Schreib v. Am. Family Mut. Ins. Co.

• Decision Date: 03 September 2015
• Docket Number: Case No. C14–0165JLR.
• Court: U.S. District Court — Western District of Washington
• Parties: Theresa L. SCHREIB, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE CO., Defendant.

129 F.Supp.3d 1129

Theresa L. SCHREIB, Plaintiff,

v.AMERICAN FAMILY MUTUAL INSURANCE CO., Defendant.

Case No. C14–0165JLR.

United States District Court, W.D. Washington, at Seattle.

Signed Sept. 3, 2015.

Christopher Michael Davis, Gregory Stephen Colburn, Davis Law Group, P.S., Bradley Jerome Moore, Stritmatter Kessler Whelan, Seattle, WA, for Plaintiff.

Rory W. Leid, III, Alison Elyse O'Neill, Kimberly Larsen Rider, Cole Wathen Leid Hall PC, Seattle, WA, for Defendant.

AMERICAN ORDER¹ GRANTING DEFENDANT PARTIAL SUMMARY JUDGMENT

JAMES L. ROBART

, District Judge.

I. INTRODUCTION

This matter comes before the court on three motions for partial summary judgment. Defendant American Family Mutual Insurance Company ("American Family") first moved for partial summary judgment on the measure of damages. (Damages Mot. (Dkt. # 67).) In her response to that motion, Plaintiff Theresa Schreib cross-moved for partial summary judgment on the same issue. (Damages Resp. (Dkt. # 72).) Finally, American Family moved for partial summary judgment on the availability of Olympic Steamship fees. (Olympic Mot. (Dkt. # 75).)

Having considered the submissions of the parties, the balance of the record, and the relevant law, the court GRANTS American Family's motions for partial summary judgment on the issues of damages² and Olympic Steamship fees.

II. BACKGROUND

The vast majority of facts in this case are undisputed. Ms. Schreib was involved in an uncontested liability automobile collision in April, 2009. (Compl.(Dkt. # 3) ¶ 2.1.) She alleges that, as a result of the collision, she incurred a mild traumatic brain injury

, in addition to neck, back, and hip injuries. (Id. ¶ 2.5.) American Family disputes the extent to which Ms. Schreib's alleged injuries were caused by the collision. (See generally Resp. (Dkt. # 18).)

At the time of the collision, Ms. Schreib had an automobile insurance policy with American Family. (8/14/14 Rider Decl. (Dkt. # 20) ¶ 22, Ex. 19.) Her policy included underinsured motorist ("UIM") coverage with a policy limit of $500,000.00. (Id. at 2.) Ms. Schreib settled her claim with the tortfeasor for $75,000.00, the full amount covered by the tortfeasor's insurance policy. (Davis Decl. (Dkt. # 14) ¶ 4.) American Family approved her settlement. (Id. ) Ms. Schreib also received $56,300.00 in personal injury protection ("PIP") benefits from her policy with American Family. (Id. ¶ 5.)

In the spring of 2011, after receiving amounts totaling $131,300.00 from the tortfeasor's insurance company and American Family's PIP coverage, Ms. Schreib submitted a claim to American Family for UIM benefits. (8/14/14 Rider Decl. ¶ 4, Ex. 1.) Over the next few months, Ms. Schreib and American Family corresponded several times regarding her claim for UIM benefits. (See generally id. ) Eventually, in November, 2011, American Family informed Ms. Schreib that it had determined that the combination of her settlement with the tortfeasor's insurance company and the PIP award, totaling $131,300.00, was sufficient to fully compensate her for the injuries sustained in the collision. (Id. ¶ 10, Ex. 7.) Ms. Schreib contested the findings and submitted a "settlement demand package" to American Family in February, 2012, formally requesting payment of the $500,000.00 UIM policy limit. (Davis Decl. ¶ 15, Ex. 8.)

Following ongoing disputes over the UIM claim, in September, 2012, Ms. Schreib informed American Family that she would pursue claims under Washington's Insurance Fair Conduct Act ("IFCA"), RCW 48.30.015

. (Davis Decl. ¶ 25, Ex. 15.) In December, 2012, pursuant to her policy, Ms. Schreib requested that her claim be submitted to binding arbitration. (Id. ¶ 26, Ex. 16.) An arbitrator heard Ms. Schreib's claim in September, 2013. (Id. ¶ 34.) The arbitrator issued a decision on October 17, 2013, ruling that Ms. Schreib incurred damages as a result of the automobile accident in the amount of $1,186,988.00. (Id. ¶ 35, Ex. 17.) Although documentation is not contained in the record before the court, the parties agree that American Family subsequently tendered the $500,000.00 UIM policy limit to Ms. Schreib. (See Damages Mot. at 5; Damages Resp. at 22–24.)

