United Servs. Auto. Ass'n v. Speed, 43728–7–II.

Citation317 P.3d 532,179 Wash.App. 184
Decision Date28 January 2014
Docket NumberNo. 43728–7–II.,43728–7–II.
CourtCourt of Appeals of Washington

179 Wash.App. 184
317 P.3d 532

Robert J. SPEED, Appellant.

No. 43728–7–II.

Court of Appeals of Washington,
Division 2.

Jan. 28, 2014.

[317 P.3d 535]

Simon Henri Forgette, Attorney at Law, Kirkland, WA, Benjamin Franklin Barcus, Ben F. Barcus & Associates PLLC, Tacoma, WA, Howard Mark Goodfriend, Smith Goodfriend PS, Seattle, WA, for Appellant.

Irene Margret Hecht, Keller Rohrback LLP, Seattle, WA, Maureen Mullane Falecki, Keller Rohrback LLP, Seattle, WA, for Respondent.


¶ 1 Robert Speed appeals the trial court's summary judgment dismissal of his duty to defend, duty to explore settlement and bad faith claims against United Services Automobile Association (USAA) arising from Speed's allegation that a USAA insured had deliberately assaulted him in a road rage incident. Speed had filed suit against USAA as the assignee of the insured following entry of a stipulated judgment. We hold that (1) USAA had no duty to defend Speed's claim under either his homeowners or auto insurance policies because the claim did not allege an “accident” as required for coverage under the policies, (2) USAA's “uncertainty” whether to provide a defense did not create a duty to defend when the unambiguous claim allegations did not trigger such a duty, (3) in the absence of a duty to defend USAA had no duty to explore settlement, and (4) the trial court properly denied Speed's bad faith claims. Accordingly, we affirm.

Speed's Claim

¶ 2 On March 2, 2009, Dennis Geyer and Speed were involved in an altercation and Speed suffered serious personal injuries. The State charged Geyer with second degree assault with a deadly weapon. On August 25, 2009, Speed's attorney sent a demand letter to Geyer seeking $650,000 to compensate Speed for his injuries. The letter described the incident as follows:

On March 2, 2009, Mr. Speed and Dr.

[317 P.3d 536]

Geyer 1 were operating their motor vehicles in the vicinity of the Tacoma Narrows Bridge. Dr. Geyer apparently became angry over something Mr. Speed had done while driving in front of him. Once they were on the bridge, Dr. Geyer pulled along side [sic] Mr. Speed and motioned for him to pull over. Frightened, Mr. Speed took the first exit after the bridge. Dr. Geyer followed Mr. Speed for an extended period of time before the two vehicles stopped for a traffic signal. According to witnesses, Dr. Geyer got out of his vehicle, opened the door of Mr. Speed's vehicle and beat Mr. Speed with his fists and a metal thermos, pulling Mr. Speed from his vehicle as he did so. Dr. Geyer then drove away from the scene leaving Mr. Speed bleeding and unconscious in the street.

Clerk's Papers (CP) at 56–57. The letter stated that “[t]his case is aggravated by the intentional conduct of Dr. Geyer, including leaving Mr. Speed, potentially for dead, at the scene” and that “[w]ere this a case of negligence that was covered by insurance” Speed's attorneys would be seeking a seven-figure verdict or settlement. CP at 61. The letter further stated that if Geyer agreed to pay the requested amount, Speed and his attorneys would recommend to the prosecutor that Geyer be allowed to plead guilty to a misdemeanor assault charge.

¶ 3 Geyer carried homeowners and auto insurance with USAA. On October 14, 2009, seven months after the incident, Geyer notified USAA of the incident and Speed's claim. He requested coverage under both policies. By that date, the settlement offer in Speed's demand letter, by its terms, already had been revoked. A USAA adjuster interviewed Geyer the next day, and Geyer's statements suggested that he was claiming self-defense.

USAA's Reservation of Rights and Investigation

¶ 4 In a letter dated October 19, 2009, USAA informed Geyer that “[t]he current facts of this incident give rise to potential coverage issues under both your automobile and homeowner's policies” and that it was investigating his claim under a reservation of its right to deny coverage. CP at 210. With regard to the homeowners policy, the letter stated that the incident facts indicated that Speed's injuries may not have been the result of an “occurrence” as defined in the policy because Speed alleged that Geyer had intentionally and deliberately struck him in the head. The letter also stated that the policy may not provide coverage because of the intentional act exclusion. With regard to the auto policy, the letter stated that Speed's claim might not be the result of an “auto accident” as defined in the policy and that the policy may not provide coverage under the intentional act exclusion. CP at 213–14.

