Old Republic Insurance Co. v. Jason D. and Andrea O'Neal , 237 W. Va. 512 ( 2016 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2016 Term
FILED
June 10, 2016
released at 3:00 p.m.
No. 15-0012 RORY L. PERRY, II CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
OLD REPUBLIC INSURANCE COMPANY,
Petitioner
v.
JASON D. O’NEAL and ANDREA O’NEAL, his wife,
Individually, and as parents and next friends of
ANDREW SCOTT O’NEAL, ANNA LEIGH GRACE O’NEAL,
and AUSTIN MATTHEW O’NEAL, Infants under the age of eighteen,
Respondents
Appeal from the Circuit Court of Wyoming County
The Honorable Warren R. McGraw, Judge
Civil Action No. 10-C-20
REVERSED, IN PART; AFFIRMED, IN PART.
Submitted: February 10, 2016
Filed: June 10, 2016
Michael J. Schessler, Esq. W. Stuart Calwell, Esq.
Paul E. Frampton, Esq. David H. Carriger, Esq.
Bowles Rice LLP The Calwell Practice, LC
Charleston, West Virginia Charleston, West Virginia
Counsel for the Petitioner Counsel for the Respondents
JUSTICE WORKMAN delivered the Opinion of the Court.
JUSTICE LOUGHRY concurs, in part, and dissents, in part, and reserves the right to file a
separate opinion.
SYLLABUS BY THE COURT
1. “In reviewing an order denying a motion under Rule 60(b),
W.Va.R.C.P., the function of the appellate court is limited to deciding whether the trial court
abused its discretion in ruling that sufficient grounds for disturbing the finality of the
judgment were not shown in a timely manner.” Syl. Pt. 4, Toler v. Shelton, 157 W. Va. 778,
204 S.E.2d 85 (1974).
2. “A motion to vacate a judgment made pursuant to Rule 60(b), West
Virginia Rules of Civil Procedure, is addressed to the sound discretion of the court, and the
court’s ruling on such motion will not be disturbed on appeal unless there is a showing of an
abuse of such discretion.” Syl. Pt. 5, Toler v. Shelton, 157 W. Va. 778, 204 S.E.2d 85
(1974).
3. “A court, in the exercise of discretion given it by the remedial provisions
of Rule 60(b), W.Va.R.C.P., should recognize that the rule is to be liberally construed for the
purpose of accomplishing justice and that it was designed to facilitate the desirable legal
objective that cases are to be decided on the merits.” Syl. Pt. 6, Toler v. Shelton, 157 W. Va.
778, 204 S.E.2d 85 (1974).
i
4. West Virginia Rule of Civil Procedure 60(b) may be used as a means
to seek relief from a judgment or order that was not noticed to a party in accordance with
West Virginia Rule of Civil Procedure Rule 77(d) upon a showing of diligence or exceptional
circumstances by the aggrieved party. The requisite diligence or exceptional circumstances
necessary for Rule 60(b) relief under these circumstances will require a case-by-case
analysis.
5. “A circuit court’s entry of summary judgment is reviewed de novo.”
Syl. Pt 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
6. “‘“A motion for summary judgment should be granted only when it is
clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not
desirable to clarify the application of the law.” Syllabus Point 3, Aetna Casualty & Surety Co.
v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).’ Syllabus
Point 1, Andrick v. Town of Buckhannon, 187 W.Va. 706, 421 S.E.2d 247 (1992).” Syl. Pt
2, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
7. “‘The doctrine of subrogation is that one who has the right to pay, and
does pay, a debt which ought to have been paid by another is entitled to exercise all the
remedies which the creditor possessed against that other.’ Syl. Pt. 1, Bassett v. Streight, 78
ii
W.Va. 262, 88 S.E. 848 (1916).” Syl. pt. 4, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d
729 (1986).” Syl. Pt. 2, Bush v. Richardson, 199 W. Va. 374, 484 S.E.2d 490 (1997).
8. “‘The right of subrogation depends upon the facts and circumstances
of each particular case. Huggins v. Fitzpatrick, 102 W.Va. 224, 228, 135 S.E. 19, 20 (1926).’
Syl. pt. 3, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).” Syl. Pt. 3, Bush v.
Richardson, 199 W. Va. 374, 484 S.E.2d 490 (1997).
iii
Workman, Justice:
This case is before the Court upon the appeal of the Petitioner Old Republic
Insurance Co. (hereinafter referred to as “Old Republic”) from two orders entered in the
Circuit Court of Wyoming County, wherein the court denied Old Republic’s Rule 601 motion
for relief from judgment and motion for summary judgment. Old Republic argues2 that the
circuit court 1) abused its discretion when it denied Old Republic’s Rule 60 motion for relief
from entry of judgment order and 2) erred in its application of statutory and substantive law
by granting the Respondents (hereinafter referred to collectively as “the Plaintiffs”) summary
judgment and determining that Old Republic was not entitled to a statutory right of
subrogation as set forth in West Virginia Code § 23-2A-1 (2010).3 Having reviewed the
parties’ briefs and arguments, the appendix record and all other matters before the Court, we
find that the circuit court erred in denying Old Republic’s Rule 60 motion; however, we
affirm the circuit court’s entry of summary judgment in favor of the Plaintiffs. As we will
discuss in greater detail below, Old Republic’s claim for subrogation fails because it is
1
See W. Va. R. Civ. P. 60(b) set forth infra in section III. A. of this opinion.
2
Old Republic’s two assigned errors are lengthy, cumbersome, and contain subparts
that are repetitious of the larger assignments of errors. Thus, we condense the two errors for
discussion purposes. See In re Tax Assessments Against Pocahontas Land Corp., 158 W. Va.
229, 234, 210 S.E.2d 641, 645-46 (1974) (“The assignments of error are numerous and are
lengthy, repetitious and confusing for each appeal. The assignments may be condensed . . .
.”).
3
See W. Va. Code § 23-2A-1(b) set forth infra in section III. B. of this opinion.
1
attempting to recover money that it never expended and that its insured, Speed Mining, is not
entitled to recover.
I. Facts and Procedural History
This case arises from a June 20, 2009, accident at an underground American
Eagle Mine in Kanawha County West Virginia. The Plaintiff, Jason O’Neal,4 who was
employed as an electrician by Speed Mining, LLC, (“Speed Mining”), was working in the
mine when a shuttle car struck and ran over him. The accident caused catastrophic injuries
to Mr. O’Neal, including the loss of one leg, a significant portion of his pelvis and his
genitalia.
On February 11, 2010, the Plaintiffs5 filed a lawsuit against Speed Mining,6
alleging claims of deliberate intention pursuant to West Virginia Code § 23-4-2 (2005)7 and
4
Mr. O’Neal was approximately twenty-nine years old at the time. He was married
and had three minor children.
