Filed: May 07, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1571 MULVEY CONSTRUCTION, INCORPORATED; ONE BEACON INSURANCE COMPANY, Plaintiffs – Appellants, and DCI/SHIRES, INCORPORATED, Intervenor/Plaintiff v. BITUMINOUS CASUALTY CORPORATION; BROWN & BROWN INSURANCE AGENCY OF VIRGINIA, INCORPORATED, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at Bluefield. David A. Faber, Senior District Judge. (1:07-cv-00634) Argue
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1571 MULVEY CONSTRUCTION, INCORPORATED; ONE BEACON INSURANCE COMPANY, Plaintiffs – Appellants, and DCI/SHIRES, INCORPORATED, Intervenor/Plaintiff v. BITUMINOUS CASUALTY CORPORATION; BROWN & BROWN INSURANCE AGENCY OF VIRGINIA, INCORPORATED, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at Bluefield. David A. Faber, Senior District Judge. (1:07-cv-00634) Argued..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1571
MULVEY CONSTRUCTION, INCORPORATED; ONE BEACON INSURANCE
COMPANY,
Plaintiffs – Appellants,
and
DCI/SHIRES, INCORPORATED,
Intervenor/Plaintiff
v.
BITUMINOUS CASUALTY CORPORATION; BROWN & BROWN INSURANCE
AGENCY OF VIRGINIA, INCORPORATED,
Defendants – Appellees.
Appeal from the United States District Court for the Southern
District of West Virginia, at Bluefield. David A. Faber, Senior
District Judge. (1:07-cv-00634)
Argued: January 29, 2014 Decided: May 7, 2014
Before DUNCAN, KEENAN, and WYNN, Circuit Judges.
Affirmed in part and vacated in part and remanded by unpublished
opinion. Judge Wynn wrote the opinion, in which Judge Duncan
and Judge Keenan joined.
ARGUED: Stuart A. McMillan, BOWLES RICE LLP, Charleston, West
Virginia, for Appellants. Avrum Levicoff, LEVICOFF, SILKO &
DEEMER, PC, Pittsburgh, Pennsylvania; Henry I. Willett, III,
CHRISTIAN & BARTON, LLP, Richmond, Virginia, for Appellees. ON
BRIEF: Thomas M. Hancock, BOWLES RICE LLP, Charleston, West
Virginia, for Appellants. Pamela C. Deem, KAY CASTO & CHANEY,
PLLC, Charleston, West Virginia, for Appellee Brown & Brown
Insurance Agency of Virginia, Inc.
Unpublished opinions are not binding precedent in this circuit.
2
WYNN, Circuit Judge:
A city utility worker was killed when the trench he was
working in collapsed while he was repairing a sewage line at a
construction site for a McDonald’s restaurant in Bluefield, West
Virginia. His estate brought a wrongful death action against
the general contractor responsible for constructing the
restaurant, Mulvey Construction, Inc. (“Mulvey”), and its
subcontractor, DCI/Shires (“DCI”). In response, DCI’s insurance
company, Bituminous Casualty Corporation (“Bituminous”), refused
to defend and indemnify Mulvey. That refusal prompted Mulvey
and its insurer, One Beacon Insurance Company (“One Beacon”), to
bring this action, which requires us to determine the scope of
DCI’s insurance policy from Bituminous. In particular, we must
decide which state’s law applies to this insurance contract
dispute, whether Mulvey was covered by DCI’s insurance, and
whether the applicable statute of limitations bars Mulvey’s and
its insurer’s third-party beneficiary claim.
For the reasons explained below, we affirm the district
court’s holding that Virginia law controls the contract issue,
that Virginia law does not allow estoppel to extend an insurance
policy’s coverage, and that Appellants’ third-party beneficiary
claim is barred by the Virginia statutes of limitations.
However, we reverse the district court’s rejection of
Appellants’ insured contract and duty to defend claims and
3
remand this matter to the district court for further
consideration.
I.
In May 2002, DCI, a Virginia corporation, applied for a
renewal insurance policy with Bituminous through Brown & Brown
Insurance Agency (“Brown”), a Virginia insurance agency. DCI
had a Virginia post office box as its mailing address, but DCI’s
physical office was in Bluefield, West Virginia. Bituminous
issued DCI’s renewal policy, which was effective from May 20,
2002 to May 20, 2003. Although Bituminous’s headquarters is in
Illinois, the policy identified its Richmond, Virginia branch
office as the location for “the insurance company issuing this
insurance” and referred inquiries to the Virginia State
Corporation Commission’s Bureau of Insurance. J.A. 50.
