Tavakoli v. Allstate Prop. & Cas. Ins. Co.
| Decision Date | 21 December 2012 |
| Docket Number | CASE NO. C11-1587RAJ |
| Court | U.S. District Court — Western District of Washington |
| Parties | HOSSEIN TAVAKOLI, et al., Plaintiffs, v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant. |
HONORABLE RICHARD A. JONES
This matter comes before the court on the parties' motions for partial summary judgment. Although the parties have requested oral argument, the court finds oral argument unnecessary. For the reasons stated below, the court DENIES Plaintiffs' motion for partial summary judgment (Dkt. # 33) and GRANTS in part and DENIES in part Defendant's motion for partial summary judgment (Dkt. # 35). This order concludes with instructions for the parties to prepare for trial, which will begin on January 28, 2013.
In October 2007, Jason Koehne drove his car into a car that Plaintiff Hossein Tavakoli was driving. Mr. Tavakoli's wife, Plaintiff Pourandok Shahnian, was a passenger. No one disputes that the accident injured Mr. Tavakoli. So far as the record reveals, Ms. Shahnian suffered no injuries.
Defendant Allstate Property and Casualty Company ("Allstate") was Mr. Tavakoli's car insurance provider. Mr. Tavakoli quickly notified Allstate about the accident. Almost as quickly, Mr. Tavakoli hired a lawyer. Within three days of the accident, the lawyer told Allstate not to communicate directly with Mr. Tavakoli. That initial conduct marked the beginning of more than three years in which Mr. Tavakoli's lawyer severely limited Allstate's ability to investigate Mr. Tavakoli's claim. The lawyer refused to allow Allstate to interview Mr. Tavakoli regarding the accident, offering only an unfulfilled promise to submit a written statement from Mr. Tavakoli regarding the accident.1 The lawyer also declined to provide releases that would have allowed Allstate to obtain Mr. Tavakoli's medical records. Wyche Decl. (Dkt. # 37) ¶ 8 & claim diary.
Until December 2010, Allstate received only what limited information Mr. Tavakoli's lawyer chose to reveal. Allstate knew soon after the accident that the lawyer was attempting to recover damages from Mr. Koehne and his insurance carrier, USAA. By March 2008, it knew that Mr. Tavakoli claimed to have suffered injuries that were severe enough that he could not give a recorded statement to Allstate. In October 2008, it learned that the lawyer had reached a settlement with Mr. Koehne for $25,000, which the lawyer represented to be the limits of Mr. Koehne's USAA policy. At that point, the lawyer disclosed more about Mr. Tavakoli's injuries, informing Allstate that he had suffered a closed head injury and spinal injuries, had seen a variety of medical providers, and was continuing medical treatment. At the time, Mr. Tavakoli's medical expenses were about $23,000. The lawyer declined to authorize Allstate to review Mr. Tavakoli's medical records, and instead informed Allstate that he would provide documentation when he sent a demand letter. Allstate acknowledged the settlement, declined to exerciseits right to pursue Mr. Koehne directly, and encouraged the lawyer to contact Allstate at any time to discuss the claim.
After the 2008 settlement, Allstate contacted the lawyer at least 15 times. Allstate checked with the lawyer every few months, inquiring about the claim and requesting medical records and other documentation. Generally speaking, the lawyer refused to provide documentation, insisting that he would include medical records and other documents only when he compiled a demand letter. The lawyer revealed limited information to Allstate. Allstate received a copy of the police report regarding the accident in November 2008, although it is not clear if the lawyer provided it. From the police report, Allstate determined that Mr. Tavakoli was likely not at fault in the accident. Allstate complied with the lawyer's request for certified copies of Mr. Tavakoli's policy (the "Policy"). In February 2009, the lawyer told Allstate that Mr. Tavakoli was still treating with various medical providers. In June 2009, the lawyer made an oral demand for $250,000, the limit of the Policy's uninsured motorist ("UIM") coverage.2 He claimed that Mr. Tavakoli had suffered permanent neurological damage, that he was having "aggressive outbursts" that had left his family life "in shambles." He stated that Mr. Tavakoli ran a restaurant, that business was suffering, and that Mr. Tavakoli's wife was struggling to keep the business afloat. Allstate asked him to document any business losses, and he agreed to do so.
The June 2009 conversation demonstrated to Allstate that Mr. Tavakoli was likely to assert a substantial UIM claim. Allstate began considering possible defenses that Mr. Koehne might have been able to assert against Mr. Tavakoli. It considered whether the police report suggested a basis for holding Mr. Tavakoli partially at fault. It consideredsending an investigator to observe Mr. Tavakoli at his restaurant. So far as the record reveals, Allstate never took any action beyond these discussions.
