Frye v. Erie Ins. Co.

Full title: BRIAN FRYE, Plaintiff Below/Petitioner, v. ERIE INSURANCE COMPANY…

Court: State of West Virginia Supreme Court of Appeals

Date published: Jun 12, 2024

902 S.E.2d 794 (W. Va. 2024)

Opinion

No. 22-0378

06-12-2024

Brian FRYE, Plaintiff Below/Petitioner, v. ERIE INSURANCE COMPANY, Defendant Below/Respondent.

Richard A. Monahan, Esq., James G. Bordas III, Esq., Luca D. DiPiero, Esq., BORDAS & BORDAS, PLLC, Wheeling, West Virginia, Counsel for Petitioner Amy M. Smith, Esq., STEPTOE & JOHNSON, PLLC, Bridgeport, West Virginia, Michelle Gaston, Esq., STEPTOE & JOHNSON, PLLC, Wheeling, West Virginia, Counsel for Respondent

WALKER, Justice

Syllabus by the Court

1. "The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W. Va. R. Civ, P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed." Syllabus Point 1, Wickland v. American Travellers Life Ins. Co., 204 W. Va. 430, 513 S.E.2d 657 (1998).

2. "A motion under Rule 59(e) of the West Virginia Rules of Civil Procedure should be granted where: (1) there is an intervening change in controlling law; (2) new evidence not previously available comes to light; (3) it becomes necessary to remedy a clear error of law or (4) to prevent obvious injustice." Syllabus Point 2, Mey v. Pep Boys-Manny, Moe & Jack, 228 W. Va. 48, 717 S.E.2d 235 (2011).

Appeal from the Circuit Court of Ohio County, The Honorable Jason A. Cuomo, Judge, Case No. 19-C-52

Richard A. Monahan, Esq., James G. Bordas III, Esq., Luca D. DiPiero, Esq., BORDAS & BORDAS, PLLC, Wheeling, West Virginia, Counsel for Petitioner

Amy M. Smith, Esq., STEPTOE & JOHNSON, PLLC, Bridgeport, West Virginia, Michelle Gaston, Esq., STEPTOE & JOHNSON, PLLC, Wheeling, West Virginia, Counsel for Respondent

WALKER, Justice:

Brian Frye contends that his home has suffered damage due to underground mine subsidence. He submitted a claim to his home insurer, Respondent Erie Insurance, Co. and notified the Board of Risk Insurance and Management of the damages. Erie and BRIM investigated Mr. Frye’s claim. Erie denied the claim, and BRIM later informed Mr. Frye that the damage to his property was not due to mine subsidence. Mr. Frye then sued Erie for breach of contract, among other claims. The circuit court granted summary judgment to Erie, concluding that Erie functioned as BRIM’s agent in the adjustment of Mr. Frye’s claim. Mr. Frye next moved the circuit court to alter or amend that judgment, arguing that it threatened the constitutionality of article 30 ("Mine Subsidence Insurance"), chapter 33 of the West Virginia Code. In so doing, Mr. Frye presented arguments to the circuit court that drew into question the constitutionality of statutes affecting the public interest of West Virginia, so that, under West Virginia Rule of Civil Procedure 24(c) and circumstances present, here, the circuit court was obliged to "give notice thereof to the attorney general of this State." That did not occur. So, in these particular circumstances, we now vacate the order denying Mr. Frye’s Rule 59(e) motion and remand this matter to the circuit court for further proceedings as described, below.

I. FACTUAL AND PROCEDURAL BACKGROUND

Mr. Frye owns a home in Ohio County, West Virginia. He came to believe that his house, garage, and property had been damaged by underground mine subsidence. So, on November 21, 2017, Mr. Frye’s counsel submitted a claim against Mr. Frye’s homeowner’s insurance policy, issued by Erie Insurance, Co.

Mr. Frye’s counsel also notified the Board of Risk and Insurance Management^{1 1 1 1} the same day. BRIM responded that Erie, and not BRIM, insured the Frye property, so that any damages related to mine subsidence would be paid by Erie, not BRIM. Yet, as BRIM acknowledged, it "does play a role in the mine subsidence claim process … basically … as a reinsurer for Erie[.]" BRIM also advised Mr. Frye that its "role can be found at" article 30, chapter 33 of the West Virginia Code and attendant legislative rules. BRIM directed Mr. Frye to "submit [his] claim to Erie" so that Erie could then "present it to [BRIM] with documentation" of Mr. Frye’s mine subsidence coverage. BRIM represented that Mr. Frye’s letter would be "place[d] with the claim information when received from Erie."

1 BRIM is a creature of statute, see W. Va. Code § 29-12-3 (2001), and is tasked with "general supervision and control over the insurance of state property, activities and responsibilities …." Id. § 29-12-5(a)(1) (2024).

1 Tennessee Rule of Civil Procedure 24.04 is substantially similar to the provisions of West Virginia Rule of Civil Procedure 24(c). The Tennessee Rule provides: When the validity of a statute of this state or an administrative rule or regulation of this state is drawn in question in any action to which the State or an officer or agency is not a party, the court shall require that notice be given the Attorney General, specifying the pertinent statute, rule or regulation.

1 See, e.g., State of West Virginia Board of Risk and Insurance Management, 2023 Annual Report, 2 (Aug. 28, 2023).

1 The mine subsidence coverage is set forth in an endorsement entitled "West Virginia Coal Mine Subsidence Coverage Part Endorsement" which outlines, inter alia, coverage, exclusions, and other sundry provisions including a lengthy arbitration provision which provides for arbitration only if BRIM and the insured "mutually consent[.]" Although this endorsement language includes an occasional reference to BRIM, it is always in conjunction with "the company" or not at all. "The company" is expressly defined as "the company providing this insurance as designated on the Declarations." As its final provision, that endorsement states that "ALL OTHER PROVISIONS OF THE POLICY APPLY." Nowhere does the endorsement reflect an agreement by petitioner to Erie’s delegation of its contractual obligations, nor could it reasonably do so in light of all the other language unequivocally demonstrating that petitioner has contracted solely with Erie for the coverage outlined in the policy and as governed exclusively by the terms of that policy.

Erie sent Mr. Frye’s counsel a reservation of rights letter on December 7, 2017. Five days later, Erie advised Mr. Frye’s counsel that it had "submitted an assignment to BRIM to investigation [sic] the cause of the loss to the insured property." BRIM engaged Irvine & Associates, Inc. to investigate Mr. Frye’s claim.

On January 19, 2018, engineer Richard A. Bragg (unaffiliated with Irvine & Associates) inspected Mr. Frye’s property at Erie’s behest. Mr. Frye and his lawyer were present. In a report dated February 5, 2018, Mr. Bragg concluded that the damage observed at Mr. Frye’s property was not consistent with mine subsidence and other causes were more plausible. The engineer later elaborated on what those other causes were—for example, settlement and frost heave. Mr. Frye was not given a copy of Mr. Bragg’s report until October 2018. Erie did, however, send Mr. Frye numerous status letters between January 3 and September 24, 2018, informing him that his claim was open and that the mine subsidence investigation was pending.

Also on January 19, 2018, Irvine & Associates contacted Mr. Frye’s attorney to schedule an inspection independent of the one performed by Mr. Bragg. On March 26, 2018, engineer Robert L. Bloomberg inspected Mr. Frye’s property at Irvine & Associate’s request (acting on behalf of BRIM). Mr. Frye’s lawyer accompanied Mr. Bloomberg throughout the inspection. Mr. Bloomberg authored a report dated October 12, 2018, in which he also concluded that Mr. Frye’s property had not been damaged by mine subsidence. Irvine & Associates emailed that report to Mr. Frye’s counsel the same day and invited Mr. Frye’s counsel to submit any additional claim documentation within thirty days. Based on email correspondence between Irvine & Associates and BRIM, it appears that Mr. Frye’s lawyer did not respond to the October 12 email.

On October 19, 2018, Erie sent Mr. Frye’s counsel a letter denying insurance coverage:

[Erie] has completed our investigation into the property damage loss which included a personal inspection and two engineer inspections from Romauldi, Davidson, & Associates and Bloomberg Consulting Engineer. Our investigation has determined that the damages to the insured property were not caused by mine subsidence, but were caused by wear and tear and deterioration, maintenance and earth movements. A review of the language in the Extracover Policy specifically excludes coverage for each of these causes of loss.

On February 27, 2019, BRIM notified Mr. Frye and counsel that it had determined that damage to the Frye home was "not the result of collapse of an underground mine." The letter also mentioned the prior communications with Mr. Frye’s lawyer:

The report of our consulting engineer is attached [i.e., the Bloomberg report]. This is the same report which our adjusters, Irvine and Associates, first forwarded to your attorneys … on October 12, 2018. Since that time, we have been waiting to see if you or your attorney would present any contrary or additional evidence to dis

pute the report. A second copy of the report was sent to [your counsel] on January 22, 2019. To date, we have received no response taking issue with our findings.

On February 21, 2019, Mr. Frye filed a lawsuit against Erie for breach of the insurance contract and common law and statutory bad faith. Erie moved for judgment on the pleadings in June 2021, arguing that under article 30, chapter 33 of the West Virginia Code and § 115-1-4 of the West Virginia Code of State Rules, BRIM had the exclusive authority to adjust Mr. Frye’s claim for damages arising from mine subsidence, so that it could not be said to have breached the insurance contract when Mr. Frye’s claim was denied. As to Mr. Frye’s common law and statutory bad faith claims, Erie argued that it could not be subject to those claims absent a breach of the insurance contract. Mr. Frye responded that BRIM’s "participation in the mine subsidence investigation did not absolve Erie from complying with its obligations as [Mr. Frye’s] insurer"—in other words, that an insurer may not delegate the duties it owes to the insured to another party—and that his bad faith claims were independent of his claim against Erie for breaching the insurance contract.

The court denied Erie’s motion in July 2021, concluding that,

BRIM’s role does not nullify Erie’s obligation to its insured to reasonably investigate all claims arising under its homeowners insurance policies such that would render any breach of contract claim legally inoperative. Plaintiff has adequately set forth factual allegations supporting viable claims for breach of contract as well as common law and statutory bad faith.

Following additional discovery, Erie moved for summary judgment in February 2022, reiterating its earlier arguments. Erie also argued that Mr. Frye had not offered evidence to establish that Erie engaged in pattern or practice of claims handling that violated the Unfair Trade Practice Act, West Virginia Code §§ 33-11-1 to 10 (UTPA). Mr. Frye responded with arguments similar to those in the earlier round of briefing. Regarding his UTPA claim, Mr. Frye argued that certain discovery responses tended to show that Erie had committed multiple violations of that statute in its handling of his claim, and so preserved a genuine issue of material fact for trial. The court heard argument on Erie’s motion for summary judgment during the February 2022 pre-trial conference.

The court entered an order granting Erie’s motion for summary judgment on March 3, 2022. Relying on West Virginia Code § 33-30-8 (2016),^{2 2 2 2} West Virginia Code of State Rules § 115-1-4.1,^{3 3 3} Higginbotham v. Clark, ^{4 4 4} and a recent decision by the United States District Court of the Northern District of West Virginia,^{5 5} the court concluded that,

2 W. Va. Code § 33-30-8 (2016) (in part) (BRIM "is authorized to undertake adjustment of losses and administer the fund, or it may provide in a reinsurance agreement that the insurer do so.").

