Mulcahy v. Farmers Ins. Co. of Washington

• Decision Date: 15 July 2004
• Docket Number: No. 73647-2.,73647-2.
• Court: Washington Supreme Court
• Parties: Mary MULCAHY, Petitioner, v. FARMERS INSURANCE COMPANY OF WASHINGTON; Farmers Group Inc., d/b/a Farmers Insurance Group of Companies; and Farmers Insurance Exchange, Respondents.

95 P.3d 313

152 Wash.2d 92

Mary MULCAHY, Petitioner, v. FARMERS INSURANCE COMPANY OF WASHINGTON; Farmers Group Inc., d/b/a Farmers Insurance Group of Companies; and Farmers Insurance Exchange, Respondents.

No. 73647-2.

Supreme Court of Washington, En Banc.

July 15, 2004.

Mary Mulcahy, Pro se.

Sidney Robert Snyder, Seattle, for Respondents.

Linda B. Clapham, Michael B. King, June A. Jackson, LANE POWELL SPEARS LUBERSKY LLP, for Amicus Curiae Washington Defense Trial Laywers.

Bryan Patrick Harteniaux, Spokane, for Amicus Curiae, Washington State Trial Lawyers.

CHAMBERS, J.

Mary Mulcahy was injured in a car accident in British Columbia. She settled her claim with the other driver. The other driver's insurer did not pay the whole settlement amount. Instead, it reduced its settlement pay out by the amount of first party insurance coverage Mulcahy was entitled to receive under British Columbia's universal compulsory automobile insurance law. It advised Mulcahy that her own insurance company was obligated to pay the difference. Mulcahy's own insurer disagrees.

Primarily, we must decide whether Washington courts may enforce an agreement between a Washington insurer and British Columbia that obligates the insurer to provide first party no-fault benefits to its own insureds in accordance with British Columbia's universal compulsory insurance law. We conclude, under the facts of this case, that this insurance company's contractual obligations may be enforced in Washington State by Washington courts.

FACTS

In May 1994, a Washington resident, Mulcahy, was driving her automobile in British Columbia, Canada. Her vehicle was struck by one driven by a British Columbia resident, Sidney Schneider. Mulcahy contends, and it is uncontested, that the collision was entirely the fault of Schneider. Although contested, Mulcahy also contends that she suffered serious injuries and, because her own insurer refused to pay the benefits to which she was entitled, she eventually lost her home and became destitute.

Schneider was insured by the Insurance Corporation of British Columbia (ICBC), the exclusive provider of compulsory automobile insurance in, and operated by, the Province of British Columbia. Mulcahy had purchased an insurance policy in the state of Washington from Farmers Insurance Company of Washington (Farmers), which specifically covered her while driving in Canada. Farmers provided US$10,000 in personal injury protection (PIP)¹ benefits, which Farmers paid by April 4, 1995. It is Mulcahy's position that Farmers' agreement with British Columbia and her insurance policy obligated Farmers to provide first party no-fault benefits under British Columbia law up to Can$150,000. She also contends that because of her injuries and Farmers' failure to provide benefits, her health deteriorated, she was unable to support herself, she lost her home, and she was forced to live in her car and transitional housing.

Mulcahy is currently without legal counsel. She herself argued her case before this court. Earlier, she had retained a lawyer in British Columbia to pursue her personal injury claim against Schneider and his insurer, ICBC. More than five years after her collision, she entered into mediation with ICBC and agreed to settle her claim for a total of Can$375,000² in December 1999.³ However, in 1986, Farmers had filed a power of attorney and undertaking, commonly referred to as a PAU. Filing a PAU allows American insurers to participate in Canada's reciprocal insurance scheme, which "ensures that a person who has entered into a motor vehicle insurance contract [outside the province] is recognized as insured in [the] province[ ]." Potts v. Gluckstein, [1992] 8 O.R.3d 556, 558 (Ont.Ct.App.). By filing the PAU, Farmers agreed to compensate its insureds, such as Mulcahy, when they are involved in an accident in British Columbia according to the same terms that British Columbia residents are compensated by ICBC. Because of the PAU filed by Farmers, Mulcahy's tort claim was reduced by Can$150,000, the amount of first party no-fault benefits required by British Columbia law to be paid by her own insurer. ICBC confirmed Mulcahy's tort settlement was reduced, in accordance with British Columbia law, by the amount of "benefits properly payable by Farmer's [sic]." Clerk's Papers at 634.

In March of 2000, Mulcahy filed suit in British Columbia seeking to enforce Farmers' contractual obligations under the PAU to provide British Columbia's universal compulsory insurance benefits to Farmers' insureds who operate motor vehicles within the province. She filed a virtually identical suit six weeks later in King County, Washington. Her complaint in King County also alleged a breach of her insurance contract, bad faith, and Consumer Protection Act (CPA), chapter 19.86 RCW, violations. A short time later and with assistance of counsel, Mulcahy filed two amended complaints.

