by Jennifer Dinning | Jul 27, 2017 | Blog News, Publications, Uncategorized
In Swank, et al. v. Valley Christian School et al., ___ Wn.2d ___, ___ P.3d ___ (July 6, 2017), the Washington Supreme Court held that the Lystedt law (RCW 28A.600.190) creates an implied cause of action. The 2009 Lystedt law requires that 1) schools develop a concussion and head injury information sheet; 2) youth athletes be removed from play on suspicion of sustaining a concussion or head injury; and 3) youth athletes removed from play may not return without written clearance from a health care provider.
Andrew Swank (Drew) was a student at Valley Christian School, a non-profit religious school in Spokane, WA. In 2007, a parent, Jim Puryear, approached Valley Christian and offered to start a football team. Valley Christian accepted and Puryear began coaching as an unpaid volunteer. Valley Christian developed a concussion information sheet (CIS) and Coach Puryear distributed the CIS to parents at the beginning of the 2009 season. Coach Puryear discussed the CIS with parents and Drew and his mother both signed the CIS.
On September 18, 2009, Drew was hit hard on the head during a football game. The Swanks live in Idaho and took Drew to his primary care physician in Idaho – Dr. Burns. Dr. Burns examined Drew in Idaho. Two days later, Dr. Burns wrote a note for Drew at his mother’s request.
Drew played football the next day. Though he initially played well, his performance declined sharply during the game. Drew appeared sluggish and confused and was slow to respond. Drew was hit by an opposing player during the game, staggered to the sidelines, and collapsed. He died two days later.
The Swanks sued Valley Christian, Coach Puryear, and Dr. Burns. The trial court granted summary judgment against the Swanks. The Court of Appeals affirmed the trial court on all but the Swanks’ negligence claim against Valley Christian. The Washington Supreme Court reversed the trial court decision, except as regards Dr. Burns.
The Court applied the Bennett test to determine whether the Lystedt law provides an implied cause of action. The Court found that all three elements of the Bennett test were met: 1) Drew is a member of the class protected by the statute; 2) the legislative history showed support for a remedy; and 3) an implied cause of action is consistent with the purpose of the statute. Having found that the Lystedt law includes an implied cause of action, the Court further held that the requirements in RCW 28A.600.190(2), (3), and (4) include duties which can support a claim.
The Court found that the Swanks’ claims against Valley Christian and Coach Puryear may proceed, but that the Washington Courts lacked personal jurisdiction against the Idaho physician, Dr. Burns.
The Washington Supreme Court remanded the matter with instructions to reinstate the Swanks’ claims against Valley Christian and Coach Puryear.
by Jennifer Dinning | Jul 26, 2017 | Blog News, Publications, Uncategorized
In Smelser v. Paul, et al, ___ Wn.2d ___, ___ P.3d ___ (July 6, 2017), the Washington Supreme Court found that, under the parental immunity doctrine, parents owe no duty of care to their children, and on that basis, fault for negligence cannot be apportioned to a parent of the plaintiff under RCW 4.22.070.
Derrick Smelser, then two years old, was run over by a car driven by defendant, Jeanne Paul while playing in his yard. At the trial court level, Ms. Paul was allowed to assert an affirmative defense that the child’s father was partially at fault on a theory of negligent supervision. The trial court instructed the jury under RCW 4.22.070, and the jury determined that the father was 50% at fault. The trial court did not enter judgment against the father because of the parental immunity doctrine.
The Washington Supreme Court found that the common law doctrine of parental immunity in Washington State establishes that there is no tort liability or tort duty applicable to a parent for negligent supervision or negligence in other parenting activities. The Washington Supreme Court went on to state that, under RCW 4.22.051, in order to be an at-fault entity, the party must have engaged in negligent or reckless conduct that breaches a recognized duty. Because the Court found that parents do not have a recognized duty of supervision of their children, the parents’ conduct is not tortious, and they cannot be an at-fault entity.
