Hinkle v. Matthews et al

Filing 135

MEMORANDUM OPINION AND ORDER granting 73 MOTION by Safe-Guard Products International, LLC for Summary Judgment; this case is dismissed. Signed by Judge John T. Copenhaver, Jr. on 3/25/2019. (cc: counsel of record; any unrepresented parties) (kp)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON

ROBIN L. HINKLE, individually
and on behalf of those similarly
situated,
Plaintiff,
v.

Civil Action No. 2:15-cv-13856

CASEY JOE MATTHEWS; TIMOTHY MAY
and CONNIE MAY, husband and wife;
SANTANDER CONSUMER, USA, INC., an
Illinois corporation; SAFE-GUARD
PRODUCTS INTERNATIONAL, LLC, a
Georgia limited liability
company; and JOHNNY HINKLE,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is defendant Safe-Guard Products
International, LLC’s motion for summary judgment filed November
8, 2016.
I.

Background

Plaintiff Robin L. Hinkle is a resident of Delbarton,
West Virginia.

Am. Compl. ¶ 1.

Defendant Safe-Guard Products

International, LLC (“Safe-Guard”) is a Georgia limited liability
company that offers Guaranteed Auto Protection (“GAP”) insurance
to vehicle purchasers in West Virginia.

Id. ¶¶ 5, 17.

In the

event of an accident resulting in the total loss of a vehicle,
1

GAP insurance is generally used to cover any “gap” between the
purchaser’s outstanding balance owed on the automobile and the
amount paid by the purchaser’s primary insurer.

See id. ¶ 26

and see Mot. Summary Judgment, “ECF # 73,” Ex. B, 1.
In July 2006, Johnny and Robin Hinkle1 entered into a
“Retail Installment Contract and Security Agreement” for the
purchase of a vehicle from C&O Motors, Inc. of Saint Albans,
West Virginia.

Id. ¶ 25.

The vehicle cost $20,552.70, of which

the Hinkles financed $19,718.20 over a period of six years with
an interest rate of 14.25%.

See ECF # 73, Ex. A, 2.

The

Hinkles agreed to payment of monthly installments of $411.38,
with a 5% late charge if a payment was more than ten days late.
Id. at 1.
As part of that same transaction, the Hinkles
purchased GAP insurance from Safe-Guard for $495.00, which they
agreed to pay as part of the Retail Installment Contract and
Security Agreement.

Id.

The terms of the GAP insurance

addendum state:
the Dealer/Assignee agrees to cancel a portion of the
Customer’s indebtedness in the event of a Total Loss
of the Vehicle as defined herein. The Deficiency
Waiver Addendum will waive the amount equal to the
1

Although the Hinkles have since divorced, they purchased the
automobile together and are co-owners thereof. Johnny Hinkle
was named as a defendant in the complaint. Am. Compl. ¶ 6.
2

Unpaid Net Balance less the Actual Cash Value (ACV) of
the vehicle, both as defined herein . . . [.]
Mot. Summary Judgment, “ECF # 73,” Ex. B, 1.

“Unpaid Net

Balance” is defined as excluding, inter alia, “any and all . . .
late charges, delinquent payments, deferred payments,
uncollected service charges, . . . and penalty fees . . . [.]”
Id.

The GAP insurance addendum was sold to the Hinkles by C&O

salesman Paul L. Waugh, who, according to Ms. Hinkle’s
affidavit, “led [Mr. and Ms. Hinkle] to believe that [they] were
purchasing an insurance policy that would protect [them] from
continuing to owe any outstanding balance still owed on the loan
after a total loss, whatever the circumstances.”
Mem. in Opposition, “ECF # 77,” Ex. B, 3.

Plaintiff’s

Ms. Hinkle reviewed

the Gap insurance addendum, which named both of the Hinkles, at
the time of purchase and it was properly signed by Mr. Hinkle
and the dealer.

ECF # 73 Ex. B, 1; Ex. C, 43.

Shortly after purchasing the automobile, the Hinkles
began falling behind on their payment schedule and accruing
significant late fees.

