Armstrong v. Safeco Ins. Co.
| Citation | 50 Wn.App. 254,748 P.2d 666 |
| Decision Date | 08 January 1988 |
| Docket Number | No. 19084-9-1,19084-9-1 |
| Parties | , 56 USLW 2399 Jack C. ARMSTRONG and Jane Doe Armstrong, husband and wife, Appellants, v. SAFECO INSURANCE COMPANY, a Washington Insurance Corporation, Respondent. |
| Court | Washington Court of Appeals |
James P. Hunter, Anderson, Hunter, Dewell, Baker & Collins, P.S., Everett, for respondent Safeco Ins. Co.
This case presents an issue of first impression concerning an insurer's refusal to renew an auto policy. RCW 48.18.292(1) requires an insurer which does not renew to give 20 days notice to the insured and to include the actual reason for refusal to renew.
Jack C. Armstrong, the insured under an auto policy, contends that the statutory requirement of "the actual reason" for nonrenewal requires a reason based upon good cause. Safeco Insurance Company (Safeco) argues that the question The Armstrongs' automobile insurance policy ran for periods of 6 months from July 12, 1977 to November 14, 1984. The last 6-month renewal was in May 1984. The last claim on the policy was made by the Armstrongs in April 1984.
is entirely legal and the "actual reason is all the statute requires." We summarize the facts which support Armstrong's claim for damages
In October 1984, the Armstrongs were advised by Safeco that their policy would not be renewed, effective November 14, 1984. The reason given for nonrenewal was "claims frequency and the unrevealed speeding cite for 65 in a 55 on 10/3/82."
In response to the notice of nonrenewal, the Armstrongs wrote a letter to the Washington State Insurance Commissioner, outlining the history of their insurance coverage with Safeco. The Armstrongs stated that this was the only speeding ticket Mr. Armstrong had in 30 years of driving, and that Safeco did not ask them if they had any tickets; instead, Safeco made no inquiries and just sent the renewal policy each year and requested that the premium be paid.
The Armstrongs' letter also explained the claims that the Armstrongs had made for coverage under their policies with Safeco since 1977. They stated they felt the real reason for nonrenewal was that they had filed a claim against the underinsured motorist portion of the Safeco policy, which had not yet been settled.
On March 20, 1985, in response to the Armstrongs' letter, Mr. Robb Bruns, Safeco personal lines underwriting manager, wrote a letter to the insurance commissioner itemizing the claims made under the Armstrong insurance policies over the 7-year period of their coverage with Safeco. The claims were itemized as follows:
1. June 1, 1980--Comprehensive--rock thrown up by passing vehicle, broke windshield.
2. January 1, 1982--Collision--car stolen and damaged in an accident.
3. December 4, 1982--Collision and PIP--claimant ran stop sign and struck insured's car.
4. January 28, 1984--Comprehensive--tires slashed.
5. February 25, 1985--Comprehensive--tires slashed.
6. April 18, 1984--Collision--insured struck by claimant.
None of these claims were made subsequent to May 1984, the date of the last renewal for a period of 6 months. Nor did any of the claims arise out of culpable driving activities on the part of the Armstrongs. 1
The Armstrongs brought this action, alleging bad faith on the part of Safeco in refusing to renew the automobile liability insurance policy. On August 21, 1986, the trial court granted Safeco's motion for summary judgment of dismissal. This appeal timely follows.
First, Safeco argues that the exhibits and affidavit of Paul J. Burns, Armstrongs' attorney, are not based on the affiant's personal knowledge and therefore cannot be considered by the court to establish the foregoing factual summary.
CR 56(e) requires that affidavits submitted in summary judgment proceedings be made on personal knowledge, set forth admissible evidentiary facts, and affirmatively show the affiant is competent to testify as to his averments. Meadows v. Grant's Auto Brokers, Inc., 71 Wash.2d 874, 878, 431 P.2d 216 (1967). Although CR 56(e) makes no distinctions between affidavits of the moving and nonmoving parties, the drastic potentials of a summary judgment motion compel the courts to indulge in leniency with respect to affidavits presented by the nonmoving party. Meadows, at 879, 431 P.2d 216.