2 Another Tennessee case cited in footnote 23 of the majority opinion is distinguishable from the present case. See Shelby Cnty. v. Deling. Taxpayers 2018, No. W202300446 COAR3CV, 2024 WL 1944737 (Tenn. Ct. App. May 3, 2024) ("Shelby County"). In Shelby County, the issue of notice to the Tennessee Attorney General was first raised on appeal because of a "recent case decided and filed in the Sixth Circuit Court of Appeals." Id. at *2. The lower court completed its review of Shelby County on June 29, 2022. See id. The "recent case" noted in Shelby County was not handed down by the Sixth Circuit until October 10, 2022, five months after the lower court in Shelby County had issued its ruling. Compare id. with Hall v. Meisner, 51 F.4th 185, 187 (6th Cir. 2022), reh’g denied, No. 21-1700, 2023 WL 370649 (6th Cir. Jan. 4, 2023), and cert, denied sub nom. Meisner v. Towanda Hall, — U.S. —,143 S. Ct. 2639, 216 L.Ed.2d 1225 (2023), and cert. denied, — U.S. —, 143 S. Ct. 2638, 216 L.Ed.2d 1225 (2023). An issue raised for the first time on appeal because of another court’s opinion that was not in existence at the time a case was before a trial court is dramatically different from when, as here, the parties were fully aware of an issue and chose not to raise it before the trial court.

2 Id.

2 As discussed by the majority, although Higginbotham chastises the Legislature for failing to include a method for obtaining review of claims decisions, the case was procedurally postured as an insured's attempted litigation of his retroactive policy cancellation before the Insurance Commissioner. At no point did the Higginbotham Court evaluate whether an insured maintains his contractual rights as against his insurer for wrongful denial of a mine subsidence claim.

3 W. Va. R. Code § 115-1-4.1 (eff. Aug. 1, 2021) ("All mine subsidence claims shall be reported to the Board for assignment to qualified independent adjusting firms in accordance with claim procedures as outlined on Appendix D. The selected adjusting firm will send all reports simultaneously to the insurer and the Boar d with all settlement authority, coverage questions and related matters being resolved by the Board.") (emphasis added).

3 Id. at 3. That BRIM represents it provides reinsurance to "home and business owners," rather than to insurance companies, suggests that BRIM is not really a reinsurer at all. Instead, it indicates BRIM understands it has privity with each and every homeowner who purchases mine subsidence coverage. See. infra, footnote 1818.

3 Moreover, if the Legislature intended to remove any tight of recourse by the insured against the insurer or BRIM, it surely would have indicated as much in that portion of the statute governing "[r]ight of recourse"—West Virginia Code § 33-30-12. Instead, that statute provides only that BRIM has no right of recourse against the insurer except in the case of fraud, and that it may require the insurer to seek recovery for payments in the event of fraud or violation of policy conditions. Id. The statutory scheme may not—through its complete silence as to an insured’s right of recourse—be read to strip an insured of well-established civil remedies.

4 189 W. Va. 504, 432 S.E.2d 774 (1993).

4 115 C.S.R. § 1.4.1.

4 However, regardless of whether Erie has express recourse under the terms of the Reinsurance Agreement, BRIM may also be liable to Erie for Implied indemnity. As we have explained: The general principle of implied indemnity arises from equitable considerations. At the heart of the doctrine is the premise that the person seeking to assert implied indemnity … has been required to pay damages caused by a third party …. In the typical case, the indemnitee is made liable to the injured party because of some positive duty created by statute or the common law, but the actual cause of the injury was the act of the indemnitor. Syl. Pt. 2, Hill v. Joseph T. Rverson & Son, Inc., 165 W. Va. 22, 268 S.E.2d 296 (1980). To whatever extent Erie claims its hands were tied by BRIM’s decision-making, because of its first-party contractual obligation to its insured, its liability to petitioner was created by BRIM and presents a fairly classic scenario for application of the equitable doctrine of implied indemnity. Moreover, to whatever extent BRIM claims immunity from suit, should Erie be held liable to petitioner for BRIM’s claims handling determination, consideration could be made for Erie’s assertion of a claim against it in the Legislative Claims Commission. See W. Va. Code § 14-2-13 ("The jurisdiction of the commission, except for the claims excluded by section fourteen, shall extend to the following matters: (1) Claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state or any of its agencies, which the state as a sovereign commonwealth should in equity and good conscience discharge and pay[.]"); cf. e.g., VanKirk v. Green Const. Co., 195 W. Va. 714. 466 S.E.2d 782 (1995) (involving contractual claim filed against DOH in Court of Claims and subsequent action in circuit court to resolve indemnity).

5 Patterson v. Westfield Ins. Co., 516 F.Supp.3d 557 (N.D. W. Va. 2021).

5 115 C.S.R., App’x D, ¶ 5.

[a]bsent (1) fraud, (2) any wrongful conduct occurring between the time of receiving notice of a mine subsidence claim and transferring the claim to BRIM (e.g., delay in transferring the case to BRIM), and/or (3) any wrongful handling of claims other than mine subsidence, an action for breach of contract may not be maintained against insurer [sic.] per W. Va. Code § 33-30-1 et seq. and the regulations enacted pursuant thereto. In this case, because [Mr. Frye] has presented insufficient evidence which would create genuine issues of material fact for a jury to decide on any of the above three scenarios, [Mr. Frye’s] breach of contract claims, as well as his extra contractual claims … must be dismissed.

The court entered a final judgment order on March 29, 2022. The next day, Mr. Frye filed a motion under West Virginia Rule of Civil Procedure 59(e) to alter or amend the judgment.^{6 6} There, Mr. Frye argued that the court clearly erred as a matter of law when it granted summary judgment to Erie because it (1) did not address whether BRIM’s role in mine subsidence claims violates various provisions of the West Virginia Constitution, and (2) concluded that the BRIM statutes and related regulations expressly prohibit an insured from bringing claims against his insurer in the context of mine subsidence claims. Erie responded that Mr. Frye’s constitution-all argument was a "red herring," considering the "vast evidence of no mine subsidence," at Mr. Frye’s property. Erie also argued that Mr. Frye could not use Rule 59(e) to introduce a new legal argument and that he had waived that constitutional argument by failing to alert the Attorney General of the matter, as required under West Virginia Rule of Civil Procedure 24(c).

6 W. Va. R. Civ. P. 59(e) (1998) ("Any motion to alter or amend the judgment shall be filed not later than 10 days after entry of the judgment."). This Court has adopted amendments to the West Virginia Rules of Civil Procedure, effective January 1, 2025. Amended Rule 59(e) states, "[a] motion to alter or amend a judgment shall be filed no later than 28 days after the entry of the judgment."

6 "Pushmi-pullyus … had no tail, but a head at each end, and sharp horns on each head. They were … terribly hard to catch." Hugh Lofting, The Story of Doctor Dolittle, 81 (1920).

The circuit court denied Mr. Frye’s Rule 59(e) motion on April 18, 2022. The court refused to rule on Mr. Frye’s constitutional argument because "it was not plead [sic.] in [the complaint] nor argued in [his] Motion for Summary Judgment briefings." The court then concluded that Mr. Frye's constitutional argument was moot because he had not raised a genuine issue of material fact in response to Erie’s motion for summary judgment. Regarding Mr. Frye’s second argument, the court determined that he had misunderstood its ruling at summary judgment. The court reiterated that an insured may sue his insurer on the mine subsidence endorsement of his homeowner’s insurance in certain circumstances—fraud, delay in assigning the claim to BRIM, or wrongful handling of claims other than loss due to mine subsidence. The court also concluded that, as it had "found in its [o]rder, [Mr. Frye] presented no genuine issues of material fact for a jury to resolve, and no reasonable jury could have concluded based upon those facts, that [Mr. Frye’s] home sustained damage from mine subsidence." Mr. Frye now appeals.

II. STANDARD OF REVIEW

[1, 2] "The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed."^{7 7} Mr. Frye’s Rule 59(e) motion is based on the summary judgment awarded to Erie, so we review de novo Mr. Frye’s Rule 59(e) motion.^{8 8} A Rule 59(e) motion is properly granted where "(1) there is an intervening change in controlling law; (2) new evidence not previously available comes to light; (3) it becomes necessary to remedy a clear error of law or (4) to prevent obvious injustice."^{9 9} While "[a] Rule 59(e) motion may be used to correct manifest errors of law or fact, or to present newly discovered evidence," it "is not appropriate for presenting new legal arguments, factual contentions, or claims that could have previously been argued."^{10 10}

7 Syl. Pt. 1, Wickland v. Am. Travellers Life Ins. Co., 204 W. Va. 430, 513 S.E.2d 657 (1998).

7 115 C.S.R., App’x C.

8 See Syl. Pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994) ("A circuit court's entry of summary judgment is reviewed de novo.").

8 2023 Annual Report at 11.

9 Syl. Pt. 2, Mey v. Pep Boys-Manny, Moe & Jack, 228 W. Va. 48, 717 S.E.2d 235 (2011).

9 Id. at 12.

10 Id. at 56, 717 S.E.2d at 243.

10 Premiums were lower during the 2016 fiscal year because, at that time, mine subsidence insurance payouts were capped at $75,000.

III. ANALYSIS

Mr. Frye assigns three errors to the circuit court’s denial of his Rule 59(e) motion. First, he argues that the circuit court committed a clear error of law affecting substantial justice when it declined to address the constitutionality of article 30, chapter 33 of the West Virginia Code and when it "fail[ed] to interpret [those statutes] in a manner that does not deprive [him] (and others similarly situated) of his constitutional rights to a rem- edy, due process, and equal protection of the law." Mr. Frye also contends that the circuit court committed clear legal error by denying his Rule 59(e) motion on the grounds that he had not raised a genuine issue of material fact as to whether the damage to his property was due to mine subsidence, when the court had not made that finding in its order granting summary judgment to Erie. Finally, Mr. Frye asserts that, even if the court had made such a ruling at summary judgment, he adduced sufficient evidence of property damage due to mine subsidence to withstand Erie’s motion for summary judgment. Before addressing Mr. Frye’s first (and determinative) assignment of error, we provide a short summary of article 30, chapter 33 of the West Virginia Code and our sole decision addressing those statutes, Higginbotham, v. Clark.

The Legislature enacted article 30 ("Mine Subsidence Insurance") of chapter 33 in 1982. In broad strokes, the legislation "provided that mine subsidence insurance coverage would be made available to all state residents through the State Board of Risk and Insurance Management [BRIM], which serves in an administrative capacity as the Manager and Trustee of the West Virginia Mine Subsidence Fund."^{11 11} The Legislature explained that it intended article 30 to respond to~-in fact, alleviate—the "great loss of home, shelter and property" caused by mine subsidence, along with the detriment that loss caused to West Virginians’ health, safety and welfare.^{12 12}

11 Higginbotham, 189 W. Va. at 505–06, 432 S.E.2d at 775–76 (internal notes omitted).

11 State of West Virginia Board of Risk and Insurance Management, 2018 Annual Report, "Reconciliation of Unpaid Claims and Claims Adjustment Expense Liability by Type of Contract," at 171 (Aug. 28, 2018) (emphasis added).

