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    1) Deborah Shepherd brought a lawsuit against Quality Insurance and State Farm to determine which insurance policy would cover damages from a car accident that killed Robert Shepherd. 2) The district court found that Quality Insurance had primary coverage under a policy it had issued to Robert Humphreys, the owner of the car involved. However, the appellate court reversed, finding that Humphreys' Quality Insurance policy had expired before the accident according to its own three-month terms. 3) West Virginia law requires notice of cancellation or non-renewal of policies, but not for expiration at the end of the policy term, which was the case here since Humphreys did not pay the premium due. Therefore, the Quality policy was

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    United States Court of Appeals, Fourth Circuit

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    1) Deborah Shepherd brought a lawsuit against Quality Insurance and State Farm to determine which insurance policy would cover damages from a car accident that killed Robert Shepherd. 2) The district court found that Quality Insurance had primary coverage under a policy it had issued to Robert Humphreys, the owner of the car involved. However, the appellate court reversed, finding that Humphreys' Quality Insurance policy had expired before the accident according to its own three-month terms. 3) West Virginia law requires notice of cancellation or non-renewal of policies, but not for expiration at the end of the policy term, which was the case here since Humphreys did not pay the premium due. Therefore, the Quality policy was

    Original Description:

    Filed: 1987-03-04 Precedential Status: Non-Precedential Citations: 813 F.2d 1228 Docket: 86-1096

    Original Title

    Deborah Shepherd, Administratrix of the Estate of Robert J. Shepherd, Deceased v. Quality Insurance Co., a Corporation, Organized and Existing Under the Laws of the State of West Virginia State Farm Mutual Automobile Insurance Company, a Mutual Insurance Company Organized and Existing Under the Laws of the State of Illinois, Defendant- and Lucille Ramey Robert A. Humphreys: Cleo McKinney, 813 F.2d 1228, 4th Cir. (1987)

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    1) Deborah Shepherd brought a lawsuit against Quality Insurance and State Farm to determine which insurance policy would cover damages from a car accident that killed Robert Shepherd. 2) The district court found that Quality Insurance had primary coverage under a policy it had issued to Robert Humphreys, the owner of the car involved. However, the appellate court reversed, finding that Humphreys' Quality Insurance policy had expired before the accident according to its own three-month terms. 3) West Virginia law requires notice of cancellation or non-renewal of policies, but not for expiration at the end of the policy term, which was the case here since Humphreys did not pay the premium due. Therefore, the Quality policy was

    Copyright:

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    28 views5 pages

    United States Court of Appeals, Fourth Circuit

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    1) Deborah Shepherd brought a lawsuit against Quality Insurance and State Farm to determine which insurance policy would cover damages from a car accident that killed Robert Shepherd. 2) The district court found that Quality Insurance had primary coverage under a policy it had issued to Robert Humphreys, the owner of the car involved. However, the appellate court reversed, finding that Humphreys' Quality Insurance policy had expired before the accident according to its own three-month terms. 3) West Virginia law requires notice of cancellation or non-renewal of policies, but not for expiration at the end of the policy term, which was the case here since Humphreys did not pay the premium due. Therefore, the Quality policy was

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    of 5

    813 F.

    2d 1228
    Unpublished Disposition

    NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of


    unpublished dispositions is disfavored except for establishing
    res judicata, estoppel, or the law of the case and requires
    service of copies of cited unpublished dispositions of the Fourth
    Circuit.
    Deborah SHEPHERD, Administratrix of the Estate of Robert
    J.
    Shepherd, deceased, Plaintiff-Appellee,
    v.
    QUALITY INSURANCE CO., a corporation, organized and
    existing
    under the laws of the State of West Virginia;
    Defendant-Appellant,
    State Farm Mutual Automobile Insurance Company, a mutual
    insurance company organized and existing under the
    laws of the State of Illinois, Defendant- Appellee,
    and
    Lucille Ramey; Robert A. Humphreys: Cleo McKinney,
    Defendants.
    No. 86-1096.

    United States Court of Appeals, Fourth Circuit.


    Argued Nov. 11, 1986.
    Decided March 4, 1987.

