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Oung v. Allstate Fire And Casualty Insurance Co.

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

November 14, 2017

LIKA OUNG, et al., Plaintiffs,
v.
ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, et al., Defendants.

          ORDER DENYING ALLSTATE'S MOTION FOR SUMMARY JUDGMENT

          Robert S. Lasnik United States District Judge

         This matter comes before the Court on “Defendant Allstate Fire & Casualty Insurance Company's Motion for Summary Judgment.” Dkt. # 28. Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving party, there is no genuine issue of material fact that would preclude the entry of judgment as a matter of law. The party seeking summary dismissal of the case “bears the initial responsibility of informing the district court of the basis for its motion” (Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)) and “citing to particular parts of materials in the record” that show the absence of a genuine issue of material fact (Fed. R. Civ. P. 56(c)). Once the moving party has satisfied its burden, it is entitled to summary judgment if the non-moving party fails to designate “specific facts showing that there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324. The Court will “view the evidence in the light most favorable to the nonmoving party . . . and draw all reasonable inferences in that party's favor.” Krechman v. County of Riverside, 723 F.3d 1104, 1109 (9th Cir. 2013). Although the Court must reserve for the jury genuine issues regarding credibility, the weight of the evidence, and legitimate inferences, the “mere existence of a scintilla of evidence in support of the non-moving party's position will be insufficient” to avoid judgment. City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1049 (9th Cir. 2014); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Factual disputes whose resolution would not affect the outcome of the suit are irrelevant to the consideration of a motion for summary judgment. S. Cal. Darts Ass'n v. Zaffina, 762 F.3d 921, 925 (9th Cir. 2014). In other words, summary judgment should be granted where the nonmoving party fails to offer evidence from which a reasonable jury could return a verdict in its favor. FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509, 514 (9th Cir. 2010).

         Having reviewed the memoranda, declarations, and exhibits submitted by the parties, [1] the Court finds as follows:

         BACKGROUND

         On July 30, 2013, plaintiff Lika Oung was involved in a car accident while driving southbound on I-5 in Seattle, Washington. At the time of the accident Mr. Oung was stopped in traffic, and the vehicle behind him, driven by Balakrishman Swamy, was also stopped. A third car driven by Harrison Wyles rear-ended Mr. Swamy's vehicle, which in turn rear-ended Mr. Oung's car. Mr. Oung suffered injuries to his head and neck and was taken to the emergency room. Both parties agree that Mr. Oung was not at fault.

         Mr. Oung was insured by defendant Allstate Fire & Casualty Insurance Company (“Allstate”), including underinsured motorist (“UIM”) coverage. Mr. Oung recovered the $100, 000 policy limits from the at-fault driver Mr. Wyles, as well as $10, 000 from Allstate for personal injury protection. Mr. Oung then filed a UIM claim with Allstate.

         On January 9, 2015, Mr. Oung's attorney Brian Russell sent a letter to Allstate informing the defendant of the UIM claim on behalf of Mr. Oung and his wife Sophy Long. Allstate assigned the claim to adjuster Michael Cabin. Over the next eighteen months, Mr. Oung and Allstate disputed the value of the claim. During this time, emails, letters, and records were exchanged between Mr. Oung's attorney and Allstate, as Allstate repeatedly asked for more information. On March 25, 2015, [2] Mr. Russell sent a demand letter to Allstate seeking the policy limits of $100, 000 for medical expenses, wage loss, and general damages including Sophy Long's loss of consortium. Decl. of Brian P. Russell (Dkt. # 32), Ex. 5. Mr. Oung requested arbitration as one option under his policy, but Allstate refused. Decl. of Michael Cabin (Dkt. # 30), Ex. 8. The parties engaged in two attempts at mediation, both of which were unsuccessful. Decl. of Michael Cabin (Dkt. # 30), at 17, 21. Mr. Cabin evaluated Mr. Oung's claim at least four times during this period and offered at most $15, 474 to settle.[3] Decl. of Michael Cabin (Dkt. # 30), at 21.

