Supreme Court dismisses bad faith claim against insurer over fatal car wreck

CHARLESTON – In a Nov. 26 memorandum opinion, a unanimous West Virginia Supreme Court affirmed the Circuit Court of Jackson County’s order dismissing bad faith and unfair trade practices claims against Westfield Insurance Company.

Robert Keith Sayre died from injuries received in an August 2008 car accident. He was a passenger in a car driven by Richard “Ryan” Smith, who also died as a result of the accident.

Petitioner, Steve Sayre, the Administrator of the Estate of Robert Keith Sayre, asserted that the accident was caused by the “negligence and/or recklessness of both Ryan Smith and the driver of the other vehicle, Kurtis Barnett.”

Smith, and the Smith vehicle, were covered by a Westfield Insurance Company insurance policy and Westfield reached an agreement with Sayre to pay the full liability coverage of $100,000.

Barnett’s vehicle was covered by another insurance company, and this company reached a tentative settlement whereby the Estate of Ryan Smith and the Petitioner would split the liability limit of Barnett’s insurance.

Petitioner Sayre also asserted a claim for the “underinsured” coverage contained in Smith’s Westfield policy, asking for the underinsured policy limit of $20,000 plus a one-third attorney fee.

Westfield tendered a check for the $20,000 policy limit. “However, Westfield refused to pay attorney’s fees to petitioner for procuring the underinsured motorist benefits,” according to the opinion.

Petitioner filed a lawsuit against Westfield asserting negligence, breach of contract, common law bad faith and violation of the unfair claim settlement practices portion of the West Virginia Unfair Trade Practices Act regarding Westfield’s handling of the underinsured motorist claim, including the denial of attorneys’ fees.

The circuit court either dismissed for “failure to state a claim” or, alternatively, entered summary judgment for Westfield on all of the claims.

Petitioner Sayre appealed the circuit court’s rulings on the bad faith and UTPA claims.

Regarding the bad faith claim, the court wrote, “Petitioner alleged in his Amended Complaint that he was ‘compelled... to institute this litigation in order to recover amounts due under Westfield’s policy[.]’ However, petitioner had already received a check for the full underinsured motorist coverage before he filed suit.”

“Although there remained a disagreement as to whether he was entitled to attorney’s fees... petitioner was certainly not compelled to bring suit to collect any policy benefits.”

Moving to the second claim, the Court explained that in order to “maintain the statutory implied cause of action” for the UTPA claim, it must be shown that Westfield had “an indication of a general business practice” of unfair claim settlement behavior.

“We find that these allegations are insufficient to establish a violation of the UTPA, much less the commensurate requirement that petitioner demonstrate that Westfield violated the UTPA with such frequency as to indicate a general business practice," the court wrote.