Opinion ID: 2551829
Heading Depth: 1
Heading Rank: 4

Heading: wac 284-30-380

Text: Hayden Farms argues that WAC 284-30-380, [2] which requires insurers to specify the grounds for denying a claim in their written denial, precluded MOE from raising additional grounds for denial beyond those cited in its initial letter. Br. of Appellants at 15. Hayden Farms asserts that WAC 284-30-380's preclusive effect applies regardless of whether there was prejudice to the insurer or whether the insured acted in bad faith. See Suppl. Br. of Pet'r at 9-13. The Court of Appeals disagreed finding that the regulation was not violated based on subsection (2) and that preclusion was inappropriate absent prejudice. See Hayden, 95 Wash.App. at 567-68, 977 P.2d 608. We agree with the Court of Appeals, but only in so far as we find that WAC 284-30-380 does not have a preclusive effect and that preclusion or estoppel is inappropriate absent either prejudice or bad faith. Under the Consumer Protection Act (CPA), individuals are vested with a private cause of action against insurers for unfair or deceptive practices. Industrial Indem. Co. of the N.W., Inc. v. Kallevig, 114 Wash.2d 907, 920, 792 P.2d 520, 7 A.L.R.5th 1014 (1990) (citing RCW 19.86.090). Individuals bringing such actions must show (1) an unfair or deceptive act or practice; (2) in trade or commerce; (3) that impacts the public interest; (4) which causes injury to the party in his business or property; and (5) which injury is causally linked to the unfair or deceptive act. Kallevig, 114 Wash.2d at 920, 792 P.2d 520 (citing case). One way the first two elements can be satisfied is by establishing a violation of WAC 284-30. See Kallevig, 114 Wash.2d at 923, 792 P.2d 520 (A violation of WAC 284-30-330 constitutes a violation of RCW 48.30.010(1), which in turn constitutes a per se unfair trade practice by virtue of the legislative declaration in RCW 19.86.170.); accord Van Noy v. State Farm Mut. Auto. Ins., 98 Wash.App. 487, 496, 983 P.2d 1129 (1999) (first two elements of CPA claim satisfied by showing alleged act constituted per se unfair trade practice). Consequently, the regulations within WAC 284-30 do not, in and of themselves, create causes of action and require an attendant CPA claim to be given effect. However, even if Hayden Farms had asserted a successful CPA claim utilizing WAC 284-30-380, it would not have received the requested remedy. The specified remedies are: actual damages; fines and penalties; cease and desist orders; and the denial, suspension or revocation of an insurer's license. Preclusion and estoppel are conspicuously absent from the list. See WAC 284-30-400; RCW 19.86.090, .140; RCW 48.05.140(1); RCW 48.30.010. Their absence is determinative because, as the CPA explicitly dictates, no penalty or remedy shall result from a violation of this chapter except as expressly provided herein. RCW 19.86.170. Having shown that WAC 284-30-380 does not have a preclusive effect, Hayden Farms is left relying on traditional forms of estoppel available in insurance cases. Under these forms of estoppel, insureds must demonstrate that they either suffered prejudice or the insurer acted in bad faith when the insurer failed to raise all its grounds for denial in its initial denial letter. Bosko v. Pitts & Still, Inc., 75 Wash.2d 856, 864, 454 P.2d 229 (1969) (traditional equitable estoppel requires prejudice) (citing cases); Kirk v. Mt. Airy Ins. Co., 134 Wash.2d 558, 563-65, 951 P.2d 1124 (1998) (insurance bad faith estoppel, as the name implies, requires bad faith denial by insured). Hayden Farms, however, failed to allege either prejudice or bad faith and, thus, neither of these forms of estoppel apply. Consequently, while the basis of our decision may differ, we affirm the Court of Appeals' ultimate conclusion that MOE was not precluded from raising additional defenses on summary judgment. We next turn to the issue of whether MOE properly denied its duty to defend Krause. B.