Farmers Mutual Insurance v. Appalachian Power Co. , 78 F. App'x 259 ( 2003 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FARMERS MUTUAL INSURANCE 
COMPANY,
Plaintiff-Appellant,
v.  No. 02-2316
APPALACHIAN POWER COMPANY, a
corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Joseph Robert Goodwin, District Judge.
(CA-02-984-2)
Argued: September 24, 2003
Decided: October 20, 2003
Before WILKINSON and GREGORY, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Debra Tedeschi Herron, MCNEER, HIGHLAND,
MCMUNN & VARNER, L.C., Clarksburg, West Virginia, for Appel-
lant. Mark Harrison Hayes, ROBINSON & MCELWEE, Charleston,
West Virginia, for Appellee. ON BRIEF: James A. Varner, Sr.,
MCNEER, HIGHLAND, MCMUNN & VARNER, L.C., Clarksburg,
2 FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER
West Virginia, for Appellant. Brian R. Swiger, Robert George, ROB-
INSON & MCELWEE, Charleston, West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
This appeal presents the question of whether, under West Virginia
law, an adjudicated joint tortfeasor is barred from seeking contribu-
tion in a separate civil action from a fellow joint tortfeasor, when: (1)
the adjudicated joint tortfeasor had originally filed a cross claim for
contribution against the alleged joint tortfeasor in the underlying tort
action; (2) the adjudicated joint tortfeasor subsequently agreed to a
voluntary dismissal without prejudice of his cross claim for contribu-
tion; and (3) the alleged joint tortfeasor was not a party to the ensuing
adverse judgment in the underlying tort action. Applying the authority
of Howell v. Luckey, 518 S.E.2d 873 (W.Va. 1999), we answer this
question in the affirmative.
I.
In the present appeal, the adjudicated joint tortfeasor is Charles
Harper (Harper) and the fellow joint tortfeasor is Appalachian Power
Company (Appalachian Power). Harper’s liability insurance carrier,
Farmers Mutual Insurance Company (Farmers Mutual), paid James
and Joyce Kizer (the Kizers), the plaintiffs in the underlying tort
action in West Virginia state court, the entirety of the nearly 1.3 mil-
lion dollar judgment plus prejudgment interest.1
1
The judgment against Harper was upheld on appeal. Kizer v. Harper,
561 S.E.2d 368 (W.Va. 2001). For the factual details of the underlying
tort action see id. at 371-72.
FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER 3
Subsequent to this payment, Farmers Mutual, standing in the shoes
of its insured Harper, brought the present civil action against Appala-
chian Power in West Virginia state court, asserting a claim under
West Virginia law for contribution from Appalachian Power as a fel-
low joint tortfeasor. Appalachian Power had also originally been a
party in the underlying tort action, but was dismissed from the case
prior to trial. The Kizers had sued Appalachian Power as a joint tort-
feasor, and Harper had brought a cross claim for contribution against
it under West Virginia law. For reasons apparently related to litigation
strategy, the Kizers agreed to voluntarily dismiss their tort claims
against Appalachian Power with prejudice. Also for reasons appar-
ently related to litigation strategy, Harper agreed to voluntarily dis-
miss his cross claim for contribution against Appalachian Power
without prejudice. Presumably, Harper wanted the ability to argue an
empty chair defense before the jury. Appalachian Power was placed
on the jury verdict form even though the company was no longer a
party in the action. In answer to special interrogatories, the jury found
Harper one-percent at fault, Appalachian Power ninety-percent at
fault, and James Kizer’s employer Cablecom (not a party in the pres-
ent appeal) nine-percent at fault.
Appalachian Power removed Farmers Mutual’s separate civil
action for contribution to the United States District Court for the
Southern District of West Virginia and moved to dismiss the action
pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)).
Primarily relying upon the decision by the Supreme Court of Appeals
of West Virginia in Howell v. Luckey, 518 S.E.2d 873 (W.Va. 1999),
Appalachian Power argued that West Virginia law barred Farmers
Mutual’s separate civil action for contribution because Harper had
voluntarily dismissed his cross claim for contribution against it and,
thus, Appalachian Power was not a party to the judgment ren-
dered/entered in the underlying tort action in West Virginia state
court. The district court agreed and granted Appalachian Power’s
Rule 12(b)(6) motion. This timely appeal followed.
II.
We review de novo a district court’s dismissal of a complaint pur-
suant to Rule 12(b)(6). Mylan Labs., Inc. v. Matkari, 7 F.3d 1130,
1134 (4th Cir. 1993). "[A] Rule 12(b)(6) motion should only be
4 FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER
granted if, after accepting all well-pleaded allegations in the plain-
tiff’s complaint as true and drawing all reasonable factual inferences
from those facts in the plaintiff’s favor, it appears certain that the
plaintiff cannot prove any set of facts in support of his claim entitling
him to relief." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th
Cir. 1999).
