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University of Washington v. Government Employees Insurance Co.

Court of Appeals of Washington, Division 1

September 11, 2017

UNIVERSITY OF WASHINGTON, Respondent,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY d/b/a GEICO Indemnity Company, Appellant,

          Trickey, A.C.J.

          The University of Washington obtained a jury verdict against Government Employees Insurance Company (GEICO) for violation of the Consumer Protection Act (CPA), chapter 19.86 RCW. GEICO appeals, arguing that the trial court abused its discretion when it granted the University's motion to amend its complaint to add a CPA claim and erred as a matter of law when it allowed the University to even bring a CPA claim. GEICO also maintains that the trial court abused its discretion when it denied GEICO's motions for judgment as a matter of law, for a new trial, and remittitur; that the jury award was so excessive as to be the result of passion or prejudice; and that the University was not legally entitled to recover attorney fees incurred for pursuing its CPA claim. Finding no error, we affirm.

         FACTS

         In March 2011, Kyle Murphy, a GEICO insured driver, and Officer Ruslan Sattarov, a University of Washington Police Department (UWPD) officer, were in a two-car accident in the University District of Seattle, Washington. Murphy drove his vehicle into an intersection with a green light as Officer Sattarov, responding to a call in his patrol car, entered on a red light. The cars collided. Officer Sattarov's car crashed into the storefront of American Apparel, causing property damage.

         Tyler Lennier was riding in Murphy's car, and UWPD Officer Stefan Pentcholov was Officer Sattarov's passenger. Officer Sattarov's vehicle injured two pedestrians, James Howard and Megatron Lawrence. Murphy's insurance policy had limits of $50, 000 for property damage and $100, 000 for bodily injury per person, up to $300, 000 per occurrence.

         GEICO assigned Andrea Kravitz to be its primary claims adjuster for the incident. The University assigned Wendy Winslow-Nason from its risk management department to handle the claims. Murphy, Lennier, Howard, Lawrence, and American Apparel all became claimants of GEICO.

         In April 2011, Kravitz notified the claimants that GEICO had determined that Murphy bore 60 percent of the fault and the University bore 40 percent of the fault. But Kravitz sent UWPD a letter that stated that Murphy bore 40 percent of the fault and the University bore 60 percent of the fault. Kravitz did not immediately inform the University of this discrepancy.

         Based on GEICO's representation that the University bore 60 percent of the fault, Winslow-Nason negotiated with Kravitz to split liability equally between GEICO and the University (the Agreement). The Agreement would apply to all personal injury and property damage claims. Both sides believed they were improving their position from 60 percent liability to 50 percent.

         Winslow-Nason sent a confirming e-mail to Kravitz, stating, "This confirms that we have agreed to apportion liability 50/50 in regard to this loss."[1] Kravitz acknowledged the e-mail and the Agreement in her claim file.

         In June 2011, Zachary Kozma, a new GEICO claims adjuster assigned to the incident, faxed Winslow-Nason a document disclaiming all liability on behalf of GEICO until he had completed his investigation. The University received the Seattle Police Department's Case Investigation Report (CIR) on July 15, 2011. The CIR concluded that Officer Sattarov's actions were the proximate cause of the collision and attributed liability to the University.

         On July 20, 2011, Winslow-Nason e-mailed Kozma in response to his disclaimer of liability with attached witness statement summaries from the CIR and a redacted copy of the CIR. Kozma confirmed the Agreement after receiving the requested information. It was not until October 2015 that GEICO discovered that Winslow-Nason had access to the complete CIR by July 15, 2011.[2]

         The parties settled three of the outstanding claims under the Agreement. Winslow-Nason continued to evaluate the remaining claims under the assumption that the Agreement between the University and GEICO would apply. In March 2013, Winslow-Nason told Nathan Broderick, GEICO's new claims adjuster, that she valued Lennier's claims as up to $20, 000, and that GEICO would be responsible for half of that value.

          Winslow-Nason agreed to release Murphy from liability in exchange for GEICO reimbursing the University for the Lennier settlement under the Agreement, and Broderick stated that the Lennier settlement amount was acceptable. GEICO's next claims adjuster, Joshua Kipp, confirmed with Winslow-Nason that the University would handle the outstanding settlements and seek 50 percent reimbursement from GEICO.

