thoburn's claim that none
of the Mirandys' money was at stake. The Mirandys, however, main-
tain that this is not the case. Moreover, the Mirandys note that in
1993, Allstate informed them in writing that they would be responsi-
ble for any excess liability. Although Anthony Werner, the lawyer
Allstate hired for the Mirandys, sent them a letter on July 25, 1995,
four months after the March verdict, stating"[a]s I expressed to you
both on numerous occasions prior to and even subsequent to the ver-
dict . . . none of your personal assets had been, nor will they ever be,
at stake in this case," the very next day the Mirandys' own lawyer
wrote to Allstate and denied this contention. In that letter, the Miran-
dys' lawyer further stated: "Allstate Insurance Company [has] never
acknowledged its responsibility to me or the Mirandys. . . . For over
two (2) years Timothy and Suzanne Mirandy have anguished over
their potential personal exposure for liability to Mrs. Thoburn. . . .
6
[T]heir fear that they could lose their homes to Mrs. Thoburn during
the time their claim against Allstate was pending[ ] has been signifi-
cant." He asked the company to "[p]lease confirm, in writing, that
Allstate is going to pay the entire verdict . . . so that Timothy and
Suzanne Mirandy will have no personal liability." Allstate did not
respond to this letter.
The Mirandys acknowledge that Werner told them during jury
deliberations they would not be liable for an excess verdict. However,
it not clear that Werner, a lawyer Allstate hired to represent the
Mirandys, had authority from Allstate to bind the company to pay the
excess verdict for the Mirandys. After all, despite the July 1995 letter
from the Mirandys' lawyer requesting that Allstate confirm in writing
that it would not seek recovery for the excess verdict from the Miran-
dys, Allstate never issued such a written statement until it filed an
amended answer to the Mirandys' complaint in July 1996. Further-
more, even if Werner did have authority from Allstate to tell the
Mirandys during jury deliberations that Allstate would pay any excess
verdict, this statement came a little late in the day. The accident had
occurred four years earlier, and two years earlier Allstate expressly
informed the Mirandys of their right to obtain their own counsel and
their personal liability for any verdict in excess of policy limits. Cer-
tainly an insured that retains counsel and faces liability for two years
may suffer annoyance and inconvenience -- and attorney fees -- just
as a claimant would where an insurer delays settlement, regardless of
whether the insurer ultimately pays the excess. Cf. Poling, 450 S.E.2d
at 637 ("The mere fact that after months of delay and hassle the insur-
ance company deigns to speak to the injured party and settles the case
. . . does not preclude the plaintiff from later bringing a bad faith
action . . . .").
In Dodrill, the West Virginia Supreme Court of Appeals deter-
mined that, viewing the facts in the light most favorable to Dodrill,
a reasonable jury could conclude the insurer acted in bad faith in vio-
lation of the UCSPA. In reaching this conclusion, the court consid-
ered that liability was clear, that the claimant negotiated with the
insurer for two-and-a-half years without obtaining a settlement, that
numerous contacts existed between the claimant and the insurer and
that the jury rendered a verdict twice the insurer's settlement offer.
See Dodrill, 491 S.E.2d at 11-13.
7
In this case, the "negotiations," to the extent there were any, contin-
ued for four years without obtaining a settlement. Liability was clear
from the start. Even if causation was debatable, both medical experts
opined that the accident contributed to Thoburn's injuries. Moreover,
although Allstate seeks to blame Thoburn for delaying the availability
of her medical records, almost two years prior to trial an Allstate rep-
resentative noted that Thoburn's medical records at that time were
"quite voluminous." Contacts with Allstate were numerous; Thoburn
and the Mirandys each made multiple requests that Allstate settle for
the policy limits.
Werner (the attorney Allstate hired) advised Allstate well prior to
trial that "if the jury does believe [Thoburn's] version, [the] verdict
can be expected to reach well into six figures," and suggested that the
company settle within the $70,000 to $80,000 range. In response, an
Allstate claims representative increased reserves for the case to
$65,000, re-valued the case at $75,000, and asked for settlement
authority in that amount, yet Allstate's managers never authorized a
settlement offer above $20,000. The jury returned a verdict more than
ten times Allstate's settlement offer.
