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November 1, 2013
A Discussion of Purpose, Intent, and Strategy
Greg Harper
Harper Hayes PLLC

Karen Weaver
Soha&Lang P.S.




Any first party claimant to a policy of insurance
who is unreasonablydenied a claim

◦ for coverage
◦ or payment of ...
The superior court may, after finding
that an insurer has


◦ acted unreasonably in denying a claim for coverage or
payme...









The superior court shall,
after a finding of unreasonable denial of a
claim for coverage or payment of benef...
 ―First

party claimant‖
 ―Denial‖ of ―payment of
benefits‖

 ―denial‖ vs. ―delay‖ in payment

 Does

WAC violation al...
 Certified

Question: ―actual
damages‖

◦ Morella v Safeco – SETTLED /
DISMISSED

 No

Pending Washington
Appellate Case...
IFCA‘S Purpose?
Compare:
WPI 320.06.01 Insurance Fair Conduct Act
__________ claims that __________ has violated the Washington
Insurance ...
With:
WPI 320.01 Insurer's Failure to Act in Good Faith—Burden of
Proof—General
__________ has the burden of proving each ...
(6) This section does not limit a
court's existing ability to make any
other determination regarding an
action for an unfa...
• Who is the intended
beneficiary?

• 1st party versus 3rd party
debate
Think traditional definitions:

1st party = policyholder
2nd party = insurer

3rd party = tort claimant
―Any first party claimant to a policy of
insurance who is unreasonably denied a claim
for coverage or payment of benefits ...
House Bill 2060:

―(b) ‗Third party claimant‘ means
[someone] asserting a claim against [a]

legal entity insured under an...




Royal Globe Ins. Co. v. Superior Court, 23 Cal.

3d 880, 592 P.2d 329, 153 Cal. Rptr. 842
(1979), reversed by Moradi...
Pre-IFCA bad faith remedies for
breach of duty to defend (liability
coverage only) allowed coverage by
estoppel and covena...
Are their strategic considerations the
same?
 Does size of claim matter?
 Does ability to pay attorney matter?
 Is cons...







IFCA does not operate retroactively
IFCA notice – suit – litigate – damage
determination
Suit – IFCA notice – a...
 What‘s
 Who

trebled?

trebles it?

 When

is it trebled?

 What‘s

intended?
 Federal

versus state courts

 Application

of Seventh
Amendment

 Is

arbitration award subject
to trebling?











Greg Harper
Harper Hayes PLCC
206.340.8830
greg@harperhayes.com
Karen Weaver
Soha& Lang P.S.
206.654.16...
Bad Faith Nov2013 Insurance Fair Conduct Act
Bad Faith Nov2013 Insurance Fair Conduct Act
Bad Faith Nov2013 Insurance Fair Conduct Act
Bad Faith Nov2013 Insurance Fair Conduct Act
Bad Faith Nov2013 Insurance Fair Conduct Act
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Bad Faith Nov2013 Insurance Fair Conduct Act

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Transcript of "Bad Faith Nov2013 Insurance Fair Conduct Act"

