IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION ONE

TRINITY UNIVERSAL INSURANCE

COMPANY OF KANSAS,

Respondent,

v.

OHIO CASUALTY INSURANCE

COMPANY,

Appellant.

No. 67832-9-1

ORDER GRANTING MOTION

TO ADMIT ADDITIONAL

EVIDENCE, DENYING

MOTION FOR

RECONSIDERATION, AND

WITHDRAWING OPINION

The respondent, Trinity Universal Insurance Company of Kansas, filed a motion

to admit additional evidence. The appellant, Ohio Casualty Insurance Company, has

filed an opposition to the motion, and Trinity filed a reply. A panel of the court has

considered the motion pursuant to RAP 9.11 and has determined that the motion should

be granted.

The respondent, Trinity Universal Insurance Company of Kansas, filed a motion

for reconsideration. The appellant, Ohio Casualty Insurance Company, has filed an

answer. A panel of the court has considered the motion and has determined that the

motion should be denied.

The court on its own motion has determined that the published opinion filed

March 18, 2013 should be withdrawn and replaced with a substitute opinion.

Now, therefore, it is

ORDERED that the motion to admit additional evidence is granted; it is further

ORDERED that the motion for reconsideration is denied, it is further

ORDERED that the opinion filed March 18, 2013 is withdrawn, and it is further
No. 67832-9-1/2

ORDERED that a substitute opinion shall be published and printed in the

Washington Appellate Reports.

DATED this

WE CONCUR

4

)j' day oi llM/MAM .,2013.

?

Vfl^v^L.,,

ro
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TRINITY UNIVERSAL INSURANCE

COMPANY OF KANSAS,

Respondent,

OHIO CASUALTY INSURANCE

COMPANY,

Appellant.

No. 67832-9-1

DIVISION ONE

PUBLISHED OPINION

FILED: August 19, 2013

Appelwick, J. — Trinity defended and settled a personal injury claim made

against Ohio's insured. Trinity then sued Ohio for subrogation, equitable contribution,

and insurer bad faith under the CPA1 and IFCA.2 When Ohio failed to appear, Trinity

obtained a default order and judgment for defense and indemnification costs, as well as

treble damages under the CPA and IFCA. Trinity claims that under the principle of

equitable subrogation, it was entitled to assert the insured's CPA and IFCA claims

against Ohio, even without express agreement. We reverse the portions of the

judgment based upon the CPA and IFCA claims. We affirm the judgment for defense

and indemnification costs.

FACTS

In September 2007, Philip Riley was injured when he fell off scaffolding at a

construction site in Kitsap County. Riley was employed by a subcontractor, Cascade

Construction Company. Riley sued the worksite's general contractor, Millennium

1Washington Consumer Protection Act, ch. 19.86 RCW.

2 Insurance Fair Conduct Act, ch. 48.30 RCW
No. 67832-9-1/2

Building Company Inc. Trinity Universal Insurance Company of Kansas insured

Cascade, while Ohio Casualty Insurance Company insured Millennium.

Millennium tendered defense of the lawsuit to Ohio. Ohio initially accepted

tender and appointed an attorney to represent Millennium. But, Ohio then tendered

Millennium's defense to Trinity, claiming that Millennium was an additional insured

under the policy Trinity issued to Cascade. Though Riley's complaint alleged only

Millennium's acts or omissions, Trinity acknowledged it was conceivable that some act

or omission by Cascade could have played a role in Riley's injury. Therefore, in

January 2009, Trinity accepted tender and took over defense of the lawsuit without a

reservation of rights.

In August 2009, Trinity attempted to tender Millennium's defense back to Ohio.

Trinity contended that, under the circumstances of complaint, Trinity and Ohio were at

least coprimary insurers. Trinity reminded Ohio that, under Washington law, an

insurer's duty to defend is triggered if the insurance policy conceivably covers

allegations in the complaint.3 Trinity pointed out that the complaint alleged only

Millennium's acts or omissions, triggering Ohio's duty to defend. In other words, if

Millennium's acts or omissions were found to be the cause of the accident, Ohio would

be entirely responsible for defense and indemnification.

But, Ohio refused to accept the retender. Ohio cited an "'other insurance'"

provision in Millennium's policy, which stated that Ohio's insurance is primary except if

"'any other primary insurance [is] available to you covering liability for damages arising

3 Am. Best Food. Inc. v. Alea London. Ltd.. 168 Wn.2d 398, 404, 229 P.3d 693

(2010).
No. 67832-9-1/3

out of the premises or operations.'" Based on this provision, Ohio insisted that its

coverage was excess to Trinity's.

In December 2009, Trinity notified Ohio and the Washington State Insurance

Commissioner that it planned to sue unless Ohio agreed to participate in Millennium's

defense. Trinity explained that it would be asserting its equitable contribution rights as

Cascade's insurer, as well as the direct, subrogated rights of Millennium. Ohio again

refused.