ECF # 73, Ex. C, 52-53.

Approximately

five years after the purchase, there was an accident which
resulted in the Hinkles’ automobile being considered a total
loss.

Based on the estimated cash value of the automobile, Ms.

Hinkle’s insurer, State Farm, issued a check in the amount of
$7,285.00 to Santander Consumer USA Inc. (“Santander”), the
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lienholder on the automobile.

ECF # 73, Ex. D, 1.

At the time

of the accident, Hinkle had a payoff balance of $11,983.81,
which included late charges and deferred payments.
29; ECF # 73, Ex. E.

Am. Compl. ¶

When Santander sought to collect the

remaining $4,698.81 not covered by State Farm’s payment, Hinkle
tried to invoke her Safe-Guard policy.

Am. Compl. ¶¶ 29, 30.

Safe-Guard denied her claim, evaluating her “Re-Amortized
Balance at Date of Loss” at only $5,283.68 due to
“inconsistencies in [Hinkle’s] payment history, such as late
payments[.]”

ECF # 73, Ex. E.

The State Farm payoff would have

more than covered this amount, with a leftover “Negative Gap” of
$2,001.32.

Id.

Accordingly, Safe-Guard found that no coverage

was available.
Plaintiff filed her original complaint in the Circuit
Court of Mingo County, bringing claims for breach of contract,
common law bad faith, and violations of the West Virginia Unfair
Trade Practices Act (“WVUTPA”), as well as separate counts for a
declaratory judgment to recover benefits under the GAP contract
and punitive damages.

The complaint named Safe-Guard as a

defendant, along with Santander (the assignee of plaintiff’s car
loan), three individuals involved in the car accident, and
Johnny Hinkle.

On October 16, 2014, the circuit court denied

Santander’s motion for summary judgment as to the breach of

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contract, bad faith, WVUTPA, and punitive damages claims.

See

ECF # 77, Ex. A.
On March 11, 2015, the West Virginia Supreme Court of
Appeals affirmed the circuit court’s finding that the GAP policy
was insurance.

See State of West Virginia, ex rel. Safe-Guard

Products Int’l, LLC, v. Thompson, 235 W. Va. 197 (2015).
On October 9, 2015, the case was removed to this court
pursuant to the Class Action Fairness Act, 28 U.S.C. § 1453.
Plaintiff filed her amended class action complaint on December
23, 2015.

See ECF # 25.

The new complaint contained class

action claims for violations of the West Virginia Consumer
Credit and Protection Act (“WVCCPA”), which Safe-Guard moved to
dismiss. The court dismissed those claims in an order entered on
August 31, 2018.

See ECF # 121.

Safe-Guard now seeks summary

judgment on the remaining claims for breach of contract, common
law bad faith, unfair trade practices under the WVUTPA,
declaratory judgment to recover benefits under the GAP contract,
and punitive damages.2

2

On October 5, 2015, prior to this case being removed, the
Circuit Court of Mingo County entered an agreed partial
dismissal order dismissing defendants Casey Joe Matthews,
Timothy May, and Connie May. See ECF # 1 Ex. 4. Additionally,
on November 15, 2018, this court granted final approval of
Hinkle’s class settlement with Santander and dismissed them from
this action. See ECF # 130. No claims have been asserted
5

II.

Governing Standard

Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).

“Material” facts are those necessary to

establish the elements of a party’s cause of action.

Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also News
& Observer Publ’g Co. v. Raleigh-Durham Airport Auth., 597 F.3d
570, 576 (4th Cir. 2010).

A “genuine” dispute of material fact

exists if, in viewing the record and all reasonable inferences
drawn therefrom in a light most favorable to the non-moving
party, a reasonable fact-finder could return a verdict for the
non-moving party.

Anderson, 477 U.S. at 248.

Inferences that are “drawn from the underlying
facts . . . must be viewed in the light most favorable to the
party opposing the motion.”
U.S. 654, 655 (1962).

United States v. Diebold, Inc., 369

A party is entitled to summary judgment

if the record, as a whole, could not lead a rational trier of
fact to find for the non-moving party.

