Putnam Bancshares Inc v. Progressive Classic Ins. Co.

Decision Date05 April 2010
Docket NumberNo. 34769.,34769.
Citation692 S.E.2d 658,225 W.Va. 279
CourtWest Virginia Supreme Court
PartiesPUTNAM BANCSHARES, INC., a West Virginia Corporation d/b/a Putnam County Bank and T.C.'s Used Cars, LLC, a West Virginia limited liability company, Appellees,v.PROGRESSIVE CLASSIC INSURANCE COMPANY, Appellant.

Syllabus by the Court

1. “A circuit court's entry of summary judgment is reviewed de novo. Syllabus Point 1 Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

2. Where an insurance company has extended an offer to renew an automobile liability or physical damage insurance policy, and the insured does not accept that offer and does not pay the premium due for renewal, thus allowing the underlying policy to expire, neither W.Va.Code, 33-6A-1 [2004], nor W.Va.Code, 33-6A-4 [2004], impose a duty upon the insurance company to provide a notice to the insured that the policy has expired.

3. Where an insurance company has extended an offer to renew an automobile liability or physical damage insurance policy, and the insured does not accept that offer and does not pay the premium due for renewal, thus allowing the underlying policy to expire W.Va.Code, 33-6A-1a [1992], does not impose a duty upon the insurance company to provide notice to a loss payee that the insured did not renew the policy or that the insurance policy expired.

4. Pursuant to W.Va.Code, 33-6A-4(e)(1) and (2) [2004], an insured has the right to reinstate an automobile liability or physical damage policy of insurance that was not renewed as a result of the insured's failure to pay the renewal premium when due. However, to reinstate the policy an application for reinstatement, and payment of the premium due, must be made within forty-five days of the expiration date of the expired policy. If the policy is reinstated, then there is a lapse in coverage between the date of the expiration of the policy and the reinstatement date.

R. Carter Elkins, Esq., Laura L. Gray, Esq., Campbell Woods, PLLC, Huntington, WV, for Appellant.

Christopher S. Smith, Esq., Hoyer, Hoyer & Smith PLLC, Charleston, WV, for Appellee, T.C.'s Used Cars, LLC.

Jill C. Bentz, John M. Canfield, Dinsmore & Shohl, LLP, Charleston, WV, for Amicus Curiae West Virginia Insurance Federation.

KETCHUM, J.:

Progressive Classic Insurance Company (hereafter Progressive) appeals an order of the Circuit Court of Putnam County granting summary judgment in favor of the Appellee T.C.'s Used Cars for $14,390.43, together with interest and costs. The circuit court found that Progressive had issued a renewal automobile insurance policy and thereafter improperly cancelled that policy without giving notice to the insured and to the loss payee of Progressive's intent to cancel the insured's policy for non-payment of a renewal premium. Having fully considered the record, briefs and arguments of the parties, we reverse the circuit court and remand this matter to the circuit court for entry of summary judgment in favor of Progressive.

I. Factual Background

The facts underlying this appeal are undisputed. In August 2006, Terry Daniel, Jr., (hereafter Mr. Daniel) purchased a 2004 Chevrolet Silverado from T.C.'s Used Cars, and financed that purchase with a loan from the Putnam County Bank. A requirement of the loan was that Mr. Daniel obtain, and maintain, an insurance policy sufficient to cover any physical damage to the vehicle and that the insurance policy list Putnam County Bank as the loss payee. A further requirement of the loan was that T.C.'s Used Cars execute a commercial guaranty, in favor of Putnam County Bank, guaranteeing repayment of Mr. Daniel's loan.

On August 23, 2006, Progressive issued an automobile liability and physical damage insurance policy to Mr. Daniel, with Putnam County Bank listed as the loss payee for damage to the Silverado.1 The policy provided that it was effective for the six-month period of August 23, 2006, through February 23, 2007.

On January 29, 2007, Progressive offered to renew Mr. Daniel's policy by mailing to Mr. Daniel a renewal invoice. Included with the renewal invoice was a Declarations Page for the renewal policy period being offered by Progressive and Proof of Insurance Cards for the renewal period. The Declaration Page for the offered renewal policy expressly noted that it was effective only if Mr. Daniel paid the renewal premium. The renewal invoice also expressly noted that renewal premium was due by February 23, 2007.

On February 9, 2007, Progressive mailed to Mr. Daniel a “Renewal Reminder.” This reminder informed Mr. Daniel that his policy would expire on February 23, 2007, and said that Mr. Daniel's renewal premium must be received no later than February 25, 2007, in order to avoid a lapse in coverage. Mr Daniel did not pay the renewal premium, or any portion of that premium, by the due date.