In July 2002, Mulvey entered into a subcontract agreement
with DCI for a portion of the construction of a McDonald’s
restaurant in Bluefield, West Virginia. Under the subcontract
agreement, DCI agreed to list Mulvey and McDonald’s as
additional insureds on its insurance policy with Bituminous.
To satisfy this requirement, DCI sent the subcontract agreement
to Brown. In July and August 2002, Brown issued certificates of
insurance stating that Mulvey and McDonald’s were additional
4
insureds on DCI’s insurance policy with Bituminous. The
certificates of insurance also stated that “THIS CERTIFICATE IS
ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.”
J.A. 44, 259-64. DCI’s insurance policy was not amended to add
Mulvey and McDonald’s as additional insureds. In October 2002,
Brown sent a copy of the insurance policy to DCI.
In January 2003, a city employee was attempting to repair a
pipe next to the McDonald’s restaurant when the trench he was in
collapsed and killed him. His estate sued McDonald’s, Mulvey,
and DCI for wrongful death, alleging that the retaining wall at
the McDonald’s had been negligently constructed. Mulvey and
McDonald’s requested that Bituminous defend them in the wrongful
death action. Bituminous refused, stating that neither Mulvey
nor McDonald’s was an additional insured on DCI’s policy.
Mulvey and McDonald’s settled the wrongful death suit, and
Mulvey’s insurer, One Beacon, paid the settlement on behalf of
McDonald’s and Mulvey.
Appellants Mulvey and One Beacon initiated an arbitration
action against DCI in New York asserting indemnification and
breach of contract claims. In 2007, Appellants brought this
action against Bituminous and Brown seeking a declaratory
judgment that Mulvey was entitled to coverage from Bituminous
5
for the underlying action and payment of settlements and legal
fees. The complaint (and later the amended complaint) included
a breach of contract claim against Bituminous, an estoppel claim
against Bituminous and Brown, and a third-party beneficiary
claim against Brown. Bituminous moved for summary judgment on
these claims. The district court addressed these claims in
separate summary judgment orders during the case and the
district court’s conclusion of each of these individual claims
did not resolve the other claims.
The district court ruled that Virginia law applied and
granted Bituminous summary judgment on Appellants’ breach of
contract claim. However, the district court allowed
supplemental briefing on the estoppel and insured contract
claims under Virginia law. Mulvey and One Beacon had originally
conceded that the insurance contract was formed in Virginia,
but, after the district court granted summary judgment to
Bituminous on the breach of contract claim, moved to amend the
judgment arguing that the policy was issued in West Virginia.
The district court ordered them to offer evidence supporting
their change of view on the location of contract formation.
Appellants provided affidavits stating that a DCI employee was
assigned to gather mail from DCI’s Virginia post office box and
carry it to the offices in West Virginia. The district court
6
reaffirmed its earlier ruling that Virginia law governed the
case.
Brown also moved for summary judgment on Appellants’ third-
party beneficiary claim, arguing that the claim was barred by
the statute of limitations. The district court agreed and
granted summary judgment to Brown.
The district court also granted summary judgment to
Bituminous on Appellants’ estoppel claim and held that Virginia
law does not allow estoppel to extend insurance coverage,
especially where the disclaimer language in the certificates was
“clear and unambiguous[.]” J.A. 625-28. However, the district
court stayed the case pending completion of the ongoing New York
arbitration before considering the insured contract theory. 1
After Appellants dismissed the New York arbitration, they
renewed their motion for summary judgment on the insured
contract theory. The district court rejected the theory and
granted summary judgment to Bituminous. Mulvey and One Beacon
timely appealed these rulings.
1
The amended complaint does not contain an insured contract
claim as one of the specified counts. However, the amended
complaint sought a declaration that “Mulvey’s subcontract
agreement with [DCI] is an insured contract under DCI’s
Bituminous policy so that Mulvey stands in the shoes of DCI for
coverage purposes” and that “Bituminous owes Mulvey a duty to
indemnify and defend it as an additional insured with an insured
contract on its policy of insurance covering DCI . . . .” J.A.
197.
7
II.
First, Appellants argue that the district court erred in
ruling that Virginia law, rather than West Virginia law, applied
in this case. Second, Appellants argue that the district court
erred in holding that estoppel did not apply and that Mulvey
could not rely on the certificates of insurance to establish
coverage under DCI’s insurance policy. Third, Appellants argue
that the district court erred in rejecting their insured
contract theory; namely, that the subcontract between Mulvey and
DCI did not trigger a duty to defend requiring Bituminous to
defend Mulvey and McDonald’s in the wrongful death action.
