Fisher v. Allstate Ins. Co.
| Decision Date | 03 September 1998 |
| Docket Number | No. 65491-3,65491-3 |
| Citation | 136 Wn.2d 240,961 P.2d 350 |
| Court | Washington Supreme Court |
| Parties | Kelly FISHER, Respondent, v. ALLSTATE INSURANCE COMPANY, Petitioner. |
Reed, McClure, William Hickman, Michael S. Rogers Seattle, Johnson, McLean, Riccelli & Devlin, Peter J. Johnson, Spokane, for Petitioner.
Milton G. Rowland, Spokane, for Respondent.
Bryan P. Harnetiaux, Harbaugh & Bloom, Gary N. Bloom, Debra Stephens, Spokane, Amicus Curiae on Behalf of Washington State Trial Lawyers Association.
Burgess, Fitzer, Leighton & Phillips, Timothy R. Gosselin, Tacoma, Amicus Curiae on Behalf of Washington Defense Trial Lawyers.
Is an underinsurance motorist carrier bound by the results of an arbitration between its insured and the tortfeasor when the carrier did not participate but had notice and an opportunity to intervene in the action? Yes.
The trial court entered partial summary judgment in favor of Kelly Fisher, the insured, holding Allstate Insurance Company, Fisher's insurer, was bound by the arbitration award against the tortfeasor. The Court of Appeals affirmed, relying on Finney v. Farmers Ins. Co., 21 Wash.App. 601, 586 P.2d 519 (1978), aff'd, 92 Wash.2d 748, 600 P.2d 1272 (1979), holding an underinsured carrier is bound by the resulting judgment against a tortfeasor when an insurer has notice and an opportunity to intervene. Fisher v. Allstate Ins. Co., 85 Wash.App. 594, 933 P.2d 1094, review granted in part, denied in part by 133 Wash.2d 1015, 946 P.2d 401 (1997). The parties present two issues: (1) was Finney correctly decided and, if so, (2) does Finney apply here. We affirm concluding Finney was correctly decided and governs this case.
Kelly Fisher was seriously injured in a motorcycle accident in northern Idaho. Susan Allman, the driver of the car that struck the motorcycle, had liability coverage with a limit of $125,000. The operator of the motorcycle had a policy with Allstate which had an underinsured motorist (UIM) coverage limit of $25,000.
Both the tortfeasor's insurer and Allstate refused to tender their policy limits to Fisher. Fisher sued the offending driver, Allman, in Idaho. Trial was set for September 1994. Fisher also filed suit against Allstate for UIM coverage in Spokane County Superior Court. That case was scheduled for trial in April 1994 but was continued to October 1994, one month after the scheduled trial date in the Idaho case.
Early on, Allstate knew of Fisher's suit against the tortfeasor but Allstate elected not to participate. The parties conducted a joint deposition and Allstate was invited to participate in another deposition taken in Minnesota. Sometime in September 1994 Allstate was notified Fisher and the tortfeasor were in arbitration. The arbitrator awarded $236,000 in damages to Fisher.
Upon receiving the arbitration award, well in excess of the tortfeasor's coverage limit, Fisher demanded Allstate pay its $25,000 UIM limit. Allstate refused. Fisher then amended her complaint to include a bad faith claim and moved for summary judgment. The trial court entered partial summary judgment in favor of Fisher, finding that Allstate was bound by the arbitration. Allstate appealed and the Court of Appeals affirmed in a published opinion. Fisher, 85 Wash.App. 594, 933 P.2d 1094.
After the Court of Appeals published Fisher, Allstate noticed Fisher had not reduced her arbitration award to final judgment. Allstate then petitioned for review of the Court of Appeals decision, and we granted review. Fisher v. Allstate Ins. Co., 133 Wash.2d 1015, 946 P.2d 401 (1997).
Summary judgment is appropriate where no genuine issues of material fact exist, and the nonmoving party is entitled to judgment as a matter of law. The court considers all facts and reasonable inferences in a light most favorable to the nonmoving party. CR 56(c); Failor's Pharmacy v. Department of Soc. & Health Servs., 125 Wash.2d 488, 493, 886 P.2d 147 (1994).
