Hayseeds “Necessity” Requires More Than Post-Suit Settlement Timing; West Virginia UTPA Subsections (b), (c), (d), (f), (g), and (m) Remain Unavailable to Insureds

Precedents Cited

1) Summary judgment framework (federal procedure)

• Bandy v. City of Salem, 59 F.4th 705 (4th Cir. 2023): supplied the de novo standard of review and the general Rule 56 approach (construing facts/inferences for the nonmovant).
• Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986): reinforced that a “scintilla of evidence” is insufficient to defeat summary judgment.
• Wai Man Tom v. Hosp. Ventures LLC, 980 F.3d 1027 (4th Cir. 2020): conclusory allegations cannot create a genuine dispute of material fact.
• Morrison v. County of Fairfax, 826 F.3d 758 (4th Cir. 2016): framed the dispositive question as whether “no reasonable jury could find” for the nonmovant on the record.

2) West Virginia “Hayseeds” line (common-law fee shifting and consequential damages)

• Hayseeds v. State Farm Fire & Casualty, 352 S.E.2d 73 (W. Va. 1986): provided the foundational rule: when a policyholder “substantially prevails” in a qualifying first-party coverage dispute, the insurer may owe attorneys’ fees, net economic loss from delay, and aggravation/inconvenience damages.
• Jordan v. Nat'l Grange Mut. Ins. Co., 393 S.E.2d 647 (W. Va. 1990): supplied the controlling “substantially prevails” test used by the Fourth Circuit, including the critical “necessity” element—i.e., the insured must show “but for” counsel’s services, the settlement would not have been reached; post hoc timing alone is insufficient.
• Hadorn v. Shea, 456 S.E.2d 194 (W. Va. 1995): added practical guidance on “necessity,” emphasizing that negotiation is bilateral (“It takes two to negotiate”) and that a claimant’s own refusal to negotiate can defeat a claim that counsel was necessary to obtain settlement.
• Miller v. Fluharty, 500 S.E.2d 310 (W. Va. 1997): invoked for the proposition that a reasonable insured demand triggers an insurer duty either to meet it or to promptly explain why it is unsupported—highlighting how the absence of a concrete demand undermined Bristol’s theory.
• Hadorn v. Shea (again, by implication from the opinion’s footnote): noted that West Virginia extended Hayseeds-type recoveries beyond property damage to other first-party contexts; this mattered because it contextualized (without resolving) the still-contested question of whether third-party liability claims fit.

3) West Virginia UTPA standing/availability limits

• State ex rel. State Auto Prop. Ins. Cos. v. Stucky, 806 S.E.2d 160 (W. Va. 2017): cited by the district court (and endorsed by the Fourth Circuit) for limiting certain UTPA subsections to third-party claimants rather than insureds.
• State ex rel. W. Va. Mut. Ins. Co. v. Salango, 866 S.E.2d 74 (W. Va. 2021): similarly supports the limitation on insured standing under those subsections.
• Bristol Springs Custom Homes, LLC v. Argo Grp. US, Inc., No. 3:23-CV-246, 2024 WL 5453237 (N.D. W. Va. Dec. 19, 2024): the appealed district court decision, relied upon for the subsection-by-subsection statutory analysis and the conclusion that subsection (m) tracks the same operative language.

4) Appellate practice (cross-appeal necessity)

• al-Suyid v. Hifter, 139 F.4th 368 (4th Cir. 2025): controlled the disposition of Defendants’ cross-appeal; cross-appeals are dismissed when they merely seek affirmance on alternative grounds rather than to enlarge rights or lessen obligations under the judgment.

Legal Reasoning

1) Why the Hayseeds claim failed: “necessity” and negotiation conduct

The panel treated the case as turning on the second prong of Jordan v. Nat'l Grange Mut. Ins. Co.—whether “the [insured's] attorney's services were necessary to obtain payment of the insurance proceeds.” The court accepted that Bristol could argue the settlement amount eventually approximated what was needed to resolve the Ritter claim, but held the record did not permit a reasonable inference that counsel’s services were the “but for” cause of the settlement.

