Daniel W. Thomas v. William Ray McDermitt and State Farm Mutual Insurance

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2013 Term FILED
_______________ October 7, 2013
released at 3:00 p.m.
No. 12-0688 RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
_______________ OF WEST VIRGINIA
DANIEL W. THOMAS, ANGELA Y. THOMAS, individually and ANGELA Y.
THOMAS, as mother and next friend of LUKE D. THOMAS, an infant,
Petitioners
v.
WILLIAM RAY MCDERMITT and STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Respondent
_______________________________________________
Certified Question from the Circuit Court of Mason County
The Honorable David W. Nibert, Judge
Civil Action No. 11-C-81-N
CERTIFIED QUESTION ANSWERED
_______________________________________________
Submitted: September 11, 2013
Filed: October 7, 2013
Brent K. Kesner, Esq. R. Carter Elkins, Esq.
Kesner & Kesner, PLLC Campbell Woods, PLLC
Charleston, West Virginia Huntington, West Virginia .
And Attorney for Respondents
Anthony J. Majestro, Esq.
Powell & Majestro, PLLC Andrew R. Pauley, Esq.
Charleston, West Virginia Office of the West Virginia Insurance
Attorneys for Petitioners Commissioner
Charleston, West Virginia
Attorney for Amicus Curiae
Michael D. Riley, West Virginia
Insurance Commissioner
Jill C. Rice, Esq.
Mychal S. Schulz, Esq.
Dinsmore & Shohl, LLP
Charleston, West Virginia
Attorney for Amicus Curiae
West Virginia Insurance Federation
JUSTICE WORKMAN delivered the Opinion of the Court
JUSTICE DAVIS dissents and reserves the right to file a dissenting opinion.
SYLLABUS BY THE COURT
1. “The appellate standard of review of questions of law answered and
certified by a circuit court is de novo.” Syl. Pt. 1, Gallapoo v. Wal-Mart Stores, Inc., 197
W.Va. 172, 475 S.E.2d 172 (1996).
2. “Where the issue on an appeal from the circuit court is clearly a question
of law or involving an interpretation of a statute, we apply a de novo standard of review.”
Syl. Pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).
3. “Where an offer of optional coverage is required by statute, the insurer has
the burden of proving that an effective offer was made, and that any rejection of said offer
by the insured was knowing and informed.” Syl. Pt. 1, Bias v. Nationwide Mut. Ins. Co., 179
W.Va. 125, 365 S.E.2d 789 (1987).
4. “When an insurer is required by statute to offer optional coverage, it is
included in the policy by operation of law when the insurer fails to prove an effective offer
and a knowing and intelligent rejection by the insured.” Syl. Pt. 2, Bias v. Nationwide Mut.
Ins. Co.,179 W.Va. 125, 365 S.E.2d 789 (1987).
i
5. “‘“Where a statute is of doubtful meaning, the contemporaneous
construction placed thereon by the officers of government charged with its execution is
entitled to great weight, and will not be disregarded or overthrown unless it is clear that such
construction is erroneous.” Syllabus point 7, Evans v. Hutchinson, [158] W. Va. [359], 214
S.E.2d 453 (1975).’ Syllabus point 8, Smith v. State Workmen’s Compensation
Commissioner, 159 W.Va. 108, 219 S.E.2d 361 (1975).” Syl. Pt. 3, State ex rel. ACF Indus.,
Inc. v. Vieweg, 204 W.Va. 525, 514 S.E.2d 176 (1999).
6. “Interpretations of statutes by bodies charged with their administration are
given great weight unless clearly erroneous.” Syl. Pt. 4, Sec. Nat’l Bank & Trust Co. v. First
W. Va. Bancorp, Inc., 166 W.Va. 775, 277 S.E.2d 613 (1981).
7. “A cardinal rule of statutory construction is that significance and effect
must, if possible, be given to every section, clause, word or part of the statute.” Syl. Pt. 3,
Meadows v. Wal–Mart Stores, Inc., 207 W.Va. 203, 530 S.E.2d 676 (1999).
8. “‘The common law, if not repugnant of the Constitution of this State,
continues as the law of this State unless it is altered or changed by the Legislature. Article
VIII, Section 21 of the Constitution of West Virginia; Chapter 2, Article 1, Section 1, of the
Code of West Virginia.’ Syllabus Point 3, Seagraves v. Legg, 147 W.Va. 331, 127 S.E.2d
ii605 (1962).” Syl. Pt. 3, State ex rel. Van Nguyen v. Berger, 199 W.Va. 71, 483 S.E.2d 71(1996).
9. “‘“The common law is not to be construed as altered or changed by statute,
unless legislative intent to do so be plainly manifested.” Shifflette v. Lilly, 130 W.Va. 297,
43 S.E.2d 289 [1947].’ Syllabus Point 4, Seagraves v. Legg, 147 W.Va. 331, 127 S.E.2d 605(1962).” Syl. Pt. 4, State ex rel. Van Nguyen v. Berger, 199 W.Va. 71, 483 S.E.2d 71 (1996).
10. “‘It is well established that the word “shall,” in the absence of language
in the statute showing a contrary intent on the part of the Legislature, should be afforded a
mandatory connotation.’ Syllabus Point 1, Nelson v. West Virginia Public Employees
Insurance Board, 171 W.Va. 445, 300 S.E.2d 86 (1982).” Syl. Pt. 1, E.H. v. Matin, 201
W.Va. 463, 498 S.E.2d 35 (1997).
11. “As a general rule, where a statute directs certain proceedings to be done
in a certain way, and the form does not appear essential to the judicial mind, the law will be
regarded as directory, and the proceedings under it will be held valid, though the command
of the statute as to form has not been strictly obeyed, the manner not being the essence of the
thing to be done.” Syl. Pt. 11, Calwell’s Ex’r v. Prindle’s Adm’r, 19 W.Va. 604, 1882 WL
3581 (1882).
iii
12. An insurance company’s failure to use the West Virginia Insurance
Commissioner’s prescribed forms pursuant to West Virginia Code § 33-6-31d (2011) results
in the loss of the statutory presumption and a reversion to the standards enunciated in Bias
v. Nationwide Mutual Insurance Co., 179 W.Va. 125, 365 S.E.2d 789 (1987).
iv
Workman, Justice:
The Circuit Court of Mason County, West Virginia has certified the following
question to this Court relating to a civil action filed as a result of injuries sustained in an
automobile accident:
Whether an insurance company’s failure to use the West
Virginia Insurance Commissioner’s prescribed forms pursuant
to W. Va. Code § 33-6-31d results in underinsured motorists
coverage being added to the policy as a matter of law in the
amount the insurer was required to offer or merely results in the
loss of the statutory presumption and a reversion to the lower
standards expressed in Bias, which existed at common law prior
to the enactment of W. Va. Code § 33-6-31d [2011].
