washington v. oregon insurance law - welcome to pacific ......washington v. oregon insurance law...
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Washington v. Oregon Washington v. Oregon Washington v. Oregon Washington v. Oregon
Insurance LawInsurance LawInsurance LawInsurance LawPacific Northwest Chapter of the CPCU Society Pacific Northwest Chapter of the CPCU Society Pacific Northwest Chapter of the CPCU Society Pacific Northwest Chapter of the CPCU Society
November 6, 2014 MeetingNovember 6, 2014 MeetingNovember 6, 2014 MeetingNovember 6, 2014 Meeting
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About Us
Misty EdmundsonMisty EdmundsonMisty EdmundsonMisty Edmundson
[email protected]@[email protected]@sohalang.com(206) 654-6604
Paul RosnerPaul RosnerPaul RosnerPaul Rosner
[email protected]@[email protected]@sohalang.com
(206) 654-6601
Soha & Lang, PSSoha & Lang, PSSoha & Lang, PSSoha & Lang, PS
1325 Fourth Avenue, Suite 2000
Seattle, WA 98101-2570
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When Claims Go
Sideways in
Washington
Stipulated Settlement Agreements and Judgments with a Covenant Not to Execute
• A case may be ripe for a settlement involving a covenant judgment and assignment of rights
when:
• When an insured faces a trial that may result in:
An excess judgment
Some claims which are covered and some which are not
• A policy limits demand has been made and the insurer does not pay or does not
respond;
• The insured has both appointed defense counsel and personal counsel; and
• Either the insured or the claimant thinks a bad faith claim against the insurer is viable.
When Claims Go
Sideways in
Washington
The assignment of an insured’s claims against his/her insurer to a plaintiff
typically contains three components.
• A judgment establishing the insured’s liability.
• A covenant not to execute given by the claimant to the insured, promising that
the claimant will not enforce the judgment on any of the insured’s assets (other
than insurance).
• An assignment by the insured to the claimant of any rights the insured may
have under the insurance policy or against the insurer.
When Claims Go
Sideways in
Washington
The deck is stacked against the insurer in a Reasonableness Hearing:
• No right to jury;
• Hearing can occur on minimal notice to insurer;
• Insurer may not be allowed any discovery;
• Virtually everything is up to “discretion” of trial judge;
• Much easier for judge to stamp “reasonable,” otherwise judge has duty
to determine what the reasonable settlement value really is.
• Once deemed “reasonable,” rebuttable presumption really isn’t
• Washington Supreme Court extremely anti-insurer
∗ WashingtonWashingtonWashingtonWashington – Four Corners plus “one
way mirror”
∗ OregonOregonOregonOregon – Strict Four Corners
Duty to Defend SOHA&
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∗ WashingtonWashingtonWashingtonWashington – look outside the complaint
to find duty but not to deny.
∗ OregonOregonOregonOregon – have not addressed “one way
mirror” but would be inconsistent with
case law.
Extrinsic Evidence on the
Duty to Defend
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∗ WashingtonWashingtonWashingtonWashington: : : : Unsettled whether can look outside the
complaint to see if someone is an insured
∗ OregonOregonOregonOregon: : : : In Fred Shearer & Sons, Inc. v. Gemini Ins. Co., the
Oregon Court of Appeals held that the insurer had a duty to
defend based on materials extrinsic to the complaint,
rejecting the insurer’s argument that it could only look at the
complaint and the insurance policy.
Stranger to the PolicySOHA&
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∗ Washington Washington Washington Washington : You get them.: You get them.: You get them.: You get them.
∗ Oregon Oregon Oregon Oregon : You probably don’t get them.: You probably don’t get them.: You probably don’t get them.: You probably don’t get them.
Pre-Tender Defense CostsSOHA&
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∗ WashingtonWashingtonWashingtonWashington: There isn’t one.
∗ OregonOregonOregonOregon: The insured is the “primary”
client.
Tripartite RelationshipSOHA&
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∗ WashingtonWashingtonWashingtonWashington: Proof of actual facts
establishing coverage.
∗ OregonOregonOregonOregon: The duty to indemnify is established
by proof of actual facts demonstrating a right
to coverage.
