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Hinkle v. Matthews

United States District Court, S.D. West Virginia, Charleston

March 25, 2019

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


          John T. Copenhaver, Jr. Senior United States District Judge.

         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, 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 Hinkle[1] 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 $4 95.00, 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 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." Plaintiff's Mem. in Opposition, "ECF # 77," Ex. B, 3. 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 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. Am. Compl. ¶ 29; ECF # 73, Ex. E. 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 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]

         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 ...

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