The circuit court answered the certified question by finding “that an insurance company’s
failure to use the West Virginia Insurance Commissioner’s prescribed forms pursuant to W.
Va. Code § 33-6-31d results in underinsured motorists coverage being added to the policy
as a matter of law. . . .” Based upon this Court’s thorough evaluation of the briefs, arguments
of the parties,1 the record provided to this Court, and applicable precedent, this Court answers
the certified question as follows: An insurance company’s failure to use the West Virginia
Insurance Commissioner’s prescribed forms pursuant to West Virginia Code § 33-6-31d
1
Also appearing before the Court in this proceeding are two Amici Curiae who support
State Farm’s position in this case: West Virginia Insurance Federation and West Virginia
Insurance Commissioner. This Court expresses its appreciation for the appearance of these
Amici Curiae and has considered their arguments in conjunction with those of the parties
herein.
1
(2011) results in the loss of the statutory presumption and a reversion to the standards
enunciated in Bias v. Nationwide Mutual Insurance Co., 179 W. Va. 125, 365 S.E.2d 789(1987).
I. Factual and Procedural History
On May 4, 2007, Angela Thomas visited an agent for State Farm Mutual
Automobile Insurance Company (hereinafter “State Farm”) in Point Pleasant, West Virginia.
Mrs. Thomas purchased a liability policy from State Farm which provided insurance
coverage limits of $100,000 per person, $300,000 per occurrence for bodily injuries. The
agent also offered Ms. Thomas underinsured motorist (hereinafter “UIM”) coverage and
explained the purpose of UIM coverage, the limits available for purchase, and the cost of
each available limit.2 Mrs. Thomas declined to purchase UIM coverage and signed a form
indicating (1) she read and understood the notice regarding coverage, (2) she understood
UIM coverage, and (3) she was exercising her right to reject such coverage.
On August 16, 2009, Mrs. Thomas, her husband Daniel Thomas, and their son,
Luke Thomas, were involved in a motor vehicle accident in which William Ray McDermitt
negligently crossed the center line and collided with the Thomas vehicle. All three members
of the Thomas family sustained serious injuries in the accident. Because the injuries
2
The agent recommended that Mrs. Thomas purchase UIM coverage at limits of
$100,000 per person, $300,000 per occurrence, and $50,000 for property damage.
2
sustained by the Thomas family exceeded the available liability coverage under Mr.
McDermitt’s automobile liability policy, the Thomas family (hereinafter “petitioners”) filed
an underinsured motorist claim with their insurer, State Farm, despite Mrs. Thomas’
purported rejection of such coverage in May 2007.
Based upon the absence of underinsurance coverage in the petitioners’ policy,
State Farm denied coverage for this automobile accident. In August 2011, the petitioners
filed a civil action against Mr. McDermitt and State Farm, alleging that: (1) they were injured
as a result of Mr. McDermitt’s negligence; (2) Mr. McDermitt was an underinsured motorist;
(3) the State Farm policy must be reformed to include UIM coverage; and (4) State Farm’s
refusal to provide UIM benefits constituted a breach of the insurance contract. The
petitioners asserted that a “knowing and intelligent” waiver of underinsurance coverage had
not occurred.
On April 24, 2012, the circuit court granted the petitioners’ motion for partial
summary judgment, concluding that State Farm’s UIM selection/rejection form did not
precisely comply with the Insurance Commissioner’s prescribed form. The parties agree that
State Farm’s underinsurance offer/rejection form, signed by Mrs. Thomas, did include all the
elements required by the Insurance Commissioner. The only difference between State
Farm’s form and the Insurance Commissioner’s prescribed form is State Farm’s inclusion
3
of additional elements that arguably render the form difficult to understand and more
complicated than necessary. The forms for rejection of underinsured and uninsured motorist
coverage signed by Mrs. Thomas, for instance, contain seven columns of information
concerning pricing of coverage in differing amounts to be selected by the insured. The
Insurance Commissioner’s prescribed forms contain only four columns of optional coverage
choices available to an insured.3
The circuit court certified the above-quoted question to this Court pursuant to
West Virginia Code §58-5-2 (2012).4 The circuit court answered the certified question as
3
In its brief, State Farm explained that UIM rates are explained on the forms by
presenting pricing of available optional coverage in several columns. The rate to be paid by
an insured for optional coverage depends on several factors, including whether the policy
includes a multi-car discount and whether the insured also purchases collision coverage. To
assist agents in explaining the costs of the various levels of UIM coverage, State Farm
developed a form that differentiated among various premiums based upon what level of
coverage the insured desired to purchase.
4
West Virginia Code 58-5-2 provides as follows:
Any question of law, including, but not limited to, questions arising
upon the sufficiency of a summons or return of service, upon a challenge of
the sufficiency of a pleading or the venue of the circuit court, upon the
sufficiency of a motion for summary judgment where such motion is denied,
or a motion for judgment on the pleadings, upon the jurisdiction of the circuit
court of a person or subject matter, or upon failure to join an indispensable
party, may, in the discretion of the circuit court in which it arises, be certified
by it to the supreme court of appeals for its decision, and further proceedings
in the case stayed until such question shall have been decided and the decision
thereof certified back. The procedure for processing questions certified
pursuant to this section shall be governed by rules of appellate procedure
(continued...)
4
follows: “An insurance company’s failure to use the West Virginia Insurance
Commissioner’s prescribed forms pursuant to W Va. Code § 33-6-31d results in underinsured
motorists coverage being added to the policy as a matter of law. . . .”
II. Standard of Review
In Burrows v. Nationwide Mutual Insurance Co., 215 W. Va. 668, 600 S.E.2d
565 (2004), this Court articulated the following applicable standard of review: “This Court
employs a plenary standard of review when we answer certified questions.” Id. at 672, 600
S.E.2d at 569. Similarly, in syllabus point one of Gallapoo v. Wal-Mart Stores, Inc., 197 W.
Va. 172,475 S.E.2d 172 (1996), this Court stated: “The appellate standard of review of
questions of law answered and certified by a circuit court is de novo.”
The circuit court’s answer to the certified question in this case also implicates
issues of application of statutory law. This Court has specified that “[w]here the issue on an
appeal from the circuit court is clearly a question of law or involving an interpretation of a
statute, we apply a de novo standard of review.” Syl. Pt. 1, Chrystal R.M. v. Charlie A.L.,
194 W.Va. 138, 459 S.E.2d 415 (1995).
4
(...continued)
promulgated by the supreme court of appeals.