UIM insurance provides a second layer of excess insurance coverage that "floats" on top of recovery from other sources for the injured party. Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 87, 794 P.2d 1259 (1990) (citing Elovich v. Nationwide Ins. Co., 104 Wash.2d 543, 549, 707 P.2d 1319 (1985)). Coverage eligibility depends upon the insured's demonstrating he or she is "legally entitled to recover" in tort from the underinsured motorist. RCW 48.22.030(2). The insurer must pay its insured's uncompensated damages " 'until the underinsurance policy coverage is exhausted or until the insured is fully compensated, whichever occurs first.' " Mencel v. Farmers Ins. Co., 86 Wash.App. 480, 484, 937 P.2d 627 (1997) (quoting Hamilton v. Farmers Ins. Co., 107 Wash.2d 721, 723, 733 P.2d 213 (1987)).
Parties contract with UIM insurers to provide this additional layer of compensation. As a result, the court must consider the contractual relationship between the insurer and the insured when deciding UIM issues. Johnson v. Farmers Ins. Co., 117 Wash.2d 558, 566, 817 P.2d 841 (1991) (citing Blackburn, 115 Wash.2d at 88, 794 P.2d 1259). The court, the Legislature, and the contracting parties impose contractual duties upon the insurer and insured. RCW 48.01.030; Tank v. State Farm Fire & Cas. Co., 105 Wash.2d 381, 385-86, 715 P.2d 1133 (1986). Such duties include in good faith "giv[ing] 'equal consideration' to the insured's interests." 1 Tank, 105 Wash.2d at 385-86, 715 [961 P.2d 353] P.2d 1133 (quoting Tyler v. Grange Ins. Ass'n, 3 Wash.App. 167, 177, 473 P.2d 193 (1970)).
Although the relationship of the insurer and insured is contractual, the source of the obligation to offer UIM coverage is statutory. The Washington underinsured motorist statute requires UIM insurance to be "provided ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles...." RCW 48.22.030(2). The statute embodies a strong public policy to ensure the availability of a source of recovery for an innocent automobile-accident victim when the responsible party does not possess adequate liability insurance. Bohme v. PEMCO Mut. Ins. Co., 127 Wash.2d 409, 413, 899 P.2d 787 (1995); Finney v. Farmers Ins. Co., 92 Wash.2d at 751, 600 P.2d 1272.
The first issue is whether Finney should be overruled. The Finneys' daughter died in an automobile accident. Finney v. Farmers Ins. Co., 21 Wash.App. at 603, 586 P.2d 519. The Finneys sought recovery from Farmers Insurance Company under the uninsured motorist (UM) provision of their insurance policy. They also brought a wrongful death action against the driver and alleged owner of the car in which their daughter was riding. Id. at 604, 586 P.2d 519. The Finneys settled their claim against the driver. The remainder of the action went to trial and resulted in a judgment against the car owner. Id. at 605, 586 P.2d 519. The car owner's insurer denied coverage and the Finneys were unable to collect the judgment. Id.
The Finneys then brought an action against their own insurer to recover damages under the UM provisions. Id. Among other defenses Farmers contended it was not bound by the judgment because "(1) it was not a party to that action and collateral estoppel [did] not apply," and (2) provisions of its policy required any judgment regarding liability and damages between the insurer and insured be resolved by arbitration. Id. at 616, 586 P.2d 519. Farmers conceded it had a right to intervene in the action between the insured and the tortfeasor but argued its failure to do so did not render it bound by the findings, conclusions, or judgment. Id. at 617, 586 P.2d 519.
Division III of the Court of Appeals bound Farmers by the resulting judgment. The court reasoned that "Farmers had to know that this determination [of liability and damages between its insured and the tortfeasor] might be crucial to their liability...." Id. at 618, 586 P.2d 519. The court also found Farmers was not entitled to utilize the arbitration provision because it had notice and an opportunity to participate in the action. Id. at 619, 586 P.2d 519.
