Mulvey Construction, Inc. v. Bituminous Casualty Corp.

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 13-1571

MULVEY CONSTRUCTION, INCORPORATED; ONE BEACON INSURANCE

COMPANY,

Plaintiffs – Appellants,

and

DCI/SHIRES, INCORPORATED,

Intervenor/Plaintiff

v.

BITUMINOUS CASUALTY CORPORATION; BROWN & BROWN INSURANCE

AGENCY OF VIRGINIA, INCORPORATED,

Defendants – Appellees.

Appeal from the United States District Court for the Southern

District of West Virginia, at Bluefield. David A. Faber, Senior

District Judge. (1:07-cv-00634)

Argued: January 29, 2014 Decided: May 7, 2014

Before DUNCAN, KEENAN, and WYNN, Circuit Judges.

Affirmed in part and vacated in part and remanded by unpublished

opinion. Judge Wynn wrote the opinion, in which Judge Duncan

and Judge Keenan joined.

ARGUED: Stuart A. McMillan, BOWLES RICE LLP, Charleston, West

Virginia, for Appellants. Avrum Levicoff, LEVICOFF, SILKO &

DEEMER, PC, Pittsburgh, Pennsylvania; Henry I. Willett, III,

CHRISTIAN & BARTON, LLP, Richmond, Virginia, for Appellees. ON

BRIEF: Thomas M. Hancock, BOWLES RICE LLP, Charleston, West

Virginia, for Appellants. Pamela C. Deem, KAY CASTO & CHANEY,

PLLC, Charleston, West Virginia, for Appellee Brown & Brown

Insurance Agency of Virginia, Inc.

Unpublished opinions are not binding precedent in this circuit.

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WYNN, Circuit Judge:

A city utility worker was killed when the trench he was

working in collapsed while he was repairing a sewage line at a

construction site for a McDonald’s restaurant in Bluefield, West

Virginia. His estate brought a wrongful death action against

the general contractor responsible for constructing the

restaurant, Mulvey Construction, Inc. (“Mulvey”), and its

subcontractor, DCI/Shires (“DCI”). In response, DCI’s insurance

company, Bituminous Casualty Corporation (“Bituminous”), refused

to defend and indemnify Mulvey. That refusal prompted Mulvey

and its insurer, One Beacon Insurance Company (“One Beacon”), to

bring this action, which requires us to determine the scope of

DCI’s insurance policy from Bituminous. In particular, we must

decide which state’s law applies to this insurance contract

dispute, whether Mulvey was covered by DCI’s insurance, and

whether the applicable statute of limitations bars Mulvey’s and

its insurer’s third-party beneficiary claim.

For the reasons explained below, we affirm the district

court’s holding that Virginia law controls the contract issue,

that Virginia law does not allow estoppel to extend an insurance

policy’s coverage, and that Appellants’ third-party beneficiary

claim is barred by the Virginia statutes of limitations.

However, we reverse the district court’s rejection of

Appellants’ insured contract and duty to defend claims and

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remand this matter to the district court for further

consideration.

I.

In May 2002, DCI, a Virginia corporation, applied for a

renewal insurance policy with Bituminous through Brown & Brown

Insurance Agency (“Brown”), a Virginia insurance agency. DCI

had a Virginia post office box as its mailing address, but DCI’s

physical office was in Bluefield, West Virginia. Bituminous

issued DCI’s renewal policy, which was effective from May 20,

2002 to May 20, 2003. Although Bituminous’s headquarters is in

Illinois, the policy identified its Richmond, Virginia branch

office as the location for “the insurance company issuing this

insurance” and referred inquiries to the Virginia State

Corporation Commission’s Bureau of Insurance. J.A. 50.

In July 2002, Mulvey entered into a subcontract agreement

with DCI for a portion of the construction of a McDonald’s

restaurant in Bluefield, West Virginia. Under the subcontract

agreement, DCI agreed to list Mulvey and McDonald’s as

additional insureds on its insurance policy with Bituminous.

To satisfy this requirement, DCI sent the subcontract agreement

to Brown. In July and August 2002, Brown issued certificates of

insurance stating that Mulvey and McDonald’s were additional

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insureds on DCI’s insurance policy with Bituminous. The

certificates of insurance also stated that “THIS CERTIFICATE IS

ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS

UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND,

EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.”

J.A. 44, 259-64. DCI’s insurance policy was not amended to add

Mulvey and McDonald’s as additional insureds. In October 2002,

Brown sent a copy of the insurance policy to DCI.

