Nielsen v. California Capital Insurance Company et al, No. 2:2022cv00177 - Document 146 (E.D. Wash. 2023)
Court Description: ORDER denying 61 Defendants' Motion for Partial Summary Judgment. Signed by Judge Thomas O. Rice.
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Nielsen v. California Capital Insurance Company et al Case 2:22-cv-00177-TOR Doc. 146 ECF No. 146 filed 09/25/23 PageID.3924 Page 1 of 15 1 2 3 4 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 6 7 JOSIE NIELSEN, a single woman, NO. 2:22-CV-0177-TOR 8 9 10 Plaintiff, ORDER DENYING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT v. 12 CALIFORNIA CAPITAL INSURANCE COMPANY, a foreign corporation, and EAGLE WEST INSURANCE COMPANY, a foreign corporation, 13 Defendants. 11 14 BEFORE THE COURT is Defendants’ Motion for Partial Summary 15 Judgment (ECF No. 61). This matter was submitted for consideration without oral 16 argument. The Court has reviewed the record and files herein, the completed 17 briefing, and is fully informed. For the reasons discussed below, Defendants’ 18 motion for summary judgment (ECF No. 61) is DENIED. 19 BACKGROUND 20 This case arises out of a dispute between Plaintiff Josie Nielsen and her ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 1 Dockets.Justia.com Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3925 Page 2 of 15 1 underinsured motorist (“UIM”) insurance provider, California Capital Insurance 2 Company, and its subsidiary Eagle West Insurance Company (together, “CIG”). 3 ECF No. 59-3 at 2. Plaintiff’s amended complaint asserts that Defendants 4 breached their contract, violated the Insurance Fair Conduct Act (“IFCA”) and 5 Consumer Protection Act (“CPA”), negligently handled Plaintiff’s claim, and 6 failed to act in good faith. ECF No. 13 at 11-14. Plaintiff also sought an award of 7 attorney’s fees and costs for the breach of contract pursuant to Olympic S.S. Co., 8 Inc. v. Centennial Ins. Co., 117 Wash.2d 37 (1991). Id. at 11, ¶ 5.8. 9 Defendants move for partial summary judgment on Plaintiff’s CPA claims 10 and request for an award of attorney’s fees under Olympic S.S. Co., 117 Wash.2d 11 37. ECF No. 61. As such, the Court recounts the following facts in the light most 12 favorable to the Plaintiff. See Scott v. Harris, 550 U.S. 372, 378 (2007) (holding 13 that courts must view the facts and draw reasonable inferences in the light most 14 favorable to the party opposing the summary judgment motion). 15 On June 21, 2017, Plaintiff was injured in a vehicle crash when the Jeep 16 Cherokee her then-boyfriend was driving swerved off-road to avoid hitting a deer. 17 ECF No. 44-1 at 3-4. The vehicle rolled over twice, and the airbags did not 18 deploy. Id. at 5. Plaintiff suffered multiple injuries, including, most seriously, 19 facet nerve injuries to the neck and a right posterior pelvis and hip injury. ECF 20 ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 2 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3926 Page 3 of 15 1 No. 43 at 3. Plaintiff has had two hip surgeries since the accident. Id. at 3. 2 Plaintiff settled with the at-fault driver in March 2021 for his insurance policy 3 limits of $100,000. ECF Nos. 43 at 4; 71 at 2. On March 15, 2021, Plaintiff 4 submitted a demand letter requesting that Defendants tender her $1,000,000—the 5 policy limit under her UIM coverage—and any remaining personal injury 6 protection (PIP) coverage. Ex. 63-3 at 12. At the time, Plaintiff’s medical specials 7 totaled $83,365.37. Id. at 10. 8 Ten days later, on March 25, 2021, the first adjuster assigned to Plaintiff’s 9 case extended an offer of $195,000. ECF No. 44-7 at 7. On December 16, 2021, 10 Plaintiff rejected the offer, attributing the delay in response to her need for further 11 treatment. ECF No. 44-9 at 2. Plaintiff explained that she had received 12 radiofrequency ablation (“RFA”) treatment in June 2021 to address her chronic 13 bilateral neck pain. Id. at 3. RFA uses an electrical current to damage target nerve 14 fibers, thereby mediating the sensation of pain. ECF No. 44-2 at 3, ¶ 3. Plaintiff, 15 who had only received RFA on one side of her neck, claimed that she would need 16 the procedure on both sides on at least an annual basis. ECF No. 44-9 at 4. 