We unanimously affirmed Finney, 92 Wash.2d 748, 600 P.2d 1272. Although we did not explicitly address whether an insurer was bound by a previous judgment, we noted the issue had been either "thoroughly and adequately addressed by the comprehensive opinion of the Court of Appeals or [had] been abandoned by petitioner for lack of citation to authority." 92 Wash.2d at 750, 600 P.2d 1272. This issue was diligently briefed by both parties before this court as well as the Court of Appeals and was specifically raised in the petition for review.
Finney established a rule of law which binds this court under stare decisis. We thus affirm an insurer will be bound by the "findings, conclusions and judgment" entered in the action against the tortfeasor when it has notice and an opportunity to intervene in the underlying action against the tortfeasor, id. at 618, 586 P.2d 519, and see no compelling reason to depart from this precedent. Moreover our holding articulates the rule applied in a majority of jurisdictions in both the UM and UIM contexts. 2 Id. at 617, 586 P.2d 519 ().
The rule is further supported by the UIM statute itself. RCW 48.22.030(2) requires all new and renewed policies to provide UIM coverage to those...
To continue reading
Request your trial
-
Cedell v. Farmers Ins. Co. of Wash.
...the court explained, “an inevitable conflict exists between the UIM carrier and the UIM insured.” Id. (citing Fisher v. Allstate Ins. Co., 136 Wash.2d 240, 249, 961 P.2d 350 (1998)). The court concluded that the “friction between this adversarial relationship and the traditional fiduciary r......
-
Ki Sin Kim v. Allstate Ins. Co., Inc.
...insured "`is by nature adversarial and at arm's length.'" Ellwein, 142 Wash.2d at 779, 15 P.3d 640 (quoting Fisher v. Allstate Ins. Co., 136 Wash.2d 240, 249, 961 P.2d 350 (1998)). UIM insurance provides an excess layer of coverage designed to provide full compensation for all amounts to wh......
-
Bird v. Best Plumbing Grp., LLC
...of damages. ¶ 37 Due process is satisfied by notice and an opportunity to intervene in the underlying action. Fisher v. Allstate Ins. Co., 136 Wash.2d 240, 251, 961 P.2d 350 (1998). There is no presumption of damages at the reasonableness hearing. The burden is on the settling parties to pr......
-
Little v. King
...by virtue of its UIM obligations. See Lenzi v. Redland Ins. Co., 140 Wash.2d 267, 280, 996 P.2d 603 (2000); Fisher v. Allstate Ins. Co., 136 Wash.2d 240, 245-46, 961 P.2d 350 (1998). St. Paul took no action to ¶ 8 Although youthful and uninsured, King did respond to the summons and complain......
-
Table of Cases
...1098 (1958): 12.4 Fisher Props., Inc. v. Arden-Mayfair, Inc., 115 Wn.2d 364, 798 P.2d 799 (1990): 17.7(6) Fisher v. Allstate Ins. Co., 136 Wn.2d 240, 961 P.2d 350 (1998): 11.5(4) Flint, In re, 174 Wn.2d 539, 277 P.3d 657 (2012): 13.3(2)(a) Fluke Capital & Mgmt. Servs. Co. v. Richmond, 106 W......
-
§24.6 Analysis
...of Labor & Indus., 169 Wn.2d 81, 233P.3d853 (2010). But in Fisher v. Allstate Insurance Co., 85 Wn.App. 594, 933P.2d1094 (1997), aff'd, 136 Wn.2d 240, 961P.2d350 (1998), Allstate had notice of an Idaho lawsuit but chose not to intervene because a collateral Washington case naming Allstate w......
-
§ 11.5 Related Doctrines
...Similarly, the Supreme Court will not "consider issues raised for the first time in a petition for review." Fisher v. Allstate Ins. Co., 136 Wn.2d 240, 252, 961 P.2d 350 The Court of Appeals has held that "manifest error affecting a constitutional right may be properly raised as late as a m......
-
§24.7 Significant Authorities
...period for filing a separate action. The court in Fisher v. Allstate Insurance Co., 85 Wn.App. 594, 933 P.2d 1094 (1997), aff'd, 136 Wn.2d 240, 961 P.2d 350 (1998), held that Allstate was bound by an arbitration decision because it could have intervened and chose not to. In Fisher, Allstate......