Opinion ID: 1280908
Heading Depth: 1
Heading Rank: 4

Heading: The State Bancorp Case

Text: In State Bancorp, supra, Barbara and Richard Tyman applied for a loan from the same bank involved herein, the Bruceton Bank, to develop their real estate in Monongalia County. For that purpose, the Tymans received loans from the Bruceton Bank totaling $25,000, although they asserted that an officer of the bank had orally promised them a bank loan of $75,000. The Tymans subsequently failed to make payments upon the loans, and the bank began foreclosure proceedings. Although the Tymans instituted bankruptcy proceedings, the bankruptcy court permitted the foreclosure to proceed. At the foreclosure sale, the Bruceton Bank purchased the property and later conveyed the property to the bank's attorney. The Tymans filed a complaint against the Bruceton Bank alleging (1) the tort of outrage, because the bank allegedly forced the Tymans into bankruptcy for the purpose of acquiring their property, (2) breach of contract, concerning the alleged promise to make a $75,000 loan, (3) civil conspiracy, concerning the bank's alleged intent to acquire the Tymans' property, and (4) violation of state banking laws, concerning the foreclosure and sale of the property. The Tymans stated in their complaint that they suffered severe emotional distress, lost their home and property, were forced into bankruptcy, had their credit ruined and lost expected profits from the development of the property. As in this action, the Bruceton Bank, in State Bancorp, had both commercial general liability and commercial umbrella liability insurance. That insurance was provided to the bank by the Aetna Casualty & Surety Company and subsequently by USF & G. Importantly, the Aetna and USF & G policies, in State Bancorp, and the USF & G policies in this action were virtually identical. In State Bancorp, after incurring various expenses in defending the Tyman action, the Bruceton Bank instituted a declaratory judgment action against Aetna and USF & G asserting that those companies had breached a duty to defend the bank. Finding that the Tymans' allegation of breach of contract concerning the loan they sought from the bank constituted an occurrence within the meaning of the insurance policies, the circuit court agreed with the Bruceton Bank and ordered Aetna and USF & G to reimburse the bank for the expenses. Upon appeal, this Court, in State Bancorp, examined the Tyman complaint in the underlying action to determine whether any of its allegations were reasonably susceptible of an interpretation of coverage under the Aetna and USF & G insurance policies. Horace Mann Insurance v. Leeber, 180 W.Va. 375, 378, 376 S.E.2d 581, 584 (1988). [3] With regard to the allegation of breach of contract in the complaint, this Court, consistent with a number of authorities from other jurisdictions, held that such a breach by Bruceton Bank would not constitute an occurrence or accident within the meaning of Coverage A of the commercial general liability policy. As this Court stated: [T]he breach of contract allegation in the Tymans' complaint is entirely foreign to the risk insured against in coverage A of Aetna's and USF & G's CGL policies. Moreover, this Court, in State Bancorp, determined that the remaining allegations of the Tyman complaint were not subject to Coverage A of the commercial general liability policies. As this Court stated in the State Bancorp opinion: [T]he Tymans asserted the following three counts in their complaint: the tort of outrage, the tort of civil conspiracy, and the violation of state banking laws. These three counts are rooted in the Tymans' allegation throughout their complaint that the appellees engaged in an intentional outrageous scheme.... [T]he definition of an `occurrence' does not include actions which are intended by the insured. (emphasis in original). Thus, there was nothing in the Tyman complaint which triggered coverage under the provisions of Coverage A of the Aetna and USF & G policies. However, in State Bancorp, inasmuch as the Tyman complaint suggested that the Tymans had been wrongfully evicted by the Bruceton Bank, the provisions of Coverage B of the Aetna and USF & G commercial general liability policies were invoked. As in the action now before us, the Aetna and USF & G commercial general liability policies, in State Bancorp, provided coverage in certain circumstances under Coverage B for wrongful eviction. Noting that the Aetna policy was clearly not in effect at the time the eviction occurred, this Court found for Aetna. However, this Court, in State Bancorp, remanded the action to the circuit court as to USF & G to determine (1) whether the USF & G commercial general liability policy was in effect at the time the eviction occurred and (2) if so, whether USF & G had a duty to defend the Bruceton Bank under the provisions of Coverage B. Finally, in State Bancorp, with regard to the commercial umbrella liability provisions of Aetna and USF & G, this Court found in favor of Aetna for the same reasons set forth above and remanded the action as to USF & G upon the wrongful eviction question. With regard to USF & G, this Court noted, in State Bancorp, that because of the uncertainty concerning the applicability of Coverage B of the USF & G commercial general liability policy (CGL), coverage under the excess and extended liability provisions of the USF & G commercial umbrella liability policy (CUL) were likewise uncertain, as to the Tymans' alleged wrongful eviction, and remand to the circuit court was necessary. Specifically, with regard to the extended liability provided to the bank by USF & G, this Court observed, in State Bancorp, that, as with the CGL policy, the commercial umbrella liability policy (CUL) provided coverage in certain circumstances for wrongful eviction.