In January 2003, a city employee was attempting to repair a

pipe next to the McDonald’s restaurant when the trench he was in

collapsed and killed him. His estate sued McDonald’s, Mulvey,

and DCI for wrongful death, alleging that the retaining wall at

the McDonald’s had been negligently constructed. Mulvey and

McDonald’s requested that Bituminous defend them in the wrongful

death action. Bituminous refused, stating that neither Mulvey

nor McDonald’s was an additional insured on DCI’s policy.

Mulvey and McDonald’s settled the wrongful death suit, and

Mulvey’s insurer, One Beacon, paid the settlement on behalf of

McDonald’s and Mulvey.

Appellants Mulvey and One Beacon initiated an arbitration

action against DCI in New York asserting indemnification and

breach of contract claims. In 2007, Appellants brought this

action against Bituminous and Brown seeking a declaratory

judgment that Mulvey was entitled to coverage from Bituminous

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for the underlying action and payment of settlements and legal

fees. The complaint (and later the amended complaint) included

a breach of contract claim against Bituminous, an estoppel claim

against Bituminous and Brown, and a third-party beneficiary

claim against Brown. Bituminous moved for summary judgment on

these claims. The district court addressed these claims in

separate summary judgment orders during the case and the

district court’s conclusion of each of these individual claims

did not resolve the other claims.

The district court ruled that Virginia law applied and

granted Bituminous summary judgment on Appellants’ breach of

contract claim. However, the district court allowed

supplemental briefing on the estoppel and insured contract

claims under Virginia law. Mulvey and One Beacon had originally

conceded that the insurance contract was formed in Virginia,

but, after the district court granted summary judgment to

Bituminous on the breach of contract claim, moved to amend the

judgment arguing that the policy was issued in West Virginia.

The district court ordered them to offer evidence supporting

their change of view on the location of contract formation.

Appellants provided affidavits stating that a DCI employee was

assigned to gather mail from DCI’s Virginia post office box and

carry it to the offices in West Virginia. The district court

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reaffirmed its earlier ruling that Virginia law governed the

case.

Brown also moved for summary judgment on Appellants’ third-

party beneficiary claim, arguing that the claim was barred by

the statute of limitations. The district court agreed and

granted summary judgment to Brown.

The district court also granted summary judgment to

Bituminous on Appellants’ estoppel claim and held that Virginia

law does not allow estoppel to extend insurance coverage,

especially where the disclaimer language in the certificates was

“clear and unambiguous[.]” J.A. 625-28. However, the district

court stayed the case pending completion of the ongoing New York

arbitration before considering the insured contract theory. 1

After Appellants dismissed the New York arbitration, they

renewed their motion for summary judgment on the insured

contract theory. The district court rejected the theory and

granted summary judgment to Bituminous. Mulvey and One Beacon

timely appealed these rulings.

1

The amended complaint does not contain an insured contract

claim as one of the specified counts. However, the amended

complaint sought a declaration that “Mulvey’s subcontract

agreement with [DCI] is an insured contract under DCI’s

Bituminous policy so that Mulvey stands in the shoes of DCI for

coverage purposes” and that “Bituminous owes Mulvey a duty to

indemnify and defend it as an additional insured with an insured

contract on its policy of insurance covering DCI . . . .” J.A.

197.

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II.

First, Appellants argue that the district court erred in

ruling that Virginia law, rather than West Virginia law, applied

in this case. Second, Appellants argue that the district court

erred in holding that estoppel did not apply and that Mulvey

could not rely on the certificates of insurance to establish

coverage under DCI’s insurance policy. Third, Appellants argue

that the district court erred in rejecting their insured

contract theory; namely, that the subcontract between Mulvey and

DCI did not trigger a duty to defend requiring Bituminous to

defend Mulvey and McDonald’s in the wrongful death action.

Finally, Appellants argue that the district court erred in

applying Virginia’s statute of limitations and granting summary

judgment on the third-party beneficiary claims to Bituminous.

We address each issue in turn.

III.

We review de novo the district court’s choice of law

determination. See Salve Regina Coll. v. Russell, 499 U.S. 225,

231–34 (1991). When a district court is considering a case

based on diversity jurisdiction, the court must apply the forum

state’s conflict of laws rules. Klaxon Co. v. Stentor Elec.

8

Mfg. Co., 313 U.S. 487, 496 (1941). Here, the forum state is

West Virginia; thus, West Virginia’s choice of law principles

must be applied.

