           IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                  September Term 2013
                                    _______________                FILED
                                      No. 12-1254             November 13, 2013
                                    _______________               released at 3:00 p.m.
                                                                  RORY L. PERRY II, CLERK
                                                                SUPREME COURT OF APPEALS
                                 JOHANNA DORSEY,                    OF WEST VIRGINIA

                                Plaintiff Below, Petitioner

                                            v.

                 PROGRESSIVE CLASSIC INSURANCE COMPANY,

                         Defendant Below, Respondent



                     Appeal from the Circuit Court of Ohio County

                       The Honorable Ronald E. Wilson, Judge

                               Civil Action No. 11-C-95


                            REVERSED AND REMANDED



                                Submitted October 15, 2013

                                 Filed: November 13 , 2013



David A. Jividen, Esq.                           E. Kay Fuller, Esq.
Chad C. Groome, Esq.                             Martin & Seibert, L.C.
Jividen Law Offices, P.L.L.C.                    Martinsburg, West Virginia
Wheeling, West Virginia                          Counsel for the Respondent
Counsel for the Petitioner
                                                 Jill Cranston Rice, Esq.
                                                 Mychal Sommer Schulz, Esq.
                                                 Jacob A. Manning, Esq.
                                                 Dinsmore & Shohl, LLP
                                                 Charleston, West Virginia
                                                 Counsel for amicus curiae
                                                 West Virginia Insurance Federation


JUSTICE KETCHUM delivered the Opinion of the Court.


CHIEF JUSTICE BENJAMIN dissents and reserves the right to file a dissenting Opinion.

                             SYLLABUS BY THE COURT



              Where a West Virginia motor vehicle insurance policy includes within the

definition of an insured person “any other person while occupying a covered vehicle,” a

guest passenger is a first-party insured under the medical payments section of the policy.
Ketchum, Justice:

              Johanna Dorsey (“Dorsey”) appeals the August 29, 2012, order of the Circuit

Court of Ohio County which dismissed her action against Progressive Classic Insurance

Company (“Progressive”). Dorsey, a guest passenger in a vehicle insured by Progressive,

received medical payments coverage under the Progressive policy. Those payments were for

some of the medical expenses she incurred for the treatment of her injuries caused when the

vehicle was rear-ended by a truck.

              Dorsey later prevailed in a lawsuit against the truck owner and driver for her

injuries and medical expenses. Included in the damages she recovered were the medical bills

Progressive paid under the medical payments coverage. Progressive asserted a subrogation

lien on the recovery for the amount it paid under the medical payments coverage section of

the policy.

              Dorsey contends that Progressive improperly refused to reduce its subrogation

lien, for the medical payments it made on her behalf, by Progressive’s pro rata share of the

attorney fees and costs Dorsey incurred in the litigation against the truck owner and driver.

Dorsey filed a lawsuit against Progressive alleging that the refusal to reduce the lien

constituted first-party common law bad faith and a violation of the West Virginia Unfair

Trade Practices Act. However, noting that Dorsey was not the “named insured” but only an

“insured” under the Progressive policy and paid no premiums for the policy, the circuit court

dismissed the action. The circuit court concluded that Dorsey was a third-party insured under


                                             1

the Progressive policy and that she must be a first-party insured to pursue her first-party

common law and statutory bad faith claims against Progressive.

              This Court is of the opinion that the circuit court committed reversible error

in dismissing the lawsuit. A review of Progressive’s insurance policy, the undisputed facts,

and the relevant legal authorities demonstrate that Dorsey’s status under the Progressive

policy was that of a first-party insured, with standing to pursue her first-party common law

and statutory bad faith claims against Progressive. Accordingly, the August 29, 2012, order

of the Circuit Court of Ohio County is reversed, and this action is remanded to that court for

proceedings consistent with this opinion.1



                                      I. Background

              On September 18, 2007, a 1996 Subaru driven by Joshua A. Teacoach was

rear-ended by a truck owned by Comcast Corporation and driven by James Renforth.

Dorsey, a guest passenger in the Teacoach vehicle, sustained bodily injuries in the accident

and incurred medical expenses. The Teacoach vehicle was insured under a West Virginia

motor vehicle policy of insurance issued by Progressive. Dorsey filed a medical payments

claim with Progressive under the policy, and Progressive paid the medical payments policy

limit in the amount of $5,000 on her behalf.