Williams v. Griffin, 952

against Johnny Hinkle, and he has not made an appearance in this
action.
6

F.2d 820, 823 (4th Cir. 1991).

Conversely, summary judgment is

inappropriate if the evidence is sufficient for a reasonable
fact-finder to return a verdict in favor of the non-moving
party.

Anderson, 477 U.S. at 248.
III.

A.

Discussion

Law of the Case
As an initial matter, the court considers Hinkle’s

contention that the court should not decide the issues presented
in Safe-Guard’s motion because of the “law of the case”
doctrine.

Hinkle argues that since the Circuit Court of Mingo

County already denied a motion for summary judgment filed by
Santander, that the circuit court’s ruling precludes this court
from reconsidering any issues decided therein, including, inter
alia, that the contract contained ambiguities.

“The law-of-the-

case doctrine generally provides that ‘when a court decides upon
a rule of law, that decision should continue to govern the same
issues in subsequent stages in the same case.’” Musacchio v.
United States, 136 S. Ct. 709, 716 (2016) (quoting Pepper v.
United States, 562 U.S. 476, 506 (2011)).

The doctrine “directs

a court’s discretion, it does not limit the tribunal’s power.”
Arizona v. California, 460 U.S. 605, 618 (1983).

7

Among other reasons, Hinkle’s argument fails because
the interlocutory motion for summary judgment by the state court
does not constitute the law of the case.

See Winchester Homes,

Inc. v. Osmose Wood Preserving, Inc., 37 F.3d 1053, 1059 n. 8
(4th Cir. 1994) (“The Supreme Court has indicated that ‘it
requires a final judgment to sustain the application of the rule
of the law of the case just as it does for the kindred rule of
res judicata.’”)(quoting U.S. v. United States Smelting Co., 339
U.S. 186, 199 (1950)); see also Peralta v. Dillard, 744 F.3d
1076, 1088 (9th Cir. 2014) (“the denial of a summary judgment
motion is never law of the case because factual development of
the case is still ongoing.”).
Accordingly, the court does not rely on the
previously-entered order by the Circuit Court of Mingo County,
and conducts its own analysis herein.
B.

Breach of Contract
In its motion for summary judgment, Safe-Guard claims

that the terms of the contract are unambiguous and do not
entitle Hinkle to relief as a matter of law.

“When a court

interprets an insurance policy, the ‘[l]anguage in an insurance
policy should be given its plain, ordinary meaning.’ . . .
‘Where the provisions of an insurance policy contract are clear
and unambiguous they are not subject to judicial construction or
8

interpretation, but full effect will be given to the plain
meaning intended.’” Murray v. State Farm Fire & Cas. Co., 203 W.
Va. 477, 482 (1998) (quoting Soliva v. Shand, Morahan & Co.,
Inc., 176 W.Va. 430 syl. pt.1 (1986) and Keffer v. Prudential
Ins. Co. of America, 153 W.Va. 813, syl. (1970)).

However,

“‘[w]henever the language of an insurance policy provision is
reasonably susceptible of two different meanings or is of such
doubtful meaning that reasonable minds might be uncertain or
disagree as to its meaning, it is ambiguous.’”

Id. (quoting

Prete v. Merchants Property Ins. Co. of Indiana, 159 W.Va. 508,
syl. pt. 1 (1976)).

When the terms of an insurance contract are

ambiguous, those “ambiguous terms . . . are to be strictly
construed against the insurance company and in favor of the
insured.’”

Chafin ex rel. Estate of Bradley v. Farmers &

Mechanics Mut. Ins. Co. of W.Va., 232 W. Va. 245, 249 (2013)
(quoting Nat'l Mut. Ins. Co. v. McMahon & Sons, 177 W.Va. 734,
syl. Pt. 4 (1987)).
Hinkle contends that the GAP insurance addendum
contained both patent and latent ambiguities that must be
resolved in her favor.

Patent ambiguities occur “where the

uncertainty as to meaning ‘arises upon the words of the . . .
instrument as looked at in themselves[,]’”

Ward v. Dixie Nat.