MEANING OF "ACTUAL REASON"
The Armstrongs argue that the duty of good faith and the language of RCW 48.18.292(1)(a) and (5) support the conclusion that before an insurer may refuse to renew, there must be a valid basis for nonrenewal, based on culpable driving activity by the insured, which increases the insurer's risk exposure.
RCW 48.18.292(1)(a) provides:
(1) Each insurer shall be required to renew any contract of insurance subject to RCW 48.18.291 unless one of the following situations exists:
(a) The insurer gives the named insured at least twenty days' notice in writing as provided for in RCW 48.18.291(1), that it proposes to refuse to renew the insurance contract upon its expiration date; and sets forth therein the actual reason for refusing to renew; or....
RCW 48.18.292 does not define an "actual reason" or what basis there must be for an insurer's refusal to renew an auto policy. RCW 48.18.292(5), however, provides some guidance:
No insurer shall refuse to renew the liability and/or collision coverage of an automobile insurance policy on the basis that an insured covered by the policy of the insurer has submitted one or more claims under the comprehensive, road service, or towing coverage of the Safeco argues there is no requirement that the "actual reason" required by the statute be a reason based upon good and sufficient cause; that there is no vested right to continued liability insurance coverage, and that no law requires an insurance company to automatically extend a 6-month period of insurance coverage.
policy. Nothing in this subsection shall prohibit the nonrenewal of comprehensive, road service, or towing coverage on the basis of one or more claims submitted by an insured
Insurance, as a business affected by the public interest, is subject to extensive regulations. The statute governing nonrenewal must be interpreted by an ascertainable standard. As demonstrated by the parties' arguments here, "actual reason" is ambiguous, and we must determine its meaning. State ex rel. McDonald v. Whatcom Cy. Dist. Court, 92 Wash.2d 35, 593 P.2d 546 (1979). In construing statutes, the primary objectives are to effectuate legislative intent, ascertained from the statutory context as a whole, and to avoid unjust or absurd consequences. Hanks v. Nelson, 34 Wash.App. 852, 664 P.2d 15 (1983); In re Hoffer, 34 Wash.App. 82, 659 P.2d 1124 (1983).
Inherent in RCW 48.18.292 is a presumption that automobile insurance will be renewed, subject to certain exceptions, including the statement of "actual reasons" at issue. The purpose for statutes requiring such notice is to prevent nonrenewal or cancellation for statutorily prohibited reasons, see RCW 48.30.300; to provide the insured the opportunity to convince the insurer not to carry through on its proposed action (here, nonrenewal) and to allow the insured ample time to obtain replacement coverage. Shqeir v. Equifax, Inc., 636 S.W.2d 944, 948-49 (Mo.1982) (). Though truthfulness of the reasons may be a concomitant of "actual reasons", it is not sufficient to meet an objective standard by which to measure the right of nonrenewal.
Nor may the insurer meet its statutory obligation by making an incomplete statement of its reasons for nonrenewal. In Government Employees Ins. Co. v. Insurance Comm'r, 40 Md.App. 201, 389 A.2d 422 (1978), the Court of Appeals considered an insurance company's nonrenewal of automobile policy based on the insured's son's driving record. The Maryland statute required an insurer to give the insured notice of its intent not to renew including "[t]he insurer's actual reason or reasons for proposing to take such action." Md.Ann.Code art. 48A, § 240AA(b)(iii) (1957). 2 The insured was informed the reason for nonrenewal was "Alan J. Frank's [son's] driving record" and included four speeding violations; the notice did not inform the insured that the rationale was that the son had received those speeding tickets within a two year period and that three of the tickets were received after the son had attended a driver (rehabilitation) clinic. Because the stated reason was not the entire reason, the court held it fell short of the "actual reason or reasons" and thus did not comply with the statute. Where the entirety of the reasons is not given, the insured is unable to contest in any meaningful way the nonrenewal of his policy.
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