Edward and Teresa Baez v. Foremost Insurance Co. (Memorandum Decision)

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STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS Edward Baez and Teresa Baez, Plaintiffs Below, Petitioners FILED May 11, 2018 vs) No. 17-0473 (Monongalia County 17-C-24) Foremost Insurance Company, Defendant Below, Respondent EDYTHE NASH GAISER, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA MEMORANDUM DECISION Petitioners Edward Baez and Teresa Baez, by counsel Alex J. Shook and Andrew G. Meek, appeal the Circuit Court of Monongalia County’s April 24, 2017, order granting respondent’s partial motion to dismiss. Respondent Foremost Insurance Company (“Foremost”), by counsel Robert L. Massie, filed its response. This Court has considered the parties’ briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate Procedure. On July 12, 2016, Edward Baez was the passenger in a Ford owned and operated by William Gorbey. At that same time, Delbert Lemley (a defendant below) was driving a Jeep in the opposite direction. The vehicles were involved in a head-on collision, as a result of which Edward Baez alleges that he was seriously injured. In their complaint, filed on January 31, 2017, Teresa Baez claimed that she suffered a loss of consortium due to her husband’s injuries. Mr. Lemley had liability bodily injury insurance coverage with Nationwide Insurance Company in the amount of $25,000 per person and $50,000 per occurrence. Due to the fact that at least two other claims for damages had been made against that coverage, the most petitioners could recover from Nationwide is $25,000. Petitioners reached a full and final settlement with their insurance company, Safeco Insurance, whereby Safeco offered its underinsured motorist bodily injury liability policy limit of $20,000. At all times relevant to this action, petitioners owned two golf carts. Foremost issued an insurance policy covering those golf carts with a policy period that included July 12, 2016, and both petitioners were named insureds on that policy. The policy provided bodily injury and passenger liability coverage in the amount of $50,000 per person and $100,000 for each accident. While it provided uninsured motorist coverage, it did not provide underinsured motorist coverage. Petitioners filed suit below against Foremost and individual defendants in the Circuit Court of Monongalia County alleging that Foremost failed to make the required offer of 1 underinsured motorist (“UIM”) bodily injury coverage so such coverage must be read into the policy to provide coverage.1 On March 2, 2017, Foremost filed a partial motion to dismiss pursuant to Rule 12(b)(6) of the West Virginia Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Petitioners submitted a response to that motion, arguing that Foremost was required under West Virginia law to offer UIM bodily injury coverage benefits in the amount of $50,000 per person and $100,000 per occurrence. They further claimed that as a result of failing to offer such coverage, UIM coverage should be read into the policy by operation of law. However, Foremost asserted that because golf carts are off-road vehicles not registered pursuant to West Virginia law that there was no requirement to offer underinsurance coverage. Following oral argument on that motion, the circuit court granted the partial motion to dismiss by order entered April 24, 2017. In its order granting the partial motion to dismiss, the circuit court found that the Motor Vehicle Safety Responsibility Law does not require all motor vehicles to maintain security in the form of an insurance policy within the specified limits; it based that conclusion on its finding that that requirement applies only to owners or registrants of motor vehicles required to be registered and licensed in this state. It went on to state that “[a]lthough not specifically defined or described in the statutes, golf carts are not designed or intended for highway use – even less so than ATVs.” It also found that [n]ormally, an insurer issuing an automobile insurance policy in West Virginia is required to make a commercially reasonable offer of underinsurance motorist coverage as well. The key issue in this case is whether the subject insurance policy falls within the requirement where the insurer must make an offer of UIM coverage. It, therefore, concluded that because golf carts are not motor vehicles required to be licensed in West Virginia, the subject golf carts are excepted from the mandatory security provisions in the Motor Vehicle Safety Responsibility Law, including the motor vehicle liability insurance coverage mandated by West Virginia Code § 17D-4-2. “Thus, there is no requirement that if liability coverage is offered on a vehicle not defined as a motor vehicle, that underinsured bodily injury coverage must also be offered.” Petitioners appeal from that order. “Dismissal for failure to state a claim is proper ‘where it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.’” Murphy v. Smallridge, 196 W.Va. 35, 37, 468 S.E.2d 167, 168 (1996). This Court has also held that “[a]ppellate review of a circuit court’s order granting a motion to dismiss a complaint is de novo.” Syllabus Point 2, State ex rel. McGraw v. Scott Runyan Pontiac–Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995). Mey v. Pep Boys-Manny, Moe & Jack, 228 W. Va. 48, 52, 717 S.E.2d 235, 239 (2011). 1 The claims against the other defendants below, Delbert Lemley, Jason Halcomb, and Jenna Edmond, are not a part of this appeal. 