Court Opinion

ID: 4280163
Source: CourtListenerOpinion
Date Created: 2018-05-31 19:51:38.089765+00
Date Added: 2024-06-11T14:34:44.355312
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

SARAH GOSNEY, as assignee and as
Personal Representative of the                    DIVISION ONE
Estate of Jerry Welch; JOHN VOSE,
PIZZA TIME INC., and PIZZA TIME                  No. 74717-7-1
HOLDINGS OF WASHINGTON, INC.,                    (consol. with No. 74812-2-1
                                                 and No. 74813-1-1)
       Respondents/Cross Appellants,
                                                 PUBLISHED OPINION
                 v.

FIREMAN'S FUND INSURANCE
COMPANY and THE AMERICAN
INSURANCE COMPANY,foreign
insurance companies,

       Appellants/Cross Respondents.              FILED: May 31, 2018

       DWYER, J. — Following a five-week trial, the jury returned its special

verdicts. After the jury was dismissed, it became apparent that the parties

disagreed as to what exactly the jury had been asked and what its answers

meant. The trial judge, based on his understanding of what he had asked the

jury to decide, entered a significant judgment in favor of plaintiff Gosney.

However, applying judicial estoppel, the judge declined to enter judgment on the

jury's verdicts in favor of plaintiffs Vose and Pizza Time.
No. 74717-7-1/2

       Defendant Fireman's Fund appeals from the judgment entered against it

and in favor of Gosney. Vose and Pizza Time cross-appeal from the trial court's

denial of relief. For good measure, all parties seek relief from various other trial

court rulings.

       We reverse the trial court's judicial estoppel rulings. In all other respects,

we affirm the various decisions of the trial court.

                                           1

       John Vose is the owner and sole shareholder of Pizza Time, Inc. and

Pizza Time Holdings of Washington, Inc.(collectively PT). Vose owns and

operates several corporate PT stores and also acts as a franchisor with 30 to 35

frahchise0s. As the franchisor, Vose personally prepared operational manuals

for his franchises that were then incorporated into the franchise agreement by

reference. These operational manuals purported to give Vose control over

various aspects of franchisee employment procedures, including the right to

terminate franchisee employees for any reason at any time.

       Ethan Shaefer owned and operated a PT franchise store prior to and

following Vose's acquisition of the PT franchise. Unbeknownst to Vose, one of

Shaefer's pizza delivery drivers—Angela Heller—had a poor driving record and a

criminal background. On September 1, 2005, Heller, who had been drinking on

the job, drove her car across the center line while making a delivery. Heller

caused a head-on collision and killed the driver of the other car, Jerry Welch.

Vose visited Shaefer shortly after receiving word of the collision. Shaefer told

Vose that he had called his attorneys and that he had insurance.

                                          2
No. 74717-7-1/3

       In September 2006, Jerry Welch's widow filed suit against PT in Thurston

County. Sarah Gosney—Welch's daughter—was later substituted as the

personal representative and plaintiff in the underlying action.' Vose's attorney

informed him that, pursuant to the franchise agreement, Shaefer would have to

indemnify and defend PT.

       PT has had insurance through Fireman's Fund Insurance Company

(Fireman's) since 2005. PT's insurance policy required Fireman's to indemnify it

for up to $1.5 million pursuant to a "non-owned auto policy" and an additional $1

million pursuant to a "general liability policy."

       Vose first informed Fireman's of the automobile collision and ongoing

litigation on January 31, 2008. Gosney had extended an offer to PT and Shaefer

to settle for policy limits. Trial was scheduled for April 21, 2008. Fireman's

began investigating coverage and liability on February 8, 2008. On February 21,

2008, Gosney's counsel, David Beninger, wrote to Robert Novasky, counsel for

both Vose and Shaefer, to notify Novasky that Gosney's offer to settle would

remain open for only seven more days. Novasky forwarded this letter to Paul

Badaracco, Fireman's primary claims handler assigned to the matter, for

resolution.

       On February 22, 2008, Badaracco wrote to Vose to acknowledge receipt

of his claim. Badaracco noted that "[a]lthough this incident occurred on Sept 1,

2005 and the lawsuit was filed on Sept 14, 2006, Fireman's Fund's first notice of

       1 We refer to the Welch estate as "Gosney."

                                            - 3-
No. 74717-7-1/4

this claim and ongoing litigation was... on Feb. 8, 2008, some two and a half

years after the accident."

        Novasky wrote to Badaracco again on February 28, 2008. Novasky stated

that laillother defendants have tendered their policy limits, but plaintiff is

demanding a 'global' settlement that requires the tender of all available policy

limits." Novasky requested that Fireman's contact Beninger to confirm Fireman's

position with regard to the demand.2

        Fireman's appointed counsel John Matthews of Jackson & Wallace, LLP

to defend PT. Matthews contacted Novasky to discuss the case and review court

documents. Matthews then contacted Vose and received his approval to request

a continuance of the trial date. Trial was rescheduled for December 29, 2008.

Gosney withdrew the global settlement offer as a result of the continuance.3

        On March 27, 2008, Badaracco wrote to Vose to inform him that PT's

coverage for nonowned business automobile exposure covered up to $1.5

million4 in losses and that the current claim "could result in damages in excess of

        2 Just one day prior to receiving this letter, Fireman's had internally concluded that it was
not prejudiced by the late notice and that it had a duty to defend PT in the underlying action.
        3 Badaracco did not inform Vose that continuing the trial date would result in the
withdrawal of the settlement offer. Gosney's expert witness testified:
        Well, this gets to the proposition that by continuing the case, you are rejecting the
        settlement offer. So at that point it's a choice. You have got to decide what you
        want to do. But the consequences of continuing means that the chances for[PT]
        and Mr. Vose to get settled within limits is going to be withdrawn. So my belief,
        my opinion, based on the Washington standards, are [that] they have to tell the
        insured and get the insured's choice. Do you want us to file for a continuance or
        do you want us to accept the settlement?

        ... I'm not sure that Mr. Vose has any idea that the settlement was going to be
        withdrawn, if he files for the continuance. I didn't see anything where that was
        explained to him to say if we do this the settlement offer is gone, and we can't tell
        you whether it'll ever come back.
        4 As discussed herein, the policy actually provided a total of $2.5 million in coverage.

                                                -4-
No. 74717-7-1/5

.. . policy limits." Badaracco advised Vose to retain counsel to advise him "with

respect to any potential excess exposure above the referenced limits."

       Patricia Anderson, an attorney representing Gosney, later contacted

Fireman's to request a copy of the PT insurance policy. On July 17, 2008,

counsel for Fireman's sent Anderson a copy of the policy and confirmed that

Fireman's "continues to reserve any and all rights and defenses that may now

exist or that may arise in the future." Anderson then contacted Howard Bundy,

corporate counsel for PT. Anderson told Bundy that Gosney was interested in

reaching a settlement and was willing to discuss a settlement "involving an

agreement or covenant not to execute against personal assets, in exchange for

an assignment of the claims against the insurance company and a stipulated

judgment."

       Bundy, who had not represented Vose or PT on any matter related to the

Gosney litigation, advised Vose to retain independent counsel. Vose then

forwarded the settlement offer to attorney Matthews. Matthews asked Bundy to

"please forward these emails and offers to the counsel that[PT] and/or John

Vose hires to represent him personally on this coverage issue, as we cannot

advise our client on coverage matters." Bundy then agreed to represent Vose in

the Gosney litigation.

                                        5
No. 74717-7-1/6

                                       Settlement

       Gosney and Vose reached a settlement on September 2, 2008.5 The

settlement offer required Vose and PT to assign to Gosney "all rights, privileges,

claims, causes or chose of actions that they may have against their insurer,"

including any arising out of the "handling of the claims or suit related thereto, as

well as arising out of the insurance contract, obligations, investigation,

evaluation, negotiation, defense, settlement, indemnification... bad faith,

negligence, malpractice, breach of contract, fiduciary breach, Consumer

Protection Act[6 (CPA)], Insurance Fair Conduct Act[7 (1FCA)], punitive damages

and/or otherwise." The settlement offer reserved to Vose and PT all elements of

damages "for their personal emotional distress, personal attorneys' fees,

personal damages to credit or reputation and other non-economic damages"

arising from the assigned causes of action.

       The settlement offer did not specify a dollar amount. Rather, it provided:

       Defendants do hereby stipulate and agree to having partial
       judgment entered against them for the full insurance limits to avoid
       any delay in executing, garnishing or collecting those offered
       assets. Plaintiffs agree to withhold formal entry of this partial
       judgment for fifteen (15) days to allow the insurers to pay all
       insurance proceeds to the Luvera Trust Account, in trust for the
       Welchs. Defendants are entitled to a credit, offset and partial
       satisfaction of any judgment for the amounts paid by their insurers.
              Further, the parties agree to have the full amount of the
       damages and/or judgments determined by stipulation approved as
       reasonable by the Court, or arbitration. The parties agree to use
       good faith efforts to reach a stipulated covenant judgment,
       contingent upon a reasonableness finding by the court. . . .

       5 Gosney and Shaefer apparently reached a separate settlement. The record before us
does not disclose either the timing or terms of that settlement.
       6 Ch. 19.86 RCW.
       7 RCW 48.30.010-.015.

                                            6
No. 74717-7-1/7

       The settlement offer further provided for a 12 percent interest rate

accruing and compounding annually on the unpaid damages from the date of

signing. Finally, the settlement offer contained a covenant not to execute or

enforce the judgment against Vose or PT.

       Gosney and Vose—on behalf of himself and on behalf of PT—signed the

settlement agreement. Bundy then sent a copy of the settlement agreement to

Fireman's along with a letter demanding the payment of policy limits and notice

under the IFCA. Fireman's never responded to Bundy and never agreed to the

settlement offer.

       On December 19, 2008, Thurston County superior court Judge Gary

Tabor entered judgment against Vose and PT for $2.5 million with interest

accruing at 12 percent per annum from September 2, 2008. Judge Tabor also

issued an order approving the settlement as reasonable as to Welch's minor

children. Jackson & Wallace filed a notice of intent to withdraw effective January

29, 2009.

       On September 1, 2009, Gosney filed suit against Fireman's and named

PT and Vose as codefendants. The complaint alleged negligence, breach of the

CPA, breach of the IFCA, breach of contract, and breach of the specific unfair

claims and settlement practices regulation.8 In its answer, Fireman's asserted

the affirmative defenses of waiver and estoppel, contributory fault, and fraud or

collusion in the settlement.

       8 WAC 284-30-330.

                                         7
No. 74717-7-1/8

                                       Arbitration

       On November 1, 2010, Fireman's moved to stay the action "until Plaintiffs

and Defendant[PT] conduct and conclude their arbitration to determine the final

value of the settlement in their underlying litigation." Fireman's argued that a

stay was necessary because

             [Fireman's] cannot effectively defend itself in this lawsuit
      without resolution of the underlying settlement amount, which, if
      proven reasonable, will form the "presumptive measure of
      damages" in this lawsuit. [PT] claims it cannot provide [Fireman's]
      written discovery responses ... without jeopardizing its position in
      the eventual arbitration of the settlement amount. This leaves
      [Fireman's] in a litigation quandary, precluding [Fireman's] ability to
      prepare for and receive a fair trial.

       King County Superior Court Judge Laura Inveen granted Fireman's motion

to stay on November 30, 2010. The stay was granted pending the final

determination of damages by either "stipulated amount approved as reasonable

by the court," or "final arbitration decision."

       Gosney and Vose decided to enter arbitration. On September 17, 2012,

Beninger notified John Bennett, outside counsel representing Fireman's, of the

date and time of the arbitration. Arbitration was scheduled for November 1,2012

before former King County Superior Court Judge Charles Burdell.

       Beninger described the scope of the arbitration as "all remaining issues."

Bennett responded to the notice asking what the "remaining issues" included.

On October 4, 2012, Bennett again wrote to Beninger asking "what issues the

parties intend to arbitrate." Bennett stated that "[t]ime is of the essence if

Fireman's Fund is to make an informed decision whether to participate in the

arbitration and to prepare to participate," and demanded that Beninger respond

                                          -8-
No. 74717-7-119

by the following day. Beninger responded simply that "[t]he issues subject to

arbitration are broad."

        Bennett wrote to Beninger on October 9, 2012, declining to participate in

the arbitration. Bennett explained,

                As I am sure you understand, Fireman's Fund cannot
        reasonably participate in an arbitration when it does not know what
        will be arbitrated. Your response that the issues to be arbitrated
        are "broad" does not provide the information Fireman's Fund needs
        to be able to participate in the arbitration.
                Also, Fireman's Fund is concerned that defendants have
        shared with plaintiff all confidential information relating to matters at
        issue in the arbitration, which would preclude any potential for a fair
        hearing of the matters in dispute. Your response ignores that
        concern.