On February 27, 2007, four days after the policy expired, Mr. Daniel was in an accident while driving the Silverado, resulting in the vehicle being declared a total loss. The following day, on February 28, 2007, Mr. Daniel paid the minimum of the premium amount required to renew his policy with Progressive. A receipt for this payment was provided to Mr. Daniel. However, the receipt expressly informed Mr. Daniel that his “policy [would] renew with a lapse in coverage. The renewal effective date will be one day after payment is made.”

Later, Putnam County Bank, as the loss payee, made a claim with Progressive to recover for the loss of the Silverado. Progressive denied the claim, noting that the policy had expired prior to the accident. Thereafter, T.C.'s Used Cars paid the loan balance and Putnam County Bank assigned the loan note and its rights to T.C.'s Used Cars.

Putnam County Bank and T.C.'s Used Cars filed suit against Progressive, claiming that Progressive was obligated to pay the claim under the renewal policy issued to Mr. Daniel, and claiming that Progressive had failed to give notice to Mr. Daniel and the loss payee of Progressive's intent to cancel Mr. Daniel's policy for non-payment of the renewal premium. Both parties later filed Summary Judgment motions.

The circuit court subsequently granted summary judgment in favor of T.C.'s Used Car's and concluded that Progressive cancelled the renewal policy in violation of the notice provisions required by W.Va.Code, 33-6A-1(e)(7) [2004]. The circuit court also found that Progressive failed to give proper notice to the loss payee, as required by W.Va.Code, 33-6A-1a [1992], of Progressive's intent to cancel the renewal policy for non-payment of the renewal premium.2

Progressive now appeals the circuit court's order granting summary judgment to T.C.'s Used Cars and denying Progressive's motion for summary judgment on the issue of its liability to provide coverage for Mr. Daniel's accident.

II. Standard of Review

We have previously held that [a] circuit court's entry of summary judgment is reviewed de novo. Syllabus Point 1 Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

III. Discussion

Progressive submits that the circuit court erroneously applied our decision in Dairyland Insurance Company v. Conley, 218 W.Va. 252, 624 S.E.2d 599 (2005), by ruling that Progressive had, in effect, issued a new policy to Mr. Daniel and that Mr. Daniel's accident was covered under that policy. We agree with Progressive.

In Dairyland we addressed the issue of whether an insurance company was required to give notice of cancellation of a new automobile insurance policy it issued where the check paying the initial premium later bounced and was returned for insufficient funds. Unlike the facts in Dairyland, we are not presented with a situation where an insurer, in exchange for payment made, issued a new insurance policy. Instead, we are presented with issues as to what notice, if any, is required where an existing automobile liability or physical damage insurance policy expires on its own terms after an insured did not accept an offer to renew the policy and did not pay the required renewal premium.

The record shows that Progressive issued to Mr. Daniel an automobile liability and physical damage insurance policy and that the express term of that policy was for a six-month period. This policy expired and terminated on its own terms on February 23, 2007. Prior to the expiration, Progressive offered to renew Mr. Daniel's policy and expressly cautioned Mr. Daniel that his policy was expiring on February 23, 2007. Mr. Daniel did not accept the offer by paying the required renewal premium by the due date. Instead, it was not until after the policy had expired and until after his accident (which resulted in a total loss of the insured vehicle) that Mr. Daniel paid the minimum amount of the renewal premium required to renew his coverage.

The circuit court reasoned that because Progressive had offered to renew Mr. Daniel's coverage, and provided to him the policy documentation relevant to the renewal policy, that Progressive had actually issued a new policy and was therefore required to send a notice of cancellation for non-payment of the renewal premium. We see four issues arising from the circuit court's findings.

The first issue is whether W.Va.Code, 33-6A-1 [2004] 3 or W.Va.Code, 33-6A-4 [2004] 4, requires that an insurer send a notice of cancellation of an automobile liability or physical damage insurance policy where the original policy has expired on its own terms. Our review of these statutes gives no suggestion that the legislature intended to require an insurance company to “cancel” an expired policy. In such instances, there is nothing to cancel-the policy has expired.

The second issue is whether W.Va.Code, 33-6A-1 [2004], or W.Va.Code, 33-6A-4 [2004], requires an insurance company to send a notice of cancellation when an insured fails to accept an offer to renew an expiring policy by paying the required renewal premium by the due date. There is no suggestion in either of these Cod...

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