Archives: Legal Developments – Washington

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Policyholders Must Be “Made Whole” Before Insurers Recover Payments From Third Parties

The Washington Supreme Court recently issued a decision strongly reiterating the “made whole” doctrine under Washington law, which provides that an insurer cannot exercise its right of reimbursement from a third party who injured its insured, until the insured itself has been made whole by recovery of damages or losses it has incurred. In Daniels … Continue Reading

Does the Causation-Trigger Wording of an Additional Insured Endorsement Matter?

When two companies agree to work together, they will try to allocate the risk of something going wrong to the company that’s in the best position to prevent that from happening. For example, in the construction industry a general contractor will usually try to push risks from construction defects onto the subcontractors. That risk-transfer usually … Continue Reading

Allocation-Process Information Shielded by Mediation Privilege, not Available to Insurer: Wash. Fed. Court

In a decision with important implications for “long-tail” environmental contamination coverage claims in the Northwest, a federal court in Washington state has held that information from a confidential “allocation” proceeding in a Superfund site does not need to be produced to an insurer for one of the parties. The decision provides comfort to those hoping … Continue Reading

In Extraordinary Ruling, Washington Supreme Court Applies “Efficient Proximate Cause” Rule to Liability Coverage Dispute

On April 27, the Washington Supreme Court created a significant new wrinkle in how courts will approach liability insurance disputes involving policy exclusions. In Xia v. ProBuilders Specialty Insurance Co. RRG, the Court applied the “efficient proximate cause” rule to a third-party liability case for the first time, a move that may effectively render most … Continue Reading

Washington Federal Court Confirms That EPA General Notice Letters Trigger the Duty to Defend

The United States District Court for the Western District of Washington recently held that several insurers breached their insurance contracts when they refused to defend their insureds against letters from the EPA and the Washington State Department of Ecology identifying them as potentially liable parties at a Washington Superfund site. King Cty. v. Travelers Indem. … Continue Reading

Washington Supreme Court Narrows Scope of the Insurance Fair Conduct Act

In a decision issued last week, the Washington Supreme Court narrowed the possible relief available to policyholders who are harmed by insurer misconduct, holding that a claim cannot be brought under the Insurance Fair Conduct Act based on claims handling, unless there has been an actual denial of coverage. In 2007, Washington enacted the Insurance … Continue Reading

Washington Court Limits Coverage by Estoppel When Insured’s Assets Are Not at Risk

Many tort lawsuits are resolved by an insured defendant’s stipulating to a judgment in favor of the plaintiff, and the plaintiff’s agreeing not to execute on the judgment against any of the defendant’s assets except for its insurance.  Simultaneously, the defendant typically assigns its claims against its insurer to the settling plaintiff, who then pursues … Continue Reading

If You Purchase Contaminated Property, Is It Covered?

Can a policyholder that knowingly purchases contaminated property be covered for the costs of cleaning up that property under policies of insurance issued before the purchase? Yes, according to a new unpublished decision from the Washington Court of Appeals. In 1999, the Port of Longview purchased property that had been used from the 1950s through … Continue Reading

In Washington, Coverage for Sole Proprietorship Must Include Broad Definition of “Insured”

I ran across a cautionary tale recently in a new Washington federal-court decision in Staheli v. Chicago Insurance Company. The lesson: in Washington, or any other community-property state, a liability policy covering a sole proprietorship must define “insured” broadly to cover the spouse of the proprietor. This is a cautionary tale for insurance agent/brokers as much … Continue Reading

Different Approaches to the Duty to Defend in Oregon and Washington

Oregon and Washington are often viewed as sister states, similar in their climates, policies and attitudes. Yet, while the two states share a border and a uniquely Pacific Northwest culture, their approaches to insurance law differ greatly. In particular, the legal protections to prevent insurers from wrongfully refusing to defend a policyholder against a covered … Continue Reading

Washington Federal Court Goes Where None Have Gone Before on Excess Carrier Bad Faith

Late last month, the United States District Court for the Western District of Washington faced an issue that appears never to have been addressed in Washington or any other state: Whether a policyholder may pursue a bad faith claim against its excess insurance carrier for refusing to defend when the insured’s primary carrier is insolvent. … Continue Reading