12 W. Va. Code § 33-30-1 (1982).

12 Experts known to have been hired by BRIM to review Mr. Frye’s claim are: (1) Irvine Associates; (2) Al Bragg of Romauldi, Davidson & Associates (inspected once but wrote two different reports); (3) Robert Bloomberg of Bloomberg Consulting Engineers (inspected and wrote one report); and (4) John Hempel (registered professional geologist), Jennifer Boyle (environmental specialist), and Keven Boyle (wildlife biologist) of EEI Geophysical Damage Investigations (inspected and wrote one report).

We have explained that,

[u]nder W.Va.Code, 33–30–1, et se.q., a rather complex bureaucratic system exists to ensure that eligible insureds receive mine subsidence coverage. The system works as follows: (1) the statute mandates that mine subsidence coverage be granted to all eligible insureds unless they affirmatively waive such coverage; (2) the insured pays a mine subsidence coverage premium to the insurer; (3) the insurer then forwards the premium, minus a "ceding commission," to [BRIM]; (4) [BRIM] "is authorized to undertake adjustment of losses and administer the fund" under W.Va. Code, 33–30–8; and (5) whenever a mine subsidence claim is submitted to an insurer, it must "be reported to [BRIM] for assignment to qualified independent adjusting firms …. The selected adjusting firm will send all reports simultaneously to the insurer and the Board with all settlement authority, coverage questions and related matters being resolved by the Board." 8 W.Va.C.S.R. § 115–1–4.1.^{13 13}

13 Higginbotham, 189 W. Va. at 513–14, 432 S.E.2d at 783–84 (Miller, J. concurring) (internal notes omitted) (emphasis in original).

13 S&P Global, US Homeowners Industry Loss Ratio Again Nears 90% (Jan. 6, 2022) (found at https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-homeowners-industry-loss-ratio-again-nears-90-68160774) (last accessed May 9, 2024).

We have also explained that § 115-1-4.1 "makes it clear that the insurer acts merely as an agent of the State and is bound by the Board’s decisions, because ‘all settlement authority, coverage questions and related matters’ are to be resolved by the Board."^{14 14}

14 Id. at 510, 432 S.E.2d at 780 (quoting W. Va. C.S.R. § 115-1-4.1).

14 S&P Global, US Homeowners Industry Posts Big Premium Gains, Loss Ratio Declines in Q1 (June 22, 2022) (https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-homeowners-industry-posts-big-premium-gains-loss-ratio-dedines-in-q1-70850250) (last accessed May 9, 2024). The best performing insurer (Farmers Insurance) posted a 40% loss ratio, while the worst performer (Liberty Mutual) had a 60.9% ratio.

In Higginbotham, we indicated that BRIM’S authority over the adjustment of mine subsidence claims conflicted with its nominal status as the "reinsurer" of insurers such as Erie, resulting in confusion as to "what recourse an insured has if aggrieved by a [BRIM] decision."^{15 15} We observed in that case that, "[w]here a typical reinsurance contract is involved, ‘there is no privity … between the original insured and the reinsurer; as a result, it is generally recognized that the original insured cannot recover directly from the reinsurer."^{16 16} Yet, we saw that BRIM’s "mine subsidence arrangement with insurers … is not a traditional reinsurance agreement," apparently because, again, under article 30, chapter 33 and BRIM’s legislative rules, "the insurer acts merely as an agent of the State and is bound by [BRIM’s] decisions …. "^{17 17} For that reason, in Higginbotham, we stated "it is necessary for [BRIM] to set forth in its regulations some procedural guidelines applicable to this variation on the reinsurance contract," lest "[f]undamental principles of due process" be implicated.^{18 18}

15 Id.

15 Board of Risk and Insurance Management, 2021 Annual Report, "Risk Funding Study" by AON at 237 (August 28, 2021).

16 Id. (quoting Allan D. Windt, Insurance Claims and Disputes § 7.10 (2d ed.1998)).

16 2023 Annual Report at 31.

17 Id.

17 See H.B. 3542 (passed March 10, 2023) (decreasing monies in the "Mine Subsidence Insurance Fund … by expiring the amount of $50,000,000"); 2023 Annual Report at 28 (describing how the money would be used to cover claims against other state agencies, like schools).

18 Id.; see also id. at 515, 432 S.E.2d at 785 (Miller, J., concurring) ("I agree with the majority that the appellant's constitutional right to due process has not been met in this case and a remand is therefore necessary."). At the pretrial conference, both parties represented to the circuit court that, to their knowledge, Mr. Frye did not have an administrative remedy for the allegedly erroneous claims decision. Later, during briefing to this Court, Erie pointed to Appendix A to West Virginia Code of State Rules § 115-1-3.4—the form, mine subsidence coverage insurers must issue, and which includes an arbitration provision. That provision begins as follows: In the event that the Insured and the Company, through [BRIM], as called for by the statute, are unable to reach an agreement as to: (1) whether the insured STRUCTURE has sustained damage … during the effective policy dates, due to COAL MINE SUBSIDENCE … then either the Insured or BRIM may request that such issue(s) in dispute will be submitted to binding arbitration…. At such time as the parties have mutually indicated their written consent to binding arbitration of the issue(s) in dispute, the arbitration process shall thereby commence …. According to Erie, because "the regulations provide a remedy of arbitration against BRIM that Mr. Frye has failed to acknowledge, … the [circuit [c]ourt properly declined to address a facial challenge to" article 30, chapter 33. It appears that Erie did not raise this argument to the circuit court in response to Mr. Frye's Rule 59(e) motion. For that reason, we decline to address it.

18 A handful of courts have recognized that, in limited circumstances, an insured may have a cause of action against their insurer’s reinsurer. One of those limited circumstances is when the reinsurance contract is more than a contract of indemnity but is, effectively, the contract for insurance directly to the insured where the reinsurer takes the reins of administering and adjusting claims. For instance, in O’Hare v. Pursell, 329 S.W.2d 614 (Mo. 1959), the court allowed insureds to pursue claims directly against a reinsurer because the reinsurer’s policy was effectively for the benefit of the insured, not the primary insurer: An ordinary contract of reinsurance, in the absence of provisions to the contrary, operates solely as between the reinsurer and the reinsured. It creates no privity between the original insured and the reinsurer. The contract of insurance and the contract of reinsurance are totally distinct and unconnected. An ordinary contract of reinsurance is one of indemnity against loss, and no action will lie until the loss has been paid…. The liability of the reinsurer is solely and exclusively to the reinsured. The reinsurer has no contractual obligation with the original insured and is not liable to him…. [H]owever, reinsurance contracts may be drafted in such a form as to create a liability on the part of the reinsurer not only to the reinsured primitive insurer but also in favor of the original insured…. [W]here the contract of reinsurance is more than a mere contract of indemnity, and is made for the benefit of the policyholders of the reinsured, and by it the reinsurer assumes the liability of the latter upon its policies, the liability of the reinsurer may be directly enforced by the insured[.] 329 S.W.2d at 620 (cleaned up). The discussion in O'Hare seems indistinguishable from the instant case. West Virginia law requires insurers to offer mine subsidence insurance ostensibly backed by the reinsurance fund administered by BRIM. But private insurers must charge premiums set by BRIM, irrespective of the private insurers’ actual processing, indemnity, or bad faith expenses; insurers must use policy language drafted by BRIM; BRIM adjusts every claim; and BRIM represents in its annual reports that it provides reinsurance to "home and business owners," rather than to insurance companies. These circumstances suggest that BRIM is not really a reinsurer at all. Instead, it indicates BRIM understands it has privity with each and every home and business owner who purchases mine subsidence coverage. See also, Felman Prod., Inc. v. Indus. Risk Insurers, No. CIV.A. 3:09-0481, 2009 WL 3380345, at *2 (S.D.W. Va. Oct. 19, 2009) ("A reinsurer may also become directly liable to the insured via conduct; generally by directly handling an insured's claim. See Klockner Stadler Hurter Ltd. v. The Insur. Co. of Penn., 785 F.Supp. 1130, 1134 (S.D.N.Y. 1990) (finding a reinsurer that directly handled an insured’s claim is directly liable to that insured); Allstate Insur. Co. v. Administratia Asigurarilor De Stat, 948 F.Supp. 285 (S.D.N.Y, 1996) (same); Venetsanos v. Zucker, Facher & Zucker, 271 N.J.Super. 459, 638 A.2d 1333 (N.J. Super. 1994) (same)."); 8 Blashfield Automobile Law and Practice § 342:12 (2023) ("[A] reinsurance contract may be drawn in such form and with such provisions as to create a liability on the part of the reinsurer directly to the original insured."); David J. Marchitelli, Who May Enforce Liability of Reinsurer, 87 A.L.R.6th 319 (2013) ("[C]ourts have found that … third parties were entitled to proceed directly against a reinsurer … where the reinsuring document, either by intent or poor draftsmanship, created rights in third parties and became more than an ordinary reinsurance agreement or where an overreaching reinsurer exposed itself to liability by behaving more like a primary insurer than a reinsurer."). The statutory-regulatory-contractual relationship between BRIM and Erie might also be characterized as a "fronting" arrangement where a licensed insurer writes a policy that is then ceded to an unlicensed reinsurer who controls claims decisions. Esteban Carranza-Kopper, Fronting Arrangements: Industry Practices and Regulatory Concerns, 17 Conn. Ins. L.J. 227 (2010).

Higginbotham is problematic for both Erie and Mr. Frye, as the briefing to the circuit court demonstrates. In its motion for summary judgment, Erie stressed the statement in Higginbotham that, under § 115-1-4.1, insurers such as Erie function as agents of BRIM and are bound by its decisions. Mr. Frye refused to engage with Erie on that argument, electing to focus on the theory that Erie—with whom he was in contractual privity—could not delegate its duties under the insurance contract to BRIM. Notably, Mr. Frye did not once cite Higginbotham in his response to Erie’s brief in support of its motion for summary judgment. Yet, that case became the backbone of his argument in his Rule 59(e) motion: that the circuit court’s summary judgment ruling jeopardized the constitutionality of article 30, chapter 33 by depriving him of the only possible avenue to challenge BRIM’s coverage decision, and that to save the statutes,¹⁹ the court had to allow his breach of contract claim against Erie to proceed.

19 See Syl. Pt. 1, in part, Stale ex rel. Appalachian Power Co. v. Gainer, 149 W. Va. 740, 143 S.E.2d 351 (1965) ("Every reasonable construction must be resorted to by the courts in order to sustain constitutionality, and any reasonable doubt must be resolved in favor of the constitutionality of the legislative enactment in question.").

Erie did not respond to that argument, substantively. Instead, it argued, first, that Mr. Frye could not raise a new legal argument via Rule 59(e) and, second, that he had waived the issue by not notifying the Attorney General of the matter under West Virginia Rule of Civil Procedure 24(c). On the first point, Mr. Frye replied to Erie, below, and now argues on appeal, that the constitutional arguments he pressed in his Rule 59(e) motion were not new. Rather, according to Mr. Frye, they were discussed at length during the pretrial conference. After a careful review of the transcript of that hearing, we agree.

