Lloyd v. Allstate Ins. Co.

• Decision Date: 23 April 2012
• Docket Number: No. 65618–0–I.,65618–0–I.
• Citation: 275 P.3d 323
• Court: Washington Court of Appeals
• Parties: Jerry L. LLOYD, individually, Appellant, v. ALLSTATE INSURANCE COMPANY, a foreign insurer; Deerbrook Insurance Company, a foreign insurer, Respondents.

275 P.3d 323

Jerry L. LLOYD, individually, Appellant,

v.ALLSTATE INSURANCE COMPANY, a foreign insurer; Deerbrook Insurance Company, a foreign insurer, Respondents.

No. 65618–0–I.

Court of Appeals of Washington, Division 1.

Feb. 21, 2012.Publication Ordered April 23, 2012.

Ray C. Brooks, Attorney at Law, Redmond, WA, for Appellant.

Marilee C. Erickson, Jason E. Vacha, Reed McClure, Seattle, WA, for Respondents.

BECKER, J.

¶ 1 Jerry Lloyd appeals the trial court's grant of summary judgment in favor of two insurance companies in a dispute over the settlement value of his wrecked automobile. We conclude Lloyd has failed to demonstrate the existence of any reasonable dispute concerning the facts that are material to his claims.

FACTS

¶ 2 Jerry Lloyd owned a 2005 Chevrolet Malibu Classic that was involved in an accident on August 18, 2008. At the time of the accident, he had an automobile insurance policy with Deerbrook Insurance Company. In the event of a collision, Lloyd's policy permitted him to recover the “Actual Cash Value” of his vehicle, subject to a $500 deductible. Lloyd called Deerbrook to report the accident on the evening of August 18, 2008. He was informed that his claim would be handled by Allstate Insurance Company.

¶ 3 Allstate asked Lloyd to take the vehicle to an auto shop for an appraisal. The shop examined the vehicle and determined it was a “total loss” because repair costs totaled $7,977.87, which exceeded the value of the car. The motor mounts were cracked, the frame of the car was bent, and the air bag system had to be replaced. Lloyd took the car to two more repair shops for second opinions and was given the same evaluation.

¶ 4 A technical representative for Allstate went to view the car. This person reported to Autosource Valuation Services, a third party car appraisal service, that the engine was “well-maintained” and the interior, exterior, and tires had been in “good” condition before the collision, except for moderate wear to the seats, minor wear to the carpets, and minor damage to the exterior trim.

¶ 5 Autosource completed its report on September 4, 2008. The report set the “Total Condition Adjusted Market Value” of the car—before adding sales tax and licensing fees—at $8,510. This value was based on a “typical vehicle” with an odometer reading of 48,990 miles. It took into account the good condition of Lloyd's car, including the well-maintained interior, exterior, and engine. Autosource attached to its report a list of 10 other 2005 Chevrolet Malibu Classics for sale within a 24 mile radius, with prices ranging from $8,899 to $9,995. These cars had odometer readings ranging from 27,009 to 66,859 miles.

¶ 6 The odometer reading of Lloyd's car was 113,855 miles. An Allstate representative requested a corrected report to account for the higher mileage of Lloyd's car. In the corrected report, Autosource calculated a new value of $5,105 by subtracting $3,405 to account for the higher mileage of Lloyd's car. This report did not alter the original report's statement as to the car's well-maintained interior, exterior, and engine.

¶ 7 On September 9, 2008, Allstate adjuster Steven Graham telephoned Lloyd to offer him $5,105.00 for the actual cash value of the car. After adding sales tax and fees and subtracting Lloyd's $500.00 deductible, Graham offered Lloyd a net payout of $5,102.18.

¶ 8 Lloyd refused the offer. He told Graham he had seen comparable cars selling for more and his car was worth more. Graham explained that the car's “very high mileage” reduced its value. Lloyd insisted that the high mileage did not matter because of his car's regular service records. Graham agreed to reevaluate by asking Autosource for a new valuation based on a different methodology. He also told Lloyd he would be willing to consider any market research he could provide.

¶ 9 Autosource returned a revised report on September 10, 2008. The new report provided two quotes from local car dealers, based on the dealers' professional opinions of the car's actual cash value given its condition and mileage. The dealers gave quotes of $6,075.00 and $6,500.00, which grew to $6,654.63 and $7,115.75, respectively, after adding sales tax and license fees.

¶ 10 The next day, Graham called Lloyd to extend a second offer of $6,654.63. Lloyd rejected this offer, stating that he needed between $9,000.00 and $13,000.00 to replace his car. Graham later testified that he was prepared to offer the higher estimate of $7,115.75 to settle the claim, but he did not do so either then or later.

