W. Va. Court Says Insurer Not Liable for Former Gov. Moore’s Legal Fees

July 2, 2004

The West Virginia State Supreme Court has rejected former Gov. Arch Moore’s claim that the state’s former insurance company should have represented him when he was sued for defrauding the state while in office.

In an unsigned opinion, the justices upheld a Marshall County Circuit Court ruling that said CNA Insurance Co. was not obligated to represent Moore when he and coal operator Paul Kizer were sued by the state for $3.2 million.

The state filed the federal lawsuit in 1990 after Moore pleaded guilty to five federal corruption charges: mail fraud, extortion, filing false tax returns in 1984 and 1985 and obstruction of justice. He served three years of a five-year, 10-month sentence and was released in 1993.

The civil case sought restitution for $2.3 million in workers’ compensation and black lung refunds Kizer received and $550,000 in kickbacks Moore received. Kizer was dropped from the case in 1992 after his coal companies began declaring bankruptcy.

CNA refused to represent Moore in the civil case. He settled the case before it went to trial in 1996 by agreeing to pay $750,000.

The former three-term governor sued CNA in 2000 in circuit court.

In his appeal to the Supreme Court, Moore argued that questions involving insurance coverage must be liberally construed in the insured’s favor. He also cited the justices’ ruling in another case involving the assistant manager of a clothing store who was fired after a 15-year-old female customer accused him of sexual misconduct. In that case, the court said the store’s insurer incorrectly refused to represent the worker.

The court said Wednesday that the earlier case, styled Tackett vs. American Motorists Ins. Co., was different because the worker had not pleaded guilty to any criminal charge.

“In Tackett, the issue of the guilt of the defendant was still in question. Put another way, in Tackett, the circuit court was dealing with mere allegations, while in Gov. Moore’s case the factual determinations were already settled as provided by his guilty plea,” the opinion said.

Also, the court said, it rejected a similar argument from Moore when it denied his request to reinstate his law license last year.

“We believe, given the facts of this case, if we were to find that Gov. Moore should have been provided a defense to the State’s claims, it would have created a nearly unlimited duty to defend in future cases and would require insurers to defend an insured regardless of the circumstances,” the opinion said.

“To do so, we think would deprive insurers of the benefit to relating to scope of coverage that they bargained for and expose them unfairly to boundless claims of bad faith.”

Chief Justice Elliott “Spike” Maynard concurred in part and dissented in part.

“While it is clear to me that some of the claims against Gov. Moore are unquestionably outside of the scope of coverage, we do not know enough, in my view, to make such a finding with regard to all of the claims against Gov. Moore,” Maynard wrote in a separate opinion.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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