       1
        In addition to the briefs and the record-appendix of the parties, this Court has
received and considered the amicus curiae brief of the West Virginia Insurance Federation.


                                               2

              Dorsey filed a personal injury action against Comcast and Renforth (the

“tortfeasors”). Meanwhile, Progressive sent the tortfeasors’s insurer, Liberty Mutual

Insurance Company, written notice of Progressive’s subrogation lien for the $5,000 in

medical payments.2 In November 2010, Dorsey settled her personal injury action for

$60,000. Soon after, a dispute arose between Dorsey and Progressive concerning the medical

payment subrogation lien. Dorsey asserted that Progressive was required to reduce its lien

by its pro rata share of the attorney fees and costs she incurred in the lawsuit against the

tortfeasors. According to Dorsey, Progressive refused to do so which delayed the closure of

the settlement.3 However, Progressive asserted that no reduction was warranted.

       2
        In a January 10, 2008, letter to Liberty Mutual entitled Updated Med-Pay Lien,
Progressive confirmed that it had previously sent formal notice of its subrogation rights.
Moreover, the letter stated that it had a $5,000 medical payments lien.
      Syllabus points 3 and 4 of Nationwide Mutual Insurance Company v. Dairyland
Insurance Company, 191 W.Va. 243, 445 S.E.2d 184 (1994), state:
                     3. The subrogation rights of an insurance carrier are not
             barred so long as the tortfeasor’s insurance carrier was notified
             of the subrogation claim before it settled with the insured who
             received the medical payments.
                     4. Ordinarily the tortfeasor’s insurance carrier is
             primarily responsible for payment of the subrogation claim. It
             is responsible because it was aware of the claim before it
             obtained the insured’s release.
Accord Provident Life and Accident Insurance Company v. Bennett, 199 W.Va. 236, 241,
483 S.E.2d 819, 824 (1997).
       3
        Syllabus point 3 of Federal Kemper Insurance Company v. Arnold, 183 W.Va. 31,
393 S.E.2d 669 (1990), makes clear:
                    When an automobile insurer is reimbursed, under a
             subrogation clause in the insurance contract, for benefits paid to
             a covered person that such person has then successfully
                                                                                (continued...)

                                              3

                         II. Dorsey’s Claims Against Progressive

              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

                                 III. Standard of Review

              Progressive initially filed a motion to dismiss or, in the alternative, a motion

for summary judgment. Following the interlocutory denial of the motion, Progressive, citing

Loudin, sought a reconsideration of the ruling. Based on Loudin, the circuit court reversed

its ruling and dismissed Dorsey’s lawsuit pursuant to the August 29, 2012, order. The

dismissal raises a question of law concerning Dorsey’s standing to pursue first-party common

law and statutory bad faith claims against Progressive.

              Syllabus point 1of Chrystal R. M. v. Charlie A. L., 194 W.Va. 138, 459 S.E.2d

415 (1995), holds: “Where the issue on appeal from the circuit court is clearly a question of

law or involving an interpretation of a statute, we apply a de novo standard of review.” Syl.

pt. 4, Harrison County Commission v. Harrison County Assessor, 222 W.Va. 25, 658 S.E.2d

555 (2008). See also Wrenn v. West Virginia Department of Transportation, 224 W.Va. 424,

427, 686 S.E.2d 75, 78 (2009) (This Court “generally reviews circuit court orders granting

motions to dismiss de novo.”). Accord Doering v. City of Ronceverte, 228 W.Va. 147, 151,

718 S.E.2d 497, 501 (2011). With that standard in mind, we proceed to address the merits

of Dorsey’s appeal.



                                      IV. Discussion

              This case turns on whether Dorsey’s claim was a first-party claim under the

Progressive policy, or a third-party claim. This is because in Elmore v. State Farm Mutual


                                              6

Automobile Insurance Company, 202 W.Va. 430, 504 S.E.2d 893 (1998), this Court held in

the syllabus that a third-party insured has no cause of action against an insurance carrier “for

common law breach of the implied covenant of good faith and fair dealing or for common

law breach of fiduciary duty.” (Emphasis added). Moreover, in 2005, the West Virginia

Legislature prohibited statutory third-party bad faith causes of action against insurers. W.Va.

