Opinion ID: 2585831
Heading Depth: 2
Heading Rank: 2

Heading: Misappropriation of an Expert Witness

Text: The Ellweins assert that, by continuing to use accident reconstruction expert Cooper as its own witness after the UIM claim was made, Hartford violated its duty of good faith. Hartford refutes this claim, arguing that Cooper was its witness because it retained him on its own behalf. Under Hartford's theory, as a UIM insurer, it stood in the shoes of the underinsured motorist and, thus, was under no obligation that would have prevented it from utilizing Cooper's services in defending against the UIM claim. [9] While we agree that insurers' duties differ in the UIM context, we nevertheless find that Hartford acted in bad faith with respect to Cooper. The real issue in this case is: what is the nature of a UIM insurer's duty of good faith toward its insured? Or, more specifically, does a UIM insurer violate its duty of good faith by hiring an expert for its insured to aid in the insured's liability representation, and then retaining that expert to aid in its defense of an insured's UIM claim? In addressing this issue, we (1) compare the nature of the reservation of rights context and the UIM context to determine the applicable duty of good faith and (2) apply that duty to the facts of this case. When an insurer defends its insured under a reservation of rights, an insurer is nearly a fiduciary of the insured. Safeco Ins. Co. of Am. v. Butler, 118 Wash.2d 383, 389-90, 823 P.2d 499 (1992); Tank v. State Farm Fire & Cas. Co., 105 Wash.2d 381, 385-86, 715 P.2d 1133 (1986) (citing case). While the insurer does not have to place the insured's interests above its own, it is required: to give equal consideration to the insured's interests. Thus, an insurance company's duty of good faith rises to an even higher level than that of honesty and lawfulness of purpose toward its policyholders: an insurer must deal fairly with an insured, giving equal consideration in all matters to the insured's interests. Tank, 105 Wash.2d at 385-86, 715 P.2d 1133 (citation omitted). The Tank court, at page 388, went on to list four specific criteria to meet this enhanced obligation: First, the company must thoroughly investigate the cause of the insured's accident and the nature and severity of the plaintiff's injuries. Second, it must retain competent defense counsel for the insured. Both retained defense counsel and the insurer must understand that only the insured is the client. Third, the company has the responsibility for fully informing the insured not only of the reservation of rights defense itself, but of all developments relevant to his policy coverage and the progress of his lawsuit. Information regarding progress of the lawsuit includes disclosure of all settlement offers made by the company. Finally, an insurance company must refrain from engaging in any action which would demonstrate a greater concern for the insurer's monetary interest than for the insured's financial risk. On the other hand, the relationship between a UIM insurer and its insured is by nature adversarial and at arm's length. Fisher v. Allstate Ins. Co., 136 Wash.2d 240, 249, 961 P.2d 350 (1998). UIM insurance provides an excess layer of coverage that is designed to provide full compensation for all amounts that a claimant is legally entitled to where the tortfeasor is underinsured. Allstate Ins. Co. v. Dejbod, 63 Wash.App. 278, 281, 818 P.2d 608 (1991). Legally entitled to is the operative phrase, as a UIM insurer stands in the shoes of the tortfeasor, and its liability to the insured is identical to the underinsured tortfeasor's, up to the UIM policy limits. Dayton v. Farmers Ins. Group, 124 Wash.2d 277, 281, 876 P.2d 896 (1994); see also Dejbod, 63 Wash.App. at 281-82, 818 P.2d 608. Stated otherwise, UIM insurers are allowed to assert liability defenses available to the tortfeasor because UIM insurance is designed to place the insured in the same position as if the tortfeasor carried liability insurance.... The injured party is not entitled to be put in a better position by having been struck by an uninsured motorist as opposed to an insured motorist. Dayton, 124 Wash.2d at 281, 876 P.2d 896. As is evident from the above, Tank 