The West Virginia Supreme Court of Appeals affirmed the dismissal of plaintiffs' bad faith claim because they were not insureds under the policy. Triad Insulation, Inc. v. Nationwide Mut. Fire Ins. Co., 2013 W.Va. LEXIS 768 (W. Va. June 24, 2013).
Triad Insulation was the sole named insured under a commercial property policy issued by Nationwide. Plaintiff Brian Galligan was the president/owner of Triad. The policy covered a building that Triad used as its principle place of business. The building was owned by Brian Galligan's wife, Plaintiff Helen Galligan.
During the Nationwide policy period, the building suffered structural damage to the roof due to large amounts of snow and ice. A claim was submitted to Nationwide.
Triad and Mr. and Mrs. Galligan eventually sued, alleging that Nationwide mishandled the adjustment of the loss by refusing to authorize necessary repairs, which eventually resulted in the total loss and demolition of the building.
Nationwide filed a motion to dismiss count five of the complaint, which claimed the Galligans' loss of personal property in the building. The Gallilgans alleged that Nationwide failed to exercise reasonable care in adjusting this claim. The circuit court granted the motion to dismiss because plaintiffs were not insured under the policy.
The Supreme Court agreed that the Galligans, third parties to the insurance contract, could not sue Nationwide in tort for duties defined by the policy. The court further noted that Triad had been paid the full policy limits for loss of the building and Triad still had pending its own bad faith claim against Nationwide.
The holding in Triad Insulation, Inc. is similar to the Hawaii Supreme Court's decision in Young v. Allstate, 119 Haw. 403, 198 P.3d 666 (2008). In Young, the plaintiff's bad faith claim against the insurer of the driver who hit her, Allstate, was dismissed because she was not an insured under the policy. Mrs. Young's claim for intentional infliction of emotional distress against Allstate survived, however, because it was an issue preserved for the jury.