Court Opinion

ID: 1087108
Source: CourtListenerOpinion
Date Created: 2013-10-25 19:09:47.955575+00
Date Added: 2024-06-11T13:22:27.661436
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                     September 2013 Term
                                                      FILED
                          __________              October 25, 2013
                                                    released at 3:00 p.m.
                         No. 12-0705                RORY L. PERRY II, CLERK
                                                  SUPREME COURT OF APPEALS
                         __________                   OF WEST VIRGINIA

AIG DOMESTIC CLAIMS, INC., n/k/a CHARTIS CLAIMS, INC., and
    COMMERCE AND INDUSTRY INSURANCE COMPANY,
               Defendants Below, Petitioners

                               v.

                HESS OIL COMPANY, INC.,
                Defendant Below, Respondent

                             AND

                          __________

                         No. 12-0719
                         __________

                 HESS OIL COMPANY, INC.,
                  Defendant Below, Petitioner

                               v.

AIG DOMESTIC CLAIMS, INC., n/k/a CHARTIS CLAIMS, INC., and
    COMMERCE AND INDUSTRY INSURANCE COMPANY,
                Defendants Below, Respondents
 ________________________________________________________

        Appeal from the Circuit Court of Harrison County
              Honorable Thomas A. Bedell, Judge
                   Civil Action No. 10-C-20

               REVERSED AND REMANDED
_________________________________________________________
                            Submitted: September 25, 2013
                               Filed: October 25, 2013

John H. Tinney, Esq.                           James A. Varner, Sr., Esq.
John H. Tinney, Jr., Esq.                      Debra Tedeschi Varner, Esq.
The Tinney Law Firm PLLC                       McNeer, Highland, McMunn
Charleston, West Virginia                      & Varner
                                               Huntington, West Virginia
Christopher P. Ferragamo, Esq.
Jackson & Campbell, P.C.                       Michael J. Romano, Esq.
Washington, D.C.                               Law Office of Michael J. Romano
                                               Clarksburg, West Virginia
Kathleen M. Sullivan, Esq.                     Counsel for Hess Oil Company, Inc.
Quinn Emanuel Urquhart &
Sullivan LLP                                   Christopher J. Regan, Esq.
New York, NY                                   Bordas and Bordas, PLLC
Counsel for AIG Domestic Claims, Inc.,         Wheeling, West Virginia
n/k/a Chartis Claims, Inc., and                Counsel for Amicus Curiae West
Commerce and Industry Insurance Co.            Virginia Association for Justice

JUSTICE LOUGHRY delivered the Opinion of the Court.
JUSTICE DAVIS, deeming herself disqualified, did not participate in the decision of this
case.
SENIOR STATUS JUSTICE MCHUGH sitting by temporary assignment.
                              SYLLABUS BY THE COURT

              1. “This Court reviews the rulings of the circuit court concerning a new trial

and its conclusion as to the existence of reversible error under an abuse of discretion

standard, and we review the circuit court’s underlying factual findings under a clearly

erroneous standard. Questions of law are subject to a de novo review.” Syl. Pt. 1, Burke-

Parsons-Bowlby Corp. v. Rice, 230 W.Va. 105, 736 S.E.2d 338 (2012).

              2. “Although the ruling of a trial court in granting or denying a motion for a

new trial is entitled to great respect and weight, the trial court’s ruling will be reversed on

appeal when it is clear that the trial court has acted under some misapprehension of the law

or the evidence.” Syl. Pt. 4, Sanders v. Georgia-Pacific Corp., 159 W.Va. 621, 225 S.E.2d
218 (1976).

              3. “An erroneous instruction is presumed to be prejudicial and warrants a new

trial unless it appears that the complaining party was not prejudiced by such instruction.”

Syl. Pt. 2, Hollen v. Linger, 151 W.Va. 255, 151 S.E.2d 330 (1966).

                                               i
                4.   “‘The law presumes . . . that corporations are separate from their

shareholders.’ Syl. pt. 3 (in part), Southern Electrical Supply Co. v. Raleigh County National

Bank,[173] W.Va. [780], 320 S.E.2d 515 (1984).” Syl. Pt. 1, Laya v. Erin Homes, Inc., 177

W.Va. 343, 352 S.E.2d 93 (1986).

                5. A dissolved corporation that is asserting a claim solely in its corporate name

under authority of West Virginia Code § 31D-14-1405(b)(5) (2009) may not recover

damages for the personal aggravation, annoyance, and inconvenience of its non-party former

shareholders.

                6. “‘It is error to give inconsistent instructions, even if one of them states the

law correctly, inasmuch as the jury, in such circumstances, is confronted with the task of

determining which principle of law to follow, and inasmuch as it is impossible for a court

later to determine upon what legal principle the verdict is founded.’ Opinion, State Road

Commission v. Darrah, 151 W.Va. 509, 513, 153 S.E.2d 408, 411 (1967).” Syl. Pt. 2,

Burdette v. Maust Coal & Coke Corp., 159 W.Va. 335, 222 S.E.2d 293 (1976).

