Gosney v. Fireman's Fund Ins. Co.

• Decision Date: 31 May 2018
• Docket Number: No. 74813-1-I,No. 74717-7-I,consol. with No. 74812-2-I,74717-7-I,74813-1-I
• Citation: 419 P.3d 447
• Court: Washington Court of Appeals
• Parties: Sarah GOSNEY, as assignee and as Personal Representative of the Estate of Jerry Welch ; John Vose, Pizza Time Inc., and Pizza Time Holdings of Washington, Inc., Respondents/Cross Appellants, v. FIREMAN'S FUND INSURANCE COMPANY and The American Insurance Company, foreign insurance companies, Appellants/Cross Respondents.

419 P.3d 447

Sarah GOSNEY, as assignee and as Personal Representative of the Estate of Jerry Welch ; John Vose, Pizza Time Inc., and Pizza Time Holdings of Washington, Inc., Respondents/Cross Appellants,

v.FIREMAN'S FUND INSURANCE COMPANY and The American Insurance Company, foreign insurance companies, Appellants/Cross Respondents.

No. 74717-7-I

consol. with No. 74812-2-I

No. 74813-1-I

Court of Appeals of Washington, Division 1.

FILED: May 31, 2018

Howard Mark Goodfriend, Smith Goodfriend PS, 1619 8th Ave. N, Seattle, WA, 98109-3007, David Merritt Beninger, Luvera Barnett Brindley Beninger et al, Deborah Lee Martin, The Luvera Law Firm, 701 5th Ave. Ste. 6700, Seattle, WA, 98104-7016, Felix G. Luna, Leonard J. Feldman, Peterson Wampold Rosato Feldman Luna, 1501 4th Ave. Ste. 2800, Seattle, WA, 98101-3677 for Appellants.

Felix G. Luna, Mallory Colleen Allen, Michael Simon Wampold, Peterson Wampold Rosato Feldman Luna, 1501 4th Ave. Ste. 2800, Seattle, WA, 98101-3677, Catherine Wright Smith, Howard Mark Goodfriend, Smith Goodfriend PS, 1619 8th Ave. N, Seattle, WA, 98109-3007, David Merritt Beninger, Luvera Barnett Brindley Beninger et al, Deborah Lee Martin, The Luvera Law Firm, 701 5th Ave. Ste. 6700, Seattle, WA, 98104-7016 for Plaintiffs.

Felix G. Luna, Peterson Wampold Rosato Feldman Luna, 1501 4th Ave. Ste. 2800, Seattle, WA, 98101-1609, Howard Mark Goodfriend, Smith Goodfriend PS, 1619 8th Ave. N, Seattle, WA, 98109-300, Leonard J. Feldman, Peterson Wampold Rosato Feldman Luna, 1501 4th Ave. Ste. 2800, Seattle, WA, 98101-3677, Robert M. Sulkin, Malaika Marie Eaton, McNaul Ebel Nawrot & Helgren PLLC, 600 University St. Ste. 2700, Seattle, WA, 98101-3143 for Respondents.

John A. Bennett, Attorney at Law, 888 Sw 5th Ave. Ste. 300, Portland, OR, 97204-2017, Matthew J. Sekits, Bullivant Houser Bailey PC, 1700 7th Ave. Ste. 1810, Seattle, WA, 98101-1820, Curtis Campbell Isacke, Robert M. Sulkin, Malaika Marie Eaton, McNaul Ebel Nawrot & Helgren PLLC, 600 University St. Ste. 2700, Seattle, WA, 98101-3143 for Appellants/Cross-Respondents.

David Merritt Beninger, Luvera Barnett Brindley Beninger et al, Deborah Lee Martin, The Luvera Law Firm, 701 5th Ave. Ste. 6700, Seattle, WA, 98104-7016, Howard Mark Goodfriend, Catherine Wright Smith, Smith Goodfriend PS, 1619 8th Ave. N, Seattle, WA, 98109-3007, Felix G. Luna, Mallory Colleen Allen, Michael Simon Wampold, Leonard J. Feldman, Peterson Wampold Rosato Feldman Luna, 1501 4th Ave. Ste. 2800, Seattle, WA, 98101-3677 for Respondents/Cross-Appellants.

PUBLISHED OPINION

Dwyer, J.¶ 1 Following a five-week trial, the jury returned its special verdicts. After the jury was dismissed, it became apparent that the parties disagreed as to what exactly the jury had been asked and what its answers meant. The trial judge, based on his understanding of what he had asked the jury to decide, entered a significant judgment in favor of plaintiff Gosney. However, applying judicial estoppel, the judge declined to enter judgment on the jury's verdicts in favor of plaintiffs Vose and Pizza Time.

¶ 2 Defendant Fireman's Fund appeals from the judgment entered against it and in favor of Gosney. Vose and Pizza Time cross-appeal from the trial court's denial of relief. For good measure, all parties seek relief from various other trial court rulings.

¶ 3 We reverse the trial court's judicial estoppel rulings. In all other respects, we affirm the various decisions of the trial court.

I

¶ 4 John Vose is the owner and sole shareholder of Pizza Time, Inc. and Pizza Time Holdings of Washington, Inc. (collectively PT). Vose owns and operates several corporate PT stores and also acts as a franchisor with 30 to 35 franchisees. As the franchisor, Vose personally prepared operational manuals for his franchises that were then incorporated into the franchise agreement by reference. These operational manuals purported to give Vose control over various aspects of franchisee employment procedures, including the right to terminate franchisee employees for any reason at any time.