In West Virginia, generally, the law of the state where an

insurance contract was formed governs contract disputes:

“In a case involving the interpretation of an

insurance policy, made in one state to be performed in

another, the law of the state of the formation of the

contract shall govern, unless another state has a more

significant relationship to the transaction and the

parties, or the law of the other state is contrary to

the public policy of this state.”

Joy Tech., Inc. v. Liberty Mut. Ins. Co., 421 S.E.2d 493, 496

(W. Va. 1992) (quoting Liberty Mut. Ins. Co. v. Triangle Indus.,

Inc., 390 S.E.2d 562, 563 (W. Va. 1990)). We thus begin our

inquiry with an examination of where the pertinent contract was

formed.

A.

Under West Virginia law, “[a] contract is made at the time

when the last act necessary for its formation is done, and at

the place where the final act is done.” Carper v. Kanawha

Banking & Trust Co., 207 S.E.2d 897, 901 (W. Va. 1974)

(syllabus, pt. 8) 2 (citing Restatement of Contracts § 74 (1932));

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“Pursuant to West Virginia’s Constitution, the Supreme

Court of Appeals of West Virginia articulates new points of law

through its syllabus.” Hoschar v. Appalachian Power Co., 739

F.3d 163, 174 n.5 (4th Cir. 2014) (citing Walker v. Doe, 558

S.E.2d 290, 296 (2001)).

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see also Tow v. Miners Mem’l Hosp. Ass’n, 305 F.2d 73, 75 (4th

Cir. 1962) (“Examining [West Virginia] law, we find that the

contract here in question was made in New York because there the

last event occurred necessary to make a binding agreement[.]”).

The West Virginia Supreme Court has observed that “[a]n

insurance contract, similar to other contracts, ‘is an offer and

acceptance supported by consideration.’ . . . The application

for insurance is the offer, which the insurer then decides to

accept, reject or modify. The insurer then issues a policy or

certificate of insurance that evidences the insurance contract.”

Keller v. First Nat’l Bank, 403 S.E.2d 424, 427 n.5 (W. Va.

1991) (quoting Warden v. Bank of Mingo, 341 S.E.2d 679, 682

(1985)). Therefore, where a party has made an offer to the

insurance company by applying for insurance, the insurance

company’s issuance of the policy constitutes its acceptance.

Appellants argue that the district court erred in

concluding that Virginia law governs the case. Specifically,

they contend that the insurance contract between DCI and

Bituminous was formed in West Virginia because DCI’s principal

office is located there. Appellants contend that DCI accepted

the contract in West Virginia when the insurance policy was

opened in DCI’s West Virginia office or when the premium check

was signed in DCI’s West Virginia office. We disagree.

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Under West Virginia law, DCI’s renewal application

constituted the offer to create the insurance contract. In

response, Bituminous issued the insurance policy, thus,

accepting DCI’s offer. At that point, the contract was formed

according to West Virginia law. Neither the opening of the copy

of the policy in DCI’s West Virginia’s office nor the first

premium payment constituted the final act of contract formation.

The issuance of the policy from Bituminous’s Virginia branch

office represented Bituminous’s acceptance of DCI’s offer, the

last act necessary to form the insurance contract. Thus,

Virginia law applies—unless another state has a more significant

relationship or Virginia’s law contravenes West Virginia public

policy.

B.

Regarding whether another state has a more significant

relationship to the transaction and parties than Virginia, the

West Virginia Supreme Court has looked to the Restatement

(Second) of Conflict of Laws and identified several non-

exclusive factors for courts to consider:

(a) the needs of the interstate and international

systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states

and the relative interests of those states in the

determination of the particular issue,

(d) the protection of justified expectations,

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(e) the basic policies underlying the particular field

of law,

(f) certainty, predictability and uniformity of

result, and

(g) ease in the determination and application of the

law to be applied.

Triangle, 390 S.E.2d at 567. The West Virginia Supreme Court

placed great emphasis on uniformity and predictability, holding

that

“certainty, predictability and uniformity of result,”

as well as “ease in the determination and application

of the law to be applied” is essential to the

interpretation of an insurance policy when the law is

not otherwise chosen by the parties. Given the

increasingly complex nature of the insurance industry,

we believe that the needs of the “interstate” system

of insurance require that law be applied in the most

uniform and predictable manner possible.

Id. The Court also looked to the parties’ reasonable

expectations, examining whether “the insurance company

demonstrated any reasonable expectation at the time the

contracts were entered into that any litigation over the policy

would be based upon West Virginia law.” Id.