Code, 33-11-4a(a) [2005], of the UTPA provides:

                     A third-party claimant may not bring a private cause of
              action or any other action against any person for an unfair
              claims settlement practice. A third-party claimant’s sole remedy
              against a person for an unfair claims settlement practice or the
              bad faith settlement of a claim is the filing of an administrative
              complaint with the commissioner in accordance with subsection
              (b) of this section. A third-party claimant may not include
              allegations of unfair claims settlement practices in any
              underlying litigation against an insured.

              Dorsey’s action against Progressive, alleging first-party common law bad faith

and a violation of the UTPA, arose out of the section of Progressive’s policy entitled “Part

II - Medical Payments Coverage.” That section provided in relevant part:

              Subject to the Limits of Liability, if you pay the premium for
              Medical Payments Coverage, we will pay the usual and
              customary charge for reasonable and necessary expenses,
              incurred within three (3) years from the date of an accident, for
              medical and funeral services because of bodily injury:

              1. sustained by an insured person;
              2. caused by an accident; and
              3. arising out of the ownership, maintenance or use of a motor

              vehicle or trailer.

              . . . .



                                               7

              When used in this Part II:

              1. “Insured person” and “insured persons” mean:
                     a. you while occupying any vehicle, other than a vehicle
                     owned by you which is not a covered vehicle; [and] .
                     . .
                     d. any other person while occupying a covered vehicle[.]

(Emphasis added).5

              Notwithstanding those definitions of an “insured person” in the Medical

Payments Coverage section of the policy, the circuit court, relying on Loudin, determined that

Dorsey was a third-party insured. As stated, 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.” See also State ex rel. Allstate Insurance

Company v. Gaughan, 203 W.Va. 358, 369, 508 S.E.2d 75, 86 (1998). Relying solely on

Loudin, the circuit court precluded Dorsey from pursuing her common law and statutory bad

faith claims against Progressive.

              The facts in Loudin, however, are very different from the circumstances in the

current matter. In Loudin, the policyholder, Thomas Loudin, was injured when his truck was

accidently backed over him while being driven by a person to whom Loudin had given

permission to drive the truck. The truck was insured by National Liability & Fire Insurance


       5
           In addition, the Progressive policy included a section entitled “General
Definitions.” In that section, “covered vehicle” was defined as “any vehicle shown on the
Declarations Page.” Moreover, the word “occupying” was defined as “in, on, entering, or
exiting.” It is undisputed that Dorsey was in the covered vehicle, a 1996 Subaru, at the time
of the accident.

                                              8

Company (“National”). Loudin filed a claim under the liability coverage provision of the

policy based on the negligence of the truck driver who was insured as a “permissive user”

under Loudin’s policy. National refused to pay Loudin’s negligence claim against the

permissive user. Loudin then filed a negligence action in circuit court against the permissive

user, with counts against National alleging first-party common law bad faith and violations

of the UTPA because National improperly handled his claims against the permissive user

under the liability coverage of his policy. The action against the permissive user finally

settled, and National, asserting that Loudin was a third-party insured on his claim against the

driver, moved for summary judgment on the claims of common law bad faith and UTPA

violations. The circuit court agreed that Loudin was a third-party insured and entered

summary judgment in favor of National.

              The issue before this Court in Loudin was whether the named policyholder,

Thomas Loudin, was a first-party insured entitled under West Virginia law to bring a cause

of action against National for common law bad faith and violations of the UTPA for the

improper handling of his negligence claim against the permissive driver, or whether Loudin

was a third-party insured without standing to bring the action. To resolve the issue, this

Court, in Loudin, considered, inter alia, the Insurance Commissioner’s definitions of first-

party and third-party claimant found in the West Virginia Code of State Rules pertaining to

“Unfair Trade Practices.” Those Rules contain the following definitions:

                    W.Va. C.S.R. § 114-14-2.3. (2006) - “First-party
              claimant” or “Insured” means an individual, corporation,

                                              9

              association, partnership or other legal entity asserting a right to
              payment under an insurance policy or insurance contract arising
              out of the occurrence of the contingency or loss covered by such
              policy or contract.

