Johanna Dorsey v. Progressive Classic Insurance ( 2013 )

FILED
December 27, 2013
RORY L. PERRY II, CLERK
No. 12-1254 – Johanna Dorsey v. Progressive Classic Insurance SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Company
Benjamin, Chief Justice, dissenting:
I write separately to reiterate my dissent in Loudin v. National Liability &
Fire Insurance Company, 228 W. Va. 34, 716 S.E.2d 696 (2011), regarding first-party
and third-party rights under insurance contracts. In Loudin, the Majority departed from
well-established law by imposing a duty of good faith and fair dealing on insurance
companies when dealing with third parties, despite the absence of any underlying
contractual duty. The Majority’s holding in the case sub judice furthers the error of
Loudin, blurring the distinction between first-party and third-party insurance rights.
Therefore, I dissent.
In the instant case, the Majority holds that “a guest passenger is a first-party
insured under the medical payments section” of an insurance policy where an “insured
person” is defined under the policy as “any other person while occupying a covered
vehicle.” The Majority justifies its new syllabus point by noting that the petitioner,
Johanna “Dorsey, who never asserted any claims against the named insured and only
asserted a claim under the policy, has characteristics of a first-party insured.” The
Majority agrees with Dorsey’s assertion that her “claims were clearly not claims
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presented against an ‘insured tortfeasor’ or their [sic] insurer,” concluding that Dorsey
must then be a first party, not a third party.
This analysis ignores the simple fact that Dorsey never contracted with the
respondent, Progressive Classic Insurance Company (“Progressive”). She never paid
insurance premiums to Progressive, and she had no legal relationship with Progressive.
The duty of good faith and fair dealing arises in contractual relationships. Here, the
contract was between the driver, Joshua Teacoach, and Progressive.
Furthermore, despite the Majority’s implication to the contrary, Dorsey did
not seek benefits based upon a duty owed directly to her. Instead, the benefits Dorsey
sought flowed from Progressive’s contractual duty to Teacoach. Thus, even though
Dorsey qualifies as an “insured person” under the policy, she is not a first party to the
contract; she is a third party. See, e.g., Gillette v. Estate of Gillette, 837 N.E.2d 1283,
1289 (Ohio App. 2005) (“[W]e conclude that although appellant is an insured under the
[insurance] policy, where she seeks liability coverage for the negligence of the named
insured . . . she stands in the shoes of a third-party claimant who is not owed any
contractual duty by the insurer.”); Smith v. Allstate Ins. Co., 202 F. Supp. 2d 1061, 1067
(D. Ariz. 2002) (“The Court is convinced that the Arizona Supreme Court would follow
the nearly unanimous precedent from other jurisdictions and hold that an individual is a
third-party claimant when she is injured by a coinsured’s negligence and she claims
liability benefits under a jointly owned insurance policy.”); Rumley v. Allstate Indemnity
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Co., 924 S.W.2d 448, 450 (Tex. App. 1996) (“The relationship between the parties, and
the duties arising from that relationship, must be considered in the context of the
particular occurrence in dispute. . . . Although [the appellant] had a contractual
relationship with [the insurer], the claim underlying the allegations of bad faith in failing
to promptly settle for policy limits is based not upon benefits payable to her under the
policy, but upon her husband’s tort liability to her for his negligence.”); Wilson v. Wilson,
468 S.E.2d 495, 497 (N.C. App. 1996) (“[W]e conclude that North Carolina does not
recognize a cause of action for third-party claimants against the insurance company of an
adverse party based on unfair and deceptive trade practices . . . .”). To the extent that the
Majority opinion finds otherwise, I dissent.
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