¶ 5 Ethan Shaefer owned and operated a PT franchise store prior to and following Vose's acquisition of the PT franchise. Unbeknownst to Vose, one of Shaefer's pizza delivery drivers—Angela Heller—had a poor driving record and a criminal background. On September 1, 2005, Heller, who had been drinking on the job, drove her car across the center line while making a delivery. Heller caused a head-on collision and killed the driver of the other car, Jerry Welch. Vose visited Shaefer shortly after receiving word of the collision. Shaefer told Vose that he had called his attorneys and that he had insurance.

¶ 6 In September 2006, Jerry Welch's widow filed suit against PT in Thurston County. Sarah Gosney—Welch's daughter—was later substituted as the personal representative and plaintiff in the underlying action.¹ Vose's attorney informed him that, pursuant to the franchise agreement, Shaefer would have to indemnify and defend PT.

¶ 7 PT has had insurance through Fireman's Fund Insurance Company (Fireman's) since 2005. PT's insurance policy required Fireman's to indemnify it for up to $1.5 million pursuant to a "non-owned auto policy" and an additional $1 million pursuant to a "general liability policy."

¶ 8 Vose first informed Fireman's of the automobile collision and ongoing litigation on January 31, 2008. Gosney had extended an offer to PT and Shaefer to settle for policy limits. Trial was scheduled for April 21, 2008. Fireman's began investigating coverage and liability on February 8, 2008. On February 21, 2008, Gosney's counsel, David Beninger, wrote to Robert Novasky, counsel for both Vose and Shaefer, to notify Novasky that Gosney's offer to settle would remain open for only seven more days. Novasky forwarded this letter to Paul Badaracco, Fireman's primary claims handler assigned to the matter, for resolution.

¶ 9 On February 22, 2008, Badaracco wrote to Vose to acknowledge receipt of his claim. Badaracco noted that "[a]lthough this incident occurred on Sept. 1, 2005 and the lawsuit was filed on Sept. 14, 2006, Fireman's Fund's first notice of this claim and ongoing litigation was ... on Feb. 8, 2008, some two and a half years after the accident."

¶ 10 Novasky wrote to Badaracco again on February 28, 2008. Novasky stated that "[a]ll other defendants have tendered their policy limits, but plaintiff is demanding a 'global' settlement that requires the tender of all available policy limits." Novasky requested that Fireman's contact Beninger to confirm Fireman's position with regard to the demand.²

¶ 11 Fireman's appointed counsel John Matthews of Jackson & Wallace, LLP to defend PT. Matthews contacted Novasky to discuss the case and review court documents. Matthews then contacted Vose and received his approval to request a continuance of the trial date. Trial was rescheduled for December 29, 2008. Gosney withdrew the global settlement offer as a result of the continuance.³

¶ 12 On March 27, 2008, Badaracco wrote to Vose to inform him that PT's coverage for nonowned business automobile exposure covered up to $1.5 million⁴ in losses and that the current claim "could result in damages in excess of ... policy limits." Badaracco advised Vose to retain counsel to advise him "with respect to any potential excess exposure above the referenced limits."

¶ 13 Patricia Anderson, an attorney representing Gosney, later contacted Fireman's to request a copy of the PT insurance policy. On July 17, 2008, counsel for Fireman's sent Anderson a copy of the policy and confirmed that Fireman's "continues to reserve any and all rights and defenses that may now exist or that may arise in the future." Anderson then contacted Howard Bundy, corporate counsel for PT. Anderson told Bundy that Gosney was interested in reaching a settlement and was willing to discuss a settlement "involving an agreement or covenant not to execute against personal assets, in exchange for an assignment of the claims against the insurance company and a stipulated judgment."

¶ 14 Bundy, who had not represented Vose or PT on any matter related to the Gosney litigation, advised Vose to retain independent counsel. Vose then forwarded the settlement offer to attorney Matthews. Matthews asked Bundy to "please forward these emails and offers to the counsel that [PT] and/or John Vose hires to represent him personally on this coverage issue, as we cannot advise our client on coverage matters." Bundy then agreed to represent Vose in the Gosney litigation.

Settlement

¶ 15 Gosney and Vose reached a settlement on September 2, 2008.⁵ The settlement offer required Vose and PT to assign to Gosney "all rights, privileges, claims, causes or chose of actions that they may have against their insurer," including any arising out of the "handling of the claims or suit related thereto, as well as arising out of the insurance contract, obligations, investigation, evaluation, negotiation, defense, settlement, indemnification ... bad faith, negligence, malpractice, breach of contract, fiduciary breach, Consumer Protection Act[⁶ (CPA) ], Insurance Fair Conduct Act[⁷ (IFCA) ], punitive damages and/or otherwise." The settlement offer reserved to Vose and PT all elements of damages "for their personal emotional distress, personal attorneys' fees, personal damages to credit or reputation and other non-economic damages" arising from the assigned causes of action.

¶ 16 The settlement offer did not specify a dollar amount. Rather, it provided:

Defendants do hereby stipulate and agree to having partial judgment entered against them for the full insurance limits to avoid any delay in executing, garnishing or collecting those offered assets. Plaintiffs agree to withhold formal entry of this partial judgment for fifteen (15) days to allow the insurers to pay all insurance proceeds to the Luvera Trust Account, in trust for the Welchs. Defendants are entitled to a credit, offset and partial satisfaction of any judgment for the amounts paid by their

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