Never Ending Appraisal

Lora’s house was damaged by fire in 1992. She and her fire insurer then entered into a long dance which should have ended in July 1993, when the insurer (AMMI) petitioned for the appointment of 14 an umpire to oversee the appraisal process. But it was not until November 1993 that Lora agreed to participate. But then she changed her mind. In February 1994, the court ordered appraisal. The appraisers met at the property in April 1994, but Lora did not show up. Lora’s public adjuster would not let AMMI’s appraiser view the property until June 1994. In December 1994, an award for damage to the residence was made.

In December 1995, the appraisal hearings on personal property were held. AMMI offered $36,384.66 RCV, and Lora requested $142,701.19 RCV. The appraiser awarded $69,411.68 RCV. Lora sued AMMI for bad faith and CPA violations. The superior court dismissed when AMMI moved for summary judgment.

The Court of Appeals affirmed.

1. Whether an insurer acted in bad faith and whether an insurer’s acts prejudiced the insured are questions of fact. As the moving party, AMMI has the initial burden of showing the absence of an issue of material fact as to these issues. AMMI could meet its burden of showing the absence of evidence to support Lora’s case. The burden then shifted to Lora to set forth specific facts establishing that there was a genuine issue for trial. Lora could not reply solely on the allegations in her pleadings, on speculation, or on argumentative assertions that unresolved factual issues remain.
2. An insurer must deal fairly with an insured, giving equal consideration in all matters to the insured’s interests. The duty to act in good faith is broad and conduct that does not amount to intentional bad faith or fraud may be a breach of the duty.
3. Generally, an action for bad faith handling of an insurance claim sounds in tort.
4. To prevail on a CPA claim, one must show (1) an unfair or deceptive act or practice in trade or commerce that impacts the public interest, and (2) resulting injury to the claimant’s business or property. The insured may establish the first element by showing a violation of any subsection of WAC 284- 30- 330.
5. The elements of a non- CPA bad- faith claim are similar. The violation of a WAC 284- 30- 330 subsection establishes a breach of duty. But, unlike the injury in the CPA claim, the injury alleged need not be economic and may include emotional distress or personal injury.
6. Thus, to prevail on a summary judgment motion on either the CPA or non- CPA badfaith claims, AMMI must show there is no question of fact as to (a) whether it violated any subsection of WAC 284- 30- 330, or (b) whether such violation caused a recognized injury.

After setting out the rules, the court then went through each of the policyholder’s asserted WAC violations and pointed out that the policyholder had failed to present evidence to support the claim.

This decision is probably modified by the Ellwein decision. No longer will it be the company’s burden when moving for summary judgment on bad faith to show the absence of an issue of material fact. Instead, it will be the company’s burden to show the existence of an issue of material fact, because if there is an issue of material fact as to bad faith, then the policyholder cannot discharge its burden of proving bad faith as a matter of law.

American Manufacturers Mutual Ins. v. Osborn, 104 Wn. App. 686, 17 P. 3d 1229 (2001).