Given the above facts, a reasonable jury could determine Allstate
acted in bad faith in violation of the UCSPA. Thus, the district court
erred in granting summary judgment to Allstate. This is not to say that
the Mirandys are entitled to judgment as a matter of law. Allstate well
may be able to demonstrate that Thoburn created delay by failing to
provide documentation, that the company acted reasonably based on
evidence that called into question the cause of Thoburn's injuries, and
that Allstate timely informed the Mirandys that they would not be lia-
ble for an excess verdict. But a jury must decide these questions.
III.
The district court also granted summary judgment to Allstate on the
Mirandys' common law bad faith claim. The court recognized that,
under Shamblin v. Nationwide Mut. Ins. Co., 396 S.E.2d 766 (W. Va.
1990), an insurer may be liable to an insured for an excess verdict
rendered against the insured in an underlying personal injury suit
where the insurer in bad faith fails to settle the claim within the policy
limits.
8
The West Virginia Supreme Court of Appeals adopted a two-part
bad faith standard in Shamblin. First, "wherever there is a failure on
the part of an insurer to settle within policy limits where there exists
the opportunity to so settle and where such settlement within policy
limits would release the insured from any and all personal liability,"
the insured has established a prima facie case of bad faith. Id. at 776.
Second, when such a prima facie case has been established, the
insurer then bears the burden
to prove by clear and convincing evidence that it attempted
in good faith to negotiate a settlement, that any failure to
enter into a settlement where the opportunity to do so
existed was based on reasonable and substantial grounds,
and that it accorded the interests and rights of the insured at
least as great a respect as its own.
Id.The district court stated that it did not think Shamblin provided a
basis for the Mirandys' claim because Allstate paid the excess verdict
without forcing the Mirandys to bring an action against Allstate. Cer-
tainly, Shamblin and its progeny deal with situations where the
insured sought recovery for an excess verdict that the insurer declined
to pay. See, e.g., id. at 771; Marshall v. Sasseen, 450 S.E.2d 791, 797-
98 (W. Va. 1994).
However, the facts and result in Shamblin suggest that in the appro-
priate case an insured can recover damages for an insurer's bad faith
even if the insurer pays the excess verdict prior to any action against
it by the insured. In Shamblin, the insurer refused to settle the under-
lying personal injury suit against the insured within the policy limits
of $100,000. After trial, a jury returned a verdict against the insured
for $697,500. Thus, the insured became personally liable for the
$597,500 -- the excess amount. The insured sued the insurer to
recover the excess verdict, asserting that the insurer acted in bad faith.
A jury awarded the insured compensatory damages of $1,000,000,
punitive damages of $1,500,000, and attorney fees of $330,000.
Shamblin, 396 S.E.2d at 769, 771. On appeal, the West Virginia
Supreme Court of Appeals affirmed the $1,000,000 award of compen-
satory damages, which surpassed the excess verdict amount by more
9
than $400,000. The Mirandys assert that the $402,500 differential
between the underlying excess verdict ($597,500) and the compensa-
tory damages awarded to the insured in Shamblin ($1,000,000)
reflected compensation to the insured for annoyance and inconve-
nience stemming from the insurer's bad faith. See Reply Brief of
Appellant at 12.
The Shamblin court did not explain the basis for the award of
$402,500 -- the difference between the excess verdict and the amount
the insured obtained from its insurer. Unlike the UCSPA cases, no
court has held that an insured can seek compensation for annoyance
and inconvenience in a Shamblin claim; but, no court has held that an
insured cannot so recover. In light of the extensive West Virginia case
law sustaining claims for various kinds of damages in suits brought
by insureds against their insurers, we believe the West Virginia
Supreme Court of Appeals would conclude that an insured can
recover compensation for annoyance and inconvenience suffered
when an insurer breaches its common law duty to act in good faith
and to place the insured's interest on an equal footing with its own.
Cf. Miller v. Fluharty, No. 23993, 1997 WL 771057, at *7 (W. Va.
Dec. 16, 1997) (in common law Hayseeds action, insured can recover
for annoyance and inconvenience and reasonable attorney fees
incurred by insurer's failure to settle). To hold otherwise would allow
an insurer that knows it acted in bad faith to escape liability for the
insured's annoyance, inconvenience, and attorney fees simply by pay-
ing the excess verdict before the insured has opportunity to bring suit.