5
Utilizing these standards, this Court evaluates the issues underlying the
certified question and the circuit court’s answer thereto.
III. Discussion
The petitioners argue that the circuit court was correct in answering the
certified question by finding that State Farm’s failure to use the exact form prescribed by the
Insurance Commissioner results in the addition of underinsured motorist coverage to the
policy as a matter of law. State Farm, conversely, contends that the consequence of failure
to use the precise form is loss of the statutory presumption that the insured provided a
reasonable offer which was knowingly rejected.
A. Common Law Under Bias
In this Court’s 1987 decision in Bias, we were confronted with a certified
question regarding underinsurance coverage available to several passengers of a bus involved
in a serious motor vehicle accident. 179 W.Va. at 126, 365 S.E.2d at 790. Finding that the
insurer had presented no proof on the record that it had made an effective offer of
underinsured motorist coverage to Ms. Bias, we concluded that such coverage was therefore
included in her policy by operation of law. Id. This Court held as follows in syllabus point
one of Bias: “Where an offer of optional coverage is required by statute, the insurer has the
6
burden of proving that an effective offer was made, and that any rejection of said offer by
the insured was knowing and informed.”5 Id. at 125, 365 S.E.2d at 789. Syllabus point two
identified the consequences of failure to prove such offer and rejection: “When an insurer
is required by statute to offer optional coverage, it is included in the policy by operation of
law when the insurer fails to prove an effective offer and a knowing and intelligent rejection
by the insured.” Id. at 126, 365 S.E.2d at 790. Further, the Bias Court held that an offer of
optional insurance coverage must be “made in a commercially reasonable manner, so as to
provide the insured with adequate information to make an intelligent decision” in order to
be effective under West Virginia Code § 33-6-31. Id. at 127, 365 S.E.2d at 791. In defining
“commercially reasonable,” this Court explained that an offer must state “the nature of the
coverage offered, the coverage limits, and the costs involved.” Id.
B. Enactment of West Virginia Code § 33-6-31d
In 1993, in apparent response to the insurance industry’s concerns regarding
the manner in which the requirements of Bias should be satisfied, the Legislature enacted
5
West Virginia Code § 33-6-31(b) (2011) provides that the insurer
shall provide an option to the insured with appropriately adjusted premiums to
pay the insured all sums which he shall legally be entitled to recover as
damages from the owner or operator of an uninsured or underinsured motor
vehicle up to an amount not less than limits of bodily injury liability insurance
and property damage liability insurance purchased by the insured without
setoff against the insured’s policy or any other policy.
7
West Virginia Code § 33-6-31d, providing additional clarification regarding an insurer’s
offer of UIM coverage. That statute provides, in pertinent part, as follows:
(a) Optional limits of uninsured motor vehicle coverage
and underinsured motor vehicle coverage required by section
thirty-one of this article shall be made available to the named
insured at the time of initial application for liability coverage
and upon any request of the named insured on a form prepared
and made available by the insurance commissioner. The
contents of the form shall be as prescribed by the commissioner
and shall specifically inform the named insured of the coverage
offered and the rate calculation therefor, including, but not
limited to, all levels and amounts of such coverage available and
the number of vehicles which will be subject to the coverage.
The form shall be made available for use on or before the
effective date of this section. The form shall allow any named
insured to waive any or all of the coverage offered.
(b) Any insurer who issues a motor vehicle insurance
policy in this state shall provide the form to each person who
applies for the issuance of such policy by delivering the form to
the applicant or by mailing the form to the applicant together
with the applicant’s initial premium notice. . . . The contents of
a form described in this section which has been signed by an
applicant shall create a presumption that such applicant and all
named insureds received an effective offer of the optional
coverages described in this section and that such applicant
exercised a knowing and intelligent election or rejection, as the
case may be, of such offer as specified in the form. Such election
or rejection shall be binding on all persons insured under the
policy.
(c) Any insurer who has issued a motor vehicle insurance
policy in this state which is in effect on the effective date of this
section shall mail or otherwise deliver the form to any person
who is designated in the policy as a named insured. . . . The
contents of a form described in this section which has been
signed by any named insured shall create a presumption that all
named insureds under the policy received an effective offer of
8
the optional coverages described in this section and that all
such named insured[s] exercised a knowing and intelligent
election or rejection, as the case may be, of such offer as
specified in the form. Such election or rejection is binding on all
persons insured under the policy.
W. Va. Code § 33-6-31d (emphasis supplied).
C. Insurance Commissioner’s Informational Letters
Soon after West Virginia Code § 33-6-31d was enacted, the West Virginia
Insurance Commissioner provided guidance on implementation of the statutory requirements
by issuing a 1993 Informational Letter, identified by the Insurance Commissioner as Number
88. That letter included two sample offer forms, an “Important Notice” to be provided with
the forms, and instructions regarding completion of the forms. Another Informational Letter,
identified as Number 121, was issued by the Insurance Commissioner in 2000. It modified
the sample forms and included the following statement, particularly relevant to the case sub
judice:
Statutory compliance in the reproduction of the forms contained
herein necessary to create a presumption of an effective offer of
optional coverages and a knowing and intelligent election or
rejection is achieved so long as the reproduced forms provide
ALL the information set forth within the Insurance
Commissioner promulgated forms. It is not necessary that the
reproduced forms be exact replicas of the Commissioner forms
in size and shape.
9
This Court has generally held that an entity charged with the administration of
a statutory scheme is entitled to some deference, unless the entity’s interpretations conflict
with the statute they purport to cover. See Syl. Pt. 3, State ex rel. ACF Indus., Inc. v. Vieweg,
204 W.Va. 525, 514 S.E.2d 176 (1999) (“‘“Where a statute is of doubtful meaning, the
contemporaneous construction placed thereon by the officers of government charged with
its execution is entitled to great weight, and will not be disregarded or overthrown unless it
is clear that such construction is erroneous.” Syllabus point 7, Evans v. Hutchinson, [158]
W. Va. [359], 214 S.E.2d 453 (1975).’ Syllabus point 8, Smith v. State Workmen’s
Compensation Commissioner, 159 W.Va. 108, 219 S.E.2d 361 (1975).”); Syl. Pt. 4, Sec.
Nat’l Bank & Trust Co. v. First W. Va. Bancorp, Inc., 166 W.Va. 775, 277 S.E.2d 613 (1981)
(“Interpretations of statutes by bodies charged with their administration are given great
weight unless clearly erroneous.”). In Japan Whaling Association v. American Cetacean
Soc’y, 478 U.S. 221, 233-34 (1986), the United States Supreme Court stated: “[I]f a statute
is silent . . . with respect to the question at issue, our longstanding practice is to defer to the
‘executive department’s construction of a statutory scheme it is entrusted to administer.’”
