Washington Supreme Court Weighs in on the Cooperation Clause

Staples v. Allstate Insurance Co., __ Wn.2d __, __P.3d ___,  2013 WL 25887 (January 24, 2013)

The insured, whose insurance claim was denied for failure to cooperate, brought action against his homeowners’ insurer, alleging breach of contract, bad faith, and violation of the Insurance Fair Conduct Act (IFCA).  In the trial court, summary judgment was entered for the insurer, and the insured appealed. The Court of Appeals affirmed, and appeal was taken to the Washington Supreme court who then reversed.

The insured, John Staples (“Staples”) had his van stolen from a parking lot.  In the van, Staples had stored a large collection of tools.  When staples reported the theft to the police, he stated that the tools were worth approximately $15,000, and that his van was a “work truck” that was absically a “mobile workshop” for his business.  Two weeks later, Staples submitted a claim for the theft loss under his homeowner’s policy issued by Allstate.  Staples told Allstate that the tools were worth between $20,000 and $25,000 and were for his personal use although they could be used for work.

Based on Staples’ inconsistent statements to the police and the insurer, Allstate transferred staples claim tot he special investigation unit, which in turn requested that Staples provide information proving ownership of the tools, a sworn proof of loss and other documents.  Allstate also recorded two statements from staples, neither of which was under oath.  Over the next couple of months Staples failed to provide the requested information  despite repeated written requests from Allstate.  Three months later, Staples submitted a sworn proof of loss, and in response, Allstate requested an examination under oath (“EUO”) and further documents.  When the documents were not provided, Allstate cancelled the EUO and stated that it would reschedule the EUO and requested that Staples contact Allstate to reschedule the EUO.

Staples hired an attorney that began making allegations of IFCA violations and accusing Allstate of making burdensome and vexatious requests.  Staples did not attempt to reschedule his EUO or provide the documents that Allstate had requested.  After giving Staples several extensions in which to comply with the EUO and document demands, and staples failure to do so, Allstate denied the claim.  Staples instituted coverage litigation and Allstate moved for summary judgment based on Staples’ failure to cooperate.

3. What You Must Do After A Loss

In the event of a loss to any property that may be covered by this policy, you must:

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d) give us all accounting records, bills, invoices and other vouchers, or certified copies, which we may reasonably request to examine and permit us to make copies.

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       f) as often as we reasonably require:

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2) at our request, submit to examinations under oath, separately and apart from any other person defined as you or insured person and sign a transcript of the same.