Filed: Nov. 12, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1343 ROBIN J. YORK, Administratix of the Estate of Adam R. York, Plaintiff – Appellant, v. PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD, Defendant – Appellee, and JOSHUA MILLER; JOHN J. MILLER; MYRA MILLER; PAUL HOWARD, JR., Defendants. Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. Joseph R. Goodwin, District Judge. (2:12-cv-006582) Submitted: October 15, 2014
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1343 ROBIN J. YORK, Administratix of the Estate of Adam R. York, Plaintiff – Appellant, v. PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD, Defendant – Appellee, and JOSHUA MILLER; JOHN J. MILLER; MYRA MILLER; PAUL HOWARD, JR., Defendants. Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. Joseph R. Goodwin, District Judge. (2:12-cv-006582) Submitted: October 15, 2014 ..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1343
ROBIN J. YORK, Administratix of the Estate of Adam R. York,
Plaintiff – Appellant,
v.
PROPERTY AND CASUALTY INSURANCE COMPANY OF HARTFORD,
Defendant – Appellee,
and
JOSHUA MILLER; JOHN J. MILLER; MYRA MILLER; PAUL HOWARD,
JR.,
Defendants.
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Joseph R. Goodwin,
District Judge. (2:12-cv-006582)
Submitted: October 15, 2014 Decided: November 12, 2014
Before MOTZ, DUNCAN, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
James Graham Bordas, III, Michelle Lee Marinacci, BORDAS &
BORDAS, PLLC, Wheeling, West Virginia; C. Benjamin Salango,
PRESTON & SALANGO, Charleston, West Virginia, for Appellant.
Michael H. Carpenter, Katheryn M. Lloyd, CARPENTER LIPPS &
LELAND LLP, Columbus, Ohio; Catherine M. Stetson, Sean Marotta,
HOGAN LOVELLS US LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Robin York (York), as administrator of the estate of
her son, Adam York (Adam), appeals orders of the district court
denying York’s motion to remand this action to state court, and
granting defendant Property & Casualty Insurance Company of
Hartford’s (Hartford) motions for relief from default judgment
under Fed. R. Civ. P. 60(b) and for summary judgment. York’s
suit alleged that Hartford violated a provision of the West
Virginia Unfair Trade Practices Act (WVUTPA), W. Va. Code
§ 33-11-4(9), and engaged in common law bad-faith claim
handling, in the manner in which it investigated, litigated, and
eventually settled a claim York asserted under her policy
against Hartford. The district court held that (1) Hartford’s
removal was timely; (2) Hartford was entitled to relief from
judgment because its default was the result of excusable neglect
and it possessed a meritorious defense; (3) Kentucky law, rather
than West Virginia law, governed the dispute; and (4) under
Kentucky law, York’s action was untenable. We affirm the
judgment of the district court.
I.
Adam York died in a single-vehicle automobile accident
on October 13, 2011, in Mingo County, West Virginia. Adam was a
passenger in the vehicle driven by Joshua Miller.
3
Like his parents, Adam was a Kentucky resident. Adam
was insured through his parents’ policy with Hartford, 1 which
featured a $100,000 underinsured/uninsured motorist (UIM)
benefit. Soon after the accident, York, through West Virginia
counsel, notified Hartford of the accident and of York’s suit
for damages against Miller and his insurer in West Virginia
state court. Hartford assigned the claim to an adjuster located
at one of its offices in Indiana.
In January 2012, York informed Hartford that Miller’s
insurer had offered to settle her claim for its policy limits,
in exchange for a waiver of Hartford’s subrogation rights.
After two months in which York and Hartford each apparently
waited for the other to act, York amended her complaint and
added a UIM claim against Hartford, seeking the $100,000 policy
limit. Although York properly served Hartford, the complaint
was misfiled due to an internal clerical error, and Hartford
failed to answer.
York moved for default. At the same time, Hartford’s
adjuster continued to converse with York’s counsel in regard to
York’s claim against Miller. During these conversations, York’s
1
Hartford is an Indiana corporation, whose principal place
of business is in Connecticut.
4
counsel never mentioned Hartford’s failure to answer or York’s
pending motion for default.
On June 11, 2012, Hartford offered to settle York’s
claim for the $100,000 policy limit, but received no response.
The next day, York’s counsel appeared in state court, default
was entered against Hartford, and a hearing on damages was set
for the next month.
