# Slone v. State Auto Property & Casualty Insurance Company

> District Court, S.D. West Virginia · January 19, 2021

URL: https://www.frixlaw.com/law-library/cases/10729466

## Case

- **Court:** District Court, S.D. West Virginia
- **Decided:** January 19, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10729466

## How later opinions describe it (automated extraction)

- concluding that business patrons constitute “too broad” a class “to qualify for third-party status” absent specific language in the contract bestowing third-party 24 beneficiary status
- concluding that service was defective under Rule 4(d)(1)(B), a prior version of the rule at issue here which contained the same “delivery restricted to the addressee” language, where the temporary secretary of the defendant signed the return receipt
- concluding that the coverage is intended to benefit the insured

## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON

PATTY SLONE,

Plaintiff,

v. Civil Action No. 2:19-cv-00408

STATE AUTO PROPERTY AND CASUALTY
INSURANCE COMPANY, JOE MASK, and
SHERI LENTHE,

Defendants.

MEMORANDUM OPINION AND ORDER

Pending is the joint motion of the defendants, State
Auto Property and Casualty Insurance Company (“State Auto”), Joe
Mask and Sheri Lenthe, to dismiss or, in the alternative, motion
for summary judgment, filed on May 28, 2019. ECF No. 3.
I. Background
Plaintiff Patty Slone, a resident of Mingo County,
West Virginia, was a guest at Janet’s Park & Eat, Inc.
(“Janet’s”) in Logan County, West Virginia, on August 4, 2016.
Compl., ECF No. 1-3, at ¶ 7; see also ECF No. 23-1, at 19 (State
Auto insurance policy providing the full legal name of Janet’s).
1
She “sustained an [undisclosed] injury” after slipping and
falling at the restaurant. Id. at ¶¶ 10, 28.

Janet’s maintained an insurance policy through State
Auto effective from April 13, 2016, to April 13, 2017. ECF No.
23-1, at 19. The policy includes a Commercial General Liability
Coverage Part that provides for medical payments coverage up to
$10,000.00, general liability coverage up to $1,000,000.00 per
occurrence, and personal injury and advertising liability
coverage up to $1,000,000.00. Id. at 29. The policy reads, in
relevant part:

COVERAGE C MEDICAL PAYMENTS
1. Insuring Agreement
a. We will pay medical expenses as described
below for "bodily injury" caused by an
accident:
(1) On premises you own or rent;
(2) On ways next to premises you own or
rent; or
(3) Because of your operations;
provided that:
(1) The accident takes place in the
"coverage territory” and during the
policy period;
(2) The expenses are incurred and
reported to us within one year of the
date of the accident; and
(3) The injured person submits to
examination, at our expense, by
physicians of our choice as often as we
reasonably require.
2
b. We will make these payments regardless of
fault. These payments will not exceed the
applicable limit of insurance. We will pay
reasonable expenses for:
(1) First aid administered at the time
of an accident;
(2) Necessary medical, surgical, x-ray
and dental services, including
prosthetic devices; and
(3) Necessary ambulance, hospital,
professional nursing and funeral
services.

Id. at 137.1 The policy then lists exclusions from medical
payments coverage:
2. Exclusions
We will not pay expenses for “bodily injury”:
a. Any Insured
To any insured, except "volunteer workers".
b. Hired Person
To a person hired to do work for or on
behalf of any insured or a tenant of any
insured.
c. Injury On Normally Occupied Premises
To a person injured on that part of premises
you own or rent that the person normally
occupies.
d. Workers Compensation And Similar Laws
To a person, whether or not an “employee” of
any insured, if benefits for the “bodily
injury” are payable or must be provided
under a workers’ compensation or disability
benefits law or a similar law.

1 Under the State Auto policy, “bodily injury” is defined as
“bodily injury, sickness, or disease sustained by a person,
including death resulting from any of these at any time.” ECF
No. 23-1, at 142. Inasmuch as the defendants do not assert that
Slone did not sustain a “bodily injury” as defined by the
policy, the court assumes for the purposes of this opinion that
this point is not at issue.
3
e. Athletics Activities
To a person injured while practicing,
instructing or participating in any physical
exercises or games, sports, or athletic
contests.
f. Products-Completed Operations Hazard
Included within the “products-completed
operations hazard”.
g. Coverage A Exclusions
Excluded under Coverage A.

Id.2
The Janet’s State Auto policy also pertinently defines
“insured.” “Insureds” include, as relevant here and with
certain exceptions: (1) an entity that is “designated in the
Declarations” and is not “a partnership, joint venture or

2 Coverage A, i.e., the general liability “Bodily Injury and
Property Damage Liability,” exclusions that pertain to bodily
injuries and not solely property damage, which is not relevant,
include: liability for expected or intended injuries;
contractual liability; liquor liability; liability under
workers’ compensation, disability benefits, unemployment
compensation, or similar laws; employers’ liability; liability
arising from pollution; liability arising from the aircraft,
auto, or watercraft of an insured; liability arising from
mobile equipment of an insured; liability arising from war;
personal and advertising injury liability; and liability
resulting from “recording and distribution of material or
information in violation of law.” ECF No. 23-1, at 132-36, 145.
The defendants do not contend that Slone fits these exclusions.

4
limited liability company”;3 (2) executive officers and directors
when acting with respect to their duties as well as stockholders
with respect to their liability as stockholders; (3) employees
and volunteer workers of the entity; and (4) any person acting
as a real estate manager for the entity. Id. at 138-39. The
policy does not confer “insured” status on guests such as Slone.