Trinity continued defense and ultimately settled Riley's claims for $225,000 in

January 2010. Millennium and Cascade received a full and complete release of all

Riley's claims.

Trinity served the insurance commissioner on May 12, 2010,4 with a summons

and complaint against Ohio for subrogation, equitable contribution, and insurer bad

faith. On May 13, 2010, the commissioner forwarded the summons and complaint by

certified mail to Ohio's registered agent for service, Corporation Service Company

(CSC). The commissioner received a return receipt stamped and dated by CSC. CSC

has no record of receiving Trinity's summons and complaint. The parties do not dispute

that Trinity did not provide notice of the lawsuit to Ohio's claims representative or its

outside counsel.

Trinity filed its complaint with the court on July 7, 2010. Trinity alleged that Ohio

improperly relied on its "other insurance" exclusion to deny defense, because Riley's

complaint did not specify the cause of the accident. Trinity asserted five causes of

4 Ohio is a foreign insurer, so service on the insurance commissioner constitutes

service on the insurer. RCW 48.05.200(1).
No. 67832-9-1/4

action against Ohio. First, Trinity argued that by withdrawing from and refusing to

contribute to Millennium's defense, Ohio breached its contractual duty to defend

Millennium. Second, Trinity claimed that Ohio breached its duty of good faith and fair

dealing by unreasonably refusing to defend Millennium, in violation of IFCA. Third,

Trinity claimed that Ohio failed to respond to pertinent communications from a claimant

within 10 days, as required by WAC 284-30-360(3). Fourth, Trinity argued that the

same conduct constituted per se violations of the CPA. Lastly, Trinity claimed it was

entitled to equitable contribution for Ohio's share of Millennium's defense, because both

Trinity and Ohio had obligations to defend.

When Ohio failed to appear or answer, Trinity moved ex parte for a default order

and judgment. Trinity requested the full cost of defending and indemnifying Millennium,

attorney fees, and treble damages under IFCA and the CPA, totaling $764,271. Trinity

provided declarations and other exhibits supporting its request for damages. On July

14, 2010, a court commissioner granted the motion and entered judgment in the full

amount.

Trinity waited a year and five days before collecting on the judgment. Trinity

admitted that it purposefully waited a year to collect in order to gain a procedural

advantage over Ohio. On August 24, 2011, Ohio filed a motion to vacate the default

order and set aside the judgment. Ohio argued the default judgment should be

overturned, because (1) Ohio was not served; (2) Trinity had no standing to bring the

claims; (3) the court commissioner failed to enter findings of fact and conclusions of law

necessary to support the judgment; (4) Ohio's failure to appear was inadvertent,

because it was unaware of the lawsuit; and (5) Ohio could assert prima facie defenses
No. 67832-9-1/5

to liability and damages. The court denied Ohio's motion to vacate and this appeal

followed.

DISCUSSION

Ohio makes several arguments on appeal. Ohio argues that the default

judgment should be vacated under CR 60(b)(1), because its failure to appear was due

to inadvertence or excusable neglect and it can assert prima facie defenses. Ohio

contends that Trinity either waived or is estopped from asserting the one year time

limitation for CR 60(b)(1) motions, because Trinity purposefully delayed in collecting the

default judgment.

Ohio argues that the default order and judgment are void due to lack of subject

matter jurisdiction, because Trinity did not have standing to bring statutory insurer bad

faith claims against Ohio. Ohio maintains that Trinity lacked standing to assert the IFCA

and CPA claims, because those claims belong to Millennium and Trinity never received

express assignment from Millennium.

Ohio also argues that Trinity improperly obtained the default judgment through

misrepresentation or misconduct, so the judgment should be vacated under CR

60(b)(4). Ohio asserts that Trinity's alleged damages were uncertain and speculative,

so the trial court erred by entering default without holding an evidentiary hearing and

making findings. Lastly, Ohio argues that the trial court should not have granted

Trinity'ssupplemental attorney fees, because Trinity had no legal right to them.

Default judgments are generally disfavored in Washington. Griggs v. Averbeck

Realty. Inc., 92 Wn.2d 576, 581, 599 P.2d 1289 (1979). Courts prefer to determine

cases on their merits rather than by default. Id In reviewing an entry of default, the
No. 67832-9-1/6

court's principal inquiry should be whether the default judgment is just and equitable.

