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Home > Attorney Work Product > View From Proskauer: ERISA Plan Fiduciaries—Are Your Conversations With Counsel Privileged?
View From Proskauer: ERISA Plan Fiduciaries—Are Your Conversations With Counsel Privileged?
It is generally understood that communications between clients and lawyers are privileged and that the substance of those conversations may not be divulged to third parties except in the rarest of circumstances. In the employee benefits world, however, plan sponsors and fiduciaries are often surprised to learn that this cardinal rule does not always apply. In fact, many communications between plan fiduciaries and plan counsel must be divulged to plan participants and beneficiaries.
The reason for different treatment of the attorney-client privilege in employee benefits matters is the so-called “fiduciary exception,” pursuant to which communications between an attorney and a plan fiduciary are not shielded from disclosure to plan participants. There are two explanations for the exception: first, because the participants, rather than the plan fiduciaries, are viewed as the “real” clients of plan counsel; and second, because plan participants are entitled to disclosure of all information pertaining to the administration of their claims for benefits.
While the fiduciary exception doctrine is well established, its application may differ depending on the particular facts and circumstances presented. This article highlights ten principles that generally are determinative of whether the exception will apply.
Identify the Client. In order to evaluate whether the fiduciary exception is applicable, one must first identify the client with whom the attorney was communicating. There are several potential clients, including the plan, a plan fiduciary, a plan administrator or a plan sponsor, which in the multiemployer context could include a contributing employer or a union. The fiduciary exception applies—if at all—only in cases of attorney communications with plan fiduciaries.
Nature and Purpose of the Communication. The reasoning behind the fiduciary exception, at least in part, is that plan fiduciaries have a duty to make information regarding the administration of a plan available to a plan’s participants and beneficiaries. As part of this obligation, fiduciaries must make available upon request communications with plan counsel that are intended to assist in the administration of the plan. Whether a communication concerns the administration of a plan is often a fact-intensive inquiry made by a court in camera.
Limits to the Fiduciary Exception. Courts have recognized that there are circumstances where the fiduciary exception is inapplicable. For instance, it has no application where the advice relates to a settlor function, e.g., issues pertaining to adoption, amendment and termination of a plan amendment. Similarly, where the goal of the advice is to advise the fiduciary of his or her potential personal liability, the fiduciary exception does not apply.
Joint Representation. A plan fiduciary cannot preclude the application of the fiduciary exception to the attorney-client privilege where it is otherwise applicable merely by retaining the same counsel that advises the plan sponsor. In other words, if a lawyer is retained to advise an employer to provide advice in his capacities as both a nonfiduciary and as a plan fiduciary, consultation on the nonfiduciary matters will not prevent disclosure of privileged communications on the fiduciary matters.
Participant Claims and Appeals. Although a participant’s administrative claim or appeal is necessarily adversarial in nature, i.e., a participant generally demands benefits or additional benefits that she believes she is entitled to under the terms of the plan, courts have concluded that the fiduciary exception applies to communications between plan fiduciaries and counsel concerning such claims and appeals provided that the communications occur prior to the time the administrative process is fully exhausted. One rationale for this conclusion is that under Department of Labor regulations, a claimant who has had her claim denied must be allowed access to all documents and information “relevant” to the claim. Post-decisional communications, where a plan seeks legal advice after the decision to deny an appeal, are no longer relevant to the decision-making process and constitute evidence that the interests of the beneficiary and the plan fiduciary have diverged.
Good Cause Requirement. Early in the development of the fiduciary exception, some courts required a participant to demonstrate good cause before applying the fiduciary exception. The requirement derives from the showing that a shareholder must make in a derivative action to obtain discovery from management. The few courts that have required a showing of good cause in the Employee Retirement Income Security Act context appear to be seeking a balance between the fiduciary’s interest in confidentiality and the participant’s need for the information in question. Most courts have either expressly rejected the need to show good cause, or simply have not addressed the issue.
Application to DOL Proceedings. Where the DOL commences an investigation or a lawsuit on behalf of participants and beneficiaries, courts have concluded that the agency steps into the shoes of the participants and beneficiaries and may invoke the fiduciary exception.
Application to Insurance Companies. There is a split of authorities regarding the application of the fiduciary exception to insurance companies. The Third Circuit concluded that the fiduciary exception does not apply to a health plan insurer because the plan beneficiaries were not the “real” clients obtaining legal representation. The court reached this conclusion because: (i) legal title to the assets remained with the insurer; (ii) a conflict of interest exists when an insurance company determines eligibility for benefits and pays those benefits from its own funds; (iii) insurers have interests larger and distinct from any one plan’s beneficiaries insofar as they handle multiple ERISA benefit plans at once; and (iv) insurers paid for legal advice using their own assets, not those of their beneficiaries. The Ninth Circuit, on the other hand, found that the fiduciary exception is applicable to insurers. The court reasoned that the fiduciary exception applied equally to both trustees who serve as fiduciaries of a plan and insurers acting in the role of fiduciaries, since both maintain the same legal duties as fiduciaries under ERISA and there is no meaningful distinction between them.
Waiver. The attorney-client privilege can be waived if the communication occurs in the presence of a third party. In the employee benefits world, meetings about plan issues often address a multitude of issues, such as plan investments, ongoing compliance and benefit claims and appeals. These meetings are often attended by various service providers, including the plan fiduciaries, counsel, investment consultants, actuaries and accountants. Careful consideration should be given to whether the presence of service providers is necessary to the discussion at hand. If it is not, any privilege that may have existed concerning a conversation between the plan fiduciaries and counsel could be deemed to have been waived.
Attorney Work Product. The work product doctrine protects attorney communications, thought processes and other activities conducted in anticipation of litigation. Courts have concluded that the fiduciary exception generally has no application to the work product doctrine because the work product belongs exclusively to the attorney. However, courts have ruled that communications between plan fiduciaries and the plan’s attorney during the administrative process are not shielded from disclosure under the fiduciary exception, even if they may appear to be made in anticipation of litigation.
While ethical issues arise across all disciplines, they are particularly prevalent in the employee benefits practice because of the multiple parties involved and the multiple “hats” that individuals may wear. The fiduciary exception to the attorney-client privilege adds yet another layer of complication. Plan fiduciaries should be mindful of the principles outlined above when engaged in communications with their attorneys, so that they avoid being surprised—and potentially disadvantaged—if these communications one day become the subject of litigation.
 See, e.g., U.S. v. Mett, 178 F.3d 1058, 1063 [23 EBC 1081] (9th Cir. 1999) (26 BPR 1545, 6/7/99) (“As applied in the ERISA context, the fiduciary exception provides that ‘an employer acting in the capacity of ERISA fiduciary is disabled from asserting the attorney-client privilege against plan beneficiaries on matters of plan administration.’”) (citation omitted).
 See, e.g., Bland v. Fiatallis North America, 401 F.3d 779, 787-88 [34 EBC 1875] (7th Cir. 2005) (51 PBD, 3/17/05; 32 BPR 681, 3/22/05).
 See, e.g., U.S. v. Mett, 178 F.3d at 1065 (holding that the fiduciary exception did not apply to legal memoranda advising defendants, as plan trustees, about their personal, civil and criminal exposure).
 See, e.g., In re Long Island Lighting Co., 129 F.3d 268, 272 [21 EBC 2025] (2d Cir. 1997).
 See, e.g., Gunderson v. MetLife Ins. Co., No. 10-CV-50, 2011 WL 487755, at *10-11 (D. Utah Feb. 7, 2011).
 See, e.g., Neathery v. Chevron Texaco Corp. Group Acc. Policy No. OK826458, No. 05 Civ. 1883, 2006 WL 4690828, at *2 (S.D. Cal. July 11, 2006).
 See In re Occidental, 217 F.3d 293, 297 (5th Cir. 2000); Donovan v. Fitzsimmons, 90 F.R.D. 583, 586-87 (N.D. Ill. 1981) (144 PBD, 7/26/00; 27 BPR 1828, 8/1/00).
 See, e.g., Solis v. The Food Employers Labor Relations Assoc., 644 F.3d 221, 229-31 [50 EBC 2697] (4th Cir. 2011) (88 PBD, 5/6/11; 38 BPR 910, 5/10/11) (“there was no principled basis on which to distinguish between enforcement actions and investigations in the application of the fiduciary exception”).
 Wachtel v. Healthnet, Inc., 482 F.3d 225 [40 EBC 1545] (3d Cir. 2007) (63 PBD, 4/3/07; 34 BPR 856, 4/10/07).
 Stephan v. Unum Insurance Co. of Amer., 697 F.3d 917 [54 EBC 1887] (9th Cir. 2012) (177 PBD, 9/13/12; 39 BPR 1767, 9/18/12).
 See, e.g., Hill v. State Street Corp., 2013 U.S. Dist. LEXIS 181168, at 17-19 (D. Mass. Dec. 30, 2013).
 See, e.g., Wildbur v. Arco Chemical, 974 F.2d 631, 646 [16 EBC 1235] (5th Cir. 1992) (“Because the attorney work product doctrine fosters interests different from the attorney-client privilege, it may be successfully invoked against a pension plan beneficiary even though the attorney-client privilege is unavailable.”).

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Justice Scalia was the funniest justice, at 77 "laughing episodes." On average, he was good for slightly more than one laugh - 1.027, to be precise - per argument.
The simple notation "[laughter]" does not, moreover, distinguish between "a series of small chuckles" and "a joke that brought the house down." Nor, Professor Wexler said, does it separate "the genuine laughter brought about by truly funny or clever humor and the anxious kind of laughter that arises when one feels nervous or uncomfortable or just plain scared for the nation's future."