The West Virginia Supreme Court discussed the significant

relationship prong in Joy Technologies, Inc. v. Liberty Mutual

Insurance Company, 421 S.E.2d 493 (W. Va. 1992). In that case,

a company that cleaned and repaired mining machinery in West

Virginia polluted West Virginia property. The company was sued

for property damage and personal injuries, and the insurer

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argued that an exclusion applied. Joy, 421 S.E.2d at 493-96.

Crucial to the exclusion issue was what state’s law applied.

The West Virginia Supreme Court recognized the Triangle

precedent and identified factors that weighed in favor of

applying the law of the state of contract formation—

Pennsylvania. Id. at 496. However, the Court ultimately was

persuaded to apply West Virginia law because of the nature of

the suit. The West Virginia Supreme Court’s reasoning focused

on the nature of the suit—toxic pollution—and its close link to

location:

[t]he action in the present case arises out of the

expenditures of monies for remediating damage caused

by pollution to property in West Virginia, and it is

rather clear that the pollution arose from operations

which were conducted in West Virginia and involved a

facility located in West Virginia. Thus, the injury

occurred in West Virginia, the instrumentality of

injury was located in West Virginia, and the forum

selected to try the issues was West Virginia. These

factors suggest that West Virginia has had a very

significant relationship to the transaction and the

parties. In fact, the relationship would appear to be

more substantial than that of Pennsylvania, where the

contract was formed.

Id. at 496-97. For its reasoning, the West Virginia Supreme

Court looked to a New Jersey pollution case, in which the New

Jersey Appellate Division held that New Jersey law controlled a

dispute about insurance “purchased to cover an operation or

activity, wherever its principal location, which generates toxic

wastes that predictably come to rest in New Jersey[.]” Gilbert

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Spruance Co. v. Pa. Manufacturers’ Ass’n Ins. Co., 603 A.2d 61,

65 (N.J. App. Div. 1992). Similarly, the Joy court decided

against applying Pennsylvania law because Liberty Mutual’s

position regarding the exclusion of coverage would be

“inconsistent with, and contrary to, the public policy of [West

Virginia].” Id. at 497.

Appellants argue that under Joy, West Virginia law must

apply. Specifically, Appellants claim that, as in Joy, the

location and instrumentality of the injury was in West Virginia

and the forum selected to try the issues was West Virginia. Yet

we find Joy easily distinguishable.

It is hard to imagine cases with stronger local ties than

environmental cases in which toxic pollution has occurred and

local interests in remediation and compensation are paramount.

But environmental harm and pollution are not at issue here.

Rather, this case involves a commercial liability insurance

contract that covers DCI’s construction work in multiple states.

Although the tragic accident in this case occurred in West

Virginia and killed a citizen of that state, the West Virginia

Supreme Court has downplayed the importance of injury location

compared to the place of contract formation. See Nadler v.

Liberty Mut. Fire Ins. Co., 424 S.E.2d 256, 262 (W. Va. 1992);

Lee v. Saliga, 373 S.E.2d 345, 352 (W. Va. 1988); see also Howe

v. Howe, 625 S.E.2d 716, 723 (W. Va. 2005) (affirming the lower

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court’s finding that Ohio had a more significant relationship to

the parties and transactions because the “only relationship West

Virginia [had] to the parties or transactions at issue [was] the

‘mere fortuity’ that the accident at issue occurred” there);

Johnson v. Neal, 418 S.E.2d 349, 351 (W. Va. 1992) (per curiam)

(“In the present case, the insurance policy was issued in

Virginia by a Virginia company to a Virginia resident. West

Virginia’s relationship to the transaction based on the situs of

the accident and the residence of the uninsured motorist is

minor.”).

In addition, the reasonable expectation of the parties to

the contract must be considered. The parties to the insurance

contract included Bituminous, an Illinois corporation operating

out of a Virginia branch office, DCI, a Virginia corporation

that used Brown, a Virginia insurance agent, to secure the

renewal insurance contract. Although the construction project

and accident were in West Virginia, the centerpiece of this

litigation is the interpretation of the insurance contract,

which was formed in Virginia. Thus, the parties to the contract

reasonably should have expected that Virginia law would apply.

In sum, “certainty, predictability and uniformity of result” and

“ease in the determination and application of the law to be

applied” strongly support the application of Virginia law.

Triangle, 390 S.E.2d at 567. And we agree with the district

15

court that West Virginia did not have a more significant

relationship to the transaction or parties than Virginia.

C.

