CHARLESTON – The state appeals court overturned a Marion Circuit Court decision that allowed defendants in fatal car accident case to file cross-claims against their own insurer over policy coverage.
On June 1, the Supreme Court of Appeals of West Virginia granted Zurich American Insurance Co.’s petition for a writ of prohibition, as moulded, against Dan’s Car World and Daniel Cava and Salvatore Cava. Salvatore Cava is the son of Daniel Cava, the owner of Dan's Car World.
The car dealership and the Cava defendants filed individual cross-claims against Zurich, their insurer, over whether an umbrella policy covered Salvatore Cava following his involvement in a fatal car accident, according to court documents.
The appeals court found that the Cava defendants’ cross-claims against Zurich were “not ripe for adjudication,” according to court records. Therefore, the court ruled that the circuit court ruling on Dec. 8, 2016, lacked subject matter jurisdiction, and the order denying Zurich’s motion to dismiss the cross-claims was “void and unenforceable,” according to court documents.
In June 2014, David R. Allen died nine days after he was involved in a motor vehicle accident with Salvatore Cava, an employee of Dan’s Car World, who was driving a company SUV at the time and struck Allen while he was riding his motorcycle.
The administrator of Allen’s estate, Christina Varvel, asserted a declaratory judgment action against Universal Underwriters Insurance Co. and Zurich to determine the amount of coverage available. Zurich determined that the car dealership’s garage policy provided liability coverage to Cava, and the company offered Varvel a $300,000 settlement.
Varvel asserted that she also had a claim to the business’ commercial umbrella policy, which provides liability coverage up to $5 million. Zurich maintained that Cava was not covered under this policy because he was not using the company vehicle for work purposes when the accident occurred, according to court documents.
Frustrated by Zurich not increasing the settlement amount, Cava defendants filed individual cross-claims in circuit court against Zurich, arguing that its insurer placed its interest above theirs the litigation in the Varvel case, according to court documents. The Cava defendants claimed Zurich acted in bad faith by failing to investigate the matter properly and settle the case, accusing the insurer of engaging in intentional, wrongful litigation conduct, according to court documents.
The circuit court denied Zurich attempt to have the cross-claims dismissed.
Zurich sought a writ of prohibition to prevent the circuit court from enforcing the order denying its motion to dismiss the cross-claims asserted by the Cava defendants, calling the ruling “clearly erroneous as a matter of law.”
Zurich argued that the Cava defendants' cross-claims are premature because they have suffered no damages since an excess judgment has not been entered against them. The insurer also argued that it will not be able to properly defend itself in the declaratory judgment action if the appeals court did not intervene.
The appeals court called the Cava defendants’ complaints “no more than attacks on Zurich for defending itself in the declaratory judgment action and second-guessing of strategic decisions made by the defense counsel retained by Zurich,” according to court documents.