¶ 11 On October 17, 2008, Allstate received a letter from attorney Alana Bullis, stating that Lloyd had retained her to represent him, that Lloyd wished to invoke the appraisal clause of his policy, and that he had selected an appraiser. Allstate retained an appraiser the same day. The following week, Allstate's appraiser, Mark Olson, prepared a report concluding that Lloyd's car was worth $6,183.79, taking into consideration its “very clean” condition and high mileage. The two appraisers met on October 27, 2008. They agreed on an “Award of the Loss” in the amount of $6,683.79, plus sales tax and licensing fee.

¶ 12 On November 3, 2008, Graham spoke to Bullis and explained that he would be sending Lloyd a check for $6,815.16. This amount included the full appraisal award, increased by sales tax and fees and decreased by his $500.00 policy deductible. Bullis claimed that Allstate was not entitled to subtract the deductible. Graham asked Olson whether the appraisers had included the deductible in the appraisal award. Olson told him they had not. Lloyd's own appraiser confirmed Olson's answer in a letter to Bullis.

¶ 13 Before Graham issued the check, however, Lloyd decided that he wanted to keep his car. Graham subtracted $545.38 from the settlement to account for the car's salvage value and sent Lloyd a check in the amount of $6,269.78 on November 26, 2008. Lloyd cashed the check promptly. Later, he changed his mind about keeping the car. He asked Graham to take the car back and repay him the salvage value. On January 21, 2009, Graham issued Lloyd a second check for the $545.38 salvage value. Lloyd cashed it promptly. As of that date, Allstate had paid Lloyd a total of $6,815.16 in settlement of his claim. Allstate deemed the matter finished and the claim paid.

¶ 14 On March 6, 2009, Lloyd filed a lawsuit against Allstate alleging violations of the duty of good faith and fair dealing, violations of various provisions of the Washington Administrative Code, violations of the Consumer Protection Act, chapter 19.86 RCW, and breach of contract. He amended his complaint on June 16, 2009, adding Deerbrook as a defendant. Allstate and Deerbrook moved for summary judgment. The trial court granted summary judgment in favor of the insurance companies. This appeal followed.

¶ 15 When reviewing an order on summary judgment, we engage in the same inquiry as the trial court. Cummins v. Lewis County, 156 Wash.2d 844, 852, 133 P.3d 458 (2006). Summary judgment is proper where the entire record shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Cummins, 156 Wash.2d at 852, 133 P.3d 458. We review the record taking all facts and reasonable inferences in the light most favorable to the nonmoving party. Babcock v. Mason County Fire Dist. No. 6, 144 Wash.2d 774, 784, 30 P.3d 1261 (2001).

BAD FAITH

¶ 16 Lloyd argues that the insurers breached their duty of good faith and engaged in unfair and deceptive trade practices by extending unreasonably low settlement offers. Because the two offers were unfairly low, he contends, he was compelled to invoke the appraisal clause, incurring additional expense and delay.

¶ 17 An insurer's duty of good faith includes an affirmative duty to promptly investigate claims and attempt to effectuate fair and equitable settlements, without resort to litigation, arbitration, or appraisal. WAC 284–30–330(6)–(7); Coventry Assocs. v. Am. States Ins. Co., 136 Wash.2d 269, 279–81, 961 P.2d 933 (1998). To establish bad faith, an insured is required to show that the insurer's actions were unreasonable, frivolous, or unfounded. Mutual of Enumclaw Ins. Co. v. Dan Paulson Constr., Inc., 161 Wash.2d 903, 916, 169 P.3d 1 (2007). An insurer does not act in bad faith where it “acts honestly, bases its decision on adequate information, and does not overemphasize its own interest.” Werlinger v. Clarendon Nat'l Ins. Co., 129 Wash.App. 804, 808, 120 P.3d 593 (2005), review denied, 157 Wash.2d 1004, 136 P.3d 759 (2006). The determinative question is the reasonableness of the insurer's actions in light of all the facts and circumstances of the case. Anderson v. State Farm Mut. Ins. Co., 101 Wash.App. 323, 329–30, 2 P.3d 1029 (2000), review denied, 142 Wash.2d 1017, 20 P.3d 945 (2001). Where reasonable minds could not differ as to the reasonableness of the insurer's actions, summary judgment is appropriate. See Hertog, ex rel. S.A.H. v. City of Seattle, 138 Wash.2d 265, 275, 979 P.2d 400 (1999).

¶ 18 Graham's two settlement offers were both reasonable and based on “adequate information.” Werlinger, 129 Wash.App. at 808, 120 P.3d 593. Allstate promptly and thoroughly investigated Lloyd's loss by sending a field representative to view the car and having the car examined by a private auto body shop. The two offers Graham extended were based directly on Autosource's market research, which incorporated the field representative's observations that the car's interior, exterior, and engine were in good condition. Both offers tendered 100 percent of the actual cash value accorded to the car by Autosource appraisals. There is no evidence that Graham made any attempt to reduce the appraisals arbitrarily.

¶ 19 Lloyd contends the original Autosource valuation of $8,510 was an accurate representation of his car's value. Because his car's engine was regularly serviced and the car...