Id. at 233-34 (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
837, 844 (1984)) (additional citations omitted)).
10
D. Application of West Virginia Code § 33-6-31d
At the outset of this Court’s analysis, it is imperative to acknowledge what
West Virginia Code § 33-6-31d specifically states and, perhaps more importantly, what it
fails to state. The statute does not address the manner in which an insured can rebut the
presumption that he or she received such an offer and knowingly rejected it. Further,
conspicuously absent from the statute is any express provision regarding the result of an
insurer’s failure to utilize the prescribed form. There is also no provision indicating that
failure to use the requisite form renders an offer of UIM coverage ineffective as a matter of
law or results in coverage being added to the policy as a matter of law, as the petitioners
argue in the present case.
It is clear, however, that under the plain language of West Virginia Code §
33-6-31d, an insurer must use the Commissioner’s form in order to gain the benefit of the
statutory presumption that (1) its offer of UIM coverage was effective, and (2) the insured’s
rejection of such coverage was knowing and intelligent.
West Virginia Code § 33-6-31d is premised upon the common law foundation
announced in Bias. In addressing the application of that statute, we recognize that the
Legislature is presumed to be aware of the common law underlying particular areas of
11
legislation.6 The chronology and context of this issue of UIM coverage cannot be overstated
and is indispensably instructive. While a legislative enactment may arguably be susceptible
to doubtful interpretations when standing alone, analysis within context substantially reduces
the opportunity for erroneous application. Because the Bias decision had been rendered prior
to the enactment, the Legislature is presumed to have known that the commercially
reasonable standard had been established as the means for determining the efficacy of an
6
It is axiomatic that we may “assume that our elected representatives . . . know the
law[.]” Cannon v. Univ. of Chicago, 441 U.S. 677, 696–97 (1979). This Court has also
consistently adhered to the following principle:
“A statute should be so read and applied as to make it
accord with the spirit, purposes and objects of the general
system of law of which it is intended to form a part; it being
presumed that the legislators who drafted and passed it were
familiar with all existing law, applicable to the subject matter,
whether constitutional, statutory or common, and intended the
statute to harmonize completely with the same and aid in the
effectuation of the general purpose and design thereof, if its
terms are consistent therewith.” Syllabus Point 5, State v.
Snyder, 64 W.Va. 659, 63 S.E. 385 (1908).
Syl. Pt. 5, Community Antenna Serv., Inc. v. Charter Communications VI, LLC, 227 W.Va.
595, 712 S.E.2d 504 (2011); see also Syl. Pt. 5, Kessel v. Monongahela Cnty Gen. Hosp., 220
W.Va. 602, 648 S.E.2d 366 (“‘“When the Legislature enacts laws, it is presumed to be aware
of all pertinent judgments rendered by the judicial branch. By borrowing terms of art in
which are accumulated the legal tradition and meaning of centuries of practice, the
Legislature presumably knows and adopts the cluster of ideas attached to each borrowed
word in the body of learning from which it was taken and the meaning its use will convey to
the judicial mind unless otherwise instructed.” Syl. pt. 2, in part, Stephen L.H. v. Sherry
L.H., 195 W.Va. 384, 465 S.E.2d 841 (1995).’ Syllabus Point 3, CB&T Operations
Company, Inc. v. Tax Commissioner of the State of West Virginia, 211 W.Va. 198, 564
S.E.2d 408 (2002).”).
12
insurer’s offer. The statute established the framework for the development of a form for the
conveyance of information and stated that “contents of a form described in” that statute
would create a presumption that the insureds had received an effective offer and knowingly
rejected it. W. Va. Code § 33-6-31d(b) and (c) (emphasis supplied).
In addition to the context of the Bias common law standard, the statute must
also be applied in a manner which gives meaning to the Legislature’s implementation of a
presumption that an effective offer has been made and knowingly rejected where the
prescribed form has been used. Effect must be given to every word employed in a statutory
enactment.7 “A cardinal rule of statutory construction is that significance and effect must,
if possible, be given to every section, clause, word or part of the statute.” Syl. Pt. 3,
Meadows v. Wal–Mart Stores, Inc., 207 W.Va. 203, 530 S.E.2d 676 (1999); accord State ex
rel. Johnson v. Robinson, 162 W.Va. 579, 582, 251 S.E.2d 505, 508 (1979) (“It is a well
known rule of statutory construction that the Legislature is presumed to intend that every
word used in a statute has a specific purpose and meaning.”). In this context, the
Legislature’s use of the phrase “contents of a form” must not be overlooked. See W.Va.
Code § 33-6-31d. In order to facilitate application of the intent of the statute, the Legislature
7
A closely-related concept emphasizes the need to refrain from interpretations which
result in unreasonable results. See Charter Commc’ns VI, PLLC v. Cmty Antenna Serv., Inc.,
211 W.Va. 71, 77, 561 S.E.2d 793, 799 (2002) (internal citations and quotes omitted) (“[A]
well established cannon of statutory construction counsels against . . . an irrational result
[for] ‘[i]t is the “duty of this Court to avoid whenever possible a construction of a statute
which leads to absurd, inconsistent, unjust or unreasonable results.”).
13
primarily focused on the contents of the form. That observation lends additional credence
to the contention that failure to use an exact replica of the Insurance Commissioner’s
prescribed form, while depriving an insurer of the benefit of the “presumption,” would not
necessarily interfere with the proper presentation of the “contents of a form” and would
consequently potentially satisfy the Bias commercially reasonable standard.
Moreover, the Legislature’s implementation of a presumption is pivotal in this
case. As the Martin court aptly observed, “[t]he creation of the presumption is only given
meaning when examined within the context of Bias. . . . Without the imposition of the
evidentiary burden in Bias, the need for the statutory presumption created by § 33-6-31d
would be nonexistent.” 809 F. Supp. 2d at 505.8
It is axiomatic that the Legislature had the authority, in enacting West Virginia
Code § 33-6-31d, to penalize an insurer for failure to utilize the precise form by requiring the
immediate addition of UIM coverage as a matter of law. It did not do so. As this Court
8
This Court acknowledges that the petitioners disagree with the logic of Martin. It
could be argued that a purpose of the presumption is to provide an opportunity for an insured
to rebut any presumption of an effective offer and knowing rejection, even where the insurer
uses the prescribed form. However, this Court does not find that to be the only appropriate
utilization of the presumption. There is no evidence, by either actual language or by
implication, that the Legislature intended application of coverage to be the immediate
consequence of failure to use the prescribed form. The immediate consequence of such
failure is merely the loss of the benefit of the presumption of reasonable offer and knowing
rejection. In the absence of such presumption, the standards of Bias control.
