INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
They failed to yell “timber”
In late 2015, while insured under a homeowners policy issued by Farmers & Mechanics Mutual Insurance company of West Virginia (Farmers), Andrea Dale Dye (Dye) made an agreement that, eventually, triggered a lawsuit. Dye met with Larry Jones of Jones Hauling (Jones).
Jones wanted permission to go on her property in order to perform a timber removal job at a neighbor’s bordering property. While in discussion, Jones suggested that Dye consider removing timber from her property as well. They agreed to do so and a timber sale contract was executed. Work was completed on the properties around mid-year 2016.
Nearly a year later, the Bradleys, another Dye neighbor, were visiting their property and discovered that timber had been removed. The Bradleys sought triple damages for theft of timber and property damage. They filed suit against Dye (amongst other parties). Dye filed a claim with Farmers. The insurer agreed to defend Dye, but only under a reservation of rights.
The insurer’s next step was to file its own complaint. It sought a declaration that it was not obliged to defend or provide protection to Dye. The insurer’s rationale was that the Bradleys’ complaint did not qualify as an occurrence. Further, the policy contained provisions that excluded coverage even if the loss met the definition of an occurrence.
Another development was a demand from the Bradleys to settle their claim for policy limits, but they withdrew that demand. Next, during a mediation, Dye asked that her claims for attorney fees, breach of contract and bad faith be settled by a payment of $100,000. In response, Farmers sent two letters with different offers on how to proceed with litigation. The first offer was to settle the claim for $15,000 and the latter was an agreement to handle any judgment if Dye agreed to permit the insurer to proceed with an attempt to resolve a claim equal to the policy’s limits.
In light of the insurer’s offers, Dye filed for summary judgment, claiming that Farmer’s letters estopped/waived their reservation of rights. A circuit court handled the initial action by denying the estoppel and waiver motions; then it ruled in favor of Farmers after agreeing that the loss was excluded. Dye appealed, but the intermediate court of appeals also ruled in Farmer’s favor. Dye again appealed.
Under the second appeal, the critical arguments presented by Dye were that she relied upon the information contained in the letters received from Farmers (constituting the insurer abandoning its reservations of rights) along with her belief that the lower court rulings that a business exclusion applied were in error.
The higher court reached the same conclusion as the other courts, finding no evidence that Farmers’ communications endangered its reserved rights. Rather, the insurer actively pursued options in response to Dye’s claims and the underlying lawsuit from the Bradleys, all while seeking determination as to whether it owed any coverage obligation.
With regard to the applicability of the policy’s business exclusion, Dye’s argument was that excluded activity applied only when the insured was directly involved. The court disagreed, finding instead that the policy wording excluded liability for business conducted at the insured location. The entity actually conducting the business was irrelevant. As a result, the higher court affirmed the lower court decisions in favor of Farmers.
Andrea Dale Dye v. Farmers & Mechanics Mutual Insurance Company of West Virginia—Supreme Court of Appeals of West Virginia—No. 24-20—June 10, 2026.