        Bennett extended an offer to pay for a transcription of the arbitration.

Beninger replied, "It seems like you are trying to generate reasons to avoid the

arbitration, rather than participate in good faith. Please keep in mind that you

moved the court and compelled the arbitration of all remaining issues." Beninger

rejected the offer to pay for transcription of the arbitration. In response, Bennett

asserted that Fireman's had no good faith duty to participate in the arbitration as

Fireman's was not a defendant and the arbitration was not a reasonableness

hearing.9

        Following the arbitration, Judge Burdell valued Gosney's claim at

$10,800,289. Judge Burdell found that PT and Vose were jointly liable for the

damages, that there was no bad faith, collusion, or fraud between the settling

        9 Although Beninger declined to elaborate on the topics to be arbitrated in his
correspondence with Bennett, Beninger did discuss the arbitration with Bundy. On October 29,
2012, Beninger provided a nonexclusive list of the arbitration topics to Judge Burdell. The topics
included liability, total damages, contributory fault, fraud/collusion or bad faith, and the
"reasonable amount of covenant judgment." Beninger did not provide Fireman's with this list.

                                               - 9-
No. 74717-7-1/10

parties, and that the damages award was a reasonable covenant judgment

amount. Judge Burdell further found that Fireman's had "notice and opportunity

to participate, submit evidence and be heard." The award caption included

Fireman's as a party.

      The arbitration proceeding was unusual and is one of the most

contentious subjects in this proceeding. King County Superior Court Judge Sean

O'Donnell summarized some of the arbitration oddities:

      Mr. Vose admitted personal liability (pursuant to the settlement
      agreement) when he was not named in the lawsuit brought by Mr.
      Welch's estate. Prior to reaching an amount for damages and prior
      to the arbitration, Mr. Bundy... turned over the confidential
      Jackson Wallace attorney file to Mr. Benninger [sic](at Mr.
      Benninger's [sic] insistence). Mr. Bundy and Plaintiffs' counsel
      discussed the issues to be arbitrated well in advance of the
      hearing, and Mr. Bundy even provided Mr. Benninger [sic] with
      favorable case law prior to appearing before Judge Burdell.
               At the arbitration hearing itself, Mr. Bundy failed to submit his
      own trial brief, he failed to'call a single witness to testify, he failed to
      offer his own exhibits, he failed to call an expert in franchisor
      liability, and he agreed that Ms. Heller(the driver who killed Mr.
      Welch) was an employee of Pizza Time (the franchisor) when, in
      fact, Ms. Heller only worked for the franchisee. He also was silent
      to the fact that Fireman's Fund was listed in the caption of the
      arbitration brief(and other pleadings) as a party, when Fireman's
      Fund was not. Neither he nor Mr. Benninger [sic] made any effort
      to correct this error before Judge Burdell.
               Additionally, Mr. Bundy failed to contest the difference
      between the damages award and the reasonableness
      finding/amount entered by Judge Burdell. The corollary to that
      concession is that Mr. Bundy agreed that Fireman's was liable for
      the total damage amount, with no discount afforded to Mr.
      Vose/Pizza Time for issues related to franchisor liability. Finally,
      the hearing was truncated, lasting only a matter of hours.

      On November 16, 2012, Thurston County Superior Court Judge Thomas

McPhee determined that the arbitration award was reasonable and entered

judgment against Vose and PT for $10,800,289 (hereinafter "underlying

                                        -10-
No. 74717-7-1/11

judgment"). The judgment included pre- and postjudgment interest accruing at

the rate of 12 percent compounded annually from September 2, 2008 until paid.1°

On April 12, 2013, Judge Tabor granted Fireman's motion to remove its name

from the caption of the arbitration award. Judge Tabor granted the requested

relief but wrote on the order, "Court makes clear this does not affect the award or

goes to any of the merits or repercussions of the award."

       On August 23, 2013, Fireman's moved for partial summary judgment in

this action, asserting that "(1) as a matter of law Fireman's Fund is not bound by

the arbitration award and judgment obtained against Nose and PT]and that,

therefore;(2) Plaintiffs' claim against Fireman's Fund for the amount of the

arbitration award should be dismissed." King County Superior Court Judge

Timothy Bradshaw denied the motion.

       On November 26, 2013, Judge Bradshaw entered an order preventing

Fireman's from deposing Beninger. On January 27, 2014, Judge Bradshaw

entered an order "to preclude attempts to relitigate the underlying Thurston

County wrongful death action, issues and judgment."

                                             Trial

       Judge O'Donnell presided over a five-week jury trial in April and May

2015. At the close of Plaintiffs'11 case, Fireman's moved for judgment as a

matter of law pursuant to CR 50(a). Fireman's argued that the covenant

judgment was the result of fraud and collusion, that Fireman's had not harmed

         10 Judge McPhee noted that Fireman's was given notice of the arbitration and refused to
participate. Fireman's is not listed as a party in the caption of the judgment.
         11 We refer to Gosney, Vose, and PT collectively as "Plaintiffs."
No. 74717-7-1/12

Vose, and that Vose was judicially estopped from recovering damages because

of his failure to disclose his claim during a prior bankruptcy proceeding. The trial

court denied Fireman's motion but reserved ruling on the issue of judicial

estoppel.

       The jury was asked to resolve five claims: negligence, breach of contract,

breach of the CPA, breach of the IFCA, and breach of the duty of good faith. The

jury was instructed on Fireman's affirmative defenses of fraud, collusion, excuse

of performance by estoppel, and excuse of performance by waiver.

       At trial, Plaintiffs argued various violations of the duty of good faith. The

jury was instructed that an insurer "that refuses to defend in good faith voluntarily

forfeits its ability to protect itself against a settlement in excess of policy limits

unless the settlement or arbitration is the product of fraud or collusion."

Instruction 22. The jury was further instructed:

               An insurance company will be bound by the findings,
       conclusions and judgment entered against their insured when it has
       adequate notice and an opportunity to intervene in the underlying
       action. The insurer is bound to what might, or should, have been
       litigated as well as to what was actually litigated. An insurer is not
       entitled to litigate factual questions that were resolved in the liability
       case by judgment or arm's length settlement.
               This instruction applies only in the absence of fraud or
       collusion.

Instruction 38.

               If you find that Fireman's failed to act in good faith by
       breaching its duty to defend and/or settle, then the law presumes
       that Plaintiffs Pizza Time and Mr. Vose were injured and that the
       failure to act in good faith was the proximate cause of this injury.
       You are bound by that presumption unless you find that Fireman's
       failure to act in good faith did not injure Plaintiffs Pizza Time and
       Mr. Vose.

                                          - 12-
No. 74717-7-1/13

              Fireman's bears the burden of proof that any failure to act in
      good faith did not injure Plaintiffs Pizza Time and Mr. Vose.
              Plaintiffs bear the burden of proving the amount of damages.
              For all other claims that Fireman's failed to act in good faith,
      Plaintiffs have the burden of proving each of the following
      propositions:
             (1) That Fireman's failed to act in good faith;
             (2)That Plaintiff Pizza Time or Mr. Vose was damaged; and
             (3)That Fireman's failure to act in good faith was a proximate
      cause of Plaintiff Pizza Time's or Mr. Vose's damages.
              If you find from your consideration of all of the evidence that
      each of these propositions has not been proved, your verdict on the
      claim of failure to act in good faith should be for Fireman's. On the
      other hand, if each of these propositions has been proved, you
      must consider Fireman's affirmative defenses.

Instruction 53.

              If your verdict is for the Plaintiffs on their claim that
      Fireman's Fund/American Insurance Company failed to act in good
      faith, then you must determine the amount of money that will
      reasonably and fairly compensate the plaintiffs for such damages
      as you find were proximately cause[d] by Fireman's Fund/American
      Insurance Company's failure to act in good faith.
              If you find for the Plaintiffs on their claim that Fireman's
      Fund/American Insurance Company failed to act in good faith as to
      [the] duty to defend or settle, your verdict must include the amount
      of the judgment on the arbitration award, unless you further find for
      Fireman's Fund/American Insurance Company on its affirmative
      defense that the settlement was the product of fraud or collusion.
      The judgment amount is $10,800,289, plus interest.

Instruction 54.

      The interrogatories on the special verdict form, and the jury's answers,

were as follows:

       QUESTION la: Plaintiffs' Claims

       Have the Plaintiffs proven all elements of any or all of their claims
       as to the Defendants? (The elements of these claims are
       described in the accompanying Jury Instructions.)

       ANSWER: (Check "yes" or "no")

                                       -13-
No. 74717-7-1/14

      Negligence                                    X     Yes       No

      Breach of Contract                            X     Yes       No

      Breach of the Consumer Protection Act         X     Yes       No

      Breach of the Insurance Fair Conduct Act      X     Yes       No

      Breach of Duty of Good Faith                  X     Yes       No

      QUESTION lb

      If you answered "yes" to Question la as to Breach of Duty of Good
      Faith, did you find a breach of the duty to defend or settle?

      X       Yes     No

      QUESTION 2: Contributory Negligence

      QUESTION 2A: Have the Defendants proven that Plaintiffs were
      contributorily negligent?

      ANSWER (Check "yes" or "no")

              Yes X    No

      QUESTION 3: Defendants' Defenses

      Have the Defendants proven all elements of any or all of their
      defenses? Answer each of the subparts below. (The elements of
      these claims and defenses are described in the accompanying Jury
      Instructions.)

      ANSWER:(Check "yes" or "no")

      Fraud                                               Yes X      No

      Collusion                                           Yes X      No

      Excuse of Performance by Estoppel                   Yes X      No

      Excuse of Performance by Waiver               X     Yes        No

                                     - 14-
No. 74717-7-1/15

       QUESTION 4a: Damages

       Based on the jury instructions, what amount of damages, if any, do
       you find were incurred by Plaintiffs John Vose and Pizza Time?

      (INSTRUCTION No. 1: Do not duplicate damages across multiple
      claims.)

      (INSTRUCTION No. 2: Do not reduce the damages for Negligence
      for any contributory negligence you may find in Question 2. The
      Court will determine that amount.)
                                                      Damages:

       Negligence:                                        $100,000.00

       Breach of Contract:                                $20,000.00

       Breach of Duty of Good Faith:                      $300,000.00

       Breach of Consumer Protection Act:                 $20,000.00

       Breach of the Insurance Fair Conduct Act:          $20,000.00

       Question 4b:

       If you awarded damages in Question 4a, does the damages
       amount include the judgment?

                        Yes                                       X        No

       SUPPLEMENTAL QUESTION:

       Of the damages identified in the Verdict Form in Question 4a, what
       is the total dollar amount of damages incurred by Plaintiff John
       Vose, as opposed to those incurred by Pizza Time?

       $240,000.00

       Following receipt of the jury's verdict, the trial court discharged the jury

and granted Plaintiffs' motion to prohibit contact with the jurors. Plaintiffs later

filed a presentation of judgment, asserting that the amount that should be

entered as the principal judgment amount, based on the jury's verdict, was

                                        -15-
No. 74717-7-1/16

$11,260,289. In response, Fireman's argued that the jury did not award the

amount of the underlying judgment and that, even assuming that it did, Fireman's

was not bound by that judgment.

        The trial court agreed with Plaintiffs as to the legal effect of the jury's

verdict and entered judgment in favor of Plaintiffs.12 The trial court awarded

interest on the underlying judgment beginning from the date of entry of the

arbitration award. The trial court also concluded that Fireman's was estopped

from contesting the arbitration award. The trial court found that Fireman's had

sufficient notice of the arbitration hearing, that the arbitration hearing was

"actually litigated," and that Fireman's was in privity with Vose and PT at the time

of the arbitration hearing.

        Fireman's then filed a motion for reconsideration. The trial court reviewed

the jury's special verdict and concluded:

               The jury here made a factual determination of plaintiffs' bad
        faith damages other than and in addition to the covenant judgment
        in the amount of $300,000.00. The jury accordingly found harm as
        a result of Fireman's. . . failure to act in good faith. But the

         12 Little time was spent addressing the jury's finding that Fireman's had established its
defense of excuse of performance by waiver.
         Plaintiffs argued to the trial judge that the "contractual concept of waiver of performance
expressed in the court's instructions has no application to plaintiffs' statutory claims, nor to the
tortious bad faith or negligence claims." Memo. in Supp. of Presentation of J. at 5. In response,
Fireman's appeared to agree that the finding was not of significance:"[The waiver finding is not
necessary, but it's certainly helpful. ... I think the waiver finding may, may be pertinent, but it's
certainly not necessary to uphold what the jury did and to uphold the specific amounts that they
found, were the damages proximately caused by Fireman's conduct." In its order entering
judgment in favor of Plaintiffs, the trial court addressed the jury's finding in a footnote:
         The jury found that Mr. Vose/Pizza Time waived Fireman's Fund duty to provide
         a defense. The jury made no mention of Fireman Fund's separate contractual
         duty to settle. Nor does the jury's waiver finding implicate Fireman Fund's
         independent statutory duty to settle (which the jury found Fireman's Fund
         breached). Indeed, Plaintiffs correctly point out that breach of Fireman's
         independent good faith duty to settle is grounded in tort and not contract law.
         Fireman's has neither assigned error to the trial court's order with respect to the issue of
waiver nor has it otherwise discussed the jury's finding in its briefing.

