State of West Virginia ex rel. Safe-Guard Products International, LLC v. Thompson

In 2006, Mr. and Mrs. Hinkle purchased a new vehicle from a dealership in West Virginia. The Hinkles financed more than $19,000 of the vehicle’s purchase price through Santander Consumer, USA. When they purchased the vehicle, the Hinkles also purchased guaranteed-asset-protection (GAP) insurance from the car dealer to cover any payments they might owe if the vehicle were ever declared a total loss following an accident and the value assigned was less than the amount owed. The GAP insurance was serviced by Safe-Guard Products International, LLC (defendant), who would pay the balance owed on a covered vehicle directly to the note holder following the vehicle’s total loss and based on a claim filed by the insurance holder. In 2011, Mrs. Hinkle had a car accident, and her covered vehicle was declared a total loss. The Hinkle’s insurance company paid the actual cash value of the vehicle to Santander, leaving the Hinkles owing a balance of more than $7,000 on the note. Mrs. Hinkle submitted a claim for the balance owed to Safe-Guard. However, Safe-Guard declined coverage due to the Hinkle’s history of late and deferred payments on the vehicle. Mrs. Hinkle filed suit against Safe-Guard in a state circuit court, alleging breach of contract and bad faith. Subsequently, Mrs. Hinkle filed a motion for partial summary judgment on the issue of whether the GAP insurance constituted insurance under West Virgnia law. The circuit court found that the GAP insurance was insurance, and Safe-Guard sought a writ prohibiting the enforcement of the summary-judgment order.