IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2013 Term FILED
_______________ October 29, 2013
released at 3:00 p.m.
No. 12-0774 RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
_______________ OF WEST VIRGINIA
WAYNE A. LEMASTERS and MARY JOAN LEMASTERS,
Plaintiffs Below, Petitioners
v.
NATIONWIDE MUTUAL INSURANCE COMPANY,
Defendant Below, Respondent
____________________________________________________________
Appeal from the Circuit Court of Marshall County
The Honorable David W. Hummel Jr., Judge
Civil Action No. 06-C-137H
AFFIRMED
____________________________________________________________
Submitted: September 11, 2013
Filed: October 29, 2013
Christopher J. Regan, Esq. Ronda L. Harvey, Esq.
James G. Bordas, III, Esq. Bowles Rice LLP
Scott S. Blass, Esq. Charleston, West Virginia
Michelle L. Marinacci, Esq.
Bordas and Bordas, PLLC Ashley P. Hardesty, Esq.
Wheeling, West Virginia Bowles Rice LLP
Counsel for the Petitioners Morgantown, West Virginia
Counsel for the Respondent
The Opinion of the Court was delivered PER CURIAM.
JUSTICES DAVIS and WORKMAN dissent and reserve the right to file dissenting
opinions.
SYLLABUS BY THE COURT
1. “When a policyholder of uninsured or underinsured motorist
coverage issued pursuant to W. Va. Code, 33-6-31(b) substantially prevails in a suit
involving such coverage under W. Va. Code, 33-6-31(d), the insurer issuing such policy
is liable for the amount recovered up to the policy limits, the policyholder’s reasonable
attorney fees, and damages proven for aggravation and inconvenience.” Syl. pt. 6,
Marshall v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994).
2. “Whenever a policyholder substantially prevails in a property
damage suit against its insurer, the insurer is liable for: (1) the insured’s reasonable
attorneys’ fees in vindicating its claim; (2) the insured’s damages for net economic loss
caused by the delay in settlement, and damages for aggravation and inconvenience.” Syl.
pt. 1, Hayseeds v. State Farm Fire & Cas., 177 W. Va. 323, 352 S.E.2d 73 (1986).
3. “An implied private cause of action may exist for a violation by an
insurance company of the unfair settlement practice provisions of W. Va. Code, 33-11-
4(9); but such implied private cause of action cannot be maintained until the underlying
suit is resolved.” Syl. pt. 2, Jenkins v. J.C. Penney Cas. Ins. Co., 167 W. Va. 597, 280
S.E.2d 252 (1981).
i
4. “More than a single isolated violation of W. Va. Code, 33-11-4(9),
must be shown in order to meet the statutory requirement of an indication of ‘a general
business practice,’ which requirement must be shown in order to maintain the statutory
implied cause of action.” Syl. pt. 3, Jenkins v. J.P. Penney Cas. Ins. Co., 167 W. Va.
597, 280 S.E.2d 252 (1981).
5. “The conditions and predicate for bringing a case under Jenkins v.
J.C. Penney Casualty Insurance Company, 167 W.Va. 597, 280 S.E.2d 252 (1981), are
wholly different from those necessary for bringing an underlying contract action or for
bringing an action under Hayseeds, Inc. v. State Farm Fire & Casualty, 177 W.Va. 323,
352 S.E.2d 73 (1986). Whereas under Hayseeds it is necessary that a policyholder
substantially prevail on an underlying contract action before he may recover enhanced
damages, under Jenkins there is no requirement that one substantially prevail; it is
required that liability and damages be settled previously or in the course of the Jenkins
litigation. Jenkins instead predicates entitlement to relief solely upon violation of the
West Virginia Unfair Trade Practices Act, W. Va. Code § 33-11-4(9), where such
violation arises from a “general business practice” on the part of the insurer.” Syl. pt. 9,
McCormick v. Allstate Ins. Co., 197 W. Va 415, 475 S.E.2d 507 (1996).