14
stated in Motto v. CSX Transportation, Inc., 220 W.Va. 412, 647 S.E.2d 848 (2007),
“[w]here the Legislature itself has not acted, it is improper for this Court, under the guise of
statutory interpretation, to amend legislative enactments in order to judicially impose upon
the Legislature a result it did not intend.” Id. at 420, 647 S.E.2d at 856.
This Court is not at liberty to impose its own view of what the language in
question should mean or what penalty for violation the legislature should have imposed.9
“This Court does not sit as a superlegislature. . . . It is the duty of the legislature to consider
facts, establish policy, and embody that policy in legislation. It is the duty of this court to
enforce legislation unless it runs afoul of the State or Federal Constitutions.” Boyd v.
Merritt, 177 W.Va. 472, 474, 354 S.E.2d 106, 108 (1986); see also State v. Anderson, 212
W.Va. 761, 765, 575 S.E.2d 371, 375 (2002). There is nothing in the express statutory
language of West Virginia Code § 33-6-31d to indicate that the addition of coverage is the
necessary immediate consequence of failure to utilize the prescribed form.10
9
“Legislative intent is found not in what the legislature meant to say but in the
meaning of what it did say.” Dana-Robin Corp. v. Common Council, 348 A.2d 560, 567
(Conn. 1974).
10
In Perito v. County of Brooke, 215 W.Va. 178, 597 S.E.2d 311 (2004), this Court
stated:
“[I]t is not for [courts] arbitrarily to read into [a statute] that which it does not
say. Just as courts are not to eliminate through judicial interpretation words
that were purposely included, we are obliged not to add to statutes something
the Legislature purposely omitted. . . . Moreover, [a] statute, or an
(continued...)
15
Furthermore, there is nothing in the express language of the statute to indicate
a legislative intent to invalidate or render obsolete the standard of Bias. Although the
petitioners contend that Bias is no longer viable and has been superceded by West Virginia
Code § 33-6-31d, a clear reading of the cases referencing Bias as being superceded reveals
that only a portion of Bias was superceded by the statute. Even Ammons v. Transportation
Insurance Co., 219 F.Supp.2d 885 (S.D. Ohio 2002), a case relied upon by the petitioners in
support of their position and examined later in this opinion, recognizes that only “the portion
of Bias that sets forth the information that must be contained in an offer of optional coverage
for it to be effective has been superceded by [the statute].” Id. at 894.
This Court agrees with the State Farm’s argument that Bias was not rendered
obsolete by the enactment of West Virginia Code § 33-6-31d. As this Court stated in
syllabus point three of State ex rel. Van Nguyen v. Berger, 199 W.Va. 71, 483 S.E.2d 71(1996):
“The common law, if not repugnant of the Constitution of this
State, continues as the law of this State unless it is altered or
changed by the Legislature. Article VIII, Section 21 of the
Constitution of West Virginia; Chapter 2, Article 1, Section 1,
of the Code of West Virginia.” Syllabus Point 3, Seagraves v.
Legg, 147 W.Va. 331, 127 S.E.2d 605 (1962).
10
(...continued)
administrative rule, may not, under the guise of ‘interpretation,’ be modified,
revised, amended or rewritten.”
Id. at 184, 597 S.E.2d at 317 (additional internal quotations and citations omitted).
16
Syllabus point four of Van Nguyen continued: “‘“The common law is not to be construed
as altered or changed by statute, unless legislative intent to do so be plainly manifested.”
Shifflette v. Lilly, 130 W.Va. 297, 43 S.E.2d 289 [1947].’ Syllabus Point 4, Seagraves v.
Legg, 147 W.Va. 331, 127 S.E.2d 605 (1962).” Thus, if the Legislature had sought to
designate Bias as entirely effaced by the statute, it would have done so. “If the Legislature
intends to alter or supersede the common law, it must do so clearly and without
equivocation.” Van Nguyen, 199 W.Va. at 75, 483 S.E.2d 71 at 75.11
The parties also address the Legislature’s provision that the prescribed form
“shall” be used by the insurer. In that regard, this Court has often quoted the axiom that
11
Additional authorities cited by the parties reference Bias without significant or
determinative analyses of its continued viability. See, e.g., W. Va. Emp’rs. Mut. Ins. Co. v.
Summit Point Raceway Assoc., 228 W.Va. 360, 719 S.E.2d 830 (2011) (discussing that
statute was “apparent endorsement” of Bias, referencing Bias as superceded, but failing to
address question currently before this Court); Luikart v. Valley Brook Concrete & Supply,
Inc., 216 W.Va. 748,754 n.11, 613 S.E.2d 896, 902 n.11 (2005) (citing Bias in a footnote
for the concept that insurers are required to offer “certain coverage benefits” in automobile
insurance and noting that Bias was superseded by statute “as recognized in Ammons. . . .”);
Jewell v. Ford (“Jewell I”), 211 W.Va. 592, 567 S.E.2d 602 (2002) and Jewell v. Ford
(“Jewell II”), 214 W.Va. 511, 590 S.E.2d 704 (2003) (finding that factual issues regarding
whether the insurer had completed Insurance Commissioner’s prescribed form in such
manner that effective offer was made precluded summary judgment). The parties also
discuss this Court’s opinion in Westfield Insurance Co. v. Bell, 203 W.Va. 305, 507 S.E.2d
406 (1998). While that case is instructive on the broad issue of offering optional coverage,
it is not helpful to this Court’s analysis herein because it was based upon a form developed
by an insurance company after West Virginia Code § 33-6-31d became effective but before
the Insurance Commissioner had issued the prescribed form in Informational Letter Number
88. Moreover, in Westfield, this Court did not address the consequences of failure to comply
with the Commissioner’s guidelines. See Westfield, 203 W.Va. at 309, 507 S.E.2d at 410.
17
legislative use of the word “shall” denotes a mandatory obligation.12 In syllabus point one
of E.H. v. Matin, 201 W.Va. 463, 498 S.E.2d 35 (1997), for instance, this Court explained
that “‘[i]t is well established that the word “shall,” in the absence of language in the statute
showing a contrary intent on the part of the Legislature, should be afforded a mandatory
connotation.’ Syllabus Point 1, Nelson v. West Virginia Public Employees Insurance Board,
171 W.Va. 445, 300 S.E.2d 86 (1982).” (emphasis supplied).
While courts justifiably commence their analyses with the premise that the use
of the word “shall” forecloses the exercise of discretion, detailed evaluation often reveals that
the use of “shall” is not determinative or that other language in the statute reveals a contrary
intent. For instance, this Court has observed a distinction between “mandatory” and
“directory” based upon whether a penalty13 has been established for noncompliance with a
12
In order to properly evaluate the distinction between the terms “mandatory” and
“directory,” this Court must acknowledge the misleading characterization of those terms in
some of our relatively recent opinions. Various discussions have inaccurately referenced the
term “directory” as being synonymous with the term “mandatory;” the terms are actually
antonyms. The term “directory” is defined as “providing advisory but not compulsory
guidance.” Webster’s New Collegiate Dictionary 320 (1979).
