Mann et al v. Geico General Insurance Company, No. 2:2012cv00909 - Document 49 (W.D. Wash. 2013)
Court Description: ORDER denying 29 Defendant's Motion for Summary Judgment; denying 32 Plaintiff's Motion for Partial Summary Judgment. Signed by Judge Ronald B. Leighton.(DN)
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Mann et al v. Geico General Insurance Company 1 Doc. 49 HONORABLE RONALD B. LEIGHTON 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 8 KEVIN MANN, CASE NO. 2:12-CV-00909-RBL 9 Plaintiff, 10 v. ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES 11 12 GEICO GENERAL INSURANCE COMPANY, a foreign insurer, 13 Defendants. 14 THIS MATTER is before the court on Plaintiff Kevin Mann’s Motion for Partial 15 Summary Judgment [Dkt. #32], and Defendants GEICO’s Motion for Summary Judgment 16 regarding Olympic Steamship fees [Dkt. #29]. 17 Mann claims that GEICO acted in bad faith in violation of Washington’s Consumer 18 Protection Act when it (1) did not notify him that Uninsured Motorist coverage was relevant to 19 his claim when he first reported the accident, (2) unreasonably denied coverage for the accident 20 when Mann made a UIM claim, and (3) failed to initiate a dispute resolution proceeding. Mann 21 seeks partial summary judgment on these issues. He argues that the amount of his damages will 22 be determined at trial. 23 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 1 Dockets.Justia.com 1 GEICO seeks a ruling as a matter of law that Mann is not entitled to any Olympic 2 Steamship fees because it did not deny him coverage, but rather denied Mann’s UIM claim. 3 4 5 For the following reasons both Motions are DENIED. I. BACKGROUND On August 17, 2009, Plaintiff Kevin Mann was involved in an accident on Highway 410 6 in Enumclaw, WA. His Ford F-350 pick-up truck left the road and rolled several times. Mann’s 7 injuries required him to be airlifted to Harborview. Mann had minimal insurance through 8 GEICO. His policy did not include Personal Injury Protection coverage, but, consistent with 9 state law, did include Underinsured Motorist (UIM) coverage in the amount of $50,000. It is 10 apparently undisputed that Mann’s injuries exceeded that amount. 11 Mann made a claim with GEICO two days after the accident, and GEICO paid for the 12 property damage to his truck within a week. Mann alleges that GEICO did not notify him of his 13 possible UIM coverage, but GEICO disputes this. In October, 2009, GEICO told a medical 14 provider seeking a claim number there was no PIP coverage available and that UIM coverage did 15 not apply, because it had determined Mann was at fault. Mann did not pursue possible UIM 16 coverage until he consulted with an attorney in August 2010. 17 On August 20, 2010, Mann made a UIM claim. GEICO began an investigation, which 18 included obtaining the police report and written statements from five witnesses. It also took the 19 recorded statements of witnesses Rebekah Holkesvig and Ryan Burks. Although there were 20 multiple witnesses to the accident, no single witness saw the accident in its entirety, and the 21 witnesses’ accounts are conflicting. Some witnesses say it looked like Mann was speeding, 22 involved in a road rage incident, or racing a Mitsubishi Eclipse, but these witnesses did not see 23 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 2 1 Mann’s accident. Another witness, Holkesvig, saw Mann swerve off the road and roll into the 2 ditch, but did not see another vehicle. 3 On September 13, 2010, GEICO finished its investigation and determined that the 4 accident was 100% Mann’s fault. GEICO notified Mann that its “investigation… [did] not 5 support the conclusion that a “phantom vehicle” played a role in the causation of this accident” 6 because “the facts of the accident must be proven with competent evidence… [and GEICO] will 7 not accept the testimony of [Mann]… for any injuries or damages resulting from this accident.” 8 [Dkt. #36 at 7]. Mann disagreed with GEICO’s finding and his attorney continued to correspond 9 with a GEICO claims examiner through March of 2012 about obtaining coverage. 10 Mann sued GEICO for bad faith in May 2012, on three primary grounds: (1) He claims 11 GEICO failed to disclose his UIM coverage in 2009; (2) that GEICO’s denial of UIM coverage 12 based on a lack of evidence of a “phantom vehicle” was bad faith; and (3) GEICO failed to 13 initiate dispute resolution proceedings, forcing him to sue to obtain the benefits of his policy. 