Westin McLean Named the Newest Shareholder at Lether Law Group

Congratulations to Westin McLean for being named as the newest shareholder at Lether Law Group. This distinction recognizes Westin’s exemplary leadership and mentorship at the firm, as well as the excellent results he has obtained for our clients. Westin is licensed in both Washington and Oregon, and provides invaluable experience based upon his years of practice in the Oregon market. For those who have been lucky enough to work with Westin, you can appreciate his hard work and the great advice he has provided to all of his clients.

Congratulations Westin for a job well done. We look forward to continuing to grow Lether Law Group with you in this new decade.

If you would like to learn more about Westin McLean or retain him to assist on any matter, please contact our office or Westin directly.

Continued Growth and Changes at Lether Law Group in 2020

As we enter a new decade, Lether and Associates has become Lether Law Group. This change reflects the firm’s continued growth and recognizes our newest Partners and Shareholders and the efforts they have made to expand the practice. Lether Law Group is no longer simply Tom Lether and a group of Associates. It is a group of dynamic, aggressive, and talented lawyers working together as a family.

This firm’s name change will not impact any current business relations or require any of our clients to modify any of their existing operating agreements or relationships with the firm. If you do have any questions in regard to this name change, please feel free to give Tom Lether a call.

We have also changed our office business hours to 8:30 a.m. – 5:30 p.m. PST.

We look forward to continuing to serve you as LetherLaw Group as we enter into a new decade of service to our client base.

Expanding Back Home

As some of you may know, Tom Lether was raised in Hawaiʻi and maintains strong connections with his island home. For this reason, Lether & Associates is extremely excited and proud to congratulate Kasie Kashimoto for passing the Hawaiʻi State Bar and becoming licensed in Hawaiʻi. Kasie was born and raised on Oʻahu and is proud to represent her home state. Kasie allows us to continue to expand our representation of our mainland insurance clients in the 50th state. Congratulations and Aloha to Kasie.

New Growth at Lether & Associates

Lether & Associates is proud to announce that Kevin Kay has joined Lether & Associates as a partner. Kevin started his civil practice with Tom Lether and Eric Neal over 15 years ago and has since worked in the Northwest and around the country as coverage and extra-contractual counsel for a number of insurers. Kevin brings to Lether & Associates his years of experience as well as new opportunities for growth with our expanding client base. Given his prior work with Tom and Eric, it is great to welcome him back into the Lether family.

If you would like to discuss any matters with Kevin or Lether & Associates, feel free to reach out. Once again, we welcome Kevin to the firm.

Defense Cost Recovery: The Federal Court Changes the Landscape in Washington

In 2013, the Washington State Supreme Court handed down the decision in National Surety Corp. v. Immunex that expanded defense cost exposure in Washington for liability insurers. Specifically, the Immunex court found that Washington liability insurers were not entitled to recovery of defense costs and fees which were incurred and paid for by a liability insurer even though there was no coverage for the loss. The court expressly found that even if the insurer reserved its rights as to reimbursement, there still is no right to recovery unless the liability policy expressly allowed for the recovery. National Surety Corp. v. Immunex, 176 Wn.2d 872, 888-889, 297 P.3d 688 (2013).

The Immunex decision caused significant concerns for liability insurers. It also provided a green light for insureds to tender claims where there was clearly no coverage with the expectation that the liability insurer would pay for the defense, (given Washington’s harsh penalties for denying a defense obligation), without any downside risk. Liability insurers, on the other hand, were forced to defend claims which were clearly not covered without any right to seek reimbursement even if it turned out that the claim was not covered. As a result, many insurers made it a practice to file declaratory judgment actions to have their defense obligations decided early on before the defense fees turned out to be more than the indemnity arguably owed under the policy. That option worked well, except of course when the insured files a motion for stay. If the stay is granted, the insurer could be stuck paying hundreds of thousands of dollars, if not more, in defense costs or be forced to try to settle out early and pay an uncovered claim in order to avoid the fees.