13
A “statutory penalty,” is defined as a “penalty imposed for a statutory violation; esp.,
a penalty imposing automatic liability on a wrongdoer for violation of a statute’s terms
without reference to any actual damages suffered.” Black’s Law Dictionary 1247 (9th ed.
2009). Thus, a statutory penalty “(1) impose[s] automatic liability for a violation of its terms;
(2) set[s] forth a predetermined amount of damages; and (3) impose[s] damages without
regard to the actual damages suffered by the plaintiff.” Landis v. Marc Realty, 919 N.E.2d
300, 307 (Ill. 2009), citing McDonald’s Corp v. Levine, 439 N.E.2d 475, 480 (Ill. App.
Ct.1982).
(continued...)
18
legislative pronouncement. In State v. Hager, 102 W.Va. 689, 136 S.E. 263 (1926), this
Court held that “[i]t is an established rule of construction that where a legislative provision
is accompanied with a penalty for failure to observe it, the provision is mandatory.” Id. at
692, 136 S.E. at 264 (citations omitted). In State ex rel. Board of Education v. Melton, 157
W.Va. 154, 198 S.E.2d 130 (1973), this Court addressed the mandatory/directory distinction
and reasoned as follows:
Generally the use of the word ‘shall’ in statutes limits or
prevents the exercise of discretion, however, such use is not
always conclusive in determining whether ‘shall’ represents a
mandatory or directory instruction. Canyon Public Service
District v. Tasa Coal Company, W.Va., 195 S.E.2d 647. There
is no universal rule by which directory provisions may be
distinguished from those which are mandatory. 1A Sutherland,
Statutory Construction, § 25.03, page 299. Generally, whether
a statute is mandatory or directory is determined from the
intention of the Legislature. If that intention is to make
compliance with the statute essential to the validity of the act
directed to be done, the statute is mandatory. State ex rel.
Kennedy v. Boles, 150 W.Va. 504, 147 S.E.2d 391; State v.
Carduff, 142 W.Va. 18, 93 S.E.2d 502; State ex rel. Thompson
v. Fry, 137 W.Va. 321, 71 S.E.2d 449.
13
(...continued)
The statute in the case sub judice does not expressly provide a penalty for
failure to use the prescribed form, as the term penalty is defined above. The statute offers
a benefit by specifying that “the contents of the form . . . shall create a presumption” of
effective offer and knowing rejection. W. Va. Code § 33-6-31d (emphasis supplied). Thus,
without gaining the presumption, an insurer simply remains at the status quo, with the statute
neither adding to nor detracting from that status. To propose that the statute does create a
penalty for failure to use the prescribed form is tantamount to adding more language to the
statute than the Legislature included.
19
Id. at 165, 198 S.E.2d at 136.
In State ex rel. Kennedy v. Boles, 150 W.Va. 504, 147 S.E.2d 391 (1966), this
Court provided an instructive explanation of the mandatory/directory distinction, as follows:
The distinction between mandatory and directory
statutory provisions is clearly stated in 82 C.J.S., Statutes,
Section 376, and 50 Am.Jur., Statutes, Section 25. In 82 C.J.S.,
Statutes, Section 376, the text contains this language: “Whether
a statute is mandatory or directory depends on whether the thing
directed to be done is of the essence of the thing required, or is
a mere matter of form, and what is a matter of essence can often
be determined only by judicial construction. Accordingly, when
a particular provision of a statute relates to some immaterial
matter, as to which compliance with the statute is a matter of
convenience rather than substance, or where the directions of a
statute are given merely with a view to the proper, orderly, and
prompt conduct of business, it is generally regarded as directory,
unless followed by words of absolute prohibition; and a statute
is regarded as directory where no substantial rights depend on it,
no injury can result from ignoring it, and the purpose of the
legislature can be accomplished in a manner other than that
prescribed, with substantially the same results.”
150 W.Va. at 511-12, 147 S.E.2d at 396 (emphasis supplied). The Kennedy Court also held
that “[i]f, however, the intention of the Legislature is not to make compliance with the statute
essential to the validity of the act directed to be done or the procedure to be followed, the
statute is merely directory.” Id.In Calwell’s Executor v. Prindle’s Administrator, 19 W.Va. 604, 1882 WL
3581 (1882), this Court dealt with the distinction between mandatory and directory in
20
litigation involving whether a statutory requirement for certain columns in a document had
been satisfied. In that civil action concerning matters of liens, debts, and property sold in
trust, the issue of a statutory requirement that different items “shall be stated in separate
columns” arose, and this Court stated:
This raises the question, whether the statute in this respect is
mandatory or simply directory. I am of the opinion, that the
statute in this respect must be held as simply directory and not
mandatory, if for no other reason, because the thing directed to
be done in this particular is not the essence of the thing required.
Lord Mansfield in Rex v. Loxdale, 1 Burr. 447; Pott Dwarr. on
Statutes, &c., of 1871, 222, 223, 224, 226, notes; Marchant v.
Langworthy, 6 Hill. 646; Striker v. Kelly, 7 Hill. 9; People v.
Cook, 8 N. Y. 67; People v. Cook, 14 Barb. 290; People v.
Schermerhorn, 19 Barb. 558. In the last case it was held, that a
statute is directory, where the thing is directed to be done is an
immaterial matter, where a compliance is matter of convenience
rather than substance. In Dwarr. on Statutes at page 226 in a
note it said: “And in general it may be laid down as a rule, that
when a statute directs certain proceedings to be done in a certain
way or at a certain time, and the form or period does not appear
essential to the judicial mind, the law will be regarded as
directory, and the proceedings under it will be held valid, though
the command of the statute as to form and time has not been
strictly obeyed; the time and manner not being the essence of the
thing required to be done.” This it seems to me states a good
general rule upon the subject.
19 W.Va. at 666, 1882 WL at *39. Syllabus point eleven of that opinion held as follows:
As a general rule, where a statute directs certain proceedings to
be done in a certain way, and the form does not appear essential
to the judicial mind, the law will be regarded as directory, and
the proceedings under it will be held valid, though the command
of the statute as to form has not been strictly obeyed, the manner
not being the essence of the thing to be done. (p. 666).
21
Id. at 608, 1882 WL at *4.