  1. 1. November 1, 2013
  2. 2. A Discussion of Purpose, Intent, and Strategy
  3. 3. Greg Harper Harper Hayes PLLC Karen Weaver Soha&Lang P.S.
  4. 4.   Any first party claimant to a policy of insurance who is unreasonablydenied a claim ◦ for coverage ◦ or payment of benefits by an insurer    may bring an action in the superior court . . . 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.
  5. 5. The superior court may, after finding that an insurer has  ◦ acted unreasonably in denying a claim for coverage or payment of benefits ◦ or has violated a rule in subsection (5) of this section,   increase the total award of damages to an amount not to exceed three times the actual damages.
  6. 6.      The superior 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 attorneys' 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.
  7. 7.  ―First party claimant‖  ―Denial‖ of ―payment of benefits‖  ―denial‖ vs. ―delay‖ in payment  Does WAC violation alone support action?  ―Actual damages‖
  8. 8.  Certified Question: ―actual damages‖ ◦ Morella v Safeco – SETTLED / DISMISSED  No Pending Washington Appellate Cases
  9. 9. IFCA‘S Purpose?
  10. 10. Compare: WPI 320.06.01 Insurance Fair Conduct Act __________ claims that __________ has violated the Washington Insurance Fair Conduct Act. To prove this claim, __________ has the burden of proving each of the following propositions: (1) That __________ [unreasonably denied a claim for coverage] [unreasonably denied payment of benefits] [or] [violated a statute or regulation governing the business of insurance claims handling]; (2) That __________ was [injured] [damaged]; and (3) That __________ act or practice was a proximate cause of __________ [injury] [damage]. If you find from your consideration of all of the evidence that each of these propositions has been proved, your verdict [on this claim] should be for __________. On the other hand, if any of these propositions has not been proved, your verdict [on this claim] should be for __________.
  11. 11. With: WPI 320.01 Insurer's Failure to Act in Good Faith—Burden of Proof—General __________ has the burden of proving each of the following propositions: (1) That __________ failed to act in good faith in one of the ways claimed by __________; (2) That __________ was [injured] [damaged]; and (3) That __________ failure to act in good faith was a proximate cause of __________ [injury] [damage]. If you find from your consideration of all of the evidence that each of these propositions has been proved, your verdict [on the claim of failure to act in good faith] should be for __________. On the other hand, if any of these propositions has not been proved, your verdict [on the claim of failure to act in good faith] should be for __________.
  12. 12. (6) This section does not limit a court's existing ability to make any other determination regarding an action for an unfair or deceptive practice of an insurer or provide for any other remedy that is available at law.
  13. 13. • Who is the intended beneficiary? • 1st party versus 3rd party debate
  14. 14. Think traditional definitions: 1st party = policyholder 2nd party = insurer 3rd party = tort claimant
  15. 15. ―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 . . . .‖ RCW 48.30.015(1) ―‗First party claimant‘ means an individual, corporation, association, partnersh ip, or other legal entity asserting a right to payment as a covered person under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by such a policy or contract.‖ RCW 48.30.015(4)
  16. 16. House Bill 2060: ―(b) ‗Third party claimant‘ means [someone] asserting a claim against [a] legal entity insured under an insurance policy . . . .‖ ―(7) An insurer engaged in the business of insurance may not unreasonably deny a claim for coverage or payment of benefits to any first party claimant or third party claimant.‖ Discuss
  17. 17.   Royal Globe Ins. Co. v. Superior Court, 23 Cal. 3d 880, 592 P.2d 329, 153 Cal. Rptr. 842 (1979), reversed by Moradi-Shalalv. Fireman‘s Fund Ins. Cos., 46 Cal. 3d 287 (1988). Subsequent attempts by the California legislature to reinstate the Royal Globe rule were resoundingly overturned by California voters.
  18. 18. Pre-IFCA bad faith remedies for breach of duty to defend (liability coverage only) allowed coverage by estoppel and covenant judgments with presumed harm and reasonableness rulings  First-party had no presumption of harm, no coverage by estoppel, reasonableness criteria do not apply 
  19. 19. Are their strategic considerations the same?  Does size of claim matter?  Does ability to pay attorney matter?  Is construction defect a class by itself?  Impact of contingent fee vs. hourly? 
  20. 20.     IFCA does not operate retroactively IFCA notice – suit – litigate – damage determination Suit – IFCA notice – amend – litigate – damage determination Damage determination – IFCA notice – suit litigate
  21. 21.  What‘s  Who trebled? trebles it?  When is it trebled?  What‘s intended?
  22. 22.  Federal versus state courts  Application of Seventh Amendment  Is arbitration award subject to trebling?
  23. 23.         Greg Harper Harper Hayes PLCC 206.340.8830 greg@harperhayes.com Karen Weaver Soha& Lang P.S. 206.654.1691 weaver@ sohalang.com
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