Court Opinion

ID: 5116114
Source: CourtListenerOpinion
Date Created: 2021-10-05 17:20:43.420659+00
Date Added: 2024-06-11T08:21:54.571602
License: Public Domain

Filed
                                                                                       Washington State
                                                                                       Court of Appeals
                                                                                        Division Two

                                                                                       October 5, 2021

      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II
    ALIONA KOSOVAN,                                                No. 54904-2-II

                               Appellant,

          v.

    OMNI INSURANCE COMPANY, a foreign                         PUBLISHED OPINION
    insurance carrier, PRAXIS CONSULTING,
    INC., a foreign corporation,

                               Respondents.

         CRUSER, J. — Aliona Kosovan appeals the trial court's orders granting summary judgment

in favor of Omni Insurance Company (Omni) and Praxis Consulting, Inc. (Praxis), dismissing her

Consumer Protection Act (CPA)1 claims against both entities. Kosovan was injured in a motor

vehicle accident by an at-fault third party and obtained Personal Injury Protection (PIP) benefits

under her insurance policy with Omni. Kosovan then sought to recover for personal injury damages

she sustained in a suit against the tortfeasor. Before Kosovan settled with the tortfeasor and

received full compensation for her injuries, Omni transferred its interest in collecting its

1
    Chapter 19.86 RCW.
No. 54904-2-II

subrogation2 claim for PIP benefits to Praxis, and Praxis submitted a subrogation claim letter to

the tortfeasor’s insurer. Kosovan filed suit alleging that Omni and Praxis’ conduct amounted to a

violation of the CPA.

       On appeal, Kosovan argues that the trial court erred in granting summary judgment in favor

of Omni and Praxis because, at minimum, a genuine dispute of material fact remains as to each

element of her CPA claim and Omni and Praxis were not entitled to judgment in their favor as a

matter of law.

       We hold that Kosovan raised a genuine issue of material fact as to each element of her CPA

claim against Omni based on her allegation that Omni breached its duty as her insurer to exercise

good faith under RCW 48.01.030 when it attempted to assert a right to recover PIP benefits before

Kosovan was fully compensated for her injuries. However, we hold that Kosovan’s claim against

Praxis was properly dismissed as a matter of law.

       Accordingly, we reverse the trial court’s order granting summary judgment in favor of

Omni, affirm the trial court’s order granting summary judgment in favor of Praxis, and remand for

further proceedings consistent with this opinion.

                                              FACTS

                                         I. THE COLLISION

       On December 6, 2015, Kosovan was driving in Oregon when she was hit from behind by

a car driven by Joseph Roland. Kosovan suffered a dislocated jaw and hip, and she sustained a

2
 Subrogation refers to “the right that one party has against a third party following the payment, in
whole or in part, of a legal obligation that ought to have been met by such third party.’” Daniels v.
State Farm Mut. Auto. Ins. Co., 193 Wn.2d 563, 569, 444 P.3d 582 (2019) (quoting 2 ALLAN D.
WINDT, INSURANCE CLAIMS AND DISPUTES § 10:5, at 10-23 (6th ed. 2013)).
                                                 2
No. 54904-2-II

concussion. Kosovan also experienced severe pain in her back for which she sought care from a

chiropractor. In addition to the regular chiropractic treatment that Kosovan received over the 18

months that followed, Kosovan received continued care for her jaw injury and had regular

appointments with a neurologist. Kosovan incurred approximately $38,500 in medical expenses

related to the collision.

        Kosovan was insured by Omni when the collision occurred. In January 2016, counsel for

Kosovan informed Omni that Kosovan had made a claim and “may institute a cause of action”

against Roland. Clerk’s Papers (CP) at 584. Roland was insured by United Services Automobile

Association (USAA). Roland’s policy limit for personal injuries was $25,000 for any single person

injured in a collision, which is the mandatory minimum bodily injury coverage allowed under

RCW 46.29.090. USAA accepted full liability for the collision on behalf of Roland.

                       II. SUBROGATION FOR PIP BENEFITS PAID TO KOSOVAN

        Kosovan applied for PIP benefits from Omni, and her application reflected medical

expenses totaling $38,566.23. Omni paid Kosovan $10,000 in PIP benefits, which was the

maximum allowed under her policy. Kosovan’s policy with Omni set forth procedures for seeking

subrogation and reimbursement of benefits paid to its insured. Omni’s insurance policy provided

in relevant part:

        OUR RIGHT TO RECOVER PAYMENT

               A. If we make a payment under this policy and the person to or for whom
        payment was made has a right to recover damages from another we shall be
        subrogated to that right. That person shall do:
        1. Whatever is necessary to enable us to exercise our rights; and
        2. Nothing after loss to prejudice them.

        ....

                                               3
No. 54904-2-II

               B. If we make a payment under this policy and the person to or for whom
       payment is made recovers damages from another, that person shall:
       1. Hold in trust for us the proceeds of the recovery; and
       2. Reimburse us to the extent of our payment. However, any reimbursement due to
       us shall be reduced by our pro rata share of any reasonable and necessary costs and
       expenses, including deposition costs, witness fees and attorney's fees, incurred in
       bringing the claim.