Finally, the policy’s Coverage A (the general
liability coverage titled “Bodily Injury and Property Damage
Liability”) and Coverage B (titled “Personal and Advertising
Injury Liability”) provisions each promise to pay “sums” for
certain injuries that the insured “becomes legally obligated to
pay as damages” as a result of separate civil actions. Id. at

132, 136. Coverages A and B differ from Coverage C inasmuch as
the Coverage C medical payments coverage promises to pay
“expenses” rather than “sums” relating to “damages” that result
from separate lawsuits. See id. at 137.

3 Janet’s as well as Morrison’s Drive Inn, Inc. are listed as
the “First Named Insured” in the Declarations. ECF No. 23-1, at
19. Although it is not a “First Named Insured,” Parkway Drive
Inn, Inc. is listed as a named insured in the Declarations. Id.
at 20. “Additional Interests/Insureds” include Logan Property
Management LLC as a “Manager or Lessor of Premises,” and
“Owners, Lessees or Lessor of Leased Equipment – Automatic” also
qualify as “Additional Insured[s]” in the declarations. Id. at
30, 34, 35.
5
Slone filed suit against Janet’s in the Circuit Court
of Logan County, Civil Action No. 17-C-283, purportedly seeking
damages for her fall that could be covered by the Coverage A
general liability coverage of the State Auto Policy. ECF No. 1-
3, at ¶ 22; ECF No. 4, at 2 n. 3; ECF No. 6, at 2. That action
was dismissed on summary judgment inasmuch as, according to the

plaintiff, the circuit court “found that Janet’s Restaurant was
not liable for Slone’s injuries as the hazard which caused said
injuries was open and obvious.” ECF No. 6, at 2.
The complaint does not describe when or how Slone
submitted a medical payments coverage claim under the Janet’s
State Auto policy, but Slone indicates that “Defendants State

Auto and Mask acknowledged [her] injury and applicable medical
payments coverage with limits for said incident in the amount of
$10,000.00.” ECF No. 1-3, at ¶ 11. Slone claims that the
expenses caused by her injury exceeded the $10,000.00 medical
payments coverage limit. Id. at ¶ 12. She adds that “much” of
her medical expenses were paid by Medicare and that Medicare had
a right to reimbursement of proceeds issued pursuant to the
$10,000.00 coverage. Id. at ¶ 13. It is alleged that the
defendants “acted to induce Plaintiff Slone to seek a reduction

6
of her Medicare lien, which she did, on the inducement that
Defendants would pay the reduced amount to Medicare and then pay
the balance to Plaintiff.” Id. at ¶¶ 55.

Slone further alleges that on May 29, 2018, Medicare
sent her a $4,882.58 “final demand in satisfaction of its right
of reimbursement from Defendant State Auto’s medical payments
coverage,” which she forwarded to State Auto. Id. at ¶ 15.
Slone contends, and the defendants acknowledge, that State Auto
reimbursed Medicare in the amount of $4,882.58 on August 2,
2018. Id. at ¶ 16; ECF No. 7, at 2.

Slone states that she then “immediately demanded that
the medical payment policy limits balance of $5,117.42 be paid
to her and her attorney pursuant to the provisions of the
policy.” ECF No. 1-3, at ¶ 17. She alleges that on August 29,
2018, Medicare “acknowledged no further conditional payments”
from the medical payments coverage. However, Slone claims that
State Auto erroneously opened a second medical payments claim
with Medicare and that she thereafter notified State Auto of

this error and again demanded payment of the $5,117.42 balance.
Id. at ¶¶ 20-21.

7
After this demand, Lenthe, an employee or agent of
State Auto, allegedly “attempted to induce Plaintiff Slone to
resolve the outstanding medical payments due by compromising her
liability claim against Defendant State Auto's insured,
Janet’s,” in violation of West Virginia insurance statutes and
regulations. Id. at ¶ 22; accord id. at ¶ 5. According to the

plaintiff, State Auto, Mask, and Lenthe “have failed and
continue to fail to pay the remainder of the medical payments
coverage policy limits and have not acknowledged receipt of the
demand nor offered any explanation as to why they have failed to
pay the remaining balance of the medical payments coverage that
is due.” 4 Id. at ¶ 19.

The defendants offer a slightly different version of
events. In their June 17, 2019 reply to the pending motion,
they assert that Slone acknowledged that Medicare held a second,
unresolved lien on the medical payments coverage after the first
lien was resolved. ECF No. 7, at 2. They state, however, that
on June 10, 2019, subsequent to the filing of this action on May

4 Mask’s exact role in State Auto’s conduct is not evident
from the face of the complaint other than allegations that he is
an employee or agent of the insurance company who was somehow
involved in the handling of the medical payments coverage claim.
See ECF No. 1-3, at ¶ 5. Regardless, the defendants do not
raise this as an issue.
8
24, 2019, counsel for the plaintiff disclosed a letter from
Medicare indicating that the second lien had been resolved. Id.
Counsel for the defendants confirmed during a December 21, 2020
telephonic status conference with the court and counsel that all
Medicare liens have been resolved.

Slone filed this action in the Circuit Court of Mingo
County on April 16, 2019. Her complaint alleges three counts
against the defendants: Count I, “First Party Bad Faith (Common
Law)”: Count II, “Violations of the West Virginia Unfair Trade
Practices Act,” a statutory bad faith claim brought under W. Va.
Code § 33-11-4(9); and Count III, Fraud.5 Id. at ¶¶ 27-53.