For many years the Internal Revenue Service has sought to defeat the use of family limited partnerships and family limited liability companies (family holding companies) to achieve valuation discounts for transfer tax purposes. In this effort the Service has employed numerous theories and strategies, with varying success. This commentary considers the most recent theory advanced by the Service - that assets transferred to a family holding company are includible in the decedent's estate, at their full, undiscounted value, under section 2036 of the Internal Revenue Code. This commentary provides a simple roadmap to the government's position on this issue, as articulated in several recent cases. The purpose of the commentary is not to discuss these cases in detail, but rather to explain the government's position in general terms, with the goal of assisting practitioners in structuring transactions to avoid the problems identified.
In a complex securities fraud case, the Supreme Court of Texas addressed the propriety of a jury instruction regarding breach of fiduciary duty under former Trust Code § 113.059 [see now Trust Code § 111.0035].
The instruction failed to reflect the possibility that the standard of care may be modified by agreement. Because the instruction did not account for contractual modifications, the court determined it was overly broad and consequently defective.
Sterling Trust Co. v. Adderley, 168 S.W.3d 835 (Tex. 2005).
Earlier on this blog, here, here, here, and here, I have been reporting on the case of Lillian Glasser and the battle to control her and her $25 million fortune.
Calling the dispute a "legal fratricide" between sibling rivals that has consumed millions of dollars in attorneys' fees, Biery's order said "the end result ... is the creation of a Glasser chess game in which Mrs. Glasser has become a pawn."
His ruling sends parts of the case back to Bexar County Probate Court where a trial will be held over who should become the guardian of Glasser and her $25 million estate. But because the principal parties come from three states, Biery kept control over other issues.
The following is a summary of the recent Texas case of Ayers v. Mitchell, 167 S.W.3d 924 (Tex. App.—Texarkana 2005, no pet. h.).
Mother, Father, Daughter, and Son opened a joint bank account consisting of funds contributed by Mother and Father. Over time, Daughter obtained sole control over these funds and refused to return them to Father after Mother’s death. The trial court determined that Mother and Father had created an irrevocable oral trust with Daughter as the trustee and thus agreed with Daughter that Father could not regain the funds. The appellate court reversed.
The court began its analysis with Texas Property Code § 112.004 which provides that a trust must be in writing unless it satisfies the oral trust exception for personal property. For an oral trust of personal property to be enforceable, there must be a transfer of trust property to a trustee who is neither the settlor nor a beneficiary provided the transferor expresses trust intent either at or before the time of the transfer. The court reviewed the facts and determined that Father had not made a completed transfer of the bank account funds and thus no trust existed even though Father had expressed the requisite trust intent.
The court recognized that the Texas Trust Code does not define the term “transfer.” After examining cases dealing with the ownership of funds in multiple-party accounts, the court held that a transfer “must divest the [settlor] of all dominion and control over the trust res.” Ayers at 929. Father did not transfer the funds because he remained on the account and thus had the right to make withdrawals at any time. In addition, there was evidence of several occasions where Father directed the use of the funds in the account.
Note: In dicta, the court explained that even if Father had created a trust, it would have been revocable and the evidence established its revocation. For example, Father’s filing this lawsuit and asking for his money would have revoked any trust that he may have created.
Moral: All trusts should be in writing and the writing should clearly express the settlor’s intent.
This article is directed to all of those audiences, with the goal of informing them about the principal features of the legislation and its implications for their practices. In doing so, the article will identify most of the relatively small number of differences between the Virginia UTC and the official text of the UTC as adopted by the National Conference of Commissioners on Uniform State Laws ("NCCUSL").
Part II of the article begins with a summary of the reasons for adopting the UTC, both generally and in Virginia in particular. Part II then provides an overview of the development of the UTC leading up to its adoption by NCCUSL in 2000. Part II then describes the process leading to enactment of the UTC by the General Assembly. Part II also discusses the role of the official NCCUSL Comments in understanding and interpreting the Virginia UTC.
Part III of the article provides an overview of the Virginia UTC. It begins by describing the scope of the Virginia UTC, which applies exclusively to express trusts or trusts required to be administered as express trusts. Part III then describes the manner in which the statute implements the principle of effecting the express intent of the settlor. Part III also describes the few instances in which the terms of a trust instrument cannot override the rules set forth in the statute. Part III further describes the extent to which the common law and principles of equity will continue to govern certain matters concerning the administration of trusts. Part III then describes the function of each of the principal subdivisions of the statute and explains the principal ways in which the Virginia UTC varies from the original.
Part IV provides a detailed discussion of several key concepts utilized in the Virginia UTC, specifically the concepts of "knowledge," "qualified beneficiaries," and "representation," each of which plays a significant role in resolving matters of trust administration.
This discussion is followed by Part V, in which the article examines the numerous ways in which the Virginia UTC facilitates trust administration without judicial intervention.
In Part VI, the article examines several key substantive elements of the Virginia UTC, including the rules concerning judicial modification of trusts, rules governing the liability of trustees, and rules governing the rights of creditors of trust beneficiaries.
Finally, Part VII of the article offers some concluding remarks.
Earlier on this blog, here, here, and here, I have been reporting on the case of Lillian Glasser and the battle to control her and her $25 million fortune.
The case is now receiving national attention triggered by a story which appears in today's New York Times.
[T]he case highlights the checkerboard practices of local probate courts, which govern the transfer of property from people who die or are declared incompetent. The courts are not federally regulated, but in response to a growing number of interstate disputes, the National Conference of Commissioners on Uniform State Laws is drafting nationwide probate standards similar to those in the field of child custody.
Some states require residency, known as domicile, for a probate court to have jurisdiction. Other states, including Texas, require only physical presence. Experts say the lack of uniformity can be exploited by parties seeking legal venues where they enjoy an advantage.
Ralph Blumenthal, A Family Feud Sheds Light on Differences in Probate Practices From State to State, NY Times, Dec. 28, 2005.
Earlier on this blog, here and here, I have been reporting on the case of Lillian Glasser and the battle to control her and her $25 million fortune.
Stuck in San Antonio for the past 10 months as the central figure in a complex and contentious family probate battle, Lillian Glasser, a wealthy 85-year-old widow from New Jersey, is despairing of ever going home.
"I can't take it anymore. I'm afraid I'll never live to see New Jersey again. I think that's going to be the end of it, that I'll never make it back," Glasser said last week. "I never did anything. I'm the victim of a bunch of nuts."
According to Glasser's lawyer, friends and family members who speak to her regularly, her mood is becoming increasingly morbid and pessimistic. To one, she remarked bitterly that the only way she'll leave Texas is in a box.
"She is in essence, walking her last mile. She's in a desperate state here. If she doesn't get out of Texas, the woman is going to give up," said Karen Pena, Glasser's court-appointed lawyer in San Antonio.
John MacCormack, Hopeless holiday for courts' captive, San Antonio Express-News, Dec. 26, 2005.
Earlier on this blog, I reported on the case of Lillian Glasser and the battle to control her and her $25 million fortune. The posting, based on a newspaper article, painted a grim picture that Lillian was being held hostage and psychologically tortured.
You should be aware that Mrs. Glasser designated her daughter to serve as her agent at a time that Mrs. Glasser had capacity. She was represented by a well respected New Jersey lawyer who is a Fellow of the American College of Trust and Estate Counsel and the power was properly witnessed. The power of attorney was durable and when the treating physician certified Mrs. Glasser's lack of capacity, it was activated as it was a springing power.
Mrs. Glasser is now severely demented and although her daughter has accounted for all of her funds to the son, the court appointed attorneys and Judge Spencer, Mrs. Glasser's son has filed what he admits is a pre death will contest alleging that his rights have been tortiously interfered with as they pertain to his mother. Despite the fact that Texas does not allow pre death will contests, this dispute has lingered on under the guise that Mrs. Glasser wants to go "home". Mrs. Glasser's memory of "home" was when her husband and parents were alive which is no longer the case. When she got to New Jersey on her last visit, she requested to return to San Antonio. As you are aware, it is unfortunate that people who have dementia have little insight to the fact they lack the judgment or ability to make decisions where to live. She is not oriented to time and sometimes lives in the past. She is functioning on the intellectual equivalent of a young child per one of her treating physicians.
Mrs. Glasser resides in a lovely high-rise in San Antonio with round the clock care. She goes to her country club, gets massages, physical therapy and has regular visitors. She has a home in New Jersey and Florida and her grandchildren reside in San Antonio. Unfortunately, she no longer has the judgment or the ability to make decisions about her health and well being.
I think the record needs to be clear that Mrs. Glasser and her husband (who also had a power of attorney) both took the necessary steps to avoid the dispute that now exists. I also think it is important to point out to the professors who read your blog that more and more, guardianship proceedings are being utilized as pre death will contests. Perhaps a no contest clause should be put in a power of attorney for those jurisdictions who recognize the validity of such clauses or an arbitration clause should be incorporated into a power of attorney so individuals private lives do not become a source of newspaper articles and blogs. Even when agents are carefully selected, disgruntled relatives can still file litigation.
In a student note, J.M. Robinette discusses the case of Edmundson v. Estate of Fountain, No. 03-1459, 2004 WL 1475423, Ark. July 1, 2004. Wills -- Holographic Wills and Testamentary Intent -- Extrinsic Evidence is Inadmissible to Prove Testamentary Intent for Holographic Wills Lacking Words of Disposition, 27 U. Ark. Little Rock L. Rev. 545 (2005).
Few civil matters are as controversial as will disputes. These cases often pit family member against family member for recognition of their claim to the estate of a deceased loved one. Unlike formal wills in which ceremonial formalities prove the intention of the testator, when confronted with a holographic will the survivors of the deceased may question the intent of the document. One commentator observed that the majority of holographic wills were forgeries. Due to these concerns, holographic wills have great potential to incite disputes over the deceased's estate. Notwithstanding the potential for controversy, the holographic will survives as an inexpensive means for citizens to avoid intestacy. In fact, provisions for holographic wills are in both the Uniform Probate Code and the Restatement (Third) of Property.