14 Mann now seeks judgment as a matter of law on his bad faith claim. GEICO opposes this Motion, and in its own Motion seeks a determination that even if 15 16 Mann prevails, he is not entitled to his attorneys’ fees under Olympic Steamship. It argues that 17 Mann is not entitled to fees because it denied his UIM claim, but never denied that Mann had 18 UIM coverage. 19 II. DISCUSSION 20 A. 21 Summary Judgment and Insurer’s Duty of Good Faith. Summary judgment is appropriate when, viewing the facts in the light most favorable to 22 the nonmoving party, there is no genuine issue of material fact which would preclude summary 23 judgment as a matter of law. Once the moving party has satisfied its burden, it is entitled to 24 summary judgment if the non-moving party fails to present, by affidavits, depositions, answers to ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 3 1 interrogatories, or admissions on file, “specific facts showing that there is a genuine issue for 2 trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). “The mere existence of a scintilla of 3 evidence in support of the non-moving party’s position is not sufficient.” Triton Energy Corp. v. 4 Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). Factual disputes whose resolution would not 5 affect the outcome of the suit are irrelevant to the consideration of a motion for summary 6 judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In other words, 7 “summary judgment should be granted where the nonmoving party fails to offer evidence from 8 which a reasonable [fact finder] could return a [decision] in its favor.” Triton Energy, 68 F.3d at 9 1220. 10 An insurer has a duty of good faith to its policyholder and violation of that duty may give 11 rise to a tort action for bad faith. Truck Ins. Exch. v. Vanport Homes, Inc., 147 Wash.2d 751, 12 765, 58 P.3d 276 (2002). To succeed on a bad faith claim, the policyholder must show the 13 insurer's breach of the insurance contract was unreasonable, frivolous, or unfounded. Overton v. 14 Consol. Ins. Co., 145 Wash.2d 417, 433, 38 P.3d 322 (2002). Whether an insurer acted in bad 15 faith is a question of fact. Van Noy v. State Farm Mut. Auto. Ins. Co., 142 Wash.2d 784, 796, 16 16 P.3d 574 (2001). If reasonable minds could differ that an insurer's conduct was reasonable, or if 17 there are material issues of fact with respect to the reasonableness of the insurer's action, then 18 summary judgment is not appropriate. Smith v. Safeco Ins. Co., 150 Wash. 2d 478, 486, 78 P.3d 19 1274, 1277-78 (2003). 20 B. Disclosure of UIM Coverage. 21 22 Mann’s first bad faith claim is based on his claim that GEICO failed to even notify him that his policy included UIM coverage, and did not investigate the accident when he first 23 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 4 1 reported it on August 19, 2009. GEICO points to its records as evidence that it did notify Mann 2 of his UIM coverage: 3 Fnol Loss Report Did you Advise Of 1st Party Coverages? Yes 4 See GEICO Claim Notes [Dkt #36 at 5]. 5 If and to the extent Mann’s bad faith claim is based on GEICO’s failure to inform him of 6 his policy’s potential UIM coverage, this evidence presents a question of fact as to whether 7 GEICO actually failed to do so. Mann’s Motion for Summary Judgment on his bad faith claim 8 on this basis is therefore DENIED. 9 C. Reasonableness of Coverage Denial. 10 The second basis for Mann’s bad faith claim is his allegation that GEICO denied UIM 11 coverage based on its determination that there was no independent evidence corroborating 12 involvement of a “phantom vehicle,” when in fact there was evidence suggesting that there was a 13 second car, and that that car caused the accident. Mann relies on the fact that several eye 14 witnesses confirmed the presence of a Mitsubishi Eclipse interacting with Mann’s vehicle before 15 the accident and leaving the scene afterward, as well as Mann’s “excited utterance” statements at 16 the scene that a second vehicle “cut me off.” [Dkt. #32 at 2]. 17 GEICO does not disagree that another vehicle may have been present, but argues that 18 there was no evidence to support a “phantom vehicle” under the policy’s definition. The policy 19 requires that such a vehicle “causes bodily injury or property damage… and has no physical 20 contact.” GEICO argues that the witness statements show that Mann was “engaged in road 21 racing just prior to the accident and that loss of control was the sole cause of the motor vehicle 22 accident.” GEICO’s finding is largely based on Holkesvig’s statement that she saw Mann lose 23 control of his truck, but did not observe any other vehicles near the truck just before the accident. 