17 Plaintiff alleged that, because of this new treatment, her past medical specials had 18 risen to over $90,000 from the time she submitted her initial demand, her future 19 medical specials were likely to increase by approximately $227,500, and the total 20 value of her claim was now worth $2,450,000. Id. Based on these new figures, ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 3 Case 2:22-cv-00177-TOR 1 ECF No. 146 filed 09/25/23 PageID.3927 Page 4 of 15 she renewed her demand for a payout of the $1,000,000 policy limit. Id. On January 13, 2022, Defendants responded that “there are questions of 2 3 causation and damages” and requested that Plaintiff participate in an independent 4 medical examination (IME). ECF No. 63-8 at 2. Plaintiff then sent a Notice of 5 Violation of IFCA to Defendants, stating that she would file a claim if the matter 6 was not resolved within the next 20 days. ECF No. 63-9 at 3. Nevertheless, 7 Plaintiff underwent an IME with Dr. Michael Battaglia, an orthopedic surgeon 8 hired by Defendants, in May 2022. ECF No. 44-1. Dr. Battaglia agreed that RFA 9 treatment was “within the standard of care,” id. at 10, but disputed the necessity of 10 annual treatments, id. at 10, 15. 11 Based on the competing information from Dr. Battaglia, the newly assigned 12 claims adjuster called Plaintiff to offer $175,000 in “new money.” 1 ECF No. 44- 13 10 at 4. Defendants asserted that this brought the total offer to $303,212.17 when 14 the $100,000 from the at-fault driver, medical expenses, and PIP payments were 15 included. Id. 16 // 17 18 1 Plaintiff defines “new money” as “additional payment that already takes 19 into account any payment under personal injury protection coverage and the 20 amount the at-fault driver paid.” ECF No. 51 at 6, ¶ 29. ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 4 Case 2:22-cv-00177-TOR 1 ECF No. 146 filed 09/25/23 PageID.3928 Page 5 of 15 Plaintiff answered that she believed her claim was worth more than that, but 2 that she would accept the $175,000 as a minimum agreed-upon amount for the 3 time being while continuing to pursue a higher award. ECF Nos. 43 at 7, 44-8 at 5. 4 The claims adjuster responded that Defendants would not be advancing the 5 $175,000 because it did not represent an agreed-upon value. ECF No. 44-8 at 5; 6 44-10 at 4. Defendants added that they were open to further discussion, but that 7 any further mediation would require “a meaningful move off the policy limits.” Id. 8 at 1. 9 On June 30, 2022, Plaintiff filed suit in Stevens County Superior Court, 10 asserting claims for breach of contract, negligent claims handling, violations of 11 IFCA, and violations of the CPA. ECF No. 1-2; see also ECF No. 13. Defendants 12 removed the action to District Court for the Eastern District of Washington on July 13 25, 2022. ECF Nos. 1, 3. 14 15 16 DISCUSSION I. SUMMARY JUDGMENT STANDARD The Court may grant summary judgment in favor of a moving party who 17 demonstrates “that there is no genuine dispute as to any material fact and that the 18 movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In ruling 19 on a motion for summary judgment, the court must only consider admissible 20 evidence. Orr v. Bank of America, NT & SA, 285 F.3d 764 (9th Cir. 2002). The ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 5 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3929 Page 6 of 15 1 party moving for summary judgment bears the initial burden of showing the 2 absence of any genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 3 317, 323 (1986). The burden then shifts to the non-moving party to identify 4 specific facts showing there is a genuine issue of material fact. See Anderson v. 5 Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). “The mere existence of a scintilla 6 of evidence in support of the plaintiff’s position will be insufficient; there must be 7 evidence on which the jury could reasonably find for the plaintiff.” Id. at 252. 8 For purposes of summary judgment, a fact is “material” if it might affect the 9 outcome of the suit under the governing law. Id. at 248. Further, a dispute is 10 “genuine” only where the evidence is such that a reasonable jury could find in 11 favor of the non-moving party. Id. The Court views the facts, and all rational 12 inferences therefrom, in the light most favorable to the non-moving party. Scott v. 13 Harris, 550 U.S. 372, 378 (2007). Summary judgment will thus be granted 14 “against a party who fails to make a showing sufficient to establish the existence of 15 an element essential to that party’s case, and on which that party will bear the 16 burden of proof at trial.” Celotex, 477 U.S. at 322. 