Dorsey v. Progressive Classic Ins. Co., No. 12–1254.

• Court: Supreme Court of West Virginia
• Writing for the Court: KETCHUM
• Citation: 753 S.E.2d 93,232 W.Va. 595
• Parties: Johanna DORSEY, Plaintiff Below, Petitioner v. PROGRESSIVE CLASSIC INSURANCE COMPANY, Defendant Below, Respondent.
• Docket Number: No. 12–1254.
• Decision Date: 27 December 2013

232 W.Va. 595
753 S.E.2d 93

Johanna DORSEY, Plaintiff Below, Petitioner
v.
PROGRESSIVE CLASSIC INSURANCE COMPANY, Defendant Below, Respondent.

No. 12–1254.

Supreme Court of Appeals of
West Virginia.

Submitted Oct. 15, 2013.
Decided Nov. 13, 2013.
Dissenting Opinion of Chief Justice Benjamin Dec. 27, 2013.

[753 S.E.2d 94]

Syllabus by the Court

Where a West Virginia motor vehicle insurance policy includes within the definition of an insured person “any other person while occupying a covered vehicle,” a guest passenger is a first-party insured under the medical payments section of the policy.

David A. Jividen, Esq., Chad C. Groome, Esq., Jividen Law Offices, P.L.L.C., Wheeling, WV, for the Petitioner.

E. Kay Fuller, Esq., Martin & Seibert, L.C., Martinsburg, WV, for the Respondent.

Jill Cranston Rice, Esq., Mychal Sommer Schulz, Esq., Jacob A. Manning, Esq., Dinsmore & Shohl, LLP, Charleston, WV, for amicus curiae West Virginia Insurance Federation.

KETCHUM, Justice:

Johanna Dorsey (“Dorsey”) appeals the August 29, 2012, order of the Circuit Court of Ohio County which dismissed her action against Progressive Classic Insurance Company (“Progressive”). Dorsey, a guest passenger in a vehicle insured by Progressive, received medical payments coverage under the Progressive policy. Those payments were for some of the medical expenses she incurred for the treatment of her injuries caused when the vehicle was rear-ended by a truck.

Dorsey later prevailed in a lawsuit against the truck owner and driver for her injuries and medical expenses. Included in the damages she recovered were the medical bills Progressive paid under the medical payments coverage. Progressive asserted a subrogation lien on the recovery for the amount it paid under the medical payments coverage section of the policy.

Dorsey contends that Progressive improperly refused to reduce its subrogation lien, for the medical payments it made on her behalf, by Progressive's pro rata share of the attorney fees and costs Dorsey incurred in the litigation against the truck owner and driver. Dorsey filed a lawsuit against Progressive alleging that the refusal to reduce the lien constituted first-party common law bad faith and a violation of the West Virginia Unfair Trade Practices Act. However, noting that Dorsey was not the “named insured” but only an “insured” under the Progressive policy and paid no premiums for the policy, the circuit court dismissed the action. The circuit court concluded that Dorsey was a third-party insured under the Progressive policy and that she must be a first-party insured to pursue her first-party common law and statutory bad faith claims against Progressive.

This Court is of the opinion that the circuit court committed reversible error in dismissing the lawsuit. A review of Progressive's insurance policy, the undisputed facts, and the relevant legal authorities demonstrate that Dorsey's status under the Progressive policy was that of a first-party insured, with standing to pursue her first-party common law and statutory bad faith claims against Progressive. Accordingly, the August 29, 2012, order of the Circuit Court of Ohio County is reversed, and this action is remanded

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to that court for proceedings consistent with this opinion.¹

I. Background

On September 18, 2007, a 1996 Subaru driven by Joshua A. Teacoach was rear-ended by a truck owned by Comcast Corporation and driven by James Renforth. Dorsey, a guest passenger in the Teacoach vehicle, sustained bodily injuries in the accident and incurred medical expenses. The Teacoach vehicle was insured under a West Virginia motor vehicle policy of insurance issued by Progressive. Dorsey filed a medical payments claim with Progressive under the policy, and Progressive paid the medical payments policy limit in the amount of $5,000 on her behalf.

Dorsey filed a personal injury action against Comcast and Renforth (the “tortfeasors”). Meanwhile, Progressive sent the tortfeasors's insurer, Liberty Mutual Insurance Company, written notice of Progressive's subrogation lien for the $5,000 in medical payments.² In November 2010, Dorsey settled her personal injury action for $60,000. Soon after, a dispute arose between Dorsey and Progressive concerning the medical payment subrogation lien. Dorsey asserted that Progressive was required to reduce its lien by its pro rata share of the attorney fees and costs she incurred in the lawsuit against the tortfeasors. According to Dorsey, Progressive refused to do so which delayed the closure of the settlement.³ However, Progressive asserted that no reduction was warranted.