The defendants have provided the circuit court docket
sheet, which documents the plaintiff’s efforts at service during
the outset of the case and is quoted verbatim below:

Date Action / Result

04/16/2019 COMPLAINT FILED & SUMMONS ISSUED;
SUMMONS SENT TO ATTY – DID NOT

5 The plaintiff clearly asserts all three counts against
State Auto and Lenthe. However, Mask is only directly mentioned
in the context of the statutory bad faith claim, and as noted,
his precise role in State Auto’s alleged misconduct is not
clear. See ECF No. 1-3, at ¶ 53. But the defendants do not
challenge the complaint on these grounds, and the court declines
to address the issue in this opinion.
9
SENT CORRECT AMOUNT FOR CERT MAIL
& MAIL FEE;

04/25/2019 SUMMONS IS SUED FOR SHERI LENTHE &
JOE MASK CERT MAIL, RTRN REC & RES
DEL;

04/29/2019 ACCEPTED SERVICE OF PROSCESS SOS
ON BEHALF OF STATE AUTO PROPERTY
AND CASUALTY INSURANCE COMPANY
FILED;

05/03/2019 RETURN CERTIFIED MAIL CARD SIGNED
(CANT READ SIGNATURE) 04-30-19
FILED;

05/03/2019 RETURN CERTIFIED MAIL CARD SIGNED
(CANT READ SIGNATURE) 04-30-19
FILED
ECF No. 1-1. Additionally, the summonses for all three
defendants appear in the record and are dated April 16, 2019.
ECF No. 1-3, at 14-16. Neither party has filed certified mail
receipts or returns pertaining to the service of the defendants.
The defendants removed the action to this court on May
24, 2019. ECF No. 1. They filed the pending motion on May 28,
2019. ECF No. 3. In the motion, the defendants assert two
separate challenges. The first concerns Slone’s ability to
assert any of her claims, namely, West Virginia Unfair Trade
Practices Act (“UTPA”) bad faith, common law bad faith, and
fraud. ECF No. 4, at 4-8. The second concerns service of
10
process on Mask and Lenthe, who according to the defendants,
reside in Tennessee and Minnesota, respectively, and whom the
plaintiff attempted to serve at State Auto’s corporate
headquarters in Columbus, Ohio. Id. at 3, 8-9. The defendants
moved to stay discovery on September 4, 2019 pending the
resolution of the motion, whereupon the court granted a stay on

September 26, 2019. ECF No. 17.
II. Legal Standards

A. Failure to State a Claim
The challenge to Slone’s ability to bring the bad
faith and fraud claims is styled as a Federal Rule of Civil
Procedure 12(b)(6) motion for failure to state a claim or, in

the alternative, a Rule 56 motion for summary judgment. The
defendants have produced several pieces of evidence outside the
pleadings in support of their arguments relating to Slone’s
ability to bring bad faith claims. These include an excerpt of
the Janet’s State Auto policy that provides for the medical
payments coverage, its exclusions, and the definition of
“Insured” (ECF No. 3-2), a copy of the plaintiff’s May 14, 2019
administrative complaint in a related state proceeding before

11
the West Virginia Office of the Insurance Commissioner (ECF No.
7-1), and a copy of a May 15, 2019 letter from an insurance
specialist of the Office of the Insurance Commissioner to State
Auto (ECF No. 7-2). Further, upon the court’s request, the
parties submitted a jointly stipulated full copy of the State
Auto insurance policy. ECF No. 23; ECF No. 23-1.

A motion styled as a motion to dismiss or, in the
alternative, for summary judgment “implicates the [c]ourt’s
discretion under [Federal Rule of Civil Procedure] 12(d).”
Stone v. Trump, 400 F. Supp. 3d 317, 349 (D. Md. 2019) (citation
omitted). Rule 12(d) provides that “[i]f, on a motion under
Rule 12(b)(6) or 12(c), matters outside the pleadings are

presented to and not excluded by the court, the motion must be
treated as one for summary judgment under Rule 56.” The Fourth
Circuit has also clarified that documents attached to a motion
to dismiss may be considered without converting the motion to
one for summary judgment “so long as they are integral to the
complaint and authentic.” Philips v. Pitt Cnty. Mem. Hosp., 572
F.3d 176, 180 (4th Cir. 2009).

12
The excerpt of the Janet’s State Auto policy (ECF No.
3-2) was attached as an exhibit to the pending motion, and the
court considers the full stipulated policy (ECF No. 23-1) as a
timely supplement to that exhibit. The Janet’s State Auto
policy is integral to the complaint inasmuch as it is repeatedly
referenced therein and provides for the medical payments

coverage that underlies the claims in this action. See ECF No.
1-3 (Complaint). Additionally, the parties acknowledge the
authenticity of the policy in their stipulation. See ECF No. 23
(stipulating that the policy “is a full and complete certified
copy of the insurance policy”). The other documents furnished by
the defendants do not appear to be integral to the complaint.
And the resolution of the legal issues presented does not hinge
on these documents. Thus, the court considers the insurance
policy as it relates to the Rule 12(b)(6) portion of the motion
to dismiss without converting the motion to one for summary
judgment while excluding the other documents produced by the

defendants insofar as they are offered in relation to the

13
pending motion. 6

Federal Rule of Civil Procedure 8(a)(2) requires that
a pleading contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Rule 12(b)(6)
correspondingly provides that a pleading may be dismissed when

6 The court also notes that on January 30, 2020, more than
seven months after briefing of the pending motion concluded and
more than four months after this action was stayed, the
defendants also filed a “supplemental memorandum of law” in
support of the motion. ECF No. 17. This filing includes other
exhibits relating to the separate administrative proceeding
before the Office of the Insurance Commissioner, namely, a
September 13, 2019 letter from the Office of the Insurance
Commissioner to counsel for the plaintiff closing the
administrative complaint (ECF No. 19-1), Slone’s September 17,
2019 administrative request for a hearing regarding the closing
letter (ECF No. 19-2), and the Office of the Insurance
Commissioner’s December 19, 2019 order denying a hearing on the
matter (ECF No. 19-3).

