DAVIS, Justice:
In this appeal from an order imposing monetary sanctions against petitioners Joseph Casaccio (hereinafter referred to as "Mr. Casaccio") and National Indemnity Company (hereinafter referred to as "National Indemnity"), this Court is asked to determine whether West Virginia Trial Court Rule 25.10 permits a circuit court to impose sanctions upon the insurance carrier for an insured party when the insurance carrier fails, without good cause, to appear at court-ordered mediation through the presence of a representative who has full decision-making discretion to examine and resolve issues and make decisions in connection with the mediation. We find that West Virginia Trial Court Rule 25.10 does authorize a trial court to sanction such an insurance carrier; however, because we find no sanctionable conduct occurred in this case, we reverse the circuit court's order imposing sanctions.
The events giving rise to the lawsuit that ultimately led to the sanctions at issue herein occurred on May 30, 2003, when Charles E. Curtiss, Norma Lee Curtiss, and Mary Lynn Curtiss were killed in a vehicular accident on I-64 East at the Lee Street exit in Charleston, West Virginia. On May 26, 2005, Harold A. Curtiss, in his capacity as Executor of the estates of his parents and sister who were killed in the aforementioned accident (hereinafter referred to as "the Plaintiffs"), filed a wrongful death action against John Tanner and Hartley Trucking Company, Inc. Hartley Trucking was bankrupt, but insurance coverage for the accident was available through a policy issued to Hartley Trucking by Converium.
On March 2, 2006, the circuit court ordered the parties to complete mediation in this case by November 17, 2006. The trial was scheduled for December 3, 2006. The first mediation in this case was held on November 10, 2006. Ms. Jo Knapp, an employee of a third-party administrator, appeared at the mediation as the designated representative of Converium.
Prior to the mediation, on October 16, 2006, Converium entered into a "Stock Purchase Agreement" with National Indemnity whereby National Indemnity agreed to purchase all or certain portions of Converium. The agreement contained the following clause that is relevant to the instant matter, which effectively limited Converium's settlement authority to amounts less than $500,000:
No representative of National Indemnity appeared at the mediation. Notwithstanding the forgoing agreement limiting Converium's unilateral authority to settle actions to amounts less than $500,000, which had not been communicated to the Plaintiffs or to the mediator, Ms. Knapp made an unqualified offer of $700,000 to settle the case. This offer was rejected. Ultimately, Ms. Knapp agreed to recommend and seek approval for a settlement in the amount of $900,000, and the Plaintiffs agreed to accept $900,000 to settle all claims. At the conclusion of the mediation session, Ms. Knapp, for the first time, revealed that the proposed settlement could not be consummated without approval from National Indemnity. Mr. Curtiss relates that Ms. Knapp then promised the Plaintiffs' counsel and the mediator that the Plaintiffs' acceptance of the $900,000 offer would not be used as bargaining leverage against them if National Indemnity refused to settle the case. National Indemnity refused to consent to the $900,000 settlement. In the week following the mediation, Converium reduced its settlement offer to $350,000
The circuit court then ordered the parties to try again to mediate this case on November 27, 2006, and instructed the mediator to inform the parties that certain individuals were to attend the mediation, including a representative of National Indemnity. Mr. Casaccio was National Indemnity's designated representative to attend this mediation. Mr. Casaccio did not appear at the November 27th mediation, claiming that he missed a connecting flight. Nevertheless, Mr. Casaccio participated in the November 27th mediation by phone. The circuit court scheduled a third mediation for November 28, 2006, and again required Mr. Casaccio's presence. Mr. Casaccio attended the November 28th mediation, which took place in Judge Zakaib's chambers, and the case was settled for $850,000.
On December 13, 2006, the circuit court held a summary proceeding and ratified the settlement and proposed distribution of the settlement proceeds. During this proceeding, the circuit court sua sponte instructed the parties that it was setting for hearing the issue of whether the conduct of Mr. Casaccio or National Indemnity warranted sanctions under either West Virginia Trial Court Rule 25.10 or the inherent powers of the circuit court.
