Dees v. Allstate Ins. Co.

• Decision Date: 21 March 2013
• Docket Number: Case No. C12–0483JLR.
• Parties: Denise D. DEES, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Washington

933 F.Supp.2d 1299

Denise D. DEES, Plaintiff,

v.ALLSTATE INSURANCE COMPANY, Defendant.

Case No. C12–0483JLR.

United States District Court,

W.D. Washington,

at Seattle.

March 21, 2013.

James Stephen Sorrels, Edmonds, WA, Sarah L. Lee, Steven P. Krafchick, Krafchick Law Firm, Seattle, WA, for Plaintiff.

Blake Edward Marks–Dias, Bryan J. Case, Riddell Williams, Seattle, WA, for Defendant.

ORDER ON DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

JAMES L. ROBART, District Judge.

I. INTRODUCTION

Before the court are Defendant Allstate Insurance Company's (“Allstate”) three motions for partial summary judgment against Plaintiff Denise D. Dees. (1/31/13 Mot. (Dkt. # 36); 2/7/13 Mot. (Dkt. # 40); 2/12/13 Mot. (Dkt. # 45).) ¹ Ms. Dees opposes all three motions in part. (2/15/13 Resp. (Dkt. # 53); 2/25/13 Resp. (Dkt. # 57); 3/4/13 Resp. (Dkt. # 60).) The court has considered the motions, all submissions filed in support and opposition thereto, the balance of the record, and the applicable law.² Being fully advised, the court GRANTS in part and DENIES in part Allstate's 1/31/13 motion regarding damages (Dkt. # 36), GRANTS Allstate's 2/7/13 motion regarding Ms. Dees' PIP claim (Dkt. # 40), and DENIES Allstate's 2/12/13 Motion (Dkt. # 45).

II. FACTUAL AND PROCEDURAL BACKGROUND

Ms. Dees brings this action against her auto insurer, Allstate, alleging that Allstate failed to fulfill its contractual obligations to her and acted unreasonably by denying her benefits. On May 21, 2006, Ms. Dees was injured in a two-car accident. (Compl. (Dkt. # 1) at ¶ 2.3.) An uninsured driver was at fault. ( Id. at ¶ 2.4.) Allstate insured Ms. Dees under an auto insurance policy at the time of the accident (hereinafter referred to as the “Insurance Contract”). (1/31/13 Mot. at 3.)

At issue in this lawsuit are two types of coverage in the Insurance Contract: Personal Injury Protection (“PIP”) and Underinsured Motorist Coverage (“UIM”). (Compl. at ¶¶ 2.1–2.2.) The pertinent portion of the PIP coverage in the Insurance Contract states:

Allstate will pay to or on behalf of the injured person the following benefits. Payments will be made only when bodily injury, sickness, disease, or death is caused by an accident arising from the ownership, maintenance or use of a motor vehicle as a motor vehicle.

(1) Medical and Hospital Benefits

All reasonable and necessary expenses incurred within three years from the date of the accident. This covers medical, surgical, and dental treatment, professional nursing, hospital, and rehabilitation services. Also covered are X-ray and other diagnostic services, prosthetic devices, ambulance services, medication, and eye glasses. Other reasonable and necessary expenses incurred for treatment prescribed by licensed medical practitioners are covered.

(Boyd Decl. (Dkt. # 37) at 20.) The Insurance Contract limits coverage of medical benefits under PIP coverage to $35,000 per person. ( Id. at 6, 22.)

UIM coverage is designed to cover losses that the insured could have received from the at-fault driver if that driver had insurance up to the UIM policy limits. The pertinent portions of UIM coverage in the Insurance Contract state:

We will pay damages which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by an injured person.

* * * * * *

The right to receive any damages and the amount of damages will be decided by agreement between the insured person and Allstate.

If the insured person and we do not agree, then the disagreement will be resolved in a court of competent jurisdiction.

(Boyd Decl. (Dkt. # 37) at 23.) The Insurance Contract limits claims under the UIM portion of the policy to $100,000. ( Id. at 6, 25.)

Allstate paid Ms. Dees $21,274.83 under the PIP portion of the policy. (1/31/13 Boyd Decl. (Dkt. # 37) at 2.) On March 28, 2007, Allstate sent Ms. Dees a letter effectively terminating her PIP claim. (2/25/13 Resp. at 5.) Allstate continued to investigate Ms. Dees' UIM claim, though the parties dispute Allstate's methodology and efforts. ( See generally 2/12/13 Mot.; 3/4/13 Resp.)

On February 23, 2011, Ms. Dees' attorney sent Allstate a UIM demand letter requesting payment of $100,000—the UIM policy limit. (Wyche Decl. Ex. M (Dkt. # 47–2).) On June 9, 2011, Allstate sent Ms. Dees' counsel a letter counter-offering $8,000, in addition to the amount it had already paid out under the PIP portion of the policy. (2/15/13 Lee Decl. Ex. 8 (Dkt. # 54–8).) Unable to reach a settlement, Ms. Dees filed the instant lawsuit in King County Superior Court on March 1, 2012. ( See Compl.) Allstate removed the case to this court. ( See Notice of Removal (Dkt. # 1).)