Slone has responded to this memorandum, arguing that it is
not authorized by the Federal Rules of Civil Procedure or the
Local Rules of Civil Procedure. ECF No. 20, at 1-2. She also
states that consideration of the administrative rulings is
premature inasmuch as they have been appealed to the Circuit
Court of Kanawha County. Id. at 2. Slone requests attorney’s
fees associated with responding to the unauthorized filing. Id.

The court agrees that this filing was unauthorized. The
supplemental memorandum is essentially a surreply, which
requires leave of court under Local Rule of Civil Procedure
7.1(a)(7). The defendants did not seek leave of court prior to
filing the memorandum. Additionally, the resolution of the
pending motion does not hinge on consideration of the memorandum
or its exhibits. Although the court declines to award
attorney’s fees, it does not consider the memorandum or its
exhibits in disposing of the motion to dismiss.
14
there is a “failure to state a claim upon which relief can be
granted.”

To survive a motion to dismiss, a pleading must recite
“enough facts to state a claim to relief that is plausible on
its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007); see also Monroe v. City of Charlottesville, 579 F.3d
380, 386 (4th Cir. 2009) (quoting Giarratano v. Johnson, 521
F.3d 298, 302 (4th Cir. 2008)). In other words, the “[f]actual
allegations must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555 (citation
omitted).

The court “must accept as true all of the factual
allegations contained in the [pleading].” Erickson v. Pardus,
551 U.S. 89, 94 (2007) (citing Twombly, 550 U.S. at 555-56).
Such factual allegations should be distinguished from “mere
conclusory statements,” which are not to be regarded as true.
Iqbal, 556 U.S. at 678. “[T]he tenet that a court must accept as
true all of the allegations contained in a complaint is

inapplicable to legal conclusions.” Id.

15
B. Sufficiency of Service

The second argument in the motion challenges the
service of Mask and Lenthe. The defendants mention that
improper service of process constitutes a lack of personal
jurisdiction over these defendants. ECF No. 4, at 9. However,
they specify that they proceed under Federal Rule of Civil
Procedure 12(b)(5) for insufficient service of process and do
not claim to proceed under Rule 12(b)(2) for lack of personal
jurisdiction. Id. at 1.

Further, it appears that the defendants pose a Rule
12(b)(5) challenge inasmuch as they title the argument as
“Plaintiff did not properly serve Defendant Mask and Defendant
Lenthe” and they do not conduct a personal jurisdiction analysis
apart from pointing out that personal jurisdiction is linked, to
some degree, with service of process. ECF No. 4, at 8-9 (citing
Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S.
344, 350 (1999) (“In the absence of service of process (or
waiver of service by the defendant), a court ordinarily may not

exercise power over a party the complaint names as
defendant.”)). Relatedly, they rely on the West Virginia Rules
of Civil Procedure in support of their sufficiency of process
16
arguments inasmuch as “[t]he issue of the sufficiency of service
of process prior to removal is strictly a state law issue.” Id.
at 8 (quoting Wolfe v. Green, 660 F. Supp. 2d 738 (S.D. W. Va.
2009)).

Accordingly, the court construes this argument as one
under Rule 12(b)(5) for insufficient service of process. Under
Rule 12(b)(5), the “[p]laintiff bears the burden of establishing
the validity of service once that service is contested.” McCoy
v. Norfolk Southern Ry. Co., 858 F. Supp. 2d 639, 651 (S.D. W.
Va. 2012) (citing Homer v. Jones–Bey, 415 F.3d 748, 754 (7th
Cir. 2005); Grand Entertainment Group, Ltd. v. Star Media Sales,
Inc., 988 F.2d 476, 488 (3d Cir. 1993)).

III. Analysis

A. Failure to State a Claim
The defendants contend that the claims alleged against
them fail as a matter of law inasmuch as they are based in bad
faith and the plaintiff is a third-party claimant who cannot
recover under West Virginia law. ECF No. 4, at 5-8.

Specifically, the defendants assert that Slone is not a
policyholder or insured under the State Auto policy, which makes
17
her a third-party claimant for the purposes of her common law
(Count I) and UTPA (Count II) bad faith claims. Id. at 6-8.
The defendants attempt to fortify their position by asserting
that the plaintiff is a third-party claimant for the purposes of
the Insurance Commissioner’s definition found in W. Va. C.S.R. §
114-14-2.8. Id. at 7. They argue that third-party claimants

have no cause of action for common law bad faith under Elmore v.
State Farm Mutual Automobile Insurance Co., 504 S.E.2d 893
(1998), or the UTPA under W. Va. Code § 33-11-4a. Id. They
also contend that the “claim for fraud (Count III) similarly
must be dismissed as it arises out of the claims-handling
process of Plaintiff’s claim for medical payments under the
policy.” Id. at 8.

Slone responds that she meets the definition of
first-party claimant under W. Va. C.S.R. § 114-14-2.3 inasmuch
as she is an individual who asserts a right to payment under the
policy rather than against an insured, such as Janet’s. ECF No.
6, at 2-3. She further contends that the definition of first-
party claimant is distinct from that of an insured and that
first-party claimants are not always insureds as evidenced by
Goff v. Penn Mutual Life Ins. Co., 729 S.E.2d 890 (W. Va. 2012)

18
(life insurance beneficiary).