        ....

               E. We shall be entitled to a recovery under Paragraph (A.) or (B.) only after
       the person has been fully compensated for damages.

Id. at 52-53.

       One week after Omni paid Kosovan her PIP benefit, Omni assigned its subrogation claim

related to recovery of the PIP benefits it paid to Kosovan to Praxis. Praxis is a firm that conducts

subrogation recovery on behalf of insurance companies to obtain reimbursement for the insurer’s

payment from a third party that is ultimately responsible for that payment. Praxis is not licensed

to operate as a collection agency in Washington.

       Under its agreement with Praxis, Omni submits a weekly list to Praxis of the PIP payments

it issued “to determine whether subrogation potential exists.” Id. at 407. Omni provides Praxis

with “the date of loss, basic facts of the accident, amount of PIP paid and identity of the PIP

insured.” Id. at 298. Praxis would then “identify, investigate, pursue and collect recovery against

[third] parties.” Id. at 407. With regard to the PIP benefits paid to Kosovan, Praxis did not

independently investigate the extent of Kosovan’s alleged damages or whether Roland’s personal

liability coverage would pay for all of Kosovan’s damages. Instead, Praxis relied on “direction and

information received from Omni.” Id. at 299.

                                                 4
No. 54904-2-II

        After receiving the assignment from Omni, Praxis contacted USAA and confirmed that

USAA had accepted full liability for the collision. Praxis then sent USAA a letter on October 19,

2017, regarding Omni’s subrogation claim. The letter read:

        Our investigation of the accident referenced below indicates that liability rests with
        your insured. Your files should now reflect that we are handling this file. On behalf
        of our client we now turn to you for reimbursement under the provisions of the
        Personal Injury Protection Law for benefits and expenses incurred by them to date
        in the amount of $10,000.00.

        ....

        Please make your check payable to Praxis Consulting, Inc. A/S/0 OIC and forward
        to the address above.

Id. at 134.

        Kosovan’s counsel received a copy of the letter Praxis sent to USAA. A staff member at

the firm Kosovan retained contacted Praxis with regard to the letter Praxis sent to USAA, asking

for further information about the medical services that were paid by the PIP benefit. The staff

member further notified Praxis that the statute of limitations related to Kosovan’s claim would

expire in the following month. Because the collision occurred in Oregon, the applicable statute of

limitations was two years following the date of collision. OR. REV. STAT. § 12.110(1).

                  III. USAA’S SETTLEMENT OFFER AND KOSOVAN’S CPA CLAIM

        Just over two weeks before the statute of limitations was set to expire, USAA offered a

$25,000 policy limit settlement to Kosovan. In the offer letter, USAA noted that it “received a PIP

subrogation in the amount of $10,000.00,” and asked Kosovan to please have Omni or Praxis fax

a letter to USAA if she can get Omni or Praxis to waive the subrogation claim. Id. at 191.

        After receiving the settlement offer from USAA, Kosovan filed a notice to the insurance

commissioner under the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, asserting that Omni

                                                  5
No. 54904-2-II

was improperly attempting to recover its subrogation claim directly from the tortfeasor. Kosovan

then filed a complaint naming Omni and Praxis as defendants on January 10, 2018, claiming that

their conduct in pursuing the subrogation claim for PIP benefits paid violated the CPA. Kosovan

alleged that Omni and Praxis improperly sought to recover on their subrogation claim because

Kosovan had not been “‘made whole’” for the injuries she suffered in the collision. Id. at 2.

       A subrogation recovery adjustor on behalf of Praxis contacted Kosovan’s counsel on

January 23, 2018 and asked why counsel had not contacted Praxis to inform Praxis of the “made

whole” issue prior to filing suit. Id. at 418. The representative then asked whether Kosovan’s

counsel would forgo the CPA suit if Praxis agreed not to pursue the subrogation “lien.” Id. at 417.

       On February 19, 2018, USAA informed Praxis that it would not reimburse Omni for the

PIP benefits Omni paid because Kosovan’s damages exceeded its policy limits. In light of this

information, Praxis responded that it would not seek reimbursement from USAA and that “USAA

could settle its claim with [Kosovan].” Id. at 410.

       Kosovan’s claim, however, was not settled until after April 25, 2018, when USAA received

written confirmation that Praxis and Omni did not intend to pursue the subrogation claim. After

Kosovan’s deposition was taken, Praxis sent a letter to Kosovan confirming that it did not intend

to pursue its subrogation claim. Kosovan then forwarded Praxis’ letter to USAA, at which time

USAA disbursed the settlement proceeds to Kosovan.

                                    IV. PROCEDURAL HISTORY

       Praxis moved for summary judgment, seeking dismissal of Kosovan’s CPA claim on the

basis that it did not commit an unfair or deceptive act when it exercised the right to seek

                                                 6
No. 54904-2-II

subrogation for PIP benefits Omni paid to Kosovan. Omni joined Praxis’ motion, arguing that the

claims against Omni should be dismissed for the same reasons.

