Sufficient Evidence Existed of Requisite Antecedent Agreement for Purpose of Insured’s Reformation Claim

In Emrys v. Farmers Ins. Co., 294 Or App 107, __ P3d ___ (Sept. 12, 2018), the insured owned two adjacent properties, with addresses at 106 Cofey Crossing Lane (“106 Property”) and 108 Cofey Crossing Lane (“108 Property”), insured under two separate policies.  The insured let the policy for the 106 Property lapse.  After the insured’s death, the estate’s personal representative learned of the properties and informed the insurer she wanted to continue the existing policy.  After a fire loss at the 106 Property, the insurer denied the claim because it had only issued coverage for the 108 Property.  The personal representative filed a lawsuit seeking to reform the policy to include the 106 Property.  On remand from a prior appeal,[1] the trial court concluded that the reformation claim failed because there was no showing of the requisite antecedent agreement.  The Court of Appeals reversed.  The appellate court exercised its power to review the case de novo because, among other things, the matter was on appeal for the second time on virtually the same issue. The Court of Appeals found that, on the undisputed facts, the parties had reached an antecedent agreement to insure the 106 Property and, therefore, reform was warranted.


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.

[1] See Emrys v. Farmers Ins. Co., 275 Or App 691, 365 P3d 1119 (2015).

Washington Supreme Court Rules Joint And Several Liability Is Preserved When A Defendant Is Vicariously Liable

In a 5-4 split decision, the Washington Supreme Court held in Afoa v. Port of Seattle, No. 94525-0 (July 19, 2018) that RCW 4.22.070.(1)(a) preserves joint and several liability when a defendant is vicariously liable for another’s fault, but whether vicarious liability exists is a factual question.

The Plaintiff, Brandon Apela Afoa, commenced this action against the Port of Seattle for injuries sustained during his employment with an independent contractor operating at Sea-Tac International Airport. At trial, the Port asserted an empty chair defense against four non-party airlines. The jury found the Port retained control over Afoa’s employer’s work, which gave rise to a duty of care to Afoa. The $40 Million verdict was apportioned by the jury as follows: 0.2% to Plaintiff, 25% to the Port, and 74.8% split equally to the four airlines. Plaintiff appealed alleging the Port was vicariously liable for the airlines’ portion of the damages because it had a nondelegable duty to provide a safe workplace.

The Court answered in the negative. The Court found that the meaning of RCW 4.22.070 is clear and unambiguous in that it generally abolishes joint and several liability for concurrent negligence.  In examining the legislative intent behind RCW 4.22.070, the Court stated that liability for breach of a nondelegable duty does not undermine the fault allocation under the statute. The Court noted that while the dissent correctly recognized an exception under the statute which would allow a nondelegable duty to result in vicarious liability for an independent contractor’s fault, the Court declined to apply this exception because the jury did not make a factual finding that that the Port retained control over the airlines’ work. The Court held that “[A]n entity that delegates its nondelegable duty will be vicariously liable for the negligence of the entity subject to its delegation, but an entity’s nondelegable duty cannot substitute for a factual determination of vicarious liability when RCW 4.22.070(1) clearly requires apportionment to “every entity which caused the claimant’s damages.””

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 Court Rules that Insurers Cannot Use “Maximum Medical Improvement” to Limit PIP Coverage

In an unanimous decision, the Washington Supreme Court held in Durant v. State Farm Mutual Automobile Insurance Company, No. 94771-6 (June 7, 2018), that Washington regulations require automobile policies containing personal injury protection (“PIP”) coverage to pay for all medical and hospital services related to an accident that are reasonable, necessary, and incurred within three years of the accident.  The issue came before the Court in the form of two certified questions submitted by the United State District Court for the Western Division in Washington which was adjudicating Durant’s claim that State Farm had wrongly refused to pay PIP benefits for chiropractic treatments arising out of his automobile accident based upon his achieving maximum medical improvement (“MMI”) where his doctor continued to prescribe the treatment as necessary.  The Court found that State Farm’s policy violated the plain language of Washington Administrative Code 284-30-395(1) by limiting coverage to those medical expenses that are essential in achieving MMI for the bodily injury sustained in the accident.

The Court answered the first certified question in the affirmative: “Does State Farm’s limitation of medical claims based on its MMI provision violate WAC 284-30-395(1)(a) or (b)?”  The Court held that the plain language of the WAC says that an “insurer may deny, limit, or terminate benefits if the insurer determines that the medical and hospital services: (a) Are not reasonable; (b) Are not necessary; (c) Are not related to the accident; or (d) Are not incurred within three years of the accident.”  As these are “the only grounds for denial, limitation, or termination of medical and hospital services permitted,” the Court determined that State Farm’s additional MMI requirement violated the statute.

The Court answered the second certified question in the negative: “Is the term ‘maximum medical improvement’ consistent with the definition of ‘reasonable’ or ‘necessary’ as those terms appear in WAC 284-30-395(1)?”  The Court found that the MMI limitation “denies Durant his PIP medical benefits necessary to return him to his pre-injury state.”  The Court held that the MMI provision was inconsistent with the terms reasonable and necessary because it would exclude palliative care from reasonable and necessary medical expenses which would not fully compensate the insured for actual damages from automobile accidents as required under PIP coverage.

