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Kramer v. Safeco Insurance Company of Oregon

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

December 18, 2019

KRISTEN and BRYAN KRAMER, husband and wife, Plaintiffs,
SAFECO INSURANCE COMPANY OF OREGON, an Oregon Corporation, Defendant.


          ROBERT J. BRYAN United States District Judge.

         This matter comes before the Court on Plaintiff's Kirsten and Bryan Kramer's Motion for Partial Summary Judgment (Dkt. 14) and the Defendant Safeco Insurance Company of Oregon's (“Safeco”) motion for partial summary judgment (Dkt. 20). The Court has considered the pleadings filed in support of and in opposition to the motions and the file herein.

         This case arises from a dispute about uninsured/underinsured motorist (“UIM”) coverage. Dkt. 1. In the pending motions, the Plaintiffs move for summary judgment on their claims for bad faith and violation of the Washington Consumer Protection Act, RCW 19.86 et. seq., (“CPA”) based on Safeco's handling of its rights pursuant to Hamilton v. Farmers Ins. Co. of Washington, 107 Wash.2d 721 (Wash. 1987). Dkt. 14 and 23. In its response, Safeco opposes the Plaintiffs' motion and cross-moves for summary judgment on both the bad faith and CPA claims, maintaining that both claims should be dismissed. Dkt. 20. For the reasons provided below, Plaintiffs' motion (Dkt. 14) should be granted, in part, and denied, in part, and Safeco's motion (Dkt. 20) should be denied.


         A. FACTS

         Both parties agree that there are issues of fact as to the underlying accident and agree that those issues are not relevant to the pending motion. Dkts. 14 and 20. For background only, the following paragraph is taken from the Complaint. The Complaint alleges that on September 6, 2016, Plaintiff Kristen Kramer's car was rear-ended by a company van owned by Poulsbo Cleaning Company. Dkt. 1-2. According to the Complaint, Ms. Kramer's car was totaled and she suffered physical injuries, including broken bones. Id. The Complaint maintains that the Kramers filed a lawsuit against Poulsbo Cleaning Company, its owner and the employee-driver. Id.; Kramer v. Poulsbo Cleaning Services, LLC, et. al., filed in the Kitsap County, Washington, Superior Court, Case No. 18-2-01587-18. The Complaint asserts that after Progressive Insurance, the insurer for Poulsbo Cleaning Company, informed the Plaintiffs that Poulsbo Cleaning Company was out of business and had no assets, and that the employee-driver had no insurance or assets, Progressive Insurance offered the policy limits of $50, 000 conditioned upon a full release of all claims. Dkt. 1-2.

         The following facts are relevant to the pending motions.

         At the time of the accident, the Plaintiffs had an automobile insurance policy, which included uninsured/underinsured motorist coverage, with Defendant Safeco. Dkt. 16. After receiving the July 10, 2018, offer of settlement from Poulsbo Cleaning's insurance company, on July 12, 2018, the Plaintiffs' lawyer wrote Safeco to: (1) “involve [it] in the decision to resolve the case by accepting the $50, 000 offer so as not to ‘compromise [Safeco's] lien without [its] prior consent, ” (2) make a claim for UIM coverage and (3) to discuss Safeco's demand for payment of subrogation damages. Dkt. 17-3, at 2-3. On July 30, 2018, having not heard from Safeco, Plaintiffs' counsel emailed Safeco to inquire on the status of the claim. Dkt. 17-4, at 2.

         Safeco's records indicate that the July 12, 2018 letter from Seattle, Washington was received on July 20, 2018 in Portland, Oregon. Dkt. 21, at 6. In an email dated August 1, 2018, Safeco's claims representative states that she did not get notice of the claim until July 24, 2018. Dkt. 21, at 9. At that time, Safeco requested more information; it did not take a position as to the offer of settlement from Progressive (the Poulsbo Cleaning Company's insurance carrier). Dkt. 21, at 11. Plaintiffs provided a majority of the requested information on August 20, 2018 (Dkt. 17-9), and by September 13, 2018, the rest was provided (Dkt. 21, at 13).