Finally, Appellants argue that the district court erred in
applying Virginia’s statute of limitations and granting summary
judgment on the third-party beneficiary claims to Bituminous.
We address each issue in turn.
III.
We review de novo the district court’s choice of law
determination. See Salve Regina Coll. v. Russell, 499 U.S. 225,
231–34 (1991). When a district court is considering a case
based on diversity jurisdiction, the court must apply the forum
state’s conflict of laws rules. Klaxon Co. v. Stentor Elec.
8
Mfg. Co., 313 U.S. 487, 496 (1941). Here, the forum state is
West Virginia; thus, West Virginia’s choice of law principles
must be applied.
In West Virginia, generally, the law of the state where an
insurance contract was formed governs contract disputes:
“In a case involving the interpretation of an
insurance policy, made in one state to be performed in
another, the law of the state of the formation of the
contract shall govern, unless another state has a more
significant relationship to the transaction and the
parties, or the law of the other state is contrary to
the public policy of this state.”
Joy Tech., Inc. v. Liberty Mut. Ins. Co., 421 S.E.2d 493, 496
(W. Va. 1992) (quoting Liberty Mut. Ins. Co. v. Triangle Indus.,
Inc.,
390 S.E.2d 562, 563 (W. Va. 1990)). We thus begin our
inquiry with an examination of where the pertinent contract was
formed.
A.
Under West Virginia law, “[a] contract is made at the time
when the last act necessary for its formation is done, and at
the place where the final act is done.” Carper v. Kanawha
Banking & Trust Co., 207 S.E.2d 897, 901 (W. Va. 1974)
(syllabus, pt. 8) 2 (citing Restatement of Contracts § 74 (1932));
2
“Pursuant to West Virginia’s Constitution, the Supreme
Court of Appeals of West Virginia articulates new points of law
through its syllabus.” Hoschar v. Appalachian Power Co., 739
F.3d 163, 174 n.5 (4th Cir. 2014) (citing Walker v. Doe,
558
S.E.2d 290, 296 (2001)).
9
see also Tow v. Miners Mem’l Hosp. Ass’n, 305 F.2d 73, 75 (4th
Cir. 1962) (“Examining [West Virginia] law, we find that the
contract here in question was made in New York because there the
last event occurred necessary to make a binding agreement[.]”).
The West Virginia Supreme Court has observed that “[a]n
insurance contract, similar to other contracts, ‘is an offer and
acceptance supported by consideration.’ . . . The application
for insurance is the offer, which the insurer then decides to
accept, reject or modify. The insurer then issues a policy or
certificate of insurance that evidences the insurance contract.”
Keller v. First Nat’l Bank, 403 S.E.2d 424, 427 n.5 (W. Va.
1991) (quoting Warden v. Bank of Mingo,
341 S.E.2d 679, 682
(1985)). Therefore, where a party has made an offer to the
insurance company by applying for insurance, the insurance
company’s issuance of the policy constitutes its acceptance.
Appellants argue that the district court erred in
concluding that Virginia law governs the case. Specifically,
they contend that the insurance contract between DCI and
Bituminous was formed in West Virginia because DCI’s principal
office is located there. Appellants contend that DCI accepted
the contract in West Virginia when the insurance policy was
opened in DCI’s West Virginia office or when the premium check
was signed in DCI’s West Virginia office. We disagree.
10
Under West Virginia law, DCI’s renewal application
constituted the offer to create the insurance contract. In
response, Bituminous issued the insurance policy, thus,
accepting DCI’s offer. At that point, the contract was formed
according to West Virginia law. Neither the opening of the copy
of the policy in DCI’s West Virginia’s office nor the first
premium payment constituted the final act of contract formation.
The issuance of the policy from Bituminous’s Virginia branch
office represented Bituminous’s acceptance of DCI’s offer, the
last act necessary to form the insurance contract. Thus,
Virginia law applies—unless another state has a more significant
relationship or Virginia’s law contravenes West Virginia public
policy.
B.
Regarding whether another state has a more significant
relationship to the transaction and parties than Virginia, the
West Virginia Supreme Court has looked to the Restatement
(Second) of Conflict of Laws and identified several non-
exclusive factors for courts to consider:
(a) the needs of the interstate and international
systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states
and the relative interests of those states in the
determination of the particular issue,
(d) the protection of justified expectations,
11
(e) the basic policies underlying the particular field
of law,
(f) certainty, predictability and uniformity of
result, and
(g) ease in the determination and application of the
law to be applied.