Pursuant to this holding, the Washington Supreme Court remanded the matter to the trial court, with instructions to enter judgement for 100% of the damages against Ms. Paul.
by Jennifer Dinning | Jul 10, 2017 | Blog News, Publications
In King County v. Vinci Constr. Grands Projects, et al., __Wn.2d __, __ P.3d __ (July 6, 2017), the Washington Supreme Court was asked to review an award of nearly $15 million in attorney fees against five surety companies following a jury trial for breach of contract in a public works project. In a six to three decision, the Washington Supreme Court ruled attorney fees under Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991) (“Olympic Steamship Fees”), which arguably had been restricted to disputes where an insured is a prevailing party in a lawsuit that is forced by an insurer’s refusal to defend or pay the claim, may be applied in the context of a dispute with sureties on a performance.
In 2006, King County contracted with three construction firms to expand its wastewater treatment system. One of the contractors, VPFK, did not perform its portion of the work by the performance deadline contained in the contract. VPFK had a performance bond that obligated the sureties to step in and “promptly remedy the default in a manner acceptable to [King County],” if VPFK did not perform under the contract.
After King County declared VPFK to be in default, the County requested that the sureties either cure VPFK’s default themselves or agree to fund a new contractor to complete VPFK’s work. The sureties, however, responded that performance was not required under the bond because no breach had occurred.
King County filed suit against VPKF and one of its sureties. VPKF’s other sureties intervened. Together, the five sureties denied coverage and adopted all of VPFK’s defenses against breach of contract. The matter proceeded to trial, and the jury found in favor of King County. As part of the relief awarded after the trial, the court awarded $15 million in Olympic Steamship Fees. Moreover, the trial court held, as a basis for awarding the County all of its legal fees, that it didn’t matter if the fees were incurred in pursuing claims against VPKF or the sureties. Because King County’s claim against the sureties was intertwined and indistinguishable from its claim against VPFK, the county could recover all of its fees under Olympic Steamship.
by Geoff Bedell | May 11, 2017 | Blog News, Publications
In Hunters Ridge Condo. Ass’n v. Sherwood Crossing, LLC, 285 Or App 416 (2017), the insured was a subcontractor on a condominium project. The insured was sued in a construction defect lawsuit. The insured failed to appear, and a default judgment was entered against it. Based on the default judgment, the condominium association (“Association”) filed a garnishment proceeding against the subcontractor’s insurance company. The Court of Appeals first held that the policy’s “Multi-Unit New Residential Construction” exclusion did not apply because the project was mixed use and included both residential and commercial units. Next, the Court of Appeals found issues of fact on whether certain other exclusions could apply, such as the “your work” exclusion. The court then addressed attorney fees that were included in the default judgment. The court held that, to the extent the attorney fees were properly considered consequential damages, they could constitute “damages” within the meaning of the policy. The Court also determined that the award of attorney fees could be “costs taxed against the insured” within the policy’s Supplementary Payments provision. Finally, the court concluded that the insurer was entitled to a jury trial on disputed questions of fact pertaining to its liability under the policy and that the garnishment statute was unconstitutional to the extent it mandated a bench trial.
Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Misty Edmundson | Apr 27, 2017 | Blog News, Publications, Uncategorized
In another example of bad facts make bad law, the Washington Supreme Court, in a six to three decision, ruled that the “efficient proximate cause rule” applies to the interpretation of general liability policies. See Xia v. ProBuilders Specialty Insurance Company RRG, __Wn.2d __, __ P.3d __ (April 27, 2017).
Turning insurance contract construction on its head, the court first analyzed whether an absolute pollution exclusion applied to a bodily injury claim caused by the inhalation of carbon monoxide fumes from an improperly installed water heater. The Court found that the pollution exclusion would preliminarily apply to a bodily injury claim caused by carbon monoxide poisoning, because the pollution exclusion applies when a “pollutant is acting as a pollutant.” The Court reasoned that, “the choice of analysis under Kent Farms versus Quadrant and the antecedent “fumes” cases, Cook and Harbor Insurance, necessarily turns on a determination of whether an occurrence, as defined under the policy, stems from either a traditional environmental harm or a pollutant acting as a pollutant. If the answer to this inquiry is yes, barring any ambiguities in the policy language, courts must apply the plain language of the pollution exclusion to determine whether the exclusion applies to the facts at hand.”