       The trial court granted Praxis’ motion for summary judgment. Although Omni joined in

Praxis’ motion, the trial court’s order only expressly dismissed Kosovan’s claims against Praxis

and was silent with regard to Kosovan’s claims against Omni.

       Kosovan appealed the trial court’s order to this court under the apparent impression that

her claims had been dismissed as to both defendants. We remanded, explaining that because the

order didn’t specify that it dismissed Kosovan’s claims against Omni, those claims were still live,

and the trial court order was not appealable as a matter of right under RAP 2.2(d).

       Thereafter, Omni moved for summary judgment, arguing that it did not engage in an unfair

or deceptive practice, that Kosovan did not suffer an injury caused by its alleged conduct, and that

Praxis was an independent contractor and Omni bore no responsibility for Praxis’ actions. The trial

court granted Omni’s motion for summary judgment. Kosovan appeals.

                                          DISCUSSION

                                I. SUMMARY JUDGMENT STANDARD

       We review a trial court’s decision to grant summary judgment de novo and conduct the

same inquiry as the trial court, considering the facts and all reasonable inferences arising from the

facts in the light most favorable to the nonmoving party. Lakey v. Puget Sound Energy, Inc., 176

Wn.2d 909, 922, 296 P.3d 860 (2013). Summary judgment is properly granted where there are no

genuine issues of material fact, and the moving party is entitled to judgment as a matter of law.

CR 56(c); Lakey, 176 Wn.2d at 922. “‘A genuine issue of material fact exists when reasonable

minds could differ on the facts controlling the outcome of the litigation.’” Ehrhart v. King County,

                                                 7
No. 54904-2-II

195 Wn.2d 388, 409, 460 P.3d 612 (2020) (quoting Dowler v. Clover Park Sch. Dist. No. 400, 172

Wn.2d 471, 485, 258 P.3d 676 (2011)).

        When the defendant is the party moving for summary judgment, the defendant bears the

initial burden of demonstrating an absence of a genuine issue of material fact. Burton v. Twin

Commander Aircraft LLC, 171 Wn.2d 204, 222, 254 P.3d 778 (2011). If the defendant successfully

makes this initial showing, the inquiry then shifts to the plaintiff. Id. at 222-23. The defendant’s

motion will be granted if the plaintiff fails to present evidence ‘“sufficient to establish the existence

of an element essential to that party’s case, and on which that party will bear the burden of proof

at trial.’” Id. at 223 (internal quotation marks omitted) (quoting Right-Price Recreation, LLC v.

Connells Prairie Cmty. Council, 146 Wn.2d 370, 382, 46 P.3d 789 (2002)).

                                   II. CONSUMER PROTECTION ACT

        Kosovan argues that she established, at minimum, a genuine issue of material fact as to

each necessary element of a CPA claim and that the trial court erred in granting summary judgment

in favor of Omni and Praxis. We agree that the trial court erred in dismissing Kosovan’s claims

against Omni on summary judgment. However, the trial court properly dismissed Kosovan’s

claims against Praxis.

        The CPA prohibits “[u]nfair methods of competition and unfair or deceptive acts or

practices in the conduct of any trade or commerce.” RCW 19.86.020. A party asserting a CPA

claim must establish five elements: (1) an unfair or deceptive act or practice, (2) occurring in trade

or commerce, (3) that affects the public interest, (4) injury to the party’s business or property, and

(5) causation. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 784-

85, 719 P.2d 531 (1986). We construe the CPA liberally. Michael v. Mosquera-Lacy, 165 Wn.2d

                                                   8
No. 54904-2-II

595, 602, 200 P.3d 695 (2009). Whether a particular action gives rise to a CPA violation is a

question of law that we review de novo. Svendsen v. Stock, 143 Wn.2d 546, 553, 23 P.3d 455

(2001).

A. UNFAIR OR DECEPTIVE TRADE PRACTICE

          A plaintiff may employ one of three approaches to establish the first element in a CPA

claim. Klem v. Wash. Mut. Bank, 176 Wn.2d 771, 787, 295 P.3d 1179 (2013). The plaintiff must

show either “a per se violation of a statute, an act or practice that has the capacity to deceive

substantial portions of the public, or an unfair or deceptive act or practice not regulated by statute

but in violation of public interest.” Id. An act that is either unfair or that is deceptive will satisfy

the first element of a CPA claim; it need not be both unfair and deceptive. Id.

          The first two elements of a CPA action may be collapsed and established where the alleged

conduct amounted to a per se unfair trade practice. Hangman Ridge, 105 Wn.2d at 785-86. A per

se unfair trade practice is a practice conducted in violation of a statute that the legislature has

declared “constitute[s] an unfair or deceptive act in trade or commerce.” Id. at 786.