On April 17, 2019, the Honorable U.S. Federal Judge James Robart issued a decision in the case of Mass. Bay Ins. Co. v. Walflor Indus. There are several interesting components in regard to Judge Robart’s decision. First, the court addressed coverage under the Advertising Injury portion of a liability policy in a claim involving, in essence, a trademark/trade dress business dispute. These types of intellectual property claims have become more and more frequent in the highly competitive and sophisticated business environment of the Northwest. These claims are routinely tendered to liability insurers by insureds who look for coverage under the Coverage B section of the policy involving Advertising Injury. In states such as Washington, where the rules in regard to defense obligations are broad and the penalties are high, liability insurers have often picked up the defense of these claims.

Based upon the specific allegations and facts of the Massachusetts Bay case, the court found that there was no coverage under the policy in regard to defense or indemnity.

That is when the decision got very interesting. Massachusetts Bay Insurance Company had added an endorsement to their Washington insurance policies allowing for defense cost reimbursement. This Washington endorsement has been adopted by a number of insurers in a direct response to the Immunex decision. In Cross Motions for Summary Judgment, the policyholder requested that Judge Robart certify this specific question to the Washington Supreme Court. Judge Robart, who is never shy about making a tough decision, refused to certify the question. Rather, in a very clear and well written opinion, he addressed the issue of whether the policy language was void as against public policy or enforceable. Judge Robart found the language was not void and enforced the language as written. The court granted the insurer’s motion and held that the insurer was entitled to reimbursement of defense costs. A link to a copy of the decision is below.

Judge Robart’s decision was based primarily on the fact that the Immunex court clearly stated that the only reason it did not allow for reimbursement is because the policy in that case did not provide for such reimbursement. Since the policy in this Massachusetts Bay claim provided clear and unambiguous language allowing for reimbursement, the court enforced the policy language. What is unclear in the decision is whether the issue of ambiguity was ever clearly argued to the court. For example, it does not appear that there was any discussion in regard to whether costs and defense fees are in essence the same thing under Washington law in regard to this endorsement. What is clear, however, is that the court will allow insurers to potentially enforce their right to seek recovery of defense fees and costs. The decision also seems to suggest that there may have been a different result had the insurer not reserved its rights as to this issue.

From a practical standpoint, it is clear that insurers who do not have this Washington specific endorsement will in all likelihood consider adding this endorsement to their policies. Also, insurers who do have the language will need to be careful in reserving their rights as to this issue. They also should consider filing early declaratory judgment actions and have the courts review whether or not the insurer is entitled to reimbursement based upon their policy language and the Massachusetts Bay case. At this point, it is unclear whether the decision will be appealed to the Ninth Circuit. Regardless, this decision may have a chilling effect on insureds who are seeking coverage for defense where they know there is a potential that they may have to pay the money back.

Lether & Associates has addressed the Washington endorsement in a number of separate legal opinions provided to its clients. If you would like to discuss this endorsement with our office, please let us know.

Mass. Bay Ins. Co. v. Walflor Indus.

In 2013, the Washington State Supreme Court handed down the decision in National Surety Corp. v. Immunex that expanded defense cost exposure in Washington for liability insurers. Specifically, the Immunex court found that Washington liability insurers were not entitled to recovery of defense costs and fees which were incurred and paid for by a liability insurer even though there was no coverage for the loss. The court expressly found that even if the insurer reserved its rights as to reimbursement, there still is no right to recovery unless the liability policy expressly allowed for the recovery. National Surety Corp. v. Immunex, 176 Wn.2d 872, 888-889, 297 P.3d 688 (2013).

The Immunex decision caused significant concerns for liability insurers. It also provided a green light for insureds to tender claims where there was clearly no coverage with the expectation that the liability insurer would pay for the defense, (given Washington’s harsh penalties for denying a defense obligation), without any downside risk. Liability insurers, on the other hand, were forced to defend claims which were clearly not covered without any right to seek reimbursement even if it turned out that the claim was not covered. As a result, many insurers made it a practice to file declaratory judgment actions to have their defense obligations decided early on before the defense fees turned out to be more than the indemnity arguably owed under the policy. That option worked well, except of course when the insured files a motion for stay. If the stay is granted, the insurer could be stuck paying hundreds of thousands of dollars, if not more, in defense costs or be forced to try to settle out early and pay an uncovered claim in order to avoid the fees.

