New COVID Legislation in Washington to Modify Insurance Policy Terms

On January 26, 2021, Senate Bill 5351 was introduced during the State of Washington’s 67th Legislature’s 2021 Regular Session. The bill seeks to change the suit limitations period from one year to two years (RCW 48.18.200), and add the provision that:

“Every property insurance policy containing a grant of coverage for direct physical loss of or damage to property shall be construed to include the deprivation of such property and the loss of the ability to use such property.”

(RCW 48.18.520). The bill would also add two new sections, applying these changes retroactively to February 29, 2020, when Governor Inslee issued Proclamation 20-05, and explaining that the act would take effect immediately.

If you have additional questions on this bill, or would like to receive continuing updates, please feel free to reach out to Soha & Lang.

Court Holds that Bicyclist is a “Pedestrian” for Purpose of Coverage

McLaughlin v. Travelers Comm. Ins. Co., Wash. Supreme Court (Dec. 10, 2020).

This case deals with whether the plaintiff, while riding his bicycle at the time of the accident, was a “pedestrian” under his California auto insurance policy’s MedPay coverage. “Pedestrian” was not defined by the policy. RCW 48.22.005(11) defines “pedestrian” for purpose of casualty insurance as “a natural person not occupying a motor vehicle as defined in RCW 46.04.320.” Since McLaughlin’s bicycle did not have a motor, he was deemed a “pedestrian.” The Court discussed the Court of Appeals approach to “harmonize” the definition of “pedestrian” in RCW 48.22.005(11) with RCW 46.04.400. The latter statute expressly excludes bicyclists from the definition of “pedestrian.” RCW 48.22.005(11), applies to casualty insurance, however, and RCW 46.04 has limiting language that definitions in that chapter apply to that chapter, “except where otherwise defined,” so RCW 48.22.005(11) was determined to be the appropriate definition to apply in this case.

The Court discussed that even if the definition of “pedestrian” in RCW 48.22.005(11) was not applied, the term “pedestrian” in the policy is ambiguous, and resolved in favor of the insured.

Soha & Lang, P.S. Receives PNW CPCU Chapter President’s Award

Soha & Lang, P.S. is honored to accept this year’s Presidents Award from the Pacific Northwest Chapter of the CPCU Society. The President’s Award recognizes a company’s strong support for insurance education and involvement in the CPCU Society. We also extend our congratulations to Soha & Lang, P.S. shareholders Paul Rosner, Jennifer Dinning, and Geoff Bedell, who earned the CPCU designation and are active in the CPCU Society.

Learn more about the Pacific Northwest Chapter of the CPCU Society at: https://pacificnorthwest.cpcusociety.org/about

Alaska Supreme Court Holds If Policy As A Whole Is Clear, Then It Is Not Ambiguous

On October 9, 2020, the Alaska Supreme Court held in Kathleen M. Downing v. Country Life Insurance Company, —P.3d—, 2020 WL 5988226 (2020), that under the doctrine of reasonable expectations, even if one part of a policy is unclear, if the policy when read as a whole is clear, the policy is not ambiguous. In this case, the daughter purchased an executive whole life policy that paid a flat $500,000 upon her death, and a Paid-Up Additions Rider (“PUAR”) that provided an increasing death benefit and cash value for each year premiums were paid on the PUAR, and that also acted as an investment. The first page of the policy stated the PUAR provided coverage of $1,079,014, but the second page of the policy included a table explaining the guaranteed cash value and paid-up insurance per year of the policy. After a year of paying the premiums, the daughter assigned the PUAR to her mother, who took over paying the premiums for the investment value. The daughter died a short time later, during the second year of the policy coverage. Country Life Insurance Company (“Country”) paid mother the $500,000 from the executive whole life policy, and $108,855 from the PUAR.

The mother sued, arguing that she was entitled to $1,079,014, the coverage on the PUAR. The Alaska Supreme Court upheld the superior court’s ruling on summary judgment that Country did not owe anything further to the mother. In doing so, the Alaska Supreme Court held that although ambiguity in a policy is construed in favor of the insured, under the doctrine of reasonable expectations, ambiguity only exists “when the contract, taken as a whole, is reasonably subject to differing interpretations.” Consequently, although the Alaska Supreme Court found the first page of the policy misleading, when viewing the policy as a whole, including the table on page two, it was clear that the policyholder could stop making payments at any time and withdraw the current cash value.

Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S. or its clients.

Soha & Lang Attorney Jillian Henderson Elected President of WDTL

On July 16, 2020, Soha & Lang, P.S. attorney Jillian Henderson was elected President of the Washington Defense Trial Lawyers (WDTL). WDTL provides education, recognition, collegiality, professional development, and advocacy for and on behalf of civil defense litigators. Jillian’s election culminates years of service. Congratulations Jillian and well done!

