Traulsen v. Cont'l Divide Ins. Co.
| Decision Date | 10 April 2023 |
| Docket Number | 82507-1-I |
| Parties | PHILLIP TRAULSEN; RICHARD AND CAROL TRAULSEN, Appellants/Cross-Respondents, v. CONTINENTAL DIVIDE INSURANCE COMPANY, Respondents/Cross -Appellant, and EPHRATA TRUCKING LLC; SAMY ZEWDU; EVERGREEN ADJUSTMENT SERVICES INC; MACK TRUCKING LLC; STATE NATIONAL INSURANCE COMPANY; MICHAEL BEYENE; ATSEBHA HAGOSE; WONDWOSSEN MERSHA; JOHN DOES, Defendants. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
The appellants, Philip, Richard, and Carol Traulsen, has filed a motion for reconsideration of the opinion filed on February 21, 2023. The respondent, Continental Divide Insurance Company has filed a motion for reconsideration and a response to appellants' motion for reconsideration. The court has determined that the appellants' motion should be granted in part and denied in part, the respondent's motion should be denied, the opinion withdrawn, and a substitute opinion filed; now, therefore, it is hereby
ORDERED that the appellant's motion for reconsideration is granted in part and denied in part; and it is further
ORDERED that the respondent's motion for reconsideration is denied; and it is further
ORDERED that the opinion filed on February 21, 2023 is withdrawn; and it is further
ORDERED that a substitute opinion shall be filed.
Phillip Traulsen and his parents, Richard and Carol,[1] appeal several summary judgment orders relating to their claims against insurer Continental Divide Insurance Company (CDIC), arising out of a traffic accident in which a tractor trailer driven by CDIC insured Samy Zewdu struck Phillip, a pedestrian, causing catastrophic injuries. CDIC cross appeals several of the same and additional summary judgment rulings.
Phillip brought suit against CDIC on his own behalf and as assignee of claims held by CDIC insureds, Ephrata Trucking and Zewdu alleging breach of contract, bad faith, negligence, and violations of the Insurance Fair Conduct Act (IFCA)[2] and the Consumer Protection Act (CPA).[3] After a series of summary judgment rulings granting and rejecting various legal claims and theories of liability, the trial court entered final judgment against CDIC in the principal amount of $1,535,980.15 and awarded Phillip statutory attorney fees and costs.
Phillip and CDIC challenge several of the court's summary judgment rulings. Because the assignments of error are so numerous, we have organized the issues as follows:
A IFCA Claims
(1) CDIC contends the trial court erred in holding it liable under IFCA as a matter of law for not paying $1 million in policy benefits after the trial court confirmed a multimillion-dollar arbitration award against CDIC's insureds;
(2) CDIC argues the trial court erred in holding that CDIC was judicially estopped from claiming that its obligation to pay interest on the arbitration award was not triggered by its confirmation; (3) Both Phillip and CDIC challenge the trial court's calculation of postjudgment interest owing under the policy;
(4) CDIC and Phillip both contend the trial court erred in finding genuine issues of material fact on Phillip's claim that the nonpayment of interest on the $1 million was an unreasonable failure to pay policy benefits under IFCA;
(5) Phillip challenges the trial court's conclusion that Phillip cannot establish that the insureds sustained actual damages under IFCA;
(6) Phillip argues the trial court erred in denying his request for attorney fees under Olympic Steamship, the CPA, and IFCA.
B. Bad Faith Claims
(1) Phillip argues CDIC is liable as a matter of law for the tort of bad faith for refusing to disclose its insureds' policy limits before he initiated litigation against those insureds;
(2) Phillip challenges the dismissal of his bad faith claim that CDIC breached its duty to settle by failing to extend a policy limits settlement offer until February 2018; and
(3) Phillip contends the trial court erred in concluding that CDIC's insureds could not establish that they were harmed by any of the acts or omissions of CDIC.
C. PIP Coverage Claim
Phillip appeals the trial court ruling that CDIC had no obligation under RCW 48.22.085(1) to offer PIP coverage to Ephrata and that, as a result, Phillip has no direct claim against CDIC for PIP benefits against CDIC.
We affirm in part and reverse in part the trial court's summary judgment orders as set out more fully below.
On the morning of April 10, 2017, Samy Zewdu, driving a commercial semitruck and trailer, struck Phillip Traulsen as he walked across South 212th Street in Kent on his way to work at Amazon. Phillip sustained head trauma and multiple broken bones, requiring months of hospitalization and resulting in severe permanent injuries.