However, the Court then added an additional step to the analysis, and found that the insurer must next determine whether the excluded occurrence is the “efficient proximate cause of the claimed loss.” Thus, it appears that the Court has instituted an additional step in the contract interpretation requirement under general liability policies, at least with respect to “[w]hen a nonpolluting event that is a covered occurrence causes toxic pollution to be released, causing damages.” In this scenario, it appears that the Insurer must first determine whether the insuring clause is satisfied, then determine whether the exclusion applies to prohibit coverage, and then finally determine whether the “efficient proximate cause” of the loss was the direct cause of the excluded damage.
Prior to this decision, the efficient proximate cause rule had only been applied to first party coverage which is generally based on “covered perils.” Nevertheless, the Washington Supreme Court rejected its own precedent and explicitly held that an efficient proximate cause analysis must be undertaken under the terms of general liability policies as well, at least in the context of a pollution claim when the pollution is proximately caused by “a nonpolluting event.”
The Court stressed, “[h]owever, the efficient proximate cause rule applies only ‘when two or more perils combine in sequence to cause a loss and a covered peril is the predominate or efficient cause of the loss.” The Court went to great lengths to distinguish the facts at issue before it with traditional environmental harm cases. The Court reasoned:
ProBuilders contends that application of the efficient proximate cause rule would defeat the exclusion entirely, arguing that all acts of unintentional pollution begin with negligence. This is not so, and application of the rule may be harmonized with Washington’s prior pollution exclusion jurisprudence. In Cook, the initial peril that set in motion the causal chain was the polluting event: the application of a chemical sealant. 83 Wn. App. at 151. Up until the point of using the sealant and creating the toxic fumes, no negligent act had occurred. Rather, the negligence in permitting the fumes to migrate occurred after the fumes had been created intentionally. Id. (“The contractors did not seal off a six-[ ]by eight-foot fresh air intake, which drew air into the building’s HVAC system. [Sealant] fumes entered the building, requiring evacuation.”). Similarly, in Quadrant, the initial peril that set in motion the causal chain was also the application of a chemical sealant, which was toxic even when used as intended. 154 Wn.2d at 168. There were no covered perils prior to the release of a pollutant acting as a pollutant. As such, application of the efficient proximate cause rule in both cases would have led to the same outcome.
The Court found that because the “efficient proximate cause” of the carbon monoxide poisoning was the negligent installation of the hot water heater (which it characterized as a covered event), and not the escape of the carbon monoxide from the heater, that the absolute pollution exclusion would not apply to bar coverage.
Moreover, the Court found that the insurer committed bad faith in not defending its insured because “under the ‘eight corners rule’ of reviewing the complaint and the insurance policy, ProBuilders should have noted that a potential issue of efficient proximate cause existed,” because the complaint alleged negligent installation of the hot water heater. The Court further found that ProBuilders acted in bad faith by failing to conduct an investigation into Washington law (before it denied the claim) “that might have alerted them to the rule of efficient proximate cause and this court’s unwillingness to permit insurers to write around it.”
The ruling in this case has the potential to have a significant impact on the duty to defend and indemnify analysis under general liability policies.
Please feel free to contact Soha & Lang, P.S. to learn more.
by Geoff Bedell | Feb 3, 2017 | Blog News, Publications
The Oregon Supreme Court held in Long v. Farmers Ins. Co. of Oregon, 360 Or 791, – P3d — (2017) that an insured may obtain statutory attorney fees without entry of a judgment. A statute, ORS 742.061, permits an award of attorney fees if, in the insured’s lawsuit against the insurer, the insured obtains a “recovery” that exceeds the amount of any tender made by the insurer within six months from the date that the insured first filed proof of a loss. The Court held that when an insured files an action against an insurer to recover sums owing on an insurance policy and the insurer subsequently pays the insured more than the amount of any tender made within six months from the insured’s proof of loss, the insured obtains a “recovery” that entitles the insured to an award of reasonable attorney fees. The fact that the insured did not obtain a judgment memorializing the payment did not make the statute inapplicable.
Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Jennifer Dinning | Feb 2, 2017 | Blog News, Publications
The Washington Supreme Court held today that violation of Washington Administrative Code (“WAC”) regulations alone does not support a cause of action under the Insurance Fair Conduct Act (“IFCA”) in Perez-Crisantos v. State Farm Fire and Casualty Co., No. 92267-5, with eight justices joining the lead opinion. The Court’s findings included the following:
- IFCA does not state a cause of action for first party insureds “whose claims were processed in violation of the insurance regulations,” but it explicitly lays out a cause of action for first party insureds who are unreasonably denied a claim.
- When the Washington State Voters were presented with the IFCA initiative, the ballot title clearly indicated an intent to create a cause of action for unreasonable denial of coverage, not for regulatory violations. On the whole, the Court concluded that the legislative history suggests that IFCA does not create an independent cause of action for regulatory violations.
- The reading sought by Mr. Perez-Crisantos would render portions of IFCA superfluous.
In reaching this conclusion, the Court agreed with the rationale of prior federal decisions that an independent cause of action based on a WAC violation was not created. Among the decisions cited by the Court was Country Preferred Ins. Co. v. Hurless, 2012 WL 2367073 (W.D. Wash. 2012), in which Soha & Lang, P.S. successfully represented the insurer on this issue.
The litigation between State Farm and Mr. Perez-Crisantos arose from his insurance claim regarding a motor vehicle accident caused by another driver. Mr. Perez-Crisantos made an underinsured motorist (“UIM”) claim with State Farm. State Farm determined that Mr. Perez-Crisantos had been fully compensated, and declined to make further payments under the UIM coverage. Mr. Perez-Crisantos sued State Farm on multiple grounds, including a claim for violation of IFCA. Mr. Perez-Crisantos premised his IFCA claim on, among other things, State Farm’s alleged violation of certain WAC regulations.
This is a fair and reasonable reading of the Insurance Fair Conduct Act and good news for insurers and, in the long run, their customers.
Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Soha Lang | Jan 9, 2017 | Blog News, Publications, Uncategorized
Soha & Lang, P.S. Shareholder Paul Rosner, J.D., CPCU has been selected to Chair the Coverage, Litigators, Educators & Witnesses Interest Group (the “CLEW IG”) of the Institutes CPCU Society for a three year term beginning on January 1, 2017.
The CLEW IG was founded in the 1990s as a home and resource for a diverse segment of CPCU Society members whose professional paths tended toward independence: attorneys representing or counseling insurers or insureds in claims and coverage matters and industry professionals putting their experience and expertise to work as consultants or as witnesses in contested insurance-related matters. When the group formed, the CLEW acronym stood for Consultants, Litigators & Expert Witnesses. Today, those initials stand for Coverage, Litigators, Educators & Witnesses, and CLEW’s members include CPCUs whose emphasis is on technical research and on the development and spread of insurance knowledge in universities and through continuing professional education. CLEW activities include presenting one or more educational programs at the CPCU Society Annual Meeting, which commonly include a “Mock Trial”; publication of articles in CPCU Society publications and other industry journals; and a growing number of webinars through the Society. Participation in these activities provides CLEW members the opportunity to interact with, and to share their technical expertise with, fellow industry professionals.
Paul’s practice focuses on representing insurance companies and risk pools in insurance coverage matters and bad faith litigation in Washington and Oregon. Paul is also a claims handling and bad faith expert with over 15 years of industry experience as a claims professional.
Please feel free to contact Paul if you have questions about the CPCU designation, the CPCU Society, the local PNW (Seattle) Chapter, the CLEW IG, or about insurance coverage issues.
Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Paul Rosner | Dec 14, 2016 | Blog News, Publications
In Mutual of Enumclaw Ins. Co. v. Myong Suk Day; Division I, No. 75633-8-I, the Washington Court of Appeals held that the insured suffered no harm where the plaintiff had fully and unconditionally released its claims against the insured, reversing the trial court’s imposition of coverage by estoppel.
