ERVIN, Circuit Judge.
Edith Gill brought this diversity action against Rollins Protective Services Company ("Rollins") on behalf of herself and her husband for damages resulting from the burning of their house in which Rollins had installed a fire alarm system. Upon Rollins' motion, United Services Automobile Association ("USAA"), the Gills' subrogated home insurer, was joined to the suit as a real party in interest. The case was submitted to a jury on theories of common-law negligence and violations of Virginia's Consumer
The case was again tried before a jury on the statutory and negligence claims. At the close of all the evidence, Gill and USAA once again withdrew their negligence claim. The jury then returned a verdict in favor of Rollins on the claims under the Virginia Consumer Protection Act.
After the district court denied Gill and USAA's motion for a new trial, they appealed, asserting that (1) the district court erred in improperly applying the legal standard for a directed verdict to the motion for a new trial, and (2) the district court erred in refusing to grant partial summary judgment on the Virginia Consumer Protection Act claims. Rollins has cross-appealed, contending that USAA, as an insurance company, lacks the capacity to seek a remedy under the Virginia Consumer Protection Act. Because we believe that the district court applied the wrong standard in ruling on the appellants' motion for a new trial, we remand this case for reconsideration of the new trial motion under the proper standard.
The facts of this case are elaborately set forth in our prior opinion at 722 F.2d at 56-58. Suffice it to say that in late August, 1978, Rollins solicited the Gills by telephone to purchase its fire and burglary alarm service. Mrs. Gill was interested in the service because her husband, who was suffering from Alzheimer's disease at the time, was somewhat careless in his smoking habits. A Rollins salesman subsequently visited Mrs. Gill and presented her with "the absolute system for [her] that would work perfectly." He described the system as virtually foolproof and capable of automatically calling the fire department for help. The Rollins salesman also gave Mrs. Gill a brochure that stated that the "virtually foolproof" wireless system would continuously monitor the house and automatically notify the proper authorities over the existing telephone system in the event of fire.
Mrs. Gill decided to subscribe to the service and signed Rollins' "Installation-Service Agreement." The system was installed on September 9, 1978. Despite the fact that Mrs. Gill had told Rollins about her husband's careless smoking habits, no fire or smoke detectors were placed in his basement study, the place where Mr. Gill spent most of his time.
On April 11, 1979, Mrs. Gill smelled smoke while she was in the kitchen above her husband's basement study. Soon thereafter, she heard Rollins' outdoor alarm. However, the inside alarm did not sound nor did the inside lights turn on as advertised. Mrs. Gill found her husband and fled the burning house, but did not call the fire department because of Rollins' assurance that the system would automatically call the fire department. However, concerned neighbors called the police who later notified the fire department. Nevertheless, the house was totally destroyed by the fire. A later investigation revealed that the fire was probably started by careless smoking in the basement study. Neither Rollins nor the Emergency Communications Center had any record of an alarm sent from the Gill house on the night of the fire.
After the jury returned its verdict in favor of Rollins on Gill's claim under the
This court has held that, in ruling upon a motion for a new trial, "a trial judge has a duty to set aside a verdict and grant a new trial even though it is supported by substantial evidence, `if he is of the opinion that the verdict is against the clear weight of the evidence or is based upon evidence which is false or will result in a miscarriage of justice....'" Wyatt v. Interstate & Ocean Transport Co., 623 F.2d 888, 891-892 (4th Cir.1980) (quoting Williams v. Nichols, 266 F.2d 389, 392 (4th Cir.1959)); accord Ellis v. International Playtex, Inc., 745 F.2d 292, 298 (4th Cir.1984); Abasiekong v. City of Shelby, 744 F.2d 1055, 1059 (4th Cir.1984); Aetna Casualty & Surety Co. v. Yeatts, 122 F.2d 350, 354 (4th Cir.1941).
This standard is very different from the standard employed in granting a motion for judgment notwithstanding the verdict.
