Grosse, C.j. Swanson, J. Pro Tem., concurs. Winsor, J. Pro Tem., dissents by separate opinion.
William R. Nodell and Shirley E. Nodell (the Nodells), as guardians of Scott Nodell and as assignees of coplaintiffs Dean Chaussee, Carol Chaussee, and Bellewood Corporation (hereinafter collectively referred to as Chaussee), appeal a judgment notwithstanding the verdict (judgment n.o.v.) resulting in the dismissal of their claims for failure to settle an insurance claim within policy limits and for bad faith. The claims are against the respondents Maryland Casualty Company (Maryland), Chaussee's insurer; Reed, McClure, Moceri & Thonn, P.S. (Reed McClure), the law firm Maryland retained to represent Chaussee; and McDonald & McGarry Company (McDonald), Chaussee's insurance agent and broker. Maryland cross-appeals arguing that the trial court erred in denying its motion for a directed verdict because the Nodells did not prove coverage. We affirm the judgment n.o.v., and thus do not reach the issue raised by Maryland's cross appeal.*fn1
In 1979, the Nodells' son Scott was severely injured when his car hit a pole after sliding on an icy road near a condominium construction site. As a result of the accident, Scott is a quadriplegic. In an underlying personal injury action, the Nodells sued Chaussee and King County for negligence in allowing ice to form and remain on a county highway.
Maryland retained Reed McClure to defend Chaussee under a reservation of rights. In March of 1982, Chaussee received interrogatories that requested the amount of the policy's insurance limits. Chaussee answered the interrogatories but left the policy limits question unanswered. A paralegal at Reed McClure contacted Maryland who refused to disclose the policy limits. When Chaussee was again contacted, he suggested the paralegal contact McDonald. The paralegal did so and was told that the policy limits were $500,000 with umbrella coverage of $2 million. In fact, the umbrella coverage was not in effect when
the accident occurred and the policy limits were actually $500,000. Sometime prior to February 1983, several Maryland employees noted the mistake but did not correct the interrogatory answer.
Before the Nodells learned of the mistake, they negotiated a settlement with King County for $1.15 million and demanded the policy limits of $2.5 million from Chaussee. Maryland and Reed McClure then informed the Nodells of the correct policy limits and Maryland agreed to pay $500,000 if the Nodells released Chaussee. The Nodells refused and again demanded that Maryland pay the erroneous policy limits of $2.5 million. When Maryland refused, Chaussee through his private attorney settled with the Nodells. In exchange for a stipulated judgment of $7.5 million with a covenant not to execute, Chaussee assigned his claims against Maryland, Reed McClure, and McDonald to the Nodells. After a hearing on June 28, 1984, a stipulated judgment for $7.5 million was entered against Chaussee. Maryland paid the Nodells the policy limits of $500,000.
The Nodells, as assignees of Chaussee, commenced an action against Maryland asserting claims for negligence, bad faith, misrepresentation, estoppel, fraud, violations of the Consumer Protection Act, breach of implied and express contracts, outrage, and negligent infliction of emotional distress.*fn2 Maryland filed a third party complaint for indemnity against McDonald and Reed McClure. The Nodells then amended their complaint and added McDonald and Reed McClure as additional defendants.
During a 5-week trial witnesses for Maryland and Reed McClure testified regarding their responsibilities and the underlying lawsuit. The Nodells did not present expert testimony on the breach of duty claims or on the reasonableness of the settlement. Neither the consent judgment nor the insurance policy was admitted into evidence. A letter was admitted into evidence which was written by Mr. Wohlford, an attorney with Reed McClure, to the Nodells' attorney stating he had always believed the policy limits were $500,000. When Wohlford testified, however, he denied he knew the interrogatory was incorrect. After the Nodells presented their case, each of the respondents moved for a directed verdict. The trial court denied the motions.
The respondents presented a limited defense. They presented a short section from Dean Chaussee's deposition regarding his knowledge of the policy limits; questioned Chaussee's personal attorney; and then rested. The jury returned a special verdict for the Nodells finding that Chaussee was forced into the settlement with the Nodells as a proximate result of the negligence of the respondents. The trial court granted the respondents' motion for a judgment n.o.v. and dismissed all of the Nodells' claims.
[1, 2] The issue on appeal is whether the trial court properly granted the judgment n.o.v. The Supreme Court has defined the standard for a judgment n.o.v.:
A motion for a judgment n.o.v. should not be granted unless the court can say, as a matter of law, that there is neither evidence nor reasonable inference therefrom sufficient to sustain the verdict. All evidence must be viewed in the light most favorable to the party against whom the motion is made. There must be "substantial evidence" as distinguished from a "mere scintilla" of evidence, to support the verdict -- i.e., evidence of a character "which would convince an unprejudiced, thinking mind of the truth of the fact to which the evidence is directed." A verdict cannot be founded on mere theory or speculation.
(Citations omitted.) Campbell v. ITE Imperial Corp., 107 Wash. 2d 807, 817-18, 733 P.2d 969 (1987) (quoting Hojem v. Kelly, 93 Wash. 2d 143, 145, 606 P.2d 275 (1980)). The trial court granted the judgment n.o.v. because the Nodells did not introduce sufficient evidence to prove damages, that is, the reasonable settlement value of the underlying claim. The trial court reasoned:
I do not believe there was one word of evidence, direct or circumstantial, regarding the reasonable settlement value of the claim 18 months or so ...