                                                ii
LOUGHRY, Justice:

              Through this appeal, Chartis Claims, Inc. and Commercial and Industry

Insurance Company (hereinafter referred to as “Chartis Claims,” “C&I,” or collectively as

the “insurance companies”) seek relief from an adverse jury verdict1 returned against them

for an unfair trade practices claim2 asserted by Hess Oil Company, Inc. (“Hess Oil”). Hess

Oil separately appealed from the May 3, 2012, order issued by the Circuit Court of Harrison

County through which the jury’s award of $53 million in punitive damages was reduced by

means of remittitur to $25 million.3 As grounds for their appeal, the insurance companies

assert that the trial court committed error by disregarding both the cardinal tenet of corporate

separateness and mandatory procedures that govern jury instructions; by giving conflicting

jury instructions; by introducing improper evidence of future remediation costs; and by

awarding punitive damages. Through its appeal, Hess seeks to reinstate the full amount of

punitive damages awarded by the jury. Upon our careful review of this matter, we are

convinced that the jury’s verdict was affected in a manner prejudicial to the insurance

companies due to multiple errors committed by the trial court. As a result, the jury verdict

       1
        The jury awarded Hess Oil $5 million in compensatory damages and $53 million in
punitive damages.
       2
       See W.Va. Code § 33-11-4(9) (2011) (setting forth litany of proscribed general
business practices pertaining to handling of first-party insurance claims).
       3
        For purposes of briefing and oral argument, this Court treated the two appeals at issue
separately. Based upon the decision we reach in the appeal taken by the insurance companies
(No. 12-0705) that a new trial is required, the appeal filed by Hess Oil (No. 12-0719) is being
disposed of simultaneously with the issuance of this opinion.

                                               1
will be set aside and this matter remanded for a new trial.

                         I. Factual and Procedural Background

              Until 2006,4 Hess Oil operated an oil distribution business through which it

owned underground storage tanks (“USTs”) at various service stations. One of those service

stations was an Exxon station located in Mt. Storm, West Virginia. Sometime in 1996, Hess

Oil applied for and obtained insurance coverage5 from C&I for environmental remediation

claims at its various properties, including the Mt. Storm site.

              On or about April 15, 1997, the West Virginia Department of Environmental

Protection (“DEP”) issued a “Confirmed Release Notice to Comply” (“Notice”) with regard

to the Mt. Storm site. The entity employed by Hess Oil to investigate the matter, Subsurface,

Inc., determined that there was some environmental contamination6 at the Mt. Storm location.

While Hess Oil was insured by the State of West Virginia for UST liability at this time, it

       4
       In 2006, Hess sold its assets to another firm and then voluntarily dissolved its
corporation in May 2008.
       5
       The policy was issued retroactive to October 1, 1995, and provided coverage through
October 20, 1997.
       6
        A former DEP Inspector, John Sneberger, testified: “The extent of the contamination
was extremely minimal. It was isolated to the left side of the pit based on the sample data
and my field observations. It would be basically something related to most likely overfills
and spills, a little bit of soil staining, very minimal.”

                                              2
never filed a claim with the state in connection with the April 15, 1997, Notice.7 Hess Oil

similarly did not submit a claim to C&I for the April 1997 contamination.8

              At the time of its policy renewal in October of 1997,9 Hess Oil submitted either

one or two applications to C&I. C&I acknowledged receipt of an application dated October

30, 1997, while Hess claims that it also submitted one that was dated October 15, 1997.10 In

December 1997, C&I issued a new one-year policy to Hess Oil effective October 21, 1997,

with $1 million of coverage. Under the “Storage Tank Third-Party Liability, Corrective

Action And Cleanup Policy,” C&I agreed to pay “reasonable and necessary costs that the

Insured is legally obligated to pay for Corrective Action due to Confirmed Releases

resulting from Pollution Conditions from an Underground Storage Tank System which

       7
        Hess Oil’s policy with the state for UST coverage ended on October 1, 1997, when
the state terminated its UST insurance program.
       8
         Hess Oil viewed the incident as a minor contamination that would be resolved by the
installation of new USTs, which were already scheduled to be replaced when the April 1997
Notice was issued. Testimony was offered at trial that the type of leakage at issue was quite
common in the 1990’s given the type of UST in use during that period.
       9
        See supra note 5.
       10
         The significance of this dispute bears on whether Hess Oil disclosed to C&I
information relative to the April 1997 Notice issued by the DEP. Whereas the October 15,
1997, application contains an affirmative response to the question of whether Hess Oil has
“had any reportable releases or spills . . . as defined by applicable environmental statutes or
regulations,” the October 30, 1997, application contains a negative answer to the same
question. During closing argument, Hess Oil recognized the possibility that the October 15,
1997, “application” may have been a “draft” document prepared for and sent only to its
insurance agent.