West Virginia does not recognize third-party common
law or statutory causes of action for bad faith. In 1998, the
West Virginia Supreme Court of Appeals considered, inter alia,
the question of whether there exists a cognizable cause of
action for “common law breach of the implied covenant of good
faith and fair dealing (common law bad faith).” Elmore, 504
S.E.2d at 896. The Elmore court concluded that state caselaw:

makes it clear that the common law duty of good faith
and fair dealing in insurance cases under our law runs
between insurers and insureds and is based on the
existence of a contractual relationship. In the
absence of such a relationship there is simply nothing
to support a common law duty of good faith and fair
dealing on the part of insurance carriers toward
third-party claimants. We therefore decline to expand
our prior holdings regarding common law bad faith
claims to allow third parties to bring an action
against the insurance carrier of another.
Id. at 897.
In 2005, the West Virginia Legislature passed W. Va.
Code § 33-11-4a, which precludes third-party bad faith claims
under the UTPA. Specifically, the statute 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
19
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.
W. Va. Code § 33-11-4a(a) (2005). For the purposes of the
statutory bar, a third-party claimant “means any individual,
corporation, association, partnership or any other legal entity
asserting a claim against any individual, corporation,
association, partnership or other legal entity insured under an
insurance policy or insurance contract for the claim in
question.” W. Va. Code § 33-11-4a(j) (2005) (emphasis added).
The statute’s text supports the conclusion that Slone may bring
a statutory bad faith claim. Slone is not a third-party
claimant bringing this action “against an insured.” Slone
proceeds against the insurer itself in this action. State Auto
is plainly not an entity insured under the Janet’s policy – it
is itself the insurer. Slone does not meet the statutory
definition of “third-party claimant” and inasmuch as the statute
only precludes such third-party claimants from asserting a cause
of action for UTPA bad faith, it does not purport to bar Slone
from bringing her statutory claim.
20
Other sources support this conclusion. In Goff, the
Supreme Court of Appeals considered whether a plaintiff
third-party beneficiary of a life insurance policy could bring a
statutory bad faith claim under the UTPA even though he was not
a party to the insurance contract or an insured under the
policy.7 729 S.E.2d at 892. The court first rejected the

defendant insurer’s argument that the plaintiff, the named
primary beneficiary of the life insurance policy in question,
was not a third-party beneficiary of the policy under the West
Virginia third-party beneficiary statute, W. Va. Code § 55-8-12
(2008). Id. at 894.
The court next concluded that “[j]ust because the

person who is asserting the claim is a third party with regard
to the subject insurance policy, that fact alone does not alter
the nature of the contract itself.” Id. at 895. The court
found that the life insurance policy at issue was, as to the
third-party beneficiary, “clearly a first-party contract.” Id.
at 896. Since the policy was a first-party contract and the
deceased insured policyholder clearly intended the plaintiff

7 Goff did not involve a common law bad faith claim, and the
court accordingly considers it in the context of a UTPA
analysis.
21
third-party beneficiary to obtain the relevant insurance
proceeds upon her death, the court determined that the
beneficiary had standing to bring a statutory bad faith claim
against the insurer under the UTPA even though he was not an
insured under the policy. Id. at 895-96.

Goff’s applicability to this case turns on whether
Slone is a third-party beneficiary of the State Auto policy’s
medical payments provision. According to the third-party
beneficiary statute,

[i]f a covenant or promise be made for the sole
benefit of a person with whom it is not made, or with
whom it is made jointly with others, such person may
maintain, in his own name, any action thereon which he
might maintain in case it had been made with him only,
and the consideration had moved from him to the party
making such covenant or promise.
W. Va. Code § 55-8-12. “The use of the term ‘sole’ [in W. Va.
Code § 55-8-12] does not mean the inclusion of more than a
single beneficiary prevents this provision from taking effect.”
Goff, 729 S.E.2d at 894 (citing Aetna Life Ins. Co. v. Maxwell,
89 F.2d 988, 993–94 (4th Cir. 1937); Erwin v. Bethlehem Steel
Corp., 62 S.E.2d 337 (1950)). Instead, a plaintiff may maintain
an action as a third-party beneficiary to a contract “if the
contract is made and intended for the benefit of a class of
22
persons definitely and clearly shown to come within the terms of
the contract” and the plaintiff is a member of that class.
United Dispatch v. E.J. Albrecht Co., 62 S.E.2d 289, 296 (W. Va.
1950). There is a presumption that a contract is intended to
benefit the contracting parties rather than third persons, and
“the implication to overcome that presumption must be so strong

as to amount practically to an express declaration” that a
person or class of persons hold third-party beneficiary status.
Ison v. Daniel Crisp Corp., 122 S.E.2d 553, 557 (W. Va. 1976).
In this case, the policy covenants to “pay medical
expenses” without regard to fault up to the applicable limit for
“bodily injuries” on premises that Janet’s owns or rents. ECF

No. 23-1, at 137. With a single exception for volunteer
workers, insureds are excluded from receiving medical payments
benefits under the coverage. And it does not appear, based on
the record before the court, that anyone other than Slone has
attempted to recover medical payments benefits during the year
for which the policy was effective, April 13, 2016 to April 13,
2017. On the other hand, non-insured, non-policyholding guests
injured on Janet’s property during the relevant period, such as
Slone, are not excluded from receiving medical payments

23
benefits. Thus, it is clear from the face of the insurance
policy that the plaintiff belongs to a class of individuals
intended to benefit from the medical payments coverage, i.e.
individuals (primarily guests) injured on Janet’s premises who
are eligible to receive benefits from the coverage during the
year for which it was effective.