The third element of the conflict of law analysis requires

the court to determine whether Virginia law is contrary to West

Virginia’s public policy. This Circuit has recognized that West

Virginia’s public policy exception “is necessarily a narrow one,

to be invoked only in extraordinary circumstances.” Yost v.

Travelers Ins. Co., 181 F.3d 95, at *6 (4th Cir. June 21, 1999)

(unpublished but orally argued). The West Virginia Supreme

Court has recognized that “[t]he mere fact that the substantive

law of another jurisdiction differs from or is less favorable

than the law of the forum state does not, by itself, demonstrate

that application of the foreign law under recognized conflict of

laws principles is contrary to the public policy of the forum

state.” Nadler, 424 S.E.2d at 258 (syllabus pt. 3). The West

Virginia Supreme Court instructed lower courts not to refuse to

apply foreign law “unless the foreign law is contrary to pure

morals or abstract justice, or unless enforcement would be of

evil example and harmful to [West Virginia’s] own people.” Id.

at 265 (quotation marks omitted).

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Appellants argue that applying Virginia law would be

contrary to West Virginia’s public policy, and they assert a

variety of policy considerations including: 1) “quickly

determining which insurance is primary,” 2) “encourag[ing] the

resolution of controversies by contracts of compromise and

settlement,” 3) “regulating insurance practices in regard to

West Virginia residents, West Virginia accidents, and how people

in West Virginia are treated;” and 4) “hold[ing] insurers

accountable in a court of law when they wrongfully deny

coverage” and enforcing indemnity agreements. Appellants’ Br.

at 22-24.

Appellants made no public policy arguments before the

district court. J.A. 392 (“[T]he court does not find (nor do

plaintiffs argue) that the law of Virginia is contrary to the

public policy of West Virginia.”). In any event, their

arguments are unavailing. Appellants have not shown how

Virginia’s public policy differs on any of these grounds or how

Virginia’s law is “contrary to pure morals or abstract justice.”

Nadler, 424 S.E.2d at 265 (quotation marks omitted).

Consequently, Appellants have failed to show that we should

depart from the default rule that the contract should be

governed by the laws of Virginia—the state of formation. West

Virginia does not have a more significant relationship to the

transaction, and Virginia law is not contrary to West Virginia

17

public policy. Therefore, we affirm the district court’s choice

of law determination.

IV.

With their next argument, Appellants contend that

Bituminous should be estopped from refusing to defend Mulvey and

McDonald’s in the wrongful death suit because Brown issued

certificates of insurance stating that Mulvey and McDonald’s

were additional insureds on DCI’s policy with Bituminous. We

review the district court’s grant of summary judgment de novo.

FDIC v. Cashion, 720 F.3d 169, 173 (4th Cir. 2013).

Under Virginia law, a party seeking to invoke the doctrine

of estoppel must prove by “clear, precise, and unequivocal

evidence” the following elements:

(1) A material fact was falsely represented or

concealed; (2) The representation or concealment was

made with knowledge of the fact; (3) The party to whom

the representation was made was ignorant of the truth

of the matter; (4) The representation was made with

the intention that the other party should act upon it;

(5) The other party was induced to act upon it; and

(6) The party claiming estoppel was misled to his

injury.

Boykins Narrow Fabrics Corp. v. Weldon Roofing and Sheet Metal,

Inc., 266 S.E.2d 887, 890 (Va. 1980). Crucially, however,

Virginia precedent reflects that estoppel may not be used to

extend the coverage of an insurance contract. Norman v. Ins.

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Co. of N. Am., 239 S.E.2d 902, 908 (Va. 1978) (“The general

rule, which we approve, is that the coverage of an insurance

contract may not be extended by estoppel or implied waiver to

include risks expressly excluded.”) (quoting Sharp v. Richmond

Life Ins. Co., 183 S.E.2d 132, 135 (Va. 1971)).

In Norman, the Virginia Supreme Court referred to two

automobile insurance cases where the insurance companies filed a

form stating that “its policy was in force and effect and

covered the driver[s],” but the Virginia Supreme Court found

that these statements “did not estop the company from denying

coverage when in fact there was no coverage.” Id. (citing Va.

Farm Bureau Mut. Ins. Co. v. Saccio, 133 S.E.2d 268 (1963) and

Va. Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 133 S.E.2d

277 (1963)). However, the Virginia Supreme Court has not

squarely addressed whether an insurance company is estopped from

denying coverage in a situation such as this case: where

certificates of insurance have been issued stating that third

parties were added as additional insureds on the policy, but

where the third parties were never actually added to the

underlying insurance policy.