17 II. 18 CONSUMER PROTECTION ACT CLAIMS In her amended complaint, Plaintiff sought recovery under the CPA, RCW § 19 19.86, alleging that Defendants’ improper claims-handling conduct caused injury 20 to her business or property. ECF No. 13 at 14, ¶ 9.7. In their motion for summary ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 6 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3930 Page 7 of 15 1 judgment, Defendants argue that Plaintiff admitted she was not claiming wage loss 2 or damage to property in her discovery responses. ECF No. 61 at 3. They add 3 that, while Plaintiff claimed in the same responses that she owned or maintained a 4 business, her business is self-admittedly irrelevant to her CPA claims. Id. at 4. 5 Plaintiff responds that Defendants’ requests for admissions were non- 6 specific, because they did not define a “claim [for] damage to property.” ECF No. 7 87 at 4; see also ECF No. 90 at 2, ¶¶ 2-3. To her understanding, an injury to 8 property under the CPA is unrestricted to a commercial or business injury and may 9 include losses resulting from unpaid insurance benefits for personal injury 10 damages, as well as expenses incurred by a plaintiff in investigating a deceptive act 11 or practice. Id. at 7-10. She explains that since Defendants have not paid her any 12 insurance benefits to date and failed to reasonably investigate her insurance claim, 13 summary judgment is inappropriate at this stage. Id. at 8-9. She further asks that if 14 the Court finds her answer to Defendants’ requests for admissions dispositive on 15 this claim, she be permitted to withdraw or amend those answers under Fed. R. 16 Civ. P. 36(b) to “clarify that she does not make an insurance claim for ‘property 17 damage,’ but . . . does assert she was injured under the CPA based on her unpaid 18 insurance benefits and . . . investigative costs.” Id. at 12. 19 20 A person injured in their business or property by a violation of the CPA may bring a civil action may sue to enjoin further violations and to recover actual ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 7 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3931 Page 8 of 15 1 damages, treble damages, and reasonable attorney’s fees. RCW § 19.86.090. “In a 2 private cause of action, the CPA requires a plaintiff to prove five elements: ‘(1) an 3 unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) 4 affecting the public interest, (4) injury to a person’s business or property, and (5) 5 causation.’” Young v. Toyota Motor Sales, U.S.A., 9 Wash. App. 2d 26, 33 (2019) 6 (quoting Panag v. Farmers Ins. Co. of Wash., 166 Wash.2d 27, 37 (2009)). The 7 parties dispute here whether Plaintiff has properly identified an injury to her 8 “property” under the fourth element.2 9 In recent years, Washington State courts have clarified what constitutes 10 injury to “property” under the CPA. In Ambach v. French, the state supreme court 11 refused to allow a plaintiff who was injured during a surgical procedure to recover 12 under the CPA, explaining that her personal injury damages were non- 13 compensable because they did not constitute an injury to her “business or 14 property.” 167 Wash.2d 167, 173-74 (2009); see also Dees v. Allstate Ins. Co., 15 933 F.Supp.2d 1299, 1311 (W.D. Wash. 2013) (holding that a plaintiff could not 16 recover the cost of her medical bills from an insurer under the CPA). However, in 17 Peoples v. United Servs. Auto. Ass’n, the court appeared to embrace a more 18 19 20 2 Plaintiff appears to accede that Defendants did not injure her “business” within the meaning of the CPA. ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 8 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3932 Page 9 of 15 1 expansive definition of an injury to property. 194 Wash.2d 771 (2019). There, the 2 court considered a certified question from the District Court for the Western 3 District of Washington regarding whether plaintiffs could maintain CPA suits 4 against their insurance carriers for wrongful denials of PIP payments. Id. at 776. 5 The court held they could, explaining, 6 7 8 Ambach does not apply here because the plaintiffs do not seek to hold their insurance companies liable for their underlying personal injuries. Instead, they seek to hold their insurance companies liable for benefits owed under contract. We conclude that the deprivation of contractedfor insurance benefits is an injury to “business or property” regardless of the type of benefits secured by the policy. 9 10 Id. at 779; see also id. at 780 (“Claims mishandling and wrongful denial of benefits 11 invade [an insured’s] property interest, regardless of the type of event that triggers 12 coverage.”). 