5
Mr. O’Neal’s lawsuit included claims of loss of consortium and support on behalf of
his wife and children.
6
Speed Mining is not a party to the instant appeal.
7
The Legislature recently amended West Virginia Code § 23-4-2 (Supp. 2015) with
the changes becoming effective June 12, 2015. Because the accident occurred in 2009, the
2005 version of the statute is applicable to this case.
2
common law negligence. The Plaintiffs also asserted a products liability claim against four
related companies and individuals, collectively referred to as the Baughan defendants.8
At the time of the accident, Speed Mining was a named insured on a workers’
compensation policy of insurance issued by Old Republic to Mangum Coal Company.9 As
a result of the accident, Mr. O’Neal filed a workers’ compensation claim. Mr. O’Neal has
received workers’ compensation benefits under Speed Mining’s workers’ compensation
policy and he will continue to receive workers’ compensation for his injuries as his workers’
compensation claim remains open.10
According to the terms of Old Republic’s policy, there was a $2,000,000
workers’ compensation deductible amount for bodily injury by accident that was paid by
Speed Mining. Beverly Sellers, Old Republic’s manager of its workers’ compensation unit,
testified during her deposition that “[i]t was Patriot’s [Speed Mining’s parent company] wish
8
The Baughan defendants included the Baughan Group, Inc., Coal Age, Inc., d/b/a
CAI Industries, Robertson, Inc., d/b/a Gauley Robertson, and Roger Baughan. These
defendants are not involved in the instant appeal.
9
Patriot Coal acquired Magnum Coal and all of its subsidiaries, including Speed
Mining, about a year before the accident at issue.
10
The workers’ compensation benefits that are the subject of the subrogation claim
were paid to the Plaintiffs through a third-party administrator, Avizent, according to the
deposition testimony of Beverly Sellers, Old Republic’s manager of its workers’
compensation unit. Old Republic consented to Avizent’s handling of insured claims for
Speed Mining.
3
to fund the $2 million deductible themselves . . . and Old Republic agreed to that.” Moreover,
if Old Republic paid benefits for the $2,000,000 of coverage it would be reimbursed by
Speed Mining. The policy provided, “you will reimburse us up to the Deductible Amount(s)
stated in the Schedule for all payments we may make on your behalf because of bodily injury
to one or more persons as a result of any one accident . . . .”
Further, under the terms of the policy, Old Republic retained all rights to
subrogation, even as to deductible amounts. The policy provided:
We have your rights and the rights of persons entitled to the
benefits of this insurance to recover all advances and payments,
including those within the Deductible Amounts from anyone
liable for the injury. You will do everything necessary to protect
those rights for us and to help us enforce them. If we recover
any advance or payment made under this policy from anyone
liable for the injury, the amount we recover will first be applied
to any payments made by us on this injury in excess of the
Deductible Amount(s); only then will the remainder of the
recovery, if any, be applied to reduce the Deductible Amount(s)
paid or reimbursed or reimbursable by you on this injury. (See
Attached Endorsement).
The Plaintiffs were fully aware of the statutory right of workers’ compensation
subrogation as demonstrated by a May 24, 2010, letter from David H. Carriger, the Plaintiffs’
attorney, to Michele Craft of Avizent, Old Republic’s third-party administrator. In the letter,
Mr. Carriger “requests an itemization of whatever lien amount you (or any other provider of
workers compensation benefits) intend to assert, should Mr. O’Neal recover monies from
4
third-parties as a result of the workplace injuries.” In response to the Plaintiffs’ inquiry, by
letter dated June 17, 2010, Christopher Brumley, an attorney for Speed Mining, indicated that
Old Republic was entitled by statute to a subrogation lien and that as of that date,
$1,068,993.77 from the workers’ compensation claim had been paid by Speed Mining. Mr.
Brumley further indicated in the letter that “Speed Mining is self insured up to its $2 million
self insured retention on the policy.” According to Mr. Brumley, “Old [R]epublic is the
carrier after the $2 million, so any subrogation frights [sic] after that amount will be the
statutory right of Old [R]epublic.”
The information given by Mr. Brumley in the aforementioned letter concerning
Speed Mining being self-insured was incorrect and was later corrected by several different
communications, both emails and letters, between Old Republic, Avizent and the Plaintiffs’
counsel. Additionally, Ms. Sellers testified during her deposition that Speed Mining was not
self-insured. Moreover, the record contains repeated notices either from Old Republic,
Speed Mining’s counsel or Avizent to the Plaintiffs’ counsel regarding Old Republic’s
statutory right of subrogation prior to any settlements in the case.
5
On October 13, 2011, the Plaintiffs settled their deliberate intention claim
against Speed Mining.11 That settlement, according to the language of West Virginia Code
§ 23-2A-1(e),12 was not subject to a workers’ compensation subrogation lien and Old
Republic is not seeking any amount as a result of subrogation from this settlement. Language
contained in the settlement agreement relating to the deliberate intention claim, however, is
important to the resolution of this case. In the agreement, the Plaintiffs and Speed Mining
expressly declared that “this Agreement is the entire agreement and encompasses all terms
and agreements negotiated by them in settlement of any and all claims relating to the Subject
Incident and that there are not other writings whatsoever.” (Emphasis added).
On March 21, 2012, the Plaintiffs moved the circuit court during a status
conference to amend their complaint to add a declaratory judgment action against Old
Republic as it had asserted a statutory subrogation lien with respect to any settlement
obtained by the Plaintiffs from the remaining Baughan defendants.
11
Speed Mining’s insurer for the deliberate intention claim was Commerce and
Industry Insurance Company. The settlement amount is confidential and has not been
disclosed in the appendix record or briefs before the Court.
12
West Virginia Code § 23-2A-1(e) provides, in relevant part, that “[t]he statutory
subrogation described in this section does not apply to uninsured and underinsured motorist
coverage or any other insurance coverage purchased . . . on behalf of the injured worker.”
Id. (emphasis added). The deliberate intention claim was subject to insurance coverage that
was purchased by Speed Mining on behalf of its workers, including Mr. O’Neal.
6
The Plaintiffs thereafter settled the products liability claims against the
Baughan defendants at a mediation that occurred on April 26, 2012. Old Republic was not
a party to the mediation and had not yet been brought into the action, because the circuit
court had not yet ruled on the motion to amend the Plaintiffs’ complaint.
In an order entered May 1, 2012, the circuit court granted the Plaintiffs’ motion
to amend their complaint to add a declaratory judgement action against Old Republic. In
granting the motion, the circuit court found that “the statutory right of subrogation under W.