Id. at 581-82. A default judgment may be set aside in accordance with CR 60(b). CR

55(c)(1). Resolution of a motion to vacate a default judgment is within trial court's

sound discretion. Hwang v. McMahill, 103 Wn. App. 945, 949, 15 P.3d 172 (2000). As

such, we review a trial court's decision on a motion to vacate a default judgment for

abuse of discretion. Morin v. Burris. 160 Wn.2d 745, 753, 161 P.3d 956 (2007). Atrial

court abuses its discretion when it is exercised on untenable grounds or for untenable

reasons. Id On the other hand, whether a judgment is void is a question of law that we

review de novo. Dobbins v. Mendoza. 88 Wn. App. 862, 871, 947 P.2d 1229 (1997).

I. CR 60(b)(1) Mistake. Inadvertence, or Excusable Neglect

Grounds for vacating a default judgment under CR 60(b)(1) include mistake,

inadvertence, surprise, and excusable neglect. A defendant moving to vacate under CR

60(b)(1) must show four factors: (1) its failure to timely appear was due to mistake,

inadvertence, surprise, or excusable neglect; (2) there is substantial evidence

supporting a prima facie defense; (3) it acted with due diligence after notice of the

default judgment; and (4) vacating the default judgment would not cause the plaintiff

substantial hardship. Little v. King, 160 Wn.2d 696, 703-04, 161 P.3d 345 (2007).

A CR 60(b) motion must be brought within one year after the default order or

judgment is entered. This one year time limit is strictly enforced and the trial court may

not extend the deadline. See CR 6(b). Here, the court commissioner entered the

default order and judgment against Ohio on July 14, 2010. Ohio filed its motion to

vacate on August 24, 2011, more than a year later.
No. 67832-9-1/7

Ohio argues that, because Trinity purposefully delayed executing on the

judgment, Trinity should be barred from asserting the CR 60(b) one year time limitation.

Trinity acknowledged that it deliberately waited a year and five days to collect on the

judgment to gain a procedural advantage. But, Washington courts do not consider it

deceptive or unfair for a plaintiff to wait a year to collect on a default judgment. See,

e.g., Friebe v. Supancheck. 98 Wn. App. 260, 264, 267, 992 P.2d 1014 (1999) (refusing

to characterize the Friebes' "'legal sleight-of-hand'" in waiting a year and two days to

collect on a default judgment "as unfair or deceptive"); Allison v. Boondock's,

Sundecker's &Greenthumb's, Inc.. 36 Wn. App. 280, 285-86, 673 P.2d 634 (1983).

Ohio nonetheless cites Lvbbert v. Grant County to argue that Trinity either

waived its time limitation argument or should be estopped from asserting it. 141 Wn.2d

29, 1 P.3d 1124 (2000). But, Lvbbert is not on point here. In that case, the Lybberts

attempted to sue Grant County, but mistakenly served process on the county

commissioner's administrative assistant. ]d at 32. Despite defective service, the

county filed a notice of appearance, jd The county indicated that it was not waiving

objections to improper service, but for the next nine months, it acted like it was

preparing to litigate on the merits. Id For instance, it served interrogatories and

requests for production on the Lybberts. Id The Lybberts asked in interrogatories if the

countywould be relying on the affirmative defense of insufficient service of process, jd

at 33. The county waited months to respond. ]d When it finally did, the statute of

limitations had run on the Lybberts' claim, so they could no longer achieve proper

service. ]d at 33-34. The county then requested the case be dismissed for that reason.

Id.
No. 67832-9-1/8

The Lybberts argued that the county either waived or should be equitably

estopped from asserting insufficient service of process. ]d at 34-35. The elements of

equitable estoppel are: (1) an admission, statement, or act inconsistent with a claim

afterwards asserted; (2) action by another in reasonable reliance upon that act,

statement, or admission; and (3) injury to the relying party from allowing the first party to

contradict or repudiate the prior act, statement, or admission. Id at 35. The court held

that the Lybberts established the first two elements but failed the third, because they did

not reasonably or justifiably rely on the county's actions. Id at 35-36. Waiver can occur

in two ways. ]d at 39. First, it can occur if the defendant's assertion of a defense is

inconsistent with previous behavior. ]d Second, if the defendant's counsel is dilatory in

asserting a defense. ]d The Lvbbert court held that the county waived its defense of

insufficient service, because it both acted inconsistently and was dilatory, jd. at 42.

Here, unlike the county's action in Lvbbert, Trinity took no inconsistent action.

Trinity informed Ohio of its intent to sue unless Ohio joined Millennium's defense.5

When Ohio refused, Trinity brought suit as promised. Trinity sought default when Ohio

failed to appear, then attempted to collect a year later. None of this was inconsistent

with asserting the one year time bar under CR 60(b). Trinity never masked its time

limitation defense by asserting a contrary argument. Moreover, waiting a year to collect

5 In a letterTrinity sent to Ohio months before filing suit, Trinity wrote, "Please be

aware that the purpose of this letter is to give Ohio 20 days to agree to participate in the

defense of Millennium. If Ohio refuses to do so, Trinity will pursue all of its rights

against Ohio in court. This will include a claim for defense costs, whatever payment

may be made by way of indemnification (should a settlement or judgment occur), treble

damages, and coverage related attorney fees permitted under the IFCA and Olympic

Steamship." Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673

(1991).
No. 67832-9-1/9

is not characterized as unfair or deceptive, so we do not construe it as dilatory. Trinity

violated no deadline or court rule in waiting a year to collect. Characterizing such an

action as dilatory would encompass a myriad of other strategic decisions attorneys are

permitted to make. And, Trinity had no obligation to give Ohio notice of the default

judgment, so Ohio could not have reasonably relied on any act or statement by Trinity.

