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Bauman v. American Commerce Insurance Co.

United States District Court, W.D. Washington, Seattle

February 16, 2017

LOUANN BAUMAN, et al., Plaintiffs,
v.
AMERICAN COMMERCE INSURANCE COMPANY, Defendant.

          ORDER DENYING MOTION FOR RECONSIDERATION

          Barbara Jacobs Rothstein U.S. District Court Judge

         This matter is currently before the Court on Defendant's Motion for Reconsideration. (Dkt. No. 114.) The Court, having reviewed Defendant's pleadings, Plaintiffs' responsive briefing and having thoroughly examined the recent Washington Supreme Court ruling which forms the basis of Defendant's request, rules as follows:

         IT IS ORDERED that the motion for reconsideration is DENIED.

         Discussion

          The essence of Defendant's motion is that a recent decision by the Washington Supreme Court - Perez-Cristanos v. State Farm Fire and Casualty Co., Cause No. 92267-5 - dictates the dismissal of Plaintiffs' entire lawsuit, an action which comprises claims for violations of the Insurance Fair Conduct Act (“IFCA”), the Washington Consumer Protection Act (“CPA”) and the tort of bad faith. See Dkt. No. 1, Complaint at ¶¶ 5.1 - 5.12.

         A. The Perez-Cristanos Decision

         Perez-Cristanos bears some surface similarities to the facts of this case. It involves a claim by a plaintiff-insured for Underinsured Motorist (“UIM”) coverage under his contract with a defendant-insurer. While Plaintiff received the PIP benefits he claimed under his policy, when he failed to receive payment on his UIM coverage he took the matter to arbitration, where he received an award which exceeded the amount he had been compensated under the other provisions of his insurance policy. His suit against his insurance company included claims for IFCA and CPA violations, as well as tortious bad faith.

         On appeal, the Washington Supreme Court upheld the trial court's dismissal of all claims against the insurer. The opinion first examines the IFCA statute to discern whether violations of the state insurance regulations (specifically, the violations listed in subsection (5) of RCW 48.30.015) will suffice to establish an IFCA violation. The high court concluded that

IFCA explicitly creates a cause of action for first party insureds who were “unreasonably denied a claim for coverage or payment of benefits”… [but] IFCA was not meant to create a cause of action for regulatory violations.

Perez-Cristanos at 12. The opinion examines evidence of legislative intent, ballot language, even the Washington Pattern Jury Instruction for an IFCA claim and comes to the narrowly-drawn conclusion that “IFCA does not create an independent cause of action for regulatory violations.” Id. at 17.

         Turning to the remainder of Perez-Cristanos' claims, the Washington Supreme Court finds their dismissal appropriate on the ground that no material facts were in dispute and the insurance company prevailed as a matter of law. Regarding the bad faith claim, the state court ruled that “[t]he fact State Farm paid PIP benefits [based on the same facts on which it denied UIM benefits] is not sufficient to create a material question of fact that State Farm violated insurance regulations by rejecting some of Perez-Cristanos's UIM claim.” Id. at 18-19. The CPA claim was similarly lacking. Had Perez-Cristanos been able to present evidence of a regulatory violation, he would have established “a per se unfair trade practice by virtue of the legislative declaration in RCW 19.86.170.” Id. at 19. But, having “failed to present a genuine issue that [State Farm] violated any provision” of the insurance regulations, Perez-Cristanos failed to establish the possibility of fundamental proof of his CPA claim, and thus it was also properly dismissed. Id. Concerning the Baumans' case, the Court notes preliminarily that Plaintiffs have restricted neither their legal theory nor their proof solely to a violation of the insurance regulations, as was the case in Perez-Cristanos.

         B. IFCA Claim

         Regarding the IFCA cause of action, Defendant asserts that Perez-Cristanos holds that “any claim under IFCA requires a denial of coverage;” there being no denial of coverage in this matter, “this Court must dismiss Plaintiffs' IFCA claim.” (Motion at 3.) Plaintiffs disagree, and so does the Court.

         Nowhere in the Perez-Cristanos opinion does the Washington Supreme Court hold there is no IFCA claim without a denial of coverage. More importantly (as the state high ...


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