         On September 14, 2018, Safeco wrote the Plaintiffs and their counsel. Dkt. 17-6. That letter provided that:

In response to your July 12, 2018 letter, we elect to exercise our buyout rights as expressed in Hamilton v. Farmers, 107 Wn.2d 721 (1987), and advance the $50, 000.00 policy limit offer extended by Progressive for the September 6, 2016 accident. In doing so, Ms. Kramer does not need nor should she sign any release or dismissal of the lawsuit in favor of Meagan Johnston [the employee-driver] or Poulsbo Cleaning Services, LLC . . . Instead, Ms. Kramer should continue with her lawsuit against Ms. Johnston and Poulsbo Cleaning as set forth in the case entitled Kirsten and Bryan Kramer v. Poulsbo Cleaning Services, LLC aka Viking Janitorial and Meagan L. Johnston, filed in the Kitsap County Superior Court, Case No. 18-2-01587-18.

Dkt. 17-6, at 3. Safeco offered to pay a pro-rata share of the costs (excluding attorneys' fees) to continue with the case but, informed the Plaintiffs that it did not intend to intervene in the Kitsap County case. Id.

         Both Ms. Kramer and Mr. Kramer state that after being told that Safeco was insisting on them continuing with the underlying case in Kitsap County, they were “angry and upset and anxious” about the need to proceed to trial even “though the policy limits had been offered to resolve the matter.” Dkts. 19 and 20.

         On September 25, 2018, the Plaintiffs' counsel wrote Safeco and indicated that the offer failed to comport with Washington law under Hamilton. Dkt. 17-7. The letter asserts that “there is nothing in the Hamilton decision that allows Safeco to only advance the settlement offer, refuse to pay out UIM benefits and force the Kramers to litigate their claim against Progressive's insured.” Id., at 3-4. The letter asked Safeco to let them know by October 5, 2018 if it still wished “to buyout the Kramers' claim against Progressive.” Id., at 4. They informed Safeco that they would not continue the lawsuit against Poulsbo Cleaning Co., et. al. but that Safeco was free to do so. Id. They stated that if Safeco did not confirm by October 5, 2018 that they intended to buyout the claim, the “Kramers will accept the Progressive policy limits offer and execute whatever release is required.” Id. They indicated that they will then look to Safeco to “satisfy its legal obligations to pay out the difference between the policy limits and [the Kramers'] damages.” Id.

         On October 4, 2018, Safeco responded by email and asked for a teleconference with Safeco's newly hired outside counsel. Dkt. 17-8, at 2. After a phone call and more email, on October 15, 2018, Safeco wrote the Plaintiffs and informed them that it was not going to exercise its rights under Hamilton to buyout the claim against Progressive. Dkt. 17-10, at 2. It agreed that a settlement with Progressive, including an executed release of all claims, would not prejudice Ms. Kramer's right to purse an UIM claim under the policy. Dkt. 17-10, at 2. Safeco indicated that it would still seek applicable offsets. Id.

         The next day, on October 16, 2018, Safeco emailed Plaintiffs' counsel, reiterated that they were not exercising Safeco's rights under Hamilton and stated, “[r]ather than substituting payment, we agree to intervene in the underlying lawsuit to litigate the value of you client's UIM claim if you feel there is UIM value after your client accepts the $50, 000 policy limits from Progressive.” Dkt. 17-11. Plaintiff's counsel states that he contacted Safeco at that point and “explained that Safeco's intent to intervene [in the lawsuit against Poulsbo Cleaning Company] makes no sense because Poulsbo Cleaning Company will not settle with the Kramers absent a full release of claims.” Dkt. 17, at 3.

         Over three months after the Plaintiffs informed Safeco of the offer of $50, 000 from Progressive, the Plaintiffs were able to and did accept the offer. Dkts. 19 and 20. They deposited the check in the bank right away but, testified that they lost the interest they should have earned had ...

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