    Before CHAPMAN and WILKINSON, Circuit Judges, and BOYLE,


    United States District Judge for the Eastern District of North Carolina,
    sitting by designation.
    Robert Glenn Steele (J. Greg Goodykoontz; Steptoe & Johnson, on brief),
    for appellant.
    William C. Garrett (Garrett, Garrett & Van Nostrand; Kenneth R. Miller;

    Debra K. Hodges; Furbee, Amos, Webb & Critchfield, on brief), for


    appellees.
    PER CURIAM:

    Deborah Shepherd, Administratrix of the Estate of Robert J. Shepherd,


    originally brought this action for declaratory judgment against Quality
    Insurance Company (Quality), State Farm Mutual Automobile Insurance
    Company (State Farm), Lucille Ramey, Robert A. Humphreys, and Cleo
    McKinney to ascertain the various rights and duties of the parties, particularly
    whether one or more of the insurance policies issued by the defendant
    insurance companies would be liable to pay damages to Shepherd for an
    accident which caused the death of Robert J. Shepherd on October 30, 1982.
    Following a bench trial, the district court found that a policy issued by Quality
    to Robert A. Humphreys was in full force and effect at the time of the
    automobile accident and that Quality had primary liability coverage affecting
    the estate of Robert J. Shepherd pursuant to that policy. Finding that the
    insurance policy issued by Quality to Robert A. Humphreys expired on its own
    terms prior to the October 30, 1982 accident, we reverse the judgment of the
    district court.

    I.
    2

    On January 7, 1982, Robert A. Humphreys purchased an insurance policy on a


    1977 Chevrolet Monte Carlo. The policy expressly stated that it was effective
    for a three-month period from January 7, 1982 through April 7, 1982. A
    subsequent policy was entered into for the period April 7, 1982 through July 7,
    1982 and another policy was undertaken for the period July 7, 1982 through
    October 7, 1982. 1 Humphreys paid the appropriate premium on or before the
    date for each new policy. Quality Insurance agents James R. Frame and Harry
    F. Kyer testified that the Humphreys' policy was a "quarterly policy" that
    would automatically terminate at the end of the three-month term.

    Following a two-day trial, the district court found that on September 14, 1982,
    Quality mailed to Humphreys at the address stated on the policy a notice which
    advised that a three-month premium payment was due on October 7, 1982.
    While there was testimony at trial that Humphreys received and read this
    notice, the record is inconclusive on this particular point. It is undisputed,
    however, that Humphreys did not pay the premium due on October 7, 1982 and
    that a letter dated October 20, 1982 advised Humphreys that his policy had
    expired upon nonpayment of premium on October 7, 1982.

    On October 30, 1982, Robert J. Shepherd died as a result of personal injuries


    sustained in a single-car accident that occurred on West Virginia State Route 4,
    in Braxton County, West Virginia. At the time of the accident, Shepherd was
    traveling as a passenger in the Humphreys' vehicle. The vehicle was being
    operated by Humphreys' fiancee, Lucille Ramey, who was driving the vehicle
    with Humphreys' permission and within the scope of that permission.

    The district court concluded that the Quality Insurance policy issued to
    Humphreys was in full force and effect on the date of the accident because
    W.Va.Code Sec. 33-6A-1, et seq., provided that an automobile liability
    insurance policy may only be terminated by cancellation or non-renewal. The
    district court further held that Quality had primary liability coverage pursuant
    to the policy issued to Humphreys and that State Farm had secondary liability
    coverage pursuant to the uninsured motorist provisions in the policies of
    insurance issued to the decedent, Robert J. Shepherd. This appeal followed.

    II.
    6

    Quality argues that the district court erred in holding that the policy issued to
    Humphreys was in full force and effect on the day of the accident--October 30,
    1982. Quality contends that the last Humphreys' policy expired on its own
    terms October 7, 1982 and that no subsequent policy was contracted by
    Quality. Therefore, Quality maintains, the West Virginia statutes requiring
    notice of cancellation and non-renewal are not applicable to this case.

