Rizzuti v. Basin Travel Service of Othello, Inc.

• Decision Date: 03 February 2005
• Docket Number: No. 22794-4-III.,22794-4-III.
• Citation: 105 P.3d 1012,125 Wash. App. 602
• Court: Washington Court of Appeals
• Parties: Sueanne RIZZUTI, John R. Rizzuti and Laura Stredwick, individually, Appellants, v. BASIN TRAVEL SERVICE OF OTHELLO, INC., a Washington corporation; Travel Insured International, Inc., a foreign corporation; and The Travelers Indemnity Company Hartford, CT, a foreign corporation, Respondents.

105 P.3d 1012

125 Wash. App. 602

Sueanne RIZZUTI, John R. Rizzuti and Laura Stredwick, individually, Appellants, v. BASIN TRAVEL SERVICE OF OTHELLO, INC., a Washington corporation; Travel Insured International, Inc., a foreign corporation; and The Travelers Indemnity Company Hartford, CT, a foreign corporation, Respondents.

No. 22794-4-III.

Court of Appeals of Washington, Division 3, Panel Five.

February 3, 2005.

Michael J. Hines, Attorney at Law, Spokane, WA, for Appellants.

Russell C. Love, Thorsrud, Cane & Paulich, Seattle, WA, for Respondents.

SCHULTHEIS, J.

Maryanne Rizzuti died in an airplane crash during a safari trip to Africa. Basin Travel Service of Othello, Inc., the travel agency that booked the trip, provided automatic transportation insurance through Travel Insured International, Inc. (TII) and Travelers Indemnity Company Hartford, CT for clients whose tickets were issued by the agency. Ms. Rizzuti's heirs¹ sued for recovery under the policy and damages for bad faith and Consumer Protection Act (CPA) violations when TII denied coverage. The trial court granted the defendants' motion for summary judgment dismissal of the complaint with prejudice.

The heirs appeal, contending the word "issued" was not defined in the travel insurance policy and should be given its plain meaning to cover all tickets booked and purchased through Basin. They also argue that TII breached a duty of good faith and the CPA by denying coverage and by failing to adequately investigate their claim. Because we find neither error in denying coverage nor bad faith in TII's actions, we affirm.

FACTS

In early 1999, Ms. Rizzuti contacted Cheryl Kresge, the owner of Basin, about booking travel on the Livingstone Safari, a package tour of Africa arranged by Abercrombie & Kent International (A & K), an Illinois based tour operator. The Livingstone Safari included roundtrip airfare from Los Angeles and all transportation, accommodations, and meals during the 15-day tour of Africa. Basin arranged for Ms. Rizzuti's flights from Pasco to Los Angeles and back.

At the time, Basin had a travel insurance policy with TII (underwritten by Travelers Indemnity Company). Previous owners of Basin had entered into the insurance agreement with Basin in 1986. The policy provided $100,000 of automatic transportation coverage for loss of life, limbs, or sight occurring on a "ticketed trip," provided the ticket was issued by Basin. Clerk's Papers (CP) at 248. Every ticket issued by Basin was accompanied by a "Memorandum of Insurance" that included the above provisions and concluded with the following:

Send written notice of claim to Travel Insured International, Inc., P.O. Box 280568, East Hartford, CT XXXXX-XXXX.

Keep this summary with your important insurance papers. It is your coverage description of the Blanket Travel Policy A-6198. All information contained on this summary is subject to the terms and conditions of the Policy.

CP at 248. Basin paid $.12 per ticketed client per ticketed trip as a premium for the coverage.

Ms. Rizzuti paid for about half of the African tour with a cashier's check made out to Basin and made the final $5,764 payment on her American Express card so as to obtain travel insurance through American Express.² Ms. Kresge deposited the cashier's check in the Basin account and then sent the payment to A & K, minus her commission of $1,974. Using A & K's charge form, she arranged for Ms. Rizzuti to pay A & K directly the $5,764 with her American Express card. Basin issued the Pasco to Los Angeles roundtrip tickets with its office machine in May 1999. These tickets were given to Ms. Rizzuti with the memorandum of insurance. The African safari tickets were issued by A & K and sent to Basin in August 1999. Ms. Kresge distributed these tickets to Ms. Rizzuti separately, without the memorandum of insurance.

The Livingstone Safari included a flight between Nairobi, Kenya, and Arusha, Tanzania, that A & K chartered on Northern Air. Ms. Rizzuti and all other passengers and crew were killed in early September 1999 when the Northern airplane crashed into Mount Meru.

On May 1, 2000, attorney Michael Hines, representing Ms. Rizzuti's estate, sent a letter to Ms. Kresge stating, "It has come to our attention that travel bookings through your office, such as Maryanne Rizzuti's, automatically trigger travel insurance protection and coverage." CP at 244. Mr. Hines asked Ms. Kresge to immediately process Ms. Rizzuti's insurance benefits or to help her estate to do so. He also requested a copy of Ms. Rizzuti's entire travel file and any information about the travel insurance, "including the underlying insurance policy, enrollment documentation, processing and claims procedures, etc." CP at 244.