6. “An insured ‘substantially prevails’ in a property damage action
against his or her insurer when the action is settled for an amount equal to or
approximating the amount claimed by the insured immediately prior to the
ii
commencement of the action, as well as when the action is concluded by a jury verdict
for such an amount. In either of these situations the insured is entitled to recover
reasonable attorney’s fees from his or her insurer, as long as the attorney’s services were
necessary to obtain payment of the insurance proceeds.” Syl. pt. 1, Jordan v. Nat’l
Grange Mut. Ins. Co., 183 W. Va. 9, 393 S.E.2d 647 (1990).
7. “There is authority in equity to award to the prevailing litigant his or
her reasonable attorney’s fees as ‘costs,’ without express statutory authorization, when
the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons.”
Syl. pt. 3, Sally-Mike Properties v. Yokum, 179 W. Va. 48, 365 S.E.2d 246 (1986).
iii
Per curiam:
The petitioners, Wayne A. Lemasters and Mary Joan Lemasters, appeal the
May 16, 2012, order of the Circuit Court of Marshall County that denied attorney fees,
costs and expenses incurred in the prosecution of bad faith allegations against the
respondent, Nationwide Mutual Insurance Company (“Nationwide”). In this order, the
court awarded attorney fees, costs and expenses pursuant to our holding in Hayseeds v.
State Farm Fire & Casualty, 177 W. Va. 323, 352 S.E.2d 73 (1986), in the amount of
$30,108.71 for substantially prevailing in the underlying first-party underinsured
motorists claim. The Lemasterses assert that the circuit court had the authority to award
additional attorney fees, costs and expenses, for their prosecution of a companion bad
faith case and requested entry of an order granting attorney fees, expenses and costs in
excess of $900,000. After a careful review of the record, the briefs submitted by the
parties and the arguments of counsel, we affirm the order of the circuit court for the
reasons stated herein.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Petitioner Wayne A. Lemasters was injured in an automobile accident on
June 15, 2004. He was not at fault for the accident. As a result of this accident Mr.
Lemasters settled his personal injury claims with the at-fault driver for that driver’s
1
insurance policy liability limits of $50,000.1 Mr. Lemasters also made a claim with his
own insurance carrier, the respondent, Nationwide, for underinsured motorists (UIM)
coverage. The coverage limit for the UIM benefits was $50,000.
A factual dispute arose between the Mr. Lemasters and Nationwide over the
extent of Mr. Lemasters’ injuries and losses, especially the extent of his lost wages.2 As
a result, final settlement on the claim was delayed. In 2006, the Lemasterses filed a civil
action against Nationwide to recover the UIM benefits. In October of 2007 the
Lemasters and Nationwide settled the claim seeking UIM coverage with the payment of
full policy limits of $50,000.
The Lemasterses did not move for attorney fees and costs under Hayseeds
at this time. Instead, the Lemasterses filed a motion to amend their complaint against
Nationwide to allege a bad faith claim for violation of the Unfair Trade Practices Act
(“UTPA”), W. Va. Code § 33-11-3 (1974). Mr. and Mrs. Lemasters alleged that
Nationwide acted in bad faith by not paying their first-party claim for UIM. Nationwide
countered that it had not acted in bad faith by delaying payment and that the delay was
1
The at-fault driver was also insured by Nationwide.
2
Nationwide argued that it was not provided sufficient information with which to
evaluate Mr. Lemasters’ claims. In terms of the wage loss claim, the petitioner argued
that the lost wages were straightforward: Mr. Lemasters was paid a set sum per hour for
his work and earned an average of $70,000 per year, including overtime.
2
the result of Nationwide’s need to fully investigate the claim. The bad faith case went to
trial. After seven days of trial, the jury returned a verdict in favor of Mr. and Mrs.
Lemasters, awarding $400,000.00 in compensatory damages and $200,000.00 in punitive
damages against Nationwide.
The jury verdict form contained several questions for the jury to answer,
including whether Nationwide violated the Unfair Claims Settlement Practices Act3 as
part of a general business practice. The jury was also asked whether Nationwide violated
the duty of good faith and fair dealing in adjusting the Lemasterses’ UIM claim. Finally
the jury was asked whether Nationwide actually knew that the Lemasterses’ underinsured
motorist claim was proper, and whether Nationwide willfully, maliciously and
intentionally utilized an unfair business practice in settling, or failing to settle, the
petitioners’ claim. To each of these questions the jury answered, “Yes.”