Numerous times during the pretrial hearing, the circuit court’s questions and comments and the parties’ arguments dovetailed with Higginbotham; article 30, chapter 33; § 115-1-4.1; and the availability of remedies and process to the insured. For example, the court discussed West Virginia Code § 33-30-8 and BRIM’s legislative rules:

Now, in 33-30-8, I don’t agree that it clearly says that the board is the only – is the exclusive agency with which to adjust claims…. But then you look at the regs enacted pursuant to that, it’s clear that that’s what they want to happen, to me. And I think that’s nuts. For as nuts as that is, to me it makes the insurer immune, which nobody has really spelled out and the Supreme Court has said it explicitly, but

Later, in response to Mr. Frye’s counsel’s statement that Erie could not delegate its duty to Mr. Frye to BRIM, the circuit court commented, that, "by that statement, to me it sounds almost like a constitutional argument, is what you’re arguing, that the legislature could not authorize by statute a delegation, constitutionally, of an insurer’s duty of fair dealing with its insured, by handing some adjustment over to a separate outfit like BRIM." The court and counsel for Mr. Frye later engaged in this colloquy:

THE [CIRCUIT] COURT: But my response is potentially it’s bad faith if – and again, I’m throwing this word out loosely – [Erie is] not immune in a mine subsidence case. The way I’m reading this potentially is – and I’m not making this finding yet – once a claim is made under mine subsidence and [the insurer] refer[s] it to BRIM, I don’t think [Erie has] has a duty to keep you informed of squat, potentially, as unfair as that may seem.

[Counsel for Mr. Frye]: Well, and that comes to my third point, which is if the law is to be interpreted that way, then you have a whole bunch of West Virginians with no remedy.

[Counsel for Mr. Frye]: I agree.

[Counsel for Mr. Frye]: And that’s a problem. That’s clearly not what was intended by the statute is that, look, you know, hey, you can go purchase mine subsidence coverage all you want, and BRIM

THE [CIRCUIT] COURT: Can do whatever it wants and you’re screwed.

[Counsel for Mr. Frye]: Yeah, BRIM can do whatever it wants and you got no remedy.

THE [CIRCUIT] COURT: Even in first party. It seems completely crazy to me, which goes back to my constitutional suggestion. Are you actually maybe suggesting that the manner in which this was written is unconstitutional, which is why I think [counsel for Erie] is saying, hey, let’s pull the reins in here, I’m not arguing complete immunity, I’m trying to pin all this down and keep the argument much more sustainable on appeal that what you guys are maybe throwing out.

The court and Mr. Frye’s counsel engaged in a similar discussion in the context of Mr. Frye’s breach of contract claim:

[Counsel for Mr. Frye]: But the breach of contract claim, the only thing my client can do is file a claim for those benefits with Erie. They can’t file it with the [S]tate. File it with Erie, and if those aren’t paid, file a breach of contract claim. And that’s the initial thing here, which is that my client still hasn’t been paid his benefits or had an opportunity to be heard. And we have an expert to testify

THE [CIRCUIT] COURT: Which is why this is about immunity. You guys can couch it any way you want, this is about immunity. The argument is the same for both. There is no breach of contract claim … if they have no duty to adjust and investigate and make a decision on whether the claim is valid.

….

[Counsel for Mr. Frye]: But a contractual relationship says, hey, you pay this, I’ll do this in exchange. And the contract was you pay premiums, you have mine subsidence, we’ll pay you the benefits.

THE [CIRCUIT] COURT: If it’s covered, yeah.

[Counsel for Mr. Frye]: If it’s covered. But this is my client’s only mechanism for determining whether that’s covered. My client didn’t get to have a hearing in front of BRIM or present anything in front of BRIM. And my client has no contract with BRIM.

Finally, the parties and the circuit court discussed whether a certified question ought to be submitted to this Court. The circuit court indicated that that course might be appropriate and outlined this question: "is an insurer in West Virginia immune from breach of contract and/or – and this is a big umbrella – bad faith, that would encompass UTPA, substantially prevail, all that stuff, in a mine subsidence case, absent fraud or a delay in the transfer of the claim to BRIM." Counsel for Mr. Frye later raised this scenario:

[Counsel for Mr. Frye]: I think also I guess perhaps secondarily with the Supreme Court would be is there a remedy under 33 or whatever the statute is for a West Virginia resident who’s – THE [CIRCUIT] COURT: Alleging breach of contract and bad faith.

[Counsel for Mr. Frye]: Or is there any remedy at all with respect to if a determination is made by BRIM that

THE [CIRCUIT] COURT: Denial of mine subsidence.

[Counsel for Mr. Frye]: Yeah. Is there a remedy at all.

THE [CIRCUIT] COURT: And nobody here seems to think there’s an administrative appeal process.

In Higginbotham, we did not consider the discrete question posed by Erie to the circuit court at summary judgment: whether an insured aggrieved by a BRIM decision may vindicate his claimed rights under the mine subsidence insurance contract by suing his insurer for breaching that contract. Regardless, the majority opinion in Higginbotham made clear that the issue left unaddressed, there—"what recourse an insured has if aggrieved by a Board of Risk decision"—may implicate constitutional questions. The exchanges quoted above demonstrate that the parties and the lower court recognized those questions before, the circuit court decided Erie’s motion for summary judgment. But we do not see that Mr. Frye could have expressly argued these questions until after the circuit court granted Erie’s motion for summary judgment; before that moment, an avenue of redress remained open to Mr. Frye— the breach of contract claim against his insurer—and the constitutional questions forecasted in Higginbotham were academic.²⁰

20 Recall that, in denying Erie’s motion for judgment on the pleadings, the circuit court had concluded that "BRIM’s role does not nullify Erie's obligation to its insured to reasonably investigate all claims arising under its homeowners insurance policies such that would render any breach of contract claim legally inoperative." (Emphasis added).

[3] This brings us to West Virginia Rule of Civil Procedure 24(c), which, in pertinent part, provides that, "[w]hen the constitutionality of a statute of this State affecting the public interest is drawn in question in any action to which this State or an officer, agency, or employee thereof is not a party, the court shall give notice thereof to the attorney general of this State."²¹ Before the circuit court, Erie argued that Mr. Frye had waived his constitutional arguments by failing to notify the Attorney General of this matter, as required by Rule 24(c). Mr. Frye replied that he had not waived the arguments, distinguished Erie’s authority,²² and stated that he would not object to any additional delay that might be caused if the circuit court followed that rule’s mandate and notified the Attorney General of the constitutional questions raised in the Rule 59(e) motion.

21 This Court adopted various amendments to the West Virginia Rules of Civil Procedure, effective January 1, 2025. The language quoted above remains in amended Rule 24. Effective January 2, 2025, it appears in new subsection (d).

22 See, e.g., Petition of City of Clairton for Ct. Approval of Additional One-Half Percent Gen. Purpose Earned Income Tax, 139 Pa.Cmwlth. 354, 590 A.2d 838, 840 (1991) (appellants waived arguments regarding constitutionality of statute where they failed to notify the attorney general as required under Pennsylvania rules of civil and appellate procedure).

On appeal, Mr. Frye restates his position that Rule 24(c) did not—and does not—-operate to bar his constitutional arguments. Erie does not now appear to argue that Mr. Frye’s failure to provide notice to the attorney general waives those constitutional arguments, as Erie acknowledges, "the burden in Rule 24(c) to give notice to the Attorney General is placed on the court …. " Rather, Erie argues that

[i]f Mr. Frye desired a ruling on a constitutional issue, he should have briefed the issue at some point before the [c]ircuit [c]ourt ruled on the summary judgment motion and requested the [c]ircuit [c]ourt to notify the Attorney General so that his office could seek intervention to defend the statutory scheme.

[4] Given the current language of Rule 24(c), and the preceding discussion of the development of this case, we do not agree with Erie’s argument and instead conclude that the Attorney General was due notice of this action.²³ Again, under Rule 24(c), "[w]hen the constitutionality of a statute of this State affecting the public interest is drawn in question in any action to which this State or an officer, agency, or employee thereof is not a party, the court shall give notice thereof to the attorney general of this State." There can be no dispute that article 30, chapter 33 of the West Virginia Code affects the public interest; the Legislature enacted those statutes to remedy the "great loss of home, shelter and property" caused by mine subsidence, along with the "detriment" which that loss caused to West Virginians’ "safety, health and welfare."²⁴ Neither the State, nor a State officer, agency, or employee is a party to this litigation—there is one plaintiff (Mr. Frye) and one defendant (Erie). The circuit court was alerted to Rule 24(c) in the course of briefing on Mr. Frye’s Rule 59(e) motion, and Mr. Frye indicated his willingness to accept any delay that may follow from notice pursuant to Rule 24(c). For those reasons, we conclude that the circuit court erred by failing to notify the Attorney General of this matter once Mr. Frye moved to alter or amend the summary judgment order on the grounds that the ruling, there, endangered the constitutionality of article 30, chapter 33 of the West Virginia Code.²⁵ On balance, we conclude that the appropriate remedy in these unique circumstances is to (1) vacate the circuit court’s order of April 18, 2022, deny- ing Mr. Frye’s Rule 59(e) motion²⁶ and (2) remand the matter to permit the circuit court to notify the Attorney General of these proceedings in accordance with Rule 24(c). Regardless of whether the Attorney General seeks permission to intervene in the proceedings on remand,²⁷ the court may undertake any additional proceedings it deems necessary to resolve Mr. Frye’s pending motion to alter or amend the summary judgment order.