2 On appeal, petitioners assert a single assignment of error: The circuit court erred by misapplying West Virginia Code § 33-6-31 regarding an insurance carrier’s obligation to offer underinsured motorist coverage with the issuance of a bodily injury liability policy issued on petitioners’ golf carts.2 Petitioners contend that the plain language of West Virginia Code § 33-631(a) and (b) require an insurance carrier to offer UIM coverage. They argue that while an insurance carrier is not obligated to provide liability insurance to any motor vehicle, including a golf cart, once it does so it must offer not only uninsured motorist coverage but also UIM coverage. Petitioners further assert that the circuit court erred by incorrectly determining that because no liability insurance is required on a golf cart no UIM coverage is required to be offered. In support of their position, petitioners point to West Virginia Code § 17A-1-1(a) and (b), which define “vehicle” and “motor vehicle,” asserting that any argument that a golf cart is an “off-road” vehicle, rather than a motor vehicle, for purposes of § 33-6-31 is not compelling because “off-road” vehicles are still “motor vehicles.” Petitioners also point to the definition of “motor vehicle” in the Foremost policy at issue, which is “a land ‘motor vehicle’ or a trailer but does not mean a vehicle: a. Operated on rails. b. Which is a farm type tractor designed or modified for use principally off public roads while not on a public road. c. Located for use as a residence or premises.” They assert that because the policy language does not comply with the broad terms of West Virginia Code § 33-6-31(b), the policy must be construed to contain the coverage provided for by statute. As this Court has previously recognized, “[a] motor vehicle that is not required to be registered and licensed pursuant to W.Va. Code §§ 17A-3-1, et seq. is excepted from the mandatory security provisions in the Motor Vehicle Safety Responsibility Law including motor vehicle liability coverage mandated by W.Va. Code § 17D-4-2.” Syl. Pt. 7, Boniey v. Kuchinski, 223 W.Va. 486, 677 S.E.2d 922 (2009). We have also held that “[i]nsurers may incorporate such terms, conditions and exclusions in an automobile insurance policy as may be consistent with the premium charged, so long as any such exclusions do not conflict with the spirit and intent of the uninsured and underinsured motorists statutes.” Syl. Pt. 3, Deel v. Sweeney, 181 W. Va. 460, 383 S.E.2d 92 (1989). The Foremost policy included in the record before this Court clearly provides that it is an “Off-Road Vehicle Insurance Policy,” and the policy defines an “Off-road vehicle” as “a selfpropelled motorized vehicle which is designed primarily for off-road use and not licensed for use on public roads. . . .” The policy goes on to define “Your covered off-road vehicle,” in relevant part, as “1. Any ‘off-road vehicle’ shown in the Declarations.” The description of the “off-road 2 “W.Va. Code, 33-6-31(b), as amended, on uninsured and underinsured motorist coverage, contemplates recovery, up to coverage limits, from one’s own insurer, of full compensation for damages not compensated by a negligent tortfeasor who at the time of the accident was an owner or operator of an uninsured or underinsured motor vehicle.” Syllabus Point 4, in part, State Auto. Mut. Ins. Co. v. Youler, 183 W.Va. 556, 396 S.E.2d 737 (1990). Syl. Pt. 5, Boniey v. Kuchinski, 223 W. Va. 486, 677 S.E.2d 922 (2009). 3 vehicles” in the declarations undisputedly includes the two golf carts at issue in the instant action. As this Court recently recognized in Erie Insurance Company v. Dolly, No. 16-1151, 2018 WL 1370627, *6, __ W.Va. __, __ S.E.2d __ (W.Va. March 12, 2018), [t]his Court found [in Boniey] that the Motor Vehicle Safety Responsibility Law, West Virginia Code § 17D-4-2, applies the insurance requirements to “motor vehicles”–but an ATV is not legally classified as a “motor vehicle” because it is expressly exempt from vehicle registration requirements by West Virginia Code § 17A-3-2(a)(6) (2004). Boniey, 223 W.Va. at 491-92, 677 S.E.2d at 927-28. We determined that “[w]here no liability insurance coverage is required on a motor vehicle under the financial responsibility law, obviously no uninsured motorist coverage is mandated to provide the equivalent of such coverage.” Id. at 492, 677 S.E.2d at 928. While a golf cart is specifically excluded from the definition of “all-terrain vehicle” in West Virginia Code § 17A-1-1(ii), the same reasoning employed in Boniey and Dolly applies in the instant matter. As the circuit court found, because low-speed vehicles and retrofitted golf carts are exempt from the vehicle registration requirements set forth in West Virginia Code § 17A-32(c), respondent was not required to offer UIM coverage to petitioners on the golf carts described in the declarations page of the policy at issue. Having reviewed the circuit court’s April 24, 2017, “Order Granting Defendant, Foremost Insurance Company’s, Partial Motion to Dismiss,” we hereby adopt and incorporate the circuit court’s well-reasoned findings and conclusions as to the assignment of error raised in this appeal. The Clerk is directed to attach a copy of that order to this memorandum decision. For the foregoing reasons, we affirm. Affirmed. ISSUED: May 11, 2018 CONCURRED IN BY: Chief Margaret L. Workman Justice Robin Jean Davis Justice Menis E. Ketchum Justice Allen H. Loughry II Justice Elizabeth D. Walker 4

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