Other jurisdictions have also aptly explained the distinction between mandatory
and directory. As observed by State v. Teer, 275 S.W.3d 258 (Mo. 2009), “[t]here are cases
that have qualified the interpretation of the word ‘shall’ by holding that ‘where a statute or
rule does not state what results will follow in the event of a failure to comply with its terms,
the rule or statute is directory and not mandatory.’” Teer, 275 S.W.2d at 261 (citing Bauer
v. Transitional School District of City of St. Louis, 111 S.W.2d 405, 408 (Mo. banc 2003));
Cline v. Carthage Crushed Limestone Co., 504 S.W.2d 118 (Mo.1974).
Such reasoning was also employed in People v. Borys, 2013 WL 4516945 (Ill.
App. Ct. 2013), wherein the court held that statutes are considered mandatory if the
legislature dictates a particular consequence for failure to comply with the provision. Id. at
*5. Yet, if a consequence is not included, the statute is considered directory, and
noncompliance does not result in any particular consequence. Id.; see also Santiago v. Slate,
804 A.2d 801 (Conn. 2002) (holding that statute is mandatory if it addresses matter of
substance. If it is simply a matter of convenience, it is considered directory); In re M.I., 989
N.E.2d 173 (Ill. 2013) (holding that mandatory or directory distinction is made by
determining whether intent of legislature dictates particular consequence for failure to
comply); Columbia Road Citizens’ Ass’n v. Montgomery Cnty, 635 A.2d 30 (Md. Ct. Spec.
22
App. 1994) (holding that “must” is considered mandatory where statute provides sanction for
noncompliance); Tx. Dept. of Public Safety v. Shaikh, 2013 WL 373441 (Tex. Crim. App.
2013) (holding that courts will generally give word “must” a mandatory meaning when it is
followed in statutory language by noncompliance penalty); Vill. of Elm Grove v. Brefka, 832
N.W.2d 121 (Wis. 2013) (holding that factors to be considered in determining whether
“shall” is mandatory are whether statute includes penalty, what consequences are stated for
violation, and nature and object of statute).
In applying West Virginia Code § 33-6-31d to the present case, this Court must
be cognizant of the statute’s inclusion of the benefit of the presumption to insurers who use
the prescribed form. We find no evidence in the clear language of the statute to indicate that
the Legislature intended to construct a paradigm in which failure to utilize the precise form
prescribed by the Insurance Commissioner to convey optional insurance coverage
information would result in the immediate addition of coverage as a matter of law.
E. Precedent and Authority of Other Jurisdictions
The question raised in the case sub judice was evaluated by the United States
District Court for the Southern District of West Virginia in Martin v. State Farm Mutual
Automobile Insurance Co., 809 F. Supp. 2d 496 (S.D. W. Va. 2011). In that case, the district
court addressed an insurer’s utilization of a form that included all the information required
23
to be included in the Insurance Commissioner’s form but also included additional
information.14 The Martin court concluded that even where an insurer’s forms vary
impermissibly from the Commissioner’s forms by including additional information, the
consequence of that deficiency was merely the loss of the presumption under West Virginia
Code § 33-6-31d, rather than the addition of UIM coverage as a matter of law. 809 F. Supp.
2d at 507. In such situation, the insurer would thereafter be required to prove, under the
criteria enunciated by this Court in Bias, that its offer was commercially reasonable and that
the insured’s rejection of such offer was knowing and intelligent. Id.Thus, under the application of West Virginia Code § 33-6-31d espoused by the
district court in Martin, the Legislature did not have to identify any consequence of failure
to use a prescribed form because Bias had already been decided and would presumably be
utilized as the fundamental method of determining whether a commercially reasonable offer
had been made. As observed above, West Virginia Code § 33-6-31d clearly provides that
an insurer who utilizes the Insurance Commissioner’s prescribed form is entitled to a
presumption that the insured thereby received an “effective offer” of UIM coverage and
“exercised a knowing and intelligent election or rejection, as the case may be, of such offer.”
14
The Martin court noted that the form prescribed by the Insurance Commissioner
contained only five columns; the forms utilized by State Farm contained six or eight columns,
the first three of which were the same as the Insurance Commissioner’s prescribed forms.
809 F.Supp.2d at 504. However, the final two to four columns in the State Farm forms listed
additional information regarding premiums per coverage level. Id.24
Id. at 33-6-31d(b). As indicated previously, however, the statute does not explicitly identify
the consequences of failure to use the prescribed form. The Martin court determined that the
answer to that query lies in the standards set forth in Bias. The Martin court reasoned as
follows:
A presumption is “[a] legal inference or assumption that a fact
exists, based on the known or proven existence of some other
fact or group of facts.” Black’s Law Dictionary (9th ed. 2009).
The creation of the presumption is only given meaning when
examined within the context of Bias. There, the West Virginia
Supreme Court of Appeals concluded that the insurer bears the
evidentiary burden of proving that an effective offer of the
optional insurance was made. Bias, 365 S.E.2d 789 at Syl. Pt.
1. Without the imposition of the evidentiary burden in Bias, the
need for the statutory presumption created by § 33-6-31d would
be nonexistent.
809 F. Supp. 2d at 505 (emphasis supplied).
The petitioners, on the other hand, rely extensively upon an opinion by United
States District Court for the Southern District of Ohio in Ammons v. Transportation
Insurance Co., 219 F.Supp.2d 885 (S.D. Ohio 2002),15 which the Martin court found clearly
15
The parties also cite cases from other jurisdictions that are somewhat helpful to this
Court’s analysis. In South Carolina, for instance, the guiding statute mandates that a certain
form be utilized and creates a presumption of an effective offer and knowing rejection
through the use of such form. See S.C. Code Ann. § 38-77-350. In an opinion dealing with
the consequences of failure to properly use the prescribed South Carolina form, the Supreme
Court of South Carolina concluded that the underlying common law standards of State Farm
Mutual Automobile Insurance Co v. Wannamaker, 354 S.E.2d 555 (S.C. 1986), the South
Carolina equivalent of Bias, were still available to determine the efficacy of an offer where
the prescribed form was not properly completed by the insurer. See also McWhite v. ACE
(continued...)
25
distinguishable. In Ammons, the Ohio court examined a form utilized by Allstate16 that
deviated significantly from the form prescribed by the Insurance Commissioner, failed to list
15
(...continued)
Am. Ins. Co., 412 Fed. Appx. 584, 587-88 (C.A. 4 S.C. 2011) (“The meaningful offer
requirement can be satisfied in one of two ways: compliance with S. C. Code Ann. §
38–77–350(A) or satisfaction of the four-part test the South Carolina Supreme Court
established in State Farm Mutual Insurance Co. v. Wannamaker, 354 S.E.2d at 556.”).