Life Ins. Co., 257 F. App'x 620, 626 (4th Cir. 2007) (quoting

9

Hann v. Carolina Cas. Ins. Co., 252 S.C. 518, 167 S.E.2d 420,
422 (1969)); “latent ambiguit[ies] arise[] when the instrument
upon its face appears to be clear and unambiguous, but there is
some collateral matter which makes the meaning uncertain.”
Energy Dev. Corp. v. Moss, 214 W. Va. 577, 586 (2003) (quoting
Collins v. Treat, 108 W.Va. 443, 446 (1930)).
Hinkle contends that “Unpaid Net Balance” as stated in
the contract is both patently and latently ambiguous.
Specifically, Hinkle argues that under “general parlance,
‘Unpaid Net Balance’ would describe the entire balance owed
under the loan[.]”

ECF # 77 at 12.

Hinkle further argues that

the use of the term “re-amortized” in Safe-Guard’s claim denial
as well as Mr. Waugh’s representation of GAP insurance make the
contract ambiguous.
In resolving the question of patent ambiguities first,
the court finds Hinkle’s arguments unconvincing.

Hinkle

acknowledges that “the small print definition of ‘Unpaid Net
Balance’ is located on the back of the form,” but omits the fact
that when “Unpaid Net Balance” is first mentioned in the twopage addendum, it is qualified by “as defined herein.”
ECF # 73, Ex. B, 1.

Id. and

The definition therein states that late

charges, delinquent payments and deferred payments, as well as
penalty fees, are not covered by the GAP insurance.
10

ECF # 73,

Ex. B.

While Hinkle may be correct regarding the general

parlance of the words “unpaid net balance,” the contract
unambiguously defines its limitations.

The court finds that

there is no reasonable interpretation of “Unpaid Net Balance” as
used here that would include the “delinquent payments, deferred
payments” she failed to make as well as the late charges and
other fees acquired by Ms. Hinkle without contradicting the
express terms of the contract.

Accordingly, there is no patent

ambiguity in the contract.
The court also finds no latent ambiguity.

Hinkle

argues that the use of the term “re-amortized” in Safe-Guard’s
correspondence denying coverage (ECF # 73, Ex. E) creates a
latent ambiguity in the original contract.

The term “re-

amortized” is not found in the contract; it is simply the term
used by Safe-Guard to represent the act of calculating the
insured’s “Unpaid Net Balance.”

It does not affect or in any

way alter the unambiguous definition of “Unpaid Net Balance.”
Finally, Hinkle argues that Paul Waugh, the
salesperson at C&O Motors, created a latent ambiguity by
“[leading the Hinkles] to believe that [they] were purchasing an
insurance policy that would protect [them] from continuing to
owe any outstanding balance still owed on the loan after a total
loss, whatever the circumstances.”
11

ECF # 77, Ex. B, 3.

Failing

to read a policy does not excuse the insured from its clear
meaning.

Am. States Ins. Co. v. Surbaugh, 231 W. Va. 288, 299

(2013) (“[i]nsurers are not required to sit beside a policy
holder and force them to read (and ask if they understand) every
provision in an insurance policy.”) (quoting Mission Viejo
Emergency Med. Assocs. v. Beta Healthcare Grp., 197 Cal. App.
4th 1146, 1156 (2011)).

Reliance on a salesperson’s

representations does not overcome the express written terms of a
policy.

See e.g., Mission, 197 Cal. App. at 1155 (“plaintiffs,

‘having failed to read the policy and having accepted it without
objection, cannot be heard to complain it was not what they
expected. Their reliance on representations about what they were
getting for their money was unjustified as a matter of
law.’”)(quoting Hadland v. NN Inv'rs Life Ins. Co., 24 Cal. App.
4th 1578, 1589 (1994)).
Waugh’s alleged portrayal of the GAP policy, even if
he did claim that coverage would be available “whatever the
circumstances,” does not render the unambiguous contract terms
ambiguous.

Had Hinkle read the terms of the contract, she would

have known that the monthly payments she failed to make and
certain late charges and other fees are not included in the term
“Unpaid Net Balance.”

