Besel v. VIKING INS. CO. OF WISCONSIN, 16669-4-III.

• Decision Date: 27 February 2001
• Docket Number: No. 16669-4-III.,16669-4-III.
• Citation: 21 P.3d 293,105 Wash.App. 463
• Court: Washington Court of Appeals
• Parties: Robert E. BESEL, Appellant, v. VIKING INSURANCE COMPANY OF WISCONSIN, a foreign insurer, Respondent.

21 P.3d 293

105 Wash.App. 463

Robert E. BESEL, Appellant, v. VIKING INSURANCE COMPANY OF WISCONSIN, a foreign insurer, Respondent.

No. 16669-4-III.

Court of Appeals of Washington, Division 3, Special Panel.

February 27, 2001.

Reconsideration Denied and Publication Ordered April 5, 2001.

Michael J. Riccelli, Spokane, for Appellant.

James B. King, Keefe, King & Bowman, Spokane, for Respondent.

KURTZ, C.J.

Mark Ralston, the insured of Viking Insurance Company (Viking), crashed his truck while driving under the influence of alcohol and injured his passenger Robert Besel. Mr. Besel asked Viking several times to pay Mr. Ralston's policy limit. Viking did not respond consistently to Mr. Besel's letters and calls, it did not move promptly to investigate and settle his claim, it did not communicate with Mr. Ralston regarding Mr. Besel's claim prior to litigation, and it lost Mr. Besel's claim file.

Mr. Besel filed suit against Mr. Ralston, who eventually consented to a $175,000 judgment against him in exchange for assignment of his rights against Viking to Mr. Besel and Mr. Besel's covenant not to execute against the judgment. Shortly thereafter, Viking paid Mr. Besel the policy limit of $25,000.

Acting pursuant to the assignment of rights, Mr. Besel filed suit against Viking, alleging, among other things, a bad faith tort claim and violation of the Consumer Protection Act (CPA), Chapter 19.86 RCW. The trial court denied Mr. Besel's summary judgment motion on the common law issues and further determined as a matter of law that any damages sustained by Mr. Ralston were limited to the policy limits of $25,000.

Because the undisputed facts show as a matter of law that Viking acted in bad faith in the handling of Mr. Besel's claim and further violated the CPA, we reverse in part. Further, we reverse the trial court's ruling as to the limit of Mr. Besel's damages and remand for further proceedings on the amount of those damages.

FACTS

Mr. Ralston crashed his truck while driving under the influence of alcohol on August 18, 1990. His automobile insurance policy with Viking provided $25,000 personal injury liability coverage for a single person. On August 20, Mr. Ralston informed Viking of the accident and the resulting injury to his passenger, Mr. Besel.

Counsel for Mr. Besel sent a letter to Viking on October 15, informing it of Mr. Besel's personal injury claim and demanding it tender Mr. Ralston's policy limits. Viking did not respond.

On November 28, Mr. Besel sent a second letter to Viking describing the extent of Mr. Besel's injuries and medical expenses and demanding tender of Mr. Ralston's policy limits. The second letter stated Mr. Besel would file suit unless Viking responded by December 7. The November 28 letter prompted a December 7 telephone call from Cher Anderson of Viking stating that the claim had been assigned to Carla Langman.

Having received no further communications from Viking, counsel for Mr. Besel telephoned Viking on December 16 and further informed the insurer of Mr. Besel's claims and the desire to settle for the full policy limits. Viking assured counsel that Ms. Langman was attending to the file, and that it would respond during the first week of January 1991.

Viking did not respond during the first week of January 1991. Counsel for Mr. Besel then sent a letter on January 8, itemizing Mr. Besel's damages and demanding payment of the $25,000 coverage in Mr. Ralston's policy. The letter also complained of the lack of response from Viking. Viking did not respond.

Counsel for Mr. Besel wrote yet another letter, dated February 28, complaining of Viking's failure to respond. The letter stated that Mr. Besel's damages were expected to exceed $200,000, but that he would settle the matter for the maximum policy limits of $25,000. The letter then stated that Mr. Besel would file suit against Mr. Ralston unless Viking tendered the $25,000 by March 8, 1991.

On March 7, counsel for Mr. Besel called Viking and left a message. John Columbus of Viking returned the call on March 8 to inform counsel that he had received the February 28 letter and also that the claims file could not be located. Mr. Columbus did not request an extension of the settlement deadline.

On March 12, Mr. Columbus called counsel for Mr. Besel and reported that the claims file appeared to have been lost. Again, Mr. Columbus did not ask to have Mr. Besel's settlement deadline extended. On March 13, Mr. Besel filed suit against Mr. Ralston and obtained a default judgment on April 4.

Viking then asked an attorney to have the default judgment set aside on Mr. Ralston's behalf. Viking assessed Mr. Ralston's liability as 100 percent.