Accordingly, the district court erred in granting Allstate summary
judgment on the Mirandys' bad faith claim.3
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3 The district court also erred in concluding that Allstate satisfied the
second prong of Shamblin. As explained, supra, in part II, Allstate has
produced evidence that it acted in good faith, but it has not proven, as
a matter of law, that it did so. Taking the evidence in the light most
favorable to the Mirandys, a reasonable jury could conclude that Allstate
acted in bad faith. Of course, if on remand the Mirandys should prevail
on both their statutory and common law bad faith claims, there can be
no duplication of damages.
10
IV.
West Virginia law provides for the availability of punitive damages
from an insurer in both UCSPA and Shamblin bad faith actions. The
plaintiff must establish that the insurer acted with actual malice,
which means the insurer knew the claim was proper but nonetheless
acted willfully, maliciously, and intentionally in failing to settle the
claim on behalf of its insured. See Dodrill, 491 S.E.2d at 14
(UCSPA); McCormick, 475 S.E.2d at 515 (same); Poling, 450 S.E.2d
at 637-38 (same); Shamblin, 396 S.E.2d at 772-73 (common law);
Berry v. Nationwide Mut. Fire Ins. Co., 381 S.E.2d 367, 374 (W. Va.
1989) (same).
The district court ruled that "in addition to finding that there has
been insufficient evidence to create a jury question on plaintiff's stat-
utory and common law bad faith claims, this court[ ] finds that there
is no evidence in the record that Allstate acted with actual malice in
handling the Mirandys' claims." The Mirandys contend that they have
proffered sufficient evidence from which a reasonable jury could con-
clude Allstate acted with actual malice.
In Dodrill, after reviewing the record the West Virginia Supreme
Court of Appeals concluded that the trial court"did not commit
reversible error in committing the issue of punitive damages to the
jury . . . [because the evidence was] sufficient to support a jury con-
clusion that the actions of [the insurer] were willful, malicious, or
intentional." Dodrill, 491 S.E.2d at 14-15. Consistent with Dodrill,
the evidence detailed above, examined in the light most favorable to
the Mirandys, could lead a reasonable jury to conclude that Allstate
intentionally failed to settle the Thoburn claim when it knew the
claim was proper. Again, Allstate has evidence to make a very strong
case to the contrary, but that question is for a jury to decide.
V.
In the early days of this suit, Allstate moved for a protective order
pursuant to Fed. R. Civ. P. 26(c) to prevent dissemination of its
claims file and the work product of Werner by the Mirandys or their
present lawyer. Allstate worried that the Mirandys would pass the
material to Thoburn and her attorneys for use in Thoburn's similar
11
bad faith case against Allstate. On November 22, 1996, a magistrate
judge granted the motion so that Allstate would have the opportunity
to litigate in state court whether the documents were discoverable by
Thoburn in her case, or whether Allstate could assert privilege vis-a-
vis Thoburn, even though it could not do so vis-a-vis the Mirandys.
In the order, the magistrate judge noted that the Mirandys objected to
the ruling.
After the district court awarded summary judgment to Allstate, the
Mirandys filed a motion to lift the confidentiality order. The court
denied the motion, reasoning that the Mirandys had failed to properly
appeal the magistrate judge's confidentiality order. Although they
made the oral objection that was noted in the order, they did not file
written exceptions to the magistrate judge's opinion within ten days
as required by Fed. R. Civ. P. 72(a). Assuming the oral objection suf-
ficed, the district court concluded that the magistrate judge's ruling
was not clearly erroneous. We review the trial court's refusal to lift
the order of confidentiality for abuse of discretion. See M & M Medi-
cal Supplies & Servs., 981 F.2d at 163.
The Mirandys do not assert they have been unable to obtain access
to Allstate's or Werner's records. Instead, they want the ability to
hand the records over to Thoburn's attorneys. As such, they cannot
demonstrate that the protective order resulted in"substantial preju-
dice" to their case. See id. The magistrate judge's conclusion that,
although Allstate cannot assert privilege with regard to the Mirandys,
the company should have the opportunity to litigate whether privilege
exists with regard to Thoburn is not unreasonable. Accordingly, the
district court did not abuse its discretion in sustaining the magistrate
judge's order. Thus, the protective order will stand. We need not
reach the district court's alternative holding involving Rule 72(a).