On April 17, 2019, the Honorable U.S. Federal Judge James Robart issued a decision in the case of Mass. Bay Ins. Co. v. Walflor Indus. There are several interesting components in regard to Judge Robart’s decision. First, the court addressed coverage under the Advertising Injury portion of a liability policy in a claim involving, in essence, a trademark/trade dress business dispute. These types of intellectual property claims have become more and more frequent in the highly competitive and sophisticated business environment of the Northwest. These claims are routinely tendered to liability insurers by insureds who look for coverage under the Coverage B section of the policy involving Advertising Injury. In states such as Washington, where the rules in regard to defense obligations are broad and the penalties are high, liability insurers have often picked up the defense of these claims.

Based upon the specific allegations and facts of the Massachusetts Bay case, the court found that there was no coverage under the policy in regard to defense or indemnity.

That is when the decision got very interesting. Massachusetts Bay Insurance Company had added an endorsement to their Washington insurance policies allowing for defense cost reimbursement. This Washington endorsement has been adopted by a number of insurers in a direct response to the Immunex decision. In Cross Motions for Summary Judgment, the policyholder requested that Judge Robart certify this specific question to the Washington Supreme Court. Judge Robart, who is never shy about making a tough decision, refused to certify the question. Rather, in a very clear and well written opinion, he addressed the issue of whether the policy language was void as against public policy or enforceable. Judge Robart found the language was not void and enforced the language as written. The court granted the insurer’s motion and held that the insurer was entitled to reimbursement of defense costs. A link to a copy of the decision is below.

Judge Robart’s decision was based primarily on the fact that the Immunex court clearly stated that the only reason it did not allow for reimbursement is because the policy in that case did not provide for such reimbursement. Since the policy in this Massachusetts Bay claim provided clear and unambiguous language allowing for reimbursement, the court enforced the policy language. What is unclear in the decision is whether the issue of ambiguity was ever clearly argued to the court. For example, it does not appear that there was any discussion in regard to whether costs and defense fees are in essence the same thing under Washington law in regard to this endorsement. What is clear, however, is that the court will allow insurers to potentially enforce their right to seek recovery of defense fees and costs. The decision also seems to suggest that there may have been a different result had the insurer not reserved its rights as to this issue.

From a practical standpoint, it is clear that insurers who do not have this Washington specific endorsement will in all likelihood consider adding this endorsement to their policies. Also, insurers who do have the language will need to be careful in reserving their rights as to this issue. They also should consider filing early declaratory judgment actions and have the courts review whether or not the insurer is entitled to reimbursement based upon their policy language and the Massachusetts Bay case. At this point, it is unclear whether the decision will be appealed to the Ninth Circuit. Regardless, this decision may have a chilling effect on insureds who are seeking coverage for defense where they know there is a potential that they may have to pay the money back.

Lether & Associates has addressed the Washington endorsement in a number of separate legal opinions provided to its clients. If you would like to discuss this endorsement with our office, please let us know.

Mass. Bay Ins. Co. v. Walflor Indus.

In 2013, the Washington State Supreme Court handed down the decision in National Surety Corp. v. Immunex that expanded defense cost exposure in Washington for liability insurers. Specifically, the Immunex court found that Washington liability insurers were not entitled to recovery of defense costs and fees which were incurred and paid for by a liability insurer even though there was no coverage for the loss. The court expressly found that even if the insurer reserved its rights as to reimbursement, there still is no right to recovery unless the liability policy expressly allowed for the recovery. National Surety Corp. v. Immunex, 176 Wn.2d 872, 888-889, 297 P.3d 688 (2013).

