Treble Trouble

 Treble Trouble

Washington’s Insurance Fair Conduct Act (IFCA) permits plaintiffs to recover “actual damages” for an unreasonable denial of a claim for coverage or payment of benefits under an insurance policy.[1] Those “actual damages” can also be tripled at the court’s discretion.[2]  Although there has been considerable IFCA litigation in Washington, the bulk of that litigation has occurred in the federal courts under diversity jurisdiction.  In Beasley v. Geico, the court of appeals digs deeper into the state’s legislative intent behind IFCA, specifically concerning if “actual damages” is board enough to include non-economic damages.[3]

 

The Underlying Case

Plaintiff in this case was injured in a car accident that occurred when he was the passenger in Anar Askerov’s vehicle.  The driver who caused the accident was underinsured.  Askerov’s insurance policy with GEICO included UIM coverage.[4]  Plaintiff demanded policy limits from Askerov’s UIM policy.  GEICO offered to pay $10,000 to settle plaintiff’s UIM claim.  Plaintiff rejected the offer, but his counsel requested that GEICO pay the $10,000 as an “undisputed UIM amount.”[5]  GEICO did not issue the $10,000 payment.

Plaintiff sued GEICO for violating RCW 48.30.015 of IFCA, breaching, amongst other things, the duty of insurance good faith.  Plaintiff sought economic and noneconomic damages and requested that the court triple those damages as allowed under IFCA.[6]  The case proceeded to a jury trial where the trial court relied on two federal cases to conclude that the IFCA claim did not include noneconomic damages.  This meant that any non-economic damages the jury would find would not be subject to trebling.

The jury found for Beasley, concluding that plaintiff had proven his IFCA claims.  They also found plaintiff’s IFCA-related economic damages were $84,000 and his noneconomic damages were $400,000.00.  Plaintiff ultimately received treble damages for his economic damages, but the court did not award treble damages for his noneconomic damages.

 

Issue Before the Appeal Court

In his appeal, plaintiff argued the trial court erred when it ruled that noneconomic damages are not recoverable and are not subject to trebling under IFCA.  Beasley argued that noneconomic damages are in fact “actual damages” recoverable and subject to trebling under RCW 48.30.015 of IFCA.

 

Analysis

Geico requested the court adopt the reasoning in previously litigated federal cases and exclude non-economic damages as recoverable under IFCA.  But in this case, the court of appeals emphasized that federal cases are not binding to the Washington courts.  Rather, Washington courts should adopt those theories and rationales which further the purposes and mandates of Washington State Statutes.  Instead of relying on federal rulings, they dug into the legislative purpose of IFCA.

Looking at the legislative history, the court of appeals found nothing directly addressing the meaning of “actual damages.”  But the court found that IFCA’s purpose was to broaden the scope of recovery in insureds.  The legislative history suggests that the legislation was in part intended to serve a punitive purpose because it allows trial courts to treble damages.  They noted that the Washington Supreme Court has recognized the purpose of IFCA was to provide insureds with another legal resource against wrongful denials.

The court determined nothing in IFCA specifies the type of damages envisioned by the legislature or suggests any limitation on damages.  The court held because the term “actual damages” as used in IFCA is ambiguous and the legislative history of IFCA demonstrates that the act was intended to protect insureds and provide additional remedies, “actual damages” includes noneconomic damages.

 

Holding

The court ruled non-economic damages are available under IFCA and rejected using federal cases as binding in making their decision.  Specifically, the court of appeals reversed the trial court’s orders related to noneconomic damages and remanded for a new trial on noneconomic damages.  They found that the term “actual damages” is ambiguous, and that the legislative history demonstrates that the legislature intended “actual damages” to include noneconomic damages under IFCA.  Ultimately, they concluded nothing in IFCA specifies the type of damages envisioned by the legislature or suggests any limitation on damages.

The court of appeals found a new trial on noneconomic damages under IFCA would be appropriate because the trial court prevented plaintiff from arguing that noneconomic damages were available under the IFCA claim, and the jury was not instructed to determine the noneconomic damages under the IFCA claim.

 

Takeaway

Beasley expands rights of insureds in Washington.  An insured can now recover noneconomic damages under IFCA, and they can also, at the trial court’s discretion, recover triple those damages.  Insurance carriers and defense counsel should be cognizant of the potential costly consequences of denying or delaying a claim, especially after an offer to settle is made.  That offer could be interpreted as an “undisputed amount,” and in Washington an undisputed amount necessitates prompt payment.  Further, the court of appeal ruled that “actual damages” can be interpreted broadly, which means that we may see more unique or novel non-economic damage requests from insureds in the near future.

 

 

 

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[1] RCW 48.30.010(7).

[2] Damages are not trebled automatically. The superior court “may . . . increase the total award of damages to an amount not to exceed three times the actual damages.” RCW 48.30.015(2) (emphasis added).

[3] Beasley v. GEICO Gen. Ins. Co., 54997-2-II, 2022 WL 4353226 (Wash. Ct. App. Sept. 20, 2022)

[4] Id at *1.

[5] IFCA requires insurers to promptly pay undisputed amounts, even before final settlements are paid.

[6] ‘Noneconomic damages’ means subjective, nonmonetary losses, including, but not limited to pain, suffering, inconvenience, mental anguish, disability or disfigurement incurred by the injured party, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation, and destruction of the parent-child relationship.” RCW 4.56.250(1)(b).