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Thanksgiving and a Cornucopia of Potential Insurance Claims

by | Nov 22, 2022 | COVID-19, Decisions, Insurance Law, News & Updates

   Thanksgiving is a time to spend with family and friends and celebrate all that we are thankful for. It is also a time for a cornucopia of potential insurance claims. Thanksgiving-related insurance claims can run the gamut from auto accidents, to slip-and-falls, fire losses, and even business losses.

   This year, it is estimated that 54.6 million people will travel more than 50 miles for their Thanksgiving celebrations, which greatly increases the risk of an auto accident or other travel-related insurance claim. In addition, the National Fire Protection Association (“NFPA”) has noted that Thanksgiving is the leading day of the year for home cooking fires in the United States.[1]  In fact, the NFPA has reported that home cooking fire reports increase over 200% on Thanksgiving Day versus the daily average for the rest of the year.[2]

   Increased risks of insurance claims are also not limited to homeowners and/or auto claims and the risks do not end on Thanksgiving Day. Millions of Americans will also venture out on Black Friday to take advantage of the many deals that can be found on the biggest shopping day of the year. This leads to increased exposure for businesses from parking lot accidents, slip-and-falls, miscellaneous property damage, and theft.  

   The increased number of losses over the Thanksgiving Weekend also results in an uptick in insurance claims under auto policies, homeowners policies, and business insurance policies. This means that insurers need to be ready to staff and handle a potentially large volume of new claims, both first-party and third-party, in the days and weeks surrounding the Thanksgiving Holiday.

   With these increased risks in mind, the Lether Law Group Family encourages everyone to use extra caution as you enjoy time with family and friends and/or as you venture out on Black Friday.

   If something unexpected should occur or if you need advice for post-Thanksgiving-related insurance claims, please keep in mind that the attorneys at Lether Law Group have over 33 years in combined experience in advising insurers and defending first and third-party claims. This includes providing coverage advice and defending large property losses, catastrophic accident injuries, and other spontaneous and unexpected claims. Please feel free to contact us at any time if you would like to discuss any Thanksgiving-related claims or any other matter.

 

[1] NFPA urges extra caution when preparing your feast this Thanksgiving, by far the leading day of the year for U.S. home cooking fires

[2] NFPA Keep everyone safe from fire hazards this Thanksgiving | NFPA

 

 

 

 

THE NINTH CIRCUIT COURT OF APPEALS AFFIRMS DISMISSAL OF COVID-19 BUSINESS INTERRUPTION CLAIMS

by | Oct 27, 2022 | COVID-19, Decisions, Insurance Law, News & Updates

                On October 17, 2022. The United States Court of Appeals for the Ninth Circuit issued additional Opinions regarding COVID-19 Business Interruption claims.

                In McCulloch, et al v. Valley Forge Ins. Co., et al¸ No. 21-35520, 2022 U.S. App. LEXIS 2860, 2022 WL 9830777 (9th Cir. Oct. 17, 2022), the Court affirmed a summary judgment ruling from the Western District of Washington dismissing claims by several dentists/dental clinics. The Plaintiffs argued that their claims were improperly dismissed because they asserted the claims resulted from “direct physical loss of or physical damage to” their insured premises. The Ninth Circuit disagreed.

                While the appeal was pending, the Washington State Supreme Court issued its ruling in Hill & Stout, PLLC v. Mutual of Enumclaw Ins. Co., 515 P.3d 525 (2022), in which the Supreme Court held that “loss of intended use of property” and “loss of business income” from COVID-19 orders did not qualify for insurance coverage as “direct physical loss of or damage to property.” As a result, the Ninth Circuit dismissed the breach of contract/direct physical loss claim.  The Court also dismissed Plaintiff’s claims that they were entitled to coverage under the policies’ civil authority coverage because there was no evidence that the Washington State Governor’s orders were in response to any actual physical property damages. Therefore, the Ninth Circuit concluded that the Hill & Stout Opinion also precludes coverage.