Indeed, common sense would tell one that

a single premium GAP insurance policy would contemplate timely

12

monthly payments that would reduce the net unpaid balance as
originally envisioned over the life of the agreement; no
reasonable person would expect credit for one’s own delinquency.
Accordingly, the court gives full effect to the plain,
unambiguous terms of the contract and finds that Safe-Guard
acted in compliance therewith when it denied Ms. Hinkle’s claim.
Safe-Guard’s motion for summary judgment on the breach of
contract claim is granted.
The court further grants summary judgment on those
claims dependent on the underlying breach of contract claim:
common law bad faith and punitive damages3.

See Jordache

Enterprises, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh,
Pa., 204 W. Va. 465, 485, 513 S.E.2d 692, 712 (1998) (“A clear
predicate to recovering punitive damages in a common law bad
faith action wherein the policyholder alleges that the insurer
knew the policyholder's claim was proper, but willfully,
maliciously and intentionally denied the claim, is that the
policyholder substantially prevail on the underlying contract
claim.”).

3

The court also grants summary judgment for Count IIID, seeking
a declaratory judgment, as it appears to be factually and
legally duplicative of the breach of contract claim.
13

C.

West Virginia Unfair Trade Practices Act
Remaining are Hinkle’s claims under the WVUTPA.

Hinkle

asserts the following violations:
(a) Misrepresenting pertinent facts or insurance
policy provisions relating to coverages at issue;
(b) Failing to acknowledge and act reasonably promptly
upon communications with respect to claims arising
under insurance policies;
(c) Failing to adopt and implement reasonable
standards for the prompt investigation of claims
arising under insurance policies; and
(d) Refusing to pay claims without conducting a
reasonable investigation based upon all available
information.
Am. Compl. ¶ 39, corresponding to W. VA. Code § 33-11-4(9)(a)(d).

To allege violations of the WVUTPA, a plaintiff “must

establish that the insurance company had a ‘general business
practice’ of committing unfair claim settlement practices and
that the breach of the law was not an isolated event.”
Barefield v. DPIC Companies, Inc., 215 W. Va. 544, 552 (2004).
“[T]he evidence should establish that . . . the violations arise
from separate, discrete acts or omissions in the claim
settlement[.]”

Id.

Hinkle appears to rely on two events to establish
Safe-Guard’s general business practice and liability under the
WVUTPA: first, that Mr. Waugh misrepresented the nature of the
GAP insurance, and second, that Safe-Guard improperly handled
14

her claim.

Neither event establishes a WVUTPA claim.

Mr.

Waugh’s alleged statement, that coverage would be available
“whatever the circumstances,” does not negate the unambiguous
terms of the contract.

Even if it did, Ms. Hinkle presents no

evidence indicating that this alleged misrepresentation of
coverage was more than an isolated event.

Further, as already

discussed, plaintiff’s claim was properly denied under the terms
of the contract.

The evidence shows that Safe-Guard acted

reasonably promptly (within the fifteen-day requirement of W.
Va. Code § 33-11-4(9)(o)) in denying the claim.

See ECF # 73,

Ex. E (Safe-Guard correspondence dated July 21, 2011), and see
ECF # 73, Ex. I, 2 (noting “CLAIM COMPLETE” on July 6, 2011).
By calculating the unpaid net balance and subtracting from that
amount the actual cash value as provided by State Farm, SafeGuard fulfilled its contractual obligation and conducted a
reasonable investigation to settle the claim.

ECF # 73, Ex. E.

Accordingly, there is no genuine dispute of material fact that
could entitle Hinkle to recovery under her WVUTPA claim.

Safe-

Guard’s motion for summary judgment on those claims is granted.
IV.

Conclusion

For the foregoing reasons, it is ORDERED that
defendant Safe-Guard’s motion for summary judgment be, and it
hereby is, granted.
15

There being no remaining issue for resolution in the abovestyled case, it is further ORDERED that this case be, and hereby
is, dismissed.
The Clerk is requested to transmit copies of this
order to all counsel of record and any unrepresented parties.
ENTER: March 25, 2019

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