Van Noy v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 18 January 2001 |
| Docket Number | No. 68548-7.,68548-7. |
| Citation | 16 P.3d 574,142 Wash.2d 784 |
| Parties | Tina VAN NOY; Patricia Faye Dinnis (formerly Patricia Faye Burkett); and Elaine Ebersole; on behalf of themselves and all others similarly situated, Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Petitioner. |
| Court | Washington Supreme Court |
Peter Anthony Danelo, Daniel J. Dunne, Robin E. Wechkin, Kenneth E. Payson, Seattle, for Petitioner.
Steven W. Berman, Sean R. Matt, Andrew M. Volk, Erin K. Flory, Seattle, for Respondents.
This appeal had its inception when a group of State Farm Insurance Company (State Farm) policyholders commenced a class action against State Farm claiming that the insurance company breached fiduciary and contractual obligations, acted in bad faith, and violated the Consumer Protection Act (chapter 19.86 RCW). The trial court granted State Farm's motion for summary judgment and dismissed the plaintiffs' causes of action. The Court of Appeals reversed the trial court, concluding that there were material issues of fact which precluded summary judgment in favor of State Farm. State Farm obtained review here, claiming that the Court of Appeals (1) erred in its formulation of the fiduciary duty owed by State Farm to its insureds, and (2) neglected to analyze the plaintiffs' claims in the context of the entire class. We affirm the Court of Appeals and remand for trial.
As noted above, the underlying action is a class-action lawsuit. Consequently, the events surrounding each class member's injury and subsequent dealings with State Farm vary to some extent. However, because the facts relating to one member of the class of plaintiffs, Tina Van Noy, are essentially representative of the entire class, we chronicle her circumstances. On October 14, 1993, Van Noy was injured in an automobile accident. Soon thereafter, she began a course of treatment that had been prescribed to her by her chiropractor. At the time of the accident, Van Noy was insured by State Farm. Her policy included personal injury protection (PIP), which is essentially no-fault coverage for medical expenses arising from bodily injuries sustained in an automobile accident. The PIP benefits that State Farm provided to Van Noy were described in the policy as follows:
Clerk's Papers (CP) at 791. The "Settlement of Loss" portion of the policy stated that:
Payments will be made on a monthly basis within 30 days after we have proof of the amount due.
CP at 619. The same section further provided:
The amount due under this coverage shall be decided by agreement. If the insured and we cannot agree, it will be decided by arbitration upon mutual written consent.
Approximately three weeks after the accident, Van Noy received a letter from the State Farm "First Party Benefits Expediter." CP at 793. The letter requested that Van Noy complete an enclosed application for medical benefits and also stated that:
Your insurance policy provides for payment of medical expenses that are reasonable and necessary. To assist us in determining this, we may obtain a second medical opinion. We may also have the treatment reviewed by other medical professionals. Your policy provides you must notify us as soon as reasonably possible after your treatment begins.
CP at 794. Van Noy complied with State Farm's request and filled out the medical benefits application. She then returned it to State Farm. This was followed by the submission to State Farm of billings that Van Noy had received from her health care providers.
For several months after the application and billings were sent to State Farm, Van Noy had no contact with the company. Finally, on March 28, 1994, nearly five months after Van Noy first began receiving treatment for her injuries, she received a missive from State Farm that stated, in relevant part, that:
Our contract of insurance with you requires that we pay only charges that are reasonable, necessary, and accident related. For that reason, we will be submitting the chiropractic and massage billings to an independent chiropractic consultant for evaluation. We will be guided by their recommendations and will pay only those charges which are deemed reasonable and necessary.
Approximately one month later, Van Noy's attorney received another letter from State Farm. This letter indicated that State Farm's "peer review" determined that only a portion of Van Noy's claims would be paid. CP at 798. The letter also informed Van Noy's attorney that the "peer review group" was in the midst of evaluating the other billings submitted by Van Noy and that State Farm "will advise you of the outcome." CP at 798. As a consequence of State Farm's action, Van Noy remained personally liable for the unpaid portion of the expenses for her treatment.
Shortly thereafter, Van Noy and two other State Farm policyholders, Patricia Faye Dinnis and Elaine Ebersole, initiated a class-action lawsuit against State Farm. In their complaint they alleged that State Farm: (1) breached its fiduciary duty and contractual obligations, (2) engaged in bad faith handling of claims, and (3) violated the Washington Consumer Protection Act. Fundamentally, the plaintiffs complained that State Farm ignored the language in its policies that provided that payments be made on a monthly basis and, instead, "stockpiles" the bills for months before finally deciding whether to honor claims for medical expenses. Answer to Pet. for Review at 1. The plaintiffs sought damages for all health care provider expenses that State Farm disallowed more than 30 days after receipt of the PIP claims. All of their causes of action were based on what they claimed was "State Farm's practice of retroactive denial of coverage, effective months prior to when the notice [was] given." CP at 30. Pursuant to CR 23, the plaintiffs moved for class certification. Over State Farm's objections, the trial court granted their motion and certified a statewide class of State Farm policyholders whose policies contained PIP coverage.
The class moved for partial summary judgment on the issues of State Farm's duty and breach of that duty. State Farm responded with its own summary judgment motion, asserting that all of the claims against it should be dismissed. The trial court denied the class's motion but granted State Farm's and dismissed the lawsuit entirely.
The class appealed to Division One of the Court of Appeals. That court reversed the grant of summary judgment in favor of State Farm, and remanded for trial, concluding that there were issues of material fact with respect to each cause of action brought by the plaintiffs. See Van Noy v. State Farm Mut. Auto. Ins. Co., 98 Wash.App. 487, 983 P.2d 1129 (1999). We, thereafter, granted State Farm's petition for review.
State Farm's petition raises two issues for our consideration. It first contends that the Court of Appeals erroneously formulated the applicable fiduciary duty that State Farm owes to its first-party insureds. State Farm's second claim of error is that the Court of Appeals "erred in its treatment of plaintiffs' breach of contract claim." Pet. for Review at 14.1 The class responds that the appellate court correctly formulated the applicable fiduciary duty and did not err in concluding that there was a factual question as to whether State Farm breached its contract with Van Noy, Dinnis, Ebersole and the other members of the class.
Summary judgment orders are reviewed de novo by this court. Hayden v. Mut. of Enumclaw Ins. Co., 141 Wash.2d 55, 1 P.3d 1167 (2000). In doing so we observe the well-known principle that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). Such a motion will be granted, after considering the evidence in the light most favorable to the nonmoving party, only if reasonable persons could reach but one conclusion. Reynolds v. Hicks, 134 Wash.2d 491, 495, 951 P.2d 761 (1998).
State Farm asserts that the Court of Appeals erred in two respects in its analysis of the fiduciary duty it owed to the plaintiff class. There are two components to State Farm's argument. First, it claims that the appellate court's opinion could be erroneously interpreted as imposing a duty on insurance companies to "`disclose all facts that would aid its insureds in protecting their interests....'" Pet. for Review at 9. It also asserts that the Court of Appeals incorrectly imposed a "novel duty" on State Farm when the court stated that "`[a]n insurer has an enhanced fiduciary obligation ....'" Pet. for Review at 11. In support of its argument, State Farm points to the following portion from the Court of Appeals opinion:
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