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The Year in Review: 2006 –2007 Case Law Update for West Virginia

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The Year in Review: 2006 –2007 Case Law Update for West Virginia THE YEAR IN REVIEW: 2006 –2007 CASE LAW UPDATE FOR WEST VIRGINIA Submitted by the Young Lawyers Committee Areas of Law Covered: Civil Procedure Commercial Litigation Deliberate Intent Evidence Insurance Law Labor & Employment Mass Tort/Class Actions Statutes of Limitation Workers’ Compensation Civil Procedure Update Tiffany Swiger Steptoe & Johnson PLLC Sixth Floor, Chase Tower P.O. Box 2190 Clarksburg WV, 26301 (304) 624-8161 –Direct Dial (304) 624-8183 –Facsimile [email protected] State ex rel. W. Va. Dept. of Transp., v. Cookman, 219 W. Va. 601, 639 S.E.2d 693 (2006). Department of Transportation (“DOT”) condemned 48.24 acres of property owned by Respondent Fort Pleasant Farms, Inc. (“Fort Pleasant”) for use in the construction of Corridor H, a highway project. The 48.24 acre tract of property at issue is a portion of a 160 acre tract owned by Fort Pleasant and contains a significant fine, fissel shale deposit. After a commissioners’ hearing was held on December 14, 2005, a report was issued valuing the taking and residue damage at $1,100,600.00. Both parties filed exceptions to the commissioners’ report with the circuit court. Fort Pleasant also filed a motion to compel answers to its discovery requests with the circuit court. The discovery requests included the following two interrogatories: INTERROGATORY NO. 1: Identify each and every expert witness or potential expert witness Petitioner or its counsel have consulted or communicated with in any fashion and/or retained in connection with this case, whether or not Petitioner intends to use or call such persons as a witness, who have not been previously disclosed. INTERROGATORY NO. 2: Have any of the persons identified as expert appraisal witnesses or potential expert appraisal witnesses appraised other properties for the Petitioner of a similar nature (properties having a highest and best use as residential, commercial and/or industrial development properties), which are located within one-half mile of the subject? If so, identify each such person and provide a copy of all appraisal reports as to each of said properties. DOT objected to both interrogatories. The circuit court found that the information sought was relevant, was not unduly burdensome and that it constituted proper discovery. The circuit court ordered DOT to produce copies of all appraisal reports and other evaluations, of or relating to the subject property, prepared for DOT regardless of whether the entities or persons would be made witnesses in the proceeding. Also, the Court ordered production of copies of all appraisal reports and evaluations relating to other properties acquired for the development of Corridor H, which were located within one-half mile of the subject property. The latter category of appraisals included all such appraisals that had been conducted twelve months before or after the date of the taking of the subject property and prepared by those persons who were or may be designated by the DOT as witnesses in the action. DOT filed a petition to the Supreme Court of Appeals of West Virginia for a writ of prohibition, arguing that the circuit court exceeded its legitimate powers and abused its discretion by ordering the production of appraisal reports and other evaluations performed by persons not designated as witnesses in the underlying condemnation case. DOT also contended that the circuit court improperly ordered the production of appraisal reports and evaluations pertaining to other properties. DOT claimed that Fort Pleasant has not satisfied its burden of showing “exceptional circumstances” as is required by Rule 26(b)(4)(B) of the West Virginia Rules of Civil Procedure, to permit the production of materials prepared by consultants and non-testifying experts. DOT maintained that none of the materials were properly discoverable. The West Virginia Supreme Court of Appeals granted the writ of prohibition with regard to both types of information sought by Fort Pleasant, finding that the circuit court failed to address the application of Rule 26(b)(4)(B)’s exceptional circumstance requirement. The Court held that “a circuit court is required, pursuant to Rule 26(b)(4)(B) of the West Virginia Rules of Civil Procedure, to make specific findings regarding the existence of exceptional circumstances justifying the discovery of facts known or opinions held by an expert or consultant who has been retained or specially employed by a party in anticipation of litigation or preparation for trial and who is not expected to be called as a witness at trial before the circuit court may compel such discovery over a party’s objection.” The Court held that to the extent the circuit court compelled the production of appraisal reports and other evaluations prepared by persons who have not been designated as DOT witnesses in the underlying condemnation matter and appraisal reports and evaluations prepared by designated