Usually, when an insured enters a stipulated judgment with a covenant not to execute, the insured agrees to a judgment and assigns claims against its insurance carrier to the claimant in exchange for a covenant not to execute on the insured’s other assets. If the insurer has engaged in bad faith while defending under a reservation of rights, then the claimant pursuing the assigned bad faith claim against the insurer may be entitled to a rebuttable presumption of harm and coverage by estoppel.
In this case, however, the insured retained her claims against her insurer and assigned only her claims against her independent insurance agent to the tort plaintiffs. Also, the settlement agreement included language that required the tort plaintiffs to sign a full satisfaction of judgment of their claims against the insured once the assigned claims against the agent were concluded. After the tort plaintiffs settled with the agent, the trial court (in a consolidated action) conducted a reasonableness hearing, concluded that the settlement amount was reasonable, and imposed coverage by estoppel.
In Werlinger v. Clarendon Nat. Ins. Co., 129 Wn. App. 804, 120 P.3d 593 (2005), the Washington Court of Appeals held that an insured could not establish harm where the insured and his spouse were shielded from personal liability by their bankruptcy status and there was no competent evidence that they suffered emotional distress as result of insurer’s actions. Here, relying on Werlinger, the Court of Appeals held that the trial court erred when it imposed the remedy of coverage by estoppel since the insured was legally insulated from any exposure on the agreed judgments because of the settlement provision granting her the right to full satisfaction of the judgments against her, independent of any claims against her insurance carrier.
Article by Paul Rosner and Jennifer Dinning.
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 authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Jennifer Dinning | Dec 9, 2016 | Blog News, Publications
On December 8, 2016, the Oregon Supreme Court upheld the determination of the Court of Appeals holding that plaintiff/respondent West Hills Development Company (“West Hills”) was an insured under a policy of insurance issued by Oregon Automobile Insurance Company (“OAIC”) and was entitled to a defense, but did so on alternative grounds. The Oregon Supreme Court found that there was no question regarding whether West Hills was an additional insured under the policy in question, and questions regarding the duty to defend were properly resolved under the “four corners” or “eight corners” rule..
The underlying lawsuit arose from West Hills’ work as the general contractor for a townhome development in Sherwood, Oregon (“Arbor Terrace”). West Hills hired multiple subcontractors, including L&T Enterprises, Inc. (“L&T”). West Hills was added as an additional insured (“AI”) on L&T’s insurance policy with OAIC. The language of the AI endorsement provides that West Hills is an insured “only with respect to liability arising out of [L&T’s] ongoing operations performed for [West Hills].” The Arbor Terrace homeowners association sued West Hills, alleging that negligence of West Hills’ subcontractors had caused defects which lead to water damage and that West Hills was liable for that negligence due to negligent hiring and supervision. The complaint alleged that damages occurred before the owners purchased their units, but did not provide any further detail regarding timing of damage.
The Court found, contrary to the argument of the parties and the determinations of the lower courts, that the language of the AI endorsement made clear that West Hills was an additional insured under the policy. Accordingly, the Court proceeded under the four corners” or “eight corners” rule, applying the principle that ambiguities in the complaint be resolved in favor of the insured, in order to determine if the duty to defend was triggered. The Court found that, although the complaint did not specifically name L&T or specifically allege that West Hills was liable for the negligence of L&T, the allegations of the complaint presented facts that “reasonably could be interpreted to result in West Hills being held liable for conduct covered by the policy: L&T’s operations for West Hills.” The Court rejected OAIC’s argument that the allegations of the complaint were barred by the “ongoing operations” language in the AI endorsement. The Court noted that the language covers claims “arising from” ongoing operations, and that the complaint’s vague statement did not rule out damage occurring during ongoing operations. Accordingly, the Court found that OAIC had a duty to defend West Hills based on the allegations of the complaint and the language of the insurance policy.
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.