See CR 55(a)(3). Rather, it was Ohio's responsibility to make a CR 60(b)(1) motion

within one year of the default order. We hold that neither equitable estoppel nor waiver

are applicable here.

Trinity was entitled under Washington law to wait a year to collect on the default

judgment. Therefore, Ohio's CR 60(b)(1) arguments are time barred and cannot

provide a proper basis to vacate. Ohio's prima facie defenses are irrelevant, because

the time bar is absolute.6

II. CR 60(b)(5) Lack of Subject Matter Jurisdiction

Ohio argues that Trinity lacked standing to bring Millennium's statutory claims

under IFCA and the CPA. Lack of standing, Ohio posits, means the trial court lacked

6 Even if we were to consider Ohio's claim of inadvertence or excusable neglect,

we find it unavailing. Ohio attributes its failure to appear to two possible reasons: (1)

the insurance commissioner's service on CSC was faulty or failed, or (2) CSC itself

failed to notify Ohio of the lawsuit. The first excuse is unconvincing, because the record

shows that the insurance commissioner took all statutorily required steps to achieve

service on CSC. See RCW 48.05.200 (requiring service on foreign insurer to be on

insurance commissioner); 48.02.200(2) (requiring commissioner to send a copy of the

process by mail or other means reasonably calculated to give notice). And, the

commissioner received a return receipt dated and stamped by CSC. The second

excuse is similarly unpersuasive. We have repeatedly held that when a company's

failure to respond to a properly served summons and complaint was due to a

breakdown of internal office procedure, it is not excusable under CR 60(b). TMT Bear

Creek Shopping Ctr.. Inc. v. PETCO Animal Supplies, Inc., 140 Wn. App. 191, 212-13,

165P.3d 1271 (2007).
No. 67832-9-1/10

subject matter jurisdiction over Trinity's claims, so the default order is void under CR

60(b)(5). A court enters a void order only when it lacks personal jurisdiction or subject

matter jurisdiction over a claim. Marlev v. Dep't of Labor & Indus.. 125 Wn.2d 533, 540,

886 P.2d 189 (1994). We use caution in characterizing an issue as jurisdictional or a

judgment as void, because the consequences of a court acting without subject matter

jurisdiction "are draconian and absolute." Cole v. Harvevland, LLC, 163 Wn. App. 199,

205, 258 P.3d 70 (2011).

In federal courts, a plaintiffs lack of standing deprives the court of subject matter

jurisdiction, making it impossible to enter a judgment on the merits. Fleck & Assocs.,

Inc. v. City of Phoenix., 471 F.3d 1100, 1102 (9th Cir. 2006). By contrast, the

Washington Constitution places few constraints on superior court jurisdiction. See

Const, art. IV, § 6 ("The superior court shall also have original jurisdiction in all cases

and of all proceedings in which jurisdiction shall not have been by law vested

exclusively in some other court."); see also Ullerv v. Fulleton, 162 Wn. App. 596, 604,

256 P.3d 406, review denied, 173 Wn.2d 1103, 271 P.3d 248 (2011). Accordingly, if a

defendant waives the defense that a plaintiff lacks standing, a Washington court can

reach the merits. Ullerv, 162 Wn. App. at 604. Therefore, in Washington, a plaintiffs

lack of standing is not a matter of subject matter jurisdiction.7 Id

7 Ohio cites a footnote from a 2002 Washington Supreme Court opinion that

says, "[Sjtanding is a jurisdictional issue that can be raised for the first time on appeal."

Int'l Ass'n of Firefighters. Local 1789 v. Spokane Airports. 146 Wn.2d 207, 212 n.3, 45

P.3d 186, 50 P.3d 618 (2002). This is the type of "'drive-by jurisdictional ruling"' we

recently declined to rely on in Cole. 163 Wn. App. at 208 (internal quotation marks

omitted) (quoting Arbauoh v. Y&H Corp., 546 U.S. 500, 510-11, 126 S. Ct. 1235, 163 L.

Ed. 2d 1097(2006)).