Va. Code § 23-2A-1 is not available to the aforementioned insurer . . . [as] it is established
that said insurer has not actually paid money or medical benefits to (or for the benefit of) Mr.
O’Neal.” Nevertheless, the Plaintiffs thereafter filed its amended complaint adding the third-
party declaratory judgment action against Old Republic on May 21, 2012.
On July 2, 2012, the Plaintiffs and the Baughan defendants executed a
Settlement Agreement Release. The Plaintiffs’ counsel did not take any action to protect Old
Republic’s claimed statutory lien13 before distributing the proceeds of this settlement, which
amounted to $3.5 million. At the time the settlement agreement was executed and the
13
See W. Va. Code § 23-2A-1(e) set forth infra in section III. B. (creating duty on part
of injured worker and his counsel to protect statutory right of subrogation or risk losing right
to retain attorney fees and costs out of subrogation amount and also creating cause of action
that insurer can bring against injured worker and his counsel to recover subrogated amount,
as well as attorney fees and costs).
7
Plaintiffs recovered this money from the Baughan defendants, workers’ compensation
benefits in the amount of $1,845,197.13 – $1,738,513.31 in medicals and $106,683.82 in
indemnity – had been paid to, or for the benefit of, Mr. O’Neal by Speed Mining due to the
$2,000,000 deductible in the Old Republic workers’ compensation policy. This is the
subrogation amount sought by Old Republic from the settlement with the Baughan
defendants arising out of the Plaintiffs’ product liability claim.
Old Republic filed its answer to the third-party complaint and asserted its own
declaratory judgment action against the Plaintiffs on July 23, 2012. Discovery followed and
both parties filed motions for summary judgment. On December 18, 2013, the circuit court
held a hearing regarding the motions. At the conclusion of the hearing, the circuit court
made no rulings on either summary judgment motion; however, the court asked both parties
to submit proposed orders by January 15, 2014.
On January 27, 2014, without any notice to Old Republic, the circuit court
entered the Plaintiffs’ proposed order. The order entered was styled, “[Proposed] Order
Granting Plaintiff Jason D. O’Neal’s Motion for Summary Judgment.” The Plaintiffs’
counsel received a “courtesy call” informing him that his proposed order was to be entered
by the circuit court. The proposed order that was entered by the circuit court only directed
service to the Plaintiffs’ counsel as the Plaintiffs submitted the proposed order with only
8
their attorneys’ names on it for signature. Consequently, the circuit clerk did not send a
copy of the proposed order, which was entered by the circuit court as the final order, to Old
Republic’s counsel. Moreover, when the order was entered onto the circuit court’s docket,
the entry was for “[Proposed] Order Granting Jason D. O’Neal’s Motion for Summary
Judgment.”
About one month later, on February 25, 2014, Old Republic’s counsel checked
the circuit court’s docket utilizing “Circuit Express” a third-party vendor that provides
electronic docket information to lawyers in West Virginia. Old Republic’s counsel saw the
styled “proposed” order and attempted to view the same, but could not do so for reasons that
are not apparent in the record. Old Republic’s counsel then called the Wyoming County
Circuit Clerk’s office and asked whether a final order had been entered in the case. The
official in the circuit clerk’s office indicated that only the “proposed” order had been
docketed. Old Republic’s counsel continued to electronically monitor the docket sheet for
the next six months. In late August of 2014, Old Republic’s counsel contacted both the
circuit court and the Plaintiffs’ attorney regarding the status of the case and was advised that
a final order had been entered. On September 4, 2014, Old Republic’s counsel was
provided a copy of the January 24, 2014, final order by facsimile, which was styled as a
“proposed” order granting the Plaintiffs’ summary judgment. Counsel for Old Republic
filed a motion pursuant to Rule 60(b) of the West Virginia Rules of Civil Procedure on
9
September 12, 2014, requesting the circuit court to re-enter the January 27, “proposed” order
as the final order so that Old Republic could appeal. By order entered December 18, 2014,
the circuit court denied Old Republic’s motion.
II. Standard of Review
Because the applicable standard of review is different for each of the issues
addressed, we will set out the applicable standard of review in the discussion of each issue.
III. Discussion of Law
A. Rule 60(b) Motion14
The first issue before the Court concerns whether the circuit court abused its
discretion when it denied Old Republic’s Rule 60(b)15 motion for relief from the entry of the
“[Proposed] Order Granting Plaintiff Jason D. O’Neal’s Motion for Summary Judgment.”
Old Republic argues that the circuit court “arbitrarily and irrationally” refused to correct the
failure to provide proper notice of the order, thereby depriving Old Republic of its due
14
Old Republic filed its motion in the circuit court asking for relief from the judgment
below pursuant to Rule 60(a) (“clerical mistakes”) and Rule 60(b)(1) (“mistake, inadvertence
surprise, excusable neglect, or unavoidable cause” or (6) (“any other reason justifying relief
from the operation of the judgment”). On appeal, Old Republic discusses the application of
Rule 60 in a very generic fashion, never expressly referring to Rule 60(a). Old Republic,
however, does expressly refer to Rule 60(b) and, consequently, our ruling today focuses upon
an application of Rule 60(b). It would behoove counsel in the future to be precise in setting
forth the authority relied upon when arguing before this Court.
15
See W. Va. R. Civ. P. 60(b) infra.
10
process right to appeal. Old Republic maintains that the circuit court improperly created an
affirmative duty for a party to monitor the docket to find any disguised order that may be a
final order after Old Republic was not served with a copy of the order upon its entry and the
Plaintiffs left Old Republic’s counsel’s name off said order. Further, Old Republic simply
requested the circuit court to vacate the entry of the January 27, 2014, “proposed” order and
re-enter that order to allow Old Republic the right to appeal the same. Thus, Old Republic
asserts that the Plaintiffs would not have suffered any undue or unfair prejudice by the
circuit court’s correction of the error in this manner.
Conversely, the Plaintiffs contend that Old Republic’s counsel should have
further investigated when he discovered that a “proposed” order had been entered to see
whether that order was the final order. Yet, despite having knowledge that the “proposed”
order had been entered on the docket sheet of the circuit court, Old Republic undertook no
further investigation to ascertain what the order was and, therefore, delayed for six months
the filing of a motion pursuant to West Virginia Rule of Civil Procedure 60(b). The
Plaintiffs argue that the circuit court correctly determined that this delay was the result of
the dilatory conduct of Old Republic’s counsel. The Plaintiffs further contend that all Old
Republic’s assignments of error related to the January 27, 2014, order are untimely and
should be stricken from the record.16
16
See Syl. Pt. 3, Toler v. Shelton, 157 W. Va. 778, 204 S.E.2d 85 (1974) (holding that
(continued...)
