by sohalang | Dec 23, 2011 | Blog News, Uncategorized
Yesterday, a 5-4 majority of the Washington Supreme Court held that certain auto insurance policies issued by Farmers Insurance Company of Washington required the company to pay for post-accident diminished value of repaired vehicles. The case arose out of a November 1998 automobile accident in which David Moeller’s Honda Civic CRX was damaged. Farmers paid the cost to repair the vehicle. Moeller acknowledged that the repairs were complete and acceptable. However, in May 1999, Moeller brought a class action breach of contract lawsuit against Farmers for failing to pay for the vehicle’s diminished value.
Our Supreme Court acknowledged that a majority of other jurisdictions have previously denied coverage for diminished value because an automobile policy’s reference to “repair or replace” unambiguously encompasses only a concept of tangible, physical value. Nevertheless, the Supreme Court disagreed with this view, noting that “the majority view’s framework ignores important presumptions in favor of the insurance consumer that are inherent in the rules of construction regarding insurance contracts.”
The court explained that the policy must be construed as the average person would read it. Through this lens, the majority held, a reasonable consumer looking at the relevant policy language would expect to be placed in the same position he/she was in prior to the accident.
The court also held the class was properly certified despite the difficulty of determining damages.
by Soha Lang | Sep 23, 2011 | Blog News, Uncategorized
On September 20, 2011, the Washington Court of Appeals held that the insurer of a condominium association could not subrogate against a tenant of a unit owner to recover funds paid for a fire loss. Community Ass’n Underwriters of America, Inc. v. Kalles, 2011 WL 4357763 (Wash. App. 2011). The court reasoned that the tenant was presumed to be a coinsured of the landlord absent an express agreement to the contrary. In reaching this result, the court rejected the insurer’s argument that the presumption of coinsured status should not attach because the insurer issued its policy to the owners association and not to the unit owner that was in privity with the tenant. The Court of Appeals also held that the tenant was entitled to recovery of the attorney fees it had incurred in defending the lawsuit under Olympic Steamship v. Centennial Insurance Co.
Insurance Coverage and Ligitagation
by sohalang | Jul 7, 2011 | Blog News, Uncategorized
On July 5, 2011, Division 1 of the Court of Appeals of Washington held there was sufficient evidence for a jury to find that an insurer’s pre-suit claims handling constituted bad faith despite the fact that the insurer subsequently tendered policy limits after the plaintiff filed suit. Moratti v. Farmers Ins. Co. of Washington, 2011 WL 2611763 (2011).
by Soha Lang | Jun 10, 2011 | Blog News, Uncategorized
In Stuart v. Pittman, 2011 WL 2162919 (Or 2011), the insured was a homeowner who contracted with a builder to construct a house at his farm. The insurer’s agent orally agreed to bind first-party course of construction insurance for the insured in August 2003; the policy itself was not delivered until March 2004. In the meantime, the house was damaged: It was framed but not enclosed, and snow and ice built up inside of it, causing the interior sheathing to split, the accumulation of water in the crawl space, and a large amount of mold. The insured had relied on the agent’s oral assurance of coverage and as a result did not require the builder to carry a performance bond or liability insurance. The insured sued the builder for faulty workmanship and obtained a judgment; however, because the builder was insolvent, the insured was unable to collect on the judgment. The insured then sued his own insurer and the insurer’s agent. The insured claimed that the insurer’s agent had issued an oral binder for a course of construction policy that eliminated the usual provisions such as, for example, exclusions for damage caused by mold and by faulty workmanship. The Court of Appeals reversed a verdict in favor of the insured, finding that the insured had failed to prove that the usual policy terms of a course of construction policy were superseded by the “clear and express” terms of the binder as required under ORS 742.043. On further review, the Oregon Supreme Court reversed the Court of Appeals and reinstated the verdict. The Oregon Supreme Court reasoned that the terms of the binder could supersede the usual policy terms under the statute and that the insured had met the statute’s “clear and express” requirement. Separately, the Oregon Supreme Court also held that that the insured could obtain attorney fees under ORS 742.061 based on an oral binder.
by Soha Lang | May 25, 2011 | Blog News, Uncategorized
In Strawn v. Farmers Ins. Co. of Oregon, S057520 (May 19, 2011), the Oregon Supreme Court reinstated an $8 million punitive damages judgment that the Oregon Court of Appeals had overturned.
In this case, the insurer used cost-containment software to evaluate its insureds’ medical expenses for personal injury protection (PIP) claims. If the insurer determined that the charge submitted by an insured’s provider exceeded a set percentage of the normal range, the insurer refused to pay the excess on the ground that it was “unreasonable.” Plaintiff filed a class action as the representative of a class who alleged that the insurer’s review process set an arbitrarily low percentage (initially, 80 percent) that resulted in the denial of claims for reasonable medical expenses. Following a jury trial, the trial court entered a judgment against the insurer for approximately $900,000 in compensatory damages and $8 million in punitive damages. The Court of Appeals reduced the punitive damages award, holding that it violated Due Process. The Supreme Court then accepted review.
Before the Supreme Court, the insurer contended that the trial court had court “cut off” its ability to rebut the reasonableness of the plaintiff’s medical expenses by excluding evidence that it, e.g., reimbursed plaintiffs in an amount that represented their reasonable medical expenses. The Supreme Court declined to reach the merits of the argument, holding that the insurer had failed to raise it below. Next, the insurer contended that it was entitled to a directed verdict on the plaintiffs’ fraud claim, contending that the plaintiffs had failed to offer direct proof of individualized reliance. The Supreme Court rejected the argument, holding that, on the facts presented, reliance could be inferred from circumstantial evidence. In particular, reliance could be inferred because the claims were based on a uniform provision in motor vehicle insurance required for drivers under Oregon’s financial responsibility laws. Finally, the Supreme Court reversed the Court of Appeals and reinstated the $8 million punitive damages claim, holding that the insurer had failed to properly preserve error. Following the verdict, the insurer had moved for a remittitur and for new trial. The trial court declined to reduce the punitive damages award on both procedural grounds (because the insurer’s motions were insufficient to challenge the verdict) and substantive grounds. The Supreme Court held that while the insurer had properly appealed the substantive basis for the trial court’s ruling, the insurer had failed to appeal from the trial court’s procedural basis and, therefore, had had waived any error.
Justice Balmer dissented.
by Soha Lang | May 21, 2011 | Blog News, Uncategorized
In Morgan v. Amex Assur. Co., 2011 WL 1878607 (Or App 2011), the insured obtained automobile insurance when she was living in Vancouver, Washington. The insurer issued a Washington insurance policy and delivered it to the insured’s Vancouver address. The insured made an underinsured motorist claim under her policy. After the insurer failed to accept coverage or tender payment, the insured filed suit. The insured accepted a pretrial offer of judgment that included “any costs and attorney fees to which plaintiff may be entitled.” The Court of Appeals held that the insured was not entitled to any attorney fees under ORS 742.061. It reasoned that attorney fees were unavailable based on a second statute, ORS 742.001, that limits the scope of Chapter 742, including ORS 742.061, to “insurance policies delivered or issued for delivery in this state.” The insured’s policy did not satisfy this second statute because it was issued and delivered in Washington.