         On July 2, 2016, Mr. Oung filed suit against Allstate demanding the $100, 000 UIM policy limits and also alleging bad faith related to Allstate's handling of the UIM claim. Mr. Oung was deposed on February 7, 2017. On March 17, 2017, Allstate agreed to pay the policy limits of $100, 000.

         The remaining issues in this litigation involve Allstate's handling of Mr. Oung's UIM claim. Plaintiff and defendant characterize the dispute dramatically differently. Allstate maintains that the back-and-forth merely “reflect[ed] a legitimate difference of opinion . . . as to the value of the UIM aspect of Mr. Oung's claim.” Dkt. # 28 at 12. Mr. Oung, on the other hand, asserts that defendant's repeated requests for more information and lowball offers amounted to tactics designed to deny and delay paying the claim. Now, Allstate asks that the bad faith claim filed against it be dismissed by this Court as a matter of law.

         DISCUSSION

         Mr. Oung's causes of action include breach of contract, bad faith, and negligence, as well as violations of the Consumer Protection Act (CPA), RCW 19.86, et seq., and the Insurance Fair Conduct Act (IFCA), RCW 48.30, et seq. Amended Complaint (Dkt. # 1, Attach. 1). Taken together, these claims allege that Allstate violated its duty of good faith in handling Mr. Oung's UIM claim.

         In general, insurers owe a duty of good faith when dealing with their insureds. See RCW 48.01.030. This basic standard of good faith applies in the UIM context even when the relationship between the insured and the insurer becomes adversarial. See Ellwein v. Hartford Accident & Indem. Co., 142 Wn.2d 766, 780-781 (2001) (overruled on other grounds by Smith v. Safeco Ins. Co., 150 Wn.2d 478 (2003)). Violations of the insurance regulations set forth in the Washington Administrative Code (WAC) may establish a breach of the insurer's duty of good faith. Rizzuti v. Basin Travel Serv. of Othello, Inc., 125 Wn.App. 602, 615-616 (2005). In order to establish bad faith, Mr. Oung must also show that Allstate's conduct was “unreasonable, frivolous or unfounded.” Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 560 (1998). To state a claim under the IFCA, Mr. Oung must prove that Allstate unreasonably denied a claim or unreasonably denied payment of benefits. Perez-Crisantos v. State Farm Fire & Cas. Co., 187 Wn.2d 669, 683 (2017).

         Although the elements of these causes of action vary slightly, [4] at its core, they center on the reasonableness of Allstate's actions in handling Mr. Oung's UIM claim. WAC 284-30-330(2) provides that an insurer may not “refuse[] to pay claims without conducting a reasonable investigation, ” and WAC 284-30-330(6) provides that an insurer must “attempt[] in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” In this case, there are genuine issues of material fact regarding whether Allstate conducted a reasonable investigation and attempted to effectuate prompt and fair settlement. Allstate's summary judgment motion recounts numerous times that it requested more information about Mr. Oung's claimed medical bills and wage loss. Dkt. # 28 at 3-10. It is possible that these requests were reasonable and made in good faith to effectuate prompt settlement. It is also possible, however, that some of these requests were attempts to stall and delay. The reasonableness of Allstate's investigation is a question of fact for a jury to decide.

         Perhaps more on point is WAC 284-30-330(7), which provides that an insurer may not “compel[] a first party claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.” Allstate's highest offer prior to the lawsuit was $15, 474, even though the adjuster had additional settlement authority. Decl. of Michael Cabin (Dkt. # 30), at 21. After the lawsuit was filed, Allstate paid the policy limits of $100, 000. Although this difference in figures is not dispositive (see Perez-Crisantos, 187 Wn.2d at 684), it is telling. This Court has written previously that “a lowball offer in the hopes that its insured would accept less than adequate compensation for his damages in order to avoid the ...


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