Articles Posted in Washington Supreme Court

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. This case concerned a class action insurance claim suit pending in federal court. Plaintiff Brett Durant was a State Farm Mutual Automobile Insurance Company insured, and carried a $35,000 personal injury protection (PIP) rider. In 2012, Durant was injured in a motor vehicle accident; he opened a PIP claim with State Farm. The "coverage letter" advised Durant that "Medical services must also be essential in achieving maximum medical improvement for the injury you sustained in the accident." Durant sought treatment with chiropractor Harold Rasmussen, DC, who diagnosed injuries including sprains to the neck, back, pelvis, and right shoulder. After a shoulder MRI showed a ligament sprain and "a possible small type I SLAP [(superior labral anteroposterior)] tear,"Durant was referred to an orthopedic surgeon who diagnosed"mild bursitis/tendinitis,"which was treated with physical therapy and cortisone injections. Durant's injuries were not resolved by a date set by his physicians; his providers billed his PIP claims, but State Farm denied them on grounds that Durant had "previously reached maximum medical improvement." The federal district court asked the Washington Supreme Court (1) whether an insurer violates WAC 284-30-395(1)(a) or (b) if that insurer denied or terminated an insured's medical benefits based on a finding of "maximum medical improvement;" and (2) whether the term "maximum medical improvement" was consistent with the definition of "reasonable" or "necessary" as those terms appeared in WAC 284-30-395(1). The Washington Court answered the first certified question "yes." With regard to the second question, the Court found that under the circumstances of this case, the term "maximum medical improvement" was not consistent with the terms "reasonable" or "necessary" as those terms appeared in WAC 284-30-395(1). View "Durant v. State Farm Mut. Auto. Ins. Co." on Justia Law

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

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This case presented for the Washington Supreme Court's review claims of breaches of fiduciary duty and legal malpractice against lawyers hired to defend insureds in a civil action where the insurance company provided the defense. The insureds claimed the lawyers failed to disclose potential conflicts of interest based on long-standing relationships the law firm had with the insurance company in not only accepting cases representing insureds in other civil cases, but also representing the insurance company itself in coverage disputes. The insureds also claimed the attorneys failed to advise them of settlement negotiations, and by taking settlement directions from the insurer. The trial court granted summary judgment in favor of the lawyers, finding the insureds failed to establish an actionable breach. The Court of Appeals affirmed. While the Supreme Court disagreed with portions of the appellate court's analysis, it affirmed the result. View "Arden v. Forsberg & Umlauf, PS" on Justia Law

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This case presented for the Washington Supreme Court's review an award of attorney fees against five surety companies following a jury trial for breach of contract in a public works project. The parties litigated the issue of whether three construction firms had defaulted on a contract, thus triggering coverage under a performance bond issued by the surety companies. At issue was whether the existence of a statutory fee provision barred equitable remedies available at common law for coverage disputes and whether the trial court correctly determined that segregation between covered and uncovered fees was impossible. The Court of Appeals affirmed the award of Olympic Steamship fees and held that the trial court did not abuse its discretion in determining that the fees could not be segregated. Finding no reversible error in that judgment, the Washington Supreme Court affirmed. View "King County v. Vinci Constr. Grands Projets" on Justia Law

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At issue in this case was the applicability of a broad, absolute insurance pollution exclusion clause to a claim based on negligent installation of a hot water heater that led to the release of toxic levels of carbon monoxide in a residential home. Zhaoyun "Julia" Xia purchased a new home constructed by Issaquah Highlands 48 LLC. Issaquah Highlands carried a policy of commercial general liability insurance through ProBuilders. Soon after moving into her home, Xia began to feel ill. A service technician from Puget Sound Energy investigated Xia's home and discovered that an exhaust vent attached to the hot water heater had not been installed correctly and was discharging carbon monoxide directly into the confines of the basement room. The claims administrator for ProBuilders, NationsBuilders Insurance Services Inc. (NBIS), mailed a letter to Xia indicating that coverage was not available under the Issaquah Highlands policy. As a basis for its declination of coverage, NBIS rested on two exclusions under the policy: a pollution exclusion and a townhouse exclusion. NBIS refused to either defend or indemnify Issaquah Highlands for Xia's loss. When a nonpolluting event that was a covered occurrence causes toxic pollution to be released, resulting in damages, the Washington Supreme Court believed the only principled way for determining whether the damages are covered or not was to undertake an efficient proximate cause analysis. Under the facts presented here, the Court found ProBuilders Specialty Insurance Co. correctly identified the existence of an excluded polluting occurrence under the unambiguous language of its policy. However, it ignored the existence of a covered occurrence negligent installation-that was the efficient proximate cause of the claimed loss. Accordingly, coverage for this loss existed under the policy, and ProBuilders's refusal to defend its insured was in bad faith. View "Xia v. Probuilders Specialty Ins. Co." on Justia Law

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In 2007, the legislature passed, and the voters ratified, the Insurance Fair Conduct Act (IFCA), RCW 48.30.015. IFCA gave insureds a new cause of action against insurers who unreasonably deny coverage or benefits. IFCA also directed courts to grant attorney fees and authorizes courts to award triple damages if the insurer either acts unreasonably or violates certain insurance regulations. The issue this case presented for the Supreme Court's review was whether IFCA also created a new and independent private cause of action for violation of these regulations in the absence of any unreasonable denial of coverage or benefits. The Court concluded it did not and affirmed. View "Perez-Crisantos v. State Farm Fire & Cas. Co." on Justia Law

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An employee of a nonprofit serving disabled adult clients used her position to embezzle more than half a million dollars held by the nonprofit for its clients. After the embezzlement was discovered, Travelers Casualty & Surety Company, the nonprofit's insurance company, made the nonprofit whole. Travelers then sought contribution from the bank in federal court. By submitting certified questions of Washington law, that court has asked the Washington Supreme Court to decide, among other things, whether a nonpayee's signature on the back of a check was an indorsement. Furthermore, the Court was also asked whether claims based on unauthorized indorsements that are not discovered and reported to a bank within one year of being made available to the customer are time barred. The Supreme Court answered yes to both questions. View "Travelers Cas. & Sur. Co. v. Wash. Trust Bank" on Justia Law

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Kut Suen and May Far Lui (the Luis) owned a building that sustained water damage after a pipe burst while the building was vacant. The Luis' insurance policy for the building limited coverage for water damage based on vacancy: coverage was suspended if the building remained vacant for 60 consecutive days and, effective at the beginning of any vacancy, and there was no coverage for certain specified losses, including water damage. The Luis argued that the policy was ambiguous and should have been interpreted in the Luis' favor to mean that the exclusion of coverage for water damage would commence only after a 60-day vacancy. The Washington Supreme Court rejected the Luis' arguments and found that the policy unambiguously excluded coverage for water damage immediately upon vacancy. The Supreme Court reversed the trial court's contrary holding and affirmed the Court of Appeals. View "Lui v. Essex Insur. Co." on Justia Law

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Richard and Susan Millies purchased a secluded piece of property in Stevens County overlooking Deer Lake. Their title company overlooked an easement that could have rendered the property far less secluded. The title insurer, LandAmerica Transnation Title Insurance Company, conceded that the easement had been overlooked in the title search and conceded coverage for the omission. After the two sides could not agree on the proper amount of compensation, the Millies sued on a variety of grounds. The jury returned a verdict in favor of LandAmerica, and the Millies appealed. Finding no reversible error, the Supreme Court affirmed. View "Millies v. LandAmerica Transnation" on Justia Law