Source: http://kirschenbaumesq.com/article/joel-johnson-appellant-v-safeco-insurance-company-of-america-et-al-respondents-no-68029-3-i-court-of-appeals-of-washington-division-one-2013-wash-app-lexis-2182
Timestamp: 2019-04-19 22:28:22+00:00

Document:
Joel Johnson, Appellant, v. Safeco Insurance Company of America et al., Respondents.
As amended by order of the Court of Appeals December 20, 2013. Order Granting Motion to Publish January 15, 2014.
Superior Court: After entering a summary judgment in favor of one of the insurers, the Superior Court for King County, No. 10-2-03695-4, Carol A. Schapira, J., on November 18, 2011, granted the other insurer's CR 50 motion for judgment as a matter of law and dismissed the plaintiff's complaint with prejudice, ruling that the plaintiff intentionally misrepresented material facts concerning his insurance claim.
Court of Appeals: Holding that the homeowner was provided sufficient notice of cancellation for failure to pay a renewal premium for the first insurer to cancel its policy and that the homeowner's intentional misrepresentations of material facts in the course of the claim proceedings precluded his claims for bad faith and statutory violations against the second insurer, the court affirms the both summary judgment and the judgment as a matter of law.
 Insurance -- Construction of Policy -- Question of Law or Fact -- Standard of Review. The interpretation of an insurance contract is a question of law that is reviewed de novo.
 Insurance -- Construction of Policy -- As a Contract -- In General. Insurance policies are construed in the same manner as contracts.
 Insurance -- Construction of Policy -- Policy as a Whole -- Meaning to All Provisions -- In General. In determining the legal effect of an insurance contract, a court must construe the contract as a whole so as to give force and effect to each clause.
 Insurance -- Construction of Policy -- Unambiguous Language -- Effect. When the language of an insurance contract is unambiguous, a court must enforce the language as written and may not modify the contract or create an ambiguity where none exists.
 Insurance -- Renewal of Policy -- Mailing Copy of Renewed Policy -- Payment of Premium -- Necessity. An insurer's mailing to an insured a copy of a renewal policy does not effect an automatic renewal for the next policy period if theenewal notice and the express terms of the policy require payment of a premium before the policy can renew.
 Contracts -- Formation -- Acceptance -- Identical Terms as Offer -- Necessity. An acceptance of an offer to contract must be identical to the offer made or no contract is formed.
 Insurance -- Renewal of Policy -- Contractual Terms -- Applicability -- In General. In the absence of a restrictive statutory provision, an insurer and an insured have the right to specify in their insurance contract the method by which the policy can be renewed.
 Insurance -- Cancellation -- Notice -- Mailing -- Sufficiency. Under RCW 48.18.293(2), proof of mailing of notice of cancellation of an insurance policy is proof of notice of the policy's cancellation.
 Appeal -- Review -- Issues First Raised in Reply Brief -- In General. An issue raised for the first time in a reply brief is too late to warrant the court's consideration.
 Trial -- Taking Case From Jury -- Sufficiency of Evidence -- Judgment as a Matter of Law -- Review -- Standard of Review. A trial court's ruling on a CR 50 motion for judgment as a matter of law is reviewed de novo.
to the plaintiff, can say, as a matter of law, that the record lacks competent and substantial evidence or does not support a reasonable inference on which a verdict in favor of the plaintiff could be sustained.
 Insurance -- Good Faith -- Insurer's Bad Faith -- Insured's Right of Action -- Fraud by Insured -- Effect. An insured who intentionally misrepresents material facts in making a claim for coverage may not pursue a claim against the insurer for bad faith.
for a violation of the Consumer Protection Act (ch. 19.86 RCW).Schindler, J., delivered the opinion for a unanimous court.
COUNSEL: Joel Hanson, for appellant.
John M. Silk, Sarah Eversole, David M. Jacobi, and Shawnmarie Stanton (of Wilson Smith Cochran Dickerson) and Joseph D. Hampton and Jeffrey S. Tindal (of Betts, Patterson & Mines PS), for respondents.