On December 28, 2006, the circuit court entered an "Order Scheduling Sanctions Hearing on February 7, 2007," which set a hearing date and briefing schedule on the issue of whether the conduct of Mr. Casaccio and/or National Indemnity Company warranted sanctions. Mr. Casaccio and National Indemnity then filed a "Motion to Dismiss for Lack of Jurisdiction; Motion for Due Process Identification of Alleged Wrongful
At a hearing on May 15, 2008, the circuit court took evidence and heard oral argument on the issue of sanctions. On August 22, 2008, the circuit court entered its first sanction order, titled "Plaintiffs' Proposed Findings of Fact, Conclusions of Law and Order Awarding Sanctions." The order awarded the Plaintiffs $50,000 as the difference between the $900,000 settlement to which they initially agreed and the $850,000 for which the case ultimately settled; $25,000 as compensation for injuries caused by Mr. Casaccio's and National Indemnity's conduct; $150,000 to punish Mr. Casaccio and National Indemnity; and attorney's fees expended by the Plaintiffs from the date of the first court-ordered mediation, November 10, 2006, through the date of the entry of the order imposing sanctions. The Plaintiffs were directed to submit an affidavit setting forth their attorney's fees.
On August 29, 2008, the Plaintiffs submitted their attorney's fees and expenses to the circuit court claiming they amounted to $115,279.78. Mr. Casaccio and National Indemnity opposed the attorney's fees. In addition, in November 2008, Mr. Casaccio and National Indemnity filed a motion asking the court to reconsider its August 22, 2008, order.
There was apparently no activity in the case for fifteen months until, on February 22, 2010, the circuit court entered an "Order Regarding Attorney Fees & Expenses," in which it ruled that the Plaintiffs were entitled to an award of attorney's fees and costs in the sum of $48,821.79. It is undisputed that, due to an apparent clerical error, Mr. Casaccio and National Indemnity did not receive a copy of the February 22, 2010, order from the circuit court. Mr. Casaccio and National Indemnity assert that they did not become aware of the February 22, 2010, order until July 2, 2010, when they were contacted by the Plaintiffs' counsel and advised that he intended to execute on the judgments.
On Tuesday, July 6, 2010, Mr. Casaccio and National Indemnity advised the circuit court of their failure to receive notice of the February 22, 2010, order. In addition, Mr. Casaccio and National Indemnity presented to the court a proposed "Order Staying Execution of Judgment," which not only stayed execution of the August 22, 2008, and February 22, 2010, orders, but also vacated and re-entered the February 22, 2010, order. The circuit court entered Mr. Casaccio and National Indemnity's proposed order on July 6, 2010.
Mr. Casaccio and National Indemnity then filed a "Motion for Clarification of Rulings and Entry of Final Order." The motion was heard by the circuit court on October 22, 2010. The circuit court made no ruling at the hearing. Subsequently, on October 29, 2010, the circuit court entered its "Order Clarifying this Court's Prior Orders and Denying Mr. Casaccio and National Indemnity's Objections." This order was prepared by the Plaintiffs' counsel and was not presented to counsel for Mr. Casaccio and National Indemnity. The order purports to make the appeal period for the February 22, 2010, order begin to run on July 2, 2010, the date on which Mr. Casaccio and National Indemnity became aware of the order. The October 29, 2010, order was entered notwithstanding the fact that the February 22, 2010, order had previously been vacated and re-entered on July 6, 2010. The October 29, 2010, order was apparently not mailed to Mr. Casaccio and National Indemnity until November 3, 2010, and was received by them on November 4, 2010. This appeal was filed on November 5, 2010.
It is well established that "[t]his Court reviews the circuit court's final order and ultimate disposition under an abuse of
Mr. Casaccio and National Indemnity have raised numerous issues on appeal. However, this case may be resolved by addressing only two of those issues: (1) whether West Virginia Trial Court Rule 25.10 authorizes a circuit court to impose sanctions on the representative of an insurance company who fails to attend mediation, and (2) whether there was sanctionable conduct in this case. We will address each of these issues in turn.