11
The circuit court found that because Old Republic’s counsel, using “Circuit
Express,” knew the Plaintiffs’ proposed order had been listed on the docket by the circuit
clerk on January 27, 2014, “[Old Republic’s] counsel . . . admitted that he received actual
notice from another source that the order in question was entered by the Clerk on the docket
prior to the deadline for filing a Notice of Appeal[.]” Thus, the circuit court determined that
it was not requiring a party to “mine the docket” searching for notice of entered orders. The
circuit court went on to characterize Old Republic’s counsel’s “lack of action” as being
“inconceivable” and “cavalier.”
The standard of review applicable to this issue is that “[i]n reviewing an order
denying a motion under Rule 60(b), W.Va.R.C.P., the function of the appellate court is
limited to deciding whether the trial court abused its discretion in ruling that sufficient
grounds for disturbing the finality of the judgment were not shown in a timely manner.”
Syl. Pt. 4, Toler, 157 W. Va. at 778, 204 S.E.2d at 86. We further held that “[a] motion to
vacate a judgment made pursuant to Rule 60(b), West Virginia Rules of Civil Procedure, is
addressed to the sound discretion of the court, and the court’s ruling on such motion will not
be disturbed on appeal unless there is a showing of an abuse of such discretion.” 157 W.
16
(...continued)
“[a]n appeal of the denial of a Rule 60(b) motion brings to consideration for review only the
order of denial itself and not the substance supporting the underlying judgment nor the final
judgment order.”).
12
Va. at 778, 204 S.E.2d at 86, Syl. Pt. 5. With the foregoing in mind, we now undertake an
examination of the issue before us.
While not raised by either party, a necessary prerequisite to the ultimate
resolution of this issue is whether Rule 60(b) of the Rules of Civil Procedure can be used
to set aside a judgment that was not noticed to a party under Rule 77(d) of the Rules of Civil
Procedure. Thus, we begin by examining these two rules. First, West Virginia Rule of Civil
Procedure 60(b) provides, in relevant part:
On motion and upon such terms as are just, the court
may relieve a party or a party’s legal representative from a final
judgment, order, or proceeding for the following reasons: (1)
Mistake, inadvertence, surprise, excusable neglect, or
unavoidable cause; (2) newly discovered evidence which by
due diligence could not have been discovered in time to move
for a new trial under Rule 59(b); (3) fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other
misconduct of an adverse party; (4) the judgment is void; (5)
the judgment has been satisfied, released, or discharged, or a
prior judgment upon which it is based has been reversed or
otherwise vacated, or it is no longer equitable that the judgment
should have prospective application; or (6) any other reason
justifying relief from the operation of the judgment. The motion
shall be made within a reasonable time, and for reasons (1), (2),
and (3) not more than one year after the judgment, order, or
proceeding was entered or taken. A motion under this
subdivision (b) does not affect the finality of a judgment or
suspend its operation.
Id. (emphasis added). Next, West Virginia Rule of Civil Procedure 77(d) provides,
Immediately upon the entry of an order or judgment the
clerk, except as to parties who appear of record to have had
13
notice thereof, shall serve by mail a notice of the entry in the
manner provided for in Rule 5 upon every party affected
thereby who is not in default for failure to appear, and shall
make a note of the mailing in the docket. Such mailing is
sufficient notice for all purposes for which notice of the entry
of an order is required by these rules; but any party may in
addition serve a notice of such entry in the manner provided in
Rule 5 for the service of papers. Lack of notice of the entry by
the clerk does not affect the time to appeal or relieve or
authorize the court to relieve a party for failure to appeal
within the time allowed.17
Id. (emphasis and footnote added).
From a plain reading of Rule 77(d), a circuit clerk’s office has a mandatory
duty to mail a copy of an order or judgment to all parties affected by the order or judgment.
The rule, however, further provides that a circuit clerk’s failure to give notice of the entry
of an order or judgment “does not affect the time to appeal or relieve or authorize the court
to relieve a party for failure to appeal within the time allowed.” Id. (emphasis added).
Consequently, had Old Republic been asking for relief solely under the auspices of Rule
77(d), the circuit did not have authority to grant relief.
Old Republic, rather than relying only upon Rule 77(d), also invoked the
protections afforded by Rule 60(b), which provides for relief from a final judgment or order
17
Additionally, West Virginia Trial Court Rule 24.01(b) provides: “Except for good
cause or unless otherwise determined by the judicial officer, no order may be presented for
entry unless it bears the signature of all counsel and unrepresented parties.” (Emphasis
added).
14
based upon a variety of reasons including “[m]istake, inadvertence, surprise, excusable
neglect, or unavoidable cause” and “any other reason justifying relief from the operation of
judgment.” W. Va. R. Civ. P. 60(b)(1) and (6). This Court has previously recognized a
liberal construction of Rule 60(b) as follows:
[a] court, in the exercise of discretion given it by the remedial
provisions of Rule 60(b), W.Va.R.C.P., should recognize that
the rule is to be liberally construed for the purpose of
accomplishing justice and that it was designed to facilitate the
desirable legal objective that cases are to be decided on the
merits.
Toler, 157 W.Va. at 778, 204 S.E.2d at 86, Syl. Pt. 6 (emphasis added); accord Syl. Pt. 2,
Hamilton Watch Co. v. Atlas Container, Inc., 156 W.Va. 52, 190 S.E.2d 779 (1972)
(“Inasmuch as courts favor the adjudication of cases on their merits, Rule 60(b) of the West
Virginia Rules of Civil Procedure should be given a liberal construction.”). Regarding the
application of liberality that embraces Rule 60(b), we explained in Hamilton Watch Co., that
[t]he purpose of the rules of civil procedure is to permit not
only a speedy determination of an adversary proceeding but,
more importantly, a just determination. With this in mind it is
understandable that provision has been made in the rules to
correct a situation which, under certain circumstances, proves
to be unjust.
156 W.Va. at 59, 190 S.E.2d at 783.
In determining whether a liberal construction of Rule 60(b), when juxtaposed
with the harsh reality of Rule 77(d), warrants relief in this case, we find an examination of
15
federal courts that have determined this matter to be helpful. The federal versions of both
Rule 60 and Rule 77 are similar to our rules.18 Succinctly stated, federal courts have found
that Rule 60(b) of the Rules of Civil Procedure can be used to set aside a judgment that was
not noticed to a party under Rule 77(d). See Vencor Hosps., Inc. v. Standard Life and Acc.
