by Sarah Davenport | Dec 14, 2017 | Blog News, Publications
In Alex Jones et al. v. St. Paul Fire & Marine Ins. Co., et al., Nos 15-35856 & 16-35160, 2017 WL 6333768 (9th Cir. Dec. 12, 2017) (unpublished), the Ninth Circuit Court of Appeals held that claims against a Washington municipal risk pool, WRCIP, for breach of contractual and extra-contractual duties had no merit. Among other things, the Ninth Circuit held that the municipal risk pool was not an “insurer” under Washington law and, in fact, was a co-insured with the risk pool members under an insurance policy issued by St. Paul & Marine Insurance Company (“St. Paul”). Accordingly, any dispute that the plaintiffs had over insurance coverage was with St. Paul and not with the risk pool:
WRCIP is not an insurer but an insured, and it satisfied its duties under its contract with St. Paul when it paid the self-insured retention. Any dispute that [plaintiffs] Jones and Vargas have over insurance coverage is therefore with St. Paul and not with WRCIP.
The Ninth Circuit also rejected the plaintiffs’ arguments that the risk pool had extra-contractual duties under Washington insurance law (internal citations omitted):
Jones and Vargas also failed to state other causes of action against WRCIP because they have not plausibly alleged that WRCIP owed them any extra-contractual duties. They acknowledge that the district court was correct in ruling that WRCIP is exempted by Washington statute from the definition of “insurer,” so it does not owe an insurer’s statutory duties.
Jones’s and Vargas’s alternative bases for extra-contractual duties are unpersuasive. WRCIP owes them no common-law fiduciary duties because neither of them (nor their public defense attorneys) “occupie[d] such a relation to” WRCIP “as to justify [them] in expecting that [their] interests will be cared for.” Jones and Vargas also rely on a general preambulatory provision of Washington’s insurance code to suggest that WRCIP owes them duties of good faith related to the general business of insurance. But under Washington law, self-insurance and the payment of self-insured retentions are not insurance, so there is no reason to imply duties on WRCIP from Washington’s insurance law. Even if there were, Jones and Vargas have failed to plead any failure by WRCIP to act in good faith because it paid its self-insured retention, at which point any coverage duties fell to St. Paul.
Accordingly, the Ninth Circuit affirmed the district court’s dismissal of all claims against the risk pool.
One of the plaintiffs also filed suit against Canfield & Associates (“Canfield”), the third-party administrator responsible for the risk pool’s day-to-day administration. In a footnote, the Ninth Circuit explained that its analysis of the claims against the risk pool also governs the claims against Canfield. Thus, the Ninth Circuit agreed with the district court’s dismissal of the claims against Canfield as well.
Authors: Sarah Davenport and Paul Rosner
Disclaimer: The opinions expressed in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Sarah Davenport | Sep 22, 2017 | Blog News, Publications
On September 14, 2017, the Washington Supreme Court held in Arden v. Forsberg & Umlauf, P.S., No. 93207-7, that lawyers who represent insurance companies in coverage disputes may also defend their insureds provided they adhere to the Rules of Professional Conduct.
In the underlying matter, Hartford retained Forsberg & Umlauf P.S. (“Forsberg”) to defend Hartford’s insureds in a civil matter. Forsberg had represented Hartford in other matters but did not disclose this relationship to the insureds or otherwise obtain their informed consent. The underlying case settled, with Hartford paying the entire settlement amount. However, the insureds sued Forsberg for breaches of fiduciary duty and legal malpractice.
The trial court granted summary judgment in favor of Forsberg. The Washington Court of Appeals affirmed. The Washington Supreme Court also affirmed, but on a different basis. After discussing the lawyers’ obligation to disclose actual and potential conflicts of interest under the Rules of Professional Conduct, the Supreme Court found there was no evidence that the insureds suffered any damages.