JUDGES: AUTHOR: Schindler, J. WE CONCUR: Lau, J., Dwyer, J.
¶1 Schindler, J. -- Joel Johnson appeals summary judgment dismissal of his claims against Safeco Insurance Co. and the order granting the CR 50 motion to dismiss his bad faith claim and claims against Mount Vernon Fire Insurance Co. under the Consumer Protection Act (CPA), chapter 19.86 RCW. We affirm.
¶2 The material facts are not in dispute. Joel Johnson owned a house in Edmonds located at 5703 145th Street Southwest and had a "Quality-Plus Homeowners Policy" with Safeco Insurance Co. On July 22, 2008, Johnson refinanced the Edmonds house with Taylor Bean & Whitaker Mortgage Corp. (TBW).
TBW assumed responsibility for paying the insurance premium from the escrow account.
¶4 On September 28, 2008, Safeco sent TBW and Johnson a renewal notice for the upcoming 12-month policy period of November 17, 2008 to November 17, 2009. In October, TBW sent Safeco a check for the premium amount due to renew the policy. But TBW stopped payment on the check and did not reissue another check to pay for the premium.
¶5 On December 2, Safeco sent Johnson an expiration notice. The notice states that Safeco had not received the renewal premium from the mortgage company. The notice gave Johnson until January 5, 2009 to send Safeco the premium to "keep your policy in effect." Neither Johnson nor TBW paid the premium to renew the homeowners' insurance policy.
¶6 On January 11, 2009, Safeco sent a notice of cancellation to TBW stating that the mortgage company's interest in the policy would be cancelled on February 5. At some point after receipt of the notice of cancellation from Safeco, TBW obtained a "lender placed" homeowners' insurance policy for Johnson's house with Mount Vernon Fire Insurance Co. The policy was effective from November 17, 2008 to November 17, 2009.
¶7 On January 25, 2009, the chimney in Johnson's house caught fire. The fire destroyed the house and [*3] personal property. Johnson moved into his rental property in Seattle.
¶8 When Johnson contacted Safeco, Safeco told him the policy expired because the premium was not paid. TBW informed Johnson that the Mount Vernon policy would cover the fire-related structure repairs, damaged personal property, and additional living expenses (ALE).
¶9 Johnson submitted a claim to Mount Vernon. Mount Vernon assigned Maureen Connor to process the claim. Mount Vernon also retained an independent local adjuster, Tony Brown. Brown inspected the property on February 6. On February 23, Brown submitted an estimate for the structural repairs of $133,041.30, plus an allowance for personal property. On February 25, Mount Vernon authorized payment for the full cost of repair. But after discovering the Safeco policy was in effect as to TBW, Mount Vernon cancelled payment. On April 27, Mount Vernon filed a claim with Safeco.
¶10 In early May, Johnson told Brown that he was living in his rental property and the rent was $1,800 a month. Johnson said that he moved into his unoccupied rental "to mitigate his exposure (ALE)."
substantive documentation to support his claim."
Johnson contacted Brown to request additional ALE. On September 21, Ziff told Johnson that he had 30 days to provide documentation to support his ALE claim or Mount Vernon would close the claim.
¶13 Safeco concluded that TBW was entitled to coverage for the structural damage to Johnson's house. In June, Safeco entered into an agreement with Mount Vernon to pay 51 percent of the structural repair costs. On June 20, Safeco paid its share of its estimate of the actual cash value of the structure.
property or any documentation to support his ALE claim.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1 On February 9, 2011, Mount Vernon issued its final payment for the cost of the repairs in the amount of $33,949.40.
Vernon denied ALE coverage on the grounds that the policy did not cover lost rent.
