Slone v. State Auto Prop. & Cas. Ins. Co.
| Decision Date | 19 January 2021 |
| Docket Number | Civil Action No. 2:19-cv-00408 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | PATTY SLONE, Plaintiff, v. STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY, JOE MASK, and SHERI LENTHE, Defendants. |
Pending is the joint motion of the defendants, State Auto Property and Casualty Insurance Company ("State Auto"), Joe Mask and Sheri Lenthe, to dismiss or, in the alternative, motion for summary judgment, filed on May 28, 2019. ECF No. 3.
Plaintiff Patty Slone, a resident of Mingo County, West Virginia, was a guest at Janet's Park & Eat, Inc. ("Janet's") in Logan County, West Virginia, on August 4, 2016. Compl., ECF No. 1-3, at ¶ 7; see also ECF No. 23-1, at 19 (). She "sustained an [undisclosed] injury" after slipping and falling at the restaurant. Id. at ¶¶ 10, 28.
Janet's maintained an insurance policy through State Auto effective from April 13, 2016, to April 13, 2017. ECF No. 23-1, at 19. The policy includes a Commercial General Liability Coverage Part that provides for medical payments coverage up to $10,000.00, general liability coverage up to $1,000,000.00 per occurrence, and personal injury and advertising liability coverage up to $1,000,000.00. Id. at 29. The policy reads, in relevant part:
Id. at 137.1 The policy then lists exclusions from medical payments coverage:
The Janet's State Auto policy also pertinently defines "insured." "Insureds" include, as relevant here and with certain exceptions: (1) an entity that is "designated in the Declarations" and is not "a partnership, joint venture orlimited liability company";3 (2) executive officers and directors when acting with respect to their duties as well as stockholders with respect to their liability as stockholders; (3) employees and volunteer workers of the entity; and (4) any person acting as a real estate manager for the entity. Id. at 138-39. The policy does not confer "insured" status on guests such as Slone.
Finally, the policy's Coverage A (the general liability coverage titled "Bodily Injury and Property Damage Liability") and Coverage B (titled "Personal and Advertising Injury Liability") provisions each promise to pay "sums" for certain injuries that the insured "becomes legally obligated to pay as damages" as a result of separate civil actions. Id. at 132, 136. Coverages A and B differ from Coverage C inasmuch as the Coverage C medical payments coverage promises to pay "expenses" rather than "sums" relating to "damages" that result from separate lawsuits. See id. at 137.
Slone filed suit against Janet's in the Circuit Court of Logan County, Civil Action No. 17-C-283, purportedly seeking damages for her fall that could be covered by the Coverage A general liability coverage of the State Auto Policy. ECF No. 1-3, at ¶ 22; ECF No. 4, at 2 n. 3; ECF No. 6, at 2. That action was dismissed on summary judgment inasmuch as, according to the plaintiff, the circuit court "found that Janet's Restaurant was not liable for Slone's injuries as the hazard which caused said injuries was open and obvious." ECF No. 6, at 2.
The complaint does not describe when or how Slone submitted a medical payments coverage claim under the Janet's State Auto policy, but Slone indicates that "Defendants State Auto and Mask acknowledged [her] injury and applicable medical payments coverage with limits for said incident in the amount of $10,000.00." ECF No. 1-3, at ¶ 11. Slone claims that the expenses caused by her injury exceeded the $10,000.00 medical payments coverage limit. Id. at ¶ 12. She adds that "much" of her medical expenses were paid by Medicare and that Medicare had a right to reimbursement of proceeds issued pursuant to the $10,000.00 coverage. Id. at ¶ 13. It is alleged that the defendants "acted to induce Plaintiff Slone to seek a reductionof her Medicare lien, which she did, on the inducement that Defendants would pay the reduced amount to Medicare and then pay the balance to Plaintiff." Id. at ¶¶ 55.
Slone further alleges that on May 29, 2018, Medicare sent her a $4,882.58 "final demand in satisfaction of its right of reimbursement from Defendant State Auto's medical payments coverage," which she forwarded to State Auto. Id. at ¶ 15. Slone contends, and the defendants acknowledge, that State Auto reimbursed Medicare in the amount of $4,882.58 on August 2, 2018. Id. at ¶ 16; ECF No. 7, at 2.
Slone states that she then "immediately demanded that the medical payment policy limits balance of $5,117.42 be paid to her and her attorney pursuant to the provisions of the policy." ECF No. 1-3, at ¶ 17. She alleges that on August 29, 2018, Medicare "acknowledged no further conditional payments" from the medical payments coverage. However, Slone claims that State Auto erroneously opened a second medical payments claim with Medicare and that she thereafter notified State Auto of this error and again demanded payment of the $5,117.42 balance. Id. at ¶¶ 20-21.
After this demand, Lenthe, an employee or agent of State Auto, allegedly "attempted to induce Plaintiff Slone to resolve the outstanding medical payments due by compromising her liability claim against Defendant State Auto's insured, Janet's," in violation of West Virginia insurance statutes and regulations. Id. at ¶ 22; accord id. at ¶ 5. According to the plaintiff, State Auto, Mask, and Lenthe "have failed and continue to fail to pay the remainder of the medical payments coverage policy limits and have not acknowledged receipt of the demand nor offered any explanation as to why they have failed to pay the remaining balance of the medical payments coverage that is due." 4 Id. at ¶ 19.
The defendants offer a slightly different version of events. In their June 17, 2019 reply to the pending motion, they assert that Slone acknowledged that Medicare held a second, unresolved lien on the medical payments coverage after the first lien was resolved. ECF No. 7, at 2. They state, however, that on June 10, 2019, subsequent to the filing of this action on May24, 2019, counsel for the plaintiff disclosed a letter from Medicare indicating that the second lien had been resolved. Id. Counsel for the defendants confirmed during a December 21, 2020 telephonic status conference with the court and counsel that all Medicare liens have been resolved.
Slone filed this action in the Circuit Court of Mingo County on April 16, 2019. Her complaint alleges three counts against the defendants: Count I, "First Party Bad Faith (Common Law)": Count II, "Violations of the West Virginia Unfair Trade Practices Act," a statutory bad faith claim brought under W. Va. Code § 33-11-4(9); and Count III, Fraud.5 Id. at ¶¶ 27-53.
The defendants have provided the circuit court docket sheet, which documents the plaintiff's efforts at service during the outset of the case and is quoted verbatim below:
ECF No. 1-1. Additionally, the summonses for all three defendants appear in the record and are dated April 16, 2019. ECF No. 1-3, at 14-16. Neither party has filed certified mail receipts or returns pertaining to the service of the defendants.
The defendants removed the action to this court on May 24, 2019. ECF No. 1. They filed the pending motion on May 28, 2019. ECF No. 3. In the motion, the defendants assert two separate challenges. The first concerns Slone's ability to assert any of her claims, namely, West Virginia Unfair Trade Practices Act ("UTPA") bad faith, common law bad faith, and fraud. ECF No. 4, at 4-8. The second concerns service ofprocess on Mask and Lenthe, who according to ...
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