In late July, York served Hartford with a packet of
materials, including notice of a hearing to approve the
settlement between York and Miller, a verified petition to
approve the settlement, a notice of a hearing on “a writ of
inquiry in accordance with W. Va. R. Civ. P. 55(b)(2),” and one
certificate of service. The latter notice of hearing was
intended to apprise Hartford both of the fact that default had
been entered against it, and of the upcoming hearing for default
judgment. But other than Hartford’s name, which was on the
caption of each page, and the cross-reference to “W. Va. R. Civ.
P. 55(b)(2),” which establishes the procedure by which judgment
by default may be entered, there was nothing to indicate the
upcoming hearing pertained to a default judgment against
Hartford. Although in receipt of York’s packet, Hartford’s
adjuster failed to recognize the significance of the notice of
hearing, and Hartford failed to appear.
5
On August 6, the state court entered default judgment
against Hartford for over $4 million, for wrongful death damages
less the $100,000 paid by Miller’s insurer. The court then
dismissed the Millers as parties and granted York permission to
amend its complaint to file additional claims against Hartford.
On September 24, 2012, Hartford received York’s
amended complaint, which sought damages for extra-contractual,
common law bad-faith claim handling, and statutory unfair trade
practices claims. On October 12, Hartford removed the case on
the basis of diversity jurisdiction.
In federal Court, York moved to remand, alleging that
Hartford’s removal was untimely, and Hartford moved to vacate
the state court’s default judgment. In a memorandum opinion
addressing both motions, the court denied York’s motion to
remand and granted Hartford’s motion to vacate. The court first
explained that Hartford’s removal was timely, as it occurred
within thirty days of the date Hartford first received notice
that the case was removable -- namely, when Hartford received
York’s amended complaint. The court then held that relief from
the state court’s judgment was proper because Hartford’s default
was the product of excusable neglect (the clerical error in
misfiling) and Hartford had a meritorious defense to the
underlying claim (that the damages exceeded the amount demanded
in the complaint).
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York then amended her complaint a second time, re-
asserting the UIM claim. Shortly thereafter, however, York and
Hartford settled this claim for the $100,000 policy limit.
After discovery, Hartford moved for summary judgment
on York’s remaining claims. In a memorandum opinion addressing
the motion, the court held that under either the lex loci
delicti choice of law test or the Second Restatement’s “Most
Significant Relationship” test, Kentucky law applied. The court
then noted that Kentucky law imposes a particularly high
evidentiary threshold for common law bad-faith claims against
insurers, and granted summary judgment to Hartford because York
had failed to make the requisite showing. York now appeals.
II.
The standard of review on a motion to remand is de
novo. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 815-16 (4th
Cir. 2004) (en banc). The burden of establishing jurisdiction
rests with the party seeking removal, and removal jurisdiction
is strictly construed; thus, “if federal jurisdiction is
doubtful, a remand to state court is necessary.”
Id. at 816
(internal alterations omitted).
A notice of removal must be filed within thirty days
“after receipt by the defendant, through service or otherwise,
of a copy of an amended pleading, motion, order or other paper
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from which it may first be ascertained that the case is one
which is or has become removable.” 28 U.S.C. § 1446(b)(3)
(2012). This thirty-day clock does not begin to run until
“receipt by the defendant” of some indicia of removability. See
Lovern v. General Motors Corp., 121 F.3d 160, 162 (4th Cir.
1997) (“[O]nly where an initial pleading reveals a ground for
removal will the defendant be bound to file a notice of removal
within 30 days.”).
In this case, Hartford did not receive a “motion,
order or other paper” from which it could have “ascertained”
that the case was removable until September 24, when it received
York’s amended complaint.
York contends that the state court’s oral dismissal of
the Millers was sufficient to constitute notice. Cf.
Yarnevic v. Brink’s, Inc., 102 F.3d 753, 755 (4th Cir. 1996)
(noting that 1446(b)’s “‘motion, order or other paper’
requirement is broad enough to include any information received
by the defendant, whether communicated in a formal or informal
manner” (internal quotation omitted)). But Hartford was not
present at that hearing and therefore could not have received
such notice, as is required to start the clock under § 1446(b).
We thus conclude that the district court properly denied York’s
motion to remand.
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III.
We review for abuse of discretion an order vacating a
default judgment under Fed. R. Civ. P. 60(b). MLC Auto., LLC v.
Town of S. Pines, 532 F.3d 269, 277 (4th Cir. 2008). Rule 60(b)
is to be “liberally construed in order to provide relief from
the onerous consequences of defaults and default judgments.”