                                              3
are unexpected and unintended from the standpoint of the Insured.” To invoke coverage,

claims had to be reported to C&I “in writing, during the Policy Period or during the

Extended Reporting Period, if applicable.”11

              By letter dated February 23, 1998, the DEP advised Hess Oil regarding

“observed changed conditions” at the Mt. Storm site. DEP Inspector Sneberger had visited

the site in response to complaints made by members of a neighboring church and confirmed

the existence of vapors, petroleum slicks, and globules. Hess Oil provided notice of the

potential claim to C&I on January 6, 1999, and coverage was accepted by C&I on July 16,

1999.12 According to the trial court’s order of May 3, 2012,13 C&I paid $622,000 in

corrective action costs for cleanup of the Mt. Storm site as a result of this claim between

January 1999 and August 2009. Altering its position regarding the availability of insurance

coverage, Chartis Claims14 disclaimed coverage for cleanup of the Mt. Storm site on August

       11
         The insurance companies take the position that the claim, for which they had been
providing coverage for ten years, was outside the relevant policy period. Rather than being
a claim for a February 1998 incident, they maintain that the contamination at issue was a
continuation of the release incident first observed by the DEP in April 1997. The insurance
companies discovered the April 1997 Notice through a FOIA request they served on the DEP
in June 2009, while attempting to recreate their files pertinent to the Mt. Storm site claim.
       12
         Hess Oil sold the Mt. Storm USTs to a third party on May 4, 1998. On May 5, 1998,
Hess Oil secured an extended reporting period from C&I, which allowed it to report claims
related to the Mt. Storm USTs until May 4, 1999.
       13
        This order addressed a myriad of post-trial motions.
       14
        Chartis Claims, an indirect subsidiary of AIG, is the corporate entity that handles
                                                                             (continued...)

                                               4
19, 2009. The disclaimer was based on an alleged inaccuracy in the October 30, 1997,

application submitted by Hess Oil and its notice of claim related to the 1998 petroleum

release.15

              As a result of the coverage disclaimer, Ryan Environmental (“Ryan”), an

environmental contractor responsible for remediation and cleanup work at the Mt. Storm site,

brought a civil action against Hess Oil seeking to collect $252,000 for work its employees

had performed. Hess Oil filed cross claims against the insurance companies, seeking both

a declaration regarding its entitlement to insurance coverage and also asserting a first-party

bad faith claim. In response, the insurance companies filed cross claims against Hess Oil,

alleging breach of contract and negligent misrepresentation. Through these cross claims, the

insurance companies sought $622,000 for the environmental remediation costs they had paid

prior to the filing of the Ryan lawsuit as well as $260,000 to reimburse them for the

settlement they reached with Ryan in May 2011.

       14
        (...continued)
claim adjustments for all the separate AIG insurance companies.
       15
          In the denial letter, Chartis Claims informed Hess Oil that its disclaimer of coverage
was based on the fact that “the Pollution Condition first detected on April 15, 1997 is the
same as that reported by the Insured to C&I in January 1999.” As support for this position,
Chartis Claims referred to the DEP’s acknowledgment of the contamination in a September
9, 1997, letter. The insurance companies further rely on the fact that the September 1997
letter from DEP was again referenced in the February 23, 1998, letter from the DEP to Hess
Oil advising it of “changed conditions” at the Mt. Storm site.

                                               5
               The matter proceeded to trial in December 2011 and, after seven days of trial,

the jury awarded Hess Oil $5 million in compensatory damages. Because the jury found that

the insurance companies had “willfully, maliciously, and intentionally utilized an unfair

business practice” while knowing the claim was proper, the case proceeded to the punitive

damage stage and the jury awarded $53 million to Hess Oil in punitive damages. Following

a motion of the insurance companies to set aside the punitive damage award based on the

absence of evidence of actual malice,16 the trial court reduced the punitive damage award

from $53 million to $25 million. Through the filing of two separate appeals, Hess Oil seeks

to have the full amount of the punitive damage award reinstated while the insurance

companies seek a grant of judgment as a matter of law17 or, alternatively, a new trial18

       16
         The insurance companies maintain that the evidence introduced against them on the
issue of bad faith settlement practices demonstrated, at best, “insurer ‘negligence, lack of
judgment, incompetence, or bureaucratic confusion.’” But in no event, they argue, did their
actions rise to the necessary level of actual malice. While the trial judge indicated to counsel,
outside of the jury’s presence, that the evidence introduced in this case did not demonstrate
actual malice, once the jury made the determination that the insurance companies acted
willfully, maliciously, and intentionally in failing to resolve the claim in good faith, the trial
court was unwilling to disturb the jury’s decision on the issue of actual malice.
       17
        The insurance companies argue that this case should never have proceeded to the
jury because Hess Oil failed to introduce evidence that the corporation, as opposed to its
former shareholders, suffered any injury in connection with the disclaimer of coverage.
       18
       Following trial, the insurance companies moved for a new trial on multiple grounds.
That motion was denied along with the other post-trial motions in the May 3, 2012, order.

                                                6
                                   II. Standard of Review

              As we recently observed in syllabus point one of Burke-Parsons-Bowlby

Corporation v. Rice, 230 W.Va. 105, 736 S.E.2d 338 (2012):

                     This Court reviews the rulings of the circuit court
              concerning a new trial and its conclusion as to the existence of
              reversible error under an abuse of discretion standard, and we
              review the circuit court’s underlying factual findings under a
              clearly erroneous standard. Questions of law are subject to a de
              novo review.

“Although the ruling of a trial court in granting or denying a motion for a new trial is entitled

to great respect and weight, the trial court’s ruling will be reversed on appeal when it is clear

that the trial court has acted under some misapprehension of the law or the evidence.” Syl.

Pt. 4, Sanders v. Georgia-Pacific Corp., 159 W.Va. 621, 225 S.E2.d 218 (1976).