The court accordingly concludes that Slone holds
third-party beneficiary status just as did the plaintiff in
Goff. Insofar as Goff stands for the proposition that third-
party beneficiaries may assert UTPA bad faith claims against
insurers, it tends to support the conclusion that Slone may
assert a statutory bad faith claim in this action.

It is noted that some courts have rejected the view
that injured guests on the premises of insureds are third-party
beneficiaries of medical payments coverage provisions, finding
that such a class of potential third parties is too broad or
that such provisions are actually intended to benefit the
insured. See Schmalfeldt v. North Pointe Ins. Co., 670 N.W.2d

651 (Mich. 2003) (concluding that business patrons constitute
“too broad” a class “to qualify for third-party status” absent
specific language in the contract bestowing third-party
24
beneficiary status); Zegar v. Sears Roebuck and Co., 570 N.E.2d
1176, 1179 (Ill. App. Ct. 1991) (concluding that the coverage is
intended to benefit the insured); see also Trouten v. Heritage
Mut. Ins. Co., 632 N.W.2d 856 (S.D. 2001) (finding Zegar
persuasive).

Still, as the Seventh Circuit has remarked, “[t]he
weight of authority suggests that medical payment provisions
regarding injured third parties are third party beneficiary
contracts” inasmuch as medical payments provisions operate
without regard to the insured’s liability and create obligations
in insurers to injured parties. Donald v. Liberty Mutual Ins.
Co., 18 F.3d 474, 481 (7th Cir. 1994) (citing Hein v. American

Family Mutual Insurance Co., 166 N.W.2d 363, 365 (Iowa 1969)
Motto v. State Farm Mutual Insurance Co., 462 P.2d 620, 621
(N.M. 1969); Johnson v. New Jersey Manufacturers Indemnity
Insurance Co., 174 A.2d 4, 8 (N.J. Super. Ct. App. Div. 1961);
8A Appleman on Insurance Law and Practice § 4902 (Rev. Vol.
1981)); accord Harper v. Wassau Ins. Co., 66 Cal. Rptr. 2d 64,
69-70 (Cal. Ct. App. 1997) (collecting cases). Moreover,
commentators have remarked more currently that “only the injured
person has a right to enforce the obligation of the insurer” to

25
pay expenses under medical payments coverage. 11 Couch on
Insurance § 158:25 (3d ed. 2020); see also 203A Appleman on
Insurance Law and Practice § 4902 (2d ed. 2011) (“Generally,
medical payment clauses are considered to constitute separate
accident insurance coverage. Such coverage is divisible from
the remainder of the policy, and creates a direct liability to

the contemplated beneficiaries.”).
Additionally, the Supreme Court of Appeals has
consulted the West Virginia Insurance Commissioner’s definitions
in cases where it is not entirely clear whether a plaintiff
asserting UTPA and common law bad faith claims is a first or
third-party claimant. See Dorsey v. Progressive Classic Ins.

Co., 753 S.E.2d 93, 98 (W. Va. 2013); Loudin v. Nat’l Liab. Fire
Ins. Co., 716 S.E.2d 696, 702-03 (W. Va. 2011). The Insurance
Commissioner defines “third-party claimant” as “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.” W. Va.
C.S.R. § 114-14-2.8. That is, the Insurance Commissioner uses
the same third-party claimant definition as the UTPA. And as

26
indicated, Slone does not meet that definition. Thus, the
Insurance Commissioner’s definition of “third-party claimant,”
emphasized by the Supreme Court of Appeals, 8 supports the
court’s conclusion that the UTPA does not bar the plaintiff from
asserting a statutory bad faith claim.

Slone does, however, meet the Insurance Commissioner’s
definition of “first-party claimant.” According to the
Insurance Commissioner, “‘First-party claimant’ or ‘Insured’
means an individual, corporation, 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. § 114-14-2.3 (emphasis added). Slone
has asserted a right to payment under the State Auto policy, and

8 In both Dorsey and Loudin, the Supreme Court of Appeals
provided fairly in-depth analyses of whether the plaintiffs
would be first or third-party claimants under the Insurance
Commissioner’s W. Va. C.S.R. § 114-14-2 definitions while making
only passing references to the UTPA’s statutory definition. See
Dorsey, 753 F.3d at 98; Loudin, 716 S.E.2d at 701. It is not
apparent why the court did so in the context of the UTPA claims
asserted in those cases inasmuch as the statute itself
articulates which claimants lack a statutory cause of action.
Regardless, the Insurance Commissioner’s definition of “third-
party claimant” mirrors that of the statute and reinforces the
idea that W. Va. Code § 33-11-4a(a) (quoted at pp. 19-20, supra)
does not bar the statutory claim in this case.
27
she may do so under the policy inasmuch as she was injured on
Janet’s property, has incurred medical expenses, and is not
excluded from receiving medical payments benefits. Further,
while the defendants challenge her ability to bring bad faith
claims in court, they do not challenge her general ability to
submit Coverage C medical payments claims to the insurer under

the policy. The policy itself supports the position that she
may submit Coverage C claims directly to the insurer in that it
distinguishes between the insurer’s duties to pay medical
“expenses” of individuals who sustain bodily injuries under
Coverage C and its duties to pay “sums that the insured becomes
legally obligated to pay as damages” in separate suits under
Coverages A and B. ECF No. 23-1, at 132, 136-137.