The Lemasterses moved for attorney fees and costs pursuant to Hayseeds
on their initial UIM action. The circuit court made a finding that the Lemasterses had
substantially prevailed in their underlying UIM action against Nationwide. The circuit
court held that “after due consideration the Plaintiffs substantially prevailed in their suit
to obtain the underinsured motorists coverage provided in their policy of insurance with
Nationwide Mutual Insurance Company and are therefore entitled to an award of
3
W. Va. Code § 33-11-4(9) (2002).
3
reasonable fees, costs, and litigation expenses pursuant to syllabus point 6 of Marshall v.
Saseen (citation omitted) and awarded $30,108.71.”4
The Lemasterses also moved for attorney fees and costs on the bad faith
award, based upon UTPA violations. Mr. and Mrs. Lemasters argued that pursuant to
Hayseeds, they were entitled to additional attorney fees, costs and expenses. They
contended that they were entitled to an additional $953,087.44 in attorney fees and costs
for litigating the bad faith claim. In addition, they asserted several other theories under
which they were entitled to these fees on the bad faith verdict, despite the fact that they
had entered into a contingency fee arrangement5 with the counsel under which fees would
be paid from the underlying verdict. They further argued that they were entitled to fees,
costs and expenses from Nationwide for vindicating the bad faith claim, as well as
4
Syl. pt. 6 of Marshall v. Saseen, 192 W. Va. 94, 450 S.E.2d 791 (1994), states:
When a policyholder of uninsured or underinsured
motorist coverage issued pursuant to W. Va. Code, 33-6-
31(b) substantially prevails in a suit involving such coverage
under W. Va. Code, 33-6-31(d), the insurer issuing such
policy is liable for the amount recovered up to the policy
limits, the policyholder’s reasonable attorney fees, and
damages proven for aggravation and inconvenience.
5
Mr. and Mrs. Lemasters entered into a contingency fee agreement with their
attorneys, whereby the attorney fees would be paid contingent upon what was recovered
by way of settlement, judgment or otherwise, calculated as follows: One-third of all
sums recovered by settlement before suit is filed, 40 percent of all sums recovered if the
case is settled after suit is filed and 50 percent of all sums recovered after an appeal is
perfected.
4
enhanced attorney fees, costs and expenses because of Nationwide’s use of an unfair
business practice. Finally, they argued that the conduct of Nationwide was vexatious and
outrageous and warranted an award of attorney fees.
In an order entered May 16, 2013, the circuit court granted Mr. and Mrs.
Lemasters attorney fees pursuant to Hayseeds for substantially prevailing on the UIM
claim in the amount of $25,818.75, as well as expenses in the amount of $639.56, for the
fees and costs incurred in pursuing the first-party UIM claim. The court also awarded
pre-judgment interest on this sum in the amount of $3,650.40, for a total award of
$30,108.71. The court order stated that the basis of the Lemasterses’ request for
additional attorney fees on the bad faith action was McCormick v. Allstate Ins. Co., 197
W. Va. 415, 475 S.E.2d 507 (1996). The court specifically found that the McCormick
case did not modify, amplify, or otherwise create any right, entitlement, or measure of
damages different than previously established in Jenkins.6 Accordingly, the court found
that it was without authority to award any “attorney fees, costs and expenses incurred in
vindicating their Jenkins/UTPA claim.” The circuit court further held that “the record is
barren of facts or argument which would tend to support Plaintiffs’ entitlement to
“increased costs and expenses, including increased attorney fees, resulting from the
insurance company’s use of an unfair business practice in the settlement or failure to
6
Jenkins v. J.C. Penney Casualty Insurance, 167 W. Va. 597, 280 S.E.2d 252 (1981),
will be discussed infra.