A witness to the accident told police that Phillip had a "white light," indicating he could cross the street and that Zewdu's truck was travelling around 40 miles per hour when it entered the intersection against a red light. Zewdu admitted he was driving 40 miles per hour, but said he had a green light when Phillip walked in front of his vehicle. Neither Zewdu nor Phillip was cited for the incident.
Ephrata Trucking, LLC owns the commercial truck Zewdu was driving and is insured by Continental Divide Insurance Company (CDIC). Under CDIC's commercial liability policy, Ephrata-of which Zewdu is a member-had $1 million in liability coverage.
CDIC hired Evergreen Adjustment Service to investigate the accident. Evergreen interviewed two witnesses to the accident who stated that Zewdu ran a red light. Evergreen reported this information to CDIC on May 3, 2017. CDIC instructed Evergreen to identify other sources of possible insurance coverage, but Evergreen did not discover that the trailer attached to Zewdu's truck at the time of the accident was owned, not by Ephrata, but by Mack Trucking, LLC and separately insured under a policy issued by State National Insurance Company.
On May 11, 2017, Phillip's attorney asked CDIC to disclose all insurance coverages and liability limits. CDIC informed counsel that it was unable to determine if disclosure of its policy limits was within its insureds' best interest and declined Phillip's request.[4] It indicated, however, that the policy did not provide personal injury protection (PIP) coverage.
Phillip and his parents sued Ephrata and Zewdu on May 27, 2017, in King County Superior Court No. 17-2-13809-6. Soon after, CDIC advised its insureds that they faced liability beyond the $1 million policy limit and suggested they hire personal counsel. CDIC disclosed its policy limits to Phillip in response to his first set of interrogatories on July 26, 2017.
On February 16, 2018, CDIC offered its policy liability limits in exchange for "a release of all claims for all insureds under the policy and dismissal of the lawsuit." Phillip rejected the offer. On March 16, 2018, CDIC again advised its insureds to retain their own counsel because "[i]t appears likely that a jury will award [Phillip] more than $1 million in damages."
The parties attended mediation on April 13, 2018. Phillip contends mediation failed because everyone was confused about the belated discovery of Mack Trucking's insurance policy covering the trailer.[5] Zewdu signed a proposed settlement agreement, in which he and Ephrata offered to allow for the entry of a "partial judgment against them for all insurance limits," including CDIC's $1 million in liability limits plus interest, to assign any claims they had against CDIC and others to Phillip, and to have the total amount of Phillip's damages determined by arbitration in exchange for Phillip's covenant not to execute on any verdict, award, or judgment against them except for the insurance policies or assigned assets. Phillip and his parents never signed this document. The parties subsequently stipulated to arbitrate "all remaining issues" in May 2018. CDIC was aware of this stipulation and agreed to participate.
On June 6, 2018, the arbitrator determined that Phillip was not contributorily negligent for his injuries. On July 27, 2018, the arbitrator issued a final award finding Phillip's total damages to be $10,608,092. The arbitrator ruled that "[j]udgment may be entered in favor of Plaintiffs and against Defendants Sammy and Jane Doe Zewdu and Ephrata Trucking . . . in accord with the above award." The superior court confirmed the award on August 31, 2018. A week later, CDIC again offered Phillip its $1 million policy limits "in exchange for a release and full and final settlement of [his] claims . . . against any and all insureds." According to counsel for CDIC, Phillip's counsel never responded to this offer.
On July 16, 2018, while the parties were in arbitration, CDIC filed a declaratory judgment action in the U.S. District Court for the Western District of Washington against Zewdu, Ephrata, and Phillip, seeking to limit its liability to the $1 million policy limit and a judicial determination that it had not breached the policy, or acted negligently, in bad faith, or in violation of the CPA or IFCA. Continental Divide Ins. Co. v. Ephrata Trucking, LLC et al., No. C18-1042-JCC WL 4385433 (W.D. Wash.).
That court stayed the federal suit pending the outcome of the state proceedings.
Between the date the court confirmed the arbitration award and March 2019, CDIC refused to pay policy limits to reduce the insureds' liability for the confirmed award.
On March 5, 2019, Ephrata, Zewdu and Phillip entered into a settlement agreement. Ephrata and Zewdu agreed to assign all claims...
To continue reading
Request your trial