This note will explore the controversy over testamentary intent in holographic wills brought about by the recent Arkansas Supreme Court decision Edmundson v. Estate of Fountain. Section II of this note will provide both the background facts of the case and the reasoning of the Arkansas Court of Appeals. After that, Section III will explore the historical background of the law of holographic wills, the early law in Arkansas and the development of the testamentary intent requirement, and the development of Arkansas law regarding the proof of testamentary intent. Next, Section IV will trace the reasoning of the Arkansas Supreme Court's majority and dissenting opinions in Edmundson. Finally, Section V will comment on the state of the law regarding both admission of extrinsic evidence to prove testamentary intent and the substantive facial requirements for a valid holographic will.


Entitlement to service connection for the Veteran's cause of death is denied.
1. At the time of the Veteran’s death, service connection was not established for any disorder.
2. The preponderance of the evidence shows that the cardiopulmonary arrest with cancer of the urinary bladder that caused the Veteran’s death was present in service or until many years thereafter and they are not related to service or to an incident of service origin.
The criteria for establishing entitlement to service connection for the Veteran's cause of death have not been met.  38 U.S.C. §§ 1101, 1110, 1112, 1113, 1116, 1310, 5103, 5107; 38 C.F.R. §§ 3.303, 3.304, 3.307, 3.309, 3.312.
The Veteran served on active duty with the Philippine Commonwealth Army of the U.S. Army Forces in the Far East (USAFFE) from December 1941 to June 1942 and from March 1945 to February 1946.  The Veteran was a prisoner of war (POW) from April 10, 1942 to June 27, 1942.
The Veteran passed away in February 1994.  The appellant is the Veteran’s surviving spouse.
This matter was previously remanded on multiple occasions, to include in July 2017.
In this regard, it can be either the immediate or underlying cause, or else be etiologically related.  38 U.S.C. § 1310; 38 C.F.R. § 3.312.  In order to constitute the principal cause of death, the service-connected disability must be medically determined to have been one of the immediate or underlying causes of death, or be etiologically related to the cause of death.  38 C.F.R. § 3.312 (b).  A contributory cause of death is one not inherently related to the principal cause, but that it contributed substantially or materially; combined to cause death; or assisted in the production of death.  Significantly, it is not sufficient to show that it casually shared in producing death, but rather it must be shown that there was a causal connection.  38 C.F.R. § 3.312(c)(1).
The appellant asserts entitlement to service connection for the Veteran’s cause of death.  He passed away in February 1994.  At the time of the Veteran’s death, he had not been granted service connection for any condition or disability related to service.  The death certificate listed the Veteran’s underlying cause of death as cardiopulmonary arrest with cancer of the urinary bladder.  No other conditions were listed as a significant or contributing cause in the Veteran’s passing.
After a review of the evidence of record, the Board finds that service connection for the cause of the Veteran’s death is not warranted.
As an initial matter, the Veteran was not service connected for any disabilities at the time of his death.  As such, the only aspects of the appellant’s claim for consideration are as follows-whether the cause of the Veteran’s death (i.e., the cardiopulmonary arrest with cancer of the urinary bladder indicated in his death certificate) should have been service-connected based on the evidence of record.
In this regard, service connection is warranted where the evidence of record establishes that a particular injury or disease resulting in disability was incurred in the line of duty in the active military service or, if pre-existing such service, was aggravated thereby.  38 U.S.C. § 1110; 38 C.F.R. § 3.303.  If a condition noted during service is not shown to be chronic, then generally a showing of continuity of symptomatology after service is required for service connection if the disability is one that is listed in 38 C.F.R. § 3.309.  38 C.F.R. § 3.303(b); see also Walker v. Shinseki, 708 F.3d 1331 (Fed. Cir. 2013).  In addition, service connection may also be granted on the basis of a post-service initial diagnosis of a disease, where the physician relates the current condition to the period of service.  38 C.F.R. § 3.303(d).  Other specifically enumerated disorders, including tropical diseases and diseases caused by being a POW, will be presumed to have been incurred in service if they manifested to a compensable degree within the first year following separation from active duty.  38 U.S.C. §§ 1101, 1112, 1113; 38 C.F.R. §§ 3.307, 3.309(a), (b), and (c).
As to service connection for cardiopulmonary arrest and cancer of the urinary bladder based on the presumptions found at 38 C.F.R. § 3.309(a), (b), and (c), the Board finds that they do not apply to the current appeal because the Veteran, despite being a POW in the Philippines, was not diagnosed with one of the enumerated diseases.  38 U.S.C. §§ 1101, 1110, 1112, 1113.
As to establishing service connection for cardiopulmonary arrest and cancer of the urinary bladder based on proof of direct causation, the service treatment records are negative for complaints, symptoms and/or diagnoses of either disease.  See Colvin v. Derwinski, 1 Vet. App. 171, 175 (1991) (VA may only consider independent medical evidence to support its findings and is not permitted to base decisions on its own unsubstantiated medical conclusions); also see 38 U.S.C. § 1110; 38 C.F.R. § 3.303(a); Hensley, supra.
Similarly, the record does not show that the Veteran had a continued problem with cardiopulmonary arrest and cancer of the urinary bladder in and since service.  In fact, as reported above, service treatment records are negative for complaints, diagnoses, or treatment for these disorders.  Likewise, the post-service record is negative for a history, complaints, or a diagnosis until decades after service.  See 38 U.S.C. § 1110; 38 C.F.R. § 3.303(b).
In this regard, the Board notes that an August 1955 hospital treatment report referenced “minimal fibrotic infiltration, right; left, clear.”  No impressions from X-ray films or laboratory findings were referenced.  A private physician’s statement, dated March 1989, noted that the Veteran had a history of fevers with productive cough and chest pain.  Reportedly, the condition had persisted for 24 years.  No specific diagnosis was rendered or indicated.  In a May 1990 medical certification, the Veteran complained of difficulty breathing, fatigability, generalized weakness and pulmonary tuberculosis (PTB).  Further, he contended that his symptoms began in 1945, and he sought treatment in 1957, 1959, and from 1961 and through the present.  He current diagnoses were listed as PTB and heart disease.  In a treatment record dated, December 1992, the Veteran’s current conditions were listed as transitional cell carcinoma of the urinary bladder, benign prostate hyperplasia, chronic renal insufficiency, and chronic bronchitis.
Furthermore, the Board finds that the most probative evidence of record are the opinions provided by the March 2017 VA examiner, as supplemented by the July 2018 VA opinion, that the Veteran’s cardiopulmonary arrest and cancer of the urinary bladder are not due to his military service including his time as a POW because these opinions were provided after a review of the record on appeal, are supported by evidence found in the claims file and/or controlling medical literature, and are not contradicted by any other medical evidence of record.  See 38 U.S.C. § 1110; 38 C.F.R. § 3.303(d); also see Rabideau v. Derwinski, 2 Vet. App. 141, 143 (1992) (establishing service connection requires finding a relationship between a current disability and events in service or an injury or disease incurred therein); Owens, supra; Colvin, supra.
In addition, the Board finds that the claimant is not competent to provide a nexus opinion because she does not have the required medical expertise to provide an answer to this complex medical question.  See Davidson, supra.
Accordingly, the Board finds that the preponderance of the evidence is against the appellant’s claim of service connection for the cause of the Veteran’s death because neither of the disease process that caused his death are due to his military service.
In reaching all the above conclusions, the Board also considered the doctrine of reasonable doubt.  38 U.S.C. § 5107(b).  However, as the preponderance of the evidence is against the claim, the doctrine is not for application.  See also, e.g., Ortiz v. Principi, 274 F. 3d 1361 (Fed. Cir. 2001); Gilbert, supra.


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Perez-Crisantos v. State Farm et al., Wash. Sup. Ct., No. 92267-5, (February 2, 2017), is perhaps the most favorable ruling for insurers from the Washington Supreme Court in the past several years. The Perez-Crisantos Court was asked to decide whether, in the absence of an unreasonable denial of coverage or benefits, the Insurance Fair Conduct Act (IFCA) creates an independent and private cause of action for an alleged violation of Washington’s Unfair Claims Settlement Practices Regulations. Definitively, the Court held that it does not.
In Perez-Crisantos, the insured was involved in car accident and sustained injuries. The insured was not at-fault and ultimately settled with the at-fault party’s insurance carrier for its policy limits. The insured then tendered a claim for underinsured motorist (UIM) benefits to his insurance carrier, State Farm. State Farm paid its personal injury protection (PIP) limit of $10,000 in medical benefits and $400 in lost wages, but did not pay benefits under the UIM policy, taking the position that the insured had already been made whole. Arguing that State Farm unreasonably denied benefits, the insured sued State Farm alleging violations of IFCA, the Consumer Protection Act (CPA), chapter 19.86 RCW, bad faith and negligence. This lawsuit was stayed while the UIM claim was sent to arbitration.
The arbitrator found that the insured’s damages from the accident totaled $51,000. After adjusting for settlement with the at-fault party, PIP payments, and attorneys’ fees, the insured received $24,000 of new money from State Farm. The stay in the bad faith lawsuit was then lifted. State Farm moved for summary judgment arguing that it had acted reasonably and that the parties had simply had a reasonable disagreement about the value of the claim. The insured moved for partial-summary judgment arguing that State Farm had violated WAC 284-30-330(7)’s prohibition of forcing first party claimants to litigation to recover “amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions.” The Spokane County Superior Court ruled in State Farm’s favor, finding no evidence that State Farm’s actions were unreasonable, and dismissed the case with prejudice.
The insured appealed directly to the Washington Supreme Court, seeking a determination as to whether IFCA creates an independent and private cause of action for an insurer’s technical violation of the Unfair Claims Settlement Practices Regulations in the absence of an unreasonable denial of coverage or benefits.
Like many of the federal courts before it, the Washington Supreme Court struggled with the interplay of paragraphs 2, 3, and 5 of the statute, and ultimately found that the statute was ambiguous. The Court further admitted that the result of an isolated regulatory violation was not clear.
