Opinion ID: 2597485
Heading Depth: 1
Heading Rank: 7

Heading: bad faith and consumer protection act claims

Text: Mulcahy alleges several acts of bad faith by Farmers: failing to disclose possible coverage under the PAU, failing to properly investigate the facts and law, overemphasizing its own interest without equal consideration for Mulcahy's interests, compelling Mulcahy to litigate her rights under the policy, and denying her first party no-fault benefits under the PAU in accordance with British Columbia's compulsory automobile insurance law. Farmers defends its actions by claiming, as a matter of law, it could not have acted unreasonably because the issues raised are matters of first impression in Washington. The Court of Appeals applied the summary judgment standard purportedly introduced in Ellwein v. Hartford Accident & Indemnity Co., 142 Wash.2d 766, 15 P.3d 640 (2001). Mulcahy v. Farmers Ins. Co. of Wash., No. 49657-3-I, slip op. (unpublished portion) at 25-26 (Wash.Ct.App. Nov. 25, 2002). [10] The Ellwein standard, which had been interpreted by some as creating a new summary judgment standard that benefits insurers accused of bad faith, was explicitly rejected by this court in American States Insurance Co. v. Symes of Silverdale, Inc., 150 Wash.2d 462, 470, 78 P.3d 1266 (2003). The Court of Appeals correctly noted that [a]cts performed in good faith under an arguable interpretation of existing law do not constitute unfair conduct violative of the consumer protection law. Mulcahy, No. 49657-3-I, slip op. at 25 (emphasis added). However, we hold it erroneously implied that acts under an arguable interpretation of existing law are, as a matter of law, always performed in good faith. See Smith v. Safeco Ins. Co., 150 Wash.2d 478, 486, 78 P.3d 1274 (2003). On remand, summary judgment is not appropriate if reasonable minds could differ that the insurer's conduct was reasonable, or if there are material issues of fact with respect to the reasonableness of the insurer's action. Id. Additionally, Mulcahy alleges that many of Farmers' alleged acts of bad faith also violate the CPA. Specifically, she claims Farmers' actions violate WAC 284-30-330, which defines unfair claims settlement practices, and WAC 284-30-350, which requires full disclosure to first party claimants of all pertinent benefits, coverages, and other provisions. Because we find the Court of Appeals applied the wrong standard in dismissing Mulcahy's bad faith claims, we also hold that her CPA claims which are based, in part, upon the alleged acts of bad faith may also have been improperly dismissed. We reverse summary judgment on the bad faith and CPA claims and remand for further proceedings consistent with this opinion.