                      W.Va. C.S.R. § 114-14-2.8. (2006) - “Third-party
              claimant” means any individual, corporation, association,
              partnership or other legal entity asserting a claim against any
              individual, corporation, association, partnership or other legal
              entity insured under an insurance policy or insurance contract of
              an insurer.

(Emphasis added).6 See also W.Va. Code, 33-11-4a(j)(1) [2005] (providing a similar

definition of “third-party claimant” in the UTPA).

              In Loudin, we found that the Commissioner’s definitions were unambiguous

and consistent with this Court’s case law. Nevertheless, under the unique facts in the case,

this Court observed that Thomas Loudin had, on the one hand, the characteristics of a first-

party claimant as the insured policyholder and, on the other hand, the characteristics of a

third-party claimant since National asserted that the permissive user was a “non-named

insured or beneficiary under the policy” when the accident occurred. 228 W.Va. at 39, 716

S.E.2d at 701. However, emphasizing that Thomas Loudin was the named insured on the

National policy, had purchased the policy, and was entitled to expect the benefits thereof, this

Court concluded that the circuit court’s classification of Loudin as a third-party insured was


       6
         Title 114, Series 76, of the West Virginia Code of State Rules is entitled “Rules of
Practice and Procedure for Administrative Proceedings Brought by Third Party Claimants.”
The Rules set forth therein govern proceedings before the Insurance Commissioner upon the
filing of an administrative complaint by a third-party claimant alleging an unfair claims
settlement practice.

                                              10

error. Indicating that the rejection of Thomas Loudin as a first-party insured would have

effectively terminated his right to seek legal redress against his insurer for the alleged

improper handling of his negligence claim against the permissive user, 228 W.Va. at 41, 716

S.E.2d at 703, we held in syllabus point 3 of Loudin:

                     When a named policyholder files a claim with his/her
              insurer, alleging that a nonnamed insured under the same policy
              caused him/her injury, the policyholder is a first-party claimant
              in any subsequent bad faith action against the insurer arising
              from the handling of the policyholder’s claim.

              In the instant case, Dorsey was not the named insured on the Progressive

policy. Dorsey, as a guest passenger in the covered vehicle, was included as an “insured

person” under the Medical Payments Coverage section of the policy Progressive issued to

the named insured, Joshua A. Teacoach. Thus, Dorsey, who never asserted any claims

against the named insured and only asserted a claim under the policy, has the characteristics

of a first-party insured. Dorsey’s brief filed in this Court accurately states:

                     Ms. Dorsey’s claims regarded first-party medical
              payments claims and were clearly not claims presented against
              an “insured tortfeasor” or their insurer. Her claims were against
              the Progressive policy that provided coverage to the vehicle
              within which she was a passenger. She never asserted a claim
              against policy-holder, Joshua Teacoach, or otherwise alleged
              that he was a tortfeasor.

              Nothing in Loudin excluded insureds, such as Dorsey, from first-party status.

To the contrary, the conclusion that Dorsey is a first-party insured is supported by the

definitions found in the West Virginia Code of State Rules cited in the Loudin opinion.


                                              11

Under W.Va. C.S.R. § 114-14-2.3. (2006), a first-party claimant or insured includes an

individual “asserting a right to payment under an insurance policy or insurance contract

arising out of the occurrence of the contingency or loss covered by such policy or contract.”

By contrast, W.Va. C.S.R. § 114-14-2.8. (2006), includes as a third-party claimant an

individual “asserting a claim against any individual, corporation, association, partnership or

other legal entity insured under an insurance policy or insurance contract of an insurer.”

(Emphasis added).

              Upon all of the above, this Court holds that where a West Virginia motor

vehicle insurance policy includes within the definition of an insured person “any other person

while occupying a covered vehicle,” a guest passenger is a first-party insured under the

medical payments section of the policy.



                                       V. Conclusion

              This Court concludes that Dorsey is a first-party insured under the Progressive

policy who may pursue an action against Progressive for common law bad faith and

violations of the UTPA. Accordingly, the August 29, 2012, order of the Circuit Court of

Ohio County is reversed, and this action is remanded to that court for proceedings consistent

with this opinion.

                                                                  Reversed and Remanded




                                             12

