CHARLESTON – Thomas Loudin's unique position as first party and third party in an insurance dispute doesn't cost him his rights as first party, the Supreme Court of Appeals has decided.
On Sept. 22, four Justices reversed Circuit Judge Thomas Keadle, who rejected Loudin's bad faith claim against National Liability and Fire Insurance.
Loudin took on double identity after his brother, William Loudin, accidentally backed his own 1993 International truck over him.
Keadle solved the problem by relying on six decisions from other states in suits between spouses, but Justice Robin Davis spotted a flaw in his logic.
She wrote that in all six cases, plaintiffs and defendants procured insurance together.
"The insurance policy submitted in the record of this case shows only the name of Mr. Thomas Loudin as the party procuring the policy," she wrote. "It is fundamentally unfair to hold that when Mr. Thomas Loudin filed his administrative claim with National, he was not owed a duty of good faith and fair dealing in resolving that claim as a first party claimant."
Justice Brent Benjamin dissented and reserved the right to file an opinion.
The accident happened in 2006 while the brothers worked on the truck. Thomas's policy covered William as a permissive driver.
National covered Thomas's $5,000 policy limit for medical payments.
Thomas also claimed liability coverage with a policy limit of $1 million, based on William's negligence.
National denied the claim, and Thomas filed a negligence action against William in Upshur County in 2008.
Thomas also sued National, alleging bad faith, breaches of contract and fair dealing, and unfair trade practices, and tort of outrage, or infliction of emotional distress.
He asserted similar claims against Consolidated Claim Services and investigators Jack Sergent and D. L. Thompson.
Thomas's wife, Alice Loudin, claimed loss of consortium.
National provided William's defense and settled the negligence claim for $150,000.
National, Continental, Sergent and Thompson moved for summary judgment, defining Thomas and Alice as third parties.
In West Virginia, a first party asserts a right to payment arising from an occurrence that the policy covers.
A third party asserts a claim against an individual that a policy covers.
Keadle decided the definition of third party fit Thomas and Alice, and he granted summary judgment to defendants on bad faith, breaches, and unfair practices.
He separately granted summary judgment on emotional distress, finding nothing in the record to show extreme and outrageous conduct.
The Justices agreed with Keadle that the definition of third party fit Thomas and Alice, but they found the definition of first party also fit.
"The circuit court's rejection of the Loudins as first party claimants effectively terminated the Loudins' right to seek redress for alleged improper handling of Mr. Thomas Loudin's claim," Davis wrote, adding that Keadle committed another error when he granted summary judgment against Loudin's claim of emotional distress.
She wrote that as a general rule, a trial court may not grant a summary judgment motion on grounds a moving party hasn't requested. She said an exception exists when a court provides notice and opportunity for a hearing, but Keadle provided neither.
The decision disappointed the West Virginia Insurance Federation, which supported National as friend of the court.
Erika Klie Kolenich of Buckhannon and Ronald Zavolta of Wheeling represent Thomas and Alice Loudin.
Don Parker, of Spilman, Thomas and Battle in Charleston, represents National, Continental Claim Services, Sergent and Thompson.