UIM suit dismissed against carrier

Where an uninsured motorists, or UIM, carrier’s obligation arises only after judgment is entered against a tortfeasor, and the complaint here did not allege any judgment was entered against a tortfeasor, it was dismissed.

Background

Jacqueline Johnson brings breach of contract and breach of good faith and fair dealing claims against Nationwide Mutual Insurance Company and Nationwide Property and Casualty Insurance Company. Defendants have filed a motion to dismiss.

Breach of contract

A UIM carrier’s obligation “‘arises only if it is determined that the insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle,’” and “‘[j]udgment is the event which determines legal entitlement to recovery.’”

Plaintiff’s amended complaint seeks recovery under two Virginia UIM policies, but plaintiff nowhere alleges that any judgment was entered against a tortfeasor to establish an enforceable UIM claim. Thus, plaintiff’s UIM claim is meritless and must be dismissed. Moreover, even if such a claim could be brought, plaintiff’s claim is barred by the statute of limitations.

Good faith and fair dealing

Count Two is based only in an alleged breach of good faith and fair dealing. Virginia does not recognize an independent cause of action for bad faith. “Virginia Code § 38.2-209 provides that an insured may recover costs and reasonable attorney fees if the insurer’s failure or refusal to provide coverage was not in good faith,” but this statute “does not create a separate and independent cause of action for bad faith.” And plaintiff sets forth no statutory, common law or other duty that could create a plausible cause of action against the defendants as alleged in Count Two.

Plaintiff unpersuasively argues that this claim should survive because, though Virginia does not recognize breach of implied warranty of good faith and fair dealing as a separate action, Virginia recognizes that breach of the implied warranty of good faith and fair dealing gives rise to an action for breach of contract. But the Fourth Circuit has recognized that “in Virginia, as elsewhere, [] although the duty of good faith does not prevent a party from exercising its explicit contractual rights, a party may not exercise contractual discretion in bad faith, even when such discretion is vested solely in that party.”

So an implied breach of good faith and fair dealing claim cannot be properly pled if a plaintiff seeks redress for an implied covenant claim “merely for Defendant’s unfavorable exercise of its explicit contractual rights.” Here, the facts alleged do not support that defendants exercised contractual discretion in bad faith.

Defendants’ motion to dismiss granted.

Johnson v. Nationwide Mutual Insurance Co., Case No. 6:22-cv-78, May 22, 2023. WDVA at Lynchburg (Moon). VLW 023-3-274. 8 pp.