The first issue that must be addressed in this appeal is whether Trial Court Rule 25.10 permits a circuit court to impose sanctions on a non-party insurance representative who has failed to attend court-ordered mediation. Rule 25.10 provides:
(Emphasis added).
To establish the proper manner in which we analyze the foregoing rule, we note that many appellate courts have recognized, and we now specifically hold, that court rules are interpreted using the same principles and canons of construction that govern the interpretation of statutes. See State v. Petty, 225 Ariz. 369, 372, 238 P.3d 637, 640 (Ct.App. 2010) ("In interpreting rules, we apply the same principles we use in interpreting statutes."); State v. Stites, 300 S.W.3d 103, 107 (2009) ("We construe court rules using the same means and canons of construction used to interpret statutes."); Timothy Whelan Law Assocs., Ltd. v. Kruppe, 409 Ill.App.3d 359,
The plain language of Rule 25.10 instructs that, if furnished reasonable notice, certain "persons" must appear at a court-ordered mediation session. (Emphasis added). Among those persons required to appear at a mediation session are "(1) each party or the party's representative having full decision-making discretion to examine and resolve issues; (2) each party's counsel of record; and (3) a representative of the insurance carrier for any insured party, which representative has full decision-making discretion to examine and resolve issues and make decisions." Rule 25.10.
The use of the term "persons" to introduce the list of those who may be required to attend mediation clearly indicates that some individuals whose attendance may be required at mediation will not be parties to the underlying lawsuit. Indeed, those "persons" are subsequently identified as a "party's representative," a "party's counsel," and "a representative of the insurance carrier for any insured party." These phrases demonstrate that the term "party" as used in Rule 25.10 is intended to mean a party in the legal sense, as in a plaintiff or defendant. This usage of the term "party" is further demonstrated by the plain language of the sentence setting out the consequences for the failure of a required person to appear at the mediation without good cause or without the requisite decision-making discretion. This language identifies four distinct individuals whose unauthorized absence may lead to sanctions: "[i]f a party or its representative, counsel, or insurance carrier fails to appear at the mediation session without good cause or appears without decision-making discretion, the court sua sponte or upon motion may impose sanctions ... against the responsible party." Rule 25.10 (emphasis added). Notably, while the rule identifies four distinct persons whose unauthorized absence may lead to sanctions, Rule 25.10 permits the court to impose sanctions only against "the responsible party." (Emphasis added). Thus, Rule 25.10, on its face, fails to authorize sanctions against a non-party insurance carrier.
However, a California court faced with a similar rule has concluded that, for the purposes of its mediation rule, an insurer is considered to be a party to the mediation. Campagnone v. Enjoyable Pools & Spas Service & Repairs, Inc., 163 Cal.App.4th 566, 77 Cal.Rptr.3d 551 (2008).
The Campagnone court acknowledged the important functions that mediation serves in the judicial system as a prelude to its decision of that case. Successful mediation saves substantial time and expense in resolving disputes, allows the parties to achieve a result acceptable to each, avoids prolonged litigation, and preserves court resources that can then be directed to other cases. Campagnone, 163 Cal.App.4th at 569, 77 Cal. Rptr.3d at 553. However,
Id., 163 Cal.App.4th at 569, 77 Cal.Rptr.3d at 553 (emphasis added).