Her complaints have not been substantively considered by trial courts in either nation. Mulcahy argues that Farmers' strategy has been to avoid adjudication of her claims on the merits. While Farmers has argued to the trial court, the Court of Appeals, and this court that a British Columbia court should decide the PAU issue on its merits, it has simultaneously sought to have the British Columbia courts avoid adjudication of the issue on its merits. First, Farmers moved the British Columbia Supreme Court to decline jurisdiction. After that court denied Farmers' motion, Farmers twice moved to dismiss the British Columbia action. The second motion to dismiss was based upon the doctrines of comity, forum non-conveniens, res judicata, and abuse of process. These motions have been denied and Farmers is appealing the denial of dismissal.

In the meantime, in Washington, Farmers engaged in discovery and moved for summary judgment. Farmers argued that Mulcahy could not rely upon Canadian law to support her claims because she failed to properly plead foreign law. In addition, Farmers argued that under the PAU it is obligated to provide liability coverage, but not first party no-fault benefits, in accordance with British Columbia law. Farmers further argued that the PAU is not enforceable outside of British Columbia. Finally, Farmers argued that its only obligation under Washington law was to provide US$10,000 in PIP benefits. Without explanation, the trial court granted Farmers' summary judgment motion and entered an order dismissing Mulcahy's complaint. The Court of Appeals affirmed except to the extent that the trial judge may have applied British Columbia law on summary judgment. Mulcahy v. Farmers Ins. Co. of Wash., 114 Wash.App. 459, 476 n. 4, 58 P.3d 307 (2002). We granted review. Mulcahy v. Farmers Ins. Co. of Wash., 149 Wash.2d 1027, 78 P.3d 656 (2003).⁴

ANALYSIS

We review an order of summary judgment de novo and perform the same inquiry as the trial court. See Jones v. Allstate Ins. Co., 146 Wash.2d 291, 300, 45 P.3d 1068 (2002). Summary judgment is proper only when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Civil Rule (CR) 56(c). All facts and reasonable inferences are considered in the light most favorable to Mulcahy, the nonmoving party. See Mountain Park Homeowners Ass'n v. Tydings, 125 Wash.2d 337, 341, 883 P.2d 1383 (1994). Farmers, the moving party, bears the burden of showing there is no genuine dispute as to any material facts. See Folsom v. Burger King, 135 Wash.2d 658, 663, 958 P.2d 301 (1998).

NOTICE OF FOREIGN LAW

First, we must determine whether Mulcahy has properly pleaded foreign law. A party who wishes to rely upon a foreign country's law must "give notice in his pleading of the foreign jurisdiction whose law he contends may be applicable to the facts of the case." CR 9(k)(2). The purpose of CR 9(k) is "to put one's opponent and the court on notice of the applicability of foreign law." Rodriguez v. Travelers Ins. Co., 54 Wash.App. 725, 728, 775 P.2d 973 (1989) (citing Byrne v. Cooper, 11 Wash.App. 549, 551, 523 P.2d 1216 (1974)).

In her complaint, Mulcahy specifically notified Farmers and the court that her tort claim in British Columbia had been reduced by Can$150,000 pursuant to British Columbia law. She explicitly informed both Farmers and the court of her reliance on British Columbia's compulsory automobile insurance statutes and regulations, which mandate first party no-fault benefits coverage up to Can$150,000. Additionally, she explicitly claimed Farmers, as a voluntary participant in the Canadian reciprocal insurance scheme, was obligated to provide her with coverage according to British Columbia law. Mulcahy cited to and provided the court and Farmers with copies of the foreign statutes, regulations, and cases upon which she relies.⁵ We hold Mulcahy has met the requirements of CR 9(k)(2) and satisfactorily pleaded foreign law.

THE PAU

Before turning to the substance of the dispute, we note that Farmers gained two important advantages by filing a PAU and voluntarily participating in Canada's reciprocal insurance scheme. First, Farmers is able to offer and charge its insureds for providing adequate coverage while driving in Canada. See Insurance (Motor Vehicle) Act, R.S.B.C., ch. 226, § 134(9) (1996); see also Potts, 8 O.R.3d at 558. Second, Farmers significantly reduces its liability when its insureds are at fault in motor vehicle accidents in British Columbia. When one of Farmers' insureds is at fault in a motor vehicle accident in British Columbia, Farmers avoids paying up to Can$150,000, which the tort victim is entitled to receive from ICBC. See Insurance (Motor Vehicle) Act, R.S.B.C., ch. 231, § 25(2) (1996); see also Ruckheim v. Robinson, [1995] 1 B.C.L.R.3d 46, ¶¶ 57, 59 (B.C.Ct.App.); accord Ins. Corp. of B.C. v. Royal Ins. Co. of Canada, [1999] 119 O.A.C. 360 (Ont.Ct.App.) (describing similar benefit to foreign insurers in Ontario).

In exchange for...