Courts around the country are split regarding whether

insurers can be estopped from denying coverage when a

certificate of insurance that identified a third party as an

additional insured has been issued. Some courts have deemed the

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insurer estopped from denying coverage. See, e.g., Sumitomo

Marine & Fire Ins. Co. of Am. v. S. Guar. Ins. Co. of Ga., 337

F. Supp. 2d 1339, 1355 (N.D. Ga. 2004); Blackburn, Nickels &

Smith v. Nat’l Farmers Union, 482 N.W.2d 600, 604 (N.D. 1992).

Significantly, West Virginia is one of the states that has held

that “a certificate of insurance is evidence of insurance

coverage” and that

because a certificate of insurance is an insurance

company’s written representation that a policyholder

has certain insurance coverage in effect at the time

the certificate is issued, the insurance company may

be estopped from later denying the existence of that

coverage when the policyholder or the recipient of a

certificate has reasonably relied to their detriment

upon a misrepresentation in the certificate.

Marlin v. Wetzel Cnty. Bd. of Educ., 569 S.E.2d 462, 472-73 (W.

Va. 2002).

Other courts, however, have held that a certificate of

insurance that expressly states that it does not alter the

coverage of the underlying policy will not be deemed to change

the policy. In such states, therefore, a party may not rely on

estoppel to assert that it is covered under the policy. See

e.g., Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882,

889 (10th Cir. 1991); T.H.E. Ins. Co. v. City of Alton, 227 F.3d

802, 806 (7th Cir. 2000); TIG Ins. Co. v. Sedgwick James of

Washington, 184 F. Supp. 2d 591, 597-98 (S.D. Tex. 2001); G.E.

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Tignall & Co., Inc. v. Reliance Nat. Ins. Co., 102 F. Supp. 2d

300, 304 (D. Md. 2000).

Here, the district court cited Norman in holding that,

under Virginia law, the certificates of insurance could not be

relied upon to establish coverage, particularly given that the

certificates included such a “clear and unambiguous” disclaimer.

J.A. 628. The district court, therefore, concluded that

Bituminous was not estopped from denying coverage.

The certificates of insurance included the direct and

specific disclaimer that the certificates are provided as “A

MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE

CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR

ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.” J.A. 44,

259-64. We, like the district court, must conclude that

Virginia would not recognize the use of estoppel to change the

policy in the circumstances of this case. We find instructive

not only Norman, but also Blue Cross and Blue Shield of Virginia

v. Wingfield, 391 S.E.2d 73 (Va. 1990). In that case, the

Virginia Supreme Court directly rejected the plaintiff’s

estoppel claim, which was based on a brochure that the insurance

company sent to him outlining the policy’s benefits. The

brochure included a clear disclaimer that the brochure was not a

contract and that the provisions of the contract governed any

discrepancies. Wingfield, 391 S.E.2d at 74. The trial court

21

granted Wingfield damages “because of the difference in the

language in the brochure furnished [Wingfield] and that in the

contracts.” Id. (alteration in original) (quotation marks

omitted). The Virginia Supreme Court disagreed, holding that

the trial court’s application of the doctrine of

estoppel, requiring payment of benefits beyond the

limited contractual time, extended coverage to include

risks not covered by the policy. In doing so, the

court erroneously brought “into being a contract of

insurance where there was none.”

Id. at 75 (quoting Norman, 239 S.E.2d at 908). Guided by the

Virginia Supreme Court’s rulings in Norman and Wingfield, we

hold that the district court did not err in refusing to apply

estoppel to extend this insurance policy’s coverage beyond its

terms.

V.

With their next argument, Appellants claim that summary

judgment was inappropriate because, even if Mulvey was not an

additional insured, Bituminous still had a duty, under the

policy’s insured contract provision, to defend them in the

wrongful death litigation.

Specifically, DCI’s insurance policy states that damages

arising from DCI’s contractual assumption of liability are

excluded. But that exclusion does not apply to liability for

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damages “[a]ssumed in a contract or agreement that is an

‘insured contract’, . . . .” J.A. 105. The policy defines

insured contract as “[t]hat part of any other contract or

agreement pertaining to your business . . . under which [DCI]

assume[s] the tort liability of another party to pay for ‘bodily

injury’ or ‘property damage’ to a third person or organization.”