5
settle fairly the underlying claim.” Hence, the circuit court found that there was no
factual basis upon which to award fees on the bad faith claim. The order noted, “as an
aside,” that inasmuch as the plaintiffs had been awarded reasonable fees, costs and
expenses as a result of “substantially prevailing” on the underlying UIM claim that any
additional award may be prohibited as being duplicative.
Finally the court found that the conduct of Nationwide did not give rise to a
need to otherwise shift the burden of paying attorney fees from the petitioner to
Nationwide, because “the complained-of actions [did] not rise to such a level that justice
require[d] the extra-ordinary relief sought by Plaintiffs herein.”
The Lemasterses filed an appeal to this order insofar as it denied the request
for $953,087.44 in attorney fees, costs and expenses associated with the litigation of the
bad faith claim.
II.
STANDARD OF REVIEW
This Court reviews the circuit court’s final order and ultimate disposition
under an abuse of discretion standard. We review challenges to findings of fact under a
clearly erroneous standard, and conclusions of law are reviewed de novo. Syl. pt. 4,
Burgess v. Porterfield, 196 W. Va. 178, 469 S.E.2d 114 (1996).
6
III.
ANALYSIS
We begin our analysis with a summary of our law relating to the payment
of attorney fees in claims filed by insureds against their own insurance company. Two
seminal cases establish the foundation for the award of fees in these types of cases:
Hayseeds v. State Farm Fire & Cas., 177 W. Va. 323, 352 S.E.2d 73 (1986), and Jenkins
v. J.C. Penney Cas. Ins., 167 W. Va. 597, 280 S.E.2d 252 (1981). Hayseeds dealt with
an action filed by the insured to collect benefits under their insurance contract. We held
that the following damages were available to the insured in this type of action:
Whenever a policyholder substantially prevails in a
property damage suit against its insurer, the insurer is liable
for: (1) the insured’s reasonable attorneys’ fees in vindicating
its claim; (2) the insured’s damages for net economic loss
caused by the delay in settlement, and damages for
aggravation and inconvenience.
Syl. pt. 1, Hayseeds, 177 W. Va. 323, 352 S.E.2d 73.
In Jenkins v. J.C. Penney Cas. Ins., 167 W. Va. 597, 280 S.E.2d 252
(1981), we established a bad faith cause of action under the UTPA and W. Va. Code §
33-11-4(9). We held that
[a]n implied private cause of action may exist for a violation
by an insurance company of the unfair settlement practice
provisions of W. Va. Code, 33-11-4(9); but such implied
7
private cause of action cannot be maintained until the
underlying suit is resolved.
Syl. pt. 2, Jenkins, 167 W. Va. 597, 280 S.E.2d 252. Furthermore, in Jenkins we held
that a single isolated violation of the UTPA would not suffice in terms of establishing a
general business practice:
More than a single isolated violation of W. Va. Code,
33-11-4(9), must be shown in order to meet the statutory
requirement of an indication of “a general business practice,”
which requirement must be shown in order to maintain the
statutory implied cause of action.
Syl. pt. 3, Id. The damages attainable under this type of litigation were not fully
explained in Jenkins, but in footnote 12, we stated:
We do not attempt to delineate the entire damage issue on a
statutory claim but it obviously does not serve to replicate the
damages obtained in the underlying claim. Certainly,
increased costs and expenses including the increase in
attorney’s fees resulting from the failure to offer a prompt fair
settlement could be recovered. In an appropriate case,
punitive damages may be recovered.
Id., at 609, n.12, 280 S.E.2d at 259, n.12.
We later elaborated on the damages available in a Jenkins action in Dodrill
v. Nationwide Mutual Insurance Company, 201 W.Va. 1, 491 S.E.2d 1 (1996). In
Doddrill, we specifically discussed footnote 12, and approved an insured’s recovery of
8
attorney’s fees and costs where benefits were due under their policy and they were
required to sue a tortfeasor to collect these benefits. Id. at 16, 491 S.E.2d at 16.