Triangle, 390 S.E.2d at 567. The West Virginia Supreme Court
placed great emphasis on uniformity and predictability, holding
that
“certainty, predictability and uniformity of result,”
as well as “ease in the determination and application
of the law to be applied” is essential to the
interpretation of an insurance policy when the law is
not otherwise chosen by the parties. Given the
increasingly complex nature of the insurance industry,
we believe that the needs of the “interstate” system
of insurance require that law be applied in the most
uniform and predictable manner possible.
Id. The Court also looked to the parties’ reasonable
expectations, examining whether “the insurance company
demonstrated any reasonable expectation at the time the
contracts were entered into that any litigation over the policy
would be based upon West Virginia law.”
Id.
The West Virginia Supreme Court discussed the significant
relationship prong in Joy Technologies, Inc. v. Liberty Mutual
Insurance Company,
421 S.E.2d 493 (W. Va. 1992). In that case,
a company that cleaned and repaired mining machinery in West
Virginia polluted West Virginia property. The company was sued
for property damage and personal injuries, and the insurer
12
argued that an exclusion applied. Joy, 421 S.E.2d at 493-96.
Crucial to the exclusion issue was what state’s law applied.
The West Virginia Supreme Court recognized the Triangle
precedent and identified factors that weighed in favor of
applying the law of the state of contract formation—
Pennsylvania. Id. at 496. However, the Court ultimately was
persuaded to apply West Virginia law because of the nature of
the suit. The West Virginia Supreme Court’s reasoning focused
on the nature of the suit—toxic pollution—and its close link to
location:
[t]he action in the present case arises out of the
expenditures of monies for remediating damage caused
by pollution to property in West Virginia, and it is
rather clear that the pollution arose from operations
which were conducted in West Virginia and involved a
facility located in West Virginia. Thus, the injury
occurred in West Virginia, the instrumentality of
injury was located in West Virginia, and the forum
selected to try the issues was West Virginia. These
factors suggest that West Virginia has had a very
significant relationship to the transaction and the
parties. In fact, the relationship would appear to be
more substantial than that of Pennsylvania, where the
contract was formed.
Id. at 496-97. For its reasoning, the West Virginia Supreme
Court looked to a New Jersey pollution case, in which the New
Jersey Appellate Division held that New Jersey law controlled a
dispute about insurance “purchased to cover an operation or
activity, wherever its principal location, which generates toxic
wastes that predictably come to rest in New Jersey[.]” Gilbert
13
Spruance Co. v. Pa. Manufacturers’ Ass’n Ins. Co., 603 A.2d 61,
65 (N.J. App. Div. 1992). Similarly, the Joy court decided
against applying Pennsylvania law because Liberty Mutual’s
position regarding the exclusion of coverage would be
“inconsistent with, and contrary to, the public policy of [West
Virginia].”
Id. at 497.
Appellants argue that under Joy, West Virginia law must
apply. Specifically, Appellants claim that, as in Joy, the
location and instrumentality of the injury was in West Virginia
and the forum selected to try the issues was West Virginia. Yet
we find Joy easily distinguishable.
It is hard to imagine cases with stronger local ties than
environmental cases in which toxic pollution has occurred and
local interests in remediation and compensation are paramount.
But environmental harm and pollution are not at issue here.
Rather, this case involves a commercial liability insurance
contract that covers DCI’s construction work in multiple states.
Although the tragic accident in this case occurred in West
Virginia and killed a citizen of that state, the West Virginia
Supreme Court has downplayed the importance of injury location
compared to the place of contract formation. See Nadler v.
Liberty Mut. Fire Ins. Co., 424 S.E.2d 256, 262 (W. Va. 1992);
Lee v. Saliga,
373 S.E.2d 345, 352 (W. Va. 1988); see also Howe
v. Howe,
625 S.E.2d 716, 723 (W. Va. 2005) (affirming the lower
14
court’s finding that Ohio had a more significant relationship to
the parties and transactions because the “only relationship West
Virginia [had] to the parties or transactions at issue [was] the
‘mere fortuity’ that the accident at issue occurred” there);
Johnson v. Neal, 418 S.E.2d 349, 351 (W. Va. 1992) (per curiam)
(“In the present case, the insurance policy was issued in
Virginia by a Virginia company to a Virginia resident. West
Virginia’s relationship to the transaction based on the situs of
the accident and the residence of the uninsured motorist is
minor.”).
In addition, the reasonable expectation of the parties to
the contract must be considered. The parties to the insurance
contract included Bituminous, an Illinois corporation operating
out of a Virginia branch office, DCI, a Virginia corporation
that used Brown, a Virginia insurance agent, to secure the
renewal insurance contract. Although the construction project
and accident were in West Virginia, the centerpiece of this
litigation is the interpretation of the insurance contract,
which was formed in Virginia. Thus, the parties to the contract
reasonably should have expected that Virginia law would apply.