                In addition, the Ninth Circuit dismissed the appeal for extra-contractual claims. With respect to the extra-contractual claims, certain Plaintiffs argued that the insurer unreasonably denied their claim and failed to conduct a reasonable investigation of the claims. The Ninth Circuit rejected both arguments. Specifically, the Court noted that the unreasonable denial claim first required a showing of an incorrect denial of the claim. Because the claim was properly denied, the extra-contractual claim failed. The Court rejected the unreasonable investigation argument because “the insurer’s denial of coverage was based on a legal interpretation of the policy. [As a result,] [t]here was no need for factual investigation…”

                In Hot Yoga, Inc. v. Philadelphia Indem. Ins. Co.¸No. 21-35806, 2022 U.S. App. LEXIS 28674, 2022 WL 9732180 (9th Cir. 2022), the Ninth Circuit similarly affirmed dismissal of contractual claims based on the Washington State Supreme Court’s Opinion in Hill & Stout. In addition, the Court held that the policy’s virus exclusion, precluding coverage when a virus initiates the causal chain that led to the cause of any claimed loss, barred coverage. 

                The Ninth Circuit also rejected the insured’s arguments regarding its extra-contractual claims. The insured argued that the district court erred in dismissing extra-contractual claims premised on the insurer allegedly “misrepresenting the pertinent policy language and preemptively denying the claim without any investigation.” The Ninth Circuit held that the claims necessarily failed because the policy did not provide coverage. 

                As we previously opined, it is clear that the Washington State Supreme Court’s decision and reasoning in Hill & Stout is having a substantial impact on pending COVID-19 BI claims in Washington. We anticipate that there will be several other similar rulings in the near future.

                If you have any questions about the above Ninth Circuit cases and how the Hill and Stout case will continue to impact COVID-19 BI claims and cases, please give us a call.

 

 

 

Kevin J. Kay

Kevin J. Kay

Shareholder

Kevin is a graduate of Pacific Lutheran University and Seattle University School of Law. He is licensed to practice in the state and federal courts of Washington and admitted to practice before the Ninth Circuit Court of Appeals. In addition, Kevin has appeared pro hac vice in courts in Louisiana and California. Kevin has represented insurers and insureds in coverage for 16 years. These claims involve personal and commercial auto policies, commercial general liability, professional liability, and E&O insurance. Kevin has also advised and represented risk pools, insurers, and insured in matters ranging from automobile/bus accidents to catastrophic landslides. His practice also includes construction defect disputes, personal injury claims, commercial leases, and significant property damage disputes.

 

Washington Supreme Court Hears Oral Argument in Case That Allowed Insureds to Name Adjusters as Defendants in Bad Faith Actions

by | Mar 6, 2019 | Insurance Law, News & Updates

On February 26, 2019, the Washington Supreme Court heard oral arguments in Keodalah v. Allstate Ins. Co. and Tracey Smith.  In this case, the Court of Appeals overturned the trial court’s dismissal of bad faith and Consumer Protection Act claims asserted directly against Tracey Smith, an adjuster for Allstate.

A link for the video recording of the oral argument is provided below:

https://www.tvw.org/watch/?eventID=2019021551

A link for the briefing filed with the Supreme Court is provided below:

https://www.courts.wa.gov/appellate_trial_courts/coaBriefs/index.cfm?fa=coabriefs.briefsByCase&courtId=A08

The issue to be addressed by the Supreme Court is whether the Keodalahs may plead a claim for bad faith and Consumer Protection Act violations directly against the Allstate adjuster, Tracey Smith. Since the Court of Appeals’ decision in Keodalah was published in March 2018, it has become common for insureds to name both the insurance company and the adjuster in lawsuits alleging bad faith claims handling.  Over the last 11 months, the ability to name the insured in a bad faith lawsuit has given rise to a multitude of new issues that must be addressed in these suits. These issues include questions about insurance counsel representing the adjuster as well as the ability to avoid federal court diversity jurisdiction by naming a local adjuster as a defendant in a lawsuit.

At the oral argument hearing, Allstate and Ms. Smith asserted that the only potentially available claim against an adjuster would be based on the general good faith statute, RCW 48.01.030, and would require the Court to hold that this statute provided for an implied right of action under Washington’s test for implying such an action.  They explained that an adjuster cannot be subject to a common law bad faith claim because there was no quasi-fiduciary relationship between an adjuster and insured. They then established that the good faith statute does not imply a right of action against an adjuster under the test.

