Residency and Personal Property Opinion Vacated

Michelle E. Gaston and Katherine MacCorkle Mullins | Steptoe & Johnson | October 5, 2017

Based upon the agreement of the parties, the United States District Court for the Southern District of West Virginia vacated and withdrew the memorandum opinion previously issued by the Court in Shank v. Safeco Ins. Co. of Am., No 2:15-CV-09033, 2016 WL 4534028 (S.D. W.Va. Aug. 30, 2016) (mem.).  See also Steptoe & Johnson Client Alert (Nov. 15, 2016).  Shank v. Safeco Ins. Co. of Am., No 2:15-CV-09033, 2017 WL 4118966 (S.D. W.Va. Aug. 22, 2017).

In Shank I, the Court addressed the following issues: (1) whether an insurer may deny coverage based upon actual residency rather than vacancy of a dwelling, and (2) to what degree an insurer may require an insured to detail personal property losses in the event of a “total loss” fire damage claim.

With respect to the first issue, the Court previously noted that West Virginia has adopted the 1943 New York Standard Fire Policy by statute.  W. Va. Code § 33-17-2.  For multiple line coverages, the language of the fire portion must be at least as favorable to the insured as the applicable portions of the standard fire policy.  Id.  In Shank I, the Safeco policy provided coverage for the “residence premises,” which was defined to include “where you reside.”  The Court found that the “residence premises” provision contained in the Safeco policy was unlawfully more restrictive than the standard fire policy’s vacancy provision.

With respect to the second issue, the Court found that the insureds had substantially complied with the policy’s requirements for describing their personal property loss, despite the fact that the insureds were unable to provide ages or costs for their itemized property.  The Court determined that because the real property was a total loss, the insureds were also entitled to the policy limits established for the loss of their personal property.

The Court’s August 22, 2017 decision vacates and withdraws the 2016 opinion.

Righting a Wrong in West Virginia – The Residential Construction Right to Cure

John R. Teare, Jr. | Spilman Thomas and Battle | May 18, 2015

In residential construction, problems can arise with customers that cause expensive litigation. In West Virginia, a right to cure in residential construction by statute can alleviate such costs.

The statutory term is residential improvement, which is defined as:

  • the construction of a residential dwelling or appurtenant facility or utility;
  • an addition to, or alteration, modification or rehabilitation of an existing dwelling or appurtenant facility or utility; or
  • repairs made to an existing dwelling or appurtenant facility or utility.

In addition to actual construction or renovation, residential improvements actually added to residential real property include the design, specifications, surveying, planning, goods, services and the supervision of a contractor’s subcontractor, officer, employee, agent or other person furnishing goods or services to a claimant.  West Virginia Code §21-11A-4(10).

In general, a homeowner is required to give written notice to the general contractor of a claim of construction defects providing:

  1. the nature of the alleged construction defect and a description of the results of the defect;
  2. a description of damages caused by the alleged construction defect, including the amount and method used to calculate those damages; and
  3. the legal theory of recovery, i.e., a construction defect, including the causal relationship between the alleged construction defect and the damages claimed.

The contractor also has an immediate right to request additional information regarding the claim, including the right to review and copy the customer’s photographs, videotapes and expert/consultant reports. The general contractor also has the authority to send similar notices to his subcontractors on the job to give them the opportunity to directly cure their own issues.

Within 30 days, the contractor shall respond in writing with an offer of compromise which may be financial or request a site inspection of the defect and damage. Failure to respond within the time period or a rejection of the demand permits the customer the right to file suit without delay. A civil action is only authorized as to defects or damages identified in the statutory notice; defects or damages subsequently discovered are subject to the same separate notice requirements applicable to the original notice.

If the customer permits an inspection, the contractor is entitled to reasonable access to the home during regular working hours and must give the homeowner a written response or proposal within 14 days which may be a financial settlement offer, a repair offer or notice that the contractor will not remedy the situation. The homeowner has 30 days to accept or reject any offer made or may negotiate further. Rejection by the homeowner requires the homeowner to provide the basis for rejection in writing.

The statute imposes a duty of good faith upon all parties in negotiation. Any settlement must be in writing and a partial settlement agreement permits the customer the right to litigate any claim not resolved.

The benefits of this process should be obvious in that expensive litigation can be avoided either by settlement or explanation of the customer’s misunderstanding of the cause of the claimed defect and/or damages. Moreover, although the statute does not specifically provide any fee shifting provisions, an unreasonable customer who rejects an offer may later be subject to sanctions by a court, including reasonable attorney’s fees if the court determines the suit was filed for an improper purpose or without sufficient factual basis for the proceeding. However, such awards are relatively rare in the West Virginia Circuit Courts.

Finally, the statute does not apply unless the contractor provides written notice to the customer when the construction contract is formed and does not apply in certain instances. Identified at West Virginia Code §21-11A-2, such claims include those under $5,000, claims that the residence is not habitable, or contracts with arbitration, mediation or other alternate dispute resolution requirements.

The statute and required disclosure can be found at West Virginia Code §21-11A-1 et seq.

via Righting a Wrong in West Virginia – The Residential Construction Right to Cure – Spilman Thomas and Battle.