10
No. 67832-9-1/11

Rather, the critical concept in determining whether a court has subject matter

jurisdiction is the type of controversy. Cole, 163 Wn. App. at 209. Washington superior

courts have subject matter jurisdiction over tort actions. Williams v. Leone & Keeble,

Inc., 171 Wn.2d 726, 730, 254 P.3d 818 (2011). Indeed, both IFCA and the CPA allow

claimants to bring suit in superior court. RCW 48.30.015(1); RCW 19.86.090. Because

Trinity's action against Ohio was well within the superior court's subject matter

jurisdiction, all other defects or errors go to something other than subject matter

jurisdiction. Cole, 163 Wn. App. at 209.

III. Standing To Assert an Insured's Statutory Rights

Though the doctrine of standing does not implicate subject matter jurisdiction, it

does prohibit a plaintiff from asserting another's legal rights. Walker v. Munro, 124

Wn.2d 402, 419, 879 P.2d 920 (1994). The claims of a plaintiff who lacks standing

cannot be resolved on the merits and must fail. Ullerv, 162 Wn. App. at 604-05.

Whether a party has standing to sue is a question of law reviewed de novo. Spokane

Airports v.RMA, Inc.. 149 Wn. App. 930, 939, 206 P.3d 364 (2009).

Ohio argues that Trinity lacked standing to bring Millennium's IFCA and CPA

claims, because such claims belong to the insured, not the insurance company.

Without express assignment, Ohio argues, Trinity remained a third party claimant with

no standing to assert Millennium's statutory claims against Ohio. Trinity claimed a right

of subrogation and that "assignment was automatic via the policy."

Subrogation is an equitable doctrine the essential purpose of which is to provide

for a proper allocation of payment responsibility. Mahler v. Szucs, 135 Wn.2d 398, 411,

957 P.2d 632 (1998). It seeks to impose ultimate responsibility for a wrong or loss on

11
No. 67832-9-1/12

the party who, in equity and good conscience, ought to bear it. Jd. There are two

features to subrogation. ]d at 412. The first is the right to reimbursement. ]d The

second is the mechanism for the enforcement of the right. Id. The right to

reimbursement may arise by operation of law, termed legal or equitable subrogation, or

by contract, called conventional subrogation. ]d By virtue of payments made to or on

behalf of an insured, an insurer has a right of reimbursement under general subrogation

principles. ]d at 413. That reimbursement may be enforced as a type of lien against

any recovery the insured secures from a third party, jd Alternatively, the insurer,

standing in the shoes of its insured, may pursue an action in the insured's name against

the third party to enforce the reimbursement right. |d Trinity asserts a right of

subrogation under both, equitable and conventional subrogation. We first address

whether the CPA and IFCA claims are subject to being subrogated.

An insured may assign its bad faith claims to a third party. Safeco Ins. Co. of

Am. v. Butler, 118 Wn.2d 383, 397, 399, 823 P.2d 499 (1992). An assignee steps into

the shoes of the assignor, and has all the rights of the assignor. Mut. of Enumclaw Ins.

Co. v. USF Ins. Co., 164 Wn.2d 411, 424, 191 P.3d 866 (2008). The assignee's cause

of action is then direct, not derivative. Estate of Jordan v. Hartford Accident & Indem.

Co., 120 Wn.2d 490, 495, 844 P.2d 403 (1993). But, without assignment, a third party

claimant has no right of action against an insurance company for breach of the duty of

good faith. Tank v. State Farm Fire &Cas. Co.. 105 Wn.2d 381, 393, 715 P.2d 1133

(1986). In Tank, the Washington Supreme Court rejected CPA claims brought by third

parties against insurance companies, jd The court found nothing in the CPA's

statutory or regulatory language that gave third party claimants the right to sue. \±

12
No. 67832-9-1/13

Similarly, IFCA provides that "[a]ny first party claimant to a policy of insurance

who is unreasonably denied a claim for coverage or payment of benefits by an insurer

may bring an action in the superior court of this state to recover the actual damages

sustained." RCW 48.30.015(1). The statute defines "first party claimant" as "an

individual, corporation, association, partnership, or other legal entity asserting a right to

payment as a covered person under an insurance policy or insurance contract." RCW

48.30.015(4). IFCA allows the superior court to award reasonable attorney fees,

litigation costs, and unlimited trebling of actual damages. RCW 48.30.015(2), (3).

Millennium meets the first party definition.

IFCA clearly vests a cause of action with first party claimants. RCW

48.30.015(1). That is, individuals and businesses who own an insurance policy may

bring suit against their insurer for unreasonably denying a claim of coverage. The

purpose of IFCA is to protect individual policy holders from unfair practices by their

insurers. S.B. Rep. on Engrossed Substitute S.B. 5726, at 2, 60th Leg., Reg Sess.

(Wash. 2007); H.B. Rep. on Engrossed Substitute S.B. 5726, at 1, 60th Leg., Reg Sess.