                                               - 16 -
No. 74717-7-1/17

      plaintiffs' floor on damages had already been determined by entry
      of the Thurston County judgment (resulting from the
      arbitration/reasonableness hearing). . .. As a matter of law, the
      jury's apparent conflict in the verdict form (finding harm for the
      breach of duty of good faith but not writing in the amount) must be
      resolved to include the arbitration amount.

       The trial court then addressed Fireman's judicial estoppel claim. Pursuant

to CR 50(a), Fireman's had moved to bar Vose from collecting on the jury's

damages award based on Vose's failure to disclose a potential claim against

Fireman's during a prior bankruptcy proceeding. The trial court agreed with

Fireman's and concluded that both Vose and PT were judicially estopped from

recovering damages.

       The trial court entered judgment in favor of Gosney and against Fireman's,

awarding Gosney the amount of the underlying judgment and accrued interest

totaling $15,612,624.34. The trial court additionally awarded Gosney attorney

fees and costs totaling $2,484,542.50 and awarded Vose and PT attorney fees

and costs totaling $405,612.50. The trial court's awards of attorney fees and

costs included a lodestar multiplier of 1.25. Fireman's now appeals. Gosney,

Vose, and PT cross-appeal.

                                           11

      "An insured may independently negotiate a settlement if the insurer

refuses in bad faith to settle a claim. In such a case, the insurer is liable for the

settlement to the extent the settlement is reasonable and paid in good faith."

Besel v. Viking Ins. Co. of Wis., 146 Wash. 2d 730, 736, 49 P.3d 887(2002)(citing

Evans v. Cont'l Cas. Co., 40 Wash. 2d 614, 628, 245 P.2d 470 (1952)). Such a

settlement agreement typically involves three features: "(1) a stipulated or

                                        -17-
No. 74717-7-1/18

consent judgment between the plaintiff and insured,(2) a plaintiffs covenant not

to execute on that judgment against the insured, and (3) an assignment to the

plaintiff of the insured's coverage and bad faith claims against the insurer." Bird

v. Best Plumbing Grp., LLC, 175 Wash. 2d 756, 764-65, 287 P.3d 551 (2012)(citing

Besel, 146 Wash. 2d at 736-38). This type of settlement agreement is often referred

to as a covenant judgment. Bird, 175 Wash. 2d at 765.

       "If the amount of the covenant judgment is deemed reasonable by a trial

court, it becomes the presumptive measure of damages in a later bad faith action

against the insurer." Bird, 175 Wash. 2d at 765 (citing Besel, 146 Wash. 2d at 738).

The insured can recover from the insurer "the amount of a judgment rendered

against the insured, even if the judgment exceeds contractual policy limits."

Miller v. Kenny, 180 Wash. App. 772, 799, 325 P.3d 278(2014). This is sometimes

referred to as the "'judgment rule." Miller, 180 Wash. App. at 799(quoting Besel,
146 Wash. 2d at 735). "The insurer still must be found liable in the bad faith action

and may rebut the presumptive measure by showing the settlement was the

product of fraud or collusion." Bird, 175 Wash. 2d at 765 (citing Mut. of Enumclaw

Ins. Co. v. T&G Constr., Inc., 165 Wash. 2d 255, 264, 199 P.3d 376 (2008)).

      The propriety of this process has been considered and endorsed by our

Supreme Court.

             Whether the insurer acts in bad faith by refusing to settle in
      good faith or by refusing to defend, the consequences to the
      insured are the same. The defense may be of greater benefit to the
      insured than the indemnity. The defense must be prompt and
      timely. An insurer refusing to defend exposes its insured to
      business failure and bankruptcy. An insurer faced with claims
      exceeding its policy limits should not be permitted to do nothing in
      the hope that the insured will go out of business and the claims

                                       - 18-
No. 74717-7-1/19

       simply go away. To limit an insurer's liability to its indemnity limits
       would only reward the insurer for failing to act in good faith toward
       its insured. We therefore hold that when an insurer wrongfully
       refuses to defend, it has voluntarily forfeited its ability to protect
       itself against an unfavorable settlement, unless the settlement is
       the product of fraud or collusion.

Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wash. 2d 751, 765-66, 58 P.3d 276

(2002).

       Reasonableness determinations are equitable proceedings to which a jury

trial right does not attach. Bird, 175 Wash. 2d at 768 (citing ROW 4.22.060(1)).

Indeed, ROW 4.22.060(1) unequivocally removes from the province of the jury a

factual determination of whether the amount of a covenant judgment is

reasonable. As our Supreme Court stated, "there is no factual determination to

be made on damages in the later bad faith claim, at least not with respect to the

covenant judgment." Bird, 175 Wash. 2d at 772. Rather, the role of the jury is to

"make a factual determination of an insured's bad faith damages other than and

in addition to the covenant judgment." Miller, 180 Wash. App. at 801.

      "An action for bad faith handling of an insurance claim sounds in tort."

Safeco Ins. Co. of Am. v. Butler, 118 Wash. 2d 383, 389, 823 P.2d 499(1992).

Harm is an essential element of any tort claim, including the bad faith handling of

an insurance claim. Butler, 118 Wash. 2d at 389 (citing Burnham v. Commercial

Cas. Ins. Co., 10 Wash. 2d 624, 627, 117 P.2d 644 (1941)). In cases in which an

insurer acts in bad faith regarding its duty to defend or settle, a rebuttable

presumption of harm arises. Butler, 118 Wash. 2d at 390-91.

       The nature of a bad faith claim against an insurer requires that an

'almost impossible burden' of proof be placed on either the insured or the

                                        -19-
No. 74717-7-1/20

insurer. Mut. of Enumclaw Ins. Co. v. Dan Paulson Constr., Inc., 161 Wash. 2d 903,

921, 169 P.3d 1 2007 (quoting Butler, 118 Wash. 2d at 390 (quoting ALLAN D.

WINDT, INSURANCE CLAIMS AND DISPUTES: REPRESENTATION OF INSURANCE

COMPANIES AND INSUREDS § 2.09, at 40-41 (2d ed. 1988))). "Either the insured

will face the almost impossible burden of proving that "he or she is demonstrably

worse off because of" the insurer's bad faith or the insurer will face the almost

impossible burden of proving the reverse." Dan Paulson, 161 Wash. 2d at 921

(quoting Butler, 188 Wn.2d at 930(quoting WINDT,supra,§ 2.09, at 40-41)). "As

between the insured and the insurer, it is the insurer that controls whether it acts

in good faith or bad. Therefore, it is the insurer that appropriately bears the

burden of proof with respect to the consequences of that conduct." Dan Paulson,
161 Wash. 2d at 921.

                                          III

       The primary question before us is whether the trial court erred by entering

judgment in favor of Gosney in an amount that included the amount of the

underlying judgment. Resolution of this complex matter requires a close

inspection of the jury instructions and the answers on the special verdict form in

light of the applicable law and the trial record.

       We review de novo the legal effect of a verdict. Estate of Dormaier v.

Columbia Basin Anesthesia, PLLC, 177 Wash. App. 828, 866, 313 P.3d 431

(2013). A special verdict asks the jury to return written findings on each issue of

fact. CR 49(a). "Once a jury renders a verdict, the trial court must declare its

legal effect." Dormaier, 177 Wash. App. at 866 (citing Dep't of Highways v. Evans

                                        - 20 -
No. 74717-7-1/21

Engine & Equip. Co., 22 Wash. App. 202, 205-06, 589 P.2d 290(1978)). The trial

court should view the verdict in light of the jury instructions and trial evidence,

construing the verdict to implement the jury's intent if consistent with the law.

Dormaier, 177 Wash. App. at 866. If the special verdict answers conflict with one

another, the trial court must attempt to harmonize them. If the special verdict

answers are irreconcilable, the trial court must order further deliberations or a

new trial. Dormaier, 177 Wash. App. at 866 (citing Tincani v. Inland Empire

Zoological Soc'y, 124 Wash. 2d 121, 136, 875 P.2d 621 (1994)).

                                          A

       Our first inquiry is whether the special verdict form provided the jury with

an opportunity to award damages to Gosney. We conclude that, by its plain

terms, it did not.

       We begin our analysis with Question 4 of the special verdict form—

damages. Question 4a asked the jury, "Based on the jury instructions, what

amount of damages, if any, do you find were incurred by Plaintiffs John Vose and

Pizza Time?" The jury was further instructed not to duplicate damages across

multiple claims and not to reduce the damages for contributory negligence. The

jury awarded Vose and PT $100,000 for negligence, $20,000 for breach of

contract, $300,000 for breach of the duty of good faith, $20,000 for breach of the

CPA, and $20,000 for breach of the IFCA. The jury was then asked to designate

the amount of damages incurred by Vose, as opposed to those incurred by PT.

The jury found that Vose incurred $240,000 in damages.

                                        - 21 -
No. 74717-7-1/22

        Question 4 plainly does not provide the jury with an opportunity to award

damages to Gosney.13 Indeed, Question 4 is unique among the questions

presented to the jury in that it is the only question that—instead of referencing the

"Plaintiffs"—asks specifically about Vose and PT while not mentioning Gosney.

The other questions presented to the jury ask about "Plaintiffs" generally—a term

that included Vose, PT, and Gosney.

        But the jury would have understood that Gosney stood to recover

damages in this suit. Beninger informed the jury on the first day of trial that

Gosney was "what's called an assignee. . . . [S]he is here standing, basically

standing in Pizza Time's shoes to pursue the claims, if any, that Pizza Time has

against Fireman's." Fireman's argued to the jury that Bundy and Beninger had

colluded to commit fraud—a claim that existed only because of the assignment.

The jury heard extensive testimony from Bundy concerning the assignment and

the preclusive effect the assignment had on Vose's ability to file a claim against

Fireman's. The jury heard testimony concerning the assignment from Vose. The

jury heard opinion testimony concerning this particular assignment, and

assignments generally, from multiple expert witnesses. The jury was reminded

of the assignment again during closing argument.

        The parties' presentation of evidence and the jury instructions confirmed

that Gosney was a "Plaintiff' as contemplated by other questions on the special

verdict form. Instruction 30 identified Vose and PT as the first party claimants.

        13 That Question 4a was designed for the jury to, if it chose, award damages to Vose and
PT is made clear by the language of Question 4b, which began, "If you awarded damages in
Question 4a ... ."

                                             - 22 -
No. 74717-7-1/23

Instruction 31 identified Gosney as the assignee of rights, claims, and causes of

action of Vose and PT. The jury was instructed that, as an assignee, Gosney

"steps into the shoes of assignor and has the rights of the assignor." Instruction

54 told the jury that, if it found breach of the duty of good faith to defend or settle

and did not find fraud or collusion, its award for the Plaintiffs "must include the

amount of the judgment on the arbitration award." From the testimony,

argument, and instructions of the court, the jury would have understood that it

was Gosney who would recover on the underlying judgment.

       Moreover, because the underlying judgment represented only the

presumptive measure of damages—theoretically allowing Gosney to seek

damages in addition to the amount of the underlying judgment—the instructions

collectively signaled to the jury that it could be asked to determine damages due

to Vose, PT, and Gosney. Bird, 175 Wash. 2d at 765. Despite this, no question on

the special verdict form gave the jury an opportunity to award damages to

Gosney.

       Notwithstanding all of this, given the manner in which the case was

argued in closing argument by Gosney's counsel, the instructions and the special

verdict form were not inconsistent. Rather, the language instructing the jury that

its verdict "must include" the underlying judgment was surplusage. This is so

because, when an assignee is seeking only an amount equal to the amount of a

covenant judgment, no factual question on the amount of damages is presented

to the jury. If the assignee establishes an entitlement to relief, the amount of the

covenant judgment is due as a matter of law. Here, because Gosney did not, in

                                         - 23 -
No. 74717-7-1/24

closing argument, seek an award greater than the amount of the underlying

judgment, there was no requirement—constitutional or otherwise—that the jury

be asked to set out the amount of damages due to Gosney. Gosney's omission

from Question 4 of the special verdict form was proper. The answers to Question

4 do not signal that the jury rejected Gosney's claim.

        The trial court did not err by so ruling.

        Our next inquiry is whether the jury found that Plaintiffs had established

every element of the tort of bad faith failure to defend or settle.14,15 The trial court

ruled that it had. We agree.