The Immunex decision caused significant concerns for liability insurers. It also provided a green light for insureds to tender claims where there was clearly no coverage with the expectation that the liability insurer would pay for the defense, (given Washington’s harsh penalties for denying a defense obligation), without any downside risk. Liability insurers, on the other hand, were forced to defend claims which were clearly not covered without any right to seek reimbursement even if it turned out that the claim was not covered. As a result, many insurers made it a practice to file declaratory judgment actions to have their defense obligations decided early on before the defense fees turned out to be more than the indemnity arguably owed under the policy. That option worked well, except of course when the insured files a motion for stay. If the stay is granted, the insurer could be stuck paying hundreds of thousands of dollars, if not more, in defense costs or be forced to try to settle out early and pay an uncovered claim in order to avoid the fees.

On April 17, 2019, the Honorable U.S. Federal Judge James Robart issued a decision in the case of Mass. Bay Ins. Co. v. Walflor Indus. There are several interesting components in regard to Judge Robart’s decision. First, the court addressed coverage under the Advertising Injury portion of a liability policy in a claim involving, in essence, a trademark/trade dress business dispute. These types of intellectual property claims have become more and more frequent in the highly competitive and sophisticated business environment of the Northwest. These claims are routinely tendered to liability insurers by insureds who look for coverage under the Coverage B section of the policy involving Advertising Injury. In states such as Washington, where the rules in regard to defense obligations are broad and the penalties are high, liability insurers have often picked up the defense of these claims.

Based upon the specific allegations and facts of the Massachusetts Bay case, the court found that there was no coverage under the policy in regard to defense or indemnity.

That is when the decision got very interesting. Massachusetts Bay Insurance Company had added an endorsement to their Washington insurance policies allowing for defense cost reimbursement. This Washington endorsement has been adopted by a number of insurers in a direct response to the Immunex decision. In Cross Motions for Summary Judgment, the policyholder requested that Judge Robart certify this specific question to the Washington Supreme Court. Judge Robart, who is never shy about making a tough decision, refused to certify the question. Rather, in a very clear and well written opinion, he addressed the issue of whether the policy language was void as against public policy or enforceable. Judge Robart found the language was not void and enforced the language as written. The court granted the insurer’s motion and held that the insurer was entitled to reimbursement of defense costs. A link to a copy of the decision is below.

Judge Robart’s decision was based primarily on the fact that the Immunex court clearly stated that the only reason it did not allow for reimbursement is because the policy in that case did not provide for such reimbursement. Since the policy in this Massachusetts Bay claim provided clear and unambiguous language allowing for reimbursement, the court enforced the policy language. What is unclear in the decision is whether the issue of ambiguity was ever clearly argued to the court. For example, it does not appear that there was any discussion in regard to whether costs and defense fees are in essence the same thing under Washington law in regard to this endorsement. What is clear, however, is that the court will allow insurers to potentially enforce their right to seek recovery of defense fees and costs. The decision also seems to suggest that there may have been a different result had the insurer not reserved its rights as to this issue.

From a practical standpoint, it is clear that insurers who do not have this Washington specific endorsement will in all likelihood consider adding this endorsement to their policies. Also, insurers who do have the language will need to be careful in reserving their rights as to this issue. They also should consider filing early declaratory judgment actions and have the courts review whether or not the insurer is entitled to reimbursement based upon their policy language and the Massachusetts Bay case. At this point, it is unclear whether the decision will be appealed to the Ninth Circuit. Regardless, this decision may have a chilling effect on insureds who are seeking coverage for defense where they know there is a potential that they may have to pay the money back.

Lether & Associates has addressed the Washington endorsement in a number of separate legal opinions provided to its clients. If you would like to discuss this endorsement with our office, please let us know.

Mass. Bay Ins. Co. v. Walflor Indus.

Memorial Day

To those in uniform serving and to those who have served in the past, we honor you today and every day.

Lether & Associates would like to wish everyone a fun and safe Memorial Day weekend.

As a reminder, the 75th Anniversary of the Normandy Invasion is June 6th.