witnesses relative to other properties, the circuit court’s order lacked the appropriate findings to order the disclosure of this information. In granting the writ, the Court recognized that upon the return of the matter to circuit court, Fort Pleasant could renew its motion to compel. If Fort Pleasant chose to do so, the circuit court would be required to hold a hearing and make the appropriate findings regarding the existence of exceptional circumstances. State ex rel. Taylor v. Nibert, 640 S.E.2d 192 (W. Va. 2006). The petitioners were plaintiffs in three separate cases wherein Nationwide was named as a defendant based upon its alleged failure to pay the full amount of uninsured and underinsured motorist coverage benefits due under certain automobile insurance policies. Two of the three cases were filed in Jefferson County and the third case was filed in Marshall County. The petitioners claimed that their cases were transferred from their chosen forums to Roane County, without any prior notice. Moreover, petitioners alleged that their cases were consolidated with twenty other civil actions from around West Virginia into a pending class action by the Circuit Court of Roane County. The Order transferring petitioners cases stated that said cases were transferred and consolidated pursuant to Rule 42(b) of the West Virginia Rules of Civil Procedure for “the purpose of enabling the Settlement Parties to proceed with a settlement of this matter.” On the same day as entry of the Transfer Order, the circuit court also entered a class certification order, which conditionally certified two classes based upon a stipulation between Nationwide and the class representatives. One of the classes contains a punitive damages subclass designated as a mandatory or non-opt-out class pursuant to Rule 23(b)(1)(B) of the West Virginia Rules of Civil Procedure. Petitioners objected to the transfer of their cases. However, said objections were rejected. Subsequently, Petitioners filed a motion to decertify the class action on the grounds that the circuit court had failed to make any findings supporting its class certification and that the mandatory punitive damages subclass failed to meet the requirement of West Virginia Rule Civil Procedure 23(b)(1)(B). The circuit court rejected Petitioners’ argument, stating that its class certification amounted to a “temporary certification” with “no binding effect” and was “geared solely to the limited goal of putting the entirety of this litigation on a proper platform and schedule [for discovery purposes].” The petitioners filed a petition for a writ of prohibition with the West Virginia Supreme Court of Appeals. The petitioners maintain that the transfer was not sanctioned by Rule 42(b) because their cases did not arise from the “same transaction or occurrence” as those cases pending in Roane County. Under Rule 42(b), transfer is required only when two or more actions arise out of the “same transaction or occurrence.” Previously, the West Virginia Supreme Court of Appeals held that “claims and counterclaims arise out of the same ‘transaction or occurrence’ where there is a logical relationship between the claim and the counterclaim.” Never having defined “logical relationship,” the Court looked to other states who have adopted this same test. There, it found the following test for determining whether a logical relationship exists between two or more actions so as to require transfer under Rule 42(b): [A] claim has a logical relationship to the original claim if it arises out of the same aggregate of operative facts as the original claim in two senses: (1) that the same aggregate of operative facts serves as the basis of both claims; or (2) that the aggregate core of facts upon which the original claim rests activates additional legal rights in a party defendant that would otherwise remain dormant. Id. (citing Revere Copper & Brass Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709, 715 (5th Cir. 1970); In re Lazar, 237 F.3d 967, 979 (9th Cir. 2001)). Utilizing the “logical relationship test,” the Court concluded that the cases were not logically related such that it could be said that they arose out the same transaction or occurrence. The Court noted that they were “mindful of the fact that all of the plaintiffs have claims for uninsured or underinsured motorist coverage and all received either or both of the 1993 and 1999 mailings offering such coverages;”however, the mere fact that all of the plaintiffs received the mailings was not a sufficient basis, by itself, for mandatory transfer. The Court recognized that common questions of law could arise “regarding whether Nationwide made commercially reasonable offers of uninsured and underinsured motorists coverage to insureds such as the petitioners,” the Court held that such inquiries alone could not be the basis for transfer under Rule 42(b). Moreover, the West Virginia Supreme Court of Appeals held that the decision to transfer the cases, without first giving petitioners an opportunity to object, was unfair and contrary to the purpose of Rule 42(b).
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