In a recent decision, the Supreme Court of Appeals of West Virginia concluded that the West Virginia Human Rights Act prohibits discrimination by an insurer in the settlement of a property claim. The full decision can be found here.
The facts of the underlying action giving rise to the instant action originated from the alleged negligence of Appalachian Heating, LLC. Appalachian Heating was hired by the Charleston-Kanawha County Housing Authority to repair and/or replace climate control units in South Park Village, a public housing development located in Charleston, West Virginia. The Plaintiffs, who are African American, resided together in an apartment located in South Park Village. On November 21, 2006, the apartment in which the Plaintiffs resided caught fire, allegedly due to negligence on the part of Appalachian Heating, causing a total loss of the Plaintiffs’ personal property and rendering the apartment temporarily uninhabitable. The defendant in the instant action provided liability insurance coverage to Appalachian Heating.
Following the fire, the insurer settled the Plaintiffs’ claims for $2,500. Thereafter, the plaintiffs commenced the instant action by filing two separate complaints, which were consolidated. Both complaints alleged, inter alia, that the insurer had violated the West Virginia Human Rights Act in settling their claims. The Plaintiffs contended that the insurer did not give their fire loss claim the same opportunity and consideration when evaluating their loss as it extends to persons who are not African American and who do not reside in public housing. Thus, the Plaintiffs argued that the insurer violated the West Virginia Human Rights Act and their cause of action should stand. The insurer filed a motion to dismiss each case, arguing that the Plaintiffs are barred from bringing their Human Rights Act case by a provision of the West Virginia Unfair Trade Practices Act (“UTPA”) that provides the only method for bringing a third-party action against an insurance company based upon its settlement practices.
The Court analyzed whether West Virginia’s Human Rights Act prohibits discrimination in the settlement of a property damage claim, and whether the UTPA precludes a third-party action against an insurer brought under said statute. As a result, the Court held that the West Virginia Human Rights Act prohibits unlawful discrimination by an insurer in the settlement of a property damage claim when the discrimination is based upon race, religion, color, national origin, ancestry, sex, age, blindness, disability or familial status. The Court also found that the UTPA and the Human Rights Act seek to remedy different harms, and no conflict exists between them. Therefore, the prohibition of a third-party law suit against an insurer under the UTPA does not preclude a third-party cause of action against an insurer under the West Virginia Human Rights Act. Accordingly, the action was remanded to the Circuit Court for further proceedings.