In sum, “certainty, predictability and uniformity of result” and
“ease in the determination and application of the law to be
applied” strongly support the application of Virginia law.
Triangle, 390 S.E.2d at 567. And we agree with the district
15
court that West Virginia did not have a more significant
relationship to the transaction or parties than Virginia.
C.
The third element of the conflict of law analysis requires
the court to determine whether Virginia law is contrary to West
Virginia’s public policy. This Circuit has recognized that West
Virginia’s public policy exception “is necessarily a narrow one,
to be invoked only in extraordinary circumstances.” Yost v.
Travelers Ins. Co., 181 F.3d 95, at *6 (4th Cir. June 21, 1999)
(unpublished but orally argued). The West Virginia Supreme
Court has recognized that “[t]he mere fact that the substantive
law of another jurisdiction differs from or is less favorable
than the law of the forum state does not, by itself, demonstrate
that application of the foreign law under recognized conflict of
laws principles is contrary to the public policy of the forum
state.”
Nadler, 424 S.E.2d at 258 (syllabus pt. 3). The West
Virginia Supreme Court instructed lower courts not to refuse to
apply foreign law “unless the foreign law is contrary to pure
morals or abstract justice, or unless enforcement would be of
evil example and harmful to [West Virginia’s] own people.”
Id.
at 265 (quotation marks omitted).
16
Appellants argue that applying Virginia law would be
contrary to West Virginia’s public policy, and they assert a
variety of policy considerations including: 1) “quickly
determining which insurance is primary,” 2) “encourag[ing] the
resolution of controversies by contracts of compromise and
settlement,” 3) “regulating insurance practices in regard to
West Virginia residents, West Virginia accidents, and how people
in West Virginia are treated;” and 4) “hold[ing] insurers
accountable in a court of law when they wrongfully deny
coverage” and enforcing indemnity agreements. Appellants’ Br.
at 22-24.
Appellants made no public policy arguments before the
district court. J.A. 392 (“[T]he court does not find (nor do
plaintiffs argue) that the law of Virginia is contrary to the
public policy of West Virginia.”). In any event, their
arguments are unavailing. Appellants have not shown how
Virginia’s public policy differs on any of these grounds or how
Virginia’s law is “contrary to pure morals or abstract justice.”
Nadler, 424 S.E.2d at 265 (quotation marks omitted).
Consequently, Appellants have failed to show that we should
depart from the default rule that the contract should be
governed by the laws of Virginia—the state of formation. West
Virginia does not have a more significant relationship to the
transaction, and Virginia law is not contrary to West Virginia
17
public policy. Therefore, we affirm the district court’s choice
of law determination.
IV.
With their next argument, Appellants contend that
Bituminous should be estopped from refusing to defend Mulvey and
McDonald’s in the wrongful death suit because Brown issued
certificates of insurance stating that Mulvey and McDonald’s
were additional insureds on DCI’s policy with Bituminous. We
review the district court’s grant of summary judgment de novo.
FDIC v. Cashion, 720 F.3d 169, 173 (4th Cir. 2013).
Under Virginia law, a party seeking to invoke the doctrine
of estoppel must prove by “clear, precise, and unequivocal
evidence” the following elements:
(1) A material fact was falsely represented or
concealed; (2) The representation or concealment was
made with knowledge of the fact; (3) The party to whom
the representation was made was ignorant of the truth
of the matter; (4) The representation was made with
the intention that the other party should act upon it;
(5) The other party was induced to act upon it; and
(6) The party claiming estoppel was misled to his
injury.
Boykins Narrow Fabrics Corp. v. Weldon Roofing and Sheet Metal,
Inc., 266 S.E.2d 887, 890 (Va. 1980). Crucially, however,
Virginia precedent reflects that estoppel may not be used to
extend the coverage of an insurance contract. Norman v. Ins.
18
Co. of N. Am., 239 S.E.2d 902, 908 (Va. 1978) (“The general
rule, which we approve, is that the coverage of an insurance
contract may not be extended by estoppel or implied waiver to
include risks expressly excluded.”) (quoting Sharp v. Richmond
Life Ins. Co.,
183 S.E.2d 132, 135 (Va. 1971)).
In Norman, the Virginia Supreme Court referred to two
automobile insurance cases where the insurance companies filed a
form stating that “its policy was in force and effect and
covered the driver[s],” but the Virginia Supreme Court found
that these statements “did not estop the company from denying
coverage when in fact there was no coverage.” Id. (citing Va.