Earlier that same year, this Court decided another bad faith case,
McCormick v. Allstate Insurance Company, 197 W. Va. 415, 475 S.E.2d 507 (1996). In
McCormick, we distinguished the differences between the filing of an action on the
insurance contract to collect benefits arising from the insurance contract, from the action
arising from violations of the UTPA. The plaintiff in McCormick had instituted a civil
action against his insurer, claiming that his insurer failed to properly handle his property
damage claim. After a trial on the merits of his complaint, the jury returned a verdict in
favor of the plaintiff in the amount of $950.00, well below the amount being sought by
the plaintiff. On the basis of that award, the trial court concluded that the plaintiff had
not substantially prevailed in the underlying claim. The plaintiff then sought an award of
attorney fees and punitive damages against his insurer, arguing that the company acted in
bad faith. Because he had not substantially prevailed in the underlying claim, the trial
court concluded that the plaintiff was therefore precluded from pursing his claim for
punitive damages and attorney fees.
In reversing and remanding the case for further proceedings, we clarified in
McCormick the separate and distinct nature of the two types of cases and the relief
available therein. In Syllabus point 9 of McCormick, we held:
9
The conditions and predicate for bringing a case under
Jenkins v. J.C. Penney Casualty Insurance Company, 167
W.Va. 597, 280 S.E.2d 252 (1981), are wholly different from
those necessary for bringing an underlying contract action or
for bringing an action under Hayseeds, Inc. v. State Farm
Fire & Casualty, 177 W.Va. 323, 352 S.E.2d 73 (1986).
Whereas under Hayseeds it is necessary that a policyholder
substantially prevail on an underlying contract action before
he may recover enhanced damages, under Jenkins there is no
requirement that one substantially prevail; it is required that
liability and damages be settled previously or in the course of
the Jenkins litigation. Jenkins instead predicates entitlement
to relief solely upon violation of the West Virginia Unfair
Trade Practices Act, W. Va. Code § 33-11-4(9), where such
violation arises from a “general business practice” on the part
of the insurer.
Our decision in McCormick resulted in a remand to the circuit court for
further consideration of the appellant’s Jenkins-type/UTPA claims. Relying on the
following language in McCormick, Mr, and Mrs. Lemasters encourage us to expand our
jurisprudence in their attorney fee claim:
This Court believes that, in the circumstances of this case,
litigation of the Jenkins-type claim is appropriate. The
appellant has prevailed in the first phase on his claim that
Allstate failed to pay the amount to which the appellant was
entitled under the insurance contract. Pursuit of the Jenkins
claim, if either of the parties elects to proceed, will afford full
opportunity to litigate the substance of the remaining issues
that were not adequately addressed during the first phase trial
had below, including, if supported by the evidence, the issue
of whether the reconditioning deductions used by Allstate are
a “general business practice”, whether, under the applicable
Jenkins rule, punitive damages should be awarded, and
whether appellant should be awarded attorney fees for
vindicating his Jenkins-type claim and, if so, in what amount
(emphasis supplied).
10
Id., at 428, 476 S.E.2d at 520.
The Lemasterses asserted further support for their fee request because
McCormick, used the use of the phrase “for vindicating his Jenkins-type claim.” They
contended that this Court distinguishes attorney fees incurred in bringing the underlying
action from those incurred in bringing a successful Jenkins-type/UTPA claim. The Court
in McCormick stated:
[A]n action under Jenkins v. J.C.Penney Casualty
Insurance Company, supra, and its progeny, is a type of
action which is wholly distinct from an underlying
contractual action on an insurer’s failure to comply with its
insurance contract. Such an action is also wholly distinct
from a Hayseeds action. Further, the conditions and predicate
for bringing a Jenkins-type case are wholly different from
those necessary for bringing an underlying contract action or
for bringing a Hayseeds action. Whereas under Hayseeds it is
necessary that a policyholder substantially prevail on an
underlying contract action before he may recover enhanced
damage, under Jenkins there is no requirement that one
substantially prevail; it is required that liability and damages
be settled previously or in the course of the Jenkins litigation.
Jenkins instead predicates entitlement to relief solely upon
violation of the West Virginia Unfair Trade Practices Act, W.
Va. Code § 33-11-4(9), where such violation arises from a
“general business practice” on the part of the insurer.
