Keodalah v. Allstate Ins. Co.

• Decision Date: 03 October 2019
• Docket Number: No. 95867-0,95867-0
• Citation: 449 P.3d 1040,194 Wash.2d 339
• Parties: Moun KEODALAH and Aung Keodalah, husband and wife, Plaintiffs-Respondents, v. ALLSTATE INSURANCE COMPANY, a corporation, and Tracey Smith and John Doe Smith, husband and wife, Defendants-Petitioners.
• Court: Washington Supreme Court

194 Wash.2d 339

449 P.3d 1040

Moun KEODALAH and Aung Keodalah, husband and wife, Plaintiffs-Respondents,

v.ALLSTATE INSURANCE COMPANY, a corporation, and Tracey Smith and John Doe Smith, husband and wife, Defendants-Petitioners.

No. 95867-0

Supreme Court of Washington.

Argued February 26, 2019

Filed OCTOBER 03, 2019

Gavin W. Skok, Fox Rothschild, 1001 4th Avenue, Suite 4500, Seattle, WA 98154-1065, Irene Margret Hecht, Keller Rohrback LLP, 1201 3rd Avenue, Suite 3200, Seattle, WA 98101-3052, Michael Barr King, Jason Wayne Anderson, Carney Badley Spellman PS, 701 5th Avenue, Suite 3600, Seattle, WA 98104-7010, for Petitioners.

Scott David Smith, C. Steven Fury, Fury Duarte, 1606 148th Avenue SE, Suite 200, Bellevue, WA 98007-6860, Vonda Michell Sargent, Carol Farr, Law Offices of Vonda M Sargent, 119 1st Avenue S, Suite 500, Seattle, WA 98104-3400, for Respondents.

Daniel L. Syhre, Michelle Elizabeth Kierce, Betts, Patterson & Mines, P.S., 701 Pike Street, Suite 1400, Seattle, WA 98101-3927, for Amici Curiae (American Insurance Association, National Association of Mutual Insurance Companies, and Property Casualty Insurers Association of America).

Alfred E. Donohue, David Michael Jacobi, Wilson, Smith, Cochran & Dickerson, 901 5th Avenue, Suite 1700, Seattle, WA 98164-2050, for Amicus Curiae (GEICO General Insurance Company).

Daniel Edward Thenell, Thenell Law Group, P.C., 12909 SW 68th Parkway, Suite 320, Portland, OR 97223-8384, for Amicus Curiae (The Coalition Against Insurance Fraud, Inc.).

Paul Mark Rosner, Geoffrey C. Bedell, Soha & Lang, P.S., 1325 4th Avenue, Suite 2000, Seattle, WA 98101-2570, Terri A. Sutton, Cozen O'Connor, 999 3rd Avenue, Suite 1900, Seattle, WA 98104-4028, Melissa O'Loughlin White, Expedia Inc., 333 108th Avenue NE, Bellevue, WA 98004-5703, for Amicus Curiae (Washington Defense Trial Lawyers).

Valerie Davis McOmie, Attorney at Law, 4549 NW Aspen Street, Camas, WA 98607-8302, Daniel Edward Huntington, Richter-Wimberley PS, 422 W. Riverside Avenue, Suite 1300, Spokane, WA 99201-0305, for Amicus Curiae (Washington State Association for Justice Foundation).

MADSEN, J.

¶ 1 At issue in this underinsured motorist case is whether RCW 48.01.030 provides a basis for an insured’s bad faith and Consumer Protection Act (CPA), chapter 19.86 RCW, claims against an employee claims adjuster. For the reasons discussed below, we hold that such claims are not available and reverse the Court of Appeals.

FACTS

¶ 2 While driving his truck, Moun Keodalah and an uninsured motorcyclist collided in April 2007. After Keodalah stopped at a stop sign and began to cross the street, the motorcyclist struck Keodalah’s truck. The collision killed the motorcyclist and injured Keodalah. Keodalah carried auto insurance with Allstate Insurance Company that included underinsured motorist (UIM) coverage.

¶ 3 The Seattle Police Department (SPD) investigated the collision and determined that the motorcyclist was traveling between 70 and 74 m.p.h. in a 30 m.p.h. zone. SPD also reviewed Keodalah’s cell phone records, which showed that Keodalah was not using his cell phone at the time of the collision.

¶ 4 Allstate also investigated the collision, interviewing several witnesses who said the motorcyclist was traveling faster than the speed limit, had proceeded between cars in both lanes, and had sped into the intersection. Allstate hired an accident reconstruction firm, Traffic Collision Analysis Inc. (TCA), to analyze the collision. TCA found that Keodalah stopped at the stop sign, the motorcyclist was traveling at a minimum of 60 m.p.h., and the motorcyclist’s excessive speed caused the collision.

¶ 5 Keodalah asked Allstate to pay him his UIM policy limit of $25,000. Allstate refused, offering $1,600 to settle the claim based on its assessment that Keodalah was 70 percent at fault. After Keodalah asked Allstate to explain its evaluation, Allstate increased its offer to $5,000.