¶16 On December 18, Johnson notified Mount Vernon that he planned to file a claim under the Insurance Fair Conduct Act, chapter 48.30 RCW, for unreasonable denial or delay for ALE payments. Mount Vernon agreed to pay Johnson an additional $1,250 a month for the previous six months.
damage, and ALE. Johnson alleged TBW had a contractual duty "to properly and timely make his insurance payments to avoid any cancellation of his insurance policy" with Safeco. Johnson alleged Mount Vernon breached its contractual duty to pay for the cost of structural repairs, personal property damage, and living expenses. Johnson alleged Mount Vernon also failed "to conduct a reasonable investigation of the fire loss, and fail[ed] to provide for the timely repair and/or rebuilt of his dwelling to its original pre-loss condition with like, kind, and quality materials and professional workmanship."
¶18 Johnson also alleged that Safeco and Mount Vernon violated the insurance regulatory provisions of the Washington Administrative Code (WAC); violated the Consumer Protection Act (CPA), chapter 19.86 RCW, and the Insurance Fair Conduct Act, chapter 48.30 RCW; and breached the duty of good faith and fair dealing. After TBW filed for bankruptcy, Johnson voluntarily dismissed TBW without prejudice.
The relevant law here that has to do with renewal of a policy or a cancellation. Either way, Safeco's properly met its obligations here. The notices were sent. Mr. Johnson didn't renew the policy.
I recognize that it may have been the responsibility of [TBW] to do that, but nevertheless, it's not Safeco's fault that the policy wasn't renewed and therefore, Safeco doesn't have any liability here.
¶20 The trial on the claims against Mount Vernon was scheduled to begin on October 3, 2011. On August 18, Johnson filed a motion for summary judgment on the breach of contract claim for ALE. Johnson argued that he was entitled to lost rental income of $1,800 a month.
¶21 On August 31, Mount Vernon took Johnson's deposition. Johnson testified that Dean Little signed the lease on May 15, 2008 and the Littles rented the upstairs portion of the duplex for $1,800 a month from May 2008 to December 2008. But Johnson later admitted that he had forged the lease and asserted the lease reflected the oral agreement he had with the Littles. [*8] Mount Vernon filed an amended answer asserting misrepresentation and fraud as an affirmative defense.
¶22 Mount Vernon filed a motion for entry of a judgment as a matter of law to dismiss. In support, Mount Vernon filed the affidavit of Dean Little. Little states that he and his spouse rented the basement apartment of Johnson's duplex from May 2008 to March 2009 for $750 a month, and they did not sign a lease.
material fact related to the insurance. (Homeowners 3, condition Q) .
3. [*9] In May 2009, plaintiff submitted a letter to Mt. Vernon requesting that he be paid $1,800 per month in additional living expenses ("ALE").
4. In November 2009, plaintiff submitted a document entitled "Rental Agreement" to Mount Vernon as evidence in support of his claim for $1,800 per month in ALE under Mount Vernon's policy.
contain the signatures of plaintiff and Pete Little.
of the agreement he had with Pete and Evon Little.
8. Whether plaintiff is entitled to ALE in addition to that which was paid prior to litigation has been at issue in this case since the beginning.
9. The Rental Agreement is a blank legal form which was filled in by plaintiff. The legal form in question did not exist on its purported May 15, 2008 date of execution as one of the pages of the Rental Agreement was not available for sale to the public until 2009. The Rental Agreement cannot be a genuine agreement between plaintiff and Pete and Evon Little.
arid Evon Little from May 15, 2008 to some time in December, 2008 for the amount of $1,800 per month.
able to locate Mr. Little and Ms. Calizar.
12. Dean Little is also known as Pete Little. Mr. Little testified in an affidavit that he and his wife did rent property from plaintiff, but (a) they rented the downstairs apartment at 9038 4th Avenue Southwest, Seattle, and not the upstairs with the address 9036 4th Avenue Southwest, Seattle; (b) they paid plaintiff $750 per month, not $1,800 per month; (c) they never signed a rental agreement; (d) they lived in the basement apartment from May of 2008 to March of 2009.
13. Plaintiff has not disputed any of the foregoing evidence, and in pleadings filed with the Court, plaintiff's counsel concedes the foregoing evidence.