Wyatt, 623 F.2d at 891 (citing Mays v. Pioneer Lumber Corporation, 502 F.2d 106 (4th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1125, 43 L.Ed.2d 398 (1975)); see also Ellis, 745 F.2d at 298.
The district court also stated that "I now in effect would have to be saying that as a matter of law the plaintiff has to recover on the evidence in the case." (JA 383). Such a statement is consistent with the standard for a motion for JNOV, not a motion for a new trial. It contemplates that no rational jury could have reasonably returned a verdict in the defendant's favor after viewing the evidence in the light most favorable to the defendant, whereas, in deciding whether to grant a new trial, a district court must simply consider whether the verdict was against the clear weight of the evidence and is unfair.
Consequently, we conclude that the district court applied the wrong standard in considering the appellants' motion for a new trial. Although the grant or denial of such a motion may "be reversed only upon a showing of abuse of discretion," Abasiekong, 744 F.2d at 1059, the application of the wrong standard in considering a motion for a new trial is plainly just such an abuse of discretion. As a result, we remand this case to the district court for reconsideration of the appellants' motion for a new trial under the proper standard as set forth in this opinion.
Gill next argues that the district court improperly denied her motion for partial summary judgment on her claims against Rollins under the Virginia Consumer Protection Act. We cannot agree.
This court has long held that summary judgment "should be granted only where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law." Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950). In reviewing the district court's denial of a motion for summary judgment, this court must apply the same standards that guided the district court in making its original decision on that motion. Smith v. University of North Carolina, 632 F.2d 316, 338 (4th Cir.1980). Consequently, we must "assess the evidence in the documentary materials before the district court in the light most favorable to the party opposing the motion" in order to determine whether the moving party has carried its burden to establish that there is "no genuine issue as to any material fact" and that the moving party "is entitled to judgment as a matter of law." United States v. Diebold, Inc, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Fed.R.Civ.P. 56(c); see also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979).
In this case, Gill sought to establish that statements contained in the Rollins brochure and made to her by the Rollins
However, we conclude that the district court correctly determined that there remained issues of material fact to be developed at trial at the time partial summary judgment was sought. Therefore, Gill's motion for partial summary judgment was properly denied.
It is clear that under Section 59.1-200(H) the question of Rollins' "intent not to sell [its product] as advertised" is an issue that is "seldom appropriate" for resolution on a motion for summary judgment. Charbonnages de France, 597 F.2d at 414. "This reflects a general perception that whether as a matter of fact any particular state of mind exists can seldom be considered to be beyond reasonable dispute because this depends entirely upon conflicting inferences to be drawn from evidence so likely to be circumstantial or, if direct, self-serving." Id. at 414.
Gill's claims under §§ 59.1-200(E) and (N) are likewise unavailing. We conclude that the statements in the Rollins brochure that the system is "virtually foolproof" (JA 388) and that it "automatically notifies the proper authorities" (JA 388) in the event of fire are not, by themselves, sufficient to constitute a per se violation of Virginia's consumer protection statute. Other statements, pictures and diagrams in the brochure qualify and explain the Rollins system so that there exists a genuine issue of material fact as to whether the brochure misrepresented the Rollins system.
The brochure, for example, explains that an emergency signal in the event of fire is not transmitted in a direct computerized link to the fire department but actually is forwarded to a "central emergency station." (JA 389). It then becomes the duty of the station to forward the signal to the fire department. The brochure contains a picture of emergency station personnel and explains their role in the event of fire. (JA 389-390). In addition, it was not wholly implausible that the brochure could be interpreted as not misrepresenting the fact that the system could be deactivated if the existing telephone lines were disabled. Although the brochure states that a "wireless system also prevents deactivation by the cutting of lines," it does not specifically refer to the cutting of telephone lines. (JA 392). Indeed, the brochure expressly states that the system "notifies proper authorities over the existing telephone system." (JA 388). Consequently, on the evidence before the court at the time it ruled on the motion, the brochure's claim that the system is "virtually foolproof" and "automatically notifies the proper authorities" was sufficiently explained by the remainder of the brochure as to raise a question of fact preventing a grant of summary judgment on the issue of Rollins' fraudulent misrepresentation of its system.