Duty to IndemnifySOHA&
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∗ WashingtonWashingtonWashingtonWashington
∗ Apply Washington rules of policy construction.
∗ Ambiguities in a policy are generally construed
against an insurer and in favor of an insured.
∗ OregonOregonOregonOregon
∗ Apply the Oregon rules of policy construction.
∗ Ambiguities are resolved against the insurer.
Policy Interpretation SOHA&
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∗ WashingtonWashingtonWashingtonWashington: May look to materials outside of the policy in
interpreting the policy under the “context rule.”
∗ OregonOregonOregonOregon: The Oregon Court of Appeals has held “despite
ordinary rules of contract interpretation, extrinsic
evidence of the parties’ intent is not a part of the
interpretation of an insurance policy under Oregon law.”
Extrinsic Evidence in Policy
Interpretation
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∗ Washington Washington Washington Washington
∗ Liability insurers have a common law “duty to settle” claims
against their insureds.
∗ Oregon Oregon Oregon Oregon
∗ “The duty to defend includes the duty to settle the case
within the policy limits if it would be reasonable to do so.”
Duty to Settle SOHA&
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∗ WashingtonWashingtonWashingtonWashington
∗ The elements of a tort action for bad faith are: 1) breach of the
obligation of good faith; 2) injury to the plaintiff; and 3) the bad
faith was a proximate cause of the injury.
∗ Oregon Oregon Oregon Oregon
∗ First First First First PartyPartyPartyParty - First party bad faith claims sound in contract only
and not in tort.
∗ Third Third Third Third partypartypartyparty - When an insurer provides a defense, a bad faith
claim may sound in contract or tort, but where an insurer does
not defend, the insurer faces liable only in contract.
Bad FaithSOHA&
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∗ WashingtonWashingtonWashingtonWashington: You get it.
∗ OregonOregonOregonOregon: To date, Oregon has declined
to adopt it.
Coverage By EstoppelSOHA&
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∗ WashingtonWashingtonWashingtonWashington: The insured may sue for a
violation of the Washington’s regulations.
∗ OregonOregonOregonOregon: Violations of Oregon’s Unfair Claims
Settlement Practices is not actionable by the
insured.
Claim Handling RegulationsSOHA&
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∗ WashingtonWashingtonWashingtonWashington: Unsettled.
∗ OregonOregonOregonOregon: Rejected.
Comparative Bad FaithSOHA&
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∗ WashingtonWashingtonWashingtonWashington: The insured may sue for a violation
of the Consumer Protection Act.
∗ OregonOregonOregonOregon: Insurance is exempt under the Unlawful
Trade Practices Act.
Consumer Protection LawsSOHA&
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∗ WashingtonWashingtonWashingtonWashington: Does not have them.
∗ However, treble damages under the Insurance Fair Conduct ActInsurance Fair Conduct ActInsurance Fair Conduct ActInsurance Fair Conduct Act.
∗ OregonOregonOregonOregon: A statute provides:
Punitive damages are not recoverable in a civil action unless it is
proven by clear and convincing evidence that the party against
whom punitive damages are sought has acted with malice or has
shown a reckless and outrageous indifference to a highly
unreasonable risk of harm and has acted with a conscious
indifference to the health, safety and welfare of others.
Punitive DamagesSOHA&
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∗ WashingtonWashingtonWashingtonWashington – may be recoverable under
Olympic Steamship, CPA, and IFCA.
∗ OregonOregonOregonOregon – Attorney Fees recoverable by Statute,
which contains a safe harbor provision.
Attorney FeesSOHA&
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Thank You
Misty EdmundsonMisty EdmundsonMisty EdmundsonMisty [email protected]@[email protected]@sohalang.com(206) 654-6604
Paul RosnerPaul RosnerPaul RosnerPaul Rosner Soha & Lang, [email protected]@[email protected]@sohalang.com 1325 Fourth Avenue, Suite 2000
(206) 654-6601 Seattle, WA 98101-2570
The written material contained herein were developed by Soha & Lang, P.S. for the benefit the
CPCU Society and any use may only be done with express written permission of Soha & Lang,
P.S.
The opinions expressed herein are those the authors and do not necessarily reflect those of
their clients or of Soha & Lang, P.S.
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