VI.
For all of these reasons, the judgment of the district court granting
summary judgment is reversed and the order denying the motion to
vacate the protective order is affirmed.
AFFIRMED IN PART AND REVERSED IN PART
12
PHILLIPS, Senior Circuit Judge, concurring:
I concur in the judgment and in all of the majority opinion except
that portion of Part I that purports to hold for this court (though by
footnote) that W. Va. Code §§ 33-11-4(9)(f) and (n) (UCSPA) creates
a private right of action in insureds such as plaintiffs to recover dam-
ages for improper settlement practices by their insurers in matters not
involving claims by the insureds for policy benefits. Ante, slip op. 3,
n.1. That is an important and, I believe, debatable issue of West Vir-
ginia insurance law that has not been addressed by the state courts and
is not properly presented for decision by this court. Nor is its resolu-
tion necessary under the procedural circumstances of this case to our
decision to remand the statutory claim for further proceedings.
Accordingly, I think that we should, and properly may, leave it an
open question in this court in the course of remanding the claim. A
brief explanation is in order.
In the district court, Allstate specifically raised as its base-line
defense that §§ (f) and (n) of the UCSPA did not give improper settle-
ment practice rights of action to insureds except in connection with
their own claims for insurance benefits. Alternatively, Allstate con-
tended that if the right existed, the Mirandys had failed to raise a gen-
uine issue of material fact respecting insurer bad faith, an essential
element of the statutory claim. The district court expressly recognized
but declined to address the statutory interpretation defense. (See
J.A. 94 (Mem. Op., n.3).) Instead, implicitly assuming for purposes of
the case that the statute did create such a right of action, the court held
that the Mirandys' claim failed as a matter of law because they had
not raised a genuine issue of fact as to Allstate's bad faith.
On the Mirandys' appeal, Allstate as appellee did not raise, as it
might have,1 the statutory interpretation issue as an alternative basis
for affirming the judgment in its favor on this claim. Under those cir-
cumstances, we should have treated that issue as procedurally
_________________________________________________________________
1 Whether by cross-appeal, if it be considered that a judgment on this
basis would "enlarge" the basis upon which summary judgment was
granted, or simply by raising it as an appellee as a basis for affirming that
favorable judgment. See United States v. American Ry. Express Co., 265
U.S. 425, 435 (1924) (Brandeis, J.) (differentiating the two procedures).
13
defaulted by Allstate. And, making the assumption of statutory cover-
age forced by that default, we then should have addressed only the
issue properly raised by the Mirandys: whether summary judgment
was properly granted for failure of forecast proof on the bad faith ele-
ment of the assumed statutory cause of action. The majority notes the
procedural default and addresses the issue raised by the Mirandys as
the basis for remanding the claim but it does not stop there. Instead
it goes on, as I think it should not have, to hold that Allstate's alterna-
tive statutory defense, which was not addressed by the district court
and not raised on this appeal, failed as a matter of law.
How, if we did abstain from addressing that issue, would that leave
the case upon remand? Specifically, if we did not address the issue,
would Allstate be precluded by reason of its procedural default on
appeal from again raising it for initial consideration by the district
court? My solution on that would be expressly to leave it to the dis-
trict court for first instance consideration as a"law of the case" ques-
tion. That doctrine has sufficient flexibility to permit its fair
consideration here. See generally 18 Charles Alan Wright, et al.,
Federal Practice and Procedure § 4478 (1981). And, because the fac-
tors properly to be considered in applying the doctrine are peculiarly
within the district court's competence in this case, that is where it
should first be considered. The virtue of this approach would be that
if Allstate were held precluded by law of the case considerations, the
general question of the statute's coverage would remain open in the
federal courts, unaffected by anything unnecessarily said in this case.2
And, on the other hand, were Allstate allowed by the district court to
raise the issue again, it could then be addressed definitively by that
court, or possibly considered for certification to the West Virginia
Supreme Court.
_________________________________________________________________
2 This is said with awareness that the question would in any event
remain an open one in the state courts, and that unpublished opinions of
this court can have only annoyance effect. But, even that, I believe, is
worth avoiding where possible.
14