(Wash. 2007). Just like the CPA, nothing in the language of IFCA gives third party

claimants the right to sue. And, nowhere does IFCA create an independent right for

insurers to bring a claim on their own behalf. We see no reason to conclude that an

IFCA claim should be treated differently than a CPA claim with respect to assignability.

However, without express assignment, an insurer may not independently assert its

insured's IFCA claims.

Trinity's conventional subrogation claim does not involve an assignment of rights

pursuant to a settlement agreement. Instead, Trinity relies exclusively on the

13
No. 67832-9-1/14

subrogation language of its insurance policy. Whether conventional subrogation and

assignment are equivalent in all respects is an open question. See Mut. of Enumclaw,

164 Wn.2d at 424. We do not address that question here. Nor do we address whether

public policy reasons may preclude the assignment of IFCA and CPA claims as part of

the insuring agreement. We address only whether the language of the policy here can

be fairly read as a matter of law to have granted Trinity an assignment of the right to

bring those claims.8

Trinity did not include the policy language in the trial court record. We granted

Trinity's motion pursuant to RAP 9.11 to supplement the record with the language of the

policy on which its claims rely. The policy subrogation language provides:

If the insured has rights to recover all or part of any payment we have

made under this Coverage Form, those rights are transferred to us. The

insured must do nothing after loss to impair them. At our request, the

insured will bring "suit" or transfer those rights to us and help us enforce

them.

This language does not expressly assign any IFCA and CPA claims of the insured to

the insurer. Trinity made no "payments under this coverage" on any IFCA or CPA claim

8 The meaning of a contract provision is a mixed question of law and fact,

because we ascertain the intent of the contracting parties by viewing the contract as a

whole, the subject matter and objective of the contract, all the circumstances

surrounding the making of the contract, the subsequent acts and conduct of the parties

to the contract, and the reasonableness of the interpretations advocated by the parties.

Berg v. Hudesman, 115 Wn.2d 657, 666-67, 801 P.2d 222 (1990). Where the facts are

undisputed, such as where the parties agree that the contract language controls and

there is no extrinsic evidence to be presented, courts may decide the issue as a matter

of law. Mut. of Enumclaw, 164 Wn.2d at 424 n.9. Here, Trinity relies exclusively on the

policy language to sustain conventional subrogation as to the IFCA and CPA claims.

Ohio was not a party to the insurance contract. Millennium, whose rights are being

asserted by Trinity, was not a purchaser of the policy, Cascade was. Millennium was an

additional insured under Trinity's policy by virtue of the Millennium-Cascade contract.

We address the meaning of the contract here as a matter of law.

14
No. 67832-9-1/15

in settling with Riley. Trinity paid a personal injury claim under its liability coverage.

Trinity recovered a judgment on those losses from Ohio based on subrogation of that

claim and equitable apportionment, which we affirm in this opinion. Nothing remains to

be reimbursed. Moreover, Millennium had no "right to recover" from Ohio. Millennium

was fully defended and fully covered by Trinity as to Riley's claims. It had no losses to

recover under IFCA and CPA claims. See Ledcor Indus.. Inc. v. Mut. of Enumclaw Ins.

Co., 150 Wn. App. 1, 11, 206 P.3d 1255 (2009). The policy language did not assign to

Trinity the right to assert IFCA and CPA claims Millennium might have had. Therefore,

Trinity lacked standing to assert IFCA or CPA claims under conventional subrogation

against Ohio.

Trinity also argues that it owned Millennium's IFCA and CPA claims under the

principle of equitable subrogation. Trinity contends that by virtue of completely

defending and indemnifying Millennium, Millennium's claims against Ohio automatically

transferred to Trinity by operation of law. As noted above, both the CPA claim and

IFCA claim belong to the insured, not the insurer. They may be assigned, but they are

not available to the insurer under equitable subrogation.

Trinity nevertheless cites two cases to argue that equitable subrogation entitled it

to assert Millennium's IFCA and CPA claims. First State Ins. Co. v. Kemper Nat. Ins.

Co., 94 Wn. App. 602, 971 P.2d 953 (1999); Truck Ins. Exch. of Farmers Ins. Grp. v.

Century Indem. Co., 76 Wn. App. 527, 529, 887 P.2d 455 (1995). But, we find those

cases inapposite here, because they deal with excess insurers, a unique class of

insurers.

15
No. 67832-9-1/16

The First State court, relying on Truck, held that an excess insurer may assert

CPA claims that its insured could have brought against the primary insurer, because the

excess insurer is equitably subrogated to the rights of its insured. 94 Wn. App. at 609.