In response, the insureds asserted that their claim was actually based on common law bad faith and the good faith statute provided the duty which applies to the adjuster for this claim.  They then stated that recognizing a bad faith claim against an adjuster was necessary to prevent the insurance company from avoiding bad faith liability by asserting that its adjuster’s offending conduct was outside the scope of the adjuster’s authority and employment duties with the insurance company.

We expect the Supreme Court to publish its decision in this case within the next few months.  The Supreme Court’s decision and its reasoning for reaching that decision will very likely have a substantial impact on how bad faith lawsuits are litigated for years to come.

If you have any questions about how the Keodalah case impacts the bad faith litigation landscape, please give us a call.

A Tale of Two Cases. The Best of Times and the Worst of Times

by | Feb 6, 2019 | Insurance Law, News & Updates

Within roughly a two-week period over this past holiday season, the Federal District Courts for the Western District of Washington issued two dramatically different orders in very similar coverage disputes. In Northwest Pipe Company v. Travelers Property Casualty Company of America and The Phoenix Insurance Company (3:17-cv-05098-BHS), the Honorable Benjamin Settle of the Tacoma District granted Travelers’ summary judgment motion dismissing Northwest Pipe’s bad faith and Consumer Protection Act claims. This decision came 14 days after the Honorable John Coughenour of the Seattle District issued a summary judgment in favor of Osborne Construction Company against Zurich American Insurance Company. In the Osborne Construction Company v. Zurich American Insurance Company matter the court found Zurich had acted in bad faith (2:18-cv-00349-JCC).

The two cases presented very similar issues. A review of the facts of the cases, however, clearly establishes the right way to handle construction liability claims in Washington and the wrong way to handle those claims. In Northwest Pipe Company v. Travelers Property Casualty Company of America and The Phoenix Insurance Company, Travelers correctly identified a tender from the named insured, agreed to assign counsel, and issued a timely and thorough reservation of rights letter. Northwest Pipe argued that Travelers was obligated to pay for the insured’s personal counsel who had allegedly assisted in the defense of Northwest Pipe. Northwest Pipe also argued that the reservation of rights letter issued by Travelers was untimely. Taking the position that Travelers had denied the claim and had failed to investigate coverage in a reasonable manner, Northwest Pipe argued that Travelers was precluded from raising coverage defenses based upon the doctrine of coverage by estoppel. Judge Settle rejected this argument and denied Northwest Pipe’s motion and granted Travelers’ motion for summary judgment dismissing all extra-contractual claims.

The Court found that Travelers was not obligated to respond to the alleged claim for the insured’s personal counsel’s fees and that Travelers’ position in regard to that claim was reasonable. The Court also noted that the remedy of coverage by estoppel is a drastic remedy that would not have been applicable even if the court had found a question of fact in regard to the bad faith claim. In regard to the coverage by estoppel issue, the Court’s decision was consistent with the decision in Ledcor Indus. (USA), Inc. v. Mut. of Enumclaw Ins. Co., 150 Wn. App. 1, 10, 206 P.3d 1255, 1261 (2009), wherein the Court found that coverage by estoppel does not apply in all cases and that an insured still must establish actual damage for a bad faith claim.

In Osborne Construction Company v. Zurich American Insurance Company, Zurich denied the defense of an AI tender. Zurich took the position that the tender was unclear and that Osborne had failed to establish that it had entered into a contract with the named insured requiring the named insured to procure insurance. Judge Coughenour found that the tender was sufficient to place Zurich on notice and that Zurich failed to investigate the AI tender appropriately. As a result, Judge Coughenour found that Zurich had not only acted in bad faith but also found that coverage by estoppel applied as a matter of law.

The disparity between these two cases presents an excellent case study of how to properly investigate liability construction cases in Washington, particularly when it comes to a tender and the prompt issuance of a correct reservation of rights letter. In a similar manner, the Zurich decision shows the extreme dangers of an inappropriate coverage position or improper investigation.

The Federal Courts remain an excellent place for insurers to litigate coverage issues. However, as these cases show, the Courts will not tolerate improper claims handling. However, the Courts will reward those insurers who follow the rules.

Lether & Associates proudly represented Travelers in theNorthwest Pipe Company v. Travelers Property Casualty Company of America and The Phoenix Insurance Company matter. If you would like to discuss these cases or any issue involving Washington law, feel free to contact our offices.