III.
Prior to the decision of Haynes v. City of Nitro, 240 S.E.2d 544(W.Va. 1977), "it was believed that contribution was only available
after a joint judgment against joint tortfeasors." Howell, 518 S.E.2d
at 876. Such statutory right of contribution was conferred by West
Virginia Code § 55-7-13 (1923), which provides:
Where a judgment is rendered in an action ex delicto against
several persons jointly, and satisfaction of a judgment is
made by any one or more of such persons, the other shall be
liable to contribution to the same extent as if the judgment
were upon an action ex contractu.
Id. This statute is still valid. W.Va. Code Ann. § 55-7-13 (Michie
2000). However, in Haynes, the West Virginia Supreme Court first
recognized "an inchoate right to contribution," Haynes, 240 S.E.2d at
547, thus allowing a joint tortfeasor to bring in as a third-party defen-
dant a fellow joint tortfeasor to share liability by way of contribution
on the verdict recovered by the plaintiff. Howell, 518 S.E.2d at 876;
Sydenstricker v. Unipunch Products, Inc., 288 S.E.2d 511 (W.Va.
1982). Critically, the right of inchoate contribution in West Virginia
"is not automatic and must be properly invoked to be preserved."
Board of Educ. of McDowell County v. Zando, Martin & Milstead,
Inc., 390 S.E.2d 796, 802-03 (W.Va. 1990).
Twenty-two years after Haynes was decided, in Howell, the
Supreme Court of Appeals of West Virginia considered yet another
question regarding contribution among joint tortfeasors: "[W]hether
the failure of a tortfeasor to implead, for purposes of inchoate contri-
bution, a third party not sued by the plaintiff in the underlying case
forecloses a separate action for contribution against that third party
FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER 5
2
after judgment has been rendered in the original suit." Howell, 518
S.E.2d at 875-76. The answer was yes. Specifically, the court held
that, in accordance with its prior case law, "a defendant may not pur-
sue a separate cause of action against a joint tortfeasor for contribu-
tion after judgment has been rendered in the underlying case, when
that joint tortfeasor was not a party in the underlying case and the
defendant did not file a third-party claim pursuant to Rule 14(a) of the
West Virginia Rules of Civil Procedure." Howell, 518 S.E.2d at 877.
Rule 14(a) of the West Virginia Rules of Civil Procedure (Rule 14)
provides, in pertinent part:
At any time after commencement of the action a defending
party, as a third-party plaintiff, may cause a summons and
complaint to be served upon a person not a party to the
action who is or may be liable to the third-party plaintiff for
all or part of the plaintiff’s claim against the third-party
plaintiff.
W. Va. R. Civ. P. 14(a).
The Howell court gave four reasons in support of its holding: (1)
a defendant’s failure to timely exercise the option of filing a third-
party claim and the resulting limitation on future claims does not
change the permissive nature of Rule 14(a); (2) by having all of the
claims decided in the same action, multiple law suits and the possibil-
ity of inconsistent verdicts are avoided; (3) judicial economy is pro-
moted by having one jury decide the liability to the plaintiff and the
percentages of liability among the defendant-joint tortfeasors; and (4)
"[i]f contribution is not limited to joint judgments, there is no way to
avoid infinitely extending the time period for suing the joint tortfea-
sor." Howell, 518 S.E.2d at 877.
2
Factually, Howell involved a joint tortfeasor (a general contractor)
who sought to maintain a separate contribution action against a fellow
joint tortfeasor (a subcontractor), who was not a party in the underlying
personal injury action in which the injured plaintiff (a construction
worker) obtained an adverse judgment against the first joint tortfeasor
(the contractor). Howell, 518 S.E.2d at 875.
6 FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER
The district court in the case before us had no trouble in granting
Appalachian Power’s motion to dismiss. According to the district
court, "[w]hile the procedural stance of this case is somewhat differ-
ent, the general principle behind the Howell case is applicable here.
Howell stands for the proposition that all those potentially liable for
a plaintiff’s harm ought to be tried together in one action." (J.A. 50-
51). The district court further explained:
Here, Appalachian and Farmers Mutual were parties to
the underlying action, but Farmers Mutual agreed to the dis-
missal of Appalachian from the case. While Farmers Mutual
is correct in its contention that a right to contribution and/or
indemnity exists, it is incorrect in its assumption that it can
assert that claim now in a separate suit. The entitlement to
contribution is not an automatic occurrence, and the right
must be properly invoked to be preserved. Bd. of Educ. of
McDowell County v. Zando, Martin & Milstead, Inc., 390
S.E.2d 796, 802-03 (W.Va. 1990). Farmers Mutual may
have had a right to contribution and/or indemnity from
Appalachian, but that right was waived when Farmers
Mutual consented to Appalachian’s dismissal. The fact that
the dismissal was styled "without prejudice" is of no
moment.