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.

Determination Of Whether Party Improves Position on Trial De Novo After Mandatory Arbitration Includes Statutory Costs

On April 12, 2018, the Washington Supreme Court held in Bearden v. McGill, No. 94320-6, that statutory costs are included when determining whether a party has improved its position at a trial de novo after a mandatory arbitration award.


In the underlying matter, the parties went to mandatory arbitration, and the arbitrator awarded damages plus statutory costs to the plaintiff.  The defendant requested a trial de novo, and at trial, the jury awarded the plaintiff less in damages but more in statutory costs, for a total award that was greater than the amount the plaintiff was awarded in mandatory arbitration.  The trial court also granted the plaintiff attorney fees and costs, on the basis that the defendant’s position did not improve from the arbitration award to the trial de novo.


The defendant appealed, and the appellate court reversed and vacated the award of attorney fees and costs, holding that the only comparison between the arbitration award and the trial award should be the common elements of the awards in each proceeding and only include “those costs and fees litigated before the arbitrator and the trial court.” On remand, the appellate court again reversed, holding that the comparison should only include the damages portions of each award and not the statutory costs awarded in either proceeding.


The Washington Supreme Court reversed the appellate court, holding that based on the language and legislative history of the Mandatory Arbitration Rules and applicable statutes, as well as what an ordinary person would understand in comparing an arbitration award and a trail award, statutory costs are included in the calculations of a party considering a trial de novo.  However, if a substantial change of parties or claims brought occurs after the arbitration award and at the trial de novo, then this comparison may be unfair and need to be considered further by the trial court.


Justice Yu concurred, arguing that the holding could be more succinct, and Justice Wiggins dissented, arguing that the amount of costs awarded does not have anything to do with the merits of the dispute and should therefore not be considered when determining whether a party has improved its position.


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.

Paul Rosner to Speak on Insurance Bad Faith at PSAA Spring Symposium on April 6th

Soha & Lang, P.S. Shareholder Paul Rosner will be speaking about insurance bad faith as part of a panel on reputational management at the Puget Sound Adjuster Association’s Spring Symposium on April 6th in Seattle.    For more information, go to the PSAA website or click on the link below.

Washington Court of Appeals Holds That An Individual Insurance Adjuster May Be Liable for Bad Faith and Violation of the Washington Consumer Protection Act

In Keodalah v. Allstate Insurance Company, No. 75731-8-1 (Mar. 26, 2018), the Washington Court of Appeals held that an insurance adjuster that handles claims may be held individually liable for bad faith and violation of the CPA.  The case involved allegations of bad faith and CPA against an Allstate insurance adjuster in an automobile claim.


The insured was involved in a fatal auto accident with a motorcycle, and made a UIM policy limits demand of $25,000.  Allstate assessed the claim and found the insured was 70% at fault, and offered $1,600 to settle the claim.  The adjuster was designated as Allstate’s 30(b)(6) witness and claimed that the insured had run the stop sign and been on his cell phone.  The adjuster later admitted that was not the case.  Allstate then tried to settle the claim for $15,000.  The insured declined.  At trial, the jury found zero liability on behalf of the insured and awarded him $108,868 for injuries, lost wages and medical expenses.  The insured then brought IFCA, bad faith and CPA claims against both Allstate and the adjuster.


The trial court dismissed the individual claims.  The Court of Appeals, however, found that the Washington bad faith regulations and CPA both apply to individual adjusters, even if they are working within the scope of their employment.  The court concluded:  “We hold that an individual employee insurance adjuster can be liable for bad faith and a violation of the CPA”.


If you have any questions regarding this case, please do not hesitate to contact Soha & Lang, P.S.


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.

Service on Foreign Insurer Must be Through the Insurance Commissioner, and Only the Insurance Commissioner

In Ohio Security Ins. Co. v. Axis Ins. Co., No. 94677-9, the Washington Supreme Court, on a certified question from the United States District Court for the Western District of Washington, confirms that Washington law establishes that service through the Washington State Insurance Commissioner is the exclusive means of service for authorized foreign insures in Washington. The Court reaches this  conclusion based on the plain language, and legislative intent, of RCW 4.28.080(7)(a) and RCW 48.05.200(1).

If you have any questions regarding this case, please do not hesitate to contact Soha & Lang, P.S.

Disclaimer: Any 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

Insurer Had No Duty To Defend Or Indemnify Where Neither Facts Alleged Nor Damages Sought in Underlying Suit Fell Within Policy Coverage

In Cincinnati Ins. Co. v. Zaycon Foods LLC, 2018 WL 847247 (E.D. Wash. February 13, 2018) (ECF 54), the U.S. District Court ruled that a liability insurer had no duty to defend or indemnify where neither the underlying complaint nor extrinsic facts described a claim for damages that could be covered under the policy.

In the underlying suit, Zaycon was sued by its former CEO for alleged violations of state and federal securities laws, fraud, negligent misrepresentation, breach of fiduciary duty, and breach of contract relating to the former CEO’s ouster as CEO.  Cincinnati agreed to defend Zaycon under a reservation of rights.

