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Manu v. Geico Casualty Co.

Supreme Court of Virginia

April 27, 2017



          PRESENT: All the Justices



         In this appeal, we consider whether the Circuit Court of Fairfax County erred in sustaining a demurrer in a case in which the plaintiff alleged that an uninsured motorist (UM) insurance carrier violated its duty of good faith to its insured, by refusing to pay its UM policy limits prior to the insured obtaining a judgment against the uninsured tortfeasor.


         Because this is an appeal from the circuit court's decision to sustain a demurrer to a complaint filed by the appellant, Ebenezer Manu (Manu), the facts are recounted as alleged in that pleading. EMAC, L.L.C. v. County of Hanover, 291 Va. 13, 20, 781 S.E.2d 181, 185 (2016).

         On October 30, 2010, Manu was a passenger in a vehicle driven by Benjamin Boateng (Boateng) that was involved in a multi-vehicle automobile accident. Boateng had a personal auto insurance policy with a $25, 000 limit. Manu was insured by GEICO Casualty Company (GEICO) under a personal auto insurance policy, which provided UM coverage with a $25, 000 limit. On November 22, 2010, Manu notified GEICO of a potential UM claim.

         Manu incurred $27, 189.12 in medical bills and $6, 375 in lost wages as a result of the accident. On October 19, 2012, Manu sued Boateng and John Doe in the Circuit Court of Fairfax County. Answers obtained in discovery from several drivers involved in the accident purportedly established that a John Doe driver was the cause of the accident. On September 19, 2013, Manu submitted this information to GEICO and advised GEICO of his intent to seek the $25, 000 in UM coverage.

         GEICO elected to defend John Doe. The trial against the defendants was scheduled for February 9, 2015. On January 30, 2015, Manu offered to settle the case for $12, 500 from GEICO, and subsequently rejected GEICO's counter-offer of $5, 000. One week before the trial, Manu settled the lawsuit against Boateng for Boateng's liability policy limit of $25, 000, and proceeded to trial solely against John Doe.

         During the trial against John Doe, the circuit court ruled that John Doe was negligent as a matter of law and that his negligence was a proximate cause of the collision. The trial proceeded on damages, and while GEICO did call a medical expert to testify, the expert did not contest Manu's medical bills or injuries. The jury returned a verdict of $68, 528.24 in favor of Manu, plus costs and prejudgment interest, and, on February 10, 2015, the court entered judgment against John Doe for that amount.

         On May 14, 2015, Manu filed a complaint against GEICO. Manu alleged that pursuant to Code § 8.01-66.1, GEICO was "charged with the duty to evaluate, adjust, and settle [uninsured motorist] claims against it in 'good faith, '" and, "notwithstanding said duty, GEICO's failure to settle plaintiff's claim within the $25, 000 policy limit after plaintiff's January 30, 2015 demand violated Code § 8.01-66.1, " and constituted a breach of GEICO's duty to act in good faith. Manu sought judgment against GEICO in the amount of $18, 528, "representing the amount of the unpaid compensation damages awarded by the jury, "[1] plus unpaid prejudgment interest, reasonable attorneys' fees of $30, 000, and expenses, costs and double interest as provided under Code § 8.01-66.1(D).

         GEICO filed a demurrer. On July 24, 2015, the circuit court held a hearing on the demurrer, and the presiding judge overruled GEICO's demurrer.

         Manu served discovery requests upon GEICO on August 20, 2015. He subsequently filed a motion to compel when GEICO did not provide all the requested documents. GEICO responded, in part, that Manu had no right to the documents because he had not satisfied the statutory prerequisites of Code §§ 8.01-66.1 and 38.2-2206 in that, at the time of the alleged bad faith, he had not obtained a judgment against John Doe. During a December 18, 2015 hearing on this motion, the court deferred ruling on the motion and ordered additional briefing.

         By letter dated January 28, 2016, the circuit court again deferred ruling on Manu's motion to compel, and invited GEICO to move for reconsideration of the prior decision overruling GEICO's demurrer. Following argument on February 26, 2016, the circuit court granted GEICO's motion to reconsider. It vacated the order overruling GEICO's demurrer, sustained GEICO's demurrer with prejudice, denied Manu's motion to compel as moot, and dismissed Manu's complaint with prejudice.

         Manu appeals. His assignment of error asserts:

The Trial Court erred by sustaining GEICO Casualty Company's Demurrer to Mr. Manu's Complaint which alleged a cause of action under Virginia Code § 8.01-66.1(D)(1). Specifically, the Trial Court erred in ruling that Virginia Code § 8.01-66.1(D)(1) did not provide Mr. Manu a remedy against GEICO Casualty Company for its alleged bad faith conduct in adjusting his uninsured motorist bodily injury claim.


         Manu argues that Code § 8.01-66.1(D)(1) imposes a duty of good faith upon a UM carrier to evaluate, adjust and settle a demand by an insured for UM coverage, prior to the insured's obtaining judgment against the uninsured tortfeasor. GEICO responds, in part, that any duty of good faith imposed by Code § 8.01-66.1(D)(1) arises concurrently with a UM carrier's obligation to pay its insured under the policy, and that the obligation to pay under a UM policy is governed by Code § 38.2-2206, which does not obligate the insurer to make any payment to the insured until after the insured obtains a judgment against the alleged uninsured tortfeasor.

         This appeal addresses the interpretation and interaction of two statutes concerning the duties of UM carriers in Virginia, Code § 38.2-2206 and Code § 8.01-66.1. "[A]n issue of statutory interpretation is a pure question of law which we review de novo." Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007).

         The critical question regarding Manu's assignment of error is whether either statute imposes a duty on the part of UM carriers to adjust and settle an insured's demand for payment under a UM policy before the insured obtains judgment against the uninsured tortfeasor. Accordingly, we first address a UM carrier's obligations which arise pursuant to Code § 38.2-2206. We then address whether and when Code § 8.01-66.1(D)(1) is triggered by the obligations imposed upon a UM insurer under Code § 38.2-2206, and whether Code § 8.01-66.1(D)(1) independently establishes any duty on the part of a UM carrier to adjust and settle UM claims before trial.

         I. Code § 38.2-2206 - Uninsured Motorist Insurance Coverage

         Code § 38.2-2206, "Uninsured motorist insurance coverage, " requires insurance companies to provide UM ...

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