Tolson v. Hodge,
411 F.2d 123, 130 (4th Cir. 1969).
Accordingly, “[a]ny doubts about whether relief should be
granted should be resolved in favor of setting aside the default
so that the case may be heard on the merits.”
Id.
To obtain relief from a default judgment under Rule
60(b), Hartford must demonstrate that (1) it defaulted for a
reason valid under Rule 60(b)(1)-(5), (2) it timely moved to set
aside the judgment, (3) relief will not result in unfair
prejudice to York, and (4) it has a meritorious defense to the
underlying action. See Augusta Fiberglass Coatings, Inc. v.
Fodor Contracting Corp.,
843 F.2d 808, 811-12 (4th Cir. 1988)
(per curiam).
We have reviewed the record and conclude that the
district court did not abuse its discretion in granting Hartford
relief from the state court judgment. Hartford timely filed for
relief, York suffered no unfair prejudice, the default was the
product of an excusable clerical error, and Hartford has a
meritorious defense -- namely, that the state court’s judgment
9
was greater than the amount York demanded in her complaint and
thus, in violation of W. Va. R. Civ. P. 54(c). We thus conclude
the district court properly granted Hartford’s motion to vacate
the state court judgment.
IV.
We review the district court’s grant of summary
judgment de novo, drawing reasonable inferences in the light
most favorable to the non-moving party. Dulaney v. Packaging
Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012). A moving party
is entitled to summary judgment if the evidence shows no genuine
issue of material fact and that such party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). “Only
disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude the entry of
summary judgment.” Anderson v. Liberty Lobby, Inc.,
477 U.S.
242, 248 (1986). To withstand a motion for summary judgment,
the non-moving party must produce competent evidence of a
genuine issue of material fact for trial. See Thompson v.
Potomac Elec. Power Co.,
312 F.3d 645, 649 (4th Cir. 2002)
(“Conclusory or speculative allegations do not suffice, nor does
a mere scintilla of evidence in support of [the non-moving
party’s] case.” (internal quotation marks omitted)).
10
Where federal jurisdiction depends on diversity of
citizenship, as it does here, “the applicable law must be
determined by the choice of law rules of the forum state.”
Brendle v. General Tire & Rubber Co., 408 F.2d 116, 116 (4th
Cir. 1969) (citing Klaxon Co. v. Stentor Mfg. Co.,
313 U.S. 487
(1941)). Thus, West Virginia’s choice of law rules apply here.
York’s claims sound in tort. See Noland v. Virginia
Ins. Reciprocal, 686 S.E.2d 23, 33-34 (W. Va. 2009) (holding
that both statutory claims for unfair insurance settlement
practices and common law claims for bad faith claims handling
are torts). Therein, “West Virginia traditionally applies the
lex loci delicti approach . . . but has in certain circumstances
shown a willingness to apply the Restatement approach to resolve
particularly thorny conflicts problems.” Kenney v. Indep. Order
of Foresters,
744 F.3d 901, 907 (4th Cir. 2014) (internal
quotation marks omitted). We “need not determine which approach
West Virginia courts would apply here,”
id. at 907-08, because,
having reviewed the relevant authority, we agree with the
district court’s conclusion that Kentucky law applies under
either approach.
Because Kentucky law applies, York has no cause of
action under the WVUTPA, and the district court properly granted
summary judgment to Hartford on that claim. For York’s
remaining common law bad-faith claim, Kentucky law requires York
11
to prove that Hartford (1) is “obligated to pay the claim under
the terms of the policy”; (2) lacked “a reasonable basis in law
or fact for denying the claim”; and (3) “either knew there was
no reasonable basis for denying the claim or acted with reckless
disregard for whether such a basis existed.” Wittmer v. Jones,
864 S.W.2d 885, 890 (Ky. 1993) (citation omitted). Altogether,
York must show that Hartford’s conduct was “outrageous, because
of an evil motive or reckless indifference to his rights. . . .
[M]ere delay in payment does not amount to outrageous conduct
absent some affirmative act of harassment or deception.”
Motorists Mut. Ins. Co. v. Glass,
996 S.W.2d 437, 452 (Ky.
1997).
We have reviewed the record and conclude that York has
not shown the requisite bad faith. The district court therefore
properly granted Hartford’s motion for summary judgment.
V.
For the foregoing reasons, the judgment of the
district court is affirmed. We dispense with oral argument
because the facts and legal contentions are adequately presented
in the materials before the court and argument would not aid the
decisional process.
AFFIRMED
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