Insurer Sues to Terminate Defense of Premera Cyber Breach

On December 8, 2015 an insurer for Premera Blue Cross sued to terminate its defense obligation (and any indemnity obligation) in a class-action lawsuit involving the theft of 11 million medical records.  We have previously reported on the massive Premera breach and the many class action lawsuits that followed the breach (now consolidated in Oregon), here.  The … Continue Reading

Duty to Defend Environmental Claims in Washington Is Under Assault

I recently spoke at a CLE, discussing how to tap into insurance for groundwater contamination issues. The Washington Court of Appeals has made that task much harder. In 2014, the Court decided Gull Industries, Inc. v. State Farm Fire & Casualty Co. (“Gull I“), which considered whether an independent cleanup under the Washington Model Toxics … Continue Reading

Washington Policyholders, Check Your Cyber Policy as Data Breach Notification Law Moves Forward

Washington has moved a step closer to bringing its data-breach notification law in line with the laws of many states (including Oregon) that require notification in the majority of scenarios, closing what some viewed as loopholes in the law and mandating notification within 45 days, rather than the prior “as soon as possible” requirement.  (Oregon … Continue Reading

WA Fed Court: “Spin, Massage, Speculation and Sophistry” Do Not Create Duty to Defend

In Wargacki v. Western National Assurance Co. Judge Leighton of the Western District of Washington held that a homeowner’s carrier had no duty to defend a civil suit where the insured shot his pregnant girlfriend, and then shot himself – despite the allegation in the complaint that the boyfriend acted “either negligently, intentionally or recklessly” and that … Continue Reading

Wash. Federal Court Broadly Applies “Ongoing Ops” Exclusions

In a decision from mid-summer, Judge Rice of the Eastern District of Washington – a relatively new judge in a jurisdiction without a lot of coverage decisions – broadly applied what are known as the “ongoing operations” or “business risks” exclusions, completely voiding the damaged party’s recovery, demonstrating the devastating impact that subtle coverage issues … Continue Reading

Wash. Fed. Court Orders Trial on AIG Defense Rates

The long-running federal court litigation between Washington company Coinstar/Redbox and its insurer, AIG, took a turn last week, with good news and bad for the policyholder.  The backstory: Redbox has been sued in several different jurisdictions for collecting information about its customers that it was not permitted to collect; the allegations are, generally, that Redbox … Continue Reading

Washington Federal Court Orders Broad Discovery of AIG Defense Rates

A significant win for policyholders in a discovery dispute over internal carrier records.  AIG and Coinstar/Redbox have been locked in coverage litigation in the Western District of Washington for some time over AIG’s obligation to defend Redbox in several class actions alleging that Redbox has violated privacy laws in its handling of consumer information.  Redbox … Continue Reading

Insurers Trying to Have It Both Ways on ‘First Party’ v ‘Third Party’

Insurance carrier-side lawyers are celebrating the result in Cox v. Continental Casualty Company, a decision out of the Western District of Washington  in which Judge Pechman held that Washington’s Insurance Fair Conduct Act (IFCA) does not apply to claims under liability policies because the policyholder there is not a “first-party claimant,” and IFCA specifically refers to … Continue Reading

Wash. Court of Appeals Gets It Dead Wrong on What Is a “Suit”

Earlier this week Division One of the Washington Court of Appeals issued its much-anticipated decision in the Gull Industries v. State Farm litigation.  The issue was whether a letter from the state equivalent of the EPA constitutes a “suit” under a standard-form legacy GL policy (that is, a policy issued before the ISO form defined “suit”). … Continue Reading

Adjuster Read Canceled Policy, Denied Claim, Committed Bad Faith

One assumption that even many commercial-lines policyholders make is to assume that the insurance adjuster that they are dealing with is an “expert” on their insurance coverage (ref. “You’re in good hands…”).  As if anyone needed one more example that that simply is not a safe assumption to make, read in disbelief the case linked … Continue Reading

Washington Federal Court Permits Deposition of Carrier’s Former Coverage Attorney

On October 30, 2013 Judge Martinez of the Western District of Washington permitted the policyholder in a long-running bad faith case to take the deposition of the carrier’s former coverage counsel, Joanne Henry, about the coverage analysis that she performed for the carrier leading to the carrier denying the tender of defense.  This decision relied … Continue Reading