Represented by Gary Sparling and Sarah Davenport of Soha & Lang, P.S., Cincinnati filed an action for declaratory relief, seeking a declaration that the claims in the underlying suit did not fall within the coverages provided in Cincinnati’s policies issued to Zaycon.  In response to Cincinnati’s summary judgment motion, Zaycon argued that certain allegations in the underlying complaint could be interpreted to describe defamation.  The Cincinnati policies provided coverage for, among other things, “personal and advertising injury” arising out of “[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.”  Zaycon argued that although the underlying suit did not formally state a cause of action for defamation, the allegations in the complaint and extrinsic facts nevertheless demonstrated that the underlying suit included claims for false statements that allegedly damaged the former CEO’s reputation.

The court disagreed, and held that the underlying complaint did not allege or imply that the alleged false statements by Zaycon’s members had damaged the former CEO’s reputation, nor did the complaint seek damages for such harm.  The court further held that the extrinsic facts failed to demonstrate that Zaycon faced potential liability for defamation in the underlying suit, when the complaint did not allege any claim for such damages.  Accordingly, the court granted summary judgment and ruled that Cincinnati had no duty to defend or indemnify, and that Cincinnati could immediately withdraw from any further defense in the underlying suit.


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.

Insureds Failed to State a Claim for the Wrongful Withholding of Money or Property from Vulnerable Persons

In Bates v. Bankers Life and Cas. Co., 362 Or 337 (2018), the Oregon Supreme Court addressed the certified question involving ORS 124.110(1)(b), which addresses financial abuse of vulnerable persons.  The certified question was:  “Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract?”  The plaintiffs were elderly persons who had purchased long-term care insurance policies from the defendant insurance company.  The plaintiffs claimed that the insurer developed onerous procedures to delay and deny insurance claims.  The court held that plaintiffs had failed to state a claim under the statute:  “[W]e answer in the negative:  Allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of ‘money or property.’”  The court reasoned that Section (1)(b) of the statute applies where a vulnerable person entrusts his or her money or property to another, who in bad faith refuses to return that money or property.  This requirement was not satisfied because the plaintiffs were not seeking the return of the money that they had transferred to the insurer but were seeking contractual benefits under the insurance policies.


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

Ninth Circuit Holds that Municipal Risk Pool Does Not Owe Duties Under Washington Insurance Law

In Alex Jones et al. v. St. Paul Fire & Marine Ins. Co., et al., Nos 15-35856 & 16-35160, 2017 WL 6333768 (9th Cir. Dec. 12, 2017) (unpublished), the Ninth Circuit Court of Appeals held that claims against a Washington municipal risk pool, WRCIP, for breach of contractual and extra-contractual duties had no merit.  Among other things, the Ninth Circuit held that the municipal risk pool was not an “insurer” under Washington law and, in fact, was a co-insured with the risk pool members under an insurance policy issued by St. Paul & Marine Insurance Company (“St. Paul”).  Accordingly, any dispute that the plaintiffs had over insurance coverage was with St. Paul and not with the risk pool:

WRCIP is not an insurer but an insured, and it satisfied its duties under its contract with St. Paul when it paid the self-insured retention. Any dispute that [plaintiffs] Jones and Vargas have over insurance coverage is therefore with St. Paul and not with WRCIP.

The Ninth Circuit also rejected the plaintiffs’ arguments that the risk pool had extra-contractual duties under Washington insurance law (internal citations omitted):

Jones and Vargas also failed to state other causes of action against WRCIP because they have not plausibly alleged that WRCIP owed them any extra-contractual duties. They acknowledge that the district court was correct in ruling that WRCIP is exempted by Washington statute from the definition of “insurer,” so it does not owe an insurer’s statutory duties.

Jones’s and Vargas’s alternative bases for extra-contractual duties are unpersuasive. WRCIP owes them no common-law fiduciary duties because neither of them (nor their public defense attorneys) “occupie[d] such a relation to” WRCIP “as to justify [them] in expecting that [their] interests will be cared for.” Jones and Vargas also rely on a general preambulatory provision of Washington’s insurance code to suggest that WRCIP owes them duties of good faith related to the general business of insurance. But under Washington law, self-insurance and the payment of self-insured retentions are not insurance, so there is no reason to imply duties on WRCIP from Washington’s insurance law. Even if there were, Jones and Vargas have failed to plead any failure by WRCIP to act in good faith because it paid its self-insured retention, at which point any coverage duties fell to St. Paul.

Accordingly, the Ninth Circuit affirmed the district court’s dismissal of all claims against the risk pool.


One of the plaintiffs also filed suit against Canfield & Associates (“Canfield”), the third-party administrator responsible for the risk pool’s day-to-day administration.   In a footnote, the Ninth Circuit explained that its analysis of the claims against the risk pool also governs the claims against Canfield.  Thus, the Ninth Circuit agreed with the district court’s dismissal of the claims against Canfield as well.



Authors: Sarah Davenport and Paul Rosner

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