              With regard to the issue of jury instructions in general, this Court reviews both

the formulation and giving of jury instructions under an abuse of discretion standard.19 See

Syl. Pt. 6, in part, Tennant v. Marion Health Care Found., Inc., 194 W.Va. 97, 459 S.E.2d
374 (1995). However, the giving of “[a]n erroneous instruction is presumed to be prejudicial

and warrants a new trial unless it appears that the complaining party was not prejudice[d] by

such instruction.” Syl. Pt. 2, Hollen v. Linger, 151 W.Va. 255, 151 S.E.2d 330 (1966).

       19
        This same abuse of discretion standard governs the trial court’s decisions with regard
to evidentiary and procedural rulings; verdict forms; and other matters of trial management.
See generally Syl. Pt. 4, State v. Rodoussakis, 204 W.Va. 58, 511 S.E.2d 469 (1998); Syl. Pt.
1 McDougal v. McCammon, 193 W.Va. 229, 455 S.E.2d 788 (1995).

                                               7
               Finally, it is well-settled that our review of punitive damage awards is plenary

in nature. See Syl. Pt. 16, Peters v. Rivers Edge Mining, Inc., 224 W.Va. 160, 680 S.E.2d
791 (2009) (stating that “this Court will review de novo the jury’s award of punitive damages

and the circuit court’s ruling approving, rejecting, or reducing such award”); see also Garnes

v. Fleming Landfill, Inc., 186 W.Va. 656, 663, 413 S.E.2d 897, 904 (1991) (recognizing that

“detailed appellate review . . . of punitive damages awards [is] important in guaranteeing due

process”). With these respective standards in mind, we proceed to consider whether the trial

court committed error.

                                        III. Discussion

                                 A. Corporate Separateness

               The insurance companies maintain that the trial court wrongly viewed and

treated the former shareholders of Hess Oil20 as the corporation for evidentiary, damage, and

verdict purposes throughout the course of the trial. Critically, the claims in the action at issue

were either brought by or against the corporation; the shareholders were not named parties.

The record fully reflects both the trial court’s failure to acknowledge the distinction between

the corporation and its former shareholders as well as the continued objections of the

insurance companies to this manner of proceeding.

         20
          The former shareholders were William Brown, Betty Brown, and the Brown Family
Trust.

                                                8
              As we recognized in syllabus point one of Laya v. Erin Homes, Inc., 177 W.Va.

343, 352 S.E.2d 93 (1986), “‘[t]he law presumes . . . that corporations are separate from their

shareholders.’ Syl. pt. 3 (in part), Southern Electrical Supply Co. v. Raleigh County National

Bank, 173 W.Va. 780, 320 S.E.2d 515 (1984)”; accord 1 Fletcher, Cyclopedia of

Corporations § 25 (2006); 18 C.J.S. Corporations § 6 (2007).              Not only have we

acknowledged that the corporate form is “never [to] be disregarded lightly,” but we have

explained that this principle applies equally to closely held corporations. S. States Co-

Operative, Inc. v. Dailey, 167 W.Va. 920, 930, 280 S.E.2d 821, 827 (1981); S. Elec. Supp.

Co. v. Raleigh Co. Nat’l Bank, 173 W.Va. at 788, 320 S.E.2d at 524 (“Our state law permits

close corporations, with one shareholder, so we cannot disregard a corporation solely because

it has one or two, and the same, shareholders.”). Admittedly, the “legal fiction” that a

corporation is “an entity separate and apart from the persons who own it” periodically

permits a piercing of the corporate veil for purposes of holding a corporation’s shareholders

personally liable. Syl. 10, in part, Sanders v. Roselawn Mem’l Gardens, Inc., 152 W.Va. 91,

159 S.E.2d 784 (1968). Given that Hess Oil, a dissolved corporation, is itself seeking

recovery,21 the facts of this case simply do not require, or even suggest, the need for a

corporate veil piercing analysis. See generally Laya, 177 W.Va. at 349-51, 352 S.E.2d at 99-

102 (discussing factors relevant to corporate veil piercing decision).

       21
         While the insurance companies had initially asserted claims against Hess Oil, just
before the case went to the jury, they submitted a stipulation indicating they would not seek
recovery from the shareholders for any damages awarded to them in this case or in any other
case or action.

                                              9
              This principle of corporate separateness is codified in our law as well. The

provision of our business corporation act addressing shareholder liability states that “[u]nless

otherwise provided in the articles of incorporation, a shareholder of a corporation is not

personally liable for the acts or debts of the corporation. . . .” W. Va. Code § 31D-6-622(b)

(2009). Of critical significance to this case is the fact that corporate dissolution does not

abrogate the axiom that a corporation and its shareholders are legally distinct. The corporate

existence, as well as its protections with regard to shareholder liability, continue even when

a corporation is dissolved. As a result, a dissolved corporation may both sue and be sued in

its corporate name. See W.Va. Code § 31D-14-1405(b)(5) (2009). In the event that claims

are brought against a dissolved corporation, those claims are enforceable:

              (1) Against the dissolved corporation, to the extent of its
              undistributed assets; or
              (2) If the assets have been distributed in liquidation, against a
              shareholder of the dissolved corporation to the extent of his or
              her pro rata share of the claim or the corporate assets distributed
              to him or her in liquidation, whichever is less, but a
              shareholder’s total liability for all claims under this section may
              not exceed the total amount of assets distributed to him or her.