          Here, Kosovan argues that Omni and Praxis engaged in per se unfair or deceptive trade

practices. First, Kosovan contends that Omni and Praxis violated their statutory obligation under

RCW 48.01.030 to exercise good faith when Praxis sent a claim letter to USAA while Kosovan

was negotiating a settlement with the tortfeasor. Second, Kosovan argues that Praxis engaged in

an unfair trade practice when it attempted to collect on the subrogation claim without obtaining a

license to operate as a collection agency in Washington as required under RCW 19.16.110 within

the Collection Agency Act (CAA).

                                                   9
No. 54904-2-II

          We agree with Kosovan that a genuine issue of material fact exists as to whether Omni

breached its statutory duty to handle Kosovan’s claim in good faith. Because a genuine issue of

material factual remains as to whether Omni engaged in conduct that could amount to an alleged

unfair or deceptive trade practice, we cannot resolve the first two elements of Kosovan’s CPA

claim against Omni as a matter of law. However, the trial court properly dismissed Kosovan’s

claims against Praxis because Praxis did not engage in a per se unfair or deceptive trade practice,

and Kosovan does not assert either of the two remaining non-per se methods for establishing the

first element of a CPA claim against Praxis.

          1. Good Faith

          Kosovan argues that both Omni and Praxis are independently bound by the duty to exercise

good faith set forth in RCW 48.01.030. She contends further that Omni is not only responsible for

its own conduct, but that it is also vicariously liable for Praxis’ conduct. Therefore, Kosovan asserts

that Omni breached its duty to exercise good faith when Omni prematurely transferred its

subrogation claim to Praxis. In addition, Kosovan argues that both Omni and Praxis breached the

statutory duty to exercise good faith when Praxis sent a letter to USAA seeking to enforce Omni’s

subrogation right before that right accrued.

          The duty to exercise good faith in RCW 48.01.030 binds Omni as Kosovan’s insurer, but

Praxis does not owe a coextensive duty to Kosovan under that statute. Consequently, Praxis is not

liable for a per se CPA violation predicated on an alleged breach of RCW 48.01.030 as a matter

of law.

          We must therefore determine whether Omni can be held responsible solely for its conduct

or whether its potential liability extends to include Praxis’ conduct in sending the claim letter to

                                                  10
No. 54904-2-II

USAA. Although a genuine issue of material fact exists as to whether Praxis was Omni’s agent or

an independent contractor, because the duty to exercise good faith in RCW 48.01.030 is

nondelegable, Omni is vicariously liable for Praxis’ conduct in sending the letter to USAA under

either circumstance. Finally, a genuine issue of material fact remains as to whether Omni breached

its duty to exercise good faith based on its act of submitting the claim to Praxis and Praxis’ act of

sending the letter to USAA.

       a. Good Faith Legal Principles

       Insurers owe a statutory duty imposed by the legislature in RCW 48.01.030 to exercise

good faith when processing an insured’s claim. Indus. Indem. Co. of the Nw., Inc. v. Kallevig, 114

Wn.2d 907, 916, 792 P.2d 520 (1990). RCW 48.01.030 provides,

               The business of insurance is one affected by the public interest, requiring
       that all persons be actuated by good faith, abstain from deception, and practice
       honesty and equity in all insurance matters. Upon the insurer, the insured, their
       providers, and their representatives rests the duty of preserving inviolate the
       integrity of insurance.

       An insurer that breaches its duty as set forth in RCW 48.01.030 has engaged in a per se

unfair or deceptive trade practice in violation of the CPA, thus establishing the first two elements

of a CPA claim. Tank v. State Farm Fire and Cas. Co., 105 Wn.2d 381, 394, 715 P.2d 1133 (1986);

see also Hangman Ridge, 105 Wn.2d at 785-86 (holding that RCW 19.86.020, the statute

proscribing unfair and deceptive trade practices, makes out the first two elements in a CPA claim

and can be established per se by violation of a legislative enactment that designates a given trade

practice as unfair or deceptive); Salois v. Mut. of Omaha Ins. Co., 90 Wn.2d 355, 359, 581 P.2d

                                                 11
No. 54904-2-II

1349 (1978) (holding that the jury’s verdict that the insurance company breached its duty to

exercise good faith in RCW 48.01.030 amounted to a per se violation of RCW 19.86.020).3

       In Tank, the court explained that “[t]he duty to act in good faith or liability for acting in

bad faith generally refers to the same obligation,” and these terms may be used “interchangeably.”

105 Wn.2d at 385. The source of this duty is “the fiduciary relationship existing between the

insurer and insured,” which “exists not only as a result of the contract between insurer and insured,

but because of the high stakes involved for both parties to an insurance contract and the elevated

level of trust underlying insureds' dependence on their insurers.” Id. Because an insurance provider

must give “equal consideration to an insured[ ] but is not required to put the insured above itself,”

the relationship between insured and insurer is best described as “‘quasi-fiduciary.’” St. Paul Fire

& Marine Ins. Co. v. Onvia, Inc., 165 Wn.2d 122, 130 n.3, 196 P.3d 664 (2008) (quoting WILLIAM

M. SHERNOFF, SANFORD M. GAGE & HARVEY R. LEVINE, INSURANCE BAD FAITH LITIGATION §

1.05 (1991)).