Ms. Schreib then filed this action against American Family, alleging claims for breach of contract, violation of IFCA, and insurance bad faith.³ (See Compl. (Dkt. # 1).) In the motions currently before the court, American Family refutes what constitutes "actual damages," with specific reference to Ms. Schreib's computations under Federal Rules of Civil Procedure 26(a)(1)(A)(iii)

. (See Damages Mot.; 6/11/15 Rider Decl. (Dkt. # 68) ¶ 3, Ex. 1 at 6.) American Family also seeks to bar Ms. Schreib from seeking Olympic Steamship fees. (See Olympic Steamship Mot.) Ms. Schreib opposes American Family's motion regarding actual damages and cross-moves for partial summary judgment on that issue. (See Damages Resp.) She does not oppose American Family's motion for partial summary judgment barring Olympic Steamship fees. (See Olympic Steamship Resp.)

III. ANALYSIS

A. Summary Judgment Standard

Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a)

; see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir.2007). The moving party bears the initial burden of showing there is no genuine issue of material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets its burden, the burden shifts to the non-moving party to "make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial." Galen, 477 F.3d at 658. The court is "required to view the facts and draw reasonable inferences in the light most favorable to the [non-moving] party." Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

Because the court grants both of American Family's motions for partial summary judgment, the analysis herein views all facts and draws all reasonable inferences in the light most favorable to Ms. Schreib.

B. The Proper Measure of "Actual Damages"

American Family's first motion for partial summary judgment seeks to limit the amount and type of damages that are deemed "actual damages" under any of Ms. Schreib's extra-contractual theories of recovery—namely, Ms Schreib's IFCA claim, her CPA claim, and her tort claim of insurer bad faith. (Damages Mot. at 1.)

IFCA provides a cause of action when an insurance policy claimant is "unreasonably denied a claim for coverage or payment of benefits by an insurer." RCW 48.30.015(1)

. A prevailing party is entitled to "actual damages sustained, together with the costs of the action"; these "costs of the action" specifically comprise "reasonable attorneys' fees and litigation costs," RCW 48.30.015(1), including expert witness fees, RCW 48.30.015(3). In addition, the court can award enhanced damages, although the total damages award is "not to exceed three times the actual damages." RCW 48.30.015(2)

.

The CPA allows a plaintiff to recover when she can establish the following elements: (1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to the plaintiff in his or her business or property; (5) causation. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 719 P.2d 531, 533 (1986)

. Similar to an IFCA claim, a prevailing party under the CPA can recover "actual damages ... together with the costs of the suit, including a reasonable attorney's fee." RCW 19.86.090. Also as under IFCA, the court can enhance damages to an amount "not to exceed three times the actual damages sustained," but unlike IFCA, an enhanced CPA damages award shall not exceed $25,000.00 in cases of unfair or deceptive trade practices such as this. Id.

Finally, the tort of insurer bad faith follows standard tort principles—it requires proving duty, breach, and damages proximately caused by the breach. See Smith v. Safeco Ins. Co., 150 Wash.2d 478, 78 P.3d 1274, 1277 (2003)

. An insurer typically owes a heightened duty to "give equal consideration to the insured's interests and its own interests." Liberty Int'l Underwriters v. Carlson, 2006 WL 623785, at *9 (W.D.Wash. Mar. 13, 2006) (citing Am. States Ins. Co. v. Symes of Silverdale, Inc., 150 Wash.2d 462, 78 P.3d 1266, 1270 (2003) ). This enhanced duty does not exist in a UIM case, in which the insurer often stands in the shoes of the tortfeasor, can assert any defense to liability that the tortfeasor had, and thus finds itself in an adversarial relationship with its own insured. See Ellwein v. Hartford Acc. & Indem. Co., 142 Wash.2d 766, 15 P.3d 640, 647 (2001), overruled in part on other grounds, Smith v. Safeco Ins. Co., 150 Wash.2d 478, 78 P.3d 1274 (2003). However, an insurer's duty of good faith does not simply disappear—in UIM cases, the insurer still owes the insured a duty of good faith and fair dealing. Id. In a UIM case, an insurer must "deal in good faith and fairly as to the terms of the policy and not overreach the insured, despite its adversary interest." Id. (quoting Hendren v. Allstate Ins. Co., 100 N.M. 506, 672 P.2d 1137, 1141 (1983) ). To demonstrate bad faith, an insured must show the denial of benefits was "unreasonable, frivolous, or unfounded," as opposed to simply incorrect. Kirk v. Mt. Airy Ins. Co., 134 Wash.2d 558, 951 P.2d 1124, 1126 (1998) (en banc); see also Kim v. Allstate Ins. Co., 153 Wash.App. 339, 223 P.3d 1180, 1189 n. 3 (2009) (applying the "unreasonable, frivolous, or unfounded" requirement from Kirk to a claim for insurance bad faith under UIM coverage). In some instances, once the insured shows that...