Ins. Co., 279 F.3d 1306, 1310 (11th Cir. 2002) (stating that “[p]rior to 1991,19 relief from
18
In Cattrell Companies, Inc. v. Carlton, Inc., 217 W. Va. 1, 614 S.E.2d 1 (2005) , we
explained that
“‘[b]ecause the West Virginia Rules of Civil Procedure are
patterned after the Federal Rules of Civil Procedure, we often
refer to interpretations of the Federal Rules when discussing our
own rules.’ See Painter v. Peavy, 192 W.Va. 189, 192 n. 6, 451
S.E.2d 755, 758 n. 6 (1994) (“Because the West Virginia Rules
of Civil Procedure are practically identical to the Federal Rules,
we give substantial weight to federal cases . . . in determining
the meaning and scope of our rules.”).”
217 W. Va. at 8 n.21, 614 S.E.2d at 8 n.21 (quoting Keplinger v. Va. Elec. & Power Co., 208
W.Va. 11, 20 n.13, 537 S.E.2d 632, 641 n.13 (2000)).
19
In 1991, Federal Rule of Appellate Procedure 4(a) was amended to include
subsection (6), which now provides:
(6) Reopening the Time to File an Appeal. – The district
court may reopen the time to file an appeal for a period of 14
days after the date when its order to reopen is entered, but only
if all the following conditions are satisfied:
(A) the court finds that the moving party did not receive
notice under Federal Rule of Civil Procedure 77(d) of the entry
of the judgment or order sought to be appealed within 21 days
after entry;
(B) the motion is filed within 180 days after the judgment
or order is entered or within 14 days after the moving party
receives notice of the entry under Federal Rule of Civil
(continued...)
16
judgment under Rule 60(b) was a recognized method of avoiding the otherwise harsh results
imposed upon parties failing to receive actual notice of a judgment until after the time for
appeal had passed. See, e.g., Harnish v. Manatee County, Florida, 783 F.2d 1535, 1538
(11th Cir.1986) (‘By availing itself of the escape valve provided by Rule 60(b) of the
Federal Rules of Civil Procedure in vacating and reentering its order on the Rule 59 motion,
the court avoided the manifest injustice worked by a rigid application of the provisions of
Rule 77(d) to the above-recited facts.’).”) (footnote added); Wilson v. Atwood Grp., 725
F.2d 255, 257 (5th Cir. 1984) (recognizing that “[b]ecause of . . . the ‘draconian effect’ of
rule 77(d), courts have sought to palliate its results by invoking rule 60(b). This rule states
that the court may relieve a party from a judgment or order for any ‘reason justifying relief
from the operation of the judgment.’”).
19
(...continued)
Procedure 77(d), whichever is earlier; and
(C) the court finds that no party would be prejudiced.
Fed. R. App. P. 4(a)(6). Since the adoption of Rule 4(a)(6), which provided a limited
opportunity for relief in circumstances where the notice of entry of a judgment or order
required by Rule 77(d) was not received or was not timely received, most federal courts have
determined that Rule 4(a)(6) “provides the exclusive method for extending a party’s time to
appeal for failure to receive actual notice that a judgment or order has been entered[,]” and
that Federal Rule of Civil Procedure 60(b) can no longer be used. See Vencor Hosps., 279
F.3d at 1311. West Virginia has no counter-part similar to the Rule 4(a)(6) and, therefore,
the viability of West Virginia Rule of Civil Procedure 60(b) for the purpose of reducing the
harshness of Rule 77(d) remains intact.
17
Moreover, the majority of federal jurisdictions resolving this issue have
required some diligence or special circumstances. See Spika v. Vill. of Lombard, Ill., 763
F.2d 282, 285 (7th Cir. 1985) (stating that “[m]ost circuits allow Rule 60(b) relief to revive
a lost right to appeal only where the appellant has exercised due diligence to ascertain
whether the judgment has been entered or has given sufficient reason for the lack of such
diligence.”); McKnight v. United States Steel Corp., 726 F.2d 333, 335 (7th Cir. 1984)
(finding that “[t]he extraordinary relief provided by Rule 60(b) may be granted only upon
a showing of exceptional circumstances.”); Rodgers v. Watt, 722 F.2d 456, 461 (9th
Cir.1983) (finding relief proper where diligence shown in checking status and docket sheet
entries were erroneously out of sequence); Hensley v. Chesapeake & Ohio Ry. Co., 651 F.2d
226, 230-31 (4th Cir.1981) (determining that court may rely on rule 60(b) to supersede Rule
77(d) under “unique circumstances.”); Buckeye Cellulose Corp. v. Braggs Elec. Constr. Co.,
569 F.2d 1036, 1038 (8th Cir.1978) (determining that three inquiries about status of the case
and reliance on clerk’s office statement that counsel would be notified sufficient for relief);
Expeditions Unlimited Aquatic Enters., Inc. v. Smithsonian Inst., 500 F.2d 808, 810
(D.C.Cir.1974) (holding that rule 60(b) permits district court to vacate and reenter judgment
where neither party received timely notice and winning party was not prejudiced.).
In light of the foregoing, as the federal courts did prior to the adoption of Rule
4(a) of the Federal Rules of Appellate Procedure, we seek to ameliorate the draconian
18
effects of West Virginia Rule of Civil Procedure 77(d). We, therefore, hold that West
Virginia Rule of Civil Procedure 60(b) may be used as a means to seek relief from a
judgment or order that was not noticed to a party in accordance with West Virginia Rule of
Civil Procedure Rule 77(d) upon a showing of diligence or exceptional circumstances by
the aggrieved party. The requisite diligence or exceptional circumstances necessary for Rule
60(b) relief under these circumstances will require a case-by-case analysis.
In the instant case, the lack of notice of the final order that was entered
granting summary judgment to the Plaintiffs is the result of error on the part of the circuit
court.20 The Plaintiffs set in motion the events that led to the lack of notice to Old Republic
by failing to include the names of Old Republic’s counsel on their proposed order submitted
to the circuit court for consideration. This initial failure was compounded by the circuit
court when it failed to change the style on the Plaintiffs’ order from “proposed” to final,
when it chose to enter the Plaintiffs’ order as its final order resolving the matter. Moreover,
unexplained in the record is why the circuit court gave the Plaintiffs’ counsel a “courtesy”
call informing him that the proposed order was going to be entered in the case, when no
commensurate “courtesy” was extended to Old Republic. This is especially significant in
light of the circuit court’s finding that “[t]here [wa]s no question that Old Republic intended
to appeal this order, should the Court rule in Mr. O’Neal’s favor.” Further, it is undisputed
20
The circuit court and the circuit clerk had sent prior orders to Old Republic’s
counsel, including the order regarding the motion to amend the complaint.