[G]iven that the trier of fact must find that an insurer acted unreasonably under subsection (1), and that such a finding mandates attorneys’ fees under subsection (3) and gives the trial court discretion to award treble damages under subsection (2), it is not clear what a finding of a regulatory violation accomplishes. (emphasis added).
IFCA explicitly creates a cause of action for first party insureds who were “unreasonably denied a claim for coverage or payment of benefits.” IFCA does not state it creates a cause of action for first party insureds who were unreasonably denied a claim for coverage or payment of benefits or “whose claims were processed in violation of the insurance regulations listed in (5),” which strongly suggests that IFCA was not meant to create a cause of action for regulatory violations.” (Internal citations omitted) (emphasis added).
In finding IFCA ambiguous, the Court then analyzed IFCA’s official ballot title and determined that it was not the legislature’s intent to create a private cause of action for mere technical violations.
This language does not suggest an intent to create a private cause of action for regulatory violations. Quite the opposite: it suggests that IFCA creates a case of action for unreasonable denials of coverage and also permits treble damages in some circumstances. On balance, we conclude that the legislative history suggests that IFCA does not create a cause of action for regulatory violations. (emphasis added).
The Washington Supreme Court then advised that Washington’s current pattern jury instruction on IFCA is a misstatement of the law. The current pattern instruction concludes that IFCA creates a cause of action if an insurer “unreasonably denied a claim for coverage” or “unreasonably denied payment of benefits,” or “violated a statute or regulation governing the business of insurance claims handling.” Based on the foregoing, this instruction is clearly incorrect.
The Perez-Crisantos decision is a rare win for insurers in what has become a very difficult jurisdiction. This decision should prove extremely important as IFCA claims, and IFCA claims premised solely on technical violations of Washington’s insurance regulations, are becoming more and more prominent. To the extent that you have detailed questions about this case or how it may affect any of your pending or future claims or litigation, do not hesitate to contact our office.
The Washington State Insurance Fair Conduct Act, commonly referred to as “IFCA”, continues to cause significant concern among insurers conducting business in the State of Washington. The lack of any decisions from the Washington State Appellate Courts interpreting or applying the statute has further compounded the uncertainty relating to IFCA.
The Federal Courts, however, have continued to issue rulings on the application of IFCA in a number of scenarios. The trend of these decisions indicates that the Federal Courts are obtaining a better grasp on how IFCA is to be applied. These decisions provide better direction to all insurers and insureds in regard to these claims.
The most recent decision from the Federal Courts is Crowthers v. The Travelers Indemnity Company, United States District Court for the Western District of Washington, 2:16-cv-00606-RSL. In Crowthers, the Honorable Robert S. Lasnik again held that a technical violation of a regulatory provision under the Washington Administrative does not necessarily constitute an IFCA violation. In issuing this holding, the Court referenced the same result reached by Judge Robart in Schreib v. American Family Mut. Ins. Co., 2015 U.S. Dist. LEXIS 118189 (W.D. Wa.). As a result, it appears that the trend in at least the Western District is that an IFCA violation requires an actual unreasonable denial benefits or of coverage, and not simply a technical violation of the regulations.
Judge Lasnik then went on to address the fact that the Plaintiff in the Crowthers case had failed to establish any “actual damages” under IFCA, as well as a lack of any damage claims asserted as to the remaining extra-contractual claims asserted by Plaintiff. The Court held that a failure to establish actual damages as to these extra-contractual causes of action also warranted dismissal of the claims on a summary judgment motion. This decision again underscores the fact that in order to prosecute an IFCA claim, a party must prove actual damages or injuries. This ruling is again consistent with the ruling in Schreib.
The Crowthers case provides excellent legal precedent for insurers to utilize in defending IFCA claims. In fact, at least one court in King County, Washington (Seattle) utilized the Crowthers decision in dismissing an IFCA claim in a separate, highly contested consent judgment case arising from an underlying commercial construction defect matter.
Lether & Associates proudly represented Travelers in the Crowthers matter. If you have any questions in regard to this case, please let us know. In the meantime, a copy of this decision is attached.
On a different note, Lether & Associates is proud to add three new attorneys to the office. Congratulations to Nicole Morrow, Matt Erickson and Ben Miller. Each of our new rising stars brings a great attitude and experience to our team. This includes adjusting experience and defense experience. Our recent growth also means we have added an attorney licensed in the State of California to better service our California client base. Welcome aboard, everyone.
Yesterday, the Oregon Supreme Court issued a decision clarifying the statute of limitation for negligent construction claims. In Goodwin v. Kingsmen Plastering Inc., 359 Or. 694 (June 16, 2016), the Court was asked to identify the period of limitations for a negligent construction claim. Plaintiffs in the case filed a claim for negligence and negligence per se, alleging construction defects that led to water intrusion at a single family residence built in 2001. Plaintiffs argued that the six-year statute of limitation set forth in ORS 12.080(3), which applies to actions “for interference with or injury to any interest of another real property,” governed their claims.
Defendant, a siding subcontractor, argued that the action was not for injury to an “interest” in real property, but rather for damage to the property itself, and should be governed by a two-year statute of limitations set for in ORS 12.110(1). That statute applies to tort actions in general.
The Oregon Supreme Court determined conclusively that the two-year statute of limitations set forth in ORS 12.110(1) applied. The Court found that ORS 12.080(3) applied only to an injury to an “interest” in real property, such as trespass or waste. It did not apply to actions arising from damage to the property itself. The Court further held that the Plaintiff’s discovery of the damage to the property initiates the two year period of limitation. As a result, the Supreme Court remanded the case back to the Court of Appeals for determination of whether or not the action was brought within two years of when the Plaintiffs knew or should have known about the damage.
This case provides clarity as to the appropriate statute of limitations in Oregon for negligent construction claims. Previously there had been some confusion over what statute should apply. The arguments presented in theGoodwin case were common. Parties often argued whether the six-year or two-year period was appropriate for actions involving construction defects. The Court has now clarified that a party has two years from which to bring a claim for negligent construction. Moreover, the Court clarified that this two-year period of limitations allows for discovery of the claim. As a result, the operative date for any statute of limitations defense will be when the claimant knew or should have known about the damage to the property.
Lether & Associates regularly represents insurers in a number of construction matters and other insurance claims in the State of Oregon. This includes some of the most significant construction defect claims in that jurisdiction. A number of our attorneys are licensed to practice in Oregon. We are always happy to discuss representation of clients in that jurisdiction.
This successful result was obtained by Tom Lether and the attorneys and staff at Lether & Associates, PLLC, in Seattle, Washington.
Dennis R. Baldwin et al., Plaintiffs, v. Thomas J. Silver et al., Appellants, Farmers Insurance of Washington, Respondent.
NOTICE: Order Granting Motion to Publish December 29, 2011.
Appeal from Pend Oreille Superior Court. Docket No: 06-2-00143-1. Judgment or order under review. Date filed: 08/26/2010. Judge signing: Honorable Rebecca M Baker.
COUNSEL: George R. Guinn, for appellants.
Eric J. Neal and Thomas Lether (of Lether & Associates PLLC) and Kimberly L. Rider (of Cole Lether Wathen Leid & Hall PC), for respondent.
JUDGES: AUTHOR: Dennis J. Sweeney, J. WE CONCUR: Teresa C. Kulik, C.J., Laurel H. Siddoway, J.
OPINION BY: Dennis J. Sweeney, delivered the opinion for a unanimous court.
¶1 Sweeney, J. — Ultimately, the parties to this suit are the homeowners and their insurance company. The suit follows a fire loss. A contractor sued the homeowners and their insurance company for failing to pay for a contractor’s repair work. The insurance company issued a check directly to the homeowners. The homeowners cashed the check but did not pay the contractor. So the insurance company wound up paying the contractor. The homeowners, nonetheless, sued the insurance company and alleged a number of causes of action. The superior court rejected all of them and summarily dismissed the homeowners’ suit. The superior court was correct and we affirm the summary dismissal.
¶2 A grease fire damaged part of Thomas and Robin Silver’s home and deck on April 3, 2006. Baldwin v. Silver, 147 Wn. App. 531, 533-34, 196 P.3d 170 (2008). The Silvers filed a claim for insurance coverage under their homeowners’ policy with Farmers Insurance of Washington to pay to repair the damage. Id. Farmers accepted coverage. Farmers agreed to make loss payments payable to the Silvers: “We shall adjust all losses with you. We shall pay you unless another payee is named in the policy.” Clerk’s Papers (CP) at 146.
¶3 Three contractors worked to repair the Silvers’ home. Dennis and Deborah Baldwin, d/b/a/ B&D Construction, repaired damage to the inside of the home. Their services cost $2,727.96. ServiceMaster and Magic Carpet also performed repair work. ServiceMaster charged $2,744.53 for its services. Magic Carpet charged $1,103.08 for its services, which should have included power washing that portion of the decking that had been damaged by fire.
¶4 On April 28, Farmers sent the Silvers a letter with an estimate and a check payable to “Robin G. & Tom Silver” for $3,438.17. The letter says the check is “for the covered portion of your building claim based on the attached estimate.” CP at 242. The estimate states that the cost of repairing the damage to the inside of the home totaled $3,438.17. The Silvers cashed the check but did not pay any of the contractors. Farmers ultimately paid the contractors and vendors directly. It paid Magic Carpet $1,103.08 in June. It paid ServiceMaster $1,534.32 in July. And it issued checks to the Silvers for their labor ($654.43), their children’s temporary housing expenses ($100), and for Ms. Silver’s temporary housing expenses and additional utility expenses ($70).
¶5 B&D Construction sued the Silvers and Farmers for payment and placed a lien on the Silvers’ property in August. Ms. Silver took B&D Construction’s complaint to her Farmers’ agent right after she was served. The agent made copies of the complaint and other documents Ms. Silver had with her. Neither Ms. Silver nor Mr. Silver formally asked Farmers to defend them in writing. And Farmers did not do so.
