Westfield Insurance v. Bell

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
WESTFIELD INSURANCE COMPANY, an
Ohio Corporation,
Plaintiff-Appellee,
v.
No. 99-2528
FRANK WALTER BELL, personally and
as personal representative of the
Estate of Betty Bell,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of West Virginia, at Martinsburg.
W. Craig Broadwater, District Judge.
(CA-96-45-3)
Argued: June 7, 2000
Decided: August 4, 2000
Before MURNAGHAN, LUTTIG, and MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Russell R. Marks, GILBERT, MARKS, SCHUBEL &
DIGIROLAMO, P.A., Hagerstown, Maryland, for Appellant. Michael
Douglas Lorensen, BOWLES, RICE, MCDAVID, GRAFF & LOVE,
P.L.L.C., Martinsburg, West Virginia, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
This claim involves a dispute between Westfield Insurance Com-
pany and Frank Bell, a policyholder. Westfield sold an automobile
policy to Bell in 1990, which provided $500,000 in standard liability
coverage, and $100,000 in uninsured or underinsured motorist
("UIM") coverage. In 1993, and every year thereafter when the policy
was renewed, Westfield offered Bell the opportunity to purchase
higher levels of UIM coverage. Bell, however, did not accept these
offers and his coverage for damage caused by underinsured motorists
remained at $100,000.
In 1995, Bell and his wife were hit by an underinsured drunk
driver. Mrs. Bell was killed and Mr. Bell was seriously injured. Bell
now claims that he is entitled to $500,000 in coverage for damage
caused by the underinsured motorist. He claims that Westfield's offer
for increased coverage - which is required by West Virginia law - was
commercially unreasonable and also that his rejection of that offer
was not knowing and intelligent.
After certifying questions to the West Virginia Supreme Court of
Appeals, the District Court granted Westfield's motion for summary
judgment, which Bell now appeals. Because we agree with the Dis-
trict Court that Westfield is entitled to summary judgment, we affirm.
I.
Westfield Insurance Company sells automobile insurance in the
State of West Virginia. In May of 1990, Westfield sold a policy to
Frank Bell providing $500,000 in standard liability coverage and
$100,000 in UIM coverage. Each year thereafter, Westfield sent a
policy renewal package to Bell including a Declaration page listing
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all current levels of coverage, the automobiles covered, and the pre-
mium charges.
In April of 1993, the West Virginia legislature passed West Vir-
ginia Code § 33-6-31d which requires all insurance companies to
offer and make available UIM coverage to all policyholders in an
amount up to the level of coverage purchased for standard liability.
In other words, if a policyholder carries $500,000 in standard liability
coverage, the insurance company is required by law to offer the poli-
cyholder $500,000 in UIM coverage. The law also refers to a standard
form, prepared by the state insurance commissioner, to be used by the
insurance companies in offering the UIM coverage to policyholders.
The insurance commissioner, however, did not make the form avail-
able until July of 1993, three months after the law was passed.
In May of 1993, immediately after the law was passed and became
effective, Westfield contacted Bell and offered him the opportunity to
purchase up to $500,000 in UIM coverage. Because the official form
prepared by the state insurance commissioner was not yet available,
Westfield used its own form to make the offer. The form was identi-
fied as Form AD 8043 and was sent along with Bell's annual renewal
package in May of 1993.
Form AD 8043 explained the meaning of UIM coverage, how
much coverage Bell currently carried, and how much he was entitled
to purchase along with the premium prices for additional coverage.
Included on pages one, three, and four in large, capitalized, bold-
faced type were warnings that failure to complete the form indicated
a decision to retain the current levels of coverage.
Bell never returned a signed copy of the form. He was offered
additional coverage in each renewal package sent to him in 1994 and
1995. He declined to purchase additional coverage and retained only
$100,000 in UIM coverage.
On July 30, 1995, Bell and his wife were involved in a serious car
accident caused by a drunk driver. Mrs. Bell was killed and Mr. Bell
sustained serious injuries. The responsible driver carried only
$100,000 in liability coverage, and the damages sustained by the Bells
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far exceeded that amount. Thus, the responsible driver was an
underinsured motorist.
Bell's attorney contacted Westfield and told the company that his
client was entitled to $500,000 in UIM coverage by operation of law.
Westfield maintained that Bell was entitled to only $100,000 in UIM
coverage, since Bell was offered and declined to purchase additional
coverage.
In July of 1996, Westfield filed a declaratory judgment action
against Bell. The District Court certified two questions to the West
Virginia Supreme Court of Appeals, which dealt primarily with the
fact that Westfield had not used the official form published by the
state insurance commissioner when it initially offered to Bell the
opportunity to purchase higher levels of UIM coverage in May of
1993. The state court answered the certified questions and held that
the fact that the insurance carrier did not use the form
required by W. Va. Code 33-6-31d [1993] when that form
had not yet been promulgated by the insurance commis-
sioner does not automatically render an offer invalid and
"commercially unreasonable." If the insurance carrier in this
case made a commercially reasonable offer of coverage in
accord with Bias and the policy holder's $500,000 limit of
liability insurance, the policyholder does not have $500,000
of underinsured motorist coverage by operation of law. Fur-
thermore, the failure of an insurance carrier to use the pre-
scribed form prior to July 1993 does not automatically
require that a trial be held to determine whether a commer-
cially reasonable offer was made under Bias.