         In February 2014, Howard filed a lawsuit against GEICO and the University, and Kipp and Winslow-Nason discussed the possibility of jointly defending the suit. Kipp later told Winslow-Nason that GEICO wished to defend the suit with its in-house counsel, but that the parties would cooperate on damages equally.

         In September 2014, Winslow-Nason settled Lawrence's personal injury claim for $19, 500 and the University paid the settlement in full. GEICO refused to reimburse the University. GEICO then refused to honor the Agreement for the Howard and Lennier claims. In October 2014, Winslow-Nason learned from Murphy's lawyer that GEICO was taking the position that it was not liable at all for the incident.

         The University sued GEICO in April 2015. The University alleged that the Agreement was a contract, that GEICO had breached the Agreement, and that the University was entitled to equitable relief. On October 14, 2015, the trial court granted the University's motion for leave to amend its complaint. On October 20, shortly before the trial date, the University filed its amended complaint, which added a claim for violation of the CPA. The University alleged that GEICO's repudiation of the Agreement was an unfair or deceptive act in trade or commerce that affected the public interest. GEICO filed an amended answer on October 28, 2015, which generally denied the University's new claim.

          The trial began on November 4, 2015. Several of the University's claims, including its breach of contract and CPA claims, proceeded to a jury trial. The court reserved decision on the University's equitable claims until after trial. GEICO stipulated that its repudiation of the Agreement occurred in trade or commerce and affected the public interest.

         The Jury returned a verdict finding in part that the Agreement was a binding contract between the parties, that GEICO had breached the Agreement and caused the University $9, 750 in damages, and that GEICO had violated the CPA and caused $300, 000 in damages to the University. Relying on the evidence before the jury, the trial court ruled in favor of the University on its equitable claims.

         The trial court denied GEICO's posttrial motion for new trial or remittur for the CPA claim, and awarded the University $495, 033.75 in attorney fees incurred in pursuing its non-equitable claims.

         GEICO appeals.

         ANALYSIS

         Motion for Leave to Amend Complaint

         GEICO contends that the trial court abused its discretion when it granted the University's motion to amend its complaint to add a claim for violation of the CPA.[3]Because GEICO possessed most of the evidence underlying the University's CPA claim and the CPA claim relied on nearly identical evidence as the University's breach of contract claim, we disagree.

         After a responsive pleading is served, a party may amend its pleading only by leave of the court or by written consent of the adverse party, and such "leave shall be freely given when justice so requires." CR 15(a). A party's response to the amended pleading is due within the shorter of "the time remaining for response to the original pleading or within 10 days after service of the amended pleading." CR 15(a). CR 15 is "'designed to facilitate the amendment of pleadings except where prejudice to the opposing party would result.'" Caruso v. Local Union No. 690,100 Wn.2d 343, 349, 670 P.2d 240 (1983) (quoting United States v. Houqham, 364 U.S. 310, 316, 81 S.Ct. 13, 5 L.Ed.2d 8 (1960)).

         The court should deny a motion to amend a complaint only when the amendment would prejudice the nonmoving party. Wilson v. Horsley, 137 Wn.2d 500, 505, 974 P.2d 316 (1999). Factors relevant to analyzing whether allowing an amendment would prejudice the nonmoving party include undue delay, unfair surprise, and jury confusion. Wilson, 137 Wn.2d at 505-06. A trial court's decision to grant or deny a motion for leave to amend is reviewed for an abuse of discretion. Wilson, 137 Wn.2d at 505.

         The fact that an amendment may introduce a new issue is insufficient, by itself, to require denial of a motion to amend. Bowers v. Good, 52 Wash. 384, 386, 100 P. 848 (1909). Instead, the court examines whether a party would be "prepared to meet the new issue." Bowers, 52 Wash, at 386. If a new claim or issue is added through the amendment, similarities between the elements or evidence relied upon for the existing and new claims weigh against a finding of prejudice. See, e.g., Kirkham v. Smith, 106 Wn.App. 177, 181, 23 P.3d 10 (2001).