In response to State Farm’s contentions regarding South Carolina’s approach,
the petitioners argue that these South Carolina cases are of limited applicability because
South Carolina permits insurance companies to submit their own forms for approval.
Instead, the petitioners direct this Court’s attention to North Carolina cases in which a
specific form has been mandated and deviation is not permitted. See State Farm Mut. Auto
Ins. Co. v. Fortin, 513 S.E.2d 782 (N.C. 1999) (holding that coverage to liability limits
became available due to failure to use mandated form); Erie Ins. Exch. v. Miller, 584 S.E.2d
857 (N.C. App. 2003) (requiring strict adherence to mandated form). The Miller court held:
“Because North Carolina by statute requires the use of a particular form and neither the
statute nor any administrative ruling by the Commissioner of Insurance has provided for
modification of the format of that form, Erie was required to strictly adhere to the required
format.” 584 S.E.2d at 859 (emphasis supplied). In a subsequent case, however, the Court
of Appeals of North Carolina approved a slight deviation in the standard form, reasoning as
follows: “Allstate’s Selection/Rejection Form uses the precise wording contained in the Rate
Bureau’s form in its entirety. The only deviation from the promulgated form is Allstate’s
inclusion of additional language which explains uninsured and UIM coverage. There is no
change or substantive amendment to the text of the Rate Bureau’s form.” Stegenga v.
Burney, 620 S.E.2d 302, 304 (N.C. App. 2005).
State Farm counters the petitioners’ arguments by emphasizing that North
Carolina cases should not be relied upon because North Carolina does not have a statutory
presumption created by the use of the prescribed form. While these cases from other
jurisdictions are minimally informative, they are neither direct authority nor squarely on point
with the situation we presently confront. The determination of the certified question
currently before this Court must be premised upon the context of the unique statutory and
common law of this state.
16
The delivery truck involved in an accident in Ammons was licensed in West Virginia
and leased by a West Virginia employer. Thus, West Virginia law applied. Ammons, 219
F. Supp. 2d at 887.
26
all vehicles in the fleet to be potentially covered by the offer, and failed to include the
premiums for each optional level of coverage on its selection/rejection form. Allstate
acknowledged in Ammons “that the forms it provided . . . did not comply with § 33-6-31d,
as they contained neither a listing of each vehicle covered under the policy nor the premiums
associated with each optional level of coverage.” 219 F. Supp. 2d at 892. In analyzing that
situation, the Ammons court observed:
Allstate acknowledges that the forms it provided to Rich [the
insured] did not comply with §33-6-31d, as they contained
neither a listing of each vehicle covered under the policy nor the
premiums associated with each optional level of coverage.
Allstate contends, however, that strict compliance was not
necessary under these circumstances. In particular, Allstate
argues that the “oppressive paperwork” that would have been
necessary made it impractical for it to list each vehicle in the
Flowers fleet. Instead, it simply attached a schedule of vehicles
to the policy, and wrote “see vehicle schedule” on the UIM
Coverage form.
219 F. Supp. 2d at 892. The Ammons court found that compliance with the requirements of
the statute was necessary, even though a representative of the insured had indicated that it
did not want UIM coverage. The court reasoned as follows:
Allstate’s failure to comply with §33-6-31d by failing to set
forth a premium breakdown showing the cost of each optional
coverage limit must be construed as a failure to make an
effective and commercially reasonable offer. Without such
offer, there could be no knowing, intelligent waiver of the
optional coverage.
Id. at 894. Based upon the findings of the Ammons court, the UIM coverage was added to
the policy as a matter of law.
27
This Court agrees with the Martin court and finds that the Ammons decision
is clearly distinguishable. First, the Ammons court did not address the precise question raised
herein concerning the effect of the presumption language included in the statute and, in fact,
never mentioned the statutory presumption in the opinion. Second, inherent in the reasoning
of the Ammons court was a recognition that Allstate not only failed to use the precise form
but also failed to incorporate the elements necessary to satisfy the substantive requirements
of a reasonable offer. In other words, as the Martin court articulated, “unlike in the instant
case, Allstate’s forms [in Ammons] did not include all the required information. In contrast,
here, State Farm’s forms do include all the required information; they just include additional
information as well.” Martin, 809 F. Supp. 2d at 507.
As a result of the more precise and logically cohesive reasoning of the Martin
court, it becomes apparent that two separate elements require analysis: (1) the consequences
of the failure to use the precise form; and (2) whether a commercially reasonable offer has
nonetheless been made. The Ammons court essentially combined these two inquires, likely
based upon the manner in which the concepts were presented to it; the issue of the
“presumption” contained in the statute was therefore never addressed.
Moreover, the Ammons court was presented with an acknowledgment by
Allstate that its forms did not contain all the required information. In contrast to Ammons,
28
and almost identical to the case sub judice, the Martin court was confronted with a form that
provided all the required information but deviated from the Insurance Commissioner’s
prescribed form by including additional information which arguably rendered the form
unreasonably confusing. Thus, the Martin court found that the deviation from the Insurance
Commissioner’s form resulted in merely the loss of the presumption and thus, the issue of
the commercial reasonableness of the offer required assessment under the standards of Bias.
This Court agrees with the reasoning of the Martin court and also adopts that interpretation
of the application of the statute.
IV. Conclusion
Based upon the foregoing and in answer to the certified question presented
herein, this Court holds as follows: An insurance company’s failure to use the West Virginia
Insurance Commissioner’s prescribed forms pursuant to West Virginia Code § 33-6-31d
(2011) results in the loss of the statutory presumption and a reversion to the standards
enunciated in Bias v. Nationwide Mutual Insurance Co., 179 W. Va. 125, 365 S.E.2d 789(1987). Thus, upon loss of the presumption, the insurer is thereafter obligated, under the
standards articulated in Bias, to prove that (1) it made a commercially reasonable offer of
coverage to the insured, and (2) the insured’s rejection of such coverage was knowing and
intelligent.
29
State Farm asserts that, in the alternative, this Court need not reach the certified
question. State Farm bases this notion on its belief that it is entitled to the presumption under
West Virginia Code § 33-6-31d. This Court declines that invitation and answers the question
as framed by the circuit court. Based upon this Court’s answer, State Farm’s assertion that
its offer was commercially reasonable and knowingly rejected will be evaluated under the
standards enunciated in Bias after thorough discovery opportunities by the parties.17
Certified Question Answered.
17
Clearly, if an insurer’s offer of UIM coverage is determined to be unreasonably
complicated or difficult for a potential insured to comprehend, it could rather soundly be
argued that the offer was not commercially reasonable under the standards of Bias.
30