Farm Bureau Mut. Ins. Co. v. Saccio,
133 S.E.2d 268 (1963) and
Va. Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co.,
133 S.E.2d
277 (1963)). However, the Virginia Supreme Court has not
squarely addressed whether an insurance company is estopped from
denying coverage in a situation such as this case: where
certificates of insurance have been issued stating that third
parties were added as additional insureds on the policy, but
where the third parties were never actually added to the
underlying insurance policy.
Courts around the country are split regarding whether
insurers can be estopped from denying coverage when a
certificate of insurance that identified a third party as an
additional insured has been issued. Some courts have deemed the
19
insurer estopped from denying coverage. See, e.g., Sumitomo
Marine & Fire Ins. Co. of Am. v. S. Guar. Ins. Co. of Ga., 337
F. Supp. 2d 1339, 1355 (N.D. Ga. 2004); Blackburn, Nickels &
Smith v. Nat’l Farmers Union,
482 N.W.2d 600, 604 (N.D. 1992).
Significantly, West Virginia is one of the states that has held
that “a certificate of insurance is evidence of insurance
coverage” and that
because a certificate of insurance is an insurance
company’s written representation that a policyholder
has certain insurance coverage in effect at the time
the certificate is issued, the insurance company may
be estopped from later denying the existence of that
coverage when the policyholder or the recipient of a
certificate has reasonably relied to their detriment
upon a misrepresentation in the certificate.
Marlin v. Wetzel Cnty. Bd. of Educ., 569 S.E.2d 462, 472-73 (W.
Va. 2002).
Other courts, however, have held that a certificate of
insurance that expressly states that it does not alter the
coverage of the underlying policy will not be deemed to change
the policy. In such states, therefore, a party may not rely on
estoppel to assert that it is covered under the policy. See
e.g., Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882,
889 (10th Cir. 1991); T.H.E. Ins. Co. v. City of Alton,
227 F.3d
802, 806 (7th Cir. 2000); TIG Ins. Co. v. Sedgwick James of
Washington,
184 F. Supp. 2d 591, 597-98 (S.D. Tex. 2001); G.E.
20
Tignall & Co., Inc. v. Reliance Nat. Ins. Co., 102 F. Supp. 2d
300, 304 (D. Md. 2000).
Here, the district court cited Norman in holding that,
under Virginia law, the certificates of insurance could not be
relied upon to establish coverage, particularly given that the
certificates included such a “clear and unambiguous” disclaimer.
J.A. 628. The district court, therefore, concluded that
Bituminous was not estopped from denying coverage.
The certificates of insurance included the direct and
specific disclaimer that the certificates are provided as “A
MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE
CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.” J.A. 44,
259-64. We, like the district court, must conclude that
Virginia would not recognize the use of estoppel to change the
policy in the circumstances of this case. We find instructive
not only Norman, but also Blue Cross and Blue Shield of Virginia
v. Wingfield, 391 S.E.2d 73 (Va. 1990). In that case, the
Virginia Supreme Court directly rejected the plaintiff’s
estoppel claim, which was based on a brochure that the insurance
company sent to him outlining the policy’s benefits. The
brochure included a clear disclaimer that the brochure was not a
contract and that the provisions of the contract governed any
discrepancies.
Wingfield, 391 S.E.2d at 74. The trial court
21
granted Wingfield damages “because of the difference in the
language in the brochure furnished [Wingfield] and that in the
contracts.” Id. (alteration in original) (quotation marks
omitted). The Virginia Supreme Court disagreed, holding that
the trial court’s application of the doctrine of
estoppel, requiring payment of benefits beyond the
limited contractual time, extended coverage to include
risks not covered by the policy. In doing so, the
court erroneously brought “into being a contract of
insurance where there was none.”
Id. at 75 (quoting
Norman, 239 S.E.2d at 908). Guided by the
Virginia Supreme Court’s rulings in Norman and Wingfield, we
hold that the district court did not err in refusing to apply
estoppel to extend this insurance policy’s coverage beyond its
terms.
V.
With their next argument, Appellants claim that summary
judgment was inappropriate because, even if Mulvey was not an
additional insured, Bituminous still had a duty, under the
policy’s insured contract provision, to defend them in the
wrongful death litigation.
Specifically, DCI’s insurance policy states that damages
arising from DCI’s contractual assumption of liability are
excluded. But that exclusion does not apply to liability for
22
damages “[a]ssumed in a contract or agreement that is an
‘insured contract’, . . . .” J.A. 105. The policy defines
insured contract as “[t]hat part of any other contract or
agreement pertaining to your business . . . under which [DCI]
assume[s] the tort liability of another party to pay for ‘bodily
injury’ or ‘property damage’ to a third person or organization.”