    It is clear from the record that Humphreys himself believed that the policy had
    expired on October 7, 1982. At trial Humphreys testified that he knew the
    policy had expired at the time of the accident. When asked why he had not
    contacted Quality after the accident, Humphreys replied: "I didn't have no
    insurance." (Joint Appendix, p. 56). Further, Quality agents also testified that
    the policy term was for three months. The West Virginia courts have long held
    that "the payment or agreement to pay an insurance premium is a consideration
    for an insurance contract. If the premium is not paid, there is no insurance."
    Parsley v. General Motors Acceptance Corporation, 280 S.E.2d 703, 707
    (W.Va.1981). See also, Nationwide Mutual Insurance Company v. Smith, 172
    S.E.2d 708 (W.Va.1970); Hare v. Connecticut Mutual Life Insurance
    Company, 173 S.E. 772 (W.Va.1934). Here, all of the evidence suggests that
    both the insured and the insurer contracted for a three-month automobile policy
    which the insured allowed to expire at the end of the stated policy period when
    he failed to pay the premium. We find that the Quality insurance policy was a
    three-month policy that expired by its own terms on October 7, 1982.

    It is undisputed that W.Va.Code Secs. 33-6A-1 and 33-6A-4 require an insurer


    to issue notice of cancellation and non-renewal. There is nothing in the Code
    sections, however, that suggests notice is required that a policy will expire at
    the end of the policy period for which a premium was charged and paid. In fact,
    a careful reading of Sec. 33-6A-4 suggests that neither the 30-day cancellation
    notice nor the 45-day non-renewal notice provisions were meant to apply to the
    expiration of a policy on its own terms. The last paragraph of Sec. 33-6A-4
    reads as follows:

    Notwithstanding the provisions of subsection (a) of this section, the insurer


    shall renew any automobile liability or physical damage insurance policy that
    has not been renewed due to the insured's failure to pay the renewal premium
    when due, if none of the other grounds for non-renewal as set forth in
    subsections (b) through (f) of this section exists and the insured makes
    application for renewal within ninety days of the original expiration date of the
    policy. If a policy be renewed as provided in this paragraph, the coverage
    afforded shall not be retroactive to the original expiration date of the policy, but
    shall resume upon the renewal date at the current premium levels offered by the
    company. W.Va.Code Sec. 33-6A-4 (1982 Replacement Volume).

    10

    This paragraph clearly distinguishes the expiration of a policy as compared to


    cancellation or non-renewal and specifically states that while an insurer must
    renew a policy that was allowed to expire by the insured's failure to pay the
    premium, any such renewal "shall not be retroactive to the original expiration
    date of the policy." This statute leaves no doubt that the West Virginia
    Legislature intended that an automobile insurance policy expire on its stated
    termination date upon non-payment of premium.

    11

    Moreover, the West Virginia Supreme Court has recognized the difference
    between the concepts of "cancellation" and "expiration." See Farmers' and
    Merchants' Bank v. Balboa Insurance Company, 299 S.E.2d 1 (W.Va.1982). In
    Farmers' and Merchants', the court stated that "we are concerned with the nonrenewal of an expiring policy rather than the cancellation of a policy." Id. at 2.

    12

    The district court concluded that the Quality Insurance policy issued to
    Humphreys was in full force and effect on the date of the accident. This
    conclusion was based on the erroneous legal conclusion that Quality failed to
    follow the statutory procedures required to terminate Humphreys' insurance
    policy by either cancellation or non-renewal. The policy was not cancelled, nor
    did Quality refuse to renew the policy. Rather, the policy expired by its own
    terms. Therefore, Quality was not required to give Humphreys notice under

    either the insurance contract or relevant West Virginia statutes and the policy
    expired on October 7, 1982.
    13

    Accordingly, the district court's judgment that the Quality insurance policy was
    in full force and effect and that Quality had primary liability coverage affecting
    the estate of Robert J. Shepherd is reversed.

    14

    REVERSED.

    With regard to the policy term, the insurance policy reads, in relevant part, as
    follows:
    (The insurance company) agrees with the insured ... in consideration of the
    payment of the premium and in reliance upon the statements in the declarations
    and subject to all the terms of the policy:
    ***

    POLICY PERIOD. Territory: This policy applies only to accidents, occurrences


    and loss during the policy period while the automobile is within the United
    States of America, its territories or possessions, or Canada, or is being
    transported between ports thereof. The policy expires at 12:01 A.M. Standard
    Time at the address of the named insured as given in the Declarations Part
    Two, on the given date therein. (Joint Appendix, pp. 115 and 118) (emphasis
    added)

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