        Question 1 a asked the jury,"Have the Plaintiffs proven all elements of any

or all of their claims as to the Defendants?" The jury answered "Yes" for breach

of the duty of good faith. Question lb asked the jury, "If you answered 'yes' to

Question la as to Breach of Duty of Good Faith, did you find a breach of the duty

to defend or settle?" The jury answered "Yes."

        We begin by noting that the jury was not asked two separate and distinct

questions but, rather, two interrelated questions. This understanding is

supported by the trial court's decision to designate the questions as Question la

and Question 1 b, rather than Question 1 and Question 2. Question I a

         14 "The duty to act in good faith or liability for acting in bad faith generally refers to the
same obligation." Tank v. State Farm Fire & Cas. Co., 105 Wash. 2d 381, 385, 715 P.2d 1133
(1986)(citing Tyler v. Grange Ins. Ass'n, 3 Wash. App. 167, 173, 473 P.2d 193(1970)). The source
of that obligation is the same—the fiduciary relationship between the insurer and the insured.
Tank, 105 Wash. 2d at 385.
         15 Again, when a plaintiff proves all elements of the tort of bad faith failure to defend or
settle and the defendant does not prove fraud or collusion, the plaintiff has established an
entitlement to relief.

                                                - 24-
No. 74717-7-1/25

unequivocally asked the jury to find whether Plaintiffs had proved "all elements"

of any or all of their claims. (Emphasis added.) The most natural way to

understand Question 1 b, therefore, is that it asked the jury to answer whether

Plaintiffs had proved "all elements" of the tort of bad faith failure to defend or

settle. The trial court's ruling is consistent with this understanding.

        We therefore conclude that the jury's affirmative answer to Question lb

necessarily includes a finding of harm.

        Fireman's argues to the contrary, asserting that Question lb was

designed to ask the jury only whether it had found a breach of the duty to defend

or settle, not whether it had found all elements of the corresponding tort proved.16

But Fireman's offers no explanation as to why the trial court would so inquire.

Determining that the jury found breach alone proved would not have assisted the

court. Such a finding would serve no purpose. On the other hand, a purpose

was served by asking, in Question 1 b, specifically about the tort of breach of duty

to defend or settle, as opposed to the breach of the duty of good faith generally.

As Instructions 53 and 54 make clear, different evidence was required to prove

these different versions of the tort of breach of the duty of good faith.

        Indeed, for the trial judge to have accepted Fireman's interpretation of

Question 1 b, the judge would have had to believe that, after a five-week trial

during which the primary cause of action at issue was the claim that Fireman's

committed the tort of bad faith breach of its duty to defend or settle, he nowhere

         16 Fireman's contends that it proved to the jury that no harm arose from its breach of the
duty to defend or settle and that this explains the jury's decision to not include the amount of the
underlying judgment in its award of damages.

                                               - 25 -
No. 74717-7-1/26

asked the jury to declare whether it found that cause of action to have been

proved. That is not a reasonable reading of the court's instructions and verdict

form and it is unsurprising that the judge refused to adopt it.

       Our understanding of Question la and lb is further supported by other

instructions to the jury. As discussed herein, harm is an essential element of the

tort of bad faith. Butler, 118 Wash. 2d at 389. Although the jury was not provided

with an elements instruction pertaining to the tort of breach of the duty to defend

or settle, the jury was appraised of the role that harm plays in proving the tort.

Instruction 53 identified the element of harm as it pertains to both bad faith

generally and bad faith failure to defend or settle. Harm was also identified as an

essential element in the instructions pertaining to Plaintiffs' CPA and IFCA

claims.

       The jury found that Plaintiffs had proved all elements of the tort. This

finding necessarily included a finding of harm.

       Our next inquiry is whether the decision to award the underlying judgment

amount was within the province of the jury. We answer in the negative.

       The jury was properly instructed that Fireman's was liable for the entire

amount of the underlying judgment if it breached its duty of good faith to defend

or settle and failed to prove fraud or collusion in the settlement. As discussed

herein, the jury found that Plaintiffs had proved all elements of the tort of bad

faith failure to defend or settle—a finding that necessarily includes the element of

                                        - 26 -
No. 74717-7-1/27

harm. The jury further found that Fireman's had failed to prove its affirmative

defenses of fraud and collusion.

         These factual findings are the necessary predicates to holding Fireman's

liable for the underlying judgment. Whether the covenant judgment itself was

reasonable was not a decision within the province of the jury. Bird 175 Wash. 2d at

768 (citing RCW 4.22.060(1)). Because Gosney did not request the jury to

award damages in addition to the underlying judgment, the total amount of

damages incurred by Gosney was likewise not a decision within the province of

the jury. There were no other factual questions put to the jury pertaining to the

underlying judgment.17

         Accordingly, the decision to award the amount of the underlying judgment

was not within the province of the jury.

         The jury here was tasked with finding whether Plaintiffs had proved that

Fireman's breached its duty of good faith to defend or settle and whether

Fireman's had proved its affirmative defenses of fraud or collusion. After the jury

made its findings, the trial court gave legal effect to the verdict.18 There was no

error.

         17 We therefore reject Fireman's contention that it cannot be held liable for the underlying
judgment because it did not receive adequate notice of the arbitration.
         The special verdict form used in this matter was substantially similar to the verdict form
proposed by Fireman's. Fireman's chose not to ask the jury to make a finding concerning notice,
thus forfeiting an opportunity to receive an explicit finding on the question. All factual questions
put before the jury inhere in the verdict. CR 49(a); Sintra, Inc. v. City of Seattle, 131 Wash. 2d 640,
659, 935 P.2d 555(1997). It was Fireman's obligation to seek the jury's answer to any particular
question properly before it. We must assume that all such questions were subsumed within the
various questions set forth in the special verdict form.
         18 The trial court's ruling was not an additur. An award of additur is made pursuant to
RCW 4.76.030. That statute provides:
         If the trial court shall, upon a motion for new trial, find the damages awarded by a
         jury to be so excessive or inadequate as unmistakably to indicate that the

                                               - 27 -
No. 74717-7-1/28

                                                  IV

        Having concluded that the trial court did not err by entering judgment in

favor of Gosney in the principal amount of the underlying judgment, we turn to

Fireman's remaining contentions. Fireman's assigns error to two of the jury

instructions. Fireman's also contends that the trial court erred by restricting its

presentation of evidence and by refusing to excuse a juror. Finally, Fireman's

contends that the trial court erred by ruling that it was collaterally estopped from

contesting the underlying judgment. Each contention is addressed in turn.

                                                  A

        Fireman's contends that two of the court's jury instructions did not

correctly state the law.

        We review the adequacy of jury instructions de novo. Hall v. Sacred Heart

Med. Ctr., 100 Wash. App. 53, 61, 995 P.2d 621 (2000). "Jury instructions are

sufficient if they (1) allow each party to argue its theory of the case,(2) are not

misleading, and (3) when read as a whole, properly inform the trier of fact of the

applicable law." City of Bellevue v. Raum, 171 Wash. App. 124, 142, 286 P.3d 695

(2012)(citing Caruso v. Local Union No. 690 of Intl Bhd. of Teamsters, 107
Wash. 2d 524, 529, 730 P.2d 1299 (1987)). "[A]n instruction that contains an

erroneous statement of the applicable law is reversible error where it prejudices a

          amount thereof must have been the result of passion or prejudice, the trial court
          may order a new trial or may enter an order providing for a new trial unless the
          party adversely affected shall consent to a reduction or increase of such verdict.
          When a trial court employs an additur, the court alters the jury's verdict by increasing the
amount awarded. Herriman v. May, 142 Wash. App. 226, 234, 174 P.3d 156(2007). In so doing,
the trial court does not give effect to the verdict. Rather, it corrects the verdict (pursuant to
statutory procedure and limitation).
          Here, the trial judge'gave effect to the jury's verdicts. The judge did not correct or alter
the verdicts. In so doing, the judge did not employ an additur.

                                                - 28 -
No. 74717-7-1/29

party." Cox v. Spangler, 141 Wn.2d 431,442, 5 P.3d 1265, 22 P.3d 791 (2000).

Error is not prejudicial "unless it affects, or presumptively affects, the outcome of

the trial." Brown v. Spokane County Fire Prot. Dist. No. 1, 100 Wash. 2d 188, 196,

668 P.2d 571 (1983).

                                          1

       Fireman's first contends that the trial court erred by rejecting its proposed

instructions defining "collusion" and instead providing an instruction that did not, it

asserts, adequately define the term.

       Fireman's submitted two proposed jury instructions regarding collusion.

The first proposed instruction defined collusion as "undisclosed cooperation or

agreement among two or more people for an improper purpose," and further

provided that collusion "may be inferred through the conduct of those involved."

The second proposed instruction was lengthy and stated:

              What constitutes collusion will differ with each situation.
       Collusion may be inferred from the circumstances. Factors that
       could demonstrate collusion include but are not limited to: whether
       there was concealment; whether the settlement was fairly and
       honestly negotiated; failure of the settling insured to consider viable
       available defenses; the length or duration of the arbitration; parallel
       conduct of the parties at the arbitration; whether a party's
       investigation and discovery were sufficient for that party and the
       court to act intelligently at the arbitration; and whether witnesses
       were subjected to vigorous cross-examination calculated to
       undermine the testimony.

       The trial court rejected Fireman's proposed instructions and instead gave

an instruction that defined collusion as "secret cooperation for an illegal or

                                        - 29 -
No. 74717-7-1/30

dishonest purpose."19 The trial court provided the jury with a separate instruction

regarding fraud.

        On appeal, Fireman's contends that the trial court's instruction artificially

constrains the definition of collusion and invites confusion about what types of

agreements are "illegal." Fireman's also contends that, because the trial court

did not instruct the jury that collusion could be inferred from attendant

circumstances, the jury could have reasonably concluded that a finding of

collusion required direct evidence.

        Collusion is commonly defined as "[a]n agreement to defraud another or to

do or obtain something forbidden by law," BLACK'S Law DICTIONARY 321 (10th ed.

2014); and as a "secret agreement: secret cooperation for a fraudulent or

deceitful purpose. ..: a secret agreement between two or more persons to

defraud a person of his rights often by the forms of law." WEBSTER'S THIRD NEW

INTERNATIONAL DICTIONARY 446(2002).

        Contrary to Fireman's assertions, nothing in the instruction given serves to

constrain the definition of collusion or invite confusion about what constitutes an

"illegal. .. purpose." The instruction is clear that collusion can be evidenced by

secret cooperation for an "illegal or dishonest purpose," allowing Fireman's to

argue to the jury that it could find collusion even sans illegal activity. (Emphasis

added.) Neither do the instructions indicate that direct evidence of collusion is

required. Instruction 9 properly instructs the jury that it must find collusion by

       19 The trial court also rejected Plaintiffs' proposed instruction defining collusion as "an
agreement to defraud another or to do or obtain something forbidden by law."

                                               - 30 -
No. 74717-7-1/31

clear, cogent, and convincing evidence. Instruction 2 properly instructs the jury

that "[t]he law does not distinguish between direct and circumstantial evidence in

terms of their weight or value in finding the facts in this case."

       "The precise wording of the instructions is within the broad discretion of

the court." Housel v. James, 141 Wash. App. 748, 758, 172 P.3d 712(2007). The

trial court did not abuse that discretion by offering a clear instruction that allowed

each party to argue its theory of the case.

                                           2

       Fireman's also contends that the trial court erred by instructing the jury

that a single violation of the Washington Administrative Code(WAC)constitutes

bad faith.

       Instruction 12 provides: "A violation, if any, of one or more of the following

statutory or regulatory requirements is a breach of the duty of good faith, an

unfair method of competition, an unfair or deceptive act or practice in the

business of insurance, and a breach of the insurance contract." That instruction

lists six unfair methods of competition and unfair or deceptive acts or practices

found in WAC 284-30-330.

       Instruction 24 provides: "For purposes of the [CPA], a breach of the duty

of good faith or a single violation of a statute or regulation relating to the business

of insurance is an unfair or deceptive act or practice. A single violation also

affects the public interest." That instruction further provides: "If you find that a

breach of the duty of good faith or a single violation of a statute or regulation

                                         - 31 -
No. 74717-7-1/32

relating to the business of insurance has occurred, then you must find that the

first three elements of a[CPA]violation have been proved."

        Fireman's contends that a single violation of the WAC is insufficient to

support a finding of bad faith. Fireman's relies on WAC 284-30-300 to support its

contention. Pursuant to that regulation:

       The purpose of this regulation, WAC 284-30-300 through 284-30-
       400, is to define certain minimum standards which, if violated with
       such frequency as to indicate a general business practice, will be
       deemed to constitute unfair claims settlement practices.

WAC 284-30-300(emphasis added).

