Bad Faith Blog

Insured motorist who was injured in an accident with an at-fault motorcyclist brought action against the automobile insurer’s adjuster who handled the claim for bad faith and violation of the Consumer Protection Act. After the trial court dismissed the action and certified it for appellate review, the Court of Appeals held the duty of good faith imposed on “all persons” involved in insurance applies equally to individuals acting as insurance adjusters. Also, the appellate court held individual insurance adjusters can be liable for a violation of the Consumer Protection Act, even if no contractual relationship exists with the individual insured.

Anastasia Fortson-Kemmerer (“Plaintiff”) sued Allstate Insurance Company (“Allstate”) to recover for bad faith and violation of the Insurance Fair Conduct Act (“IFCA”) for its actions when investigating her underinsured motorist (“UIM”) coverage claim. Allstate moved for summary judgment on the affirmative defense that Plaintiff’s previous action to enforce her UIM policy provisions operated as res judicata and barred her bad faith claim. The trial court granted summary judgment and Plaintiff appealed. The Washington Court of Appeals reversed, stating Allstate failed to demonstrate the operation of res judicata.

Summary: Allstate insured Valentine and Christina Zagorski’s home suffered a fire loss. Allstate’s Special Investigation Unit (SIU) assisted with the investigation of what was ultimately concluded to be an arson fire. Allstate’s retained counsel took an Examination Under Oath (EUO), and otherwise assisted with the claims handling before the claim was denied. After the denial, the Zagorskis filed suit for breach of contract, fraud, and sought extra-contractual damages for vexatious delay and refusal to pay. During the course of that litigation Allstate was ordered to disclose information through discovery, it refused, its attorney was held in civil contempt, and the matter was appealed to the Appellate Court, which then ruled on the various discovery issues, mostly in the Zagorskis’ favor, but also making some rulings in favor of Allstate. The Court also admonished Allstate’s counsel regarding properly responding to discovery.