Opinion ID: 2631046
Heading Depth: 2
Heading Rank: 2

Heading: Other issues Fireman's raised at the Court of Appeals

Text: ¶ 55 The Court of Appeals did not resolve certain issues because it determined that Fireman's had no duty to defend Woo. RAP 13.7 requires us to either consider and decide those issues or remand the case to the Court of Appeals to decide them. We elect to decide them rather than remand to the Court of Appeals. ¶ 56 Fireman's raised four additional arguments at the Court of Appeals: (1) that the jury's bad faith and CPA violation verdict could not be upheld on appeal if the Court of Appeals found that Fireman's correctly declined to defend Woo on only some of the policy provisions, (2) that the jury verdict could not be upheld because the trial court erred in instructing the jury that Fireman's had breached its duty to defend, (3) that the trial court erred in resolving its claim of collusion in the settlement between Woo and Alberts, and (4) that the trial court erred in denying relief from emotional distress damages the jury awarded to Woo based on Fireman's refusal to defend him.
¶ 57 Fireman's argues that if the Court of Appeals is reversed on only some of the duty to defend claims, it should remand for new trial because there was insufficient proof of bad faith if Fireman's correctly refused to defend with regard to some of the claims. Fireman's admits, however, that the bulk of Woo's case revolved around the professional liability provision. Woo argues that Fireman's waived this issue because it failed to propose a special verdict identifying the coverages under which the jury found bad faith. ¶ 58 Because Fireman's acknowledges that the bulk of Woo's case related to the professional liability provision and we reverse the Court of Appeals with respect to that provision, we conclude the jury's verdict that Fireman's acted in bad faith is not compromised and a new trial is not warranted.
¶ 59 Fireman's claims that the trial court erred in instructing the jury that Fireman's breached its duty to defend. The trial court's instruction stated: The issues for you to decide are whether defendant Fireman's Fund failed to act in good faith in handling and investigating Dr. Woo's claim, and whether defendant Fireman's Fund violated the Washington Consumer Protection Act. The Court has already determined that defendant Fireman's Fund erred in not defending Dr. Woo. However, an insurance company can be in error in its determination on the duty to defend and not be in bad faith so long as its determination was not unreasonable, frivolous or unfounded. The Court's earlier decision on the duty to defend does not control your decisions in this case. Clerk's Papers (CP) at 3559. ¶ 60 Fireman's seems to think the instruction was erroneous because it left the jury to wonder about coverage. However, the jury was not asked to determine if the policy provided coverage. Woo sought a declaration that Fireman's was estopped from denying coverage based on the duty to defend determination. The jury was asked only to determine if Fireman's acted in bad faith and in violation of the CPA by refusing to defend. ¶ 61 We conclude the trial court did not err in instructing the jury that Fireman's breached its duty to defend.
¶ 62 Fireman's claims the trial court erroneously resolved its claim of collusion in the settlement between Woo and Alberts. It argues that the court conflated the purpose of the reasonableness hearing with the question of whether the agreement was the result of fraud or collusion, thereby failing to conduct the appropriate analysis. ¶ 63 Woo responds that the court analyzes collusion twice, (1) in evaluating the reasonableness of the settlement and (2) in determining whether the settlement was the result of fraud or collusion. Once the court determines the settlement is reasonable, Fireman's has the burden of proving collusion and it failed to provide such evidence at trial. Truck Ins., 147 Wash.2d at 765, 58 P.3d 276. In contrast, Woo cited testimony of attorney John Versnel, who stated unequivocally that the settlement was devoid of any bad faith, collusion or fraud. Br. of Resp'ts at 48-49. Woo challenged the list of cases cited by Fireman's in which the insured escaped liability, noting that he did not, and noted that Fireman's never provided any suggestions regarding what a reasonable settlement would have been. Finally, Woo pointed to extensive evidence that he mounted a vigorous defense prior to settling with Alberts. ¶ 64 We conclude the trial court did not err in resolving Fireman's collusion claim regarding the settlement between Woo and Alberts.
¶ 65 Fireman's argues that the trial court erred in denying relief from the jury's award of damages for emotional distress based on Fireman's refusal to defend him. Appellants' Opening Br. at 66-67. It claims that Woo failed to present evidence about his emotional distress, other than his own testimony. Id. The court acknowledged that the damages could be viewed as extraordinarily high given the absence of any medical, psychiatric or expert testimony, but noted that Fireman's provided virtually no authority or support for [its] argument and the court could not substitute its judgment for that of the jury. CP at 3969. ¶ 66 We conclude the trial court did not err in denying Fireman's relief from the jury's damages award.