       Evidence of intentional bad faith or fraud is not required to sustain a claim that an insurer

has breached its duty under RCW 48.01.030. Kallevig, 114 Wn.2d at 916-17. Instead, courts

consider whether the insurer has acted without “reasonable justification.” Id. at 917; see also

Whistman v. West Am., 38 Wn. App. 580, 585, 686 P.2d 1086 (1984) (“Actions by an insurer done

3
 Omni argues that Kosovan cannot maintain a CPA claim based on an allegation that an insurer
breached the duty to exercise good faith. Omni is incorrect because as explained above, “[i]t is
well established that insureds may bring private CPA actions against their insurers for breach of
the duty of good faith.” Peoples v. United Servs. Auto. Ass’n, 194 Wn.2d 771, 778, 452 P.3d 1218
(2019). Omni also suggests that Kosovan cannot raise the issue of breach of the duty of good faith
because she did not assert a stand-alone bad faith cause of action. Because Omni did not identify
any legal authority and offered no argument in support of this assertion, we may presume that none
exists. In re Disciplinary Proc. Against Jensen, 192 Wn.2d 427, 440, 430 P.3d 262 (2018).
                                                 12
No. 54904-2-II

without reasonable justification are done without the good faith mandated by RCW 48.01.030.”).

Consequently, “[a]n insurance company violates the Washington CPA if it acts without reasonable

justification in handling a claim by its insured.” Unigard Ins. Co. v. Leven, 97 Wn. App. 417, 434-

34, 983 P.2d 1155 (1999). Whether an insurer has breached its duty to exercise good faith is a

question of fact. Tank, 105 Wn.2d at 383; see also Smith v. Safeco Ins. Co., 150 Wn.2d 478, 484,

78 P.3d 1274 (2003).4

4
  In Keodalah v. Allstate Insurance Company, 194 Wn.2d 339, 351, 449 P.3d 1040 (2019), when
the court held that an insured may not assert a per se CPA claim based on RCW 48.01.030 against
an individual claims adjuster, it also stated that “RCW 48.01.030 does not itself provide an
actionable duty.” This statement referenced an issue addressed earlier in the opinion wherein the
court held that RCW 48.01.030 does not create an implied cause of action. Id. at 349. To the extent
that the court’s statement that “RCW 48.01.030 does not itself provide an actionable duty” may be
interpreted as barring a per se CPA claim based solely on a violation of RCW 48.01.030, it is dicta.
In addition to its discussion regarding whether the duty in RCW 48.01.030 creates an implied cause
of action for insurance bad faith, the court separately considered whether an insured could assert
a per se CPA claim against an insurance adjuster based on RCW 48.01.030. Id. After asserting that
RCW 48.01.030 did not create an actionable duty, the court went on to explain that the reason the
insured could not rely on RCW 48.01.030 to sustain a per se CPA claim in that case was because
the duty of good faith was limited to the insurer-insured relationship, and the insurance adjuster
was not part of this relationship. Id. at 352-53. The court clarified that the insured could sue the
insurer for a breach of the statutory duty of good faith under the CPA, but not the adjuster. Id. at
352. Following from this reasoning, the court’s remark that RCW 48.01.030 did not create an
actionable duty was not necessary to its holding that the insured could not assert a per se CPA
claim against an employee adjuster. Id. at 352-53; see also Protect the Peninsula’s Future v. City
of Port Angeles, 175 Wn. App. 201, 215, 220, 304 P.3d 914 (2013) (“A statement is dicta when it
is not necessary to the court's decision in a case.”). “Dicta is not binding authority.” Protect the
Peninsula’s Future, 175 Wn. App. at 215. Therefore, we do not interpret Keodalah as necessarily
precluding CPA claimants from establishing an unfair or deceptive trade practice per se based on
a breach of the statutory duty of good faith RCW 48.01.030.
                                                13
No. 54904-2-II

        b. Application

        i. Praxis Does Not Owe a Duty to Kosovan under RCW 48.01.030

        Kosovan argues that Praxis is bound by the duty to exercise good faith in RCW 48.01.030

because that statute applies to “‘representatives and advisors’” of insurers, and Praxis fits within

this description. Br. of Appellant at 14. We disagree.

        The supreme court has considered an analogous issue in Keodalah v. Allstate Insurance

Co., 194 Wn.2d 339, 449 P.3d 1040 (2019). There, the court held that an insured may assert a

claim alleging a per se violation of the CPA based on breach of the statutory duty to exercise good

faith against an insurer, but the insured could not raise the same claim against an individual claims

adjuster employed by the insurer. Id. at 352-53. The court reasoned that the duty in RCW 48.01.030

does not extend to “someone outside the quasi-fiduciary relationship” that exists between an

insurer and its insured. Id.