W.Va. Code § 31D-14-1407(d) (2009).

              Despite these clear principles of corporate law, Hess Oil advanced its cross

claim at trial as though the non-party former shareholders, William and Betty Brown, were

personally liable for the cleanup of the Mt. Storm site upon the disclaimer of coverage and

the jury was urged to award damages for the emotional impact the coverage disclaimer had

                                              10
on the Browns.22 Notwithstanding repeated objections by the insurance companies to

evidence of the Browns’ personal injuries, the trial court allowed the jury to consider the

effect the coverage disclaimer had on the Browns as both relevant and determinative with

regard to the issue of injury and damages.23

              The record is clear in this case that no injury was suffered by Hess Oil in

connection with either the claim initiated by Ryan, which the insurance companies settled

with Ryan and obtained a release in favor of Hess Oil, or the cross claims later asserted by

the insurance companies against Hess Oil. Mr. William Brown testified both at his

deposition and at trial that Hess Oil suffered no damages. Describing this testimony as

“damaging” in its May 3, 2012, order addressing post trial motions, the trial court opined:

“Mr. Brown’s testimony reflected an admission he made when deposed: Hess Oil suffered

       22
         The Browns were permitted to testify regarding the emotional effects of a possible
recovery against them by the insurance companies for the pending claims for negligent
misrepresentation and breach of contract. Though they did not personally incur attorney’s
fees due to a contingent fee arrangement, the Browns were allowed to testify concerning the
emotional effects of such fees, as well as the emotional effects of additional future
remediation costs. But see infra note 32 (referring to fee advancement by the Browns as
potential item of compensatory damages).
       23
         Because the appendix record of this case contains only the statement of Mr. William
Brown that no assets were distributed to the shareholders upon the dissolution of the
corporation in 2008, there is no foundation for the trial court’s ruling the shareholders were
subject to potential liability from the insurance companies’ cross claims under West Virginia
Code § 31D-14-1407(d). Similarly, while counsel for Hess Oil stated during oral argument
that assets were distributed to the former shareholders in 2006, the appendix record filed in
this matter does not support this statement.

                                               11
no damages.” As the trial court was quick to acknowledge, “[t]he lion’s share of Mr.

Brown’s testimony related to the proposition that damages should be awarded based upon

the impact to Hess’s shareholders and to their potential liability stemming from the

underlying action herein.” After making these critical findings, the trial court proceeded to

address as part of its post-trial rulings whether the emotional damages sustained by the

former shareholders of Hess Oil were recoverable in this action.

              Responding to the insurance companies’ position that corporations cannot

experience personal damages in the nature of aggravation, annoyance, and inconvenience,

the trial court referenced its acknowledgment in a previous order24 that “little mandatory

authority exists on the subject of a corporation’s option to demand damages for annoyance

and inconvenience.”25 As support for its decision to uphold the personal damages awarded

to Hess Oil, the trial court relied upon dicta in Hayseeds, Inc. v. State Farm Fire and

Casualty Co., 177 W.Va. 323, 352 S.E.2d 73 (1986); specifically, a hypothetical comparison

of the amount of aggravation and inconvenience a family of five might experience as the

result of an insurance claim denial in contrast to the relatively minimal effects that such a

       24
        This order denied the insurance companies’ motions for partial summary judgment.
       25
        The trial court observed that the insurance companies “reinforce[d] this notion [that
corporations are precluded from recovering damages for aggravation, annoyance, and
inconvenience] with persuasive common law from outside of West Virginia.”

                                             12
coverage denial could potentially have on a corporation.26 The Hayseeds commentary,

offered by former Justice Neely for illustrative purposes, was aimed at preventing duplicative

damage awards, rather than designed to address whether a corporation may recover damages

of a personal nature.27 Instead of being cast in stone as the trial court assumed, the latter

issue remains open to debate. Given the facts of the case before us, however, it is not

necessary to resolve that matter.

              As the record of this case makes clear, without the evidence Hess Oil

introduced concerning the emotional damages suffered by William and Betty Brown, there

       26
        The contrived scenario was related as follows:

              In allowing an award for aggravation and inconvenience, we do
              not intend that punitive damages be awarded under another
              sobriquet. For example, a large corporation with an in-place,
              organized collective intelligence that must litigate a claim for
              several years may suffer substantial economic loss but little
              aggravation and inconvenience. On the other hand, a family of
              five that is required to live for four years in a trailer because an
              insurance company has declined to pay the fire policy on their
              $200,000 house suffers little net economic loss but an enormous
              degree of aggravation and inconvenience.

177 W.Va. at 330, 352 S.E.2d at 80.
       27
         As the trial court observed in this case, many courts have found to the contrary. See,
e.g., Pak-Mor Mfg. Co. v. Brown, 364 S.W.2d 89, 96 (Tex. App. 1962) (holding that
corporation could not recover damages for personal annoyance, discomfort, and
inconvenience as those damages were suffered by officers and employees of corporation
rather than corporation).