¶6 The Silvers hired their own attorney and cross-claimed against Farmers for breach of contract, bad faith insurance practices, and violations of the Consumer Protection Act, chapter 19.86 RCW. The Silvers alleged that Farmers breached its duties to pay for all fire damage repairs, to close the claim after the repairs were complete, and to defend the Silvers against B&D Construction’s claims. They sought damages for the lien on their residence, their tarnished reputation and credit history, liability to B&D Construction and Service Master for unpaid invoices, unrepaired damage to the Silvers’ home, attorney fees and litigation costs incurred in defending against B&D Construction, and treble damages.
¶7 In October 2006, Farmers settled B&D Construction’s claim for $6,225.74, and B&D Construction assigned its rights against the Silvers to Farmers. Farmers then answered the Silvers’ cross-claim, arguing that the claim was barred by judicial estoppel, and cross-claimed against the Silvers for the amount it paid B&D Construction. Farmers asserted it had paid the Silvers for B&D Construction’s work but that the Silvers failed to forward that payment to B&D Construction.
¶8 Farmers cancelled the Silvers’ insurance policy in March 2007 for failing to pay the contractors. To secure a new insurance policy with another insurance company, the Silvers removed their deck. They claimed that Farmers should pay for the cost of removing the old deck and installing a new deck.
¶9 The trial court accepted Farmers’ position that the Silvers’ claims were barred by the equitable doctrine of judicial estoppel and summarily dismissed the Silvers’ claims against Farmers. Farmers’ position was that the Silvers had failed to properly list their claims as assets of their bankruptcy and therefore could not bring a suit in state court for those claims. We concluded that the claims were mentioned in the bankruptcy papers and reversed that decision and remanded for further proceedings. Baldwin, 147 Wn. App. at 537; CP at 418. Meanwhile, Farmers had paid ServiceMaster $700 to settle a claim by ServiceMaster for the amount outstanding for its work.
¶10 On remand Farmers again moved for summary judgment on all of the Silvers’ claims, arguing that the Silvers had produced no evidence of damages to support any of them, because Farmers had overpaid the total claims made by about $2,700. The Silvers responded. Ms. Silver claimed in an affidavit that the Silvers never received the $654.43 check and the $70 check Farmers claimed to have sent to pay for their personal expenses. She also claimed that the fire destroyed the deck, that no one repaired it, and that Farmers owed the Silvers $10,000 for the removal and replacement of the deck. In reply, Farmers argued that the Silvers’ response was insufficient to avoid its summary dismissal because the response amounted to nothing more than conclusory, unsupported statements with no proof of actual damages.
¶11 At the summary judgment hearing, the court asked the Silvers’ attorney what proof he had of damages. The attorney responded that damages were not the issue before the court on summary judgment but that regardless the Silvers’ deposition testimony was proof of damages. The court ultimately concluded that the Silvers produced no proof of damages to support their claims and entered summary judgment for Farmers. The Silvers moved for reconsideration. They argued that the court did not give their attorney a fair opportunity to present their summary judgment argument. The court denied the motion for reconsideration.
¶12 A trial court has discretion to reasonably control the presentation of a party’s argument to secure fair, effective, and efficient proceedings. Sanders v. State, 169 Wn.2d 827, 851, 240 P.3d 120 (2010). We review the exercise of that discretion for abuse. Id. “A trial court abuses its discretion when its exercise of discretion is manifestly unreasonable or based on untenable grounds.” Palmer v. Jensen, 81 Wn. App. 148, 151, 913 P.2d 413 (1996).
¶13 The Silvers first contend that summary judgment proceedings were not conducted properly and they therefore did not get a fair hearing. They assert that the trial judge interrupted their attorney multiple times during his argument with questions about damages, did not allow him to fully argue his response to Farmers’ motion for summary judgment, and refused to acknowledge Ms. Silver’s affidavit as proof of damages. They claim the trial judge did not like their attorney because he got the judge’s first order, dismissing this case, reversed on appeal.
¶14 There is nothing unreasonable about the judge here asking the Silvers’ attorney to focus on the issue of damages. The Silvers’ claims depended on proof of damages. Smith v. Safeco Ins. Co., 150 Wn.2d 478, 485, 78 P.3d 1274 (2003) (setting forth elements for claim of bad faith insurance practices); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986)(listing elements of Consumer Protection Act violation); Nw. Indep. Forest Mfrs. v. Dep’t of Labor & Indus., 78 Wn. App. 707, 712, 899 P.2d 6 (1995) (reciting elements for breach of contract). And Farmers’ motion for summary judgment hinged primarily on the argument that the Silvers produced no evidence of damages to support any of their causes of action because the company paid all of the Silvers’ legitimate claims and then some. The judge, then, made efficient and effective use of the hearing by asking the Silvers’ attorney to focus on the issue of damages. She had, and considered, the Silvers’ 20-page response and more than 50 pages of affidavits and exhibits to help her address any other questions she might have had.
¶15 The trial judge’s refusal to consider Ms. Silver’s affidavit as proof of damages was also reasonable and proper. What the judge did here was refuse to consider the conclusory, unsupported statements set out in the affidavits. Though the trial court may be lenient to a nonmoving party’s affidavits presented in response to a motion for summary judgment, it may not consider conclusory statements contained in the nonmoving party’s affidavits. Pub. Util. Dist. No. 1 v. Wash. Pub. Power Supply Sys., 104 Wn.2d 353, 361, 705 P.2d 1195, 713 P.2d 1109 (1985). A nonmoving party cannot defeat a motion for summary judgment with conclusory statements of fact.Overton v. Consol. Ins. Co., 145 Wn.2d 417, 430-31, 38 P.3d 322 (2002).
¶16 In her affidavit, Ms. Silver claimed that the damage to her deck was worth $10,000. But no receipt, quote, or any other piece of evidence supports her statement. The statement, then, is nothing more than an unfounded, conclusory statement of damages. Indeed, the statements, quotes, estimates, and bills all support a modest claim to clean the deck of the stains caused by the hot oil splashing on the deck.
¶17 The judge did interrupt and ask questions. The questions were not only appropriate but focused in on the very issue the judge would have to decide. Without the judge’s questions, counsel’s argument would have been unfocused and not helpful to the judge and ultimately to us. The court reasonably controlled the presentation of the Silvers’ summary judgment argument and successfully secured a fair, effective, and efficient summary judgment hearing.
¶18 We review de novo the trial court’s order granting Farmers’ motion for summary judgment by engaging in the same inquiry as the trial court. O’Neill v. Farmers Ins. Co., 124 Wn. App. 516, 522, 125 P.3d 134 (2004). We will affirm the order “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” CR 56(c). “A material fact is one upon which the outcome of the litigation depends.” Vacova Co. v. Farrell, 62 Wn. App. 386, 395, 814 P.2d 255 (1991).
¶19 We consider “[t]he facts and all reasonable inferences therefrom … in the light most favorable to the nonmoving party.” O’Neill, 124 Wn. App. at 522. But the non-moving party must lay out evidentiary facts that raise genuine issues of material fact to avoid summary dismissal. Overton, 145 Wn.2d at 430-31. “[G]enuine issues of material fact cannot be created by a declarant who submits an affidavit that contradicts his or her own deposition testimony.” Selvig v. Caryl, 97 Wn. App. 220, 225, 983 P.2d 1141 (1999). Genuine issues of material fact also cannot be created by conclusory statements of fact. Overton, 145 Wn.2d at 430.
¶20 The Silvers claimed Farmers breached the insurance policy contract, did so in bad faith, and thereby violated the Consumer Protection Act by (1) failing to defend them against B&D Construction, (2) failing to properly pay the contractors’ bills, (3) failing to pay for the Silvers’ labor costs and additional living expenses or for the repair, removal, and replacement of their deck, and (4) cancelling their policy.
¶21 Breach of contract and bad faith claims depend on proof of four common elements: duty, breach, causation, and damages. Nw. Indep. Forest Mfrs., 78 Wn. App. at 712 (reciting elements for breach of contract); Smith, 150 Wn.2d at 485 (setting forth elements for claim of bad faith insurance practices). In addition to these elements, a bad faith claim also depends on proof that the breach complained of was unreasonable, frivolous, and unfounded. Id. Similarly, a Consumer Protection Act claim depends on proof of (1) an unfair or deceptive act, (2) occurring in trade or commerce, (3) a public interest impact, (4) injury to business or property, and (5) causation.Hangman Ridge Training Stables, 105 Wn.2d at 780. To maintain these claims and avoid summary judgment, the Silvers had to produce evidence raising genuine issues of material fact as to each element of each claim. We consider each allegation underlying these claims to see whether the Silvers have met their burden.
¶22 Allegation 1: Failure to Defend. Farmers did not defend the Silvers against B&D Construction’s lawsuit. The insurance policy states that Farmers had a duty to defend the Silvers “against any covered claim or suit.” CP at 147. Farmers says it did not defend the Silvers because the Silvers did not specifically ask it to undertake the defense of the action. Resp’t’s Br. at 33 (citing Unigard Ins. Co. v. Leven, 97 Wn. App. 417, 426-27, 983 P.2d 1155 (1999)).
¶23 The Silvers argue that Farmers should have issued the check payable to both them and B&D Construction. And no doubt Farmers wishes it had done just that. But there is no public law or contract provision here that requires it to issue the check jointly. Farmers was obligated under the terms of this policy to reimburse the Silvers for those losses covered by the policy and it did that.
¶24 B&D Construction sued the Silvers because the Silvers did not pay it for its work, work that Farmers had already reimbursed the Silvers for. Yet the Silvers contend that Farmers had a duty to defend them. This approach would turn the duty to defend on its head. Farmers is embroiled in this dispute because the Silvers did not use the insurance money paid by Famers to pay the contractors and vendors who repaired their home.