19
that the circuit clerk failed to give any notice to Old Republic’s counsel. Thus, when Old
Republic’s counsel saw that a proposed order had been docketed and called the circuit
clerk’s office about it, the circuit clerk correctly informed Old Republic’s counsel that no
final order had been entered, only a proposed order. Perhaps Old Republic’s counsel should
have requested a copy of the proposed order, but the failure to do so does not establish a
lack of diligence given the misleading caption on the order and the evidence offered by Old
Republic, which was not refuted, indicating that Old Republic’s counsel continued to
monitor the docket sheet for six months prior to finally inquiring of the circuit court and the
Plaintiffs’ counsel about the status of a final order. While the Plaintiffs, as well as the
circuit court, are quick to place an affirmative duty upon Old Republic to confirm the
content of an order that appeared on the circuit court’s docket as a “proposed” order, they
are equally quick to overlook their own negligence.
Consequently, under the unique facts of this case, we find that the circuit court
abused its discretion in failing to afford Old Republic relief under West Virginia Rule of
Civil Procedure 60(b) by vacating the January 27, 2014, proposed order and re-entering the
same as the final order to allow Old Republic the opportunity to file an appeal.21 The
21
In light of our ruling, we also find that the circuit court erroneously determined that
“Old Republic filed its Motion [referring to the Rule 60 motion] nearly eight months after
the original order was entered and seven months after the missed deadline for filing a Notice
of Appeal.” Rather, the appendix record supports that Old Republic filed its Rule 60 motion
within eight days of becoming aware that the January 27, 2014, “proposed” order was indeed
(continued...)
20
circumstances presented to the circuit court in this case were undeniably extraordinary and
involved culpability on the part of all involved, including the circuit court. In light of our
reversal on this issue, rather than remanding the case for the formality of re-entry of a final
order granting the Plaintiffs summary judgment, in the interest of judicial economy, we
proceed with consideration of the merits of the case as the substantive issue was fully
briefed and argued by the parties.
B. Subrogation Right
The substantive issue before the Court is whether the circuit court erred in
granting the Plaintiffs summary judgment, by determining that Old Republic was not
entitled to subrogation under the provisions of West Virginia Code § 23-2A-1. This
particular argument can not be viewed with tunnel vision, focusing solely upon the relevant
statute. Rather, the Court must explore each of the three avenues of recovery sought by the
Plaintiffs in their complaint. The first is Mr. O’Neal’s right to receive workers’
compensation under Speed Mining’s workers’ compensation insurance policy issued by Old
Republic. With this recovery comes the statutory right of subrogation in favor of Old
Republic, as well as a contractual right of reimbursement in favor of Speed Mining. See id.
The second avenue of recovery stems from the Plaintiffs’ deliberate intention claim against
21
(...continued)
intended by the circuit court to be the final order in the case.
21
Speed Mining. This particular claim is not subject to any subrogation claim by Old
Republic. The recovery received by the Plaintiffs from Speed Mining as a result of this
claim, however, involves a settlement agreement entered into between these two parties,
which impacts the resolution of this case. The final avenue of recovery arises from the
Plaintiffs’ products liability claim against the Baughan defendants. The Plaintiffs’
settlement of this claim falls within the purview of Old Republic’s statutory workers’
compensation subrogation claim. Thus, we undertake an examination of the interplay of
each of these avenues of recovery.
Looking first at Old Republic’s statutory right of subrogation as set forth in
West Virginia Code § 23-2A-1, Old Republic argues that the circuit court erred in the
application of law, statute and contract when it extinguished Old Republic’s statutory
subrogation rights. Old Republic further argues that the circuit court erred in determining
that “Speed Mining was a de-facto self-insured employer under the statute,” that Old
Republic waived any right to seek statutory subrogation, that Old Republic’s subrogation
rights were based on common law equitable principles, and that the statutory right could be
modified, because the policy proceeds were provided by Speed Mining through the
deductible, not from Old Republic’s own funds.
22
Conversely, the Plaintiffs argue that Old Republic did not have a right of
subrogation under West Virginia Code § 23-2A-1, because Patriot Coal, on behalf of Speed
Mining, paid the worker’s compensation benefits to the Plaintiff Mr. O’Neal and both
Patriot and Speed Mining waived any claims to recover those benefits by the terms of the
underlying settlement entered into between Speed Mining and the Plaintiffs in conjunction
with the Plaintiffs’ deliberate intention claim.
“A circuit court’s entry of summary judgment is reviewed de novo.” Syl. Pt.
1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).22 Further,
“‘[a] motion for summary judgment should be granted
only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify
the application of the law.’ Syllabus Point 3, Aetna Casualty &
Surety Co. v. Federal Insurance Co. of New York, 148 W.Va.
160, 133 S.E.2d 770 (1963).” Syllabus Point 1, Andrick v.
Town of Buckhannon, 187 W.Va. 706, 421 S.E.2d 247 (1992).
Painter, 192 W. Va. at 190, 451 S.E.2d at 756, Syl. Pt. 2.
We begin with an examination of the statutory right of subrogation that is
relied upon by Old Republic. West Virginia Code § 23-2A-1provides:
(b) Notwithstanding the provisions of subsection (a) of
this section, if an injured worker, his or her dependents or his
22
Similarly, “[a] circuit court’s entry of a declaratory judgment is reviewed de novo.”
Syl. Pt. 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995).
23
or her personal representative makes a claim against the third
party23 and recovers any sum for the claim:
(1) With respect to any claim arising from a right of
action that arose or accrued, in whole or in part, on or after
January 1, 2006, the private carrier or self-insured employer,
whichever is applicable, shall be allowed statutory subrogation
with regard to indemnity and medical benefits paid as of the
date of the recovery.
....
(d) In the event that an injured worker, his or her
dependents or personal representative makes a claim against a
third party, there shall be, and there is hereby created, a
statutory subrogation lien upon the moneys received which
shall exist in favor of the Insurance Commissioner, private
carrier or self-insured employer, whichever is applicable.
(e) It is the duty of the injured worker, his or her
dependents, his or her personal representative or his or her
attorney to give reasonable notice to the Insurance
Commissioner, private carrier or self-insured employer after
a claim is filed against the third party and prior to the
disbursement of any third-party recovery. The statutory
subrogation described in this section does not apply to
uninsured and underinsured motorist coverage or any other
insurance coverage purchased by the injured worker or on
behalf of the injured worker. If the injured worker obtains a
recovery from a third party and the injured worker, personal
representative or the injured worker’s attorney fails to protect
the statutory right of subrogation created herein, the injured
worker, personal representative and the injured worker's
attorney shall lose the right to retain attorney fees and costs
out of the subrogation amount. In addition, such failure creates
a cause of action for the Insurance Commissioner, private
carrier or self-insured employer, whichever is applicable,
23
In the context of the this statute, third party refers to a party that is outside the
employment relationship. Thus, in instant case, the Baughan defendants are the third parties
against whom the Plaintiffs asserted a products liability claim.