13 Cases following Peoples have allowed plaintiffs to maintain an action 14 against their insurer under the CPA for the wrongful denial of insurance benefits 15 even when the denial of benefits is not exclusively based on PIP coverage. See W. 16 Beach Condo. v. Commonwealth Ins. Co. of Am., 11 Wash. App. 2d 791, 805 17 (2020), rev. denied, 195 Wash.2d 1026 (2020) (“[R]ecoverable damages under 18 both IFCA and the CPA can include policy benefits that were unreasonably denied, 19 subject to the policy’s limits and other applicable terms and conditions.”). For 20 example, in Santiago v. GEICO Advantage Ins. Co., a plaintiff injured in a car ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 9 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3933 Page 10 of 15 1 accident sought approximately $76,000 in medical expenses and general damages 2 from her UIM insurer. C22-1370RSL, 2023 WL 5802523 at *2 (W.D. Wash. Sep. 3 7, 2023) (unreported). The court agreed that plaintiff had stated a claim under the 4 CPA, explaining that the disputed sum which she sought under the terms of her 5 contract qualified as an injury to property. Id. at *4. The Ninth Circuit reached a 6 similar result in Hopkins v. Integon Gen. Ins. Co., concluding that the plaintiff, 7 who claimed he was improperly denied reimbursement in approximately $900 of 8 expenses that exceeded his PIP coverage, established injury to property under the 9 CPA. No. 21-35196, 2022 WL 851750, at *2 (9th Cir. Mar. 22, 2022) 10 11 (unreported). Taking all facts and inferences in the light most favorable to Plaintiff, the 12 Court finds that she has stated a cognizable CPA claim. Although Plaintiff’s 13 demand for her policy limits stems from a personal injury, her allegations are 14 better characterized as a demand for benefits than a personal injury claim. See 15 Panag v. Farmers Ins. Co. of Washington, 166 Wash.2d 27, 57 (2009) (defining 16 personal injuries as “damages for mental distress, embarrassment, and 17 inconvenience.”). Further, the Court is unpersuaded at this time by the argument 18 that Plaintiff’s answer to Defendants’ requests for admission were completely 19 dispositive of her CPA claims. In view of the wider allegations of Plaintiff’s 20 complaint, a genuine issue of material fact exists as to whether Plaintiff intended ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 10 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3934 Page 11 of 15 1 her answer to mean that she had not suffered an injury to property via Defendants’ 2 refusal to tender her policy limits. See ECF No. 90 at 2, ¶ 2. Accordingly, the 3 Court denies Defendants’ motion for summary judgment on Plaintiff’s CPA claims 4 insofar as those allegations make a claim for wrongful denial of benefits. 5 Relatedly, Plaintiff also maintains that she should be permitted to pursue a 6 CPA action for the investigative expenses she incurred in hiring an insurance 7 expert, Robert Dietz, to evaluate her claim and payments made to her physician, 8 Dr. Patrick Soto, for preparing opinions related to her claim to send to Defendants. 9 ECF No. 90 at 2, ¶ 3. Defendants answer that Plaintiff’s expenses are not true 10 investigative expenses, but instead expenses incurred in litigation, which do not 11 qualify as cognizable injuries under the CPA. ECF No. 112 at 2-3. 12 Defendants correctly observe that Washington law distinguishes between 13 litigation expenses and investigative expenses incurred in pursuing a CPA action. 14 Panag, 166 Wash.2d at 62-63. In drawing this distinction, courts have generally 15 characterized “litigation expenses” as those incurred in determining whether a 16 defendant’s conduct gives rise to an actionable legal claim, whereas “investigation 17 expenses” involve investigation of a deceptive business practice. See, e.g., Ten 18 Bridges, LLC v. Midas Mulligan, LLC, 522 F.Supp.3d 856, 873 (W.D. Wash. 19 2021) (holding that expenses incurred in bringing the claim are not a cognizable 20 injury, but investigative expenses resulting from a deceptive business practice ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 11 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3935 Page 12 of 15 1 establish injury under the CPA); see also, e.g., Universal Life Church Monastery 2 Storehouse v. Am. Marriage Ministries, C19-0301RAJ, 2022 WL 2317439, at *5 3 (W.D. Wash. June 28, 2022) (slip op.) (“[A]lthough expenses incurred in bringing 4 the WCPA claim itself are not cognizable, ‘[i]nvestigation expenses and other 5 costs resulting from a deceptive business practice sufficiently establish injury.’” 