¶25 The duty to defend is triggered by a complaint that alleges facts that, if true, would render the insurer liable to the insured under the policy. Farmers Ins. Co. v. Romas, 88 Wn. App. 801, 807, 947 P.2d 754 (1997). B&D Construction sued the Silvers for payment of the work it did to repair the fire damage to the Silvers’ home. Farmers had a duty to pay the Silvers for B&D Construction’s services. CP at 146. And it is undisputed that it did so. Farmers issued the Silvers a check for $3,438.17. The Silvers received and cashed that check. And the Silvers had a duty to give B&D Construction a portion of it ($2,727.96). See CP at 147 (Section II–Liability; Coverages; Coverage E–Personal Liability).
¶26 The Silvers suggest, nonetheless, that they were relieved of their duty to pay B&D Construction because of the way Farmers issued the check. They say Farmers should have issued the check to them and B&D Construction and should have attached instructions or an itemization to the check. But they cite no authority or provision in their insurance agreement to support this argument. And an estimate that detailed the costs of the repairs that B&D Construction was hired to perform accompanied the check. Farmers is not liable for the Silvers’ failure to pay B&D Construction because Farmers did not owe the Silvers a duty to pay B&D Construction again. Thus, B&D Construction’s suit did not allege facts that would render Farmers liable to the Silvers. And it did not therefore trigger Farmers’ duty to defend the Silvers. Farmers Ins., 88 Wn. App. at 807.
¶27 Farmers’ failure to defend the Silvers amounted to neither a breach of its duty to defend the Silvers against any covered claim or suit nor did it cause the Silvers damages. Farmers, then, is not liable for the attorney fees and costs the Silvers incurred to defend themselves against B&D Construction.
¶28 Allegation 2: Failure to Properly Pay for Contractors’ Work. The Silvers claim Farmers breached its duty to pay them timely and directly for all covered losses because Farmers paid contractors directly and settled an outstanding bill with ServiceMaster without notifying the Silvers several months after ServiceMaster completed its repair work. We have already touched on this complaint but will elaborate further since it is set out as a separate assignment of error.
CP at 146. Farmers paid ServiceMaster and Magic Carpet directly for repairs they made to the Silvers’ home and it settled with ServiceMaster more than 60 days after sending it a partial payment. We conclude that this is a reasonable course of conduct consistent with the duties Farmers assumed in their agreement. The Silvers had previously failed to pay the contractors when Farmers paid the Silvers directly. And it appears to be undisputed that neither ServiceMaster nor Magic Carpet has any outstanding claims.
¶30 Moreover, the Silvers have failed to show that Farmers breached any duty it had to them by settling with ServiceMaster. The policy provides that Farmers “may … settle any claim … that we consider proper.” CP at 147 (Section II–Liability; Coverages; Coverage E–Personal Liability). It does not require that Farmers notify the Silvers of any settlement. And, even were we to assume that Farmers breached a duty to the Silvers by settling with ServiceMaster, the Silvers have produced no evidence that the breach caused damages.
¶31 Allegation 3: Failure to Pay for Temporary Housing, Additional Utilities, Labor, and Deck. The Silvers also claim that Farmers breached its duty to pay all losses because they did not receive a $654.43 check for labor expenses or a $70 check for additional utility expenses and Ms. Silvers’ temporary housing expenses. And even if that were true, Farmers’ response is again reasonable. The Silvers kept for themselves a $3,438.17 check to which they were not entitled and thereby received a windfall in excess of $2,700.
¶32 The Silvers further claim Farmers should have had a duty to investigate the Silvers’ concern that the checks Farmers allegedly sent them for their personal expenses were lost or missing. The insurance policy, however, gave Farmers the power, not a duty, to investigate claims it considered proper: “We may investigate and settle any claim or suit that we consider proper.” CP at 147 (Section II–Liability; Coverages; Coverage E–Personal Liability). Farmers, then, did not breach any duty owed to the Silvers by failing to investigate the missing checks.
First Aid Expenses. Expenses for necessary first aid to others incurred by an insured at the time of occurrence for bodily injury covered by this policy.
We shall not pay for first aid to you or any other insured.
We do not cover bodily injury: … [t]o you or any resident of your household except a residence employee.
CP at 148. Second, the fire caused $135 of damage to the deck and as a result of the fire, the deck needed to be power washed, not removed or replaced. The Silvers removed the deck because their new insurance company would not otherwise insure them. The new insurance company labeled the deck a safety hazard but did not explain why it was a hazard. However, Mr. Silver testified that dry rot had compromised the deck. The Silvers have not shown that the removal of the deck had anything to do with the fire or that their Farmers policy covered dry rot or another insurance company’s request that they remove the deck. Even assuming Farmers had a duty to pay for the deck’s removal and replacement and breached that duty, the only evidence of damages are the Silvers’ interrogatory answers and Ms. Silver’s affidavit, which contain conclusory statements of fact again unsupported by receipts, quotes, or any other evidence of the costs of removal and replacement. The Silvers’ deck claim, then, fails to present a genuine issue about damages for trial.Overton, 145 Wn.2d at 430.
¶34 Allegation 4: Policy Cancellation. The Silvers suggest that Farmers breached some duty by cancelling their homeowners’ insurance policy for failing to pay their contractors. The policy, however, allows Farmers to cancel the policy for any reason. And cancelling the policy for the Silvers’ failure to pay its contractors was reasonable, in any event. There is no evidence Farmers breached any duty relevant to cancelling the policy.
¶35 The Silvers have failed to establish their breach of contract, bad faith, and Consumer Protection Act claims as a matter of law and failed to raise a genuine issue of material fact as to any one claim. The trial court, then, did not err by granting Farmers’ motion for summary judgment. We affirm.
¶36 Attorney fees under Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991), are available only when the insured prevails. Hardy v. Pemco Mut. Ins. Co., 115 Wn. App. 151, 157, 61 P.3d 380 (2003). The Silvers have not prevailed. We, therefore, deny their request for attorney fees and costs.
Kulik, C.J., and Siddoway, J., concur.
Order Granting Motion to Publish December 29, 2011.
¶14 There is nothing unreasonable about the judge here asking the Silvers’ attorney to focus on the issue of damages. The Silvers’ claims depended on proof of damages. Smith v. Safeco Ins. Co., 150 Wn.2d 478, 485, 78 P.3d 1274 (2003) (setting forth elements for claim of bad faith insurance practices); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986) (listing elements of Consumer Protection Act violation); Nw. Indep. Forest Mfrs. v. Dep’t of Labor & Indus., 78 Wn. App. 707, 712, 899 P.2d 6 (1995) (reciting elements for breach of contract). And Farmers’ motion for summary judgment hinged primarily on the argument that the Silvers produced no evidence of damages to support any of their causes of action because the company paid all of the Silvers’ legitimate claims and then some. The judge, then, made efficient and effective use of the hearing by asking the Silvers’ attorney to focus on the issue of damages. She had, and considered, the Silvers’ 20-page response and more than 50 pages of affidavits and exhibits to help her address any other questions she might have had.
¶15 The trial judge’s refusal to consider Ms. Silver’s affidavit as proof of damages was also reasonable and proper. What the judge did here was refuse to consider the conclusory, unsupported statements set out in the affidavits. Though the trial court may be lenient to a nonmoving party’s affidavits presented in response to a motion for summary judgment, it may not consider conclusory statements contained in the nonmoving party’s affidavits. Pub. Util. Dist. No. 1 v. Wash. Pub. Power Supply Sys., 104 Wn.2d 353, 361, 705 P.2d 1195, 713 P.2d 1109 (1985). A nonmoving party cannot defeat a motion for summary judgment with conclusory statements of fact. Overton v. Consol. Ins. Co., 145 Wn.2d 417, 430-31, 38 P.3d 322 (2002).
¶21 Breach of contract and bad faith claims depend on proof of four common elements: duty, breach, causation, and damages. Nw. Indep. Forest Mfrs., 78 Wn. App. at 712 (reciting elements for breach of contract); Smith, 150 Wn.2d at 485 (setting forth elements for claim of bad faith insurance practices). In addition to these elements, a bad faith claim also depends on proof that the breach complained of was unreasonable, frivolous, and unfounded. Id. Similarly, a Consumer Protection Act claim depends on proof of (1) an unfair or deceptive act, (2) occurring in trade or commerce, (3) a public interest impact, (4) injury to business or property, and (5) causation. Hangman Ridge Training Stables, 105 Wn.2d at 780. To maintain these claims and avoid summary judgment, the Silvers had to produce evidence raising genuine issues of material fact as to each element of each claim. We consider each allegation underlying these claims to see whether the Silvers have met their burden.
CP at 148. Second, the fire caused $135 of damage to the deck and as a result of the fire, the deck needed to be power washed, not removed or replaced. The Silvers removed the deck because their new insurance company would not otherwise insure them. The new insurance company labeled the deck a safety hazard but did not explain why it was a hazard. However, Mr. Silver testified that dry rot had compromised the deck. The Silvers have not shown that the removal of the deck had anything to do with the fire or that their Farmers policy covered dry rot or another insurance company’s request that they remove the deck. Even assuming Farmers had a duty to pay for the deck’s removal and replacement and breached that duty, the only evidence of damages are the Silvers’ interrogatory answers and Ms. Silver’s affidavit, which contain conclusory statements of fact again unsupported by receipts, quotes, or any other evidence of the costs of removal and replacement. The Silvers’ deck claim, then, fails to present a genuine issue about damages for trial. Overton, 145 Wn.2d at 430.
Cardenas v. Navigators Ins. Co.
DAN CARDENAS and JANE DOE CARDENAS, husband and wife, d/b/a/ A&D CONSTRUCTION & ROOFING, a sole proprietorship; Plaintiffs, v. NAVIGATORS INSURANCE COMPANY, Defendant.
COUNSEL: For Dan Cardenas, Jane Doe Cardenas, husband and wife, doing business as A&D Construction and Roofing, a sole proprietorship, Plaintiffs: Joseph Scuderi, CUSHMAN LAW OFFICES PS, OLYMPIA, WA.
