Appeal from Superior Court of King County. Docket No: 94-2-21151-0. Date filed: 04/17/95.
Petition for Review Granted June 3, 1997,
Authored by Ronald E. Cox. Concurring: C. Kenneth Grosse, Ann L. Ellington
The opinion of the court was delivered by: Cox
COX, J.-- Dien Tran appeals an order granting summary judgment of dismissal of his claim against State Farm Fire and Casualty Company for losses resulting from a burglary. There is a genuine issue of material fact whether State Farm suffered actual prejudice caused by Tran's failure to cooperate. We therefore reverse the summary judgment order and remand for further proceedings.
In late August 1992, Tran reported to the police a burglary at a business he operated under the name of Tran Communications. The business sold and serviced pagers and cellular telephones. It was open during evenings and on weekends. Tran worked full-time as an engineer at Boeing.
The police report indicates that the side door of the business was kicked in and tennis shoe prints were on the outside of the damaged door. Tran told the police officer that the inside of the business appeared normal and that nothing seemed out of place. He also stated that he did not know if anything was missing.
The next day, Tran reported the burglary to State Farm Fire and Casualty Company. He claimed property damage, theft of business inventory and personal items, and lost income. State Farm had issued a business policy insuring Tran, "d/b/a Tran Communications," for personal property and loss of income, as well as for liabilities not relevant to this appeal.
Two days after Tran reported the burglary, Mary Woodman, a State Farm claim representative, interviewed him by telephone regarding his claim. She taped the telephone conversation, and a transcript of that tape is in the record. Tran stated that when he arrived at his business and discovered the burglary, he noticed that a display pager unit and some phone units on the front counter were gone. Tran was reluctant to itemize the losses over the telephone, stating that it would be easier for the representative to look at a form Tran had completed. During the telephone interview, Tran also mentioned other missing items. His verbal list of stolen items was preliminary, since he had not yet been able to check the stockroom for other losses.
A few days after the telephone interview, Woodman sent Tran a Personal Property Inventory Form (PPIF) to complete and return along with documentation supporting the inventory of losses e.g., canceled checks, receipts, or invoices. Wesley Bye, a claims specialist, stated that he telephoned Tran three times in the next month to follow up on the forms and to schedule an interview, but Tran did not reply to the messages Bye left. When Tran did not answer another call in mid-October, Bye sent a proof of loss form and a second PPIF.
In November 1992, Tran submitted the sworn statement and inventory but did not provide any supporting documentation for the claimed items. Bye claims to have tried unsuccessfully five times after receipt of the proof of claim to reach Tran by telephone to obtain documentation of the inventory values and schedule an inspection of the shop. After sending a letter to Tran in late December requesting contact, Bye reached Tran by telephone the following day. In that call, Tran agreed to meet Bye in the local State Farm office on January 5, 1993, to discuss the claim and record another statement.
On the day of the scheduled appointment, Bye received a letter from Tran's attorney advising him that neither Tran nor the attorney would attend the meeting. Instead, they would reschedule the meeting after reviewing a transcript of Tran's August 26 statement to Woodman.
State Farm then retained counsel to assist in confirming that Tran's claim was not fraudulent. In January 1993, State Farm's counsel sent Tran's counsel a letter requesting various documentation regarding the loss. The stated purpose of the request was to assist in preparation for an examination under oath of Tran pursuant to the policy. The letter included an exhaustive request for information regarding Tran's business and personal finances. *fn1 There was no reply to this letter.
In mid-February, State Farm's counsel sent another letter that reiterated the requests. This letter warned that failure to comply with the document request could constitute a breach of the policy conditions and result in denial of the claim. A few days later, Tran's counsel forwarded various documents regarding Tran Communications and the claimed losses, including invoices and product brochures. Tran refused to provide any financial information.
Counsel for the respective parties exchanged further correspondence regarding scheduling Tran's examination under oath and whether Tran must disclose his financial records. Tran advised State Farm that he would drop his claim for loss of business income. Tran took the position that dropping this claim made "any inquiry into his financial affairs . . . irrelevant and unduly intrusive." In early March, State Farm inspected the burglary site.
The examination under oath occurred in May 1993. Tran refused to answer any questions regarding his finances or to produce any financial records. In mid-June, State Farm renewed its request for Tran's personal and business financial records but received no reply.
State Farm then denied Tran's claim. It stated that he was in breach of the policy conditions by failing "to provide documents and to otherwise cooperate" with the investigation.
In August 1994, Tran commenced this action. He seeks declaratory relief as to the construction of the insurance policy provisions together with damages, attorney fees, costs, and other relief under the Consumer Protection Act. State Farm moved for summary ...