Opinion ID: 1283075
Heading Depth: 2
Heading Rank: 2

Heading: Insurance Policy B0711

Text: During the pendency of the litigation surrounding the methane ignition coverage, Lloyd's [3] agreed to further insure PinnOak. The record contains an initial contract for insurance, purporting to extend coverage from June 30, 2004, to June 30, 2005, for a premium of $5,000,000.00. Lloyd's argues that it soon became clear to PinnOak that it would not have the necessary cash flow to pay the premium, as it was due up-front. As asserted by Lloyd's, PinnOak's agent then contacted Lloyd's and proposed some alternative terms to the insurance contract. [4] The subsequent policy, which is the relevant policy to this appeal, is known as Policy B0711. This policy was for a term of five years, beginning June 30, 2004, and lasting through June 30, 2009. An annual premium amount of $375,000.00 was due every year, and then the amount of $1,250,000.00 would be due in five equal installments totaling $6,250,000,00, but would be deferred until after settlement of the August 2003 loss. In the event of nonrenewal, the entire amount would be due in full. Lloyd's states that this provision was PinnOak's recommendation upon realizing that it would only have positive cashflow after the 2003 event settled. [5] PinnOak elected not to renew the policy after the first full year. Subsequent to this nonrenewal, PinnOak and Lloyd's entered into a Settlement Agreement in May 2006 regarding the coverage issues surrounding the 2003 methane ignitions. PinnOak did not pay the premiums due under Policy B0711, which provided PinnOak coverage for the period of time subsequent to the time involved in the coverage lawsuit. Lloyd's then filed the underlying lawsuit on the theory that PinnOak had breached its obligations under Policy B0711, which was to pay the premium in full since PinnOak elected to cancel the coverage after the first year, and since the August 2003 incident and subsequent lawsuit had been settled. PinnOak filed a motion to dismiss. The circuit court considered matters outside of the pleadings; thus, it converted the motion to dismiss into a motion for summary judgment and disposed of the matter pursuant to Rule 56 of the West Virginia Rules of Civil Procedure. In its decision entered April 11, 2007, the circuit court found that the Settlement Agreement represented the intent of the parties to diverge from any prior agreements. Therefore, the circuit court found that the obligations under Policy B0711 were terminated, and that PinnOak did not owe the premium agreed upon in the policy. As further support for its decision, the circuit court found that the use of the term payback in Policy B0711 referred to a recoupment of settlement monies, which was an action barred by the Settlement Agreement. Lloyd's then filed a motion to alter or amend judgment, which was denied by the circuit court on June 21, 2007. This appeal by Lloyd's then followed.