For Navigators Insurance Company, Defendant, Counter Claimant: Ryan J. Hesselgesser, Thomas Lether, LETHER & ASSOCIATES, PLLC, SEATTLE, WA.
For Dan Cardenas, Jane Doe Cardenas, husband and wife, Counter Defendants: Joseph Scuderi, CUSHMAN LAW OFFICES PS, OLYMPIA, WA.
JUDGES: ROBERT J. BRYAN, United States District Judge.
This matter comes before the Court on Defendant Navigators Insurance Company’s motion for partial summary judgment requesting dismissal of Plaintiff’s extra-contractual claims. Dkt. 12. Plaintiffs Dan Cardenas and Donna Cardenas dba A & D Construction & Roofing move for a continuance of the motion for summary judgment to allow further discovery. Dkt. 18. The Court has considered the pleadings in support and in opposition to the motions and the record herein.
Dan Cardenas is a registered contractor in the State of Washington dba A & D Construction & Roofing. Cardenas was engaged by the underlying plaintiffs, Elbert and Rogene Tolson to do an addition on their existing home. The Tolsons filed suit in Pierce County Superior Court against Dan Cardenas and Jane Doe Cardenas dba A & D Construction (Cardenas) on February 4, 2011. Dkt. 1-2 pp. 1-8. The underlying complaint alleges that Cardenas left their home open to the elements, which caused damage to their home. Id.
Navigators Insurance Company (Navigators) issued a commercial general liability policy Cardenas for the period of December 12, 2008 to December 12, 2009 under Policy Number: 46-10069839. This policy was subsequently renewed from December 12, 2009 to December 12, 2010 and from December 12, 2010 to December 12, 2011 with policy numbers of 46-10104915 and 46-10131481 respectively. Dkt. 13-4 pp. 1-4.
Cardenas alleges in its Complaint against Navigators that it tendered a claim of defense and indemnity for the underlying action on February 23, 2011. Dkt. 1-14 pp. 2. The February 23, 2011, tender letter is attached to the Complaint in this action. Dkt. 1-14 pp. 58. The letter was addressed to “Navigators Specialty Insurance Company, 2101 Fourth Avenue, Suite 1850, Seattle, Wa. 98121.” Id. This address was apparently obtained on Navigator’s web page. Dkt. 22 pp. 2. This address is not listed anywhere in the policies issued by Navigators to Cardenas. Dkt. 13-4. Navigators has no record of ever receiving the February 23, 2011 correspondence on or about that date. Dkt. 12 pp. 3.
On March 17, 2011, Cardenas sent a notice of unreasonable denial of a claim to Navigators pursuant to RCW 48.30.015(8)(a). Dkt. 16 pp. 13. Cardenas attached the February 23, 2011, tender letter to this notice. Dkt. 16 pp. 13.
Navigators’ Seattle Office received this notice on March 18, 2011, stamped it received, and immediately forwarded the claim to the San Francisco construction claims office. Dkt. 13-6 pp. 2-11. Navigators opened a claim on March 18, 2011. Dkt. 13-8 pp. 2. In a March 22, 2011, letter to Cardenas, Navigators acknowledged receipt of the claim and the initiation of its investigation. Dkt. 13-8 pp. Cardenas acknowledges receipt of this notification by fax on March 28, 2011. Dkt. 16 pp. 1, 23.
On April 12, 2011, Cardenas filed an answer to the underlying complaint and named Navigators Specialty Insurance Company as a third-party defendant, alleging a breach of the duty to defend. Dkt. 1-3 pp. 3-7.
By letter to Cardenas dated April 15, 2011, Navigators acknowledged receipt of the Pierce County lawsuit which was tendered for potential defense and/or indemnity under the insurance policies. Navigators stated that it had initiated an investigation into this matter and would notify the insureds of the results as soon as they were available. Dkt. 13-9 pp. 2-3. The letter asked for information regarding the remodel contract at issue and provided the name of a local independent investigator that would be making contact with the insureds regarding the investigation of the claim. Id.
On April 28, 2011, Navigators informed counsel representing Cardenas that Navigators would likely pick up the defense. Dkt. 22 pp. 3.
On May 18, 2011, Navigators accepted tender of the defense under a reservation of rights and appointed counsel to defend Cardenas in the Pierce County litigation. Dkt. 13-11 pp. 2-21. Correspondence was sent to Cardenas’ counsel requesting they contact assigned counsel at the earliest opportunity to transfer defense of the matter. Dkt. 13-12 pp.2-5. This correspondence also requested that the third-party complaint against Navigators be voluntarily dismissed. Id. Cardenas declined to dismiss the third party complaint.
Navigators paid all pre and post tender defense costs incurred by Cardenas’ personal counsel in defense of the underlying matter. Dkt. 13-13 pp. 2-5.
On May 24, 2011, Cardenas filed an amended third party claim identifying the correct third party defendant as Navigators Insurance Company. Dkt. 1-5 pp. 3-7.
On July 13, 2011, the third party claims against Navigators were severed from the underlying action. Cardenas re-filed a Complaint against Navigators containing the same factual allegations. Dkt. 1-14 pp. 1-6. The complaint alleges causes of action for breach of contract, negligence, bad faith, violation of the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, violation of applicable insurance related Washington Administrative Code provisions, and violation of the Washington State Consumer Protection Act (CPA), RCW 19.86. Id.
Navigators’ removed the action to this Court on July 27, 2011. Dkt. 1 pp. 1-8.
Navigators filed the instant motion for partial summary judgment seeking dismissal of the extra-contractual claims. Dkt. 12. Cardenas has filed a response. Dkt. 22. Cardenas has also moved to continue pursuant Fed. R. Civ. Pro 56(d) to allow further discovery. Dkt. 18.
Cardenas requests a continuance of Navigators’ motion for partial summary judgment pursuant to Fed. R. Civ. P. 56(d). A party requesting a continuance, denial, or other order under Rule 56(d) must demonstrate: (1) it has set forth in affidavit form the specific facts it hopes to elicit from further discovery; (2) the facts sought exist; and (3) the sought-after facts are essential to oppose summary judgment. Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008); California v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998). The rule requires (a) a timely application which (b) specifically identifies (c) relevant information, (d) where there is some basis for believing that the information sought actually exists. Employers Teamsters Local Nos. 175 & 505 Pension Trust Fund v. Clorox Co., 353 F.3d 1125, 1129 (9th Cir. 2004). The burden is on the party seeking additional discovery to proffer sufficient facts to show that the evidence sought exists, and that it would prevent summary judgment. Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1161 n. 6 (9th Cir. 2001); Tatum v. City & County of San Francisco, 441 F.3d 1090, 1100 (9th Cir. 2006). The movant “must make clear what information is sought and how it would preclude summary judgment.” Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir. 1998). Denial of a Rule 56(d ) application is proper where it is clear that the evidence sought is almost certainly nonexistent or is the object of pure speculation. State of Cal., on Behalf of California Dept. of Toxic Substances Control v. Campbell, 138 F.3d 772, 779-80 (9th Cir. 1998). Failing to meet this burden is grounds for the denial of a Rule 56(d) motion. Pfingston v. Ronan Eng. Co., 284 F.3d 999, 1005 (9th Cir. 2002).
It is undisputed that Navigators has accepted tender of the claim and is defending under a reservation of rights. Cardenas’ claims concerning this duty to defend are confined to timing of Navigators’ determination to accept the tender and provide a defense. In other words, the instant litigation concerns the issue of whether Navigators is liable for “belatedly defending Cardenas.” Dkt. 18 pp. 3. The issues are confined to the timing of Navigators actions in providing a defense and whether they constitute negligence, bad faith, violation of the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, violation of applicable insurance related Washington Administrative Code provisions, and violation of the Consumer Protection Act (CPA), RCW 19.86.
Navigators has produced its claims file up to the time it provided a defense to the underlying litigation. The claim notes and relevant correspondence regarding the timing of Navigators decision to defend Cardenas under a reservation of rights is contained in these documents.
Cardenas has not demonstrated the existence or the necessity of discovery of additional facts relevant to the issue of the timing of Navigators’ response. Cardenas has not submitted affidavits that demonstrate the particular facts to be disclosed that are essential to a defense of the motion for partial summary judgment. The evidence Cardenas’ seeks is the object of pure speculation and almost certainly tangential to the issues raised in the Complaint. Plaintiff’s continuance request is based solely on an assumption and/or mere hope that Cardenas will discover evidence sufficient to defeat Navigators’ motion or discover additional basis to support the claims.
The motion for a Rule 56(d) continuance should be denied.
Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits or declarations, stipulations, admissions, answers to interrogatories, and other materials in the record show that “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).
The moving party bears the initial burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party. Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001).
To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A “material fact” is a fact that might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material fact is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, at 248. The mere existence of a scintilla of evidence in support of the party’s position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. Id., at 252.
Cardenas alleges that Navigators breached the duty to defend in accordance with the terms of the insurance policy. Breach of contract claims depend on proof of four elements: duty, breach, causation, and damages. Northwest Indep. Forest Mfrs. v. Dep’t of Labor & Indus., 78 Wn.App. 707, 712, 899 P.2d 6 (1995).
Third-party liability carriers generally owe their insureds two duties under the policy: the duty to defend suits against them and the duty to indemnify the insured for judgments and settlements covered under the terms of the policy. Mutual of Enumclaw Ins. Co. v. Dan Paulson Constr. Co., 161 Wn.2d 903, 916, 169 P.3d 1 (2007). It is undisputed here that Navigators has not denied a defense and has paid all pre and post tender defense costs associated with the underlying lawsuit. Moreover, the underlying lawsuit is still ongoing. As a result, Navigators has not breached its obligation under the policy to defend and indemnify.
Olympic Steamship v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991) provides the right for an insured to recoup attorney fees that it incurs in instituting an action because an insurer refuses to defend or pay the action or claim of the insured. Here, Navigators has not refused to defend. Navigators is providing a defense to the ongoing underlying suit. It is undetermined at this date whether indemnity is owed and Cardenas is not asserting that Navigators breached the duty to indemnify.