The fundamental holding of Jenkins recognizes a
private, implied cause of action for violations of W. Va. Code
§ 33-11-4(9) and permits plaintiff to recover attorney fees
and, under the appropriate circumstances, punitive damages,
if it can be shown that there was more than a single isolated
violation of W. Va. Code § 33-11-4(9) and that the violations
indicate a “general business practice” on the part of the
insurer . . . .
11
Since the predicate for seeking relief under Jenkins
and its progeny does not require that an insured substantially
prevail on an underlying action, and since Jenkins does allow,
under certain conditions, a party to seek reasonable attorney
fees and punitive damages, this Court believes that insofar as
the trial court’s order in the present case precludes the
appellant from seeking attorney fees or punitive damages
because the appellant failed substantially to prevail below, the
trial court’s order in the present case was erroneous.
McCormick, 197 W. Va. at 427–28, 475 S.E.2d at 519–20.
The circuit court disagreed with the Lemasterses, concluding that this
language from McCormick did not modify, amplify or otherwise create any right,
entitlement or measure of damages different than previously established in the Jenkins
case. Our review of this decision leads us to the same conclusion. We agree with the
circuit court and believe the Lemasterses have misinterpreted our direction in
McCormick. The aforementioned language in McCormick may have created some
confusion, but our later case, Dodrill, clears up any lingering questions about when
attorney fees may be recouped in actions against insurance companies. In Dodrill, we
clarified the fee issue, stating that attorney fees were awardable only for fees “incurred in
the underlying action against a tortfeasor.” The circuit court’s conclusion that it was
without authority to award the petitioners attorney fees, costs and expenses incurred in
vindicating their Jenkins/UTPA claims is supported by the Dodrill case and its specific
statement that attorney fees were recoverable in the underlying action against the
tortfeasor, as opposed to the present case where the fees arose out of a bad faith action.
The Lemasterses cannot direct this Court to any additional authority that directly
12
contradicts the circuit court’s conclusion on this issue. We find no error in the circuit
court’s resolution of the case on this ground.
Mr. and Mrs. Lemasters next argue that while they were awarded fees, costs
and expenses pursuant to our holding in Hayseeds, the award was inadequate because it
did not include those costs associated with the continuing efforts to collect the Hayseeds
damages. The Lemasterses posit that if the fees are not awarded in recognition of the
time, effort and trouble it took to obtain the monies owed under the policy, Nationwide
gets the benefit of its own actions by imposing the cost to collect these benefits on the
insured. Nationwide does not contest that Hayseeds allows an insured, such as Mr.
Lemasters, who substantially prevails in the action against the company, to recover
attorney fees as long as the attorney services were necessary to obtain payment of the
insurance proceeds.7 Nationwide contests the position of the Lemasterses that the fees
7
The award of fees is not automatic upon an insured “substantially prevailing” in a
contract-based claim against his or her insurance company. The court must find that the
attorney’s services were necessary to collect. We have held,
“An insured ‘substantially prevails’ in a property
damage action against his or her insurer when the action is
settled for an amount equal to or approximating the amount
claimed by the insured immediately prior to the
commencement of the action, as well as when the action is
concluded by a jury verdict for such an amount. In either of
these situations the insured is entitled to recover reasonable
attorney’s fees from his or her insurer, as long as the
attorney’s services were necessary to obtain payment of the
insurance proceeds.”
(continued . . .)
13
continue to be incurred until the fees are paid, and would continue to accrue under
Hayseeds throughout the duration of a related bad faith action.
While the Lemasterses cite “the principles of Hayseeds” they cite no direct
authority for their belief that Hayseeds’ damages continue through the duration of a bad
faith claim. Hayseeds clearly stated the relief available to one who substantially prevails
against an insurance company on a contract-based action: The insurer is liable for the
insured’s reasonable attorneys’ fees in vindicating its claim, the insured’s damages for
net economic loss caused by the delay in settlement, and damages for aggravation and
inconvenience. In the case at bar, the insurance proceeds were paid and the circuit court
awarded those fees shown to be directly associated with obtaining that payment to the
Lemasterses. There is simply no authority in our jurisprudence that supports the
Lemasterses’ contention that the Hayseeds damages continue throughout the course of
the bad faith litigation. Therefore it was not error for the circuit court to deny additional
attorney fees pursuant to Hayseeds.