        Our Supreme Court previously rejected an argument similar to the one

now pressed by Fireman's. See Indus. Indem. Co. of the Nw., Inc. v. Kalleviq,

114 Wash. 2d 907, 923-24, 792 P.2d 520(1990). In that case, Industrial Indemnity

argued that the trial court erred by instructing the jury that a single violation of

WAC 284-30-330 constitutes an unfair trade practice. Kalleviq, 114 Wash. 2d at

921. Our Supreme Court disagreed.

                 A violation of WAC 284-30-330 constitutes a violation of
        RCW 48.30.010(1),(20] which in turn constitutes a per se unfair trade
        practice .. . . This per se unfair trade practice may result in CPA
        liability if the remaining elements of the 5-part test for a CPA action
        under RCW 19.86.090 are established.

               The language of RCW 48.30.010 is plain and unambiguous.
       RCW 48.30.010 does not contain the frequency requirement set
       forth in WAC 284-30-300. RCW 48.30.010 prohibits insurers from
       engaging in any unfair trade practice. In other words, under RCW
       48.30.010, a single violation of WAC 284-30-330 constitutes a
       statutorily proscribed unfair trade practice. Accordingly, an insured
       may establish a per se unfair trade practice under the CPA by

       20 RCW 48.30.010 prohibits insurers from engaging in unfair trade practices and permits
the commissioner to promulgate regulations and define other acts and practices as unfair or
deceptive.

                                            - 32 -
No. 74717-7-1/33

       demonstrating a violation of RCW 48.30.010 based upon a single
       violation of WAC 284-30-330.

Kallevig, 114 Wash. 2d at 923-24.

       The jury instructions correctly stated the law.

       Fireman's next contends that it was prevented from presenting its case

because it was not permitted to "call Beninger."

              At trial, Vose testified that Bundy and Beninger drove the
      settlement and arbitration. .. . If judgment is not entered for
      [Fireman's], at a minimum,[Fireman's] is entitled to a new trial
      because denying it the right to cross-examine Beninger—given his
      pivotal role in the fraud and collusion and given that key trial
      exhibits were his own statements—impeded [Fireman's] ability to
      present key defenses. This prejudice was exacerbated by the fact
      that both fraud and collusion under the jury instructions, required
      [Fireman's] to establish the speaker's intent. . . . [Fireman's] was
      thus given an improperly burdensome task—to prove fraud or
      collusion by clear and convincing evidence without cross-examining
      the person who orchestrated the false statements. This prejudice
      was magnified by Beninger's appearance as the lead trial attorney
      for Plaintiffs during the five week trial.

Br. of Appellant at 58-59 (footnote omitted).

       Fireman's complains that it was "not permitted to call Beninger" but does

not identify or assign error to any court order prohibiting it from calling Beninger

as a witness. Rather, the record reveals that Fireman's itself moved in limine to

bar Plaintiffs from offering as evidence Beninger's knowledge and testimony

concerning the facts at issue in this litigation: "In particular, the Court should

direct Mr. Beninger to refrain from testifying as a fact witness at trial or offering

verbal commentary that takes the form of testimony during voir dire, witness

questioning, opening statements, and closing argument." Defendants' Omnibus

                                         - 33 -
No. 74717-7-1/34

Motions in Limine at 5. The trial court granted Fireman's motion and Beninger

did not testify at trial.

        The trial court granted Fireman's the relief that it sought. Fireman's

attempt to appeal from that relief is unavailing.

        Fireman's next asserts that the trial court improperly restricted its

presentation of evidence by limiting the scope of an expert witness's testimony.

        We review a trial court's admission or rejection of expert testimony for an

abuse of discretion. State v. Weaville, 162 Wash. App. 801, 824, 256 P.3d 426

(2011). Expert witness testimony is admissible to assist the trier of fact in

understanding the evidence or in determining a fact in issue. ER 702. Generally,

"[t]he facts or data in the particular case upon which an expert bases an opinion

or inference may be those perceived by or made known to the expert at or before

the hearing." ER 703.

        Fireman's retained an expert witness, attorney Jeff Tilden, to offer opinion

testimony regarding the settlement and arbitration processes. Tilden was

deposed on November 26, 2014. During his deposition, Tilden testified that he

was concerned about the settlement and arbitration processes. However, Tilden

opined that there was nothing wrong with the settlement agreement itself and

that it was not the product of fraud or collusion.

        Prior to trial, both Plaintiffs and Fireman's moved in limine for an order

prohibiting the presentation of undisclosed expert opinions. The trial court

granted the requests.

                                         - 34 -
No. 74717-7-1/35

        During trial, Tilden offered expert testimony that varied from his deposition

testimony. Tilden testified:

        By agreement, Mr. Bundy rolled over in the arbitration proceeding
        and put up no testimony at all to speak of. By agreement it appears
        that Mr. Bundy and the plaintiff's lawyers manufactured the
        argument that Ms. Heller was an employee of Mr. Vose's
        corporation. By agreement, the parties volunteered Mr. Vose's as
        ... a liable defendant, despite the fact he had one spectacular
        argument for defeating liability, and a second one I believe is very
        good. By agreement, they defrauded the bankruptcy court or stood
        by while it happened.

        Plaintiffs interposed an objection, asserting that Tilden's testimony

constituted an undisclosed expert opinion in violation of the court's order.

Plaintiffs argued that Tilden's testimony as to the manufacturing of Vose's liability

contradicted his deposition testimony that the settlement agreement was not the

product of fraud.21 Fireman's responded by arguing that Tilden's testimony was

based on new information gleaned from Vose's trial testimony.

        The trial court reviewed Vose's trial testimony and determined that it did

not vary from his deposition testimony.22 The trial court ruled that there was no

substantial change in circumstances and, accordingly, Tilden could testify as to

his concerns regarding the settlement process but could not opine that the

settlement agreement itself was the product of fraud or collusion, as such

testimony would constitute a previously undisclosed expert opinion and thus be a

         21 Plaintiffs also objected to Tilden opining that Heller was not a PT employee and opining
that Plaintiffs agreed to defraud the bankruptcy court. The trial court ultimately allowed Tilden to
testify as to the Heller employment issue but prohibited Tilden from testifying as to the claim of
bankruptcy fraud. On appeal, Fireman's has assigned error to only the trial court's ruling
prohibiting Tilden from opining on fraud or collusion in the settlement agreement.
         22 Fireman's asserted to the trial judge that Vose testified at trial that"my lawyers told me
I should commit fraud." The judge's review of the trial transcript revealed no such testimony.

                                               -35-
No. 74717-7-1/36

violation of the order in limine. The trial court instructed the jury to ignore those

parts of Tilden's testimony addressing the manufacturing of Vose's personal

liability. Tilden then provided extensive testimony as to his qualms about the

settlement and arbitration processes. Tilden testified that the settlement process

"was a joint attempt to manufacture [a] bad faith claim down the road."

       The trial court's ruling was not an abuse of discretion. Fireman's retained

Tilden to opine on the settlement and arbitration processes. During his

deposition testimony, Tilden opined that the settlement agreement was not the

product of fraud. Tilden's trial testimony to the contrary constituted a previously

undisclosed expert opinion. It was not based on information that was unknown at

the time of the motion in limine. Accordingly, it constituted a violation of the trial

court's previous order.

       The trial court did not err by so ruling.

       Fireman's next contends that the trial court erred by refusing to excuse a

juror who worked with Vose's wife and was exposed to her out-of-court reactions

to the case.

       "Deciding whether juror misconduct occurred and whether it affected the

verdict are matters for the discretion of the trial court, and will not be reversed on

appeal unless the court abused its discretion." Breckenridge v. Valley Gen.

Hosp., 150 Wash. 2d 197, 203, 75 P.3d 944(2003). The burden is on the party

alleging juror misconduct to show that the misconduct occurred. State v.

Hawkins, 72 Wash. 2d 565, 566, 434 P.2d 584(1967).

                                         - 36 -
No. 74717-7-1/37

        Following the submission of the case to the jury, one juror sent an e-mail

to the bailiff:

        I wanted to let the judge know that a co-worker of mine mentioned
        in a group setting a few weeks ago that she was in a meeting with
        Kimberly Hill (Kim Vose) and she stated that Kimberly seemed
        distracted, out of it, and not productive. Due to the requirements to
        maintain confidentiality, I didn't respond and extricated myself from
        the conversation.. ..

        Because I do not work directly (nor does my colleague who made
        these comments) with Kimberly Hill, I do not have any idea how she
        normally presents herself in the work environment. . . . In fact, I
        have never worked directly with Kimberly or any of her colleagues
        on any official county matters. ... I do not and have not socialized
        with Kimberly or any of her colleagues, or her direct manager.

        Fireman's asked the trial court to excuse the juror. Fireman's was

concerned that the juror had received information about Hill's emotional state that

was not presented at trial and that Fireman's had no opportunity to cross-

examine the individual who made the statements.23

        The trial court determined that Hill heard the information third hand, did

not respond, and terminated the conversation immediately. The trial court noted

that the juror did not know the context of the information. The trial court

determined that there were no grounds to disqualify the juror and, accordingly,

denied Fireman's request.

        The trial court's ruling was not an abuse of discretion. That the juror heard

third hand information that Hill was "distracted, out of it, and not productive" was

of no consequence. Such a disclosure establishes neither misconduct nor

prejudice.

        23 The juror   had previously disclosed her association with Hill during voir dire.

                                                 - 37 -
No. 74717-7-1/38

       Fireman's next contends that the trial court erred by ruling that it was

bound by the underlying judgment. Fireman's asserts that the "judgment rule"

does not apply because a reasonableness determination cannot be the product

of an arbitration. Fireman's also asserts that it cannot be held liable for the

underlying judgment pursuant to a theory of collateral estoppel. Each contention

is addressed in turn.

                                          1

       As discussed herein, once the amount of a covenant judgment is deemed

reasonable, it becomes the presumptive measure of damages in a later bad faith

action against the insurer. Bird, 175 Wash. 2d at 765 (citing Besel, 146 Wash. 2d at

738). The "judgment rule" binds an insurer acting in bad faith to the judgment

rendered against its insured, even if the judgment exceeds contractual policy

limits. Miller, 180 Wash. App. at 799.

       Fireman's contends that it cannot be held liable for the underlying

judgment pursuant to the judgment rule. This is so, it asserts, because a

reasonableness determination cannot be the product of an arbitration.

       As a preliminary matter, we note that, despite its numerous blanket

assertions that a reasonableness determination cannot be the product of an

arbitration, Fireman's has devoted only four sentences and a single footnote of

its 190 pages of appellate briefing to a discussion of the merits of its contention.

Fireman's cites to no authority, save an e.g. citation to the Uniform Arbitration

Act, in support of its averment.

                                        - 38 -
No. 74717-7-1/39

       Parties are required to provide "argument in support of the issues

presented for review, together with citations to legal authority and references to

relevant parts of the record." RAP 10.3(a)(6). "Passing treatment of an issue or

lack of reasoned argument is insufficient to merit judicial consideration." Palmer

v. Jensen, 81 Wash. App. 148, 153, 913 P.2d 413(1996), remanded on other

grounds, 132 Wash. 2d 193, 937 P.2d 597(1997). In addition, "[w]here no

authorities are cited in support of a proposition, the court is not required to search

out authorities, but may assume that counsel, after diligent search, has found

none." State v. Logan, 102 Wash. App. 907, 911 n.1, 10 P.3d 504(2000)(quoting

DeNeer v. Seattle Post-Intelligencer, 60 Wash. 2d 122, 126, 372 P.2d 193(1962)).

Fireman's briefing on its assertion does not meet these expectations.24

        Reasonableness determinations are a product of RCW 4.22.060. The

legislature's purpose in enacting the statute was to facilitate contribution actions

between (and allocate financial responsibility among)tortfeasors. "That statute

         24 We also note that Fireman's theory on appeal is different from the one it advanced in
its motion for partial summary judgment. Fireman's argued therein that the judgment rule did not
apply because Plaintiffs were not permitted to arbitrate the amount of a covenant judgment.
According to Fireman's, the amount of the covenant judgment could only be determined through
negotiation and settlement.
                  Here, the settlement agreement provided that Plaintiffs.. . would
         attempt, within 30 days, to settle for a specific amount; but they never did. . ..
         There is therefore no settlement amount reached by negotiation and
         compromise. There is no settlement amount that could be evaluated under the
        [reasonableness]factors, and no negotiated amount as to which the test of
         collusion or fraud could be applied.
                  Instead of a negotiated settlement amount, there is in this case an
         arbitration award determined in putative litigation. An arbitration award,
         determined on the merits, is not evaluated for reasonableness.
Fireman's Fund's Mot. for Partial Summ. J. at 12(footnote omitted).
         Contrary to Fireman's argument below, the settlement agreement explicitly
provided for arbitration as a means of determining the final settlement amount. That fact,
and the fact that Fireman's itself moved to stay the litigation until Plaintiffs could "conduct
and conclude their arbitration to determine the final value of the settlement in their
underlying litigation," may account for Fireman's assertion of a different argument on
appeal.