's enhanced obligation rule is simply unworkable in the UIM context. How could a UIM insurer stand in the shoes of the tortfeasor, with the ability to assert liability defenses, while at the same time give equal consideration to the insured's interest? UIM coverage requires that a UIM insurer be free to be adversarial within the confines of the normal rules of procedure and ethics. To require otherwise would contradict the very nature of UIM coverage. Having found that an enhanced duty does not exist does not mean, however, that the duty of good faith simply disappears after a UIM claim is made. Many other courts have held, as we do today, that the duty of good faith and fair dealing survives within the UIM relationship. This is because, although the relationship becomes adversarial, the insured still has the `reasonable expectation' that he will be dealt with fairly and in good faith by his insurer.... Craft v. Economy Fire & Cas. Co., 572 F.2d 565, 568-69 (7th Cir.1978); accord Tait v. Royal Ins. Co., 913 F.Supp. 621 (D.Me.1996); Hendren v. Allstate Ins. Co., 100 N.M. 506, 672 P.2d 1137, 1140-41 (Ct.App.1983); MFA Mut. Ins. Co. v. Flint, 574 S.W.2d 718, 720-21 (Tenn.1978); Palmer v. Farmers Ins. Exch., 261 Mont. 91, 861 P.2d 895, 913 (1993); State Farm Mut. Auto. Ins. Co. v. Canady, 197 W.Va. 107, 475 S.E.2d 107, 115 (1996). Taking a cue from the Court of Appeals of New Mexico: The rule we adopt does not mean that the insurer is precluded from defending the uninsured motorist or from evaluating the claim any differently than it would have had it provided third party coverage. What it does mean, however, ... is that the insurer must deal in good faith and fairly as to the terms of the policy and not overreach the insured, despite its adversary interest. Hendren, 672 P.2d at 1141. [10] Applying this basic standard of good faith, we find that Hartford committed bad faith as a matter of law. First, we find Hartford's claim that it believed Cooper was its expert disingenuous. Hartford clearly understood Cooper to be the Ellweins' expert, and intended to manipulate his conclusions, as is evidenced by its apparent satisfaction in having been able to get their reconstruction expert to reevaluate his position. CP at 165 (emphasis added). Second, although no previous Washington case is precisely on point regarding experts, a rule prohibiting the use and manipulation of the insured's expert by the insurer can be easily extrapolated from the analogous rule dealing with attorneys. Under Tank, it is presumed that insurers understand that an attorney hired by the insurer to defend the insured has only the insured for a client. Tank, 105 Wash.2d at 388, 715 P.2d 1133. We see no reason to treat an expert hired under similar circumstances differently. Both are hired to support the insured's defense. Both are hired at a time when the insurer clearly owes the insured a duty to not self-deal. Consequently, Hartford can not avoid the claim of bad faith based on the presence of a res nova question of law.... Guitreau v. State Farm Mut. Auto. Ins. Co., 540 So.2d 1097, 1102 (La.Ct.App.1989) ([W]here sufficient jurisprudence exists to give guidance to insurance companies in determining whether a claim should be denied, the risk of erroneous interpretation falls on the insurer.). Accord Shepherd v. State Auto Prop. & Cas. Ins. Co., 312 Ark. 502, 850 S.W.2d 324, 330 (1993); Patterson v. Nationwide Mut. Ins. Co., 358 Pa.Super. 167, 516 A.2d 1235, 1240 (1986). Finally, we find it particularly troubling that the insurer may commingle the liability representation file with the UIM file in such a way. [11] If the insurer truly stands in the shoes of the tortfeasor, the benefits of the adversarial relationship should be accompanied by its costs. UIM insurers should be prohibited from using or manipulating an expert where it would be unable to do so if it were, in fact, the tortfeasor. [12] Having found that Hartford committed bad faith as a matter of law by misappropriating the Ellweins' expert, we reverse the Court of Appeals' dismissal of this claim. Furthermore, in the name of judicial economy, we remand for the entry of summary judgment for the Ellweins on this claim and for a determination of damages. [13]