J.A. 115. In the subcontract between DCI and Mulvey, DCI agreed
to
indemnify and hold harmless . . . [Mulvey] . . . from
and against all claims, damages, losses and expenses,
including but not limited to attorney’s fees, arising
out of or arising from performance of [DCI’s] Work
under this Agreement, provided such claim . . . is
attributable to bodily injury, sickness, disease or
death[,] or to injury to or destruction of tangible
property . . . including the loss of use resulting
therefrom, to the extent caused in whole or part by
any neglect act or omission of [DCI] . . . regardless
of whether it is caused in part by a party indemnified
hereunder.
J.A. 41. Appellants argue that this provision renders the
subcontract an insured contract because DCI assumed the tort
liability of Mulvey.
Assuming for the sake of argument that the subcontract was
an insured contract, we nevertheless agree with the district
court that the indemnitee, Mulvey, was not entitled to coverage
under the insurance policy because no language added Mulvey as
an additional insured or as a third-party beneficiary.
23
Appellants attempt to rely on Uniwest Construction, Inc. v.
Amtech Elevator Services, Inc., 699 S.E.2d 223 (Va. 2010),
withdrawn in part on reh’g,
714 S.E.2d 560 (Va. 2011). In that
case, a general contractor, Uniwest, engaged subcontractors,
including Amtech, to assist in building renovation work. The
subcontract required Amtech to name Uniwest as an additional
insured under its liability insurance policies.
Id. at 225-26.
The pertinent policy included as an insured “[a]ny person . . .
to whom you are obligated by a written Insured Contract to
provide insurance such as is afforded by this policy but only
with respect to . . . liability arising out of operations
conducted by you or on your behalf . . . .”
Id. at 226.
Amtech’s insurer refused to defend and indemnify Uniwest in a
suit by the estate of a deceased employee and an injured
employee. The Virginia Supreme Court held that the insurer was
required to defend and indemnify Uniwest, not merely because the
subcontract between the parties required Amtech to defend and
indemnify Uniwest. Importantly, the Court found that Amtech’s
policy contained language sufficient to make Uniwest (and any
similarly situated contracting party) an additional insured
under the policy as well.
Id. at 232.
Here, the district court reviewed Uniwest and acknowledged
that, as in Uniwest, the subcontract required DCI to indemnify
Mulvey. However, the district court underscored “the critical
24
difference between the two policies at issue: under [the Uniwest
policy] any person to whom the insured becomes obligated under
an Insured Contract becomes an additional insured . . . . The
Bituminous Policy has no similar provision.” J.A. 713.
Although we must agree with this analysis, we conclude that it
is incomplete.
Notably, the district court did not address the insurance
policy’s Supplementary Payments section. Although that section
does not make Mulvey an additional insured, it states that:
“[i]f [Bituminous] defend[s] an insured against a ‘suit’ and an
indemnitee of the insured is also named as a party to the
‘suit’, we will defend that indemnittee if all of the following
conditions are met[.]” J.A. 110. The requisite conditions
include, among others: “the insured has assumed the liability of
the indemnitee in . . . an ‘insured contract’;” “[t]his
insurance applies to such liability assumed by the insured;”
“the obligation to defend . . . that indemnitee[] has also been
assumed by the insured in the same ‘insured contract[.]’” J.A.
110-11. If these conditions have been met, then Mulvey is
entitled to Bituminous’s defense and the district court’s grant
of summary judgment to Bituminous was in error because the
insurance company would not be entitled to judgment as a matter
of law.
25
Based on the record before us, it appears that at least
some of these conditions may be met. Under these circumstances,
we cannot affirm the district court’s grant of summary judgment
without the benefit of its analysis of a directly relevant
section of the insurance policy. We therefore vacate the
district court’s summary judgment order on the insured contract
theory and remand with specific instructions to the district
court to address whether the requirements of this provision have
been met and whether, specifically taking the provision into
consideration, Bituminous had a duty to defend Mulvey in the
underlying lawsuit.
VI.
Finally, Appellants contend that West Virginia’s, and not
Virginia’s, statute of limitations applies and that the district
court erred by dismissing their third party beneficiary claim on
the basis of Virginia’s shorter statute of limitations period. 3
Appellants contend that the certificates of insurance that Brown
3
Appellants also contend that the district court abused its
discretion by allowing Brown to untimely amend its answer to
include a statute of limitations defense. Appellants’ Br. at
51-52. However, upon close review, we reject the appellants’
claim and find that the district court did not abuse its
discretion when it ruled that appellants had failed to show any
prejudice arising from the district court’s decision to grant
Brown leave to amend its answer. See J.A. 582-87.
