Wieler v. National Indemnity Company

1 FILED IN THE U.S. DISTRICT COURT 2 EASTERN DISTRICT OF WASHINGTON Sep 04, 2024 3 4 SEAN F. MCAVOY, CLERK 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF WASHINGTON 8 9 DON WIELER, as the personal 10 representative of the estate of Eddie Todd, No. 2:23-CV-00285-SAB 11 Plaintiff, 12 v. 13 NATIONAL INDEMNITY COMPANY, ORDER RE: MOTIONS FOR 14 a foreign entity, SUMMARY JUDGMENT 15 Defendant. 16 17 Before the Court are Plaintiff’s Partial Summary Judgment Motion, ECF 18 No. 28, and Defendant’s Motion for Partial Summary Judgment, ECF No. 26. A 19 hearing on the motions was held on August 16, 2024, by videoconference. Plaintiff 20 was represented by Marshal W. Casey. Defendant National Indemnity Company 21 was represented by Jeremy T. Knight and Jodi A. McDougal. 22 In his motion, Plaintiff asks the Court to enter partial summary judgment on 23 Defendant’s Consumer Protection Act liability and find the first three elements of a 24 per se Consumer Protection Act claim have been met. 25 In its motion, Defendant asks the Court to grant summary judgment on 26 Plaintiff’s extra-contractual claims for common law insurance bad faith, negligent 27 insurance adjusting, and violations of the Insurance Fair Claims Act and Consumer 28 Protection Act. The parties agree that genuine issues of material fact exist for the 1 breach of contract claim involving the dispute about the proper amount of 2 Plaintiff’s claim. 3 Motion Standard 4 Summary judgment is appropriate “if the movant shows that there is no 5 genuine dispute as to any material fact and the movant is entitled to judgment as a 6 matter of law.” Fed. R. Civ. P. 56(a). There is no genuine issue for trial unless 7 there is sufficient evidence favoring the non-moving party for a jury to return a 8 verdict in that party’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 9 (1986). The moving party has the initial burden of showing the absence of a 10 genuine issue of fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). 11 If the moving party meets its initial burden, the non-moving party must go beyond 12 the pleadings and “set forth specific facts showing that there is a genuine issue for 13 trial.” Anderson, 477 U.S. at 248. 14 In addition to showing there are no questions of material fact, the moving 15 party must also show it is entitled to judgment as a matter of law. Smith v. Univ. of 16 Wash. Law Sch., 233 F.3d 1188, 1193 (9th Cir. 2000). The moving party is entitled 17 to judgment as a matter of law when the non-moving party fails to make a 18 sufficient showing on an essential element of a claim on which the non-moving 19 party has the burden of proof. Celotex, 477 U.S. at 323. The non-moving party 20 cannot rely on conclusory allegations alone to create an issue of material fact. 21 Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993). When considering a 22 motion for summary judgment, a court may neither weigh the evidence nor assess 23 credibility; instead, “the evidence of the non-movant is to be believed, and all 24 justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255. In 25 considering cross motions for summary judgment, the court views the evidence for 26 each of the motions “in the light most favorable to the nonmoving party” for that 27 motion and determines “whether there are any genuine issues of material fact and 28 whether the district court correctly applied the relevant substantive law.” Wallis v. 1 Princess Cruises, Inc., 306 F.3d 827, 832 (9th Cir. 2002). 2 Facts 3 This action arises out of an automobile collision that occurred on July 8, 4 2021. Eddie Todd (“Todd”) was in one of the vehicles involved in the collision. He 5 was in the back seat of a car that had slowed down to turn into a driveway. The car 6 behind him slowed down as well, and then a third car rear-ended the second car, 7 which then rear-ended the car Mr. Todd was in. 8 At the time of the accident, Mr. Todd was 74 years old and had significant 9 health issues, including end-stage renal failure, uncontrolled diabetes, rheumatoid 10 arthritis, Hepatitis C (chronic liver inflammation) and heart issues. Prior to the 11 accident, he experienced chronic neck pain, shoulder pain and hand pain related to 12 the arthritis. In 2021, he had right leg surgery due to gangrene infection. 13 As a result of the collision, Todd suffered injuries and was entitled to 14 recover compensatory damages from Defendant National Indemnity Company 15 (“National Indemnity”) under the underinsured provision of the driver’s insurance 16 policy. 17 Todd filed a claim for damages with Defendant on May 3, 2022. Lisa 18 Norgard, an employee of Defendant, took over his claim on June 9, 2022 after no 19 response on it for over 30 days. 20 From June 9, 2022 to December 28, 2022, Todd corresponded with Norgard. 21 Todd informed Norgard several times that he was suffering from a severe illness 22 and needed his benefits. Eventually, Todd’s counsel issued an Insurance Fair 23 Conduct Act (“IFCA”) notice that the delay was an actionable denial of benefits. 24 Later, when Todd’s counsel requested information from Defendant’s medical 25 expert, Norgard responded that the requested medical information was work 26 product. As a result of not receiving National Indemnity’s medical opinion of his 27 claim, Todd sought out and received a declaration of causation from his physician, 28 Dr. Lundstrum. 1 Norgard did not respond to Dr. Lundstrum’s declaration of causation for 2 three weeks. On September 23, 2022, Todd’s counsel, knowing of Todd’s terminal 3 illness, offered to arbitrate this matter so it could be resolved more quickly. 