Court: District Court, E.D. Washington; August 25, 2014; Federal District Court
The Court granted Defendant American States Insurance Company's Motion for Partial Summary Judgment, determining the validity of a policy provision requiring legal actions to be initiated within one year of the cause of action accruing. The case originated from the Estate of Carl R. Ingram's Complaint for Underinsured Motorist Coverage, following Ingram's fatal accident involving an underinsured motorist, Kenneth A. Smith. The Estate alleged that Smith’s insurer had paid its liability limits and claimed that both American States and Safeco Insurance Company provided underinsured motorist coverage for Ingram.
The policy's relevant clause mandated that any legal action against American States must be brought within one year after the cause of action accrues. American States argued that this provision complies with Washington law, specifically RCW 48.18.200, which permits such limitations in insurance contracts. The Court emphasized that summary judgment is appropriate when there are no genuine issues of material fact and that the interpretation of an insurance contract can be resolved as a matter of law, unless ambiguity exists. The ruling confirms the enforceability of the one-year limitation in the insurance policy under Washington law.
Underinsured motorist (UIM) coverage is categorized separately from property or marine transportation insurance under Washington law. Property insurance covers loss or damage to real or personal property, while marine insurance pertains to the risks associated with vessels and other modes of transportation. Vehicle insurance specifically addresses loss or damage to land vehicles, aircraft, and associated liabilities.
Plaintiff argues that a one-year limitation for filing suit against American States, as stated in RCW 48.18.200, contravenes the UIM statute (RCW 48.22.030), which aims to enable injured parties to recover damages equivalent to what they would have received if the at-fault party had adequate liability coverage. If a UIM endorsement fails to align with statutory protection, the conflicting policy provision becomes void. The Washington Supreme Court has emphasized the legislative intent for broad UIM coverage, mandating that such statutes be interpreted liberally. Courts will invalidate any exclusionary clauses that contradict the statute's express provisions or public policy.
The core of Plaintiff's argument asserts that the one-year limitation undermines public policy by setting a shorter filing period for UIM claims than for claims against fully insured tortfeasors. This position is supported by a precedent where a court ruled against a similar one-year limitation in an insurance contract, asserting that any provision that diminishes the protections guaranteed by the UIM statute is void.
The court ruled that the one-year limitation in the uninsured motorist section of the policy is void, as it undermines the public policy ensuring claimants have equivalent rights in uninsured motorist cases as they would against a responsible third party. The Washington Supreme Court has established that the statute of limitations for a breach of an insurance contract begins when the insurer breaches the contract, not from the date of the accident. Thus, the limitation period against the insurer starts when the insurer either refuses to pay a claim or pays less than what the insured believes is owed. The court concurred with American States' interpretation, affirming that the one-year limitation aligns with RCW 48.18.200 and does not contravene the underinsured motorist statute. The plaintiff retains the standard three years to pursue action against the underinsured motorist, but once American States allegedly breached its contract by failing to pay benefits, the plaintiff had one year to take legal action against them. Consequently, the court granted Defendant American States' Motion for Partial Summary Judgment. The District Court Clerk is instructed to enter and distribute this Order to counsel.