II. Dorsey's Claims Against Progressive

On March 25, 2011, Dorsey filed the current lawsuit in the Circuit Court of Ohio County against Progressive. Seeking compensatory and punitive damages, Dorsey alleged that Progressive's refusal to reduce its $5,000 subrogation lien by its pro rata share of the attorney fees and costs that Dorsey incurred in the personal injury lawsuit constituted common law bad faith and a violation of the West Virginia Unfair Trade Practices Act (“UTPA”). W.Va.Code, 33–11–1 [1974], et seq. The stated purpose of the Act is to regulate trade practices in the insurance business in this State.

In June 2011, Progressive filed a motion to dismiss or, in the alternative, a motion for summary judgment.⁴ Progressive alleged

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that, as a guest passenger, Dorsey's medical payments claim was covered under the Teacoach policy merely by virtue of her presence in the vehicle and that her coverage was not coextensive with Joshua A. Teacoach, the named insured on the policy. Therefore, as a non-premium paying, extra-contractual insured under the policy, Dorsey was a third-party insured, without standing to pursue her common law and statutory bad faith claims against Progressive.

The circuit court denied the motion on September 12, 2011. Soon after, however, Progressive filed a motion to reconsider based on this Court's September 22, 2011, opinion in Loudin v. National Liability & Fire Insurance Company, 228 W.Va. 34, 716 S.E.2d 696 (2011). Syllabus point 2 of Loudin holds: “A first-party bad faith action is one wherein the insured sues his/her own insurer for failing to use good faith in settling a claim filed by the insured.” On that basis, Progressive again alleged that Dorsey was a third-party insured without standing to pursue her bad faith claims arising under the medical payments provision of Teacoach's policy with Progressive.

Following a hearing, the circuit court entered the August 29, 2012, order granting Progressive's motion to reconsider and dismissing the action. The circuit court emphasized that Dorsey was not a named insured under the Progressive policy and paid no premiums for the policy. Consequently, the circuit court determined that, under Loudin, Dorsey was a third-party insured and was, therefore, precluded from pursuing her common law and statutory bad faith claims against Progressive. Dorsey's appeal to this Court followed.

III. Standard of Review

Progressive initially filed a motion to dismiss or, in the alternative, a motion for summary judgment. Following the interlocutory denial of the motion, Progressive, citing Loudin, sought a reconsideration of the ruling. Based on Loudin, the circuit court reversed its ruling and dismissed Dorsey's lawsuit pursuant to the August 29, 2012, order. The dismissal raises a question of law concerning Dorsey's standing to pursue first-party common law and statutory bad faith claims against Progressive.

Syllabus point 1 of Chrystal R.M. v. Charlie A. L., 194 W.Va. 138, 459 S.E.2d 415 (1995), holds: “Where the issue on appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.” Syl. pt. 4, Harrison County Commission v. Harrison County Assessor, 222 W.Va. 25, 658 S.E.2d 555 (2008). See also Wrenn v. West Virginia Department of Transportation, 224 W.Va. 424, 427, 686 S.E.2d 75, 78 (2009) (This Court “generally reviews circuit court orders granting motions to dismiss de novo.”). Accord Doering v. City of Ronceverte, 228 W.Va. 147, 151, 718 S.E.2d 497, 501 (2011). With that standard in mind, we proceed to address the merits of Dorsey's appeal.

IV. Discussion

This case turns on whether Dorsey's claim was a first-party claim under the Progressive policy, or a third-party claim. This is because in Elmore v. State Farm Mutual Automobile Insurance Company, 202 W.Va. 430, 504 S.E.2d 893 (1998), this Court held in the syllabus that a third-party insured has no cause of action against an insurance carrier “for common law breach of the implied covenant of good faith and fair dealing or for common law breach of fiduciary duty.” (Emphasis added). Moreover, in 2005, the West Virginia Legislature prohibited statutory third-party bad faith causes of action against insurers. W.Va.Code, 33–11–4a(a) [2005], of the UTPA provides:

A third-party claimant may not bring a private cause of action or any other action against any person for an unfair claims settlement practice. A third-party claimant's sole remedy against a person for an unfair claims settlement practice or the bad faith settlement of a claim is the filing of an administrative complaint with the commissioner in accordance with subsection (b) of this section. A third-party claimant may not include allegations of

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unfair claims settlement practices in any...