The merits of the Campagnone case required the court to address a local court rule pertaining to court-ordered mediation of certain cases on appeal. After a jury awarded a multi-million dollar verdict to the plaintiffs in a personal injury action, the defendants, including Enjoyable Pools & Spas Service & Repairs, Inc., appealed. The appellate court ordered appellate mediation. Under a local rule, an excess insurer was required to attend the mediation. The rule stated, in relevant part, that
Campagnone, 163 Cal.App.4th at 570, 77 Cal. Rptr.3d at 553. The excess insurer failed to comply with the rule, and the plaintiffs filed a motion for sanctions against, inter alia, the excess insurer. The court observed that "[f]ailure to comply with this rule can doom... mediation, thus undermining the beneficial purposes of the mediation process and wasting the time of all involved in the mediation." Campagnone, 163 Cal.App.4th at 570, 77 Cal.Rptr.3d at 553. The court went on to reason that
Campagnone, 163 Cal.App.4th at 570, 77 Cal. Rptr.3d at 553-54. The Campagnone court then concluded that,
Id., 163 Cal.App.4th at 570-71, 77 Cal. Rptr.3d at 554 (emphasis added). Accordingly,
163 Cal.App.4th at 573-74, 77 Cal.Rptr.3d at 556.
In view of the foregoing discussion, we now hold that, for purposes of West Virginia Trial Court Rule 25.10, the insurance carrier for an insured party is considered a party to court-ordered mediation and, thus, may be sanctioned by a trial court for its unauthorized failure to participate in said mediation through the presence of a representative who has full decision-making discretion to examine and resolve issues and make decisions in connection with the mediation.
Having determined that West Virginia Trial Court Rule 25.10 authorized the lower court to impose sanctions on an insurer, we now must consider the particular facts of this case to determine if the sanctions were warranted.
To determine whether there was a factual basis for the circuit court to impose sanctions in this case, we must examine the court's order to ascertain the specific conduct for which sanctions were imposed. In this regard, we observe that the circuit court's order is less than a model of clarity. Furthermore, several of the grounds for imposing sanctions involved the alleged egregiously deceptive conduct of Ms. Knapp and Converium in misleading the Plaintiffs with regard to Ms. Knapp's lack of full decision-making authority to resolve the case. Inexplicably, however, no sanctions were requested or imposed upon Ms. Knapp or Converium.
A careful reading of the circuit court's order in which the sanctions were imposed reveals that three separate grounds were asserted as a basis for sanctions against Mr. Casaccio and National Indemnity: (1) National Indemnity's failure to attend the mediation held on November 10, 2006; (2) National Indemnity's direction to Converium to offer the Plaintiffs $350,000 to settle the case after an earlier offer of $700,000 (made by Ms. Knapp) had been rejected; and (3) National Indemnity's failure to attend the second mediation, which was held on November 27, 2006. We will examine each of these grounds.
First, we find that National Indemnity's failure to attend the mediation held on November 10, 2006, was not sanctionable. Pursuant to Rule 25.10, certain designated individuals, which include "a representative of the insurance carrier for any insured party," are required to attend mediation only if "furnished reasonable notice." The uncontroverted evidence in the record of this case indicates that National Indemnity received no notification of the November 10, 2006, mediation. In the absence of reasonable notice, National Indemnity's failure to attend that mediation is not sanctionable.
The circuit court's second ground for imposing sanctions under Rule 25.10 was National
The circuit court's final ground for imposing sanctions was Mr. Casaccio's failure to attend the mediation session held on November 27, 2006. As we previously noted, Rule 25.10 requires the presence at mediation of "a representative of the insurance carrier for any insured party" only when such person is "furnished reasonable notice." According to the evidence in this case, the mediator's letter communicating the circuit court's order that National Indemnity attend mediation to be held on Monday, November 27, 2006, was dated November 19, 2006, which was a Sunday. While the letter indicates that it was transmitted via facsimile and U.S. Mail, the body of the letter reflects that the mediator had no contact information for National Indemnity, did not actually know the identity of National Indemnity,
For the reasons set out in the body of this opinion, the order of the Circuit Court of Kanawha County imposing sanctions upon Mr. Joseph Casaccio and National Indemnity Company for violations of West Virginia Trial Court Rule 25.10 is reversed.
Reversed.
Justice McHUGH, deeming himself disqualified, did not participate in the decision of this matter.
Judge ALSOP, sitting by temporary assignment.