¶ 5 USAA did not retain counsel to defend Geyer at this time and did not advise Geyer whether or not it believed that it had a duty to defend Speed's claim. USAA apparently assumed that it had no duty to defend until a lawsuit was filed. However, USAA did undertake a liability and coverage investigation regarding Speed's claim. USAA also informed Speed's attorney that it had received notice of the claim and that “[a]ny pending claim(s) is unresolved because we continue to investigate coverage and liability in this matter.” CP at 566.

¶ 6 USAA continued to monitor and investigate Speed's claim for the next several months. The trial on Geyer's criminal charges occurred in February 2010. Geyer admitted that he had deliberately hit Speed, but claimed he was acting in self-defense. A jury found Geyer guilty of third degree assault. Following the verdict, USAA obtained a coverage opinion from an attorney. In a May 5 letter, the attorney concluded that USAA should not have a duty to defend or provide indemnity for Speed's claim, but that the “safest course of action” would be to provide a defense under a reservation of rights. CP at 620.

Settlement Negotiations

¶ 7 On April 13, 2010, Speed offered to release Geyer from all claims if USAA would agree to pay the combined policy limits under Geyer's homeowners and auto insurance

[317 P.3d 537]

policies, totaling $800,000. In a May 10, 2010, letter, USAA explained to Geyer why it would not pay the demand. USAA stated that it was unlikely that it had a duty to indemnify Geyer because Speed's injuries were not caused by an accident or an auto accident and the policies excluded coverage for an intentional or purposeful act. However, the letter also stated:

Although USAA is rejecting the demand, neither the rejection nor this letter should be read as a final denial of all policy benefits which might be available to you. Our previous letter of October 19, 2009, informed you that coverage is questionable. Since that date, we have received and reviewed the criminal trial transcripts, and coverage is still questionable.

CP at 81. USAA ultimately did make a $25,000 settlement offer, which Speed rejected.

¶ 8 On January 20, 2011, Geyer and Speed agreed to a settlement. Geyer stipulated to the entry of a $1.4 million judgment in exchange for Speed's covenant not to execute the judgment against Geyer's assets. Geyer also assigned all his potential breach of contract and bad faith claims against USAA to Speed.


¶ 9 On January 24, 2011, USAA filed a complaint for declaratory judgment against Speed, seeking a declaration that it had no duty to defend or indemnify Geyer for the claim, was not estopped from denying coverage, and had no duty to pay the $1.4 million stipulated judgment. Speed counterclaimed, alleging that USAA acted in bad faith in failing to defend, properly investigate or settle the Speed claim and that USAA violated the Insurance Fair Conduct Act (IFCA), chapter 48.30 RCW, and the Unfair Claims Settlement Practices Regulation, chapter 284–30 WAC.

¶ 10 On February 8, Speed filed a separate personal injury complaint against Geyer, alleging that Geyer had negligently caused Speed's injuries. However, the only relief requested was a ruling that the settlement amount was reasonable. After Speed filed the complaint, USAA provided Geyer with a defense attorney. The trial court concluded that the settlement was reasonable.

¶ 11 The trial court consolidated Speed's personal injury suit and USAA's declaratory judgment action. Speed moved for partial summary judgment, asking the trial court to rule that USAA had a duty to defend Geyer upon receiving notice of Speed's personal injury claim and that USAA's failure to provide counsel to Geyer constituted bad faith. The trial court denied Speed's summary judgment motion, ruling that the issue of whether USAA had a duty to defend was “subordinate to the issue as to finding that there is policy coverage under the facts of this case.” CP at 630.

¶ 12 USAA subsequently moved for partial summary judgment, asking the trial court to declare as a matter of law that (1) there was no coverage under either policy, (2) USAA had no duty to defend Geyer, (3) USAA's failure to defend was not in bad faith, and (4) USAA was not estopped from denying coverage. The trial court granted the motion and dismissed Speed's claims for bad faith failure to defend, settle, or indemnify. USAA then moved to dismiss Speed's statutory and regulatory bad faith claims. Speed did not oppose the motion and agreed that those claims were “inextricably tied to USAA's duties to defend, settle or indemnify which the Court has now dismissed with prejudice.” CP at 947.

¶ 13 Speed appeals the trial court's orders denying his summary judgment motion, granting USAA's summary judgment motion, and granting USAA's motion to dismiss his remaining bad faith claims.


¶ 14 The trial court dismissed Speed's claims on summary judgment. We review a summary judgment order de novo, engaging in the same inquiry as the trial court. Woo v. Fireman's Fund Ins. Co., 161 Wash.2d 43, 52, 164 P.3d 454 (2007). In addition, the interpretation of an insurance policy generally is a question of law that we review de novo. Woo, 161 Wash.2d at 52, 164 P.3d 454.

[317 P.3d 538]

A. Duty To Defend

1. Introduction

¶ 15 Most standard liability insurance policies...

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