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Evergreen Collectors v. Holt

January 9, 1991


Alexander, J. Worswick, C.j., and Morgan, J., concur.

Author: Alexander

Larry and Teresa Holt appeal an order of the Pierce County Superior Court vacating a judgment of the Pierce County District Court that the Holts had earlier obtained against Evergreen Collectors. They contend that the Superior Court erred in concluding that Evergreen did not violate the Consumer Protection Act when it persisted in its attempt to recover attorney's fees from the Holts despite the fact that the underlying lawsuit between the Holts and Evergreen had been settled. We reverse.

The material facts of this case are not in dispute. In early 1986, the Holts sought to obtain an automobile insurance policy from their insurance agents, Rhymes and Carlson (Rhymes). Rhymes eventually obtained a policy for the Holts from Superior Underwriters but did not immediately inform the Holts that they had coverage under the policy.

It was only when the Holts were billed $297 that they became aware of the claimed coverage.

The Holts refused to pay the entire premium and submitted a complaint to the State Insurance Commissioner. They contended that they were not covered by the insurance policy with Superior until such time as they learned of the coverage and, consequently, were not obligated to pay the entire amount Superior was requesting. In a letter to the Holts, the Commissioner indicated that the policy with Superior was in effect. The Commissioner agreed, however, with the Holts' assertion that the term of the coverage was less than that claimed by Superior. The Holts apparently did not receive the Commissioner's decision immediately and only learned of it in August 1986 when Rhymes indicated that the Holts owed the entire premium of $297.

The Holts did not pay the premium and Rhymes, therefore, assigned the claim to Evergreen Collectors for collection. Evergreen notified the Holts that they owed $297 plus $2.97 in interest. Teresa Holt responded to Evergreen's notice in writing and indicated that the Holts disputed the obligation. Evergreen then brought suit against the Holts in Pierce County District Court to collect $299.97. Before trial the Holts and Evergreen's attorney reached an agreement that if the Holts would pay Evergreen $229, Evergreen would dismiss the lawsuit. The Holts paid Evergreen that amount and requested that Evergreen send a copy of the dismissal order to them before they were required to answer the complaint in order to avoid having a default judgment entered against them.

Having failed to receive a copy of the dismissal order on the day before their answer was due, the Holts filed their answer with the Pierce County District Court. One year eight months after the answer was filed, Evergreen sought a trial date. Larry Holt then telephoned Evergreen's manager and was informed that Evergreen's purpose in setting the case for trial was to recoup its costs. The manager said that he could not and would not tell the Holts the exact amount of these claimed costs. He did tell Larry Holt, however,

that if the Holts pursued this case to trial rather than paying the additional costs, Evergreen would recover an additional amount of $200 for their attorney's fees.

The case proceeded to trial before a Pierce County District Court commissioner. The commissioner concluded that the parties had reached an accord and satisfaction when the Holts agreed to pay the $229 in return for Evergreen's agreement to dismiss the lawsuit. From this finding, the commissioner concluded that there was no basis for Evergreen's threat to recover attorney's fees and that in doing so, Evergreen violated the Consumer Protection Act. A judgment in favor of the Holts for their damages was entered against Evergreen in the amount of $1,000, together with an attorney's fee of $1,774.

Evergreen appealed the District Court judgment to the Pierce County Superior Court. It claimed there that the District Court erred in (1) awarding damages as no damages were, in fact, proved; (2) finding a violation of the Consumer Protection Act; and (3) awarding attorney's fees. The Superior Court vacated the District Court judgment, concluding that the activities of Evergreen did not constitute a violation of the Consumer Protection Act because they all occurred after the lawsuit was filed and, therefore, the matter was a private dispute under the control of the courts.

[1] The Consumer Protection Act declares "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . ." to be unlawful. RCW 19.86.020. A claim under the act may be asserted on either of two bases: "[1] a per se violation of a statute or [2] on unfair or deceptive practices unregulated by statute but involving the public interest." Blake v. Federal Way Cycle Ctr., 40 Wash. App. 302, 308, 698 P.2d 578, review denied, 104 Wash. 2d 1005 (1985). A ...

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