When the attorney contacted Mr. Ralston, it was the first word Mr. Ralston had received from anyone connected with Viking with regard to Mr. Besel's claim. Up to that point, the only contact Mr. Ralston had received from Viking had been with regard to the settlement of his property loss claim. But no one from Viking had contacted Mr. Ralston regarding Mr. Besel's claim. Upon receipt of Mr. Besel's summons and complaint, Mr. Ralston did not inform Viking because he thought the insurance company was already handling the matter.

Mr. Ralston, through Viking's attorney, then succeeded in having the default order set aside on the issue of damages and comparative fault. Mr. Besel and Mr. Ralston eventually settled the matter by means of a stipulated judgment for $175,000, Mr. Besel's covenant not to execute judgment on Mr. Ralston's assets, and assignment of Mr. Ralston's rights under his insurance contract with Viking.

The terms of the agreement between Mr. Besel and Mr. Ralston provides for satisfaction of judgment upon conclusion of Mr. Besel's actions against Viking. Mr. Besel further agreed to satisfy the judgment regardless of his amount of recovery from Viking. And, Mr. Besel also promised to satisfy the judgment if he abandoned his claim against Viking or if the statute of limitation, law, or rule barred the claim.

Viking initially objected to the consent judgment and suggested Mr. Ralston had acted in violation of the cooperation clause of his insurance contract. Viking's attorney replied that Mr. Ralston had cooperated with him fully in the matter and that his client had little choice but to enter into the agreement with Mr. Besel. The trial court entered an order determining reasonableness and a corresponding judgment in July 1992.

Acting pursuant to the assignment of rights, Mr. Besel filed suit against Viking on July 28, 1993. Mr. Besel's allegations included negligent performance of contractual and legal obligations to Mr. Ralston, breach of contract, bad faith, misrepresentation, violation of WAC 284-30, and violation of the CPA. Mr. Besel's requested relief included $150,000 in damages—the balance of his earlier $175,000 judgment against Mr. Ralston, minus the $25,000 paid by Viking.

Viking and Mr. Besel filed cross-motions for summary judgment. The trial court entered an oral ruling denying Mr. Besel's summary judgment motion and partly granting and partly denying Viking's summary judgment motion. The court reasoned that genuine issues of material fact existed as to Mr. Besel's claims of bad faith and CPA violation. But with regard to Mr. Ralston's alleged damages, the trial court limited his recovery to $25,000, reasoning that Mr. Ralston had shown no other damages. The trial court entered a consistent order and further denied Mr. Besel's motions for reconsideration.

Mr. Besel filed an appeal. Viking did not appeal the trial court's partial denial of its own summary judgment motion. A commissioner of this court granted discretionary review.

Mr. Besel then moved to supplement the record with new evidence. The commissioner remanded the matter to the trial court for consideration of the newly discovered evidence and entry of appropriate findings. The commissioner further stayed the appeal pending completion of trial court proceedings.

The trial court considered briefing and argument on the newly discovered evidence, which consisted of affidavits and depositions pertaining to the impact of the consent judgment on Mr. Ralston's ability to obtain financing to purchase a home. The trial court then entered findings of fact.

Upon receipt of the trial court's findings, this court lifted the stay and later allowed Mr. Besel to supplement the record on appeal over Viking's objection.

STANDARD OF REVIEW

In reviewing a ruling on summary judgment, we engage in the same inquiry as the trial court. Huff v. Budbill, 141 Wash.2d 1, 7, 1 P.3d 1138 (2000). Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Huff, 141 Wash.2d at 7, 1 P.3d 1138. "A material fact is one upon which the outcome of the litigation depends." Tran v. State Farm Fire & Cas. Co., 136 Wash.2d 214, 223, 961 P.2d 358 (1998) (citing Ruff v. King County, 125 Wash.2d 697, 703, 887 P.2d 886 (1995)). We review all facts and reasonable inferences in the light most favorable to the nonmoving party. Huff, 141 Wash.2d at 7, 1 P.3d 1138. And, we review questions of law de novo. Id.

ANALYSIS

The issue before this court is whether the trial court erred in denying Mr. Besel's summary judgment motion on his common law and CPA claims, and in limiting his common law damages to $25,000.

A. Assignment of Insurance Claims

Preliminarily, we note Mr. Besel asserts his claim under an agreement assigning Mr. Ralston's rights with regard to Viking.

"An assignee steps into the shoes of the assignor and has all of the rights of the assignor." Estate of Jordan v. Hartford Acc. & Indem. Co., 120 Wash.2d 490, 495, 844 P.2d 403 (1993) (citing Morse Electro Prods. Corp. v. Beneficial Indus. Loan Co., 90 Wash.2d 195, 198, 579 P.2d 1341 (1978)). And, the assignee's rights are no greater than those of the assignor. 3 LEE R. RUSS & THOMAS F....