24
against the injured worker, personal representative and the
injured worker's attorney for the amount of the full subrogation
amount and the reasonable fees and costs associated with any
such cause of action.
Id. (emphasis and footnote added). Further, Old Republic also relies upon the following
contractual language set forth in its insurance policy concerning its workers’ compensation
coverage provided to Speed Mining. The policy provides:
We have your rights and the rights of persons entitled to the
benefits of this insurance to recover all advances and payments,
including those within the Deductible Amounts from any liable
for the injury. You will do everything necessary to protect
those rights for us and to help us enforce them. If we recover
any advance or payment made under this policy from anyone
liable for the injury, the amount we recover will first be applied
to any payments made by us on this injury in excess of the
Deductible Amount(s); only then will the remainder of the
recovery, in any, be applied to reduce the Deductible
Amount(s) paid or reimbursed or reimbursable by you on this
injury.
From an examination of the record and the applicable law, we find the circuit
court erred in its determination that the provisions of West Virginia Code § 23-2A-1(b) did
not apply in this case because “Speed Mining was a de-facto self-insured employer under
the statute, given the fact that its injured employee’s workers’ compensation benefits were
actually paid by its parent corporation, Patriot Coal, who was self-insured.” Other than a
couple of early communications, one from Speed Mining’s attorney, and one from Avizent,
referring to the $2,000,000 deductible as Speed Mining’s “self-insured retention” the record
25
is devoid of any evidence that supports the circuit court’s determination of Speed Mining’s
status as being a “de-facto self-insured.” The circuit court’s finding also is in direct conflict
with another finding made by the court that on the date of Mr. O’Neal’s accident, “his
employer, Speed Mining, was a named insured on a workers’ compensation policy that had
previously been issue[d] to Magnum Coal Company by Third party Defendant Old Republic
Insurance Company. The aforementioned policy with Old Republic included a $2 million
deductible.”24 Because Old Republic provided workers’ compensation insurance coverage
to Speed Mining as evinced by the employer being a named insured on the Old Republic
policy, Old Republic qualified as a “private insurer”25 under the provisions of West Virginia
Code 23-2A-1(b). Thus, Old Republic fell within the purview of the statute providing an
insurer a right of subrogation with regard to indemnity and medical benefits paid as of the
date of the recovery as result of an injured worker’s claim against a third party. See id.
Despite the erroneous ruling by the circuit court on the foregoing issue, we
determine that it made the right ruling in this case, but based upon incorrect reasoning. As
24
The circuit court’s finding of “de-facto self-insured” is also unsupported by the law.
See W. Va. Code § 23-2-9 (2010) (setting forth conditions that must be met in order for an
employer to be considered self-insured). There is no evidence in the record that establishes
that Speed Mining complied with the procedure established in this statute so as to qualify as
a self-insured employer or even a “de-facto self-insured” employer.
25
“Private carrier” is defined in West Virginia Code § 23-2C-2(n) (2010) to mean “any
insurer or the legal representative of an insurer authorized by the Insurance Commissioner
to provide workers’ compensation insurance pursuant to this chapter.”
26
we have explained, this Court is not bound by the incorrect reasoning relied upon by a lower
court:
We have consistently held that “[t]his Court may, on appeal,
affirm the judgment of the lower court when it appears that
such judgment is correct on any legal ground disclosed by the
record, regardless of the ground, reason or theory assigned by
the lower court as the basis for its judgment.” Syl. Pt. 3, Barnett
v. Wolfolk, 149 W.Va. 246, 140 S.E.2d 466 (1965); see also
Cumberland Chevrolet Oldsmobile Cadillac, Inc. v. General
Motors Corp., 187 W.Va. 535, 538, 420 S.E.2d 295, 298 n. 4
(1992)(stating that “even if the reasoning of a trial court is in
error . . . we are not bound by a trial court’s erroneous
reasoning”); State ex rel. Dandy v. Thompson, 148 W.Va. 263,
274, 134 S.E.2d 730, 737, cert. denied, 379 U.S. 819, 85 S. Ct.
39, 13 L. Ed. 2d 30 (1964)(stating in criminal context that
“correctness of ... [trial court’s] final action is the only material
consideration, not the stated reasons for [the trial court’s]
taking such action”).
State v. Boggess, 204 W. Va. 267, 276, 512 S.E.2d 189, 198 (1998).
Thus, we now examine other grounds relied upon by the circuit court in its
decision to grant the Plaintiffs summary judgment. The circuit court also found the
settlement entered into between Speed Mining and the Plaintiffs foreclosed the statutory
right of subrogation as “the terms of the settlement did not expressly preserve Speed
Mining’s right to be reimbursed for workers compensation benefits paid to Mr. O’Neal
should he recover monies from third-parties,” such as Baughan defendants. It is the
language contained within this settlement agreement that is the Achilles’ heal of Old
Republic’s argument that it is entitled to statutory subrogation.
27
When Speed Mining settled the Plaintiffs’ deliberate intention action, the
settlement agreement, dated October 13, 2011, provided: “It is FURTHER
SPECIFICALLY UNDERSTOOD, ACKNOWLEDGED AND AGREED by the parties that
this Agreement is the entire agreement and encompasses all terms and agreements
negotiated by them in settlement of any and all claims relating to the Subject Incident and
that there is no other writings whatsoever.” (Emphasis added).
At the time of the foregoing settlement, Speed Mining, in its own right, had
a contractual claim of reimbursement under Old Republic’s insurance policy for the
$1,845,197.13 that Speed Mining had paid as its deductible as a result of the Plaintiff Mr.
O’Neal’s workers’ compensation claim. As Beverly Sellers, Old Republic’s representative
testified during her deposition, “[t]he policy language dictates what happens to any
recovery.” According to Ms. Sellers, Old Republic would keep any amount over the
deductible and any other amount would be reimbursed to Speed Mining. Consequently,
when Speed Mining settled the deliberate intention claim with the Plaintiffs, it agreed that
the settlement was for “any and all claims relating to the Subject Incident[,]” i.e., the
accident that caused Mr. O’Neal’s injuries. Thus, Speed Mining relinquished its right of
reimbursement of any money it had expended in payment of the deductible amounts of Mr.
O’Neal’s workers’ compensation claim from the settlement the Plaintiffs entered into with
the Baughan defendants regarding their products liability claim.