Washington Supreme Court Holds School Districts May Be Strictly Liable for Employees’ Discrimination Under the WLAD

In deciding two certified questions from the Western District of Washington regarding the meaning of the Washington Law Against Discrimination (“WLAD”), chapter 49.60 RCW, the Washington Supreme Court unanimously held in W.H. et al. v. Olympia Sch. Dist., No. 97630-9 (Jun. 18, 2020) that: (1) a school district may be subject to strict liability for discrimination in places of public accommodation by its employees in violation of the WLAD, and (2) under the WLAD, discrimination can encompass intentional sexual misconduct, including physical abuse and assault.
The Plaintiffs sued the Olympia School District in the Western District of Washington in 2016, in connection with the abuse of minor passengers on a school by a bus driver employed by the school district. In response to the Supreme Court’s decision in Floeting v. Group Health Cooperative, 192 Wn.2d 848, 434 P.3d 39 (2019), the Plaintiffs successfully moved to amend their complaint to include a claim under the WLAD. The School District then moved to certify three questions regarding the WLAD to the Supreme Court. The federal court certified two of the three questions., as follows: (1) “May a school district be subject to strict liability for discrimination by its employees in violation of WLAD?,” and (2) “If a school district may be strictly liable for its employees’ discrimination under the WLAD, does ‘discrimination’ for the purposes of this cause of action encompass intentional sexual misconduct, including physical abuse and assault?”
The Court answered in the affirmative as to both questions. The court first examined the statutory language of RCW 49.60.215(14), which makes it “an unfair practice for any person or agent or employee to commit” a discriminatory act “in any place of public…accommodation.” The Court then examined its recent decision in Floeting, 192 Wn.2d 848. In Floeting, the Court held that employers are strictly liable for the actions of their employees under RCW 49.60.215. Id. at 861. With respect to the first question, the Court based its ruling on the WLAD’s definition of “person” set forth in RCW 49.60.040(19). The definition included any political or civil subdivision of the state. As RCW 28A.315.005(2) states that local school districts are political subdivision of the state, the Court found the chain of logic clear. Thus, the Court held that a school district is subject to strict liability lawsuits for discrimination in places of public accommodation by its employees in violation of the WLAD. In doing so, the Court rejected the School District’s argument that it was protected by a statutory waiver of sovereign immunity, as enacted by legislation in the 1960s, finding instead that “the WLAD clearly abrogated that sovereign immunity when it created a private cause of action, permitting suit in court, for discrimination in places of public accommodation and included public educational facilities in its definition of places of public accommodation.”
With respect to the second question certified to the Court, the Court again looked to its recent rulings in Floeting. In Floeting, the Court held that sexual harassment is a form of sex discrimination. 192 Wn.2d at 853; see also id. at 862-63 (Madsen, J., dissenting) (agreeing that “sexual harassment…is a form of sex discrimination” (citing Glasgow v. Ga.-Pac. Corp., 103 Wn.2d 401, 405, 693 P.2d 708 (1985))). In answering the second certified question in the affirmative, the Court found that because sexual harassment is a form of sex discrimination, so, too is intentional sexual misconduct, including physical abuse and assault.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

Washington Supreme Court Holds Law Firm May Represent Insured in Lawsuit Against Former Client

On May 21, 2020, the Washington Supreme Court unanimously held in Plein v. USAA Cas. Ins. Co., 97563-9, 2020 WL 2568541 (Wash. May 21, 2020), that a former client seeking to disqualify the adverse party’s lawyer has the burden of showing that matters were substantially related, and that a matter is not “substantially related” to representation of the former client if it is not factually related to any representation of the former client.

In this case, the law firm Keller Rohrback LLP (“Keller”) represented homeowners in a lawsuit against USAA Casualty Insurance Company (“USAA”) alleging that USAA refused to pay for expenses after a house fire in bad faith. Keller had previously represented USAA for many years in various cases, including a suit with similar allegations involving a house fire. As part of this former representation, Keller had gained information regarding USAA’s policies and practices, thought processes, and business and litigation philosophies and strategies. Keller’s representation had included matters involving allegations similar to those made by the homeowners. On this basis, USAA alleged a conflict of interest disqualifying Keller under Rule of Professional Conduct 1.9, which states that a lawyer may not represent a new client against a former client “in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client.”
The Washington Supreme Court, siding with the majority of jurisdictions, first determined that the burden for showing that matters are “substantially related” rests with the former client. In that context, the court then concluded that the facts of this case and those of prior USAA cases, including the prior house fire case, were distinct and unrelated. Likewise, the court concluded that the information Keller gained when it represented USAA did not preclude Keller’s representation of the homeowners. As such, the court held that Keller was not disqualified from representing the homeowners against USAA.

Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S. or its clients.