        Praxis was “someone outside the quasi-fiduciary relationship” that existed between

Kosovan and her insurer. Id. at 353. In Tank, the court described the nature of the quasi-fiduciary

relationship between insured and insurer, explaining that it arises not only as a result of their privity

of contract but also due to the mutual high stakes involved and the insured’s underlying

dependence and trust in its insurer. See 105 Wn.2d at 385. Here, Praxis did not provide insurance

to Kosovan, and there was no privity of contract between Praxis and Kosovan. Moreover, Kosovan

did not have a relationship of trust and underlying dependence on Praxis similar to that between

an insured and an insurer. Consequently, Praxis did not owe a duty to Kosovan under RCW

                                                   14
No. 54904-2-II

48.01.030, and Kosovan cannot sustain a CPA claim against Praxis predicated on a breach of this

statutory duty. See Keodalah, 194 Wn.2d at 353.5

       ii. Omni is Vicariously Liable for Praxis’ Actions

       Kosovan argues that Omni’s liability for breach of the duty to exercise good faith extends

beyond Omni’s own conduct in transferring the subrogation claim to Praxis and includes Praxis’

act of sending the claim letter to USAA. Kosovan asserts that there is a genuine dispute of material

fact as to whether Praxis was Omni’s agent, thus rendering Omni vicariously liable as Praxis’

principal. Even if Praxis were an independent contractor as opposed to an agent, Kosovan asserts

that Omni could not delegate its duty to exercise good faith and is nevertheless vicariously liable

for Praxis’ actions.

       Omni responds that the record conclusively establishes that Praxis was an independent

contractor because once Omni transferred its subrogation claim against USAA to Praxis, Omni

ceded all control over the processes involved in collecting on that claim. Omni thus asserts that it

bears no responsibility for Praxis’ actions, and Omni does not address Kosovan’s contention that

the duty to exercise good faith is nondelegable. We agree with Kosovan.

5
  In support of her argument that Praxis is bound by the duty to exercise good faith in RCW
48.01.030, Kosovan relies on Merriman v. American Guarantee and Liability Insurance Co., 198
Wn. App. 594, 396 P.3d 351 (2017). In Merriman, Division III of this court held that an adjustment
firm contracted by the insurer was bound by the statutory duty of good faith because the adjustment
firm was “a ‘person’ engaged in ‘the business of insurance’ and a representative of [the insurer].”
198 Wn. App. at 612 (quoting RCW 48.01.030). Division I of this court relied on this reasoning
in Merriman when it held that an individual adjuster can be independently liable for a breach of
the duty to exercise good faith in Keodalah v. Allstate Insurance Co., 3 Wn. App. 2d 31, 40, 413
P.3d 1059 (2018). The supreme court reversed Division I’s decision in Keodalah and held that the
statutory duty in RCW 48.01.030 binds insurers but not the insurer’s agents because the duty arises
from an insurer’s quasi-fiduciary relationship with an insured. Keodalah, 194 Wn.2d at 352-53.
Therefore, to the extent that the reasoning in Merriman is inconsistent with the supreme court’s
holding in Keodalah, Merriman has been overruled on that point. See id.
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No. 54904-2-II

       A principal may be held accountable for the actions of its agent. Thornell v. Seattle Serv.

Bureau, Inc., 184 Wn.2d 793, 803, 363 P.3d 587 (2015). However, a principal will generally avoid

liability for harm caused by the actions of an independent contractor. Wilcox v. Basehore, 187

Wn.2d 772, 789, 389 P.3d 531 (2017). To determine whether a relationship between two entities

engaged in a business agreement “is a principal-agent relationship or an ‘independent

contractorship[,] . . . the most crucial factor is the right to control the details of the work.’” Id.

(quoting Larner v. Torgerson Corp., 93 Wn.2d 801, 804-05, 613 P.2d 780 (1980)). If the principal

does not retain a right to control the other entity’s work, then that other entity is an independent

contractor. Id. at 790. Whether an entity is an agent or an independent contractor “‘can only be

decided as a matter of law where there are no facts in dispute and the facts are susceptible of only

one interpretation.’” Id. (quoting Graves v. P.J. Taggares Co., 94 Wn.2d 298, 302-03, 616 P.2d

1223 (1980)).

       Here, the facts are disputed and susceptible to multiple interpretations. For example,

language in the services agreement between Omni and Praxis indicates that Praxis was an

independent contractor because Omni did not retain control over whether and when to pursue a

subrogation claim. See id. Under the agreement, Praxis “perform[s] recovery services on behalf of

[Omni],” and “will identify, investigate, pursue and collect recovery against third parties.” CP at

177. In addition, Praxis “will review claims . . . and select claims having recovery potential to

investigate, perfect and pursue subrogation.” Id. at 178. Therefore, the services agreement

indicates that Praxis is solely responsible for investigating a claim and determining whether to

pursue subrogation. See Wilcox, 187 Wn.2d at 790.

                                                 16
No. 54904-2-II

       In contrast, Praxis submitted discovery responses stating that it did not conduct its own

investigation prior to asserting Omni’s right to subrogation in the letter submitted to USAA. As

will be explained more fully below, Omni did not have a right to subrogation or reimbursement

before Kosovan was fully compensated for the loss she sustained in the accident. See Daniels v.