                                              13
would have been little or no evidence of injury for the jury to consider.28 As former

shareholders and non-parties to the case, the Browns were not the equivalent of Hess Oil for

purposes of seeking recovery for injuries purportedly sustained by the corporation. The

contention of Hess Oil that the interests of the former shareholders are wholly merged with

those of the corporation upon the dissolution of a corporation is specious. As discussed

above, our corporate statutes make clear that the contrary is true as the legal distinction

between a corporation and its shareholders unquestionably continues post dissolution. See

W.Va. Code §§ 31D-14-1405(b)(5); 31D-14-1407(d). And while the former shareholders

of a corporation can be held liable up to the amount of assets they received upon liquidation,

the trial court appears to have acted on a mere representation that the Browns received assets

upon the liquidation of Hess Oil.29 The appendix record does not verify either the amount

or the fact of such a liquidation. As it stands, based on the submitted record, and specifically

the testimony of Mr. William Brown that no assets were distributed in 2008 upon the

dissolution of Hess Oil, there is no basis under West Virginia Code § 31D-14-1407(d) for the

trial court’s presumption of the existence of shareholder liability.30

       28
        See infra note 32.
       29
          Referring to West Virginia Code § 31D-14-1407(d), which permits shareholder
liability up to the amount of distributed assets, the trial court stated: “Under this provision,
the shareholders were subject to recovery from the AIG Defendants for AIG’s cross-claims
which totaled nearly $900,000.”
       30
        We are not questioning the representation made by counsel for Hess Oil during oral
argument that the former shareholders received assets in 2006; we simply lack evidence of
any such liquidation. Absent that evidence, there is no legal basis for holding the former
                                                                             (continued...)

                                              14
              In blindly accepting the Hayseeds illustration as controlling, the trial court

failed to consider whether that conjectural discourse31 had any applicability to a dissolved

corporation, or even more importantly, to a case in which the former shareholders were not

named parties. In our opinion, the trial court’s reliance on the hypothetical employed in

Hayseed fails in both instances. Assuming, arguendo, that a corporation could incur

damages in the nature of aggravation, annoyance, and inconvenience, the dissolution of that

corporation strongly suggests a correlative inability to sustain any such personal damages on

the part of the corporation. Confirmation of this point is gleaned from a consideration of how

the only aggravation, annoyance, and inconvenience damages that a corporation could

hypothetically incur would necessarily be experienced by its employees and shareholders;

be specifically associated with and limited to corporate matters; and, typically, be sustained

while the corporation is an ongoing concern. And, in the same manner that the personal

damages experienced by former shareholders post dissolution are not germane to the issue

of corporate injury, neither are the personal damages of non-parties who are not subject to

personal liability based on the protections afforded them by incorporation. In this case, the

admission of the aggravation, annoyance, and inconvenience evidence of non-parties was not

       30
         (...continued)
shareholders legally responsible in this case for any potential recovery from the insurance
companies. Moreover, the stipulation the insurance companies submitted, see supra note 21,
further negates the possibility that the former shareholders could have any potential liability
with relation to any claims asserted against Hess Oil by C&I or Chartis Claims.
       31
        See supra note 26.

                                              15
only of no relevance to the issue of whether Hess Oil sustained damage, but it was also

highly prejudicial to the insurance companies as it was essentially the only evidence of

injury that Hess Oil relied upon to establish its claim.

              Upon our consideration of these critical distinctions, we hold that a dissolved

corporation that is asserting a claim solely in its corporate name under authority of West

Virginia Code § 31D-14-1405(b)(5) may not recover damages for the personal aggravation,

annoyance, and inconvenience of its non-party former shareholders.32 Accordingly, we find

that the trial court erred in its decision that Hayseeds provided the necessary authority for an

award of personal damages to Hess Oil for the aggravation, annoyance, and inconvenience

of its former shareholders. As a result of the trial court’s failure to apply the construct of

corporate separateness as well as its wrongful reliance on Hayseeds, the insurance companies

are entitled to a new trial. See Bartles v. Hinkle, 196 W.Va. 381, 389, 472 S.E.2d 827, 835

(1996) (“A trial court abuses its discretion if its ruling is based on an erroneous assessment

of the evidence or the law.”).

                                    B. Jury Instructions

       32
         Because the record indicates that the Browns initially advanced their legal counsel
$30,000 in expenses, we are unable to conclude that no evidence of compensatory damages
was introduced at trial. Additionally, during oral argument counsel for the insurance
companies made certain suggestions with regard to this Court’s sua sponte reduction of the
compensatory award that further inhibits any ruling that the insurance companies were
entitled to judgment as a matter of law due to the absence of any injury.

                                              16
              The insurance companies assert error both with regard to the manner that the

jury instructions were handled by the trial court and, specifically, with regard to the giving

of two conflicting instructions. On the evening before the case was submitted to the jury, the

trial court announced: “I’m going to ask each counsel [to] give me your best six (6)

[substantive] instructions and you’re going to live with it. And I’ll note your exceptions to

that and if you don’t want to participate in that, I’ll choose the six (6) from each side.”33 The

record reflects that Hess Oil objected to this numerical limitation but that the insurance

companies did not. While this Court admittedly does not approve of the trial court’s arbitrary

selection of a finite number of jury instructions,34 we do not further address the imposition

of the instructional limitation due to the absence of an objection being raised by the insurance

companies on this particular issue. See State v. Asbury, 187 W.Va. 87, 91, 415 S.E.2d 891,

895 (1992) (“Generally the failure to object constitutes a waiver of the right to raise the

matter on appeal.”).