Westfield Ins. Co. v. Bell, 507 S.E.2d 406, 410 (W. Va. 1998).
In August of 1999, the District Court issued a Memorandum Opin-
ion and Order granting Westfield's motion for summary judgment.
Bell has now appealed.
II.
This court reviews an order granting a motion for summary judg-
ment de novo. AT&T Comm. v. Bell Atlantic-Virginia, Inc., 197 F.3d
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663, 668 (4th Cir. 1999). Summary judgment is appropriate if there
is no genuine issue of material fact and the movant is entitled to a
judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1986); Fed. R. Civ. P. 56(c). The central questions in
this case are whether Westfield made a commercially reasonable offer
for additional UIM coverage as required by statute, and whether Bell
exercised a knowing and intelligent rejection of that offer.
A.
Under West Virginia law, a commercially reasonable offer is one
that provides the insured with adequate information to make an intel-
ligent decision. Bias v. Nationwide Mutual Ins. Co., 365 S.E.2d 789,
791 (W. Va. 1987). The offer must state in definite, intelligible, and
specific terms the nature of the coverage offered, the coverage limits,
and the costs involved. Id.The offer sent to Bell by Westfield on form AD 8043 easily meets
these requirements. The description of UIM coverage is found on
page one of the four-page form. The first section includes a ques-
tion/answer format and lists the question "What is underinsured
motorist coverage?" The answer printed on the form is:
This coverage pays up to the limits of coverage for bodily
injuries to you and persons insured under your auto policy,
and for damage for insured property, which result from an
auto accident that is the fault of another driver with some
liability insurance, but not enough to fully pay you or per-
sons insured under your auto insurance policy for the inju-
ries and damages sustained.
The form also identifies eight levels of coverage available for
underinsured motorist coverage, ranging from zero to $1 million. The
form lists the premium prices for each level of coverage.
The District Court concluded that there was no "serious challenge
to the commercially reasonable nature of the offer." The form used by
the insurance company was clearly written in easy to understand
terms. It was identified as an important matter requiring a response.
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There is nothing confusing or misleading about the offer and therefore
-- given the absence of any dispute concerning the contents of the
form -- we agree that it was, as a matter of law, commercially rea-
sonable.
Bell argues that there is a material issue of fact as to whether the
offer was commercially reasonable, because his expert gave deposi-
tion testimony suggesting that the form used by Westfield was con-
fusing and therefore not commercially reasonable. The expert's
deposition testimony found fault with the offer form because of slight
disparities in the terminology used, failure clearly to identify the cur-
rent level of underinsured motorist coverage, and confusion about
whether the quoted premiums referred to a six or twelve month
period. Thus, Bell argues that a jury could find that the offer was not
commercially reasonable.
We disagree. While the form is perhaps not letter-perfect, as Bell's
expert suggests, the law does not require a "perfect" offer, but only
one that is "commercially reasonable." This form explained what
underinsured motorist coverage is and how much it costs. There can
be no serious question that the offer was reasonable. We therefore
affirm the District Court's finding that form AD 8043 was a commer-
cially reasonable offer and satisfies the requirements set out in West
Virginia Code § 33-6-31d and Bias.
B.
Bell further argues that even if the offer form sent by Westfield
was a commercially reasonable offer, he is still entitled to $500,000
in coverage by operation of law since his rejection of the offer was
not a "knowing and intelligent" rejection as required by statute. Bell
contends that the knowing and intelligent standard is subjective, and
that he did not know what "underinsured motorist coverage" was in
1993 when the offer was sent. This, he argues, creates an issue of fact
for a jury.
The District Court found that Bell's rejection was knowing and
intelligent because the form advised him (in bold-faced, capitalized
type) that action was required and that failure to complete the form
would indicate he had made a knowing and informed decision to
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retain his present level of UIM coverage as shown on the declaration
page of his policy.
The District Court was correct. Bell cannot simply assert that he
did not understand the meaning of inaction, when the form he
received clearly and unambiguously explained the significance of
inaction. Moreover, Westfield's position is supported by the statute
itself. Section 33-6-31d, subsection d, states:
Failure of the applicant or a named insured to return the
form described in this section to the insurer as required by
this section within the time periods specified in this section
creates a presumption that such person received an effective
offer of the optional coverages described in this section and
that such person exercised a knowing and intelligent rejec-
tion of such offer.
West Virginia Code § 33-6-31d(d)(emphasis added). Thus, contrary
to Bell's argument, his failure to respond to the offer for additional
coverage can properly be considered a knowing and intelligent waiver
of his right to purchase additional UIM coverage.
Considering both the plain, prominent language contained on the
offer form, and the statutory presumption that failure to return the
form constitutes a knowing rejection, the District Court was correct
in concluding that Bell's rejection of the additional coverage was
knowing and intelligent.
III.
Mr. Bell suffered a terrible loss in the 1995 car accident that took
his wife's life and caused him serious injury. His desire to recoup
additional damage payments from the insurance company is certainly
understandable. His claim that he is entitled to more coverage than he
purchased, however, is not legally supportable.
The District Court order granting summary judgment in favor of
Westfield is therefore
AFFIRMED.
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