23 See, e.g., In re Adoption of E.N.R., 42 S.W.3d 26, 33 (Tenn. 2001) (under Tennessee Rule of Civil Procedure 24.04, the trial court functions as a "gatekeeper to inquire whether notice has been provided to the Attorney General by the challenger and to suspend proceeding on the constitutional challenge until such notice has been provided and a response from the Attorney General received"); Tenn. R. Civ. P. 24.04 ("When the validity of a statute of this state or an administrative rule or regulation of this state is drawn in question in any action to which the State or an officer or agency is not a party, the court shall require that notice be given the Attorney General, specifying the pertinent statute, rule or regulation."); see also Shelby Cnty. v. Deling. Taxpayers 2018, No. W2023-00446-COA-R3-CV, 2024 WL 1944737, at *4 (Tenn. Ct. App. May 3, 2024) (after appellate court ascertained that notice of constitutional question had not been provided to the attorney general, directing that, on remand, "the trial court must also consider the applicability of Tennessee Rule of Civil Procedure 24.04"). The dissent emphasizes the following passage from In re E.N.R.: The record shows that the constitutional challenge in this case was late-raised, minimally addressed, characterized by counsel as mentioned only for the purpose of preserving it for appeal, and perhaps was simply a last ditch effort to overcome the court’s preliminary findings in favor of the opposition. To now rely upon the importance of this issue as grounds for appellate review is near hypocrisy given the short shrift it received at trial where it could have, and should have, been fully adjudicated. Dissent at 808 (quoting In re Adoption of E.N.R., 42 S.W.3d at 32). But that passage is not part of the Tennessee court’s analysis of Rule 24.04 of the Tennessee Rules of Civil Procedure. Rather, it is part of the court’s consideration of the separate issue of whether the appellant had waived his constitutional argument. See id. at 29-33; see also Miltier v. Bank of Am., N.A., No. E2010-00537-COA-R3CV, 2011 WL 1166746, at *4 (Tenn. Ct. App. Mar. 30, 2011) (constitutional challenge waived where argument raised for the first lime on appeal); Yebuah v. Ctr. for Urological Treatment, PLC, No. M2018-01652-COAR3-CV, 2020 WL 2781586, at *4 (Tenn. Ct. App. May 28, 2020), rev’d on other grounds, 624 S.W.3d 481 (Tenn. 2021) (reversing trial court’s ruling that appellants had waived their constitutional argument). In the portion of In re Adoption of E.N.R. devoted to Rule 24.04, the issue is whether the trial court committed reversible error when it did not, pursuant to that rule, "ensure that notice of the constitutional challenge ha[d] been provided to the Office of the Attorney General." In re Adoption of E.N.R., 42 S.W,3d at 33. The Supreme Court of Tennessee concluded that the trial court had not committed reversible error in the circumstances of that case because it was "unreasonable to expect a trial court to suspend a proceeding upon the untimely mention by counsel that a statute is unconstitutional," id. (emphasis added), that is, one made tepidly during closing argument and for the express purpose of preserving the matter on appeal rather than obtaining a substantive ruling by the trial court. The present circumstances are not comparable. As explained above, Mr. Frye was ill-positioned to raise these constitutional questions until the circuit court entered judgment in Erie's favor on his breach of contract claim. See supra, n. 20. Further, the circuit court was made aware of Rule 24(c) and Mr. Frye’s willingness to accede to any delay that may accrue while notice was given to the Attorney General.

24 W. Va. Code § 33-30-1.

25 See also W. Va. Code § 55-13-11 (1941) (providing that, "[i]n any proceeding [in which declaratory relief is sought, and] which involves the validity of a municipal ordinance or franchise, such municipality shall be made a party, and shall be entitled to be heard, and if the statute, ordinance or franchise is alleged to be unconstitutional, the Attorney General of the state shall also be served with a copy of the proceeding and be entitled to be heard").

26 See Oklahoma ex rel. Edmondson v. Pope, 516 F.3d 1214, 1216 (10th Cir. 2008) (stating that "[w]hen the parties and the court statutorily charged with notifying the Attorney General of a constitutional challenge to a federal statute fail to do so, the appellate court has discretion to respond in different ways, depending on the nature of the arguments and the progress of the litigation").

27 See W. Va. R. Civ. P. 24(b) ("When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a federal or State governmental officer or agency or upon any regulation, order, requirement, or agreement issued or made pursuant to the statute or executive order, the officer or agency upon timely application may be permitted to intervene in the action."). Rule 24(b) is amended effective January 1, 2025. As amended, subsection (b)(2) provides in pertinent part that, (2) By a government officer or agency. On timely motion, the court may permit a federal or state governmental officer or agency to intervene if a party's claim or defense is based on: (A) a statute or executive order administered by the officer or agency; or (B) any regulation, order, requirement, or agreement issued or made under the statute or executive order.

VACATED AND REMANDED.

CHIEF JUSTICE ARMSTEAD dissents and reserves the right to file a dissenting Opinion.

JUSTICE HUTCHISON concurs and reserves the right to file a concurring Opinion.

JUSTICE WOOTON concurs in part and dissents in part and reserves the right to file a separate Opinion.

JUSTICE BUNN disqualified.

JUDGE ABRAHAM sitting by temporary assignment.

ARMSTEAD, Justice, dissenting:

I respect the majority’s desire to abide by the general provisions of Rule 24(c) of the West Virginia Rules of Civil Procedure ("Rule 24(c)"), and do not dispute that notice to the Attorney General and the potential participation of the Board of Risk and Insurance Management ("BRIM") in this action may be helpful in resolving the matter before us. However, I am concerned with the majority’s remand of this matter to require such notice at this late stage of the proceedings when no party timely and affirmatively raised a constitutional question. I believe that imposing such requirement, following a grant of summary judgment and denial of a motion pursuant to Rule 59(e) of the West Virginia Rules of Civil Procedure ("Rule 59(e)"), is not required by the rule, and I fear it will set a concerning precedent.

Following entry of summary judgment against him, Mr. Frye filed a Motion to Alter or Amend Judgment, pursuant to Rule 59(e). In that motion, he asserted for the first time that the circuit court had failed to address the constitutionality of the statutory scheme established by our Legislature regarding the role BRIM, a non-party, takes in the claims process for mine subsidence claims. In that motion, he advanced no argument that the West Virginia Attorney General should be given notice of this constitutional question pursuant to the provisions of Rule 24(c). Instead, the question of whether such notice is required was first raised by Respondent, Erie Insurance Company ("Erie"), in its response to the Motion to Alter or Amend Judgment. A reading of the transcript of the pretrial hearing, where these issues were discussed, shows that Mr. Frye made the conscious choice not to assert any claims against BRIM. Because Mr. Frye decided what claims to assert, and he plainly decided to not assert any allegation against BRIM, challenge the constitutionality of the claims process, or seek intervention by the West Virginia Attorney General, the retroactive application of Rule 24(c) at the appellate stage of the action is untimely. Therefore, I dissent. At the pretrial conference, it was the circuit court that raised the potential issue regarding the constitutionality of BRIM’s involvement in the process of adjusting mine subsidence claims. Prior to that hearing, the record before this Court shows the parties briefed neither the constitutional issue nor the application of Rule 24(c). There was limited discussion of the potential constitutional issue at the pretrial hearing. However, Mr. Frye’s counsel, even following the discussion at that hearing, did not request that notice be given to the Attorney General and had not directly raised the issue in any pleading, prior to the grant of summary judgment. Indeed, Mr. Frye clearly had the opportunity at the conclusion of the pretrial hearing to raise the constitutional issue and the application of Rule 24(c) prior to the circuit court’s entry of summary judgment. He did not do so.

Moreover, no party raised the constitutional issue in their written memoranda addressing Erie’s motion for summary judgment. Again, it was at the pretrial hearing that the circuit court first raised the constitutional issue. During this discussion at the pretrial hearing, it is clear that counsel for Mr. Frye was aware of the constitutional conundrum yet chose to not pursue it. The circuit court began its discussion by simply raising a question about the process through which mine subsidence claims are processed:

THE [CIRCUIT] COURT: You’re saying – by that statement, to me it sounds almost like a constitutional argument, is what you’re arguing, that the legislature could not authorize by statute a delegation, constitutionally, of an insurer’s duty of fair dealing with its insured, by handing some adjustment over to a separate outfit like BRIM.

[Counsel for Mr. Frye]: I think that’s part of it, I think that’s one prong of it, Your Honor, and one reason that they can’t. But the other is that the code specifically provides for the insurer to handle and settle the claim in the customary manner. But the other is that the code specifically provides for the insurer to handle and settle the claim in the customary manner. And that’s where the difficulty is. They specifically say we’re a reinsurer. That’s why they have insurance companies do it, Your Honor, to be quite frank.

Let’s look at this from a practical standpoint, though. If BRIM was truly the ones that – if the insurance company had no authority to do anything, there would be no reason to involve the insurance companies. There would just be a fund set up by the state, and you would make a claim to that fund when you have mine subsidence, and then BRIM would make a decision, and you either get money from the state or you wouldn’t.

The discussion of the BRIM statutory process turned to whether insureds have a remedy:

[Counsel for Erie]: What I’m saying, Your Honor, is that when a mine subsidence claim is submitted, the carrier is statutorily obligated to assign to BRIM the investigation and coverage determination of that mine subsidence claim. In this case Erie did that. Erie hired its own engineer to investigate whether there were any other possible covered causes or whether it was mine subsidence, and Erie sent the delay letter every month to Mr. Frye, telling him his claim was still being investigated by BRIM for mine subsidence coverage. And when Erie got BRIM’s engineer’s report, Erie issued a denial letter. So it’s not as if Erie just sent it to BRIM and did nothing.

….

THE [CIRCUIT] COURT: [P]otentially its bad faith if – and again, I’m throwing this word out loosely – [Erie is] not immune in a mine subsidence case. The way I’m reading this potentially is – and I’m not making this finding yet – once a claim is made under mine subsidence and they refer it to BRIM, I don’t think they have a duty to keep you informed of squat, potentially, as unfair as that may seem.

[Counsel for Mr. Frye]: Well, and that comes to my third point, which is if the law is to be interpreted that way, then you have a whole bunch of West Virginians with no remedy.

THE [CIRCUIT] COURT: I agree.806 [Counsel for Mr. Frye]: And that’s a problem. That’s clearly not what was intended by the statute is that, look, you know, hey, you can go purchase mine subsidence coverage all you want, and BRIM

THE [CIRCUIT] COURT: Can do whatever it wants and you’re screwed.

[Counsel for Mr. Frye]: Yeah, BRIM can do whatever it wants and you got no remedy.

THE [CIRCUIT] COURT: Even in first party. It seems completely crazy to me, which goes back to my constitutional suggestion. Are you actually maybe suggesting that the manner in which this was written is unconstitutional, which is why I think [Counsel for Erie] is saying, hey, let’s pull the reins in here, I’m not arguing complete immunity, I’m trying to pin all this and keep the argument much more sustainable on appeal than what you guys are maybe throwing out.

Counsel for Erie then appeared to take the position that the lack of a remedy was irrelevant because Erie followed the Legislative construct:

[Counsel for Erie]: I’ll take them backwards. In regard to West Virginia being without a remedy, Your Honor, I don’t really feel that that is – while [Counsel for Mr. Frye] may have a valid point, that is not the legislative scheme that is in place. The legislative scheme was put in place because no insurance carriers would write mine subsidence coverage. So[,] the State of West Virginia developed a plan to collect premiums, create a fund, investigate and pay out valid mine subsidence claims. That’s the West Virginia legislature that created that plan. Erie followed it to a T.

THE [CIRCUIT] COURT: Okay. And forgive my ignorance. Is there actually a remedy in administrative appeals, or no?

[Counsel for Erie]: Your Honor, I don’t know that answer to that, to tell you the truth. I will tell you in this case when Mr. Frye complained, BRIM came back out two years later and hired a second consultant, this time a geologist. Three people from EEI Geophysical came out. They again two years later independently concluded no evidence of mine subsidence. So[,] there is some kind of procedure that BRIM was willing to hire a second consultant to come out and review, but the results were the same, no mine subsidence.

Counsel for Mr. Frye, however, maintained that his only remedy was a breach of contract claim against the insurer, Erie, and the issue of whether there was mine subsidence was a jury question:

[Counsel for Mr. Frye]: Without question, without question, regardless of how it’s set up, whether it’s because of a statutory scheme or whatever, Erie issued a contract, a policy of insurance to my client, and my client has to be able to – you asked a good question. So what’s my client supposed to do? You can’t just go to the state and say, hey, give me this money. The only thing you can do is go to Erie. So regardless of whether they think they can be held in bad faith or whether the decision’s like, hey, our hands are tied because of BRIM, those are all defenses to a bad faith claim.