26
sent to DCI qualify as a written contract between Brown and DCI
to add Mulvey to the Bituminous policy.
West Virginia has a five-year statute of limitations for
oral contracts and a ten-year statute of limitations for written
contracts. W. Va. Code § 55-2-6. By contrast, Virginia has a
three-year statute of limitations for oral contracts and a five-
year statute of limitations for written contracts. Va. Code §
8.01-246(2), (4).
Notably, however, West Virginia has what is known as a
borrowing statute. It provides that “[t]he period of limitation
applicable to a claim accruing outside of this State shall be
either that prescribed by the law of the place where the claim
accrued or by the law of this State, whichever bars the claim.”
W. Va. Code § 55-2A-2. Appellants’ third-party beneficiary
claim is premised on Brown’s alleged failure to add Mulvey as an
additional insured on DCI’s policy. Appellants have not alleged
that Brown, a Virginia insurance agent, breached an agreement to
add Appellants to the insurance policy in a different state than
where Brown conducts its business, Virginia. By operation of
the borrowing statute, then, Virginia’s shorter statute of
limitations applies here.
The district court deemed any contract between Brown and
DCI to add Mulvey to the Bituminous policy oral and barred by
the statute of limitations. The Virginia Supreme Court has
27
recognized that for a contract to qualify as a written contract
for statute of limitations purposes, the contract “must . . .
show on its face a complete and concluded agreement between the
parties.” Newport News, H. & O. P. Dev. Co. v. Newport News St.
Ry. Co., 32 S.E. 789, 790 (Va. 1899). Here, on their face, the
certificates of insurance do not represent a written contract.
Rather, they state that they were issued for “INFORMATION ONLY”
and specifically “CONFER[RED] NO RIGHTS UPON THE CERTIFICATE
HOLDER.” J.A. 44, 259-64. We agree with the district court
that if there was any contract requiring Brown to obtain
insurance, then it was an oral contract and thus, the three-year
statute of limitations under Virginia law applied.
Further, even assuming for the sake of argument that the
contract was written and that the longer statute of limitations
applied, this claim would still be barred under Virginia law.
Any breach of that contract occurred no later than August 2002
because the final certificate of insurance—the contract
Appellants assert required their being insured by Bituminous—was
issued on August 9, 2002, and yet Appellants were never added to
the insurance. But Appellants did not bring the third-party
beneficiary claim until October 11, 2007—after more than five
years had passed. Under Virginia law, the statute of
limitations accrues on the date of breach, not the date of the
resulting damage is discovered. Va. Code Ann. § 8.01-230
28
(“[T]he right of action shall be deemed to accrue and the
prescribed limitation period shall begin to run from the date
the injury is sustained in the case of injury to the person or
damage to property, when the breach of contract occurs in
actions ex contractu and not when the resulting damage is
discovered[.]”). Thus, the third party beneficiary claim would
be barred by the statute of limitations, even assuming that the
longer, written-contract statute applied.
In response, Appellants argue that Virginia law allows
tolling of the statute of limitation when a defendant misleads a
plaintiff into delayed filing. And indeed, the Virginia Supreme
Court has recognized tolling in the face of affirmative
misrepresentation:
“Mere silence by the person liable is not concealment,
but there must be some affirmative act or
representation designed to prevent, and which does
prevent, the discovery of the cause of action.
Concealment of a cause of action preventing the
running of limitations must consist of some trick or
artifice preventing inquiry, or calculated to hinder a
discovery of the cause of action by the use of
ordinary diligence, and mere silence is insufficient.
There must be something actually said or done which is
directly intended to prevent discovery.”
Newman v. Walker, 618 S.E. 2d 336, 338 (Va. 2005) (quoting
Culpeper Nat’l Bank v. Tidewater Improvement Co.,
89 S.E. 118,
121 (Va. 1916)). But Appellants have failed to show that
Appellees took any affirmative actions to meet this bar.
29
Appellants also argue that Virginia law allows for tolling
“when the failure to procure insurance claim was submitted to
arbitration.” Appellants’ Reply at 27. However, the
arbitration proceedings began in 2006, after the applicable
three-year statute of limitations for oral contracts expired in
August 2005. Thus, Appellants’ statute of limitations arguments
fail, and we affirm the district court’s grant of summary
judgment to Brown on the third-party beneficiary claim.
VII.
For the foregoing reasons, we affirm in part and vacate in
part the judgment of the district court and remand for further
proceedings.
AFFIRMED IN PART
VACATED IN PART AND REMANDED
30