State Farm Mut. Auto. Ins. Co., 193 Wn.2d 563, 576, 444 P.3d 582 (2019). But when asked

whether Praxis investigated the extent of Kosovan’s damages, Praxis answered that it “acted on

the direction and information received from Omni, and pursuant to its agreement with Omni.” CP

at 298. Praxis later elaborated that it did not conduct its own investigation into the extent of

Kosovan’s damages.

       Similarly, when asked whether Praxis investigated whether Roland’s policy had sufficient

coverage to pay for Kosovan’s damages, Praxis responded that it “acted on the direction and

information received from Omni, and pursuant to its agreement with Omni.” Id. at 299. Praxis

explained that it “did not conduct an investigation for the purpose of determining the limits of

liability coverage available to Mr. Roland under his policy with USAA or whether such limits

could pay for all of [Kosovan’s] damage.” Id. at 299-300. Therefore, unlike the services agreement,

this evidence reflects that Praxis relied solely on “direction and information” from Omni and that

it did not conduct its own investigation to determine whether Kosovan was fully compensated for

her losses before sending the letter to USAA. Id. at 298-99.

       Evidence in the record conflicts as to which entity, Omni or Praxis, had control over the

decision of whether and when to seek subrogation, and it is this particular decision that forms the

basis of Kosovan’s breach of the statutory duty to exercise good faith claim. Consequently, we

cannot determine whether Praxis was an agent or an independent contractor as a matter of law.

                                                17
No. 54904-2-II

       If Praxis was Omni’s agent and it engaged in conduct that amounted to a breach of the

statutory duty to exercise good faith, then Omni can be held accountable under the CPA for breach

of the statutory duty to exercise good faith based on Praxis’ conduct. See Keodalah, 194 Wn.2d at

352 n.7. However, Kosovan contends that because Omni cannot delegate its duty to exercise good

faith to an independent contractor, Omni is vicariously liable for Praxis’ conduct in any event. We

agree with Kosovan.

       A nondelegable duty is “‘[a] duty for which the principal retains primary (as opposed to

vicarious) responsibility for due performance even if the principal has delegated performance to

an independent contractor.’” Vargas v. Inland Wash., LLC, 194 Wn.2d 720, 738, 452 P.3d 1205

(2019) (alteration in original) (quoting BLACK’S LAW DICTIONARY 638 (11th ed. 2019)).

Washington courts refer to the responsibility arising from a nondelegable duty as “vicarious

liability,” although Black’s Law Dictionary refers to a nondelegable duty as a primary

responsibility. Id. (citing Afoa v. Port of Seattle, 191 Wn.2d 110, 421 P.3d 903 (2018); Millican v.

N.A. Degerstrom, Inc., 177 Wn. App. 881, 896-97, 313 P.3d 1215 (2013)).

       In Keodalah, the supreme court referenced the nondelegable duty doctrine when it held

that an insured may raise a claim under the CPA for an insurer’s breach of the duty of good faith

based on the actions of an employee adjuster. 194 Wn.2d at 353 n.7. The supreme court addressed

several cases that discuss the principal and agent relationship, and it also cited Carabba v.

Anacortes School District No. 103, 72 Wn.2d 939, 956-58, 435 P.2d 936 (1967) for the assertion

that “a principal who is under a duty to provide protection for others or their property and who

confides the performance of such duty to a servant is subject to liability for harm caused to such

others by the failure of the agent to perform the duty.” Koedalah, 194 Wn.2d at 353 n.7. This

                                                18
No. 54904-2-II

language is nearly identical to the Restatement (Second) of Agency § 214 (1958), entitled “Failure

of Principal to Perform Non-delegable Duty.”6 Compare Restatement (Second) of Agency § 214

(1958) with Keodalah, 194 Wn.2d at 353 n.7.

          The supreme court in Carabba adopted the nondelegable duty doctrine when it applied §

214 and held that the duty of protection owed by a school district to students engaged in

extracurricular activities was nondelegable. 72 Wn.2d at 956-58. Therefore, when the court in

Keodalah cited Carabba in discussing an insured’s ability to assert a CPA claim against an insurer

based on breach of the duty to exercise good faith, and when it closely echoed the language in §

214, the supreme court signaled that the nondelegable duty doctrine applies in the insurance good

faith context. 194 Wn.2d at 353 n.7.

          We expand on Keodalah and conclude that the duty to exercise good faith imposed on

insurers under RCW 48.01.030 is nondelegable. This result comports with the statement of public

interest in RCW 48.01.030 that “all persons be actuated by good faith.” As stated above, the duty

to exercise good faith in RCW 48.01.030 does not apply to an entity outside the quasi-fiduciary

relationship between an insurer and an insured. Keodalah, 194 Wn.2d at 352-53. If an insurer

delegates a responsibility it owes under its policy with an insured to an independent contractor and

that independent contractor is not also bound by the duty to exercise good faith under RCW

6
    Section 214 of the Restatement (Second) of Agency states,
          A master or other principal who is under a duty to provide protection for or to have
          care used to protect others or their property and who confides the performance of
          such duty to a servant or other person is subject to liability to such others for harm
          caused to them by the failure of such agent to perform the duty.