4 Norgard responded 11 days after the arbitration offer to respond, declining 5 arbitration and offered $25,000, which was unacceptable to Todd. 6 Todd was concerned his claim would outlive his terminal illness and 7 therefore he participated in a deposition. Norgard continued to review Todd’s 8 claim and ordered another medical review. At that time, Defendant indicated to 9 Todd that no more money would be offered. Todd died on February 15, 2023. 10 Plaintiff filed suit on behalf of the Estate of Mr. Todd in Spokane County 11 Superior Court, alleging six claims: (1) breach of contract; (2) negligent insurance 12 adjustment; (3) bad faith; (4) Insurance Fair Conduct Act; (5) per se Consumer 13 Protection Act violation; and (6) Consumer Protection Act. 14 Applicable Law 15 Federal courts sitting in diversity apply state substantive law. Cuprite Mine 16 Partners LLC v. Anderson, 809 F.3d 548, 554 (9th Cir. 2015). 17 1. Plaintiff’s Partial Motion for Summary Judgment 18 Plaintiff asks the Court to enter partial summary judgment on Defendant’s 19 per se Consumer Protection Act liability and find the first three elements of a 20 Consumer Protection Act claim have been met. 21 To prevail on a CPA claim, “‘a plaintiff must establish five distinct 22 elements: (1) unfair or deceptive act or practice; (2) occurring in trade or 23 commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or 24 property; (5) causation.’” Perez-Crisantos v. State Farm Fire and Casualty Co., 25 187 Wash.2d 669, 685 (2017) (quoting Hangman Ridge Training Stables, Inc. v. 26 Safeco Title Ins. Co., 105 Wash.2d 778, 7801 (1986)). The public interest element 27 may also be satisfied per se where an insurer has violated a statute that contains “a 28 specific legislative declaration of public interest impact.” Hangman Ridge, 105 1 Wash.2d at 791. CPA claims alleging unfair insurance practices satisfy this 2 requirement because in Wash. Rev. Code § 48.01.030, the legislature has 3 specifically declared that the “‘business of insurance is one affected by the public 4 interest.’” Anderson v. State Farm Mut. Ins. Co., 101 Wash. App. 323, 330 (2000). 5 A single violation of a chapter 284-30 WAC regulation establishes a per se 6 unfair or deceptive practice that entitles an insured to bring a private action against 7 an insurer under the CPA. St. Paul Fire and Marine Ins. Co. v. Onvia, Inc., 165 8 Wash.2d 122, 129 (2008); see also Indus. Indem. Co. of the Nw., Inc. v. Kallevig, 9 114 Wash.2d 907, 921 (1990). 10 Defendant asserts questions of fact exist regarding whether Plaintiff has 11 shown that it violated the insurance regulations. The Court agrees. Moreover, a 12 reasonable jury could find that Defendant acted reasonably, that its standards are 13 not unreasonable, frivolous, or unfounded, that it responded to all pertinent 14 communications that reasonably suggested a response was expected, and that its 15 investigation was reasonable. The Court declines to rule as a matter of law that 16 Defendant violated the insurance practices regulations. The Court denies Plaintiff’s 17 Motion for Partial Summary Judgment. 18 2. Defendant’s Motion for Summary Judgment 19 Defendant argues that Plaintiff’s extra-contractual claims for common law 20 insurance bad faith, negligent insurance adjusting and violations of the Insurance 21 Fair Conduct Act and Consumer Protection Act should be dismissed as a matter of 22 law because it did not deny, let along unreasonably deny, policy benefits to Eddie 23 Todd in connection with the UIM claim. It also argues that Plaintiff’s non per se 24 consumer protection act claim should be dismissed because Plaintiff cannot show 25 damage to business or property. As it sees it, Plaintiff’s injury is merely derivative 26 of personal injury damages. 27 Under the Insurance Fair Conduct Act (IFCA), an insurance policyholder 28 who has been “unreasonably denied a claim for coverage or payment of benefits by 1 their insurer” may file an action for damages. Wash. Rev. Code § 48.30.015. 2 In Washington, “an insurer has a duty of good faith to its policyholder and 3 violation of that duty may give rise to a tort action for bad faith.” Smith v. Safeco 4 Ins. Co., 150 Wash.2d 478, 482 (2003). In order to establish bad faith, an insured is 5 required to show the breach was unreasonable, frivolous, or unfounded.” Kirk v. 6 Mt. Airy Ins. Co., 134 Wash.2d 558, 560 (1998). 7 Here, questions of material fact exist that precludes summary judgment. 8 Also, a reasonable jury could find that Defendant unreasonably denied policy 9 benefits to Mr. Todd based on the proffered settlement amount and in doing so, 10 violated its duty of good faith and acted negligently. 11 On the other hand, the Court agrees that Plaintiff’s non per se consumer 12 protection claim should be dismissed because the failure to tender Plaintiff’s 13 requested settlement amount does not constitute an injury to Plaintiff’s business or 14 property. See Vorhees v. Esurance Ins. Servs., 2024 WL 3069977 (W.D. Wash. 15 June 20, 2024). 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 1 Accordingly, IT IS HEREBY ORDERED: 1. Defendant’s Motion for Partial Summary Judgment, ECF No. 26, is 3|| GRANTED, in part and DENIED, in part. 2. Plaintiff's Partial Summary Judgment Motion, ECF No. 28, is DENIED. 5 3. Prior to trial, the Court expects the parties to engage in meaningful settlement proceedings. The parties should file a notice if they want to use a Magistrate Judge to facilitate mediation and the Court will refer the matter to the Magistrate Judge. 9 IT IS SO ORDERED. The District Court Clerk is hereby directed to enter this Order and to provide copies to counsel. 11 DATED this 4th day of September 2024. 12 13 14 byt Za 16 □□□ Sesha 7 Stanley A. Bastian 13 Chief United States District Judge 19 20 21 22 23 24 25 26 27 28 ORDER RE: MOTIONS FOR SUMMARY JUDGMENT ~ 7