                                             - 39 -
No. 74717-7-1/40

was enacted as part of the tort reform act in 1981 to provide a means to allocate

liability among joint tortfeasors. Originally under the statute, a trial court would

determine whether a settlement amount between a tort victim and fewer than all

tortfeasors was reasonable." Bird, 175 Wash. 2d at 766 (citing Glover v. Tacoma

Gen. Hosp., 98 Wash. 2d 708, 716,658 P.2d 1230 (1983), abrogated by Crown

Controls, Inc. v. Smiley, 110 Wash. 2d 695, 756 P.2d 717 (1988)). "If so, a

nonsettling tortfeasor could offset that exact amount from a damages award at

trial." Bird, 175 Wash. 2d at 766. The Supreme Court adopted nine factors for trial

courts to consider when making a reasonableness determination pursuant to

RCW 4.22.060:

       "[T]he releasing person's damages; the merits of the releasing
       person's liability theory; the merits of the released person's defense
       theory; the released person's relative faults; the risks and expenses
       of continued litigation; the released person's ability to pay; any
       evidence of bad faith, collusion, or fraud; the extent of the releasing
       person's investigation and preparation of the case; and the
       interests of the parties not being released."

Glover, 98 Wash. 2d at 717 (alteration in original).

       The legislature's purpose in enacting the reasonableness statute had

nothing to do with covenant judgments. Indeed, when lawyers first invoked

reasonableness hearings as a means of facilitating covenant judgments, there

existed neither a legislative nor a Supreme Court pronouncement that such

actions were authorized. Nevertheless, eventually, the application of RCW

4.22.060 reasonableness hearings to the approval of covenant judgments was

explicitly endorsed by our Supreme Court. See Bird, 175 Wash. 2d at 767. The

purpose of a reasonableness hearing in this setting is to present a negotiated

                                        -40-
No. 74717-7-1/41

settlement to a neutral party—typically a judge—to protect the insurer from

excess judgments and fraud or collusion between the settling parties. Bird, 175
Wash. 2d at 765-66. These are similar to the concerns arising in contribution

actions that necessitated the statute's adoption.

        Arbitrators are a neutral party absent a material interest in the outcome of

arbitration or a substantial relationship with a party. RCW 7.04A.110(2). Herein,

Judge Burdell was a neutral party who determined an appropriate settlement

amount. Judge Burdell also considered the nine reasonableness factors and

determined that the settlement amount was reasonable.25 Judge McPhee

explicitly confirmed both the amount awarded and the reasonableness finding.26

        That, by agreement, Judge Burdell imposed the damages amount on the

parties (as opposed to the parties agreeing on the amount) is a more arms-length

proceeding than that involved in the typical covenant judgment scenario.

Additionally, Judge O'Donnell allowed Fireman's to present evidence to the jury
     i
on its assertions as to lack of notice, lack of an opportunity to participate in the

underlying litigation, and other matters that Fireman's believed pointed to fraud or

collusion.

        Fireman's does not attempt to evaluate the proceeding here employed.

That this exact approach has never been explicitly sanctioned by the Supreme

Court does not necessarily mean that the procedure discussed in Bird is the

        25 Fireman's did not resist the entry of Judge McPhee's confirmation order nor did it
appeal therefrom. The only relief it requested was the deletion of its name from the caption.
        26 The face of the arbitration award recites both "Plaintiffs' damages total:
$10,800,289.00," and "A reasonable covenantjudgment, considering all Bird/Besel factors, is
$10,800,289.00."

                                             - 41 -
No. 74717-7-1/42

exclusive appropriate procedure. On this briefing, we cannot make a reasoned

decision on the question.

        Neither does Fireman's address related questions. For instance,

assuming that Fireman's argument has merit, was Fireman's required to raise the

issue to the arbitrator? To the Thurston County superior court when it confirmed

the arbitration award and reasonableness finding? To the King County superior

court when Fireman's moved to compel the arbitration? Fireman's briefing does

not acknowledge these questions, let alone analyze them. In addition, the law

being as it is, we assume that other murky issues lie in wait, to be raised in a

helpfully-briefed future case.

        On this record, and on this briefing, Fireman's does not present a suitable

opportunity for reasoned decision-making. Accordingly, its claim does not

warrant appellate resolution. Palmer, 81 Wash. App. at 153.

        Fireman's fails to establish that the judgment rule does not apply under

these circumstances. It does not establish an entitlement to appellate relief.

                                                 2

        As a corollary to its claim that the judgment rule was inapplicable,

Fireman's asked the trial court to rule that it was also not bound to the underlying

judgment by collateral estoppel. Fireman's contends that the trial court erred by

ruling to the contrary.27

         27 Fireman's characterized the issue of collateral estoppel as its "defense." See Br. of
Appellant at 21, 54-57. In its reply brief, Fireman's characterizes collateral estoppel as its
"affirmative defense" and asserts that an order denying an affirmative defense cannot serve as a
basis to award damages. Reply Br. of Appellant at 96-98.
         Collateral estoppel is not an affirmative defense. Fireman's argued to the trial court that
the judgment rule did not apply to bind it to the underlying judgment and, as a result, the only way

                                              -42 -
No. 74717-7-1/43

       "The purpose of the doctrine of collateral estoppel is to promote judicial

economy by avoiding relitigation of the same issue, to afford the parties the

assurance of finality of judicial determinations, and to prevent harassment of and

inconvenience to litigants." Lemond v. Dep't of Licensing, 143 Wash. App. 797,

804, 180 P.3d 829(2008)(citing Hanson v. City of Snohomish, 121 Wash. 2d 552,

561, 852 P.2d 295 (1993)). The proponent of the application of the doctrine has

the burden of proving four elements:

        "(1)[T]he issue decided in the prior adjudication is identical with the
        one presented in the second action;(2) the prior adjudication must
        have ended in a final judgment on the merits;(3) the party against
        whom the plea is asserted was a party or in privity with the party to
        the prior adjudication; and (4) application of the doctrine does not
        work an injustice."

Thompson v. Dep't of Licensing, 138 Wash. 2d 783, 790, 982 P.2d 601 (1999)

(quoting Nielson v. Spanaway Gen. Med. Clinic, Inc., 135 Wash. 2d 255, 262-63,

956 P.2d 312(1998)).

        Here, the trial court considered the four elements of collateral estoppel

and found each element established. The trial court found that Fireman's had

notice of the arbitration and an opportunity to intervene. The trial court found that

the arbitration was "actually litigated." The trial court found that, at the arbitration,

Vose's and PT's interests were in privity with Fireman's interests. Finally, in its

order denying reconsideration, the trial court found that application of the doctrine

would not work an injustice. Accordingly, the trial court ruled that Fireman's was

collaterally estopped from contesting the underlying judgment.

it could be held liable for the underlying judgment was pursuant to a theory of collateral estoppel.
Fireman's asked the trial court to rule on the issue of collateral estoppel and the trial court did so.
This was not error.

                                                -43 -
No. 74717-7-1/44

       An appellate court can affirm a trial court judgment on any basis within the

pleadings and proof. Wendle v. Farrow, 102 Wash. 2d 380, 382, 686 P.2d 480

(1984). The trial court's ruling on collateral estoppel provides such an alternative

basis for affirmance. Fireman's had notice of the arbitration and an opportunity

to intervene, as determined first by Judge Burdell, then by Judge McPhee, and

finally by Judge O'Donnell in his ruling on collateral estoppel. As Judge

O'Donnell ruled,(1) Judge McPhee's order entering judgment against Vose and

PT and in favor of Gosney constituted a final judgment on the merits,(2)the

arbitration hearing was "actually litigated"—a determination supported by the

jury's finding that no fraud or collusion occurred, and (3) Fireman's was in privity

with Vose and PT because it owed both contractual and statutory duties to its

insured.

       Finally, application of the doctrine did not work an injustice on Fireman's.

As the trial court ruled,

       Fireman's Fund—a sophisticated, national insurance company with
       highly competent in-house and outside counsel—evaluated
       whether it should attend the arbitration hearing after receiving
       notice that it would occur. Fireman's Fund had options available to
       it when presented with that information. It made a decision to avoid
       the hearing altogether.
               An insurer places itself in a most difficult posture when it has
       notice of settlement but then fails to take steps to sufficiently protect
       its interests.
               Given that backdrop, the Court cannot find that the
       procedural irregularities that occurred during the arbitration
       amounted to an injustice. Nor can this Court find that binding
       Fireman's Fund to the arbitration award would work an injustice.
       This is particularly true in the posture of an insurance case, when
       "so long as the carrier 'has notice and an opportunity to intervene in
       the underlying action against the tortfeasor,' it will be bound by the
       findings, conclusions, and judgment of the arbitral proceeding."

                                        -44 -
No. 74717-7-1/45

       Lenzi v. Redland Ins. Co., 140 Wash. 2d 267, 274, 996 P.2d 603,606
       (2000).

        Fireman's fails to establish an entitlement to appellate relief.28

                                                V

        We next address Gosney's cross-appeal. Gosney contends that the trial

court erred by declining to award interest on the underlying judgment

commencing on the date on which the settlement agreement was signed. We

disagree.

        Prejudgment interest is allowable "(1) when an amount claimed is

'liquidated' or (2) when the amount of an 'unliquidated' claim is for an amount due

upon a specific contract for the payment of money and the amount due is

determinable by computation with reference to a fixed standard contained in the

contract." Prier v. Refrigeration Eng'g Co., 74 Wash. 2d 25, 32, 442 P.2d 621

(1968). A claim is liquidated where "the evidence furnishes data which, if

believed, makes it possible to compute the amount with exactness, without

reliance on opinion or discretion." Prier, 74 Wash. 2d at 32 (citing CHARLES T.

MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES § 54 (1935)).

        Here, the settlement agreement provided for a 12 percent interest rate

accruing and compounding annually on the unpaid damages from the date of

signing, September 2, 2008. The settlement agreement further provided that "the

         26 Fireman's also contends that the trial court erred by not granting its CR 50(a) motion
on its affirmative defenses of fraud and collusion. Although Fireman's assigns error to the trial
court's ruling, its argument on appeal consists of a single paragraph disputing factual questions
not at issue here. In any event, fraud and collusion were factual matters resolved by the jury,
which heard extensive and conflicting testimony on the matters.

                                              -45-
No. 74717-7-1/46

parties agree to have the full amount of the damages and/or judgments

determined by stipulation approved as reasonable by the Court, or arbitration."

       By the terms of the settlement agreement, the damages were

unliquidated. See Hansen v. Rothaus, 107 Wash. 2d 468, 477, 730 P.2d 662

(1986)("Because reliance upon opinion and discretion is necessary in

determining whether the amounts expended were reasonably necessary and

reasonable in amount, medical expenses, here cure, are unliquidated."). It was

not until Judge McPhee entered an order confirming the arbitration award as

reasonable and entering judgment against Vose and PT for $10,800,289 that the

exact amount due was determinable.

       Gosney also contends that the terms of the insurance policy require that

interest accrue from the date of the settlement agreement. The policy provides

payment for 101 interest on the full amount of any judgment that accrues after

entry of the judgment and before we have paid, offered to pay, or deposited in

court the part of the judgment that is within our Limit of Insurance." Because

Fireman's has never paid its policy limits, Gosney asserts that interest on the

$2.5 million partial judgment should accrue from the date of the settlement

agreement. But the "entry of the judgment" did not occur until November 16,

2012—the terms of the policy do not contemplate prejudgment interest.

       The trial court entered judgment with interest on the underlying judgment

amount compounding annually as of November 16, 2012, the date of

confirmation of the arbitration award by Judge Tabor. The trial court did not err

by so doing.

                                      -46 -
No. 74717-7-1/47

                                               VI

       In their cross-appeals, Vose and PT contend that the trial court erred by

ruling that they were judicially estopped from having judgment entered in their

favor on the jury's verdicts. We agree.

                                                A

        We review an application of the doctrine of judicial estoppel for an abuse

of discretion.29 Arkison v. Ethan Allen, Inc., 160 Wash. 2d 535, 538, 160 P.3d 13

(2007); Cunningham v. Reliable Concrete Pumping, Inc., 126 Wash. App. 222, 227,

108 P.3d 147 (2005); see Taylor v. Bell, 185 Wash. App. 270, 283 n.13, 340 P.3d
951 (2014)(reviewing a trial court's summary judgment decision based on

judicial estoppel). A decision constitutes an abuse of discretion when it is

manifestly unreasonable or based on untenable grounds or reasons. Kreidler v.

Cascade Nat'l Ins. Co., 179 Wash. App. 851, 861, 321 P.3d 281 (2014).