When there is no excess insurer, the insured is his own excess insurer, jd. at 611. The

primary insurer owes him a duty of good faith to protect him from excess judgment and

personal liability. ]d But, if the insured purchases excess insurance, he in effect

substitutes an excess insurer for himself. ]d Therefore, the excess insurer steps into

the shoes of the insured. See id at 610. It then follows that the excess insurer

assumes the rights and obligations of the insured, jd

Therefore, the duty a primary insurer owes to an excess insurer is identical to

that owed the insured. ]d at 610-11. So, First State, as an excess insurer, could bring

a CPA claim against the primary insurer for badly mishandling litigation, which resulted

in First State having to pay $1 million out of its excess policy. ]d at 609. Allowing First

State to bring its insured's CPA claims promoted public policy by encouraging primary

insurers to settle within their policy limits. Id at 611.

Trinity is not an excess insurer. Rather, Trinity alleged that it and Ohio were

coprimary insurers. Trinity attempts to stretch the limited application of First State too

far by arguing that a coprimary insurer should be treated like an excess insurer and be

automatically equitably subrogated to the rights of its insured. While coprimary insurers

owe their insured a duty of good faith, Tank, 105 Wn.2d at 386, First State does not

hold that they owe one another that same duty. The policy concerns of First State are

also not at play between coprimary insurers. While both Trinity and Ohio may have had

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No. 67832-9-1/17

a duty to Millennium to defend and seek a reasonable settlement, they did not owe one

another that duty.

And, perhaps most importantly, automatic equitable subrogation of primary

insurers to the insureds' statutory rights would take from the insured the statutory

damages to which they are entitled any time the insurer defends and indemnifies its

insured. We find no basis in the statutory language of the CPA and IFCA or case law to

justify doing so. Equitable subrogation entitles a paying primary insurer to seek

reimbursement for losses paid. It does not allow the insurer to assert an insured's

statutory rights without express agreement. Nor does it authorize the insurer to retain

the proceeds of those claims. Trinity has not shown any express agreement by

Millennium—whether by assignment or conventional subrogation—to transfer to Trinity

the right to bring its statutory claims against Ohio, let alone to retain the proceeds of

such claims. Trinity remains a third party, without standing to assert Millennium's IFCA

and CPA claims against Ohio.

We therefore reverse the trial court's treble damages award under IFCA and the

CPA. However, by virtue of completely defending and indemnifying Millennium, Trinity

was equitably subrogated to Millennium with respect to losses it actually paid.

Accordingly, we affirm the trial court's award for costs Trinity paid in defending and

indemnifying Millennium.

IV. CR 60(b)(4) Misrepresentation in Obtaining Default

A default judgment may be vacated ifit resulted from "misrepresentation, or other

misconduct of an adverse party." CR 60(b)(4). Ohio argues that the default order and

judgment should be vacated, because it resulted from Trinity's misrepresentation and/or

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misconduct. Trinity's alleged misrepresentation comes from one line in its ex parte

motion for default: "Trinity, as assignee of Millennium, engaged its attorneys in this case

on a contingent fee basis." (Emphasis added.) Ohio argues that Trinity did not show

any evidence of Millennium's assignment of its CPA and IFCA claims and did not

support this assertion anywhere in its motion for default, so it constitutes an affirmative

misrepresentation. We have reversed the portion of the judgment based upon the CPA

and IFCA claims, making this issue moot. Trinity's status as an assignee is not material

to its status as an equitable subrogee. Therefore, we decline to vacate the balance of

the judgment on CR 60(b)(4) grounds.

V. Hearing and Findings

Ohio argues that Trinity's alleged damages were uncertain, so the trial court

erred by entering a default judgment without holding a hearing and making findings.

Ohio points out that Trinity alleged damages in its complaint "'in an amount to be proven

at trial.'" As a result, Ohio argues, Trinity failed to allege sum certain damages, so the

court should have conducted an evidentiary hearing and was required to make findings.

We agree that the lack of express findings would be troubling in regards to the trial

court's award for treble damages under IFCA and the CPA. But, again, we have

reversed that award.

We are not similarly troubled by the lack of a hearing and express findings as far

as the award for Trinity's defense and indemnification costs. Ohio is correct that a

default judgment must be limited to the amount demanded in the complaint. CR 54(c)

("A judgment by default shall not be different in kind from or exceed in amount that

prayed for in the demand for judgment."). Therefore, if a complaint alleges damages in

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an amount to be proven at trial, damages are uncertain and require findings. CR

55(b)(2). However, CR 55(b)(2) specifies that a court "may conduct such hearings as

are deemed necessary." (Emphasis added.) Even where damages are uncertain, the

trial court has considerable discretion in determining the extent of proof needed. Miller

v. Patterson, 45 Wn. App. 450, 460, 725 P.2d 1016 (1986). Presentation of live

testimony is not required. See id Rather, the court's judgment may be based on

affidavits or declarations, jd

Moreover, the Washington Supreme Court has held that even where a default

judgment does not contain express findings and conclusions, implied findings may be

sufficient. Little, 160 Wn.2d at 706-07. In Little, the judge did not make express

findings and conclusions in her default judgment. 160 Wn.2d at 706. But, she listed all

the materials she considered and entered a default judgment in specific amounts. ]d at

707. The Washington Supreme Court agreed with the Court of Appeals that "'[t]his

necessarily implies a finding of fact that Little suffered damages in the given amounts

and the conclusion of law that Little was entitled to recover those sums from King.'" Id

(alteration in original). Such implied findings of fact may be sufficient, because CR

55(b)(2) does not define what constitutes adequate findings of fact and conclusions of

law. ]dat706.