The opinion applied several interlocking points from Jordan and Hadorn:

• Post-suit settlement timing is not enough. The court quoted Jordan’s admonition that an insured must show more than “post hoc, ergo propter hoc.” In other words, Bristol could not rely primarily on the fact that Colony’s settlement numbers rose after the complaint was filed.
• “It takes two to negotiate.” Echoing Hadorn v. Shea, the court emphasized that a party cannot claim the insurer “forced” litigation/fees if the policyholder’s own choices impeded settlement.
• Bristol’s conduct contributed to the impasse. The panel highlighted:
  • Pre-trial: Bristol refused to dismiss its counterclaim as demanded by the Ritters (analogized to the claimant in Hadorn holding firm on an unrealistic demand).
  • Post-trial: Bristol’s bankruptcy filing altered who controlled litigation/settlement rights, requiring bankruptcy-court approval for releases affecting appeal rights—an objective complication not attributable to Colony.
  • After bankruptcy: Bristol did not respond to Colony’s repeated requests to confer about how to proceed with settlement given the Ritters’ insistence on a full release including appellate waivers.
• No clear, actionable demand by the insured. The court found it “not clear” that Bristol ever made a demand (e.g., “accept the $385,000 demand now” or “increase authority to $X”), and it treated that absence as fatal when assessed against Miller v. Fluharty’s demand/response framework.
• “Futility” was rejected as a substitute for engagement. Bristol argued that because Colony had questioned coverage, demanding payment would have been futile; the court found that neither Hadorn nor Jordan supports excusing negotiation inactivity on a futility theory—particularly where the insurer remained “willing to negotiate and fund a reasonable settlement.”

On these facts, the panel concluded that no reasonable jury could find the required “but for counsel” causation, so summary judgment was appropriate.

2) Why the statutory bad faith claim failed: who may sue under § 33-11-4(9)

Bristol alleged violations of subsections (b), (c), (d), (f), (g), and (m) of W. Va. Code § 33-11-4(9). The district court held—based on State ex rel. State Auto Prop. Ins. Cos. v. Stucky and State ex rel. W. Va. Mut. Ins. Co. v. Salango—that these provisions are aimed at insurer conduct toward third-party claimants seeking to recover from the insured, not toward insureds suing their own insurers regarding claims made against them. The Fourth Circuit “affirm[ed] the reasoning and judgment” of the district court.

Notably, the opinion also affirmed the district court’s extension of that limitation to subsection (m) because it uses the same relevant statutory phrasing as the other subsections at issue. The result is a categorical disposition: Bristol’s theory of statutory liability was legally unavailable under controlling West Virginia authority.

3) Cross-appeal dismissal: alternative grounds do not require a cross-appeal

Defendants sought to cross-appeal the district court’s conclusion that Hayseeds could apply in this context. The Fourth Circuit dismissed that cross-appeal under al-Suyid v. Hifter because it sought only affirmance of a favorable judgment on an alternative rationale—precisely the situation where a cross-appeal is “unnecessary and not properly taken.”

Impact

1) Practical tightening of Hayseeds “necessity” in settlement-heavy disputes

Although unpublished and therefore nonprecedential within the Fourth Circuit, the opinion is a detailed application of West Virginia’s “necessity” requirement and may be persuasive in future federal diversity cases applying West Virginia law. Its main practical lessons:

• Build a record of demands and responses. Insureds seeking Hayseeds damages should document concrete demands (amounts, terms, deadlines) and insurer responses; generalized statements of “hope” to resolve may not suffice.
• Engagement matters. Failure to respond to insurer efforts to negotiate—especially where the insured controls (or must coordinate) essential settlement terms—can defeat “but for” causation.
• Bankruptcy can reallocate control in ways that affect “necessity.” Where a bankruptcy filing makes releases or appellate waivers subject to bankruptcy-court approval, the insured may need to affirmatively propose a workable path for settlement rather than treating the insurer as the sole impediment.

2) Reinforcement of UTPA limits for insured-plaintiffs

The opinion underscores that, under Stucky and Salango, insureds cannot repackage dissatisfaction with defense/settlement handling into claims under UTPA subsections (b), (c), (d), (f), (g), and (m). For insureds, this channels litigation into contract-based claims and whatever common-law remedies remain available (subject to their elements).

3) Appellate strategy: avoid “protective” cross-appeals that seek only alternative affirmance

The dismissal of the cross-appeal serves as a procedural reminder: if an appellee merely wants to defend the judgment on other grounds, briefing those grounds typically suffices without a cross-appeal.