        A court's decision is manifestly unreasonable if it is outside the
        range of acceptable choices, given the facts and the applicable
        legal standard; it is based on untenable grounds if the factual
        findings are unsupported by the record; it is based on untenable
        reasons if it is based on an incorrect standard-or the facts do not
        meet the requirements of the correct standard.

In re Marriage of Fiorito, 112 Wash. App. 657, 664, 50 P.3d 298 (2002).

        "Judicial estoppel is an equitable doctrine that precludes a party from

asserting one position in a court proceeding and later seeking an advantage by

taking a clearly inconsistent position." Arkison, 160 Wash. 2d at 538 (quoting

Bartley-Williams v. Kendall, 134 Wash. App. 95, 98, 138 P.3d 1103(2006)). "There

        29 The parties dispute the standard of review applicable to the trial court's order.
Because the trial court granted Fireman's motion after the entry of the jury's verdict—and entered
findings of fact after reviewing the entire record—we apply the abuse of discretion standard.
                                             - 47 -
No. 74717-7-1/48

are two primary purposes behind the doctrine: preservation of respect for judicial

proceedings and avoidance of inconsistency, duplicity, and waste of time."

Anfinson v. FedEx Ground Package Sys., Inc., 174 Wash. 2d 851, 861, 281 P.3d
289 (2012). Judicial estoppel is intended to protect the integrity of the courts—it

is not designed to protect litigants. Arp v. Riley, 192 Wash. App. 85, 91, 366 P.3d
946 (2015), review denied, 185 Wash. 2d 1031 (2016).

       A trial court's determination of whether to apply the judicial estoppel

doctrine is guided by three core factors:

      (1) whether the party's later position is clearly inconsistent with its
      earlier position,(2) whether acceptance of the later inconsistent
      position would create the perception that either the first or the
      second court was misled, and (3) whether the assertion of the
      inconsistent position would create an unfair advantage for the
      asserting party or an unfair detriment to the opposing party.

Taylor, 185 Wash. App. at 282 (citing Anfinson, 174 Wash. 2d at 861).

       As a general rule, if a debtor in a bankruptcy proceeding fails to
       report a cause of action and obtains a discharge or confirmation, a
       trial court may apply judicial estoppel to bar the action. This
       prevents a debtor from protecting the asset from creditors by
       representing to the bankruptcy court that no claim exists and then
       asserting in another court that the claim does exist. But "[a] party's
       nondisclosure of a claim in bankruptcy does not automatically lead
       to estoppel in a future suit," especially where a party lacks
       knowledge or has no motive to conceal the claims.

Am, 192 Wash. App. at 92-93 (footnotes omitted)(citing Ah Quin v. County of

Kauai Dep't of Transp., 733 F.3d 267, 271 (9th Cir. 2013) quoting Miller v.

Campbell, 137 Wash. App. 762, 771, 155 P.3d 154 (2007), affd on other grounds,

164 Wash. 2d 529, 192 P.3d 352(2008)).

                                        -48-
No. 74717-7-1/49

                                          B

       Following entry of the jury's verdict, the trial court ruled that Vose was

judicially estopped from recovering any damages in this matter:

              Plaintiff's attempt to distinguish a claim vs. reservation of
      damages in support of their proposition that Mr. Vose's failure to
      disclose the settlement agreement in the bankruptcy proceeding is
      of no moment. What is abundantly clear is that the bankruptcy
      petition required Mr. Vose to disclose equitable and future interests
      of all his assets and other personal property of any kind. Trial Ex.
      384. His reservation of an ability to seek damages in the instant
      case falls under this broad category. Despite his awareness of this
      lawsuit and his reserved claim for damages, he failed to disclose
      them.
              All of the elements of judicial estoppel have been met here
      with respect to Mr. Vose's retention of his right to pursue damages.
      His position during this case is clearly inconsistent with his
      declaration during this bankruptcy proceeding. His recovery here
      surely creates the perception that he has misled the bankruptcy
      court. His ability to collect these funds will amount to a fraud on the
      bankruptcy court, as any funds he stands to collect from this award
      should flow to his creditors.

The trial court also ruled that, because Vose was the sole shareholder of PT, PT -

was likewise judicially estopped from recovering damages.

       As a preliminary matter, we note that the trial court made no findings to

support its conclusion that PT was judicially estopped from recovering on the

jury's verdict. Vose declared personal bankruptcy in 2010. PT has never

declared bankruptcy. The trial court made no findings of alter ego, comingling of

assets, a failure to adhere to corporate formalities, or any other finding that could

support a ruling extending judicial estoppel to PT. Rather, the trial court simply

noted that Vose is the sole shareholder of PT. In this, the court erred.

                                        -49 -
No. 74717-7-1/50

       In addition, the trial court failed to adequately consider the nature of the

interest retained by Vose and whether disclosure of that interest would have

changed the outcome of the bankruptcy.

       The bankruptcy petition required Vose to list "contingent and unliquidated

claims of every nature, including tax refunds, counterclaims of the debtor, and

rights to setoff claims." "At the commencement of bankruptcy, the debtor must

disclose all of his assets to be included in the bankruptcy estate for the potential

benefit of creditors." Miller v. Campbell, 164 Wash. 2d 529, 540, 192 P.3d 352

(2008)(citing 11 U.S.C. § 521(a)(1)). "The bankruptcy estate includes all the

debtor's potential claims or causes of action that existed at the time he or she

filed for bankruptcy." Miller, 164 Wash. 2d at 540 (citing 11 U.S.C. § 541(a)(1)).

       Contrary to the trial court's conclusion, it was not proved that, at the time

of the bankruptcy filing, Vose had any such asset, claim, or cause of action to

disclose.

       Initially, it is apparent from the language of the settlement agreement that

Vose had no right or ability to personally institute a claim or lawsuit against

Fireman's. Vose could not initiate a lawsuit against Fireman's himself and he

could not compel Gosney to file such a suit. As a corollary, Vose could not

prevent Gosney from filing suit against Fireman's nor could he control any of the

claims that Gosney might decide to bring.

       In addition, Fireman's presented no evidence whatsoever—and the trial

court made no findings—as to the precise nature and value of Vose's interest.

Pursuant to 11 U.S.C.§ 541(a)(1), the bankruptcy estate is established at the

                                        - 50 -
 No. 74717-7-1/51

 "commencement of a case," i.e., at the filing of the petition. A debtor's recovery

 for an act that occurs after the "commencement of a case" is not at issue. As the

 proponent of the judicial estoppel defense, Fireman's bore the burden of proving

, that, at the time that Vose filed for bankruptcy, he possessed some cognizable

 and valuable interest. But Fireman's offered no such proof. Rather, the record

 indicates that all of Vose's claimed personal damages originated postbankruptcy,

 when Fireman's refused to settle and refused to engage in arbitration. Indeed,

  had Fireman's agreed to the terms of the settlement agreement and paid the

  policy limits, Gosney would have released all claims against Fireman's (with or

  without Vose's assent), leaving Vose with no damages to recover and no claim or

 cause of action to assert.

         Finally, Fireman's presented no evidence that disclosure would have

  changed the outcome of the bankruptcy. Fireman's offered no evidence to prove

  that any creditor would have requested a plan amendment if Vose had disclosed

  his potential interest in a lawsuit. Fireman's offered no evidence that the

  bankruptcy court would have changed the relief that it imposed had Vose

  disclosed the potential interest. Such proof is necessary. Arp, 192 Wash. App. at

  99-101. Thus, even assuming that Vose had something to disclose to the

  bankruptcy court, Fireman's failure to produce any evidence that disclosure

  would have changed the outcome of the bankruptcy proceedings precludes

  application of judicial estoppel.

                                         - 51 -
No. 74717-7-1/52

        Judicial estoppel does not exist to create a windfall for the proponent

party. Arkison, 160 Wn.2d at 540(quoting Bartley-Williams, 134 Wash. App. at

102). Rather, the doctrine is designed to protect the integrity of the judicial

process. Am, 192 Wash. App. at 100. Here, Fireman's offered insufficient

evidence—and the trial court made insufficient findings—to support applying the

doctrine of judicial estoppel to either Vose or PT. Vose's alleged failure to

disclose an amorphous and possibly valueless interest to the bankruptcy court

does not preclude him from recovering damages arising from the postbankruptcy

filing bad faith conduct of the proponent party. Similarly, given that PT is a

separate legal entity that never filed a bankruptcy petition, application of the

doctrine to it was entirely unwarranted.

        We reverse the trial court's order on judicial estoppel and remand for the

entry of a judgment in favor of Vose and PT consistent with the jury's verdicts.33

                                                VII
        Finally, Fireman's contends that the trial court erred by awarding Vose and

PT attorney fees and costs, including a lodestar multiplier of 1.25.31

        30 Fireman's contends that the trial court erred ,by awarding Gosney the underlying
judgment amount because, it avers, the court's ruling on judicial estoppel "must be understood to
negate the jury's finding of harm, by reducing all damages to zero." Br. of Appellant at 51.
Because harm is an essential element of the bad faith handling of an insurance claim, and
because Plaintiffs cannot establish harm as a result of the court's judicial estoppel ruling,
Fireman's reasons, it was error to award Gosney the underlying judgment amount
        Fireman's cites to no authority to support its assertion that the application of judicial
estoppel against Vose or PT should somehow preclude Gosney, who bargained for and obtained
an assignment of Vose's prebankrupcy claims and causes of action prior to Vose filing for
bankruptcy, from recovering against Fireman's. In any, event, because we reverse the trial court's
order on judicial estoppel, we need not further address'this contention.
        31 Fireman's has not assigned error to the trial court's award of attorney fees and costs to
Gosney.

                                              - 52 -
No. 74717-7-1/53

                                         A

       We review a trial court's award of attorney fees for an abuse of discretion.

Miller, 180 Wash. App. at 820. Washington follows the American rule "that attorney

fees are not recoverable by the prevailing party as costs of litigation unless the

recovery of such fees is permitted by contract, statute, or some recognized

ground in equity." McGreevy v. Or. Mut. Ins. Co., 128 Wash. 2d 26, 35 n.8, 904
P.2d 731 (1995). The CPA and IFCA both permit an award of attorney fees and

costs to the prevailing party. RCW 19.86.090; RCW 48.30.015(3). The

"prevailing party" in a lawsuit is the one who receives a judgment in his favor.
                                                1
Am. Fed. Say. & Loan Ass'n of Tacoma v. McCaffrey, 107 Wash. 2d 181, 194-95,

728 P.2d 155 (1986).

       Attorney fees and costs may also be awarded pursuant to Olympic

Steamship Co. v. Centennial Insurance Co., 1.17 Wn.2d 37, 52-53, 811 P.2d 673

(1991). Under Olympic Steamship,"an award of fees is required in any legal

action where the insurer compels the insured to assume the burden of legal

action, to obtain the full benefit of his insurance contract, regardless of whether

the insurer's duty to defend is at issue." 117 Wash. 2d at 53. "The equitable basis

established in Olympic Steamship for attorney fee awards is limited to efforts

necessary to establish coverage for claims against the insured and is based on

the rights of the insured." Polygon Nw. Co. v.I Am. Nat'l Fire Ins. Co., 143 Wn.

App. 753, 795-96, 189 P.3d 777(2008).

                                        - 53 -
No. 74717-7-1/54

        Here, the trial court found that Plaintiffs were the prevailing parties on all

causes of action, including the CPA, IFCA, bad faith, contract, and negligence.32

The trial court found that the claims and defenses "involved a common core of

facts, evidence, testimony and theories, in which the time devoted to discovery,

pretrial motions and preparation, trial and post-trial matters of this intertwined

action cannot be reasonably segregated." The trial court awarded Vose and PT

attorney fees totaling $400,812.50 and costs totaling $4,800.00.

        Vose and PT were the prevailing parties on all claims advanced against

and by Fireman's. Accordingly, Vose and PT may recover attorney fees and

costs associated with advancing the CPA and IFCA claims. RCW 19.86.090;

RCW 48.30.015(3). Because the trial court found that these claims were

intertwined with and inseparable from the other claims advanced by Vose and

PT—a finding supported by the record—it did not err by declining to parse out the

fees and costs associated with each individual claim. Miller, 180 Wash. App. at

823-24.

        Fireman's also contends that the trial Court erroneously awarded Vose and

PT attorney fees associated with the arbitration. There is no indication in the

record that the trial court awarded Vose and PT fees or costs associated with the

underlying arbitration.33 However, even if it did, we conclude that such an award

        32 Fireman's first contends that the trial court's judicial estoppel rulings should have
served as a basis to deny an attorney fee award to Vose and PT. Because we reverse that
decision, we need not further discuss this theory.
                                                           I
        33 The only citation to the record that Fireman's provides concerns the trial court's award
of costs to Gosney. The trial court noted that its award to Gosney "does not include costs
associated with the underlying arbitration & reasonableness hearing." Contrary to Fireman's
assertions, this does not establish that the trial court awarded Vose and PT costs associated with
the underlying arbitration.