              The insurance companies further complain about the fact that they did not get

to both review and object to the instructions prior to the reading of the instructions to the

jury. Upon inquiry, this particular issue merits minimal discussion. Not only were the

       33
         The trial court observed that after previously asking the parties to narrow down the
instructions, Hess Oil had actually increased its submitted instructions from 41 to 56.
       34
          While we fully respect the trial court’s authority to manage its courtroom and its
trial-related proceedings, the limited number of substantive instructions seems unduly
restrictive, especially in view of the complexity of this case.

                                               17
insurance companies provided with a written copy of the instructions in advance of their

offering, but the record demonstrates they failed to register any objection to the trial court’s

announcement that it would permit the parties to place their respective objections to those

instructions on the record once the jury began its deliberations. As a result, we will not

further address the procedural manner in which the jury instructions were handled by the trial

court. See id.

                 In marked contrast to the two preceding issues, the insurance companies fully

preserved their objection to the trial court’s decision to offer two instructions to the jury on

the issue of misrepresentation that are in clear conflict with each other. The applicable law

on the issue of insurance misrepresentation was provided in the following instruction given

to the jury:

                       [T]he AIG Defendants contend that Hess Oil is
                       prevented from recovering under the policy
                       because it or its representatives made a
                       misrepresentation in its application for insurance.
                       To succeed, the AIG Defendants need only prove
                       by a preponderance of the evidence that Hess
                       made a misrepresentation in the application for
                       insurance and [that] those misrepresentations
                       were material to the AIG Defendants acceptance
                       of the risk or to the hazard assumed by AIG. A
                       misrepresentation may result from silence or from
                       the suppression of facts as well as from an
                       affirmative representation.

This instruction fully comports with West Virginia Code § 33-6-7(b), (c) (2011), the statutory

provisions under which the insurance companies pursued their claim for misrepresentation

                                               18
against Hess Oil.

              The insurance companies argue that the trial court introduced the potential for

jury confusion into this case by offering the instruction on misrepresentation offered by Hess

Oil.   In giving this instruction, the trial court advised the jury about a type of

misrepresentation not at issue in the case:

                     Misrepresentations, omissions, concealment of
                     facts, and incorrect statements on an application
                     for insurance by an insured must be knowingly
                     made with an intent to deceive the insurer and
                     relate to the facts affecting the policy in order to
                     be a legitimate basis for denial of a claim.
                     Therefore, for an insurer to prevail under W.Va.
                     Code § 33-6-7(a) the insurer must establish the
                     insured’s specific intent to deceive the insurer . .
                     . Accordingly, in order to prevail, an insurer, AIG
                     must prove by a preponderance of the evidence
                     that its insured, Hess Oil knowingly made
                     misrepresentations with a specific intent to
                     deceive AIG and the misrepresentations must
                     relate to material facts affecting the policy.35

Because they did not seek recovery under subsection (a) of West Virginia Code § 33-6-7, the

section requiring a showing of an insured’s fraudulent misrepresentation, the insurance

companies argue there was no foundation for the giving of this particular instruction. We

agree.36 Not only did the instruction in question fail to conform to the facts and pleadings

       35
        Emphasis supplied.
       36
        We reject the position of Hess Oil that the jury did not “even remotely consider[]”
                                                                              (continued...)

                                              19
of the case, but it directed the jury to apply the wrong standard–a significantly elevated

standard that required a specific intent to deceive–in deciding whether Hess Oil had made

a misrepresentation on its insurance application to C&I. As we recognized in Hollen, an

erroneous instruction is presumptively prejudicial unless the complaining party can be shown

not to have been harmed by the giving of the instruction. 151 W.Va. at 255, 151 S.E.2d at

331, syl. pt. 2; accord Matheny v. Fairmont Gen. Hosp., Inc., 212 W.Va. 740, 575 S.E.2d
350 (2002).

              By giving one instruction that required the insurance companies to prove a

material misrepresentation through evidence of a mere failure to report while at the same

time providing another instruction which required proof of an intentional failure to report,

the jury was presented with contradictory and competing legal standards. The harm that

results from instructing a jury in an inconsistent fashion has long been recognized:

                     “It is error to give inconsistent instructions, even if one
              of them states the law correctly, inasmuch as the jury, in such
              circumstances, is confronted with the task of determining which
              principle of law to follow, and inasmuch as it is impossible for
              a court later to determine upon what legal principle the verdict
              is founded.” Opinion, State Road Commission v. Darrah, 151

       36
         (...continued)
the issue of misrepresentation. The record of this case demonstrates that the insurance
companies vigorously pursued their claims in this case based on misrepresentation or, more
specifically, the failure to report. In closing argument, counsel for the insurance companies
summarized their position: “They [Hess Oil] have failed to report a Confirmed Release
within the applicable policy terms of ‘96/97 policy and tried to cover it up by asserting a
second release in 1998, reported under the extended reporting endorsement.”

                                             20
               W.Va. 509, 513, 153 S.E.2d 408, 411 (1967).

Syl. Pt. 2, Burdette v. Maust Coal & Coke Corp., 159 W.Va. 335, 222 S.E.2d 293 (1976).

As we explained in Darrah, reversal is required in these instances because inconsistent

instructions create “a distinct tendency to confuse rather than to instruct or enlighten the

jury.” 151 W.Va. at 513, 153 S.E.2d at 411.