The breach of contract claim and attendant claim for an award of attorney fees pursuant to Olympic Steamship are subject to dismissal.
(1) Any first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action in the superior court of this state to recover the actual damages sustained, together with the costs of the action, including reasonable attorneys’ fees and litigation costs, as set forth in subsection (3) of this section.
The IFCA further provides that a court “may, after finding that an insurer has acted unreasonably in denying a claim for coverage or payment of benefits or has violated [certain insurance regulations], increase the total award of damages to an amount not to exceed three times the actual damages.” RCW 48.30.015(2). A court “shall, after a finding of unreasonable denial of a claim for coverage or payment of benefits, or after a finding of a violation of a rule in subsection (5) of this section, award reasonable attorney’s fees and actual and statutory litigation costs, including expert witness fees, to the first party claimant of an insurance contract who is the prevailing party in such an action.” RCW 48.30.015(3).
The statute provides a list of violations that give rise to treble damages or to an award of attorney’s fees and costs. This list includes violations of WAC 284-30-330, 350, 360, 370, and 380. RCW 48.30.015(5).
WAC 284-30-330 (2). It is an unfair practice for an insurer to fail to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
WAC 284-30-350 (1). No insurer shall fail to fully disclose to first party claimants all pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented.
WAC 284-30-350 (2). No agent shall conceal from first party claimants benefits, coverages or other provisions of any insurance policy or insurance contract when such benefits, coverages, or other provisions are pertinent to a claim.
WAC 284-30-360 (1). An insurer should respond to a claim within ten working days of receiving it.
WAC 284-30-370. An insurer must complete investigation of a claim within thirty days after notification, unless the investigation cannot reasonably be completed within that time.
Cardenas asserts that the claim was tendered on February 23, 2011. Navigators maintains that it did not receive this tender letter and that it wasn’t until March 18, 2011, that Navigators received a tender and notice of the underlying suit. Navigators acknowledged the claim on March 22, 2011, four days after receipt. Navigators appointed an investigator, communicated with its insured and began its investigation pursuant to the policy. Following its investigation, on May 18, 2011, Navigators agreed to defend under a reservation of rights.
The regulations require the insurer to acknowledge and act reasonably promptly upon communications with respect to claims. Further, upon notice of a claim, an insurer should respond within ten working days. Cardenas argues that notice of the claim was provided on February 23, 2011, and Navigators failed to acknowledge the tender until, at the earliest, March 22, 2011. This exceeds ten working days and is a violation of WAC 284-30-360 (1). Navigators’ claim file indicates that notice was not received until Cardenas’ subsequent notice on March 18, 2011 and that there was an acknowledgement on March 22, 2011. The investigation was initiated, and on May 18, 2011, Navigators agreed to defend Cardenas.
Irrespective of the diputed time frames, the purported delay in acknowledgement of the tender and completion of an investigation was not unreasonable and not a violation of the IFCA. Although violations of the enumerated regulations provide grounds for trebling damages or for an award of attorney’s fees; they do not, on their own, provide a IFCA cause of action absent an unreasonable denial of coverage or payment of benefits. See Weinstein & Riley, P.S. v. Westport Ins. Corp., No. C08-1694 JLR, 2011 U.S. Dist. LEXIS 26369, 2011 WL 887552 (W.D. Wash. March 14, 2011); Travelers Indem. Co. v. Bronsink, No.C08-1524 JLR, 2010 U.S. Dist. LEXIS 2118, 2010 WL 148366 (W.D. Wash. Jan 12, 2010); Lease Crutcher Lewis WA, LLC v. Nat. Union Fire Ins. Co. of Pittsburgh, PA, No. C08-1862 RSL, 2010 U.S. Dist. LEXIS 110866, 2010 WL 4272453 (W.D. Wash. Oct.15, 2010).
Violations, if any, of the 10 and 30 day time periods for acknowledging a claim and completing an investigation, are simple technical violations and standing alone, do not evidence any unreasonable conduct on the part of Navigators in promptly responding to the tender.
Nor has Cardenas established a material issue of fact supporting an unreasonable violation of the other enumerated regulations. There is no evidence that Navigators failed to disclose or concealed benefits, coverages, or other provisions of insurance, or to provide reasonable assistance to its insured.
Additionally, IFCA provides for a 20–day period in which to “cure” any alleged violation. RCW 48.30.015(8)(a) and (b). Cardenas provided the requisite notice of unreasonable denial of claim to Navigators by letter dated March 17, 2011. Dkt. 16 pp. 13. This notice states that the Cardenas tendered his claim to Navigators for defense and indemnity on February 23, 2011, and “have not heard anything back from Navigators.” Id. Navigators received this notification the following day on March 18, 2011. On March 22, 2011, in a letter to Cardenas, Navigators acknowledged receipt of the tender and stated that it had initiated an investigation into this matter and would notify the insureds of the results as soon as they are available. Subsequently, on May 18, 2011, Navigators accepted tender of the defense under a reservation of rights and appointed counsel to defend Cardenas in the Pierce County litigation.
According to this timeline, Navigators acknowledged the tender within the 20-day grace period provided for in RCW 48.30.015(8)(a). This acknowledgement cures the purported lack of communication regarding the tender. There being a cure, there is no basis for a cause of action for violation of IFCA.
Cardenas has also failed to demonstrate that any purported breach of the insurance regulations caused him harm. Even were harm to be presumed, Navigators has overcome any such presumption by establishing that they have provided a defense and paid all pre and post tender defense costs incurred by Cardenas’ personal counsel in defense of the underlying matter.
Cardenas has failed to raise a material issue of fact that Navigators’ actions were unreasonable given the facts and circumstances of the case. Cardenas’ IFCA claim fails as a matter of law.
Insurer bad faith claims are analyzed applying the same principles as any other tort: duty, breach of that duty, and damages proximately caused by any breach of duty. Mutual of Enumclaw Ins. Co. v. Dan Paulson Constr. Co., 161 Wn.2d 903, 916, 169 P.3d 1 (2007). In order to establish bad faith, an insured is required to show the breach was unreasonable, frivolous, or unfounded. Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 951 P.2d 1124 (1998).
An insurer has a duty to act with reasonable promptness in investigation and communication with their insureds following notice of a claim and tender of defense. St. Paul Fire & Marine Ins. Co. v. Onvia, Inc., 165 Wash.2d 122, 132, 196 P.3d 664 (2008). An unreasonable, frivolous, or unfounded breach of this duty is bad faith. Id.
Harm is an essential element of an action for an insurance company’s bad faith handling of a claim. St. Paul Fire & Marine Ins. Co. v. Onvia, Inc., 165 Wash.2d 122, 132, 196 P.3d 664 (2008). If the insured shows by a preponderance of the evidence that the insurance company breached its duty of good faith, there is a presumption of harm. Id. The insurance company can rebut this presumption by showing by a preponderance of the evidence that its breach did not harm or prejudice the insured. Id.
It is undisputed here that Navigators assigned defense counsel to defend Cardenas under a reservation of rights on May 18, 2011. It is also undisputed that Navigators has paid pre and post tender attorney fees to Cardenas’ personal counsel during the period in which personal counsel was representing Cardenas in the underlying action. As with the other causes of action, Cardenas’ allegations of bad faith stem solely from the alleged actions taken by Navigators between the date of tender and the date Cardenas filed this suit, April 12, 2011.
As previously noted, Cardenas has failed to raise a genuine issue of fact that any violation of the governing regulations was unreasonable, frivolous, or unfounded. Navigators acted with reasonable promptness in investigation and communication with Cardenas following notice of a claim and tender of defense. Further, there is no evidence that Cardenas was harmed by any delay in providing a defense. The bad faith claim is subject to dismissal.
To establish a violation of the Washington Consumer Protection Act (CPA), a plaintiff must demonstrate: (1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; (5) causation. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 719 P.2d 531, (1986); RCW 19.86.060. Violations of WAC 284-30-330 may constitute per se violations of the CPA, provided the other Hangman Ridge factors are also met. Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 764, 58 P.3d 276, 281-82 (2002). In addition, an insurer’s bad faith constitutes a per se violation of the CPA. Ledcor Indus. (USA), Inc. v. Mut. of Enumclaw Ins. Co., 150 Wn.App. 1, 12, 206 P.3d 1255 (2009).
The CPA claim fails for the same reasons as the IFCA and bad faith claims. Cardenas has failed to establish a genuine issue of fact that there was a breach of a duty of care and that Cardenas suffered harm.
The Consumer Protection Act claim is subject to dismissal.
Cardenas assets that Navigators failed to exercise ordinary care in investigating and handling the tender of defense made by Cardenas.
A negligence cause of action requires proof of four elements, (1) duty, (2) breach of that duty, (3) damages, (4) proximately caused by the breach. Hartley v. State, 103 Wn.2d 768, 777, 698 P.2d 77 (1985). The analysis of a negligence cause of action is essentially the same as that of a claim of bad faith. See Hamilton v. State Farm, 83 Wn.2d 787, 523 P.2d 193 (1974).
Cardenas having failed to establish a cause of action for bad faith, the negligence action is also subject to dismissal.
For the foregoing reasons, Cardenas is not entitled to a Rule 56(d) continuance for further discovery. Navigators is entitled to summary judgment dismissing Plaintiffs’ extra-contractual claims and breach of contract claim.
1. Plaintiffs’ Motion for Fed. R. Civ. P. 56(d) Continuance to Allow Discovery (Dkt. 18) is DENIED.
2. Defendant’s Motion for Partial Summary judgment (Dkt. 12) is GRANTED.
3. Defendants’ causes of action for breach of contract, Insurance Fair Conduct Act violations, bad faith, Consumer Protection Act violations, and negligence are DISMISSED.
4. The parties are directed to file an amended joint status report, no later than December 19, 2011, indicating what causes of action remain in this action and the status of any pending motions.
Dated this 16th day of December, 2011.

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