(J.A. 51).
Farmers Mutual makes four arguments in challenge of the district
court’s reasoning. First, Farmers Mutual argues that Howell is inap-
plicable because it was decided after Harper agreed to dismissal of his
cross claim for contribution against Appalachian Power in the under-
lying tort action.3 Second, Farmers Mutual argues that Howell is fac-
tually distinguishable because, unlike the adjudicated tortfeasor in
Howell, Harper had asserted a cross claim for contribution pursuant
to Rule 14 against Appalachian Power in the underlying tort action
with the jury finding Appalachian Power ninety-percent at fault.
Third, Farmers Mutual argues that the district court failed to
acknowledge the significance of the fact that Harper’s cross claim
3
This argument is best understood as raising an ex post facto challenge
to the district court’s application of Howell.
FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER 7
against Appalachian Power was dismissed "without prejudice."
Fourth and finally, Farmers Mutual argues that equity demands that
it, standing in the shoes of Harper, not be held responsible for the
entire amount of the underlying judgment when the jury only found
Harper one-percent at fault and found Appalachian Power ninety-
percent at fault.
We find none of Farmers Mutual’s arguments persuasive and
affirm on the reasoning of the district court. An accurate understand-
ing of West Virginia law regarding contribution and a careful reading
of Howell reveal that Howell merely stated the law as it already
existed in West Virginia and, thus, no ex post facto type problem pre-
vented the district court from applying Howell to dismiss Farmers
Mutual’s separate action for contribution.
Next, the fact that, unlike the adjudicated joint tortfeasor in Howell,
Harper originally filed a Rule 14 cross claim for contribution against
Appalachian Power in the underlying tort action is of no moment.
Harper agreed to voluntarily dismiss such claim prior to trial. Thus,
the case proceeded to trial as if Appalachian Power had never been
in the case. Were we to side with Farmers Mutual and hold that, under
such circumstances, Harper had properly preserved his right to
inchoate contribution from Appalachian Power under West Virginia
law, we would be completely at odds with the fundamental purpose
of inchoate contribution under West Virginia law which is "to enable
all parties who have contributed to the plaintiff’s injuries to be
brought into one suit." Board of Educ. of McDowell Co., 390 S.E.2d
at 802. Thus, the desired goals of judicial economy and the avoidance
of piecemeal litigation would be thwarted. Id.; see also Wilkinson v.
Duff, 575 S.E.2d 335, 339 n.2 (W.Va. 2002) (citing Howell for the
proposition that "a defendant must exercise the right to contribution
in the underlying action, and may not delay the exercising of the
right"). Moreover, in contrast to Farmers Mutual’s suggestion, such
an outcome would not be spared by the fact that the jury found Appa-
lachian Power ninety-percent at fault via a special interrogatory in the
underlying tort action. Given that the preclusive effect of res judicata
attaches only to parties to the judgment in the original action, Appala-
chian Power would be free to litigate the issue of its liability were we
to allow Farmers Mutual to proceed with its separate contribution
8 FARMERS MUTUAL INSURANCE v. APPALACHIAN POWER
action. Marriage of Betty L.W. v. William E.W., 569 S.E.2d 77, 85
(W.Va. 2002).
We dwell little on the fact that Harper’s cross claim for contribu-
tion in the underlying tort action was dismissed "without prejudice"
as opposed to "with prejudice." The "without prejudice" language
merely prevented the dismissal of Harper’s cross claim for contribu-
tion from constituting a bar to refiling. Here, another bar to refiling
comes into play. As previously explained, West Virginia law sepa-
rately imposes the existence of a joint judgment among joint tortfea-
sors as a prerequisite to a joint tortfeasor’s ability to recover
contribution from a fellow joint tortfeasor. Howell, 518 S.E.2d at 876-
77. Thus, the dismissal of Harper’s cross claim for contribution
against Appalachian Power "without prejudice" did not and could not
obviate the requirement of a joint judgment among joint tortfeasors
for purposes of a successful claim for contribution under West Vir-
ginia law.
Finally, we address Farmers Mutual’s argument that dismissal of
its contribution action results in great inequity. Affirming the district
court will not result in great inequity to Farmers Mutual. Its insured,
in whose shoes its stands in the present action, voluntarily allowed the
dismissal of his cross claim for contribution against Appalachian
Power in the underlying tort action. In exchange, Harper was able to
present an empty chair defense at trial. Having gambled on the empty
chair defense and lost, West Virginia law does not provide a second
bite at the apple.
IV.
In conclusion, we affirm the district court’s Rule 12(b)(6) dismissal
of Farmers Mutual’s separate action for contribution against Appala-
chian Power on the reasoning of the district court.
AFFIRMED