In its decision, the Washington Supreme Court rejected the argument that a lawyer who represents an insurer is automatically disqualified from representing the company’s insureds. Thus, lawyers are not precluded from representing both an insurance company and its insured; however, lawyers must follow the Rules of Professional Conduct including obtaining informed written consent from both clients when required.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Sarah Davenport | Dec 2, 2016 | Blog News, Publications
On November 30, 2016, the Oregon Court of Appeals upheld the application of an anti-assignment clause in an insurance policy where the assignment arose from the insurer’s refusal to defend or indemnify rather than from a judgment against the insured. In doing so, the Court of Appeals addressed the effect of ORS 31.825 on the anti-assignment clause.[1]
In Clinton Condo. Owners Assn. v. Truck Ins. Exchange, 282 Or App 484 (2016), Clinton Condominium Owners Association (“Association”) sued a window washing company, We Do Windows, Inc., for negligence and breach of contract. We Do Windows was insured by Truck Insurance Exchange, which declined to defend or indemnify We Do Windows. We Do Windows assigned its claims against Truck Insurance Exchange to the Association as part of a settlement. The Association then filed this action. Truck Insurance Exchange brought a summary judgment motion, which the trial court granted on the basis that the anti-assignment clause provided that an insured could not assign any rights or claims under the policy without consent from the insurer, and that an anti-assignment clause was not rendered unenforceable by ORS 31.825. The Association appealed.
The Oregon Court of Appeals cited Brownstone Homes Condo. Assn. v. Brownstone Forest Hts., 358 Or 223, 363 P3d 467 (2015), to hold that ORS 31.825 is limited to “allowing an insured to assign excess judgment claims.” It reasoned that, because the assigned claims brought by the Association arose from Truck Insurance Exchange’s refusal to defend or indemnify We Do Windows, and not from a judgment against We Do Windows, the anti-assignment clause applied and the trial court rightly granted summary judgment dismissing the action for lack of standing.
[1] ORS 31.825 provides that “[a] defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the cause of action against the insurer unless the assignment specifically so provides.” (Emphasis added).
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision both during the claims handling process and after an allegation of bad faith claims handling has been made.
Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Sarah Davenport | Dec 12, 2015 | Blog News, Publications
On December 10, 2015, the Washington Supreme Court affirmatively answered the following certified questions from the United States District Court for the Western District of Washington:
- Does the Washington Consumer Protection Act (“CPA”) create a cause of action for a plaintiff residing outside Washington to sue a Washington corporate defendant for allegedly deceptive acts?
- Does the Washington Consumer Protection Act create a cause of action for an out-of-state defendant for the allegedly deceptive acts of its in-state agent?
The Plaintiff, Sandra C. Thornell, in this putative class action lawsuit is a Texas resident. Ms. Thornell’s son was involved in a car accident in Texas, and the other motorist was insured by State Farm Mutual Automobile Insurance Company (“State Farm”), a corporation with its principal place of business in Illinois. State Farm paid for the damages to its insured’s vehicle, and then pursued Ms. Thornell for an unliquidated claim based on subrogated interest from its insured. Ms. Thornell alleged that she received three deceptive debt collection letters from Seattle Service Bureau Inc. (SSB), a corporation with its principal place of business in Washington, pursuant to the referral of unliquidated subrogation claims to SSB by State Farm.
The Washington Supreme Court answered both questions in the affirmative. Addressing Question 1, the Supreme Court noted that the CPA provides “‘[a]ny person’ can sue for a violation”, “‘[c]ommerce’ includes ‘any commerce directly or indirectly affecting the people of the state of Washington’”, and “the CPA ‘shall be liberally construed that its beneficial purposes may be served’” (emphasis in original). The court stated that a broad reading of this language is appropriate and supported by prior case law, and that it does not matter whether “commerce” is out-of-state if it affects the “people of the state of Washington,” even indirectly. Therefore, the court held “[t]he CPA does allow claims for an out-of-state plaintiff against all persons who engage in unfair or deceptive acts that directly or indirectly affect the people of Washington”.
Addressing Question 2, the Supreme Court gave a brief summary of the general rule of an agency relationship, and concluded that “[t]he ‘fact’ that the principal in this case is an out-of-state entity does not change this. A principal cannot send agents into a state to commit CPA violations in order to avoid liability by virtue of its out-of-state residence.” The Supreme Court clarified that the United States District Court would have to determine whether an agency relationship existed.
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision.
Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