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 5 1 Because the evidence presented is amenable to alternate inferences, it cannot be said as a 2 matter of law that GEICO’s denial of Mann’s UIM claim was unreasonable. Therefore, Mann’s 3 request for Summary Judgment on this claim is DENIED. 4 D. GEICO’s Obligation to Initiate Dispute Resolution. 5 It is undisputed that Mann’s GEICO policy does not require it to arbitrate disputed UIM 6 claims. Nevertheless, Mann argues that GEICO has a duty of good faith and fair dealing and has 7 a duty under Washington law to attempt to settle UIM claims without arbitration or litigation. 8 He claims that GEICO should have either agreed to arbitration or initiated a Declaratory 9 Judgment action to resolve his claim, and that GEICO’s refusal to do so was unreasonable and 10 bad faith. GEICO argues, correctly, that Washington law does not obligate it to arbitrate claims 11 in the absence of a policy provision requiring arbitration. 12 But it is bad faith to force an insured to initiate litigation to obtain coverage by offering 13 him substantially less than he ultimately recovers: 14 15 16 17 The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices of the insurer in the business of insurance, specifically applicable to the settlement of claims: (7) Compelling a first party claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts recovered in such actions or proceedings. 18 WAC 284-30-330(7). 19 GEICO argues its failure to initiate arbitration or a Declaratory Judgment action is not 20 bad faith as a matter of law. 21 Under Washington law, we must await the result of the litigation Mann initiated before 22 we can know whether GEICO offered him less than he ultimately recovered. It cannot be said as 23 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 6 1 a matter of law that GEICO’s failure to offer anything on Mann’s UIM claim was bad faith. 2 Mann’s Motion for Summary Judgment on his bad faith claim on this basis is DENIED. 3 E. Attorney’s Fees. 4 GEICO also seeks summary judgment on one narrow issue. It argues that Mann is not 5 entitled to Olympic Steamship fees as a matter of law because it did not deny Mann coverage; 6 rather, it denied his UIM claim. Mann argues that he is entitled to fees based on GEICO’s bad 7 faith, CPA violations, the Insurance Fair Conduct Act and/or Olympic Steamship. 8 An insured party has a right to recover attorney fees incurred as a result of the insurer's 9 refusal to defend the insured, or refusal to pay a justified claim by the insured. Olympic S.S. Co., 10 Inc. v. Centennial Ins. Co., 117 Wash. 2d 37, 811 P.2d 673 (1991). Olympic Steamship fees are 11 recoverable in cases where the insurer forces the insured to litigate questions of coverage, but not 12 in instances where the controversy is merely over the amount of, or the denial of, a claim. 13 Leingang v. Pierce County Med. Bureau, Inc., 131 Wash. 2d 133, 147, 930 P.2d 288, 295 (1997). 14 However, the existence of sufficient verification that a “phantom vehicle” caused the 15 accident is an element of coverage under Washington law. Farmers Ins. Co. of Washington v. 16 Frederickson, 81 Wash. App. 319, 322, 914 P.2d 138, 140 (1996). 17 GEICO argues that Mann is not entitled to Olympic Steamship fees because they did not 18 deny coverage. It argues that it investigated Mann’s claims and paid for the damage to his 19 vehicle but that Mann was not entitled to recover under a UIM claim because it had determined 20 Mann was 100% at fault. 21 GEICO’s position is undermined by its own evidence. It admitted in its formal coverage 22 denial letter that it was in fact determining UIM coverage: 23 24 “In the absence of independent evidence confirming the existence and/or involvement of a “phantom vehicle” GEICO cannot afford coverage…. If you have any additional evidence or testimony that would confirm the involvement of ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 7 1 a “phantom vehicle” please inform me immediately so that I can revisit the issue of coverage.” 2 See Sloan Dec. [Dkt. #33, exhibit 8 (emphasis added)]. 3 This question of sufficient verification that a “phantom vehicle” caused the accident is a 4 coverage issue. Therefore, it cannot be said as a matter of law that if Mann prevails, he would 5 not be entitled to his fees under Olympic Steamship. GEICO’s Motion for Summary Judgment 6 on this claim is DENIED. 7 Mann’s Motion for Summary Judgment [Dkt. #32] and GEICO’s Motion for Summary 8 Judgment [Dkt. #29] are DENIED. 9 IT IS SO ORDERED. 10 Dated this 13th day of February 11 12 13 A RONALD B. LEIGHTON UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 ORDER ON SUMMARY JUDGMENT AND OLYMPIC STEAMSHIP FEES - 8
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