Insured May Obtain Statutory Attorney Fees Where She Recovered Amount Not Memorialized In a Judgment

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.

Washington’s Insurance Fair Conduct Act Does Not Create an Independent Cause of Action for Violations of Washington Administrative Code Regulations

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.

Washington Court of Appeals Sides with Insurer – No Presumption of Harm in Stipulated Settlement

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.

Oregon Supreme Court Declines to Address Whether Extrinsic Evidence May Be Used To Determine Additional Insured Status, Finding That Allegations In Complaint Were Sufficient to Make this Determination

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.

Oregon Court of Appeals Upholds Application of Anti-Assignment Clause Where Assigned Claim Arises from Insurer’s Refusal to Defend or Indemnify

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.