Justia Washington Supreme Court Opinion Summaries

Petitioner Jennifer Mau was convicted of making false insurance claims. She challenged the sufficiency of the evidence presented against her at trial. Upon review, the Supreme Court found that the State failed to prove the existence of any "contract of insurance" underlying Petitioner's claim. Therefore the Court reversed her conviction. View "Washington v. Mau" on Justia Law

In Washington, a liability insurer unclear of its obligation to defend an insured may invoke a "reservation of rights" defense while it seeks a declaration regarding coverage. The issue before the Supreme Court in this case centered on whether the insurer may unilaterally condition its reservation on making the insured absorb defense costs if a court ultimately determines there is no coverage. The Supreme Court responded in the negative: "we recognize…that an insurer may avoid or minimize its responsibility for defense costs when an insured belatedly tenders a claim and the insurer demonstrates actual and substantial prejudice as a result." View "Nat'l Sur. Corp. v. Immunex Corp." on Justia Law

Petitioner Bruce Cedell lost his home in a fire. After hearing nothing from his insurer for several months, the company threatened to deny coverage and issued an ultimatum to Petitioner to accept one quarter of what the trial court eventually found Petitioner's claims to be worth. Petitioner brought suit alleging bad faith. The company resisted disclosing its claims file, among other things, and Petitioner moved to compel production. After a hearing and a review of the claims file in camera, the trial court granted Petitioner's motion. On interlocutory review, the Court of Appeals held that the attorney-client privilege applied to a bad faith claim by a first party insured, that the fraud exception to the attorney-client privilege required a showing of actual fraud, and that the trial court erred in reviewing Petitioner's claims file in camera because Petitioner had not made a sufficient prima facie showing of fraud. Upon review, the Supreme Court affirmed in part, reversed in part, and remanded to the trial for further proceedings. "In first party insurance claims by insured's claiming bad faith in the handling and processing of claims, other than UIM claims, there is a presumption of no attorney-client privilege. However, the insurer may assert an attorney-client privilege upon a showing in camera that the attorney was providing counsel to the insurer and not engaged in a quasi-fiduciary function. Upon such a showing, the insured may be entitled to pierce the attorney-client privilege. If the civil fraud exception is asserted, the court must engage in a two-step process. First, upon a showing that a reasonable person would have a reasonable belief that an act of bad faith has occurred, the trial court will perform an in camera review of the claimed privileged materials. Second, after in camera review and upon a finding there is a foundation to permit a claim of bad faith to proceed, the attorney-client privilege shall be deemed to be waived. . . . Cedell is entitled to broad discovery, including, presumptively the entire claims file. The insurer may overcome this presumption by showing in camera its attorney was not engaged in the quasi-fiduciary tasks of investigating and evaluating the claim." View "Cedell v. Farmers Ins. Co. of Wash." on Justia Law

The issue before the Supreme Court in this case centered on an insured's duty to cooperate with an insurer's claim investigation. Petitioner John Staples' claim was denied for failing to cooperate, namely failing to submit to an examination under oath (EUO). Petitioner sued the insurer for bad faith and related causes of action; the trial court dismissed the case on summary judgment. Upon review of the record, the Supreme Court concluded that genuine issues of fact still existed and made summary judgment inappropriate in this case. Accordingly, the Court reversed and remanded the case for further proceedings. View "Staples v. Allstate Ins. Co." on Justia Law

The issue in this case concerned a challenge to a trial court's order denying a motion to compel arbitration of an insurance coverage dispute. James River Insurance Company issued two "surplus line" insurance policies under which the Washington State Department of Transportation (WSDOT) claimed coverage. James River sought to compel arbitration of the coverage dispute pursuant to the insurance policies' arbitration clauses. WSDOT opposed arbitration and filed a motion for declaratory judgment, arguing that the arbitration clauses are unenforceable under RCW 48.18.200(1)(b), which prohibits insurance contracts from "depriving the courts of this state of the jurisdiction of action against the insurer," and under RCW 48.15.150(1), which requires that "an unauthorized insurer must be sued in the superior court of the county in which the cause of action arose." In addition, WSDOT argued that the McCarran-Ferguson Act (15 U.S.C. 1012), shields the statutes from preemption by the Federal Arbitration Act (9 U.S.C. secs. 1-14). The trial court agreed with WSDOT and denied James River's motion to compel arbitration. James River appealed and the Supreme Court granted direct review. The Court affirmed: "RCW 48.18.200(1)(b) is not merely a forum selection provision as James River maintain[ed], but rather a provision prohibiting binding arbitration agreements in insurance contracts. As such, we hold that this provision regulates the 'business of insurance' because it is aimed at protecting the performance of an insurance contract by ensuring the right of the policyholder to bring an action in state court to enforce the contract." The Court concluded that RCW 48.18.200(1)(b) was shielded from preemption by the FAA under the McCarran-Ferguson Act. View "Dep't of Transp. v. James River Ins. Co." on Justia Law