J.A. 115. In the subcontract between DCI and Mulvey, DCI agreed

to

indemnify and hold harmless . . . [Mulvey] . . . from

and against all claims, damages, losses and expenses,

including but not limited to attorney’s fees, arising

out of or arising from performance of [DCI’s] Work

under this Agreement, provided such claim . . . is

attributable to bodily injury, sickness, disease or

death[,] or to injury to or destruction of tangible

property . . . including the loss of use resulting

therefrom, to the extent caused in whole or part by

any neglect act or omission of [DCI] . . . regardless

of whether it is caused in part by a party indemnified

hereunder.

J.A. 41. Appellants argue that this provision renders the

subcontract an insured contract because DCI assumed the tort

liability of Mulvey.

Assuming for the sake of argument that the subcontract was

an insured contract, we nevertheless agree with the district

court that the indemnitee, Mulvey, was not entitled to coverage

under the insurance policy because no language added Mulvey as

an additional insured or as a third-party beneficiary.

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Appellants attempt to rely on Uniwest Construction, Inc. v.

Amtech Elevator Services, Inc., 699 S.E.2d 223 (Va. 2010),

withdrawn in part on reh’g, 714 S.E.2d 560 (Va. 2011). In that

case, a general contractor, Uniwest, engaged subcontractors,

including Amtech, to assist in building renovation work. The

subcontract required Amtech to name Uniwest as an additional

insured under its liability insurance policies. Id. at 225-26.

The pertinent policy included as an insured “[a]ny person . . .

to whom you are obligated by a written Insured Contract to

provide insurance such as is afforded by this policy but only

with respect to . . . liability arising out of operations

conducted by you or on your behalf . . . .” Id. at 226.

Amtech’s insurer refused to defend and indemnify Uniwest in a

suit by the estate of a deceased employee and an injured

employee. The Virginia Supreme Court held that the insurer was

required to defend and indemnify Uniwest, not merely because the

subcontract between the parties required Amtech to defend and

indemnify Uniwest. Importantly, the Court found that Amtech’s

policy contained language sufficient to make Uniwest (and any

similarly situated contracting party) an additional insured

under the policy as well. Id. at 232.

Here, the district court reviewed Uniwest and acknowledged

that, as in Uniwest, the subcontract required DCI to indemnify

Mulvey. However, the district court underscored “the critical

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difference between the two policies at issue: under [the Uniwest

policy] any person to whom the insured becomes obligated under

an Insured Contract becomes an additional insured . . . . The

Bituminous Policy has no similar provision.” J.A. 713.

Although we must agree with this analysis, we conclude that it

is incomplete.

Notably, the district court did not address the insurance

policy’s Supplementary Payments section. Although that section

does not make Mulvey an additional insured, it states that:

“[i]f [Bituminous] defend[s] an insured against a ‘suit’ and an

indemnitee of the insured is also named as a party to the

‘suit’, we will defend that indemnittee if all of the following

conditions are met[.]” J.A. 110. The requisite conditions

include, among others: “the insured has assumed the liability of

the indemnitee in . . . an ‘insured contract’;” “[t]his

insurance applies to such liability assumed by the insured;”

“the obligation to defend . . . that indemnitee[] has also been

assumed by the insured in the same ‘insured contract[.]’” J.A.

110-11. If these conditions have been met, then Mulvey is

entitled to Bituminous’s defense and the district court’s grant

of summary judgment to Bituminous was in error because the

insurance company would not be entitled to judgment as a matter

of law.

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Based on the record before us, it appears that at least

some of these conditions may be met. Under these circumstances,

we cannot affirm the district court’s grant of summary judgment

without the benefit of its analysis of a directly relevant

section of the insurance policy. We therefore vacate the

district court’s summary judgment order on the insured contract

theory and remand with specific instructions to the district

court to address whether the requirements of this provision have

been met and whether, specifically taking the provision into

consideration, Bituminous had a duty to defend Mulvey in the

underlying lawsuit.

VI.

Finally, Appellants contend that West Virginia’s, and not

Virginia’s, statute of limitations applies and that the district

court erred by dismissing their third party beneficiary claim on

the basis of Virginia’s shorter statute of limitations period. 3

Appellants contend that the certificates of insurance that Brown

3

Appellants also contend that the district court abused its

discretion by allowing Brown to untimely amend its answer to

include a statute of limitations defense. Appellants’ Br. at

51-52. However, upon close review, we reject the appellants’

claim and find that the district court did not abuse its

discretion when it ruled that appellants had failed to show any

prejudice arising from the district court’s decision to grant

Brown leave to amend its answer. See J.A. 582-87.