But the breach of contract claim, the only thing my client can do is file a claim for those benefits with Erie. They can’t file it directly with the state. File it with Erie, and if those aren’t paid, file a breach of contract claim. And that’s the initial thing here, which is that my client still hasn’t been paid his benefits or had an opportunity to have that heard. And we have an expert to testify

THE [CIRCUIT] COURT: Which is why this is about immunity. You guys can couch it any way you want, this is about immunity. The argument is the same for both. There is no breach of contract claim, [Counsel for Mr. Frye], if they have no duty to adjust and investigate and make a decision on whether the claim is valid.

[Counsel for Mr. Frye]: I disagree, Your Honor.

THE [CIRCUIT] COURT: How could you?

[Counsel for Mr. Frye]: Because with, respect to – that goes to the bad faith. You don’t even need a duty for a breach of contract. You know, we’re talking about tort, you know, in terms of the duty. But a contractual relationship says, hey, you pay this, I’ll do this in exchange. And the contract was you pay premiums, you have mine subsidence, we’ll pay you the benefits.

THE [CIRCUIT] COURT: If it’s covered, yeah.

[Counsel for Mr. Frye]: If it’s covered. But this is my client’s only mechanism for determining whether that’s covered. My client didn’t get to have a hearing in front of BRIM or present anything in front of BRIM. And my client has no contract with BRIM.

THE [CIRCUIT] COURT: No. But [Counsel for Erie’s] position is that her client didn’t have a chance to even weigh in on whether it was covered or not. So[,] I understand both arguments, believe me. I understand [Mr. Frye] didn’t have a chance, and I think it’s unfair, but I have to make a determination as the court to figure out if [Erie] even had a chance to weigh in legally on whether they breached the contract. And if [Erie]’s hands are now tied, how is it fair that you can sue them for breach of contract?

[Counsel for Mr. Frye]: And I can answer that.

THE [CIRCUIT] COURT: I think this whole scheme seems to be a little screwed up.

[Counsel for Mr. Frye]: Perhaps. I would tend to agree with that, that it’s a screwed up scheme. But given the scheme that it is, the fact of the matter is that there was a contract between Erie and [Mr.] Frye.

THE [CIRCUIT] COURT: No doubt.

[Counsel for Mr. Frye]: Under any contract, any contract, all right, the question is, all right, are you doing your part, basically. I’ll summarize it in simple terms. My client clearly paid his premiums. Nobody disputes that. The only question now is, all right, was there mine subsidence. And that's a jury question, that’s absolutely a jury question as to whether there was mine subsidence. If there was mine subsidence they owe that money to him, right? THE [CIRCUIT] COURT: So now we’re going to let the jury decide whether BRIM made the appropriate decision?

[Counsel for Mr. Frye]: Not really. The jury is going to decide whether there was mine subsidence.

(emphasis added).

As illustrated by this colloquy during the pretrial conference, it is clear that counsel for Mr. Frye was aware at that time that there could possibly be a constitutional issue in this case. The remaining portions of the transcript of the pretrial hearing indicate that he was also aware of the potential for filing a declaratory judgment action to address this issue and was aware of the possibility of certifying a question to this Court, all as avenues to place the constitutional issue squarely into question. Yet, counsel for Mr. Frye took no steps to formally raise the constitutional question. Instead, he waited until the circuit court entered summary judgment against Mr. Frye. It was then, for the first time, that he raised the constitutional issue in his Motion to Alter and Amend Judgment. Even still, counsel for Mr. Frye made no suggestion of the application of Rule 24(c). It was Erie who raised the potential applicability of Rule 24(c) in its response to the Rule 59(e) motion, alleging that Mr. Frye had waived its application.

The majority opinion cites to a Supreme Court of Tennessee case in footnote 23 for the proposition that the circuit court is a gatekeeper for enforcing the requirements of Rule 24(c). See In re Adoption of E.N.R., 42 S.W.3d 26 (Tenn. 2001). In doing so, the majority cited the statement of the Tennessee court that "the trial court functions as a ‘gatekeeper to inquire whether notice has been provided to the Attorney General by the challenger and to suspend proceeding on the constitutional challenge until such notice has been provided and a response from the Attorney General received.’ " Maj. Op. n 23. A full review of the discussion contained in the E.N.R. opinion, however, reveals that a key factor of a court’s gatekeeper function is a determination of the timeliness of the request to invoke Rule 24(c). As the majority states, the court in E.N.R. found:

Nevertheless, the court is required, pursuant to Tenn. R. Civ. P. 24.04,^1a to ensure that notice of the constitutional challenge has been provided to the Office of the Attorney General. This rule makes it clear that the trial court sits as gatekeeper to inquire whether notice has been provided to the Attorney General by the challenger and to suspend proceeding on the constitutional challenge until such notice has been provided and a response from the Attorney General received.

Id. at 33 (emphasis in original). This language is followed by important limiting language. The majority dismisses the additional language contained in the E.N.R. decision as only "being part of the separate issue of whether the appellant had waived his constitutional argument." However, the paragraph immediately following the excerpt cited by the majority specifically states that the untimeliness of the "mention" that the statute in that case might be unconstitutional obviated any duty on the part of the trial court to provide the notice required under Rule 24.04:

The trial court in this case did not err, however. It is unreasonable to expect a trial court to suspend a proceeding upon the untimely mention by counsel that a statute is unconstitutional. A court is obligated to ensure compliance with the notification rules only after the question of constitutionality has been put properly at issue by the challenger. Because the challenge in this case was not timely raised, the trial court had no obligation under Tenn. R. Civ. P. 24.04.

Id. at 33-34 (emphasis added). This qualifying language expressly limits the court’s duty under Rule 24 when the parties fail to timely raise a constitutional issue. Indeed, the issues of the constitutionality of the statute and the notice required to be given the Attorney General are inextricably intertwined. It is the question, of constitutionality that triggers the Rule’s application and the duty to timely raise the issue rests upon the party asserting the question of constitutionality.^2a In E.N.R., the constitutional challenge was not raised until closing argument at trial. See id. at 29. Because of such delay in raising the issue, the Tennessee Supreme Court concluded that the challenge was not preserved for appeal:

The record shows that the constitutional challenge in this case was late-raised, minimally addressed, characterized by counsel as mentioned only for the purpose of preserving it for appeal, and perhaps was simply a last ditch effort to overcome the court’s preliminary findings in favor of the opposition. To now rely upon the importance of this issue as grounds for appellate review is near hypocrisy given the short shrift it received at trial where it could have, and should have, been fully adjudicated.

Id. at 32. Further, following E.N.R., Tennessee courts have consistently held that notice to the Attorney General is not required when the request for Attorney General involvement is untimely:

In the Adoption of E.N.R. opinion, the High Court stated ‘there is little difference between an issue improperly raised before the trial court at the last minute and one that was not raised at all.’ Counsel in the Adoption of E.N.R. case had raised a question about the constitutionality of a statute only in closing argument in hope of preserving the issue for appeal. The Supreme Court held ‘that the Court of Appeals properly refused to consider the [belated] constitutional challenge.’ The Court also discussed the inability of the trial court to act ‘as gatekeeper to inquire whether notice has been provided to the Attorney General’ when the issue is not properly raised in the trial court.

Miltier v. Bank of Am., N.A., No. E2010-00537-COA-R3CV, 2011 WL 1166746, at *4 (Tenn. Ct. App. Mar. 30, 2011) (citations omitted) (bracket in original).

In In re Adoption of E.N.R., the defendant never raised the constitutional issue in a pleading or motion. And after carefully reviewing the record, the supreme court concluded that the defendant ‘raised no constitutional challenge whatsoever until closing argument.’

Yebuah v. Ctr. for Urological Treatment, PLC, No. M201801652COAR3CV, 2020 WL 2781586, at *4 (Tenn. Ct. App. May 28, 2020), rev’d on other grounds, 624 S.W.3d 481 (Tenn. 2021) (citation omitted).

Similarly, here there was no legitimate justification for Mr. Frye’s failure to properly raise the constitutional issue prior to the entry of summary judgment. Mr. Frye knew of the constitutional dilemma and did nothing. "[T]he party who brings a suit is master to decide what law he will rely upon…. " The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716 (1913). Here, Mr. Frye chose to bring a breach of contract claim against Erie, despite having full knowledge of the constitutional issue and BRIM’s role in the statutory scheme. Moreover, the circuit court effectively invited the parties to raise the constitutionality of the statute more formally, and Mr. Frye chose, as indicated by the transcript of the hearing, to simply pursue his breach of contract action against Erie.

The requirements of notice to the Attorney General outlined in Rule 24(c) are implicated when a constitutional issue is, as the rule expressly provides, "drawn in question" in a case. Here, the constitutionality of the statutory process was merely discussed in a passing fashion at the pretrial hearing, and it was neither raised in Mr. Frye’s complaint, nor was it formally asserted in any pleading prior to the grant of summary judgment. Under such circumstances, I do not believe the constitutional issue was adequately "drawn in question" to require the circuit court to provide notice to the Attorney General.

Notice to the Attorney General is admittedly an important step when the constitutionality of a statute is properly and timely placed before a court for a determination of whether such statute is violative of constitutional provisions. However, I believe the majority’s decision to remand this case for notice to the Attorney General at this late stage, based on nothing more than a mere discussion of constitutional concerns at a hearing, takes this Court down a slippery slope. Therefore, I respectfully dissent.

Justice Hutchison, concurring:

When you read the majority opinion, a key question should be obvious: Why is the Board of Risk and Insurance Management ("BRIM") not a party to this case? I concur to emphasize that nothing in this case has made sense, from the day it was filed, because BRIM was both omnipresent in the facts and yet missing as a party. On remand, the circuit court needs to (1) review the constitutional problems within the mine subsidence insurance scheme created by West Virginia Code §§ 33-30-1, et seq., and BRIM’s supporting regulations (115 C.S.R. § 1), and, (2) thereafter, likely reconsider its summary judgment ruling in favor of the defendant, Erie Insurance.

The primary problem with the statutory and regulatory scheme at issue in this case is that BRIM and homeowners’ insurers like Erie have, in effect, immunized each other from having to ever pay mine subsidence claims. In its annual reports, BRIM says that it operates a legislatively created "coal mine subsidence reinsurance program, which allows homeowners and businesses to obtain insurance coverage up to $200,000 for collapses and damage caused by underground coal mines."^1b The gist of the program is that private insurance companies incorporate a BRIM-drafted mine subsidence insurance provision into every fire insurance policy they sell to private homeowners and businesses; the insurers collect an annual premium; and then those "insurers pay BRIM a reinsurance premium, which is equal to the gross premiums collected for mine subsidence coverage," except the insurers keep for themselves "a 30% ceding commission."^2b BRIM claims (with emphasis added) that it "provides mine subsidence reinsurance to approximately 15,000 home and business owners" in West Virginia.^3b

The problem is, as both the majority opinion and Justice Wooton’s separate opinion make clear, BRIM acts as anything but a plain, generic reinsurer. A classic reinsurer would have allowed Erie to investigate and pay worthy claims and then reimbursed Erie for some or all of the claim – that is, it would have reinsured some share of the risk of subsidence claims covered by Erie. BRIM calls itself a "reinsurance program," but state law and BRIM’s regulations penalize insurers like Erie who investigate and pay claims. BRIM requires every subsidence claim to be "reported to [BRIM] for assignment to qualified independent adjusting firms[.]"^4b Moreover, "[a]ll payment authorizations will come from the Board. No reinsurance will be available for claims paid by the [insurer] without prior approval from the Board."^5b

The result is a Dolittlean push-me, pull-you^6b legal creation that results in both insurers and BRIM evading responsibility. Insurers write and issue policies that they insist cannot be honored without BRIM’s permission; BRIM does all the work to deny claims against the policy while politely saying it has no responsibility for the policy issued by the insurer. And, as I discuss below, the premiums collected by BRIM for those policies pile up in the state treasury within the mine subsidence insurance fund.

