Court: District Court, W.D. Washington; March 21, 2013; Federal District Court
Defendant Allstate Insurance Company filed three motions for partial summary judgment against Plaintiff Denise D. Dees, who opposes them in part. The court has reviewed the motions, supporting documents, and applicable law, resulting in a decision to grant in part and deny in part Allstate's motions. Specifically, the court partially grants Allstate’s January 31, 2013 motion regarding damages, grants the February 7, 2013 motion concerning Ms. Dees’ Personal Injury Protection (PIP) claim, and denies the February 12, 2013 motion.
The case arises from a May 21, 2006, automobile accident caused by an uninsured driver, for which Ms. Dees was insured by Allstate under an auto insurance policy that included PIP and Underinsured Motorist (UIM) coverage. The PIP coverage provides for medical expenses incurred within three years post-accident, capped at $35,000. Allstate has paid Ms. Dees $21,274.83 under PIP but terminated her PIP claim on March 28, 2007. The UIM coverage, limited to $100,000, allows recovery for damages from an underinsured motorist. Ms. Dees' attorney submitted a UIM demand letter for the policy limit on February 23, 2011, to which Allstate responded on June 9, 2011, with a counter-offer of $8,000. The parties dispute the adequacy of Allstate's investigation and response regarding the UIM claim.
Ms. Dees filed a lawsuit against Allstate in King County Superior Court on March 1, 2012, after failing to reach a settlement. The case was removed to a higher court. She asserts four claims against Allstate: breach of the Insurance Contract for not fully paying under UIM and PIP policies; breach of good faith by prioritizing its financial interests over hers; violation of the Washington Consumer Protection Act (CPA); and violation of the Washington Insurance Fair Conduct Act (IFCA).
Allstate's motions for summary judgment seek to establish that its maximum liability for breach of contract is limited to the UIM and PIP coverage limits minus payments already made to Ms. Dees. Allstate also argues for the dismissal of her common law bad faith claim regarding her PIP claim as time-barred, asserting it is not liable for bad faith related to her UIM claim during a specified period. Additionally, Allstate claims that any liability for the CPA is limited to property or business damages caused by its alleged unfair acts and that her IFCA claim should be dismissed as it pertains to conduct occurring before IFCA's effective date.
The court agrees that if Allstate is found liable for breach of contract, its damages are capped at the policy limits, which include a maximum of $35,000 for PIP and $100,000 for UIM. Allstate has already paid $21,274.83 under the PIP policy. Consequently, the court grants partial summary judgment in favor of Allstate, determining that if liable, its damages are limited to $113,725.17.
Allstate contends that Ms. Dees' claim of bad faith regarding the denial of her personal injury protection (PIP) claim is barred by the statute of limitations. The court agrees, noting that in Washington, tort claims related to bad faith in insurance contracts are subject to a three-year statute of limitations. Ms. Dees’ claim arose when Allstate denied her coverage on March 28, 2007, and since she filed her suit on March 1, 2012, it was filed more than three years after the denial. Ms. Dees acknowledges that she cannot pursue a bad faith claim for actions occurring before March 1, 2009. Consequently, the court grants Allstate's motion for summary judgment on the bad faith claim due to expiration of the statute of limitations.
Regarding the handling of Ms. Dees’ underinsured motorist (UIM) claim, Allstate argues it cannot be held liable for bad faith prior to receiving her UIM demand letter, asserting there is no evidence of bad faith during that period. Ms. Dees counters that material factual disputes exist regarding Allstate's consideration of her medical evidence. To establish bad faith, a policyholder must demonstrate that the insurer's actions were unreasonable or frivolous. The court finds that there are genuine issues of material fact concerning Allstate's assessment of Ms. Dees' medical information before receiving the demand letter. Allstate claims it lacked necessary medical records due to the absence of authorization; however, Ms. Dees provides evidence that her attorney had sent authorizations allowing Allstate to obtain records. Additionally, Ms. Dees states that Allstate withheld records and omitted relevant facts from its claims file. Given these conflicting accounts, the court denies Allstate's motion for partial summary judgment on the bad faith UIM claim, as reasonable minds could differ regarding Allstate's conduct.
Allstate contends that its liability for breaching the implied duty of good faith under the UIM provisions of the Insurance Contract should be limited to damages directly caused by its alleged bad faith conduct. The court agrees, affirming that Ms. Dees’ bad faith claim, rooted in tort, is limited to damages proximately resulting from the insurer's breach, which can include both economic and emotional damages if bad faith is established at trial. The court rejects Allstate's request to prevent Ms. Dees from claiming damages related to her car accident, noting that unpaid damages under the UIM provisions could be recoverable if proven to be unpaid in bad faith. Washington law treats UIM coverage as a first-party claim, meaning Allstate has no duty to defend Ms. Dees, and recovery is contingent on proving coverage. A genuine dispute exists regarding the unpaid damages from the car accident that may be covered under the UIM policy.
Regarding the Washington Consumer Protection Act (CPA), Allstate argues that any claims based on conduct before March 1, 2008, are time-barred due to the four-year statute of limitations. Ms. Dees does not dispute this but maintains her CPA claim should not be entirely dismissed. The court grants summary judgment for Allstate on any CPA claims related to actions before this date, clarifying that Ms. Dees must demonstrate unfair or deceptive practices occurring after March 1, 2008, to succeed. Allstate further argues that any damages under the CPA would be limited to those affecting Ms. Dees’ business or property and not personal injuries from the car accident, while Ms. Dees claims she is entitled to recover medical costs that Allstate should have covered.