Moreover, courts that have considered injured
claimants to be third-party beneficiaries under medical payments
provisions have done so in the context of determining whether
such claimants may directly recover payments from insurers under
the relevant policies. See, e.g., Donald, 18 F.3d at 481;
Harper, 66 Cal. Rptr. 2d at 69-70; Hunt v. First Ins. Co. of
Hawaii, Ltd., 922 P.2d 976, 980-81 (Haw. Ct. App. 1996). Thus,
it appears that injured medical payments coverage claimants,

28
generally and under the State Auto policy, fit the definition of
“first-party claimant” offered by the Insurance Commissioner
inasmuch as they are able to and do assert rights to payments
against insurers under medical payments coverage provisions.

In summary, Slone does not meet the statutory
definition of “third-party claimant” under W. Va. Code
§ 33-11-4a(j). Rather, she is a third-party beneficiary like
the plaintiff in Goff, and she is a first-party claimant and not
a third-party claimant under the Insurance Commissioner’s
definitions. Based on the foregoing, the court concludes that
Slone, as a first-party claimant and third-party beneficiary of
the medical payments provision, may assert a bad faith claim

under the UTPA.
The court next turns to the common law bad faith
claim. In both Dorsey and Loudin, the Supreme Court of Appeals
determined that the plaintiffs were first-party claimants
asserting cognizable statutory and common law bad faith claims
without drawing any distinctions between the separate causes of

action with regard to first and third-party status. See Dorsey,
753 S.E.2d at 96-99; Loudin, 716 S.E.2d at 700-05. This could
suggest that, based on the court’s determination that Slone may
29
bring a statutory bad faith claim, she is entitled to bring a
common law bad faith claim as well.

The Supreme Court of Appeals has articulated in the
context of a common law bad faith analysis that, generally
speaking, “[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.” Syl. Pt. 2, Loudin,
716 S.E.2d at 697. On the other hand, a “third-party bad faith
action is one that is brought against an insurer by a plaintiff
who prevailed in a separate action against an insured
tortfeasor.” Id. at 700 (quoting State ex rel. Allstate Ins.
Co. v. Gaughan, 508 S.E.2d 75, 86 (1998)).

Slone does not fall into either of these general
definitions. She is not an insured suing her own insurer. And
she has not prevailed in a separate action concerning the
medical payments claim. Slone maintains that she did, in fact,
file a separate, unsuccessful suit against Janet’s. However,
according to the complaint and the parties’ briefs, that action

concerned a liability coverage claim relating to the accident at
the restaurant and did not involve the medical payments coverage
claim that is the subject of this bad faith action. See ECF No.
30
1-3, at ¶ 22; ECF No. 4, at 2 n. 3; ECF No. 6, at 2.

As noted, the Supreme Court of Appeals has looked to
the Insurance Commissioner’s definitions when it is not obvious
whether a plaintiff is a first or third-party claimant with
regard to both common law and UTPA bad faith claims. See
Dorsey, 753 S.E.2d at 98; Loudin, 716 S.E.2d at 702-03. The
court’s determination in the UTPA context that Slone fits the
Insurance Commissioner’s first-party claimant definition and
does not fit the third-party claimant definition accordingly
applies equally in the context of a common law bad faith
analysis.

The court concludes that Slone is not precluded from
asserting a common law bad faith claim. And inasmuch as she may
assert a UTPA bad faith claim as well, the court will not
dismiss any bad faith claim asserted against the defendants on
the basis that she is a third-party claimant.

The defendants offer a conclusory argument for
dismissal of the fraud claim, asserting only that the “claim for
fraud (Count III) similarly must be dismissed as it arises out
of the claims-handling process of Plaintiff’s claim for medical

31
payments under the policy.” ECF No. 4, at 8; ECF No. 7, at 5
(same). They do not expound on this point in any manner, and
inasmuch as their argument appears to hinge on the success of
their arguments attacking the bad faith claims, the court
declines to dismiss the fraud claim for failure to state a
claim.

B. Insufficient Service of Process

The court turns to the defendants’ argument
challenging service of Mask and Lenthe. Specifically, the
defendants argue that West Virginia Rule of Civil Procedure
4(d)(1)(D) “permits service of process by certified mail
restricted to the addressee” but that “service was not
restricted to the addressee as it was delivered to State Auto’s
corporate address where neither Defendant Mask nor Defendant
Lenthe reside.” ECF No. 4, at 8-9 (emphasis in original).

Slone responds that the defendants have waived
objection to service of process by entering an appearance and
removing the action to this court. ECF No. 6, at 5. She also
argues that Rule 4(d)(1)(D) “does not distinguish whether []
service must be made at [a d]efendant’s dwelling or place of

32
business, only that it be made to the individual,” and that
service was made to Mask and Lenthe as individuals at their
place of business inasmuch as they are employees or agents of
State Auto. Id. at 5-6. Further, Slone states that the
defendants concealed Mask and Lenthe’s whereabouts and that the
Insurance Commissioner’s website had no information that would

indicate that they “could be served other than through their
employer’s main office in Columbus, Ohio.” Id. at 6.
As to the waiver issue, Federal Rule of Civil
Procedure 12(h)(1) provides for the waiver of a Rule 12(b)(5)
defense under certain circumstances, including when the defense
is not raised in a motion prior to the filing of a responsive

pleading or in a responsive pleading. However, as this court
has observed, “[a] party who removes an action from a state to a
federal court does not thereby waive any of his Rule 12(b)
defenses or objections.” Corbitt v. Air Prods. and Chems.,
Inc., No. 6:07-cv-00200, 2007 WL 9718736, at *1 (S.D. W. Va.
Aug. 31, 2007) (citing Freeman v. Bee Mach. Co., 319 U.S. 448,
451 (1943)).