         In opposing the University's motion to add a claim for violation of the CPA, GEICO argued that the new claim was unsupported by facts or law. GEICO did not provide specific arguments that it would be prejudiced by the amendment; GEICO focused on the University's alleged lack of justification for the amendment and GEICO's cooperation during discovery.

         The trial court did not abuse its discretion when it granted the University's motion to amend. GEICO was not prejudiced by undue delay because GEICO itself withheld the evidence underlying the University's CPA claim until late in the discovery process.[4] This included internal GEICO documents and correspondence, depositions of GEICO employees and witnesses, and the reneging adjuster's prior history of similar conduct. For a similar reason, GEICO cannot argue undue surprise, as it was aware of the evidence it held and it cannot rationally be surprised by the addition of a new claim relying on that evidence following its disclosure.

         Further, the University's breach of contract and CPA claims relied on nearly identical testimony and evidence. In a breach of contract action, the plaintiff must prove that a valid agreement existed between the parties, the agreement was breached, and the plaintiff was damaged. Lehrer v. State. Dep't of Social & Health Servs., 101 Wn.App. 509, 516, 5 P.3d 722 (2000). To prevail on a private CPA claim, a plaintiff must establish that the defendant engaged in "(1) [an] unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; (5) causation." Hangman Ridge Training Stables. Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986). Breach of a private contract may affect the public interest and, thus, be actionable under the CPA. Hangman Ridge, 105 Wn.2d at 790.

         The University's breach of contract and CPA claims both required a showing of damages and causation. GEICO stipulated that its act of repudiating the Agreement occurred in trade or commerce and affected the public interest. Thus, the only difference between the University's breach of contract and CPA claims was whether the breach of the Agreement was an unfair or deceptive act or practice within the meaning of the CPA. Because the unfair or deceptive practice element of the University's CPA claim was based on the breach of the Agreement and GEICO stipulated that its act occurred in trade or commerce and affected the public interest, we conclude that the difference between the elements of the claims is insufficient to show that GEICO would not be prepared to meet the new issue at trial.

         GEICO argues that the trial court manifestly abused its discretion because the University filed its motion to amend after the discovery cutoff, the trial court refused to reopen discovery, the amended complaint expanded the damages available to the University, and the amendment was contrary to existing law. GEICO analogizes to In re Estate of Lowe, 191 Wn.App. 216, 361 P.3d 789 (2015), review denied, 185 Wn.2d 1019 (2016). In Lowe, a party filed a motion seeking court permission to file a second amended and supplemental petition less than a month before the start of trial. 191 Wn.App. at 223. The Court of Appeals noted that the party's motion was actually a motion to amend, as it did not seek to include claims arising from transactions arising after the latest pleading. Lowe, 191 Wn.App. at 227. The Court of Appeals held that the trial court did not abuse its discretion in denying the party's motion, as the parties engaged in prolonged discovery and the motion was filed less than one month before trial. Lowe, 191 Wn.App. at 227-28.

         GEICO's argument is not persuasive. Although both here and in Lowe a party moved to file an amended complaint close to the trial date after prolonged discovery, the present case is distinguishable. For example, Lowe did not involve an added claim that relied on nearly-identical evidence and was delayed due to the nonmoving party's own actions. Thus, we reject this argument.

         GEICO argues that it was prejudiced by the addition of the CPA claim because it allowed the University to recover attorney fees and treble damages that would not have been available under its breach of contract claim. It does not offer legal authority in support of this argument. The fact that the University could recover attorney fees and damages if it prevailed on its new claim does not show that GEICO suffered from undue delay or unfair surprise, or that it would be unprepared to address the new claim at trial. Rather, these arguments pertain to the damages that would be available to the University if it prevailed on the merits of the claim. GEICO's unsupported arguments are insufficient to show that it was prejudiced by the new claims making treble damages and attorney fees available to the University.

         GEICO also argues that it was prejudiced by the trial court's refusal to continue discovery on the newly-added claim or allow GEICO to bring motions addressing the claim. GEICO does not cite ...


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