Johanna Dorsey v. Progressive Classic Insurance

Opinion

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

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

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.