Arbitration Provision Enforceable in Insurance Issued by Risk Retention Group, While Arbitration and Choice-of-Law Provisions Unenforceable in Reinsurance Contract

Two recent decisions addressed the application of a Washington statute, RCW 48.18.200, which prohibits arbitration agreements and foreign choice-of-law provisions in insurance issued to Washington insureds. First, the Ninth Circuit held that the Washington statute did not prohibit an arbitration clause in an insurance policy issued to a Washington insured by a risk retention group chartered in Arizona. Allied Professionals Ins. Co. v. Anglesey, 2020 WL 1179772 (9th Cir. Mar. 12, 2020). The Ninth Circuit explained that the arbitration provision was enforceable because the Washington statute was preempted by the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq. Second, a Washington federal district court held that the Washington statute voided arbitration and New York choice-of-law provisions in a reinsurance contract issued to a Washington risk pool. Washington Cities Ins. Auth. v. Ironshore Indem. Co., 2020 WL 1083715 (W.D. Wash. Mar. 6, 2020). In reaching this result, the court rejected the contention that reinsurance was not insurance subject to the statute.

Please note that any opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

9th Circuit Will Address Whether Convention on the Recognition of Foreign Arbitral Award, Art. II, Sec. 3 is Subject to Preemption Under McCarran-Ferguson

On February 11, 2020, in the matter of CLMS Mgmt. Servs. Ltd. P’ship v. Amwins Brokerage of Georgia, LLC, 3:19-CV-05785-RBL (W.D. Wash. Feb. 11, 2020), the US District Court in the Western District of Washington granted certification pursuant to 28 U.S.C. § 1292(b) of the court’s earlier order of December 26, 2019, in which the court held that the Convention on the Recognition of Foreign Arbitral Award, Art. II, Sec. 3 is “self-executing,” and not subject to preemption under the McCarran-Ferguson Act – and thus not preempted by Washington statute.

The Court’s Order, granting defendant’s motion to enforce an arbitration clause in the policy of insurance at issue, analyzes the interplay between the Federal Arbitration Act (FAA), the McCarran-Ferguson Act, and Art. II, Sec. 3 of the Convention. Although the FAA normally governs the enforceability of arbitration clauses, in the insurance context the McCarran-Ferguson Act, which creates a system of “reverse-preemption” for insurance law, must also be considered. The Court examined decisions by Washington state courts holding that, under the McCarran-Ferguson Act, Wash. Rev. Code 48.18.200 – which prohibits the enforcement of arbitration provisions in insurance contracts – preempts Chapter 1 of the FAA.

However, the Western District of Washington held that the same is not true of Chapter II of the FAA and ruled that Chapter II section 3 is self-executing, and thus not subject to preemption under the McCarran-Ferguson Act. The court found the reasoning of the US District Court for the Central District of California’s reasoning in the matter of Martin v. Certain Underwriters of Lloyd’s, London, to be persuasive. There, the court stated that Section 3’s use of “the verb ‘shall’ . . . expressly directs courts to enforce arbitration agreements” and thus gives Section 3 “automatic effect.”

In granting certification for immediate review, the Western District recognized that federal circuits are split and there is “considerable disagreement between courts around the country about whether and why the Convention preempts state laws like RCW 48.18.200,” and that the Ninth Circuit has not ruled on this issue. Accordingly, this will be a matter of first impression for the Ninth Circuit.

Disclaimer: Any opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

Insurer Bound By Agent’s Representation In Certificate of Insurance

The Washington Supreme Court issued a decision on October 10, 2019 in the matter of T-Mobile USA, Inc. v. Selective Ins. Co. of Am., No. 96500-5 (2019), finding that an insurance company is bound by its agent’s representations made on a certificate of insurance, despite the disclaimer language contained in the certificate of insurance, even when those representations add new insureds to the policy or otherwise alter its terms.

The matter came to the Washington Supreme Court on certification from the Ninth Circuit, which presented the following question: “Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party’s status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?” The Washington Supreme Court answered the question in the affirmative, holding that “an insurance company is bound by the representation of its agent in those circumstances.”

The Court cited to the rule of textual interpretation that the specific prevails over the general, and thus found that the general disclaimers in the certificates of insurance are ineffective and are superseded by the specific information written on the certificate. The Court also found that public policy supports enforcing the representations of an insurance company’s agents.

The Court distinguished this decision from its ruling in Postlewait Constr., Inc. v. Great Am. Ins. Co., 106 Wn.2d 96, 100-01 & n.7, 720 P.2d 805 (1986), in which the Court stated that “[T]he purpose of issuing a certificate of insurance is to inform the recipient thereof that insurance has been obtained; the certificate itself, however, is not the equivalent of an insurance policy” on the grounds that the broker in Postlewait was not the agent of the insurance company, and that the certificate of insurance at issue did not represent that the purported additional insured was in fact an additional insured.

Two justices dissented. While accepting the possibility that equitable estoppel could apply in some circumstances, that was not the case here where the entity seeking coverage, T-Mobile USA, was a sophisticated business entity and there was never any agreement that the insurance would cover it.

Disclaimer: Any opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.