6 (quoting Panag, 166 Wash.2d at 62)); see also Spicher v. Am. Family Mutual Ins. 7 Co., S.I., C22-1116 MJP, 2023 WL 5634210, at *5 (W.D. Wash. Aug. 31, 2023) 8 (costs incurred in anticipation of litigation are non-compensable). Additionally, 9 “[i]f the investigative expense would have been incurred regardless of whether a 10 violation existed, causation cannot be established.” Panag, 166 Wash.2d at 64 11 (citations omitted). 12 Any argument by Plaintiff that Dr. Soto’s initial opinion regarding her need 13 for future RFA treatment is unaccepted because that expense would have been 14 incurred regardless of Defendants’ allegedly improper final offer or not— 15 Plaintiff’s reported need for further bilateral neck pain relief procedures could not 16 have necessarily been known to Defendants without Plaintiff’s disclosure. At 17 minimum, however, a genuine issue of material fact exists as to whether Dr. Soto’s 18 reply to Dr. Battaglia’s IME report and Mr. Dietz’s evaluation of Defendants’ 19 alleged insurance malpractice related to the investigation of an unfair act or 20 ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 12 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3936 Page 13 of 15 1 practice separate from the instigation of her CPA claim. As such, the Court denies 2 Defendants’ motion for summary judgment as to Plaintiff’s CPA claim. 3 II. 4 REQUEST FOR ATTORNEY’S FEES Defendants also ask the Court to dismiss Plaintiff’s claims for recovery of 5 attorney’s fees under Olympic S.S. Co., Inc., 117 Wash.2d 37, and its progeny, 6 which have provided an equitable basis for successful claimants to recover 7 attorney’s fees when an insurer wrongfully denied coverage. See ECF No. 61 at 8 11-12 (listing cases). Defendants maintain that they have never denied coverage, 9 but only disputed the value of Plaintiff’s claim. Id. at 13. Plaintiff responds that 10 Defendants are improperly asking the Court to prejudge the issue because the jury 11 will have to resolve multiple coverage issues, including its failure to pay her 12 undisputed benefits and whether their offer denied coverage for her future medical 13 care. ECF No. 87 at 14-15. 14 Under Olympic Steamship, a plaintiff is entitled to a fee award when the 15 insurer’s actions compel the claimant to “file a suit for damages to obtain the 16 benefit of its insurance contract.” Olympic S.S. Co., 117 Wash.2d at 52-53. 17 However, the rule is only available where the plaintiff-claimant “is required to 18 litigate an issue of coverage, as opposed to the value of the claim.” See Little v. 19 King, 147 Wash. App. 883, 891 (2008). 20 ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 13 Case 2:22-cv-00177-TOR ECF No. 146 filed 09/25/23 PageID.3937 Page 14 of 15 1 At this time, the Court finds that material issues of fact pervade as to 2 whether Defendants denied Plaintiff coverage with respect to Plaintiff’s claim for 3 future medical treatment. It is true that Defendants and their agents have always 4 acceded that Plaintiff’s UIM coverage was in full force at the time of the incident 5 and that Plaintiff was entitled to some undetermined benefits under the terms of 6 that contract. See, e.g., ECF No. 82-1 at 12. However, the nominal acceptance of 7 coverage does not eliminate the question of whether Plaintiff is entitled Olympic 8 Steamship attorney’s fees because a significant part of Defendants’ refusal to pay 9 Plaintiff the full policy limit under the contract stems from their difference of 10 opinion regarding Plaintiff’s entitlement to future RFA treatment. Viewing the 11 facts in the light most favorable to Plaintiff, a reasonable finder of fact could 12 conclude that Defendants’ valuation of the claim was based on a denial of 13 Plaintiff’s entitlement to coverage for future treatments. Accordingly, the question 14 of whether Plaintiff is entitled to attorney’s fees under Olympic S.S. is better 15 reserved for after the jury has determined Plaintiff’s need for future medical 16 treatments. 17 ACCORDINGLY, IT IS HEREBY ORDERED: 18 19 1. Defendants’ Motion for Partial Summary Judgment (ECF No. 61) is DENIED as to Plaintiff’s CPA claim. 20 ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 14 Case 2:22-cv-00177-TOR 1 ECF No. 146 filed 09/25/23 PageID.3938 Page 15 of 15 2. Defendants’ Motion for Partial Summary Judgment (ECF No. 61) is 2 DENIED as to Plaintiff’s request for attorney’s fees under Olympic S.S. 3 Co. v. Centennial Ins. Co., 117 Wash. 2d 37 (1991). 4 5 6 The District Court Executive is directed to enter this Order and furnish copies to counsel. DATED September 25, 2023. 7 8 THOMAS O. RICE United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ~ 15
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