                                              - 54 -
No. 74717-7-1/55

is tenable pursuant to Olympic Steamship. AS discussed herein, Vose and PT

assigned all claims and causes of action to Gosney in the settlement agreement.

But before Gosney could step into the shoes of Vose and PT and pursue her

claims against Fireman's, Plaintiffs were forced into an arbitration proceeding

compelled by Fireman's. The fees and costs associated with this arbitration were

thus necessary predicates for Vose and PT to receive the benefit of their

insurance contract. Olympic S.S., 117 Wash. 2d at 53.

       There was no abuse of discretion.

       Adjustments to the lodestar are reserved for rare occasions. Miller, 180
Wash. App. at 825. Although the lodestar presumptively represents a reasonable

fee, "occasionally a risk multiplier will be warranted because the lodestar figure

does not adequately account for the high risk nature of a case." Chuonq Van

Pham v. Seattle City Light, 159 Wash. 2d 527, 542, 151 P.3d 976(2007).

       Here, the trial court found that a lodestar multiplier was warranted.

              A lodestar multiplier of 1.25 is appropriate given the
       contingent representation and risks this matter presented at the
       inception and throughout the nearly 7 years (or beyond) of non-
       payment, and due to the exceptional quality of representation
       provided to the plaintiffs by their counsel. Although the judgment is
       substantial, it has not been paid. Further, at the time of pursuing
       the claims, and accepting and defending the cross-claims, the risk
       of non-payment was significant.

       The trial court's ruling was sound. Plaintiffs' attorneys have received no

payment pursuant to the claims advanced against Fireman's during the many

years that this complex litigation has stretched on, and have faced a high degree

                                       - 55 -
No. 74717-7-1/56

of risk that they would never be paid at all. The trial court did not abuse its

discretion by utilizing a modest lodestar multiplier.

       We reverse the trial court's order on judicial estoppel, affirm in all other

respects, and remand the matter to the trial court for any necessary proceedings

consistent with this opinion.34

We concur:

         34 Gosney, Vose, and PT also request an award of appellate fees. Vose and PT are
entitled to an award of appellate fees pursuant to the CPA. ROW 19.86.090; Ewing v. Glogowski,
198 Wash. App. 515, 526, 394 P.3d 418(2017). Gosney is entitled to an award of appellate fees
pursuant to Olympic Steamship, 117 Wash. 2d at 53. Upon proper application, a commissioner of
our court will enter an appropriate award.

                                           - 56 -
       LEACH, J.(dissenting) — I dissent because:' disagree with the trial court's decision

to add $10.8 million to the jury's verdict. While no special verdict question asked the jury

whether Fireman's Fund Insurance Company proved that its breach of its duty to defend

did not harm the plaintiffs, the jury's answers to the special verdict questions answer this

question and show that the jury found this breach caused no harm to plaintiffs. For this

reason, the trial court improperly added $10.8 million to the jury's damage award.

       The following review of the jury instructions and the jury's answers to the special

verdict form questions show that the jury followed the court's instructions and did not

intend to award this amount because it affirmatively found that Fireman's breach of its

duty to defend and/or settle did not harm plaintiffs Pizza Time Inc. and Pizza Time

Holdings of Washington (collectively Pizza Time) or John Vose.

       Plaintiffs presented evidence supporting several theories of Fireman's failure to act

in good faith. In addition to its breach of its duty to defend and/or settle, plaintiffs

presented evidence of Fireman's failure to timely respond to pertinent communications,

failure to investigate, and failure to obtain its insured's consent before pursuing a trial

continuance.

       Special verdict question la asked the jury whether the plaintiffs had proved all

elements of any or all of their claims. It also told the jury that the elements were described

in the jury instructions. The jury answered yes for each of the plaintiffs' five claims,
                                                1
including breach of duty of good faith.

       Special verdict question lb asked whether the jury found a breach of the duty to

defend or settle, to which the jury also answered Yes. This had significance to the jury.
No. 74717-7-1/ 2
Gosney v. Fireman's Fund Ins. Co. — Dissent

Instructions 17, 53, and 54 provided a different rule for determining damages for a breach

of this duty than the rule for other breaches of the duty of good faith.

        Instructions 17 and 53 each provided in pa11,

                If you find that Fireman's failed to act in good faith by breaching its
        duty to defend and/or settle, then the law presumes that Plaintiffs Pizza
        Time and Mr. Vose were injured and that the failure to act in good faith was
        the proximate cause of this injury. You are bound by that presumption
        unless you find that Fireman's failure to act in good faith did not injure
        Plaintiffs Pizza Time and Mr. Vose.

        Instruction 54 provided in part,

               If you find for the Plaintiffs on their claim that Fireman's
        Fund/American Insurance Company failed to act in good faith as to duty to
        defend or settle, your verdict must include the amount of the iudgment on
        the arbitration award, unless you further find for Fireman's Fund/American
        Insurance Company on its affirmative defense that the settlement was the
        product of fraud or collusion. The judgment amount is $10,800,289, plus
        interest.

                As to the duties to defend and/or settle, Fireman's Fund/American
        Insurance Company has the burden of proving that any act of rsicl failure to
        act in good faith did not iniure harm, damage or prejudice the plaintiffs.

        Instructions 17, 53, and 54 all direct the jury to treat a breach of the duty to defend

and/or settle differently from other breaches of the duty of good faith when determining

damages. This explains in part why the court inclUded question lb in the special verdict

form.

        In addition, the court instructed the jury about an affirmative defense to Fireman's

breach of the duty to defend and/or settle. Instruction 52, about waiver, provided in part,

             In this case, Fireman's duty to provide a defense to Plaintiffs Pizza
        Time and Mr. Vose was excused if Fireman's has proved, by a

                                              -2-
No. 74717-7-1 / 3
Gosney v. Fireman's Fund Ins. Co. — Dissent

       preponderance of the evidence, that Plaintiffs Pizza Time and Mr. Vose
       waived their right to that performance under the contract.

       Special verdict question 31 asked the jury whether the defendants had proved all

elements of any or all of their defenses. The jury answered yes for the defense of waiver

and no for all other defenses, including fraud and collusion. This means that the jury

found that Pizza Time and Vose waived Fireman's duty to provide a defense. Instructions

17 and 53 defined the elements of the breach of good faith claim.2 These instructions

distinguished the failure to defend and/or settle from the other breach of good faith claims.

The court told the jury it must presume that Fireman's breach of the duty to defend and/or

settle harmed Pizza Time and Vose unless Fireman's proved this breach did not injure

Pizza Time and Vose. For the other breach of good faith claims, the plaintiffs had to

prove "[t]hat Plaintiff Pizza Time or Mr. Vose was damaged."

       Because the jury found that Fireman's had proved that Pizza Time and Vose had

waived Fireman's duty to defend and/or settle, the jury necessarily also found that

Fireman's had proved that its breach of this duty did not harm Pizza Time or Vose. As a

result, plaintiffs had not proved a breach of good faith claim based on a breach of the duty

to defend and/or settle. The trial court and the majority both fail to account for the jury's

waiver decision.

       1Special verdict question 2 asked about contributory negligence. The jury found
that the defendants had not proved the plaintiffs were contributorily negligent.
       2These instructions are identical. Fireman's objected to the court giving the same
instruction twice. The record does not disclose the trial court's reason for doing so.
                                            -3-
No. 74717-7-114
Gosnev v. Fireman's Fund Ins. Co. — Dissent

       Instruction 54 required the jury to include the judgment amount in its verdict if it

found for the plaintiffs "on their claim that Fireman's Fund/American Insurance Company

failed to act in good faith as to duty to defend."

        Special verdict question 4a asked the jury what amount of damages it found that

plaintiffs Vose and Pizza Time incurred. The jury answered,

                                                         Damages:

              Negligence:                                $100,000.00

              Breach of Contract:                        $ 20,000.00

              Breach of Duty of Good Faith:              $300,000.00

              Breach of Consumer Protection Act:         $ 20,000.00

              Breach of Insurance Fair Conduct Act: $ 20,000.00

       Special verdict question 4b asked the jury whether these damage amounts

included the $10 million judgment. The jury answered no.

       No special verdict question asked the jury whether Fireman's proved that its

breach of its duty to defend and/or settle did not harm the plaintiffs. But the jury's answers

to questions 1 b, 3, 4a, and 4b, when viewed in the context of the instructions as a whole,

answer this question. The jury found that Fireman's breached its duty to defend and/or

settle (answer to 1 b) but that Pizza Time and Vose waived performance of this duty

(answer to 3). If the jury followed instructions 17 and 53, as we must presume they did,

its decision not to include the judgment in its damage award for the breach of the duty of

                                             -4-
No. 74717-7-1/ 5
Gosnev v. Fireman's Fund Ins. Co. — Dissent

good faith means two things. First, that the jury found this breach did not injure Pizza

Time or Vose. And second, that some other breach of this duty did injure them.

       The jury's answers to the special verdict questions are consistent with each other

and demonstrate that the jury followed the court's instructions.              Under these

circumstances, the trial court did not have the authority to add $10.8 million to the jury's

damage award.

       The majority premises its contrary conclusion on a conflation of the jury's answer

to special verdict question lb. The majority relies in part on the structure of questions la

and lb for its analysis (answers included):

       QUESTION la: Plaintiffs Claims

       Have the Plaintiffs proven all elements of any or all of their claims as to the
       Defendants? (The elements of these claims are described in the
       accompanying Jury Instructions.)

              ANSWER: (Check "yes" or "no")

              Negligence                                         X Yes        No

              Breach of Contract                                 X Yes        No

              Breach of Consumer Protection Act                  X Yes        No

              Breach of the Insurance Fair Conduct Act           X Yes        No

              Breach of Duty of Good Faith                       X   Yes      No

       Question lb

               If you answered "yes" to Question 1a as to Breach of Duty of Good
       Faith, did you find a breach of the duty to defend or settle?

        X Yes        No

                                              -5-
No. 74717-7-1/6
Gosney v. Fireman's Fund Ins. Co. — Dissent

       The majority incorrectly concludes that the jury's answer to question lb means that

the jury found that Fireman's breach of the duty to defend or settle harmed Pizza Time

and Vose. 1 disagree.

      The majority equates a finding of breach of a duty with a finding of all elements

required to prove a claim of breach of Fireman's failure to act in good faith as to its duty

to defend and/or settle, including the element of liarm. To support its decision to ignore

the plain language of question 1 b, the majority 'offers a structural analysis: the two

questions are designated la and lb instead of 1 and 2. According to the majority, this

means that they are "interrelated questions" rather than "separate and distinct questions"

and question lb thus really asks whether plaintiffs have proved all elements of a breach

of the duty to defend and/or settle claim.

       This analysis has at least two flaws. First, it ignores the well settled rule that the

use of different words generally reflects an intent to have a different meaning. The court's

use of the words "all elements" in question la and "breach" in question lb would generally

be understood to reflect different meanings. Notably, the trial court, in its memorandum

opinion, did not say that it intended the meaning attributed to it by the majority. Second,

it ignores the history of the special verdict form's drafting.
                                                      1
        The court drafted the form given to the jury using the defendants' proposed verdict

form. Questions 1, 2, and 3 of the defendants' proposed form mirrored questions la, 2,

and 3 of the court's form. The court chose to insert a question between 1 and 2, so it

renumbered question 1 as la and inserted a question lb. It did the same thing when it

                                             -6-
No. 74717-7-1 /7
Gosney v. Fireman's Fund Ins. Co. — Dissent

inserted question 4b, renumbering 4 as 4a.3 This allowed the court to avoid renumbering

the other questions and permitted the parties to 'discuss issues about these questions

using the same number for the proposed verdict and the court's form. Unfortunately, the

court's conferences with the parties about instructions were held after hours and off the

record. So we have no additional information about the verdict form's history.

      The majority also contends that it would ,not make sense for the court to ask

whether it had found a breach of the duty to defend rather than whether it had found all

elements of the corresponding tort proved. But the record provides multiple explanations.

The parties contested whether the presumed injury rule described in instructions 17 and

53 and the presumed damage rule described in instruction 54 applied to all breaches of

an insurance company's duty of good faith or just to a breach based on a failure to defend

and/or settle. To preserve this issue for appeal, the court needed to make a record about

which duty of good faith was breached and whether the jury's damage award included

the amount of the judgement. This explains questions lb and 4b, both inserted by the

court into the defendants' proposed verdict form.

       I agree with the majority's resolution of the remaining issues that it resolves.

       3 Thecourt also modified defendants' proposed question 4 and omitted their
proposed question 5.
                                            -7-