28
The consequence of Speed Mining’s action are that when Old Republic sought
to invoke its statutory right of subrogation under the provisions of West Virginia Code § 23­
2A-1(b) relating to the settlement that the Plaintiffs entered into with the Baughan
defendants regarding the products liability claim, Old Republic sought subrogation of the
$1,845,197.13,26 which was the amount of money that had been paid by Speed Mining,27 not
Old Republic, under the subject workers’ compensation insurance policy at the time of the
products liability settlement. As previously mentioned, Speed Mining relinquished its claim
of reimbursement as part of the negotiated settlement regarding the deliberate intention
claim entered into between it and the Plaintiffs. Had Old Republic paid any money relative
26
To the extent that Old Republic argues in its brief that “[a]s of December 13, 2013,
three days before the hearing below [referring to the summary judgment hearing], . . . [Old
Republic] had already paid $239,454.65 over the deductible, and had conservatively reserved
$6,565,914.35 in benefits payments for this claim[,]” this information is nothing more than
a red herring. Old Republic was only entitled to seek subrogation for money paid as of the
date of recovery by the Plaintiffs from the third party. In this case, the date of recovery was
the date the Plaintiffs settled their products liability claim with the Baughan Defendants and
the record establishes that on that date, the workers’ compensation benefits that had been
paid remained within the $2,000,000 deductible.
27
Old Republic relied upon Argonaut Insurance Co. v. Baker, 87 S.W.3d 526 (Tex.
2002), to support its position that it is entitled to recover the deductible amount paid by its
insured in this case. A close examination of the Argonaut decision, however, reveals that the
decision fails to support Old Republic’s argument. The insurance company paid the
deductible in that case under the deductible plan the employer had in place. Thus, the
Supreme Court of Texas held the insurer “must be reimbursed from the settlement proceeds
for the benefits it has paid to and on behalf of . . . [the injured worker], including those paid
from the deductible[,]” because the insurer had actually paid the deductible amount. Id. at
531-32. In this case, as the circuit court found, Old Republic had not pay any workers’
compensation benefits to the Plaintiffs at the time they recovered from the Baughan
defendants.
29
to indemnity or medical benefits under the Old Republic workers’ compensation insurance
policy, Old Republic certainly would have had a statutory right of subrogation. The only
claim that was waived, therefore, was Speed Mining’s claim for reimbursement.
As we recognized in syllabus point two of Bush v. Richardson, 199 W. Va.
374, 484 S.E.2d 490 (1997),
“‘[t]he doctrine of subrogation is that one who has the right to
pay, and does pay, a debt which ought to have been paid by
another is entitled to exercise all the remedies which the
creditor possessed against that other.’ Syl. Pt. 1, Bassett v.
Streight, 78 W.Va. 262, 88 S.E. 848 (1916).” Syl. pt. 4, Ray v.
Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).
Furthermore, we held: “‘The right of subrogation depends upon the facts and circumstances
of each particular case. Huggins v. Fitzpatrick, 102 W.Va. 224, 228, 135 S.E. 19, 20
(1926).’ Syl. pt. 3, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).” Bush, 199
W. Va. at 375, 484 S.E.2d at 491, Syl. Pt. 3. In reaching these two holdings, even though
we accepted the differences between statutory and equitable subrogation,28 we
acknowledged that “[t]he doctrine of subrogation originated from equity rather than out of
statute or common law . . . .” Id. at 377-38, 484 S.E.2d at 493-94. We further stated that
28
We reject Old Republic’s arguments that the circuit court “applied principles of
equitable subrogation to extinguish” or modify its statutory right of subrogation. Rather, a
plain reading of the circuit court’s order reveals that the circuit court historically recognized
that the concept of subrogation is derived from equity, not statute, and that at its essence,
even statutory subrogation involves “a person who, in fact, paid the debts owed by
another[.]”
30
“[t]he purpose of subrogation is ‘to compel the ultimate payment of a debt by one who, in
justice, equity, and good conscience, should pay it.’ 83 C.J.S. Subrogation § 2 at 582 (1953)
(footnote omitted).” Bush, 199 W. Va. at 378, 484 S.E.2d at 494.
Consequently, under the unique facts of this case, Old Republic is attempting
to recover money that it never paid and that its insured is not entitled to receive. If this
Court were to allow Old Republic to exercise the statutory right of subrogation in this
matter, Old Republic would receive a windfall insofar as it would receive monies it never
expended.29 Moreover, under such a scenario, Old Republic’s insured, Speed Mining,
29
We decline to hold that a deductible amount paid under a workers’ compensation
policy may never be recovered by a private insurer under the provisions of West Virginia
Code § 23-2A-1. There may be instances either where a private insurer pays the deductible
under the terms of the policy or where the private insurer contractually asserts a subrogation
lien for money paid under the policy, which may include a deductible amount paid by the
insured, but where the insured has not released its reimbursement or subrogation claim. In
these instances, the terms of the insurance policy will more than likely govern the manner in
which either the insured reimburses the insurer or the insurer reimburses its insured.
We further note that under the contractual language of Old Republic’s policy in this
case, the insured, Speed Mining, was contractually obligated to “do everything necessary to
protect” Old Republic’s contractual rights “to recover all advances and payments, including
those within the Deductible Amount(s) from anyone liable for the injury.” According to the
terms of the policy,
[i]f we [referring to Old Republic] recover any advance or
payment under this policy from anyone liable for the injury, the
amount we recover will first be applied to any payments made
by us on this injury in excess of the Deductible Amount(s); only
then will the remainder of the recovery, if any, be applied to
reduce the Deductible Amount(s) paid or reimbursed or
(continued...)
31
would be allowed to circumvent its settlement of the deliberate intention claim entered into
with the Plaintiffs, as Speed Mining gave up any claim of reimbursement as part of the
terms of the settlement of that claim.
IV. Conclusion
Based upon the foregoing, we reverse the circuit court’s denial of Old
Republic’s Rule 60(b) motion for relief from judgment. In the interest of judicial economy,
deciding to forego remand for entry of an order granting Old Republic’s relief requested for
purposes of pursuing an appeal, we proceed with a review of the substantive issue. We
affirm the circuit court’s order granting the Plaintiffs’ motion for summary judgment.
Reversed, in part;
Affirmed, in part.
29
(...continued)
reimbursable by you [Speed Mining] on this injury.
Arguably, under the foregoing contractual language, Old Republic may have a basis for
asserting that Speed Mining breached the terms of the insurance policy; however, it is
uncertain as to how it can be established that Speed Mining failed to protect Old Republic’s
contractual rights given Old Republic had not expended any money pursuant to the insurance
policy at the time of the settlement. Moreover, as Speed Mining was not a party to this
portion of the litigation below and is not a party to this appeal, we find no basis for resolving
this issue.
32