               In its post trial rulings, the trial court acknowledged the error presented by the

two conflicting instructions on misrepresentation. Rather than recognizing the need to grant

a new trial as the result of the error, however, the trial court simply concluded that it did “not

believe this error . . . had an effect on the ultimate verdict.”37 The trial court’s conclusion

simply begs the question: there is no way to know that the inconsistent instructions did not

play a part in the jury’s decision. Due to the conceivable injection of jury confusion into the

trial as the result of these conflicting instructions, the insurance companies are entitled to a

new trial. See Burdette, 159 W.Va. 335, 222 S.E.2d 293, syl. pt. 2.

                               C. Future Remediation Costs

               As an additional ground of error, the insurance companies cite the trial court’s

       37
          The trial court further opined: “Even if the two instructions were palpably
inconsistent with one another, taking the factual circumstances and ultimate disposition of
the case into mind, the Court concludes that the instructions, as given, were fair to both
parties.”

                                               21
decision to allow Hess Oil to present evidence of future remediation costs at the Mt. Storm

site. Mr. Rine, an expert witness for Hess Oil, testified that the amount of funds necessary

to complete the site cleanup was between $561,475 to $878,475. During closing argument,

counsel for Hess Oil specifically reminded the jury of the amount in excess of $800,000

necessary for future remediation purposes for purposes of calculating the damage award.38

              Hess Oil takes the position that because the insurance companies failed to

resolve the claim within the $1 million policy limits, that it is entitled to seek the full

remediation costs as part of its claim. The insurance companies disagree, arguing that they

were only liable up to the policy limits. See Marshall v. Saseen, 192 W.Va. 94, 101, 450
S.E.2d 791, 798 (1994). And, while an insurer may be held liable beyond its policy limits

upon proof that the “policyholder . . . [made] a reasonable demand within the policy limits,”

the insurance companies maintain that Hess Oil failed to present any evidence that it made

any such demand and that they, in response, refused to settle. Miller v. Fluharty, 201 W.Va.

685, 698, 500 S.E.2d 310, 323 (1997). As a result, the insurance companies argue there was

no basis for the recovery of future remediation costs.39 They insist that the introduction of

       38
        In closing argument, counsel for Hess Oil argued to the jury that “the future
remediation is part of what the Browns are going to be stuck with here.”
       39
         Consistent with its position that Hess Oil failed to demonstrate that the former
shareholders had any liability for claims brought against the corporation, the insurance
companies argue additionally that the necessary predicate for assessing damages for an award
of future remediation costs was missing. See W.Va. Code § 31D-14-1407(d).

                                             22
this evidence prejudiced them “by providing a false justification for imposing liability

beyond C&I’s policy limits” and that Hess Oil was improperly granted “an extralegal

windfall.”

              In ruling on this issue, the trial court cited to evidence that the insurance

companies’ environmental consultant offered at trial that the cleanup of the Mt. Storm site

could have been completed within policy limits had different decisions been made during the

cleanup process. This evidence plus testimony adduced that the disclaimer of coverage

spawned additional remediation costs convinced the trial court that evidence of future

remediation “expenses was highly relevant to the amount of damages at bar.”

              Having already determined that grounds for reversal exist in this case, we need

not base our decision on this issue. We do question, however, whether there was any basis

for the jury’s consideration of this evidence without any predicate showing that the Browns,

as former shareholders, were responsible for the cleanup costs.40 And, if no clear demand

for settlement was made by Hess Oil, this case may fall outside the rulings of this Court that

permit recovery for an excess of policy limits. See Miller, 201 W.Va. at 698, 500 S.E.2d at

323.

       40
        See supra note 23.

                                             23
                                      D. Punitive Damages

              In light of the fact that we are reversing the jury’s verdict in this case, there is

no need to conduct a full review of the punitive damage award or the trial court’s remittitur

of those damages. The entitlement of Hess Oil to punitive damages will be decided anew

when this matter is retried. We note, however, that the trial court specifically questioned

whether the evidence of this case rose to the necessary level of actual malice required to

permit an award of punitive damages.41 See McCormick v. Allstate Ins. Co., 202 W.Va. 535,

540, 505 S.E.2d 454, 459 (1998) (requiring showing of “high threshold of actual malice in

the settlement process” for award of punitive damages in bad faith cases).42 In view of our

remand of this matter for a new trial, there is no need to decide whether the award of punitive

damages was improper.

                                       IV. Conclusion

              Based on the foregoing, the judgment order entered by the Circuit Court of

Harrison County on January 9, 2012, is vacated; the order of May 3, 2012, denying a new

       41
        See supra note 16.
       42
         In challenging the award, the insurance companies cite this Court’s statement in
McCormick, that an award of punitive damages in a bad faith insurance case requires
“‘intentional injury–not negligence, lack of judgment, incompetence, or bureaucratic
confusion.’” 202 W.Va. at 539, 505 S.E.2d at 458 (quoting Hayseeds, 177 W.Va. at 330-31,
352 S.E.2d at 80-81). The actions for which Hess Oil asserted bad faith in this case were
essentially organizational in nature: improper training of personnel; poor file maintenance;
and negligent claim followup.

                                              24
trial is reversed; and this matter is remanded for additional proceedings consistent with this

opinion.

                                                                   Reversed and Remanded.

                                             25