Ms. Dees brings four claims: (1) that Allstate breached the Insurance Contract by failing to pay full amounts owing under the UIM and PIP policies; (2) that Allstate breached its duty of good faith by unduly giving its own financial considerations more weight than those of Ms. Dees; (3) that Allstate violated the WashingtonConsumer Protection Act (“CPA”), RCW 19.86.010 et seq.; and (4) that Allstate violated the Washington Insurance Fair Conduct Act (“IFCA”), RCW 48.30.010–.015. (Compl. ¶¶ 4–5.)

III. DISCUSSION

Allstate's motions for summary judgment request the following:

• A determination that Allstate's maximum potential liability for breach of contract is equal to the Insurance Contract's UIM and PIP coverage limits, less offset for amounts it paid Ms. Dees under the PIP policy. (1/31/13 Mot. at 2.)

• Dismissal of Ms. Dees' common law bad faith claim related to its handling of her PIP claim as time barred. (2/7/13 Mot. at 2.)

• A determination that Allstate is not liable for bad faith as a matter of law for Allstate's handling of Ms. Dees' UIM claim between May 21, 2006 and February 24, 2011. (2/12/13 Mot. at 2.)

• A determination that if Allstate is liable for bad faith, its liability is limited to damages proximately caused by its bad faith conduct, not the underlying car accident. (1/31/13 Mot. at 2.)

• A determination that Allstate's conduct prior to March 1, 2008, cannot form the basis of Ms. Dees' CPA claim because its liability for such conduct is time-barred. (2/7/13 Mot. at 2.)

• A determination that if Allstate is liable for violating the CPA, its liability is limited to damages to Ms. Dees' property or business proximately caused by its allegedly unfair or deceptive act. (1/31/13 Mot. at 2.)

• Dismissal of Ms. Dees' IFCA claim related to Allstate's handling of her PIP claim because Allstate denied her PIP claim prior to IFCA's effective date. (2/7/13 Mot. at 2.)

• A determination that if Allstate is liable for violating IFCA, its liability is limited to damages proximately caused by its allegedly unreasonable denial of Ms. Dees' claims. (1/31/13 Mot. at 2.)

Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir.2007). The moving party bears the initial burden of showing that there is no genuine issue of material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets his or her burden, then the non-moving party “must make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial” in order to withstand summary judgment. Galen, 477 F.3d at 658.

A. Breach of Contract Damages

Allstate asserts that if it is liable for breaching the Insurance Contract, its maximum liability for damages is limited to the policy limits of the Insurance Contract, offset by the amount Allstate has already paid Ms. Dees. (1/31/13 Mot. at 5.) The court agrees, as does Ms. Dees. ³ ( SeeDees Proposed Order (Dkt. # 53–1) at 2.) An insured may only recover damages up to the policy limits in an insurance breach of contract action. Polygon N.W. Co. v. Am. Nat'l Fire Ins. Co., 143 Wash.App. 753, 189 P.3d 777, 789 (2008) (“Washington law does not in fact force insurers to pay for losses that they have not contracted to insure.”); Tribble v. Allstate Prop. and Cas. Ins. Co., 134 Wash.App. 163, 139 P.3d 373, 376 (2006). The Insurance Contract provides for a maximum PIP benefit of $35,000 and a maximum UIM benefit of $100,000. (1/31/13 Boyd Decl. at 6.) The parties do not dispute that Allstate has already paid $21,274.83 to Ms. Dees from her PIP coverage. ( Id. at 2; 2/15/13 Resp. at 2.) Thus, the court GRANTS partial summary judgment in favor of Allstate on Ms. Dees' breach of contract claim. If Allstate is liable for breach of contract, its damages for that breach are limited to $113,725.17.⁴

B. Bad Faith1. Statute of Limitations as to Ms. Dees' PIP Claim

Allstate argues that Ms. Dees' claim that Allstate acted in bad faith by denying her PIP claim is time-barred. (2/7/13 Mot. at 13.) The court agrees. In Washington, an action for bad faith under an insurance contract sounds in tort. St. Paul Fire and Marine Ins. Co. v. Onvia, Inc., 165 Wash.2d 122, 196 P.3d 664, 668 (2008). Tort claims in Washington are subject to a three-year statute of limitations. RCW 4.16.080(2). Ms. Dees' cause of action for bad faith resulting from Allstate's handling of her PIP claim accrued when Allstate denied coverage. See Lenk v. Life Ins. Co. of N. Am., 2010 WL 5173207, at *2 (W.D.Wash. Dec. 13, 2010). Allstate denied Ms. Dees' PIP claim on March 28, 2007. (2/7/13 Boyd Decl. Ex. D (Dkt. # 41–2) at 2.) Ms. Dees filed the instant suit on March 1, 2012, more than three years after Allstate denied her PIP coverage. ( See Compl.) Ms. Dees concedes that she cannot assert a bad faith claim for any action that...