And this brings me to a second unifying thread that weaves through this case: the idea of illusory coverage. Sitting between BRIM and insurers are the homeowners and business owners who paid their premiums thinking they have mine subsidence insurance. True, the annual premiums for the maximum amount of $200,000 in coverage are modest, at $43.00 on homes and $86.00 for "non-dwelling structures" (like businesses).^7b But, in the end, it appears that BRIM and insurers work together to deny just about every claim that gets filed. People are paying a premium for non-existent coverage.

Let me explain my sense this coverage is illusory. Recall that BRIM only receives 70% of the premiums collected by insurers; the insurers keep the remainder. In its latest annual report, BRIM says it collected $4,824,000 in such premiums in 2022.^8b Missing from BRIM’s report, however, is any clear discussion of how many mine subsidence claims it paid or how much it paid per claim, or in total, in 2022. Instead, one must divine results by looking at two charts assessing BRIM’s financial performance over the prior ten years. These charts show BRIM collected $33,975,000 for mine subsidence insurance in the ten-year period be- tween Fiscal Years 2013 and 2022. Simultaneously, in the same ten-year period, BRIM appears to have paid out only $5,018,000 toward subsidence claims.^9b

Read that again: BRIM collected $4.8 million in one year but paid out only $5 million toward mine subsidence claims over the previous ten years. Without doing an exhaustive analysis of BRIM’s public-facing records, it seems obvious BRIM pays out only a fraction of premiums on claims. For instance, another report says that after taking in $2,398,000 in premiums in Fiscal Year 2016,^10b BRIM’s reports show (with emphasis added) that it paid as little as $184,000 on "[c]laims and claims adjustment expenses attributable to insured events in the current fiscal year."^11b The emphasis is added because BRIM’s reports do not make clear how much money BRIM is spending in "claims adjustment expenses," such as for hiring "experts" to examine properties. Instead, expert expenses are combined together with monies paid to property owners.

Regarding expert expenses, recall that in the instant case, the record shows that BRIM paid no less than four separate engineering groups to examine Mr. Frye’s property claim.^12b These engineering groups note that the Valley Camp No. 1 mine, which was last mined in 1985, lies 373 feet directly below Mr. Frye’s property. These experts all opined in harmony that a hollowed-out room collapsing in the Valley Camp mine below could never damage the Frye property. The opinions from these BRIM-paid experts, in turn, were used by Erie to decide it would not provide coverage under Mr. Frye’s homeowner’s insurance policy.

Another measure of just how little BRIM pays out toward subsidence claims is found in its reported "loss ratio." In the context of insurance, "loss ratio" is a measure of losses by the insurer from paying insurance claims, along with the related administrative and adjustment expenses (like expert fees), all divided by the total earned premiums. A high loss ratio means less money in an insurer’s pockets; a ratio exceeding 100% means the insurer is losing money. But these ratios can ebb and flow. For instance, in the last quarter of 2021, the overall loss ratio for all U.S. homeowners insurance companies was 89.56 percent, in part because of significant losses from a major hurricane;^13b that loss ratio quickly reversed and improved to 53.9 percent in the first quarter of 2022.^14b

At the same time, in BRIM’s 2021 Annual Report, an actuary found that the mine subsidence reinsurance program "continues to perform at a favorable loss ratio" because it was averaging a mere "23% over the past 10 years."^15b Stated differently, while the homeowners insurance industry was swinging between loss ratios of 50 to 90 percent, BRIM’s mine subsidence insurance program was gliding by on a 23 percent ratio. That means BRIM – which, the last time I checked, was a public agency designed to serve the citizens of West Virginia – was pocketing 77 percent of the premiums for mine subsidence coverage that it received.

And this showed in BRIM’s balance sheet. By June 30, 2022, BRIM had a net position of $80,155,000 for "mine subsidence coverage."^16b Then the Legislature, during its 2023 session and at BRIM’s urging, passed a law moving $50 million out of the mine subsidence fund for BRIM to spend on claims against various state agencies.^17b This effectively converted years of premiums paid by homeowners and businesses for mine subsidence insurance into a tax to fund BRIM’s day-to-day expenses. And, in the end, mine subsidence insurance paid for by some 15,000 West Virginia households and businesses gave every outward appearance of being illusory.

In summary, this case is confounding because BRIM should have been a party, or at least have been compelled to have some process whereby property owners could duly challenge its mine subsidence decisions. If we were to sanction the circuit court’s summary judgment ruling, homeowners like Mr. Frye would be deprived of any means of challenging BRIM’s methodology, its push-me, pull-you shell game with private insurance companies. Thus, the circuit court’s instinct that the entire program was constitutionally problematic seems correct. Unfortunately, as the majority opinion makes clear, until the circuit court ruled that Mr. Frye could not proceed with his contract claims against Erie, his constitutional claims were neither apparent nor necessary. Throughout this case, the circuit court represented to Mr. Frye that he had a viable contract claim against Erie. And then, at the summary judgment stage, the circuit court changed course and said that he did not; it was only at that point that Mr. Frye was obligated to challenge the constitutionality of the statutory and regulatory scheme that rendered the contract claim unviable.

As the current system works, Erie is being "hung out to dry" for something it did not do, whilst the plaintiff is being deprived of any remedy. With the constitutionality of the program properly challenged, and the Attorney General advised of Mr. Frye’s claims and invited to participate, the parties and the circuit court will be better prepared to understand the true nature of the relationship between insurers and BRIM. And Mr. Frye and Erie will be able to better address chapter 30 of article 33, and BRIM’s legislative rules.

Moreover, the majority opinion is rightly silent regarding the circuit court’s summary judgment order. With the constitutional questions again before the circuit court in plaintiff Frye’s Rule 59 motion, the parties are situated to readdress Mr. Frye’s contract claims in the context of the constitutional questions presented. I see nothing in state law or BRIM’s regulations that prohibit a homeowner from asserting a breach-of-contract claim against an insurer with whom the homeowner maintained a mine subsidence insurance contract. I likewise see nothing to preclude the homeowner from pursuing an action against BRIM for interfering with that privately obtained insurance contract.^18b Es- sentially, it behooves homeowners and insurers alike to assess the nature of private mine subsidence insurance contracts in the light of BRIM’s public responsibility to maintain the mine subsidence fund, and for BRIM to fairly meet its reinsurance obligations, within constitutional considerations of due process.

Accordingly, I respectfully concur with the majority’s opinion.

WOOTON, Justice, concurring, in part, and dissenting, in part:

I concur in the majority’s decision to vacate the order denying petitioner Brian Frye’s motion pursuant to West Virginia Rule of Civil Procedure 59(e) and remand for further proceedings. However, I dissent to the refusal to also reverse the circuit court’s award of summary judgment to respondent Erie Insurance Company ("Erie"); that refusal evades and improperly endorses the circuit court’s erroneous ruling that insureds like petitioner Frye may not sue their insurer for alleged improper denial of mine subsidence claims. As it stands, the majority has left in place a determination that mine subsidence insureds in West Virginia cannot sue the party with whom they contracted for wrongful denial of such coverage, and remands merely in the hope that the Attorney General of West Virginia will intervene and explain what insureds are to do. That result cannot stand and accordingly, I respectfully dissent in that regard.

As indicated, the majority’s resolution vacates only the order denying petitioner’s Rule 59(e) motion and remands for notice to be given under West Virginia Rule of Civil Procedure 24(c), thus allowing the Attorney General the opportunity to seek intervention and defend the constitutionality of the mine subsidence insurance statutory scheme. And while perhaps procedurally permissible, this resolution does both too much and too little. It does too much in that it casts a pall of unconstitutionality over the mine subsidence insurance statutory scheme where none actually exists. It is not these statutes that unconstitutionally deprive petitioner of a remedy. Instead, it is the circuit court’s ruling that an insured cannot sue his insurer for breach of contract arising from alleged wrongful denial of coverage that deprives him of a remedy—a legal error we can and should fix. In that regard, the majority’s resolution does too little. Despite wringing its hands about an insured’s ostensible lack of recourse for an alleged wrongful denial of a claim at the hands of the West Virginia Board of Risk and Insurance Management ("BRIM"), the majority’s resolution evades the underlying error which, if corrected, would solidify petitioner’s remedy and render the State’s Rule 24(c) intervention unnecessary.

Petitioner filed a breach of contract action, along with an Unfair Trade Practices Act claim, against his first-party insurer, Erie. As with any insured/insurer or other contractual relationship, petitioner and Erie’s relationship is governed by the terms of their contract. Like any insured in West Virginia, petitioner may bring an action for breach of contract if he believes his claim was wrongfully denied, and may seek first-party damages resulting from that denial. Petitioner’s contract of insurance with Erie—even as to the mine subsidence coverage added by endorsement—is governed by the terms and conditions set forth in that policy. Endorsements for specific coverages are not novel and are governed by ordinary contractual principles, as contemplated in the policy language discussed below.

In that regard, the "Agreement" portion of petitioner’s insurance policy with Erie provides: "[W]e agree to provide the coverages you have purchased." The "Rights and Duties" provision states that "[w]e will settle any claim for loss with you." The term "we" is one of "special meaning" under the policy which provides: "‘We’, ‘us’ or ‘our’ means the Erie Insurance Property & Casualty Company." The policy further provides that "[t]his important contract between YOU and The ERIE consists of this policy with coverage agreements, limitations, exclusions and conditions, a Declarations, plus any endorsements."^1c (Emphasis added). It states further that "[t]his policy, all endorsements to it, and the Subscriber’s Agreement constitute the entire agreement between you and us." (Emphasis added). This language forms the boundaries of Erie’s agreement to provide coverage to petitioner; where it wrongfully fails to do so, petitioner unquestionably has a first party cause of action against it. Nowhere in this contract of insurance does petitioner contract with BRIM for coverage, or agree to Erie’s delegation—or BRIM’s assumption—of Erie’s obligations under the contract.

Therefore, the confounder in this case lies not in the insurance policy between petitioner and Erie, but the significance of the statutory mine subsidence insurance scheme and the reinsurance arrangement between Erie and BRIM. However, the circuit court failed to analyze this scheme to any meaningful degree, deciding that simply because the statutes grant claims handling and settlement authority to BRIM, any contractual obligations owed by Erie to petitioner are nullified. The circuit court reached this conclusion without examining the Reinsurance Agreement between Erie and BRIM or any of the law applicable to reinsurance. If it had done so, it would have found that there is nothing so fundamentally unusual about BRIM’s reinsurance arrangement with Erie as to warrant concluding that petitioner’s contractual rights have been rendered unenforceable. More importantly, the circuit court would have discovered that any significant differences in the reinsurance arrangement actually inure to petitioner’s benefit, rather than destroy his cause of action.