Under the CPA, a plaintiff must establish that the defendant's conduct is (1) unfair or deceptive; (2) related to trade or commerce; (3) impacts public interest; (4) causes injury to the plaintiff's business or property; and (5) connects that injury to the deceptive act. A plaintiff can recover actual damages, trial costs, and attorney’s fees if they prove injury to business or property, with injury being distinct from damages. Proof of any injury to property or business suffices, even without monetary damages.
In recent district decisions, courts have ruled that claims based solely on the failure to pay medical bills do not constitute business or property injuries under the CPA, as they are derivative of personal injuries, which are not compensable. Emotional damages and physical manifestations of pain are also not recognized as injuries under the CPA. Specific cases, such as Haley v. Allstate Ins. Co. and Coleman v. Am. Commerce Ins. Co., illustrate that failures to pay medical bills or claims related to personal injuries cannot be considered CPA injuries.
The court finds that Ms. Dees’ claim against Allstate for unpaid medical bills is indistinguishable from personal injury claims, as these bills arise from injuries sustained in an accident. Although Ms. Dees acknowledges that money is property, the failure to pay medical bills does not equate to a business or property injury under the CPA. Nonetheless, the court does not entirely dismiss the possibility of a CPA injury related to the car accident that could involve monetary losses, as long as the injury to property or money is diminished due to unlawful conduct, even if minimal.
Ms. Dees has the potential to demonstrate property injury due to Allstate’s failure to pay her medical bills, which may have resulted in additional financial losses, such as interest on borrowed funds. The court will not provide an advisory opinion on whether her injuries qualify under the Consumer Protection Act (CPA) until damages are quantified, advising the parties to address this in trial briefs. The court partially grants and denies Allstate's motion regarding CPA damages, allowing Ms. Dees to pursue claims for injuries to her business or property caused by Allstate's allegedly deceptive practices, while excluding claims for personal injuries.
Regarding the Washington Insurance Fair Conduct Act (IFCA), Allstate contends that Ms. Dees' claim for unreasonable denial of Personal Injury Protection (PIP) benefits fails because the denial occurred before the IFCA took effect. Ms. Dees concedes this point, leading the court to grant summary judgment in favor of Allstate on this claim.
On damages related to the IFCA, Allstate asserts liability is limited to damages directly caused by its violation, excluding personal injuries from the accident. Ms. Dees counters that "actual damages" under the IFCA encompass medical bills, lost wages, and pain and suffering. The court agrees with Allstate's limitation but clarifies that actual damages may include benefits unreasonably denied, meaning Ms. Dees could recover these amounts if proven at trial. Consequently, the court partially grants and denies Allstate's motion concerning IFCA damages.
In conclusion, the court grants in part and denies in part Allstate's motions filed on January 31, February 7, and February 12, 2013, reserving unresolved issues for trial. While noting that Allstate's simultaneous filings violated Local Rules, the court allowed consideration of all motions. Ms. Dees' request for oral argument on the January 31 motion is deemed unnecessary if it would not assist the court or prejudice either party.
The court denies Ms. Dees' request for oral argument, noting that she does not dispute many of Allstate's contentions in its motion and that the issues have been adequately briefed. The court questions the necessity of Allstate's three dispositive motions and Ms. Dees' extensive responsive briefs that address points not raised by Allstate. In breach of contract cases, the insured is entitled to expectation damages, which restore them to the position they would have been in had the contract not been breached. Ms. Dees claims incidental and consequential damages, which are valid if they naturally arise from the breach and were contemplated by the parties. However, the court refrains from ruling on these damages due to unresolved material facts regarding their availability and whether they were within the parties' contemplation at the contract's formation. Even if consequential damages are awarded, total damages cannot exceed the insurance policy limits minus amounts already paid by Allstate. The court grants summary judgment in favor of Allstate regarding Ms. Dees' bad faith claim related to PIP coverage but allows her UIM bad faith claim to proceed. Evidence shows Allstate began investigating the UIM claim in 2006, and a demand for full payment was made in 2011. While Allstate asserts Ms. Dees denied access to her medical records, there are genuine material facts in dispute regarding this access. Lastly, if Ms. Dees prevails on multiple claims, she cannot recover more than once for the same injury, meaning recovery for unpaid UIM amounts cannot overlap with damages from bad faith handling.
Washington courts have yet to apply the continuing tort doctrine to Consumer Protection Act (CPA) claims in the insurance context. The court asserts that employing this doctrine or equitable tolling would undermine the CPA's four-year statute of limitations. Ms. Dees became aware of Allstate's denial of Personal Injury Protection (PIP) benefits on March 28, 2007, and could have initiated a CPA claim at that time. However, she may contend at trial that Allstate violated the CPA through its review of her PIP medical records and affirmation of the denial in February 2009, which falls within the statute of limitations.
The court references Van Noy v. State Farm Mutual Insurance Company, which suggests plaintiffs might claim CPA injuries for seeking medical treatment they would not have pursued if they had known their insurer would deny payment. Nonetheless, the court chooses not to adopt this reasoning, noting that the relevant language in Van Noy is dicta. The Washington Supreme Court's decision in Ambach clarified that payment of medical bills for personal injuries does not qualify as an injury to property under the CPA.
If Ms. Dees can demonstrate that Allstate acted in bad faith, she effectively satisfies the criteria for the Hangman CPA test, which would strengthen her CPA claim. Successful claims for bad faith, breach of contract, or the Insurance Fair Conduct Act (IFCA) could allow her to recover unpaid medical bills, but she cannot recover the same damages multiple times. The court grants summary judgment to Allstate regarding Ms. Dees' IFCA claim related to the denial of PIP coverage while allowing her IFCA claim concerning the unreasonable denial of Uninsured Motorist (UIM) coverage to proceed.