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sent to DCI qualify as a written contract between Brown and DCI

to add Mulvey to the Bituminous policy.

West Virginia has a five-year statute of limitations for

oral contracts and a ten-year statute of limitations for written

contracts. W. Va. Code § 55-2-6. By contrast, Virginia has a

three-year statute of limitations for oral contracts and a five-

year statute of limitations for written contracts. Va. Code §

8.01-246(2), (4).

Notably, however, West Virginia has what is known as a

borrowing statute. It provides that “[t]he period of limitation

applicable to a claim accruing outside of this State shall be

either that prescribed by the law of the place where the claim

accrued or by the law of this State, whichever bars the claim.”

W. Va. Code § 55-2A-2. Appellants’ third-party beneficiary

claim is premised on Brown’s alleged failure to add Mulvey as an

additional insured on DCI’s policy. Appellants have not alleged

that Brown, a Virginia insurance agent, breached an agreement to

add Appellants to the insurance policy in a different state than

where Brown conducts its business, Virginia. By operation of

the borrowing statute, then, Virginia’s shorter statute of

limitations applies here.

The district court deemed any contract between Brown and

DCI to add Mulvey to the Bituminous policy oral and barred by

the statute of limitations. The Virginia Supreme Court has

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recognized that for a contract to qualify as a written contract

for statute of limitations purposes, the contract “must . . .

show on its face a complete and concluded agreement between the

parties.” Newport News, H. & O. P. Dev. Co. v. Newport News St.

Ry. Co., 32 S.E. 789, 790 (Va. 1899). Here, on their face, the

certificates of insurance do not represent a written contract.

Rather, they state that they were issued for “INFORMATION ONLY”

and specifically “CONFER[RED] NO RIGHTS UPON THE CERTIFICATE

HOLDER.” J.A. 44, 259-64. We agree with the district court

that if there was any contract requiring Brown to obtain

insurance, then it was an oral contract and thus, the three-year

statute of limitations under Virginia law applied.

Further, even assuming for the sake of argument that the

contract was written and that the longer statute of limitations

applied, this claim would still be barred under Virginia law.

Any breach of that contract occurred no later than August 2002

because the final certificate of insurance—the contract

Appellants assert required their being insured by Bituminous—was

issued on August 9, 2002, and yet Appellants were never added to

the insurance. But Appellants did not bring the third-party

beneficiary claim until October 11, 2007—after more than five

years had passed. Under Virginia law, the statute of

limitations accrues on the date of breach, not the date of the

resulting damage is discovered. Va. Code Ann. § 8.01-230

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(“[T]he right of action shall be deemed to accrue and the

prescribed limitation period shall begin to run from the date

the injury is sustained in the case of injury to the person or

damage to property, when the breach of contract occurs in

actions ex contractu and not when the resulting damage is

discovered[.]”). Thus, the third party beneficiary claim would

be barred by the statute of limitations, even assuming that the

longer, written-contract statute applied.

In response, Appellants argue that Virginia law allows

tolling of the statute of limitation when a defendant misleads a

plaintiff into delayed filing. And indeed, the Virginia Supreme

Court has recognized tolling in the face of affirmative

misrepresentation:

“Mere silence by the person liable is not concealment,

but there must be some affirmative act or

representation designed to prevent, and which does

prevent, the discovery of the cause of action.

Concealment of a cause of action preventing the

running of limitations must consist of some trick or

artifice preventing inquiry, or calculated to hinder a

discovery of the cause of action by the use of

ordinary diligence, and mere silence is insufficient.

There must be something actually said or done which is

directly intended to prevent discovery.”

Newman v. Walker, 618 S.E. 2d 336, 338 (Va. 2005) (quoting

Culpeper Nat’l Bank v. Tidewater Improvement Co., 89 S.E. 118,

121 (Va. 1916)). But Appellants have failed to show that

Appellees took any affirmative actions to meet this bar.

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Appellants also argue that Virginia law allows for tolling

“when the failure to procure insurance claim was submitted to

arbitration.” Appellants’ Reply at 27. However, the

arbitration proceedings began in 2006, after the applicable

three-year statute of limitations for oral contracts expired in

August 2005. Thus, Appellants’ statute of limitations arguments

fail, and we affirm the district court’s grant of summary

judgment to Brown on the third-party beneficiary claim.

VII.

For the foregoing reasons, we affirm in part and vacate in

part the judgment of the district court and remand for further

proceedings.

AFFIRMED IN PART

VACATED IN PART AND REMANDED

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