As evidence of the typicality of the reinsurance arrangement between BRIM and Erie, the mine subsidence endorsement appended to Erie’s policy references the mine subsidence insurance fund as providing "reimburse[ment] [of] the company[ ]"—just as with any reinsurance. BRIM’s own Deputy Director stated in a letter to petitioner’s counsel that BRIM "basically serves as a reinsurer for Erie[.]" Most importantly, however, the statutory scheme itself requires that Erie execute a "Reinsurance Agreement" as set forth in Appendix F to the governing regulations. See W. Va. Code R. § 115-1-3.9 ("Reinsurance agreement. -- Each insurance company subject to this rule shall enter into a reinsurance agreement with the Board. Refer to Appendix F for the wording of the Reinsurance Agreement."). Although not particularly extensive, the Reinsurance Agreement at its essence functions conceptually as most reinsurance does.

Instead, the circuit court became preoccupied with the statutory particulars of the interplay between Erie and BRIM. Perhaps influenced by an unexplained, stray comment in Higginbotham v. Clark, 189 W. Va. 504, 432 S.E.2d 774 (1993), that this is "not a traditional reinsurance agreement[,]" the circuit court ignored longstanding reinsurance principles and summarily determined that the statutory reinsurance arrangement effectively rendered Erie immune from suit. Id. at 510, 432 S.E.2d at 780. Higginbotham did not explain precisely why it deemed the reinsurance non-"traditional" but more importantly, the case fails to explain the significance of that difference relative to the rights of the original insured.^2c For all pertinent purposes—and in particular for purposes of petitioner’s right of action against Erie—BRIM is Erie’s self-proclaimed and statutory reinsurer, and no party identifies why it should not be treated as such.^3c

Therefore, BRIM’s role as reinsurer in regard to petitioner’s cause of action must be examined. As explained in Higginbotham, "[r]einsurance is defined as ‘insurance purchased by one underwriter from another, the latter wholly or partially indemnifying the former against the risks that it has assumed. The rights as between the underwriters are governed by the terms of the reinsurance contract.’ " 189 W. Va. at 510, 432 S.E.2d at 780 (quoting Windt, Allan D., Insurance Claims and Disputes § 7.10 (2d ed.1998)) (emphasis added); see also Exec. Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681 F. Supp. 2d 694, 716-17 (S.D.W. Va. 2009) ("A reinsurance contract must be interpreted like any other contract to ascertain the intent of the parties[.]"). For purposes of reinsurance relationship, the original insurer’s (or "reinsured’s" or "ceding insurer's") contract with its own insured is "a separate and distinct contract[.]" 1 Couch on Ins. § 1:33, (Nov. 2023 update) (discussing "Reinsurance"). Likewise, it is well-established that "[a]n ordinary contract of reinsurance, in the absence of provisions to the contrary, operates solely as between the reinsurer and the reinsured." 46A C.J.S. Insurance § 2079 (March 2024 update) (discussing "Contract of reinsurance").

Therefore, the circuit court was patently incorrect when it found that because the statutory scheme and reinsurance agreement grant BRIM "the authority to investigate and approve [petitioner’s] claim[,]" Erie could not have breached its contract with petitioner. Petitioner stands in privity with Erie alone; he is a stranger to any secondary agreement between Erie and BRIM regarding claim investigation and settlement approval. It is well-established that "an original insurer cannot, without the knowledge or consent of the insured, enter into any contract of reinsurance with another company which abrogates or alters the rights of the insured against it, the insurer." Exec. Risk Indem., 681 F. Supp. 2d at 716 (quoting 19 Couch on Ins. 2d § 80:64, at 670 (Rev. ed. 1983)). To the extent the Reinsurance Agreement creates rights and duties as between Erie and BRIM, that is a matter for Erie to pursue with BRIM under the terms of that contract or equitable principles. It does not, however, affect the contractual obligations between petitioner and Erie under the four comers of the insurance policy.

Along with its statement that the reinsurance relationship between BRIM and insurers is non-"traditional," the Higginbotham Court made an additional remark in dicta which appears to have contributed to the circuit court’s misapprehension of the issues. The circuit court drew particular emphasis to Higginbotham’s statement that "the insurer acts merely as an agent of the State and is bound by the Board’s decisions[.]" 189 W. Va. at 510, 432 S.E.2d at 780. However, a reinsured or ceding insurer is not the "agent" of the reinsurer; they are separately contracting parties whose relationship is governed by that contract. As the United States Supreme Court explained:

[I]t is the ceding company that remains directly liable to its policyholders, and that continues to pay claims and collect premiums. The indemnity reinsurer assumes no direct liability to the policyholders. Instead, it agrees to indemnify, or reimburse, the ceding company for a specified percentage of the claims and expenses attributable to the risks that have been reinsured, and the ceding company turns over to it a like percentage of the premiums generated by the insurance of those risks.

Colonial Am. Life Ins. Co. v. Comm’r, 491 U.S. 244, 247, 109 S.Ct. 2408, 105 L.Ed.2d 199 (1989) (emphasis added).

The question then becomes: what recourse do the respective parties to these contractual relationships have for enforcement of their rights? This is where the majority’s resolution is most demonstrably inadequate. Not only does remand for notice to the Attorney General fail to ensure BRIM’s or the State’s involvement (should the Attorney General decline to seek intervention), it fails to recognize that BRIM should be involved in the proceedings below not merely as an intervening "interested party" but as a party in interest. Because Erie has recourse against BRIM for any liability to petitioner under the terms of the Reinsurance Agreement, remand with leave to file a third-party complaint against BRIM would have been more appropriate.^4c More importantly, a review of relevant case law regarding the role of reinsurance would have demonstrated to the lower court that not only does the statutory reinsurance scheme not strip petitioner of his rights against his insurer, but it may actually create a cause of action against BRIM. As stated above, generally reinsurers are not liable to the original insured, however, there are exceptions to this rule—many of which may prove applicable here after further development and analysis. West Virginia long ago recognized this possibility. See Delp v. Mo. State Life Ins. Co., 116 W. Va. 508, 182 S.E. 580, 581 (1935) ("The effect of a strictly technical contract of reinsurance is merely to indemnify the original insurer, and, accordingly, the policyholder is not in privity with the contract and may not sue the reinsurer by reason thereof; but where the contract of reinsurance is to pay the policyholder the amount of any loss which may accrue, it is generally held that the policyholder may sue the reinsurer on the policy."). As one commentator has summarized:

[R]einsurance contracts may be drafted in such a form and with such provisions as to create a liability on the part of the reinsurer not only to the reinsured insurer, but also directly to the original insured; thus, in a case where a contract of reinsurance is made for the benefit of the policyholders of the reinsured, the reinsurer assumes the liability of the latter upon its policies, and the liability of the reinsurer may be directly enforced by the insured or by his or her privies. An insured may bring a direct action against the reinsurer where a proper third-party beneficiary agreement to that effect may be found.

46A C.J.S. Insurance § 2087 (March 2024 update) (discussing "Rights of third persons under reinsurance policy"; see also Wall, Dennis J., "Primary and excess insurers and reinsurers: A working definition of reinsurance—The effect of reinsuring agreements or treaties" Litig. & Prev. Ins. Bad Faith § 6:11 (3rd ed. Aug. 2023) (describing four categories where "liability of a reinsurer to a ceding insurer’s insured exists" including where reinsurer voluntarily undertakes duties of ceding insurer, where "reinsurer’s conduct and the other circumstances concerning the issuance of the reinsuring agreement indicate an intention on the part of the reinsurer to benefit or to be bound to the ceding insurer’s insured," or where other circumstances permit a finding of implied or quasi contract between insured and reinsurer); Wiley v. Glickman, No. A3-99-32, 1999 WL 33283312, at *13 (D.N.D. Sept. 3, 1999) (recognizing exception to general rule of nonliability for government reinsurer where contract is " ‘drawn in such form and with such provisions so as to create a liability on the part of the reinsurer directly to the original insured.’ " (quoting Ainsworth v. Gen. Reinsurance Corp., 751 F.2d 962, 965 (8th Cir. 1985))); Klockner Stadler Hurter Ltd. v. Ins. Co. of State of Pa, 785 F. Supp. 1130 (S.D. N.Y. 1990) (finding that where reinsured was required " ‘to follow and be bound by the settlements made by leading reinsurers’ " and dealt directly with insured, reinsurer consented to suit); O’Hare v. Pursell, 329 S.W.2d 614 (Mo. 1959) (where reinsurer "took over" the servicing of the original policies and dealt directly with insureds, insureds became third-party beneficiaries of reinsurance agreement); J.C. Penney Life Ins. Co. v. Transit Cas. Co. in Receivership, 299 S.W.3d 668, 674 (Mo. Ct. App. 2009) ("If the reinsurer assumes the liability of the reinsured company on its policies, then the policyholders, or their privies, may directly enforce this liability against the reinsurer."). Therefore, the nature of the reinsurance arrangement itself may give rise to liability as between the original insured and the reinsurer.

As the above cases also demonstrate, the reinsurer’s conduct may likewise create such liability. In this case, the evidence reveals that both Erie and BRIM each independently undertook claims handling functions. Each retained a different expert to evaluate petitioner’s mine subsidence claim, and each sent a denial of coverage letter. Throughout the underlying claims process and this litigation, each took overt acts of "ownership" of the claim and investigation while at the same time attempting to disavow the coverage de- cision and liability. And while both claim to merely be following the statutory and regulatory process for these claims, the underlying coverage determination cannot at once be both everyone and no one’s legal responsibility. Yet that is precisely the upshot of the circuit court’s ruling below. The foregoing cases reveal the exact opposite: that by virtue of the reinsurance arrangement as well as BRIM and Erie’s actions, petitioner may not only have an action against his own insurer but potentially against the reinsurer as well.

This discussion should not be regarded as a conclusive declaration as to the efficacy or success of these legal theories or procedural options. Rather, what it demonstrates is the complete failure of the court below to examine—and the majority to address—the interplay between the mine subsidence statutory scheme against the backdrop of black-letter insurance and contract law. Instead, the circuit court seized upon a couple of pieces of (potentially misguided) dicta and disregarded the entire applicable body of law. What the court and parties below must address on remand—regardless of whether the Attorney General seeks to intervene—is what claims are available to petitioner as a first-party insured and what recourse is available to Erie to allocate any potential liability to BRIM after a full development and analysis of the statutory and contractual relationship between them. However, what is certain is that petitioner cannot be left without a remedy for a potential wrongful denial of coverage, nor can the court delegate its duty to protect petitioner’s well-established right of action to the vagaries of the State’s intervention. At base, the lower court ignored basic tenets of contract and insurance law leading to an untenable ruling where citizens of this State—for whose sole benefit the mine subsidence insurance statutory scheme was enacted—are potentially deprived of its essential purpose without recourse.

Accordingly, I respectfully concur, in part, and dissent, in part.