Meanwhile, Allstate remained largely in the dark about Mr. Tavakoli's injuries and other damages. In October 2009, two years after the accident, the lawyer told Allstate that it should not expect a demand letter soon, and that Mr. Tavakoli continued his medical treatment. The lawyer demanded that Allstate stop contacting him so frequently. Allstate complied.
In December 2010, more than three years after the accident, Mr. Tavakoli's lawyer sent his first demand letter. Wyche Decl. (Dkt. # 37), Ex. C (Dec. 6, 2010 letter). It listed both chronic and acute diagnoses and described acute and long-term treatment that Mr. Tavakoli had received. The letter claimed just over $30,000 in medical expenses. It also claimed that Mr. Tavakoli would require unspecified "ongoing management and care" for the rest of his life. Among other physical manifestations of Mr. Tavakoli's injuries, the letter listed "erectile problems, decreased libido, depression, memory difficulties, and agitation." It claimed that the accident had "completely changed Mr. Tavakoli's personality." It said that the accident had caused "marital problems and strain on his relationship with his wife." The letter did not name Mr. Tavakoli's wife and did not advance any claim on behalf of his wife. The letter also did not point to any lost wages or business-related expenses. The letter attached medical records to support Mr. Tavakoli's claims, along with the police report from the accident. Allstate wrote the lawyer two days later, acknowledging his demand letter. In January 2011, it asked for a few missing medical records. The lawyer agreed to provide them.
By early January 2011, the Allstate adjuster assigned to Mr. Tavakoli's claim had evaluated the demand letter and medical records. He calculated total medical bills at just under $30,000, and guessed that damages might reach $100,000, minus a $25,000 offset for the payment from USAA. After considering additional records, he revised hisestimate in February 2011, asking for authority to settle the claim for a maximum payment of about $80,000, consisting of about $30,000 in medical expenses, $75,000 in general damages, minus the $25,000 offset.
In February 2011, Allstate offered to pay Mr. Tavakoli just under $48,000 in addition to the $25,000 he had already received from USAA. The same month, the lawyer wrote back reasserting his policy-limits demand. Wyche Decl. (Dkt. # 37), Ex. D (Feb. 22, 2011 letter). This time, he threatened to file suit, invoking the Insurance Fair Conduct Act ("IFCA," RCW Ch. 48.30). Again, he made no suggestion that Mr. Tavakoli's wife had a claim. He made no suggestion that lost wages or other business-related expenses were among the damages he was claiming for Mr. Tavakoli.
In March 2011, Allstate offered to pay Mr. Tavakoli about $55,000 in addition to the $25,000 he had already received from USAA. Mr. Tavakoli's response was to hire another lawyer, who the court will refer to as "litigation counsel." When litigation counsel informed Allstate of its appearance in the litigation, he named Mr. Tavakoli alone as his client and did not suggest that Ms. Shahnian had a claim. Wyche Decl. (Dkt. # 37), Ex. F (Mar. 23, 2011 letter). Litigation counsel wrote Allstate in April 2011, notifying both Allstate and the office of Washington's Insurance Commissioner that he intended to file a suit invoking IFCA. Wyche Decl. (Dkt. # 37), Ex. H (Apr. 7, 2011 letter). The April 2011 letter was remarkable because it was the first time anyone suggested that Ms. Shahnian was bringing a claim. The letter did not explain what her claim might be.
In June 2011, litigation counsel wrote Allstate to demand an immediate payment of "the amount you believe to be appropriate to compensate [Mr. Tavakoli] and his wife." Wyche Decl. (Dkt. # 37), Ex. I (Jun. 18, 2011 letter). The letter did not demand a specific amount, it simply pointed to Allstate's determination that "Mr. Tavakoli is entitled to some payment under the UIM policy . . . ."
Other than some unsuccessful attempts to schedule an independent medical examination ("IME") for Mr. Tavakoli, little happened after the June 2011 letter. In late August, Plaintiffs filed this lawsuit. They claimed that Allstate breached the Policy, acted in bad faith, violated the Washington Consumer Protection Act ("CPA," RCW Ch. 19.86), and violated IFCA. In early September 2011, Allstate turned this dispute over to its own litigation counsel.
On a motion for summary judgment, the court must draw all inferences from the admissible evidence in the light most favorable to the non-moving party. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party must initially show the absence of a...
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