¶24 The court concluded there was no genuine issue of fact for trial, and under the "controlling case law authority, Mutual of Enumclaw Ins. Co. v. Cox, 110 Wn.2d 643[, 757 P.2d 499] (1988) and Onyon v. Truck lns. Exch., 859 F.Supp. 1338 (W.D. Wash. 1994); [and] [*12] Kim v. Allstate[ Ins. Co., 153 Wn. App.
339, 223 P.3d 1180 (2009)],"
pay $22,500 in attorney fees and costs.
¶26 Johnson contends the court erred in dismissing his claims against Safeco for breach of the insurance contract, bad faith, and violation of the CPA.
¶27 When review summary judgment de novo. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). [*13] Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
CR 56(c); White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997).
134 Wn.2d 713, 721, 952 P.2d 157 (1998).
[I]t is now time to renew your Quality-Plus Homeowners policy. . .
amount to your mortgage servicing company.
computed at our then current rate for coverage then offered.
except by endorsement issued by us.
INSURING AGREEMENT: In reliance on the information you have given us, we will pay claims and provide coverage as described in this policy if you pay the premiums when due and comply with all the applicable provisions outlined in this policy.
The plain and unambiguous language of the policy requires payment of the premium in order to renew the policy.
policy. In Frye v. Prudential Insurance Co. of America, 157 Wash. 88, 95, 288 P.
of allowing the insured to make late payments. See also McGreevy v. Or. Mut.
policy not effective where insured had no notice of the changes); Webster v.
dispute that policy had been issued).
(1994). The plain language of the policy required payment of the premium.
the failure to pay a renewal premium.
was being given an opportunity to reinstate.
Irish, 37 Wn. App. at 557-58.
[*19] the expiration of the current policy period."
Safeco elects not to renew the policy does not apply.
November 17, 2008. Your Homeowners policy expired at 12:01 a.m.
standard time on November 17, 2008.
ensure that payment is sent in time to keep your policy in effect.
6 In his reply brief, Johnson cites Whistman v. West American, 38 Wn. App.
policy language was ambiguous, the notice of cancellation was not effective.
plain language of the policy and RCW 48.18.290(1)(c).
reason for canceling the policy.
before the effective date of the cancellation.
mailing as are therein affirmed.
unrebutted evidence establishes Safeco mailed the December 2 notice to Johnson.
were received); Kaiser Aluminum & Chem. Corp. v. Dep't of Labor & Indus., 57 Wn.
App. 886, 889-90, 790 P.2d 1254 (1990).
you, as interests appear. . . .
25 Wn. App. at 769.
interest in this policy is cancelled. Coverage will end at 12:01 a.m.
reply brief is too late to warrant consideration).
expenses" in violation of the WAC and the CPA.
¶45 Johnson does not challenge dismissal of his contract claims. Nor can he.
3. Made false statements; relating to this claim.
Supreme Court's decision in Cox is dispositive. We agree with Mount Vernon.
Wn.2d 907, 915, 32 P.3d 250 (2001).
by submitting a fraudulent lease "in order to obtain ALE benefits under the Mt.
misrepresented any material fact or circumstance. Cox, 110 Wn.2d at 646.
valued at $35,000 to $40,000. Cox, 110 Wn.2d at 646.
MOE's motion for judgment notwithstanding the verdict. Cox, 110 Wn.2d at 648.
, 110 Wn.2d at 648.
when to do so would provide a windfall to one guilty of fraud.
hold that Cox is not entitled to recovery under the CPA.
Cox, 110 Wn.2d at 652-53.
[*30] is not entitled to sue the insurer for bad faith or violation of the CPA).
fraud, he is entitled to pursue the bad faith and CPA claims.
both the insurer and insured engaged in wrongful acts. See Wickswat, 78 Wn. App.
Cox or here where no third party beneficiary is involved. See Wickswat, 78 Wn.
¶58 Johnson's reliance on Oregon Mutual Insurance Co. v. Barton, 109 Wn. App.
the settlement. Barton, 109 Wn. App. at 416.
for judgment as a matter of law.
¶60 We affirm dismissal of Johnson's lawsuit against Safeco and Mount Vernon.
Dwyer and Lau, JJ., concur.

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