¶ 6 Keodalah sued Allstate, asserting a UIM claim. Allstate designated claims adjuster Tracey Smith as its CR 30(b)(6) representative.¹ Although Allstate possessed both the SPD report and TCA analysis, Smith claimed that Keodalah had run the stop sign and had been on his cell phone. Smith later admitted, however, that Keodalah had not run the stop sign and had not been on his cell phone. Before trial, Allstate offered Keodalah $15,000 to settle the claim. Keodalah again requested the $25,000 policy limit, and the case proceeded to a jury trial.

¶ 7 At trial, Allstate contended that Keodalah was 70 percent at fault. The jury determined the motorcyclist to be 100 percent at fault and awarded Keodalah $108,868.20 for his injuries, lost wages, and medical expenses. The trial court entered judgment against Allstate for $25,302.95.

¶ 8 Keodalah filed a second lawsuit against Allstate and included claims against Smith. These included alleged violations of the Washington Insurance Fair Conduct Act (IFCA), chapter 48.30 RCW; insurance bad faith; and CPA violations. Allstate and Smith moved to dismiss the complaint under CR 12(b)(6) ("failure ... to state a claim upon which relief can be granted"). The trial court granted the motion in part, dismissing Keodalah’s claims against Smith and certifying the partial dismissal for discretionary review under RAP 2.3(b)(4).²

¶ 9 The Court of Appeals granted discretionary review of three issues: (1) whether IFCA creates a private cause of action for violation of a regulation, (2) whether an individual insurance adjuster may be liable for bad faith, and (3) whether an individual insurance adjuster may be liable for violation of the CPA. The Court of Appeals held that this court’s decision in Perez-Crisantos v. State Farm Fire & Casualty Co ., 187 Wash.2d 669, 672, 389 P.3d 476 (2017), which held that the IFCA does not create an independent private cause of action for violation of a regulation, foreclosed Keodalah’s IFCA claim.³

¶ 10 The Court of Appeals reversed the trial court’s CR 12(b)(6) dismissal, holding that the statutory duty of good faith imposed by RCW 48.01.030 applied to individual insurance adjusters and breach of that statutory duty could serve as a basis for Keodalah’s bad faith and CPA claims against Smith. Smith filed a petition for review, which this court granted. 191 Wash.2d 1004, 424 P.3d 1214 (2018).

ANALYSIS

Standard of Review

¶ 11 This court applies de novo review to questions concerning statutory interpretation and dismissal under CR 12(b)(6). State v. Evergreen Freedom Found. , 192 Wash.2d 782, 789-90, 432 P.3d 805 (2019), cert. denied , ––– U.S. ––––, 139 S. Ct. 2647, 204 L.Ed.2d 284 (2019) ; Tenore v. AT&T Wireless Servs ., 136 Wash.2d 322, 329-30, 962 P.2d 104 (1998). In construing a statute, the fundamental objective is to ascertain and carry out the legislature’s intent. Evergreen Freedom Found. , 192 Wash.2d at 789, 432 P.3d 805. We look to "the entire ‘context of the statute in which the provision is found, [as well as] related provisions, amendments to the provision, and the statutory scheme as a whole.’ " Id. (alteration in original) (internal quotation marks omitted) (quoting State v. Conover , 183 Wash.2d 706, 711, 355 P.3d 1093 (2015) ; see also G-P Gypsum Corp. v. Dep’t of Revenue , 169 Wash.2d 304, 310, 237 P.3d 256 (2010) ("enacted statement of legislative purpose is included in a plain reading of a statute"). As this court opined in Evergreen Freedom Foundation ,

"The meaning of words in a statute is not gleaned from [the] words alone but from all the terms and provisions of the act in relation to the subject of the legislation, the nature of the act, the general object to be accomplished and consequences that would result from construing the particular statute in one way or another."

192 Wash.2d at 790, 432 P.3d 805 (alteration in original) (internal quotation marks omitted) (quoting Burns v. City of Seattle , 161 Wash.2d 129, 146, 164 P.3d 475 (2007) ); see also id. (citing Dep’t of Ecology v. Campbell & Gwinn, LLC , 146 Wash.2d 1, 11, 43 P.3d 4 (2002), for the proposition that "plain meaning" is "discerned from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question").

¶ 12 Under CR 12(b)(6), dismissal of a complaint for "failure ... to state a claim upon which relief can be granted" involves a question of law, and such dismissal is appropriate "only if it appears beyond doubt that the plaintiff cannot prove any set of facts which would justify recovery." Tenore , 136 Wash.2d at 330, 962 P.2d 104. In such a case, a "plaintiff’s allegations are presumed to be true and a court may consider hypothetical facts not included in the record." Id. " CR 12(b)(6) motions should be granted ‘sparingly and with care’ and ‘only in the unusual case in which plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief.’ " Id. (quoting Orwick v. City of Seattle , 103 Wash.2d 249, 254, 692 P.2d 793 (1984) ; Hoffer v. State , 110 Wash.2d 415, 420, 755 P.2d 781 (1988) ). As discussed below, in our view, this is such a case.

¶ 13 The Court of Appeals’ decision turned on the statutory duty it found in RCW 48.01.30, which provides:

The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.

Keodalah echoes the Court of Appeals, arguing that by imposing a duty on "all persons" to act in good faith, the plain language of the statute subjects employee adjusters to bad faith and CPA claims premised on breach of the noted statutory duty.

¶ 14 Smith argues that not every duty imposed by a statute is an actionable tort, that RCW 48.01.030 does not expressly create a private right of action, and that the Court...