Trial court should've decided insurance issue, SC rules

CHARLESTON – The state Supreme Court, reversing and remanding a wrongful death case back to the trial court, held that it is the trial court’s job to determine whether exclusionary language in an insurance contract was brought to the attention of the insured and not the jury’s.

Justice Robin Jean Davis wrote the Feb. 6 opinion of the Court and Justice Menis E. Ketchum filed a concurrence. Chief Justice Brent D. Benjamin reserved the right to file a concurring opinion later.

“This case began on or about June 6, 1997, when Gerald Kirchner was accidentally shot and killed by Robbie Bragg. At the time of the shooting, Mr. Kirchner and Mr. Bragg were both employees of Grimmett Enterprises, a sporting goods store located in Rainelle, West Virginia,” the opinion states.

“Grimmett Enterprises was owned by David Grimmett (“Mr. Grimmett”). Mr. Kirchner was shot accidentally while Mr. Bragg was showing a customer how to load a handgun that was for sale in the store.

In December of 1997, Barbara Surbaugh, the mother of Kirchner, filed a wrongful death action against Bragg and a Workers’ Compensation deliberate intent cause of action against Grimmett Enterprises.

In 2002, Bragg and Grimmett Enterprises reached a settlement with Surbaugh for $1.5 million with the two defendants agreeing to assign all claims they might have against their respective insurers for refusing to provide a defense and coverage. Surbaugh agreed not to execute the judgment against the defendants as part of the agreement.

In 2005, Surbaugh filed an amended complaint asserting a declaratory judgment against Grimmett’s insurer, American States Insurance Company, seeking a determination of whether the insurance policy issued by American States to Grimmett provided coverage for the claim.

The policy did not provide coverage for a bodily injury to "an employee of the insured arising out of and in the course of employment by the insured," according to the opinion.

The court entered an order April 19, 2010, bifurcating the declaratory judgment action from the underlying wrongful death/deliberate intent action.

After several motions and cross-motions by the respective parties, the circuit court held as a matter of law that the exclusionary language in the policy was not ambiguous and that the issue of whether the exclusion was disclosed to Grimmett was a fact question for the jury.

A jury trial was held on the issue of whether the exclusion was disclosed to Grimmett and on June 24, 2011, the jury returned a verdict that the exclusion had not been disclosed. The circuit court then entered a final order concluding that the employee policy exclusion was unenforceable.

American States appealed to the state’s high court.

“In this case, we are presented with two dispositive issues. First, we must determine whether the trial court was correct in finding, as a matter of law, that a jury had to decide if an insurance policy’s exclusionary language was adequately brought to the attention of Mr. Grimmett," the opinion says.

“Second, we must decide whether the trial court erred in denying summary judgment in favor of American States. We will address both issues separately.

“The trial court determined that it was for the jury to decide whether the exclusionary language at issue in this case was brought to the attention of Mr. Grimmett. American States argued below, and in this appeal, that this issue was for the trial court and not a jury. We agree with American States.

“It is clear from the [cases discussed] that issues of fact, that are normally tried by a jury, may be submitted to a jury in a declaratory judgment action. However, in the context of a declaratory judgment action to determine insurance coverage, generally the issues presented are for the trial court to decide.

“This Court has held that determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law.

“[W]e wish to make clear, and so hold, that, as a general rule, the issue of whether an insurer has brought a policy exclusion to the attention of an insured is to be resolved by the trial court.

“Consequently, and in conjunction with the discussion that follows, we find that the trial court committed error in having a jury decide whether the insurance policy’s exclusionary language adequately was brought to the attention of Mr. Grimmett.”

The court then turned to the second issue of whether the trial court had erred in denying summary judgment to American States.

“Ms. Surbaugh raised the issue of failure to disclose by arguing below that Mr. Grimmett was never verbally told about the exclusions, that the initial application for insurance did not contain any exclusions, and that the initial quote for coverage did not disclose any exclusions," Davis wrote.

“In light of this evidence, Ms. Surbaugh contends American States failed to bring the exclusions to the attention of Mr. Grimmett.

“In the instant proceeding, there is nothing ‘deceptive or misleading’ in the plain and unambiguous exclusions in the policy. Consequently, there is no basis to suggest that American States had to do more than demonstrate that it communicated in writing to Mr. Grimmett that he should read the policy and its exclusions and contact American States if he had concerns.

“Had Mr. Grimmett read the policy, as he was told to do in a letter and on the policy itself, he would have learned of the exclusions and could have contacted American States with any questions he had regarding said exclusions.

“In other words, American States fulfilled its obligation to bring the exclusion to the attention of Mr. Grimmett, but Mr. Grimmett failed to carry out his duty to read the policy.

“In view of the foregoing, the circuit court’s order of June 30, 2011, which entered judgment in favor of Ms. Surbaugh based upon a jury verdict, is reversed.

“This case is remanded with instructions that the circuit court enter summary judgment in favor of American States in the bifurcated declaratory judgment part of the action.”

Justice Ketchum concurred, writing, “I agree with the majority opinion’s conclusion: an insured cannot escape the effect of exclusions in an insurance policy due to failure to read the policy, when the exclusions are clear, unambiguous and conspicuous.

“The majority opinion spent a great deal of time clearing up inconsistent, ambiguous dicta in many of our older cases. I believe we should have overruled these cases outright, and simply started over with a new bright-line syllabus reflecting the majority opinion’s ultimate conclusion set forth above.”