Ms. Kresge responded in a letter dated May 15, 2000. She stated that the automatic transportation insurance applied to all tickets issued in her office, but noted that the African flight tickets were issued by A & K. She also wrote that she had already given Ms. Rizzuti's travel file to Ms. Rizzuti's daughter, Sueanne Rizzuti. Ms. Kresge apparently did not send additional information on the travel insurance.

Mr. Hines's next letter to Ms. Kresge, dated July 21, 2000, indicated that he had contacted A & K and determined that Basin "booked" the African flight tickets. CP at 246. On that basis, he asked Ms. Kresge "to reconsider your position with respect to whether Maryanne Rizzuti's death is covered by Basin Travel's Travelers Insurance policy." CP at 246. In the event Ms. Kresge did not change her position, he asked her to send him the insurance policy so he could make "an independent assessment of the coverage issue." CP at 246. Ms. Kresge briefly responded by letter dated August 2, 2000 that she was enclosing the memorandum of insurance. She told Mr. Hines to let her know if he had further questions and concluded by stating, "I am doing everything in my power to help the Rizzuti family." CP at 247.

After reviewing the memorandum of insurance, Mr. Hines again wrote Ms. Kresge on October 17, 2000. He expressed his conviction that Ms. Rizzuti was covered by the travel insurance because (1) Basin booked the African tickets; (2) Ms. Rizzuti paid Basin for the tickets; (3) the insurance premium was included as part of the ticket price; and (4) Basin received a commission for booking the tickets. He concluded by stating, "In the event we do not receive the full $100,000 insurance proceeds within 30 days, the estate of Maryanne Rizzuti will pursue all of its legal options, including commencing litigation." CP at 249. Ms. Kresge sent this last letter to Dan O'Connell, claim manager of TII, who wrote a letter to Mr. Hines dated January 24, 2001. Mr. O'Connell stated that Ms. Rizzuti paid no premium for her coverage under the automatic transportation policy. He denied coverage by stating as follows:

It is my understanding that the South African Airways tickets were purchased through Abercrombie and Kent International as part of their package. Since those tickets were not purchased through Basin Travel[,] coverage under the Travelers' Automatic Flight policy does not apply and no benefits are payable.

CP at 254.

On August 7, 2002, Mr. Hines deposed Ms. Kresge in relation to a lawsuit brought by Ms. Rizzuti's heirs against American Express. Although Ms. Kresge admitted that the African safari package was "booked" through Basin, she noted that A & K arranged all flights, other transport, meals, and accommodations for the African tour, which began and ended in Los Angeles. CP at 195, 199. In several questions to Ms. Kresge, Mr. Hines referred to the safari tickets "issued" by Basin. CP at 199-200. Ms. Kresge did not correct this reference. However, when asked if Basin issued travel insurance for the tour, she replied, "Not in connection with this trip. We give automatic flight insurance, $100,000, for the tickets that we actually issue in our office, so [Ms. Rizzuti] did purchase a ticket from Pasco, Washington to Los Angeles to connect on this trip." CP at 202.

One week after the deposition, Mr. Hines sent a letter to Ms. Kresge and to TII. He stated that Ms. Kresge testified under oath at the deposition that the ill-fated African flight was "booked and issued" by Basin, which received a commission for booking and issuing the ticket. CP at 43. Demanding immediate tender of the policy proceeds, Mr. Hines added that he would file an attached complaint if he did not receive a commitment by August 23, 2002. Mr. Hines filed the summons and complaint against Basin, TII, and Travelers Indemnity on August 28. Norman Novotny, vice-president and general counsel of TII, sent a letter to Mr. Hines on August 29 stating that he had just received Mr. Hines's letter after returning from a trip and that he would respond within the next two weeks. In a response dated August 30, Mr. Hines agreed to defer service of the complaint on TII until after he and Mr. Novotny had had an opportunity to discuss the case.

The complaint filed by the Rizzuti heirs (the Rizzutis) alleged breach of the insurance contract, breach of a duty of good faith, and CPA violations. In October 2003, the defendants filed a motion for summary judgment dismissal of the complaint. The Rizzutis filed a cross motion for summary judgment in November. By order filed on January 8, 2004, the trial court granted the defendants' motion for summary judgment and denied the Rizzutis' cross motion for summary judgment. The Rizzutis' claims were dismissed with prejudice. They timely appeal.

COVERAGE UNDER THE AUTOMATIC TRANSPORTATION POLICY

The Rizzutis first contend the trial court erred in concluding as a matter of law that Ms. Rizzuti's death was not covered by the automatic transportation policy. We review the order of summary judgment de novo, performing the same inquiry as the trial court. Smith v. Safeco Ins. Co., 150 Wash.2d 478, 483, 78 P.3d 1274 (2003). Considering all facts and inferences in...