Rose v. St. Paul Fire & Marine Insurance Co.

Summary

The Supreme Court of Appeals of West Virginia held that a defense attorney retained by an insurer to represent an insured in a liability matter is not directly subject to the West Virginia Unfair Trade Practices Act because the attorney is not engaged in the business of insurance. The court further held that an insurer remains responsible for its own statutory duties and may be liable for knowingly encouraging, directing, participating in, relying upon, or ratifying wrongful litigation conduct by defense counsel. The court affirmed in part, reversed in part, and remanded the circuit court's order, and referred potential attorney misconduct to the Office of Disciplinary Counsel.

Holdings

1. A defense attorney employed by an insurance company to represent an insured in a liability matter is not engaged in the business of insurance and is therefore not directly subject to the West Virginia Unfair Trade Practices Act.
2. An insurance company's duties under the West Virginia Unfair Trade Practices Act are not delegable merely because the company hires a defense attorney to represent an insured.
3. An insurer may be held liable under the Act for its own actions when it knowingly encourages, directs, participates in, relies upon, or ratifies wrongful litigation conduct by defense counsel, but it is not directly liable solely because counsel committed the misconduct.

Questions Presented

1. Whether a defense attorney hired by an insurer to represent an insured in a liability matter is directly subject to the West Virginia Unfair Trade Practices Act.
2. Whether an insurer's duties under the Act are delegable when the insurer retains defense counsel.
3. Whether an insurer may be held liable under the Act for its own knowing encouragement, direction, participation in, reliance upon, or ratification of wrongful litigation conduct by retained defense counsel.

Disposition

reversed_and_remanded