Opinion ID: 2642178
Heading Depth: 1
Heading Rank: 2

Heading: Dorsey’s Claims Against Progressive

Text: 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 that, as a guest passenger, Dorsey’s medical payments claim was covered under the Teacoach policy merely by virtue of her 3 (...continued) recovered from a third party, the reimbursement should be reduced by the insurer’s pro rata share of the cost to the covered person of obtaining the recovery against the third party. Accord Anderson v. Wood, 204 W.Va. 558, 564, 514 S.E.2d 408, 414 (1999). 4 Progressive also filed a third-party complaint against Liberty Mutual Insurance Company. The third-party complaint alleged that, despite receiving multiple notices of Progressive’s subrogation lien prior to the settlement of Dorsey’s personal injury action, Liberty Mutual disbursed the entire amount of the settlement proceeds to Dorsey, thereby failing to honor Progressive’s lien. In its response, Liberty Mutual asserted that it informed Dorsey that it would (a) withhold the $5,000 owed to Progressive from Dorsey’s settlement check or (b) include Progressive as a payee on the check. However, Dorsey objected to those options and filed a motion to enforce the settlement. The motion was granted, and Liberty Mutual was ordered to issue a check to Dorsey for the full settlement amount. According to Liberty Mutual, Dorsey, thus, assumed the obligation for Progressive’s subrogation lien and agreed to hold Liberty Mutual harmless. 4 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. 5