33
In this case, the defendants actually raised the
service of process issue in the notice of removal and raised it
in the pending motion prior to the filing of any responsive
pleading. Inasmuch as the action of removal does not waive a
Rule 12(b)(5) defense, the court concludes that the defendants
have not waived their objections to service of process.

The court next turns to the validity of the service
itself. The exact date of purported service on Mask and Lenthe
is not entirely clear from the record. But the relevant
summonses are each dated April 16, 2019, and the state court
record documents two unspecified returns received on May 3,
2019. Inasmuch as the case was removed to this court on May 24,

2020, the court concludes that the purported service occurred
while the case was before the Circuit Court of Mingo County and
that West Virginia law should therefore guide the service
analysis. See, e.g., McCoy, 858 F. Supp. 2d at 651-52 (“State
law governs whether service of process is properly effected if
attempted prior to removal.”) (citing Brazell v. Green, 67 F.3d
293, 1995 WL 572890 (4th Cir. 1995) (unpublished table opinion);
Wolfe v. Green, 660 F.Supp.2d 738, 745-46 (S.D. W. Va. 2009)).

34
West Virginia Rule of Civil Procedure 4(d)(1)(D)
provides that service may generally be made on an individual by
“[t]he [county] clerk sending a copy of the summons and
complaint to the individual to be served by certified mail,
return receipt requested, and delivery restricted to the
addressee.” When considering the “delivery restricted to the

addressee” language of the rule, courts tend to focus on whether
there was an indication in the mailing that delivery was
restricted to the addressee and whether the return was actually
signed by someone other than the individual to whom delivery
should have been restricted. See, e.g., Van Wagner v. Snow, No.
11–1131, 2012 WL 3115957, at *1 n. 1 (W. Va. July 3, 2012)
(memorandum opinion) (noting in the context of Rule 4(d)(1)(D)
that the “Restricted Delivery?” spaces on certified mail cards
for the purported service of process on respondents were not
marked); State ex rel. Farber v. Mazzone, 584 S.E.2d 517, 522
(W. Va. 2003) (concluding that service was defective under Rule

4(d)(1)(B), a prior version of the rule at issue here which
contained the same “delivery restricted to the addressee”
language, where the temporary secretary of the defendant signed
the return receipt).

35
Although the summonses themselves are before the court
and the state court docket sheet record appears to indicate that
the mailings to Mask and Lenthe were supposed to be restricted
to the addressee, neither party has supplied the actual
certified mail receipts or returns that might demonstrate
whether delivery was actually marked as restricted to the

addressees. And although the state court record documents that
two certified mail returns were docketed May 3, 2020, Slone has
not shown who signed these returns. It seems likely that some
other State Auto employee inappropriately accepted service on
Mask and Lenthe’s behalf at State Auto’s Columbus headquarters
inasmuch as these defendants are individuals who allegedly
reside in Tennessee and Minnesota, respectively. See Jordan-El
v. White, No. 3:16-cv-04328, 2016 WL 6514163, at *4 (S.D. W. Va.
Oct. 7, 2016) (“Nothing in . . . West Virginia Rule of Civil
Procedure 4 permits service to be accomplished by delivering the
summons and complaint to a random employee at the home office of

a defendant’s employer.”). Inasmuch as the plaintiff bears the
burden of proving sufficiency of service and she has not done
so, these points alone may compel a finding of ineffective
service.

36
But regardless of such evidentiary issues, the
plaintiff’s other arguments, taken at face value, are also
unavailing. Slone’s arguments concerning the unavailability of
information regarding Mask and Lenthe’s whereabouts ignore the
possibility of service by other methods under West Virginia law,
in particular, the long-arm statute, which contains provisions
accounting for the inability to serve process via certified
mail. See W. Va. Code § 56-3-33(c). Additionally, it isa
plaintiff’s responsibility to effect service under Rule 4, and
it therefore does not fall on the defendants to provide their
addresses to Slone. See W. Va. R. Civ. P. 4(c) (1).

Accordingly, the court finds that Mask and Lenthe were
not properly served with process. Where the first attempt at
service is ineffective, “the appropriate remedy under the
circumstances [is] to quash the service of process” rather than
dismiss the relevant claims under Rule 12(b) (5). McCoy, 858 F.
Supp. 2d at 653 (citing Vorhees v. Fischer & Krecke, 697 F.2d
574, 576 (4th Cir. 1983); Bailey v. Boilermakers Local 667 of
Int’l Bhd. of Boilermakers, 480 F. Supp. 274, 278 (N.D. W. Va.
1979)); see also Federal Rule of Civil Procedure 4(m). Thus,
the purported service of process is quashed, and insofar as the

37

motion requests dismissal of Mask and Lenthe on service grounds,
the motion is denied without prejudice.

IV. Conclusion
Based on the foregoing, it is ORDERED that:

1. The defendants’ motion (ECF No. 3) be, and it
hereby is DENIED. The Rule 12(b)(6) arguments are denied with
prejudice. The Rule 12(b)(5) arguments concerning service of
process are denied without prejudice.

2. The attempted service of process on Mask and
Lenthe be, and it hereby is, QUASHED.
3. Slone is directed to properly serve Mask and
Lenthe within thirty days from the date of this memorandum
opinion and order. Unless service of process has been obtained

by that date, or the plaintiff shows by that date just cause for
failure to effect service within the thirty-day period, Mask and
Lenthe shall be dismissed for failure to effect service of
process.

38
The Clerk is directed to forward copies of this
memorandum opinion and order to all counsel of record and any
unrepresented parties.

ENTER: January 19, 2021

De,
Jo . Copenhaver, Jr.
Senior United States District Judge

39

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10729466. Public record. Not legal advice.