When an insured defendant believes its insurer is refusing to settle a plaintiff's claims in bad faith, the insured can negotiate an independent pretrial settlement with the plaintiff, typically involving a stipulated judgment, a covenant not to execute the judgment, and an assignment of the insurer's bad faith claim to the plaintiff (collectively, a "covenant judgment). When accepted by the trial court, the settlement amount becomes the presumptive measure of damages in the later bad faith action. The issue on appeal to the Supreme Court concerned whether article I, section 21 of the Washington Constitution entitles the insurer to have the reasonableness of the covenant judgment determined by a jury. Upon review, the Supreme Court held that it does not, and affirmed the trial and appellate courts. View "Bird v. Best Plumbing Grp., LLC" on Justia Law

The issue before the Supreme Court in this case was whether particular officers and employees of a bank owed a quasi-fiduciary duty to particular bank depositors. Michael and Theresa Annechino deposited a large amount of money at a bank specifically to ensure that their savings would be protected by the Federal Deposit Insurance Corporation (FDIC). The Annechinos relied on bank employees’ recommendations of how to structure their accounts to meet FDIC coverage rules. Unfortunately, the bank went into receivership, and the FDIC found that nearly $500,000 of the Annechinos’ deposits were not insured. The Annechinos alleged that individual officers and employees of the bank owed them a duty, the breach of which resulted in their loss. The trial court granted summary judgment in favor of the individual defendants, and the Court of Appeals affirmed. Upon review, the Supreme Court affirmed the Court of Appeals. The officers and employees of the bank did not owe the Annechinos a quasi-fiduciary duty. Holding the officers and employees personally liable under these facts would have contravened established law regarding liability for acts committed on behalf of a corporation or principal. View "Annechino v. Worthy" on Justia Law

This case involved the proper interpretation of a "resulting loss" clause in an all-risk insurance policy. It also provided an opportunity to clarify application of the efficient proximate cause rule. The Court of Appeals overturned a jury verdict in favor of the insured, reasoning that the resulting loss clause did not apply in the absence of a secondary covered peril that proximately caused the loss. The court remanded for a jury determination as to the efficient proximate cause of the insured's loss, holding that if the efficient proximate cause was not itself a covered peril, then the policy did not provide coverage. Upon review, the Supreme Court reversed the Court of Appeals. Because the loss at issue was not excluded under the policy, coverage exists under the ensuing loss provision. And, because there is no rule of law excluding coverage under an efficient proximate cause analysis, and the insurer was precluded from changing the ground for its denial of coverage, there is no basis for a jury to determine the efficient proximate cause of the loss. Accordingly, the Court reinstated the judgment of the trial court. View "Vision One, LLC v.. Phila. Indem. Ins. Co." on Justia Law

The supports for the deck system at Respondents Max and Krista Sprague's house rotted out due to improper construction techniques exposing the supports to the elements. Their claim for homeowners' insurance coverage was denied due to exclusions for rot and defective construction. The trial court granted summary judgment to their insurer, Safeco Insurance Company of America. The Court of Appeals reversed, finding that the ensuing loss provision provided coverage for the otherwise excluded losses. Upon review, the Supreme Court concluded that the homeowners policies in this case excluded coverage for both rot and defective construction, the deterioration of Respondents' deck were not covered conditions. The Court reversed the Court of Appeals and reinstated the judgment of the trial court. View "Sprague v. Safeco Ins. Co. of Am." on Justia Law

In this appeal the Supreme Court was asked to determine whether the parties' indemnity agreement clearly and unequivocally indemnified the Snohomish County Public Transportation Benefit Area Corporation (doing business as Community Transit) for losses resulting from its own negligence. Upon review, the Court concluded that the language of the agreement, and in particular language providing that indemnity would not be triggered if losses resulted from the sole negligence of Community Transit, clearly and unequivocally evidenced the parties' intent that the indemnitor, FirstGroup America, Inc. (doing business as First Transit) indemnify Community Transit for losses that resulted from Community Transit's own negligence. The Court reversed the Court of Appeals' decision to the contrary and remanded the case to the trial court for further proceedings. View "Snohomish County Pub. Transp. Benefit Area Corp. v. FirstGroup Am., Inc." on Justia Law