Ohio had reasonable notice that it could be liable for the entire amount of

defense and indemnification costs. In the December 2009 letter to Ohio, Trinity

declared its intent to recover defense and indemnification costs if Ohio did not accept

retender of defense. Trinity argued that Ohio may be entirely responsible for

indemnification and defense of Millennium, depending on whether Millennium and/or

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Cascade were determined to be at fault. Trinity did not allege sum certain damages in

its complaint, but from a fair reading of Trinity's complaint, it is apparent that Ohio might

be liable for the entire amount of settlement and defense costs. Trinity repeatedly

discusses Ohio's duty to defend its insured and responsibility for indemnification.

Therefore, the amounts Trinity requested in its complaint and later in its ex parte motion

do not differ substantially.

In its ex parte motion for default, Trinity listed the entire out-of-pocket amount it

paid to defend and indemnify Millennium. And, Trinity explained that these expenses

should have been borne by Ohio alone, based on Ohio's policy with Millennium. Trinity

attached a declaration and detailed payment history verifying these costs. The trial

court was entitled to base its judgment on this evidence. See Miller, 45 Wn. App. at

460. It did not need to conduct a separate hearing with live testimony. See id The

court's order of default and judgment explained that its decision was based on the

provided declarations, record, and pleadings. Like in Little, this necessarily implies a

finding of fact that Trinity suffered the damages described and the conclusion of law that

Trinity was entitled to recover those sums from Ohio. The trial court acted within its

discretion in relying on the evidence Trinity provided. Because the trial court made

implied findings and did not need to hold an evidentiary hearing, we decline to reverse

Trinity's award for defense and indemnification costs.

VI. Attorney Fees

Ohio asks this court to vacate the trial court's award of attorney fees in this action

to Trinity. Below, the trial court cited three legal grounds for the $32,400 attorney fees

award: the CPA, IFCA, and the Olympic Steamship doctrine. Olympic S.S. Co. v.

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No. 67832-9-1/21

Centennial Ins. Co.. 117 Wn.2d 37, 52, 811 P.2d 673 (1991). Conversely, Trinity

requests attorney fees on appeal, pursuant to RAP 18.1, for the same reasons it was

awarded fees below.

Trinity does not have standing to assert Millennium's IFCA and CPA claims. The

attorney fee award cannot be sustained on these bases. Nor does Olympic Steamship

provide a basis for the award of fees on these facts.

Under the Olympic Steamship doctrine, courts may award fees to an insured who

successfully sues an insurer to obtain insurance coverage. 117 Wn.2d at 52.

Assignees of the insured may also recover fees if they are compelled to sue an insurer

to secure coverage. McRorv v. N. Ins. Co. of N.Y., 138 Wn.2d 550, 556, 980 P.2d 736

(1999). Similarly, the Mid-Continent court allowed attorney fees when the insurer was

contractually subrogated to the rights of the insured. Order Granting Def. Titan's Mot.

for Att'y Fees, Mid-Continent Cas. Co. v. Titan Constr. Corp., No. C05-1240MJP, 2009

WL 2391527, at *2, 2009 U.S. Dist. LEXIS 72424, at *5 (W.D. Wash. Aug. 3, 2009).

There, the insured remained the real party in interest. Id

In contrast, in Safeco, we denied an award of Olympic Steamship fees when the

insurer asserted its own equitable contributions rights. Safeco. Ins. Co. of III, v. Country

Mut. Ins. Co., 165 Wn. App. 1, 8-9, 267 P.3d 540 (2011). Here, Trinity's claims against

Ohio were not based on an assignment or contractual subrogation of rights by

Millennium. See id at 8. Having failed to produce evidence of assignment or

contractual right, Trinity lacked standing to assert those claims of the insured. Rather,

Trinity's claim arose from its own equitable subrogation rights as the paying insurer, not

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the rights of the insured. Trinity is not entitled to attorney fees under Olympic

Steamship,.

For these reasons, the attorney fees awarded below are reversed, and attorney

fees on appeal are denied.

We affirm in part, reverse in part, and remand to the trial court to correct the

judgment.

WE CONCUR:

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