The Lemasterses next argue that they are entitled to these additional fees
because of the conduct of Nationwide throughout these proceedings and pursuant to our
holding in syllabus point 3 of Sally-Mike Properties v. Yokum, 179 W. Va. 48, 365 S.E.2d
Syl. pt. 1, Jordan v. National Grange Mut. Ins. Co., 183 W.Va. 9, 393 S.E.2d 647 (1990).
14
246 (1986): There is authority in equity to award to the prevailing litigant his or her
reasonable attorney’s fees as “costs,” without express statutory authorization, when the
losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons.
Syl. pt. 3, Sally-Mike.
In the case sub judice, the Lemasterses argue that the conduct of
Nationwide throughout these proceedings fits within the mandates of Sally-Mike and that
fees should be awarded. This conduct included personal attacks on the Lemasterses’
counsel, an unwillingness to accept that the Lemasterses had substantially prevailed in
the bad faith action, as well as alleged discovery abuses in which the Lemasterses argue
that Nationwide vexatiously and unreasonable relitigated issues it had
contemporaneously lost in another case. In addition, the Lemasterses argue that the
jury’s finding of actual malice by Nationwide in the handling of the UIM claim, as well
as the finding that the UTPA was violated as a general business practice, warrant fees,
costs and expenses. The circuit court declined to award fees upon this ground, making a
finding that the conduct about which the Lemasterses complained did “not rise to such a
level that justice requires the extra-ordinary relief sought by Plaintiffs herein.”
We agree with Lemasterses that, in appropriate cases, Sally-Mike
recognizes that a circuit court may make certain awards based upon the bad character of a
party in the litigation. However, the trial court was in the best position to gauge the
conduct of the parties and decide what if any award is appropriate. Herein, the trial court
15
found that “[h]aving presided over much of the pre-trial issues as well as the trial itself,”
it was “particularly familiar with how the parties and counsel conducted themselves.”
While the Lemasterses can point to various instances of what they believe constituted
vexatious conduct on the part of Nationwide, we review the conclusion of the circuit
court for an abuse of discretion. We do not believe it appropriate in this instance to
disturb the trial court’s ruling that attorney fees not be awarded based upon the conduct
of the parties.
Finally, the Lemasterses assert that this Court should adopt a bright-line
rule that, as a matter of law, a litigant against whom a finding of actual malice is made
and against whom punitive damages are assessed should be required to pay the prevailing
party’s attorney fees absent extraordinary circumstances showing why it should not.8 We
decline the invitation of the petitioners to do so. The Lemasterses cite no legal authority
in support of this change in our jurisprudence. Notably, in Midkiff v. Huntington
National Bank West Virginia, 204 W. Va. 18, 511 S.E.2d 129 (1998), we declined to
sanction an award of fees every time a jury awarded punitive damages. In Midkiff, we
stated:
Were we to agree with the argument of the appellant Midkiff,
we would be well on our way to erasing the distinction
8
The petitioners suggest that this Court adopt the following as a syllabus point:
“Reasonable attorney fees may be awarded as an element of compensatory damages
where the court or jury finds punitive damages are warranted.”
16
between attorney’s fees and punitive damages. We would in
essence be finding that every time a jury awarded punitive
damages, attorney’s fees should be awarded without further
examination. We do not agree with this approach.
Id. at 20, n.5, 511 S.E.2d at 131, n.5.
We believe this statement in Midkiff to be appropriate herein. The
determination of whether to award fees is left to the sound discretion of the circuit court.
The Lemasterses’ proposed automatic award of fees would remove this discretion from
the circuit court and is unsupported by our law. As was the case with Midkiff, we
reiterate our disagreement with an automatic approach and find no error in the circuit
court’s failure to award fees on this ground.
IV.
CONCLUSION
For the foregoing reasons, the order of the Circuit Court of Marshall
County entered May 16, 2012, is affirmed.
Affirmed.
17