Likewise, the statements of the Rollins salesperson to Mrs. Gill that the system was "ideal for her situation" and was the "absolute system ... [which] would work perfectly" were not, standing alone, sufficient to constitute a per se violation of the statute. Mrs. Gill's testimony relating to these statements at the first trial is susceptible to two differing interpretations. Although
Since there was an issue of fact as to the context in which these statements were made and thus what they actually meant, the district court properly refused to grant partial summary judgment on Gill's Consumer Protection Act claims.
On cross-appeal Rollins asserts that the district court erred in ruling that USAA has a subrogated right to relief under the Virginia Consumer Protection Act to recover from Rollins the $157,231.57 it has paid to Gill on her insurance policy.
As an initial matter, the Virginia Supreme Court has not yet determined whether an insurance company has a right to subrogation under the Virginia Consumer Protection Act. Consequently, we may decide this issue as we believe the Virginia Supreme Court would decide it. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). It is our conclusion that Virginia's highest court would agree with the federal district court that an insurance company does have a right to subrogation under the Act.
In excluding insurance companies from the Act, Section 59.1-199 does not mention subrogation rights at all.
16 Couch on Insurance 2d § 61:172 (Rev. ed. 1983).
Virginia law is in accordance with this common law trend. The right to subrogation has long been generally favored in Virginia. See, e.g., Federal Land Bank of Baltimore v. Joynes, 179 Va. 394, 402, 18 S.E.2d 917, 920 (1942) ("Virginia has long been committed to a liberal application of subrogation"); Thompson v. Miller, 195 Va. 513, 521, 79 S.E.2d 643, 647 (1954) ("While Virginia has long been committed to the liberal application of subrogation to the exigencies of particular cases, it is not a matter of absolute right but is granted or withheld as the equities of a particular case may require."); Collins v. Blue Cross of Virginia, 213 Va. 540, 544, 193 S.E.2d 782, 785 (1973) ("The general right of subrogation has long been recognized and favored in Virginia."). Indeed, Va.Code § 38.1-31.2 provides that
This right is common in the laws of many states. See, e.g., Hardware Dealers Mutual Fire Insurance Co. v. Sheek, 272 N.C. 484, 486, 158 S.E.2d 635, 637 (1968) ("Our cases seem to establish the proposition that when an insurer of property pays the insured's loss, he is subrogated to the extent of the payment to insured's claim against the wrongdoer who caused the damage."); Calvert Fire Insurance Co. v. James, 236 S.C. 431, 435, 114 S.E.2d 832, 835 (1960) ("Where the tortious conduct of a third person is the cause of a loss covered by an insurance policy, the insurer, upon payment of the loss, becomes subrogated pro tanto by operation of law to whatever rights the insured may have against the wrongdoer.").
In this case, USAA comes clearly within the requirements for an action for actual damages under § 59.1-204 because it has "suffer[ed] loss as the result of [Rollins'] violation of Section 59.1-200." Both Virginia common and statutory law provide for an insurance company's right to subrogation where, as here, the insured's loss was caused by a third party's negligent or tortious conduct. Indeed, the Gill-USAA insurance contract provides for USAA's right to subrogation. (JA 423). Section 59-199 D, while exempting insurance companies from suit under the Virginia Consumer Protection Act, is silent with respect to subrogation rights. Consequently, we can see no reason why the Act should serve to nullify the Virginia common and statutory law permitting USAA a right to subrogation, in the absence of any express indication from the Virginia legislature that such a result was contemplated and desired. Accordingly, we conclude that the district court did not err in permitting USAA a subrogated right to relief under the Virginia Consumer Protection Act to recover from Rollins the money it has paid to Gill on her insurance policy.
For the foregoing reasons, the case is remanded to the district court.
REMANDED WITH INSTRUCTIONS.
745 F.2d at 298 (quoting Felton v. Spiro, 78 Fed. 576, 582 (6th Cir.1897)).
266 F.2d at 392.