                                                   19
No. 54904-2-II

48.01.030, then the protection afforded to an insured under RCW 48.01.030 may become

substantially curtailed.

       Regardless of whether Praxis was Omni’s agent or an independent contractor, the result is

the same: Omni can be held responsible for a breach of the duty to exercise good faith in RCW

48.01.030 based on its own act of submitting the subrogation claim to Praxis for collection without

ensuring that it had a right to recover the benefits it paid, and it can be held responsible for Praxis’

act in sending the subrogation claim letter to USAA.

      iii. A Genuine Issue of Fact Remains as to Whether Omni Breached the Duty to Exercise
Good Faith in RCW 48.01.030

       Kosovan argues that, according to general subrogation principles and the particular terms

of her insurance policy, Omni did not have a right to recover PIP benefits it paid before she had

been “made whole” for her losses. Br. of Appellant at 15. Kosovan contends that therefore, there

is at least a genuine dispute of material fact as to whether Omni acted without reasonable

justification in breach of the duty to exercise good faith under RCW 48.01.030 when Omni sought

recovery of PIP benefits from USAA before it had a right to recover.

       Omni and Praxis construe Kosovan’s argument as a broad-sweeping attempt to eliminate

an insurer’s right to subrogation where an insured pursues a claim against the tortfeasor, which

they claim would subvert longstanding subrogation principles and undermine the provisions of

Omni’s policy with Kosovan. Neither Omni nor Praxis dispute that Omni did not have a right to

recover on its subrogation claim. But Omni and Praxis contend that making only an “attempt” at

subrogation recovery, even where the right has not yet accrued, is not an unfair or deceptive act.

Omni and Praxis further caution that forbidding an insurer from making a mere attempt to collect

on a subrogation claim places insurers at risk of losing subrogation rights where an insured does

                                                  20
No. 54904-2-II

not make a decision with regard to whether to pursue a direct claim against the tortfeasor before

the statute of limitations for that claim expires.

        We agree with Kosovan. A genuine dispute of material fact remains as to whether Omni’s

conduct amounted to a breach of the duty to exercise good faith when, without first determining

whether Kosovan had been made whole or whether Omni had a right to subrogation, Omni

attempted to recover its PIP benefits.

        The purpose underlying the subrogation doctrine is “to impose ultimate responsibility for

a wrong or loss on the party who, in equity and good conscience, ought to bear it.” Mahler v. Szucs,

135 Wn.2d 398, 411, 957 P.2d 632 (1998). Subrogation involves two features: “The first is the

right to reimbursement. The second is the mechanism for the enforcement of the right.” Id. at 412.

As here, an insurer’s right to subrogation may arise from a contractual provision.7 See id.

        A subrogated insurer may enforce its right to recover by using one of two methods. Id. at

413. When an insured brings a claim against the third party tortfeasor, the insurer may seek

reimbursement from the insured’s recovery that the insured obtained from the tortfeasor. Id. In the

alternative, “the [insurer,] standing in the shoes of [the insured,] may pursue an action . . . against

the third party.” Id.

7
 Kosovan argues for the first time in her reply brief that her insurance policy with Omni does not
contain a proper subrogation provision. In her opening brief, Kosovan recognized that the policy
contained a subrogation provision in paragraph (A) of her policy. We do not consider arguments
raised for the first time in a reply brief. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801,
809, 828 P.2d 549 (1992). Even if we considered this argument on is merits, Kosovan is incorrect.
We have previously held that language identical to that in paragraph (A) was a classic and proper
subrogation clause. Compare Meas v. State Farm Fire & Cas. Co., 130 Wn. App. 527, 535, 123
P.3d 519 (2005) with CP at 52.

                                                     21
No. 54904-2-II

       Regardless of the insurer’s chosen mechanism for enforcing its right, “‘[t]he potential for

conflict of interest abounds.’” Daniels, 193 Wn.2d at 570 (alteration in original) (quoting Mahler,

135 Wn.2d at 414). The conflict arises due to the fact that, “if the insured still has uncompensated

injuries, both the insurer and insured will generally be looking to recover from the same third party,

and that party’s own insurance and assets are not always sufficient to cover both claims.” Id.

Conflicts are more likely when an insurer seeks subrogation for a personal injury loss rather than

a property loss, because unlike a property loss, personal injury losses are often not readily or

objectively ascertainable. Mahler, 135 Wn.2d at 414.

       To prevent conflicts between an insured and an insurer, Washington courts “have generally

established priority for the interests of the insureds through the made whole doctrine.” Daniels,

193 Wn.2d at 571; see also Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215, 219, 588 P.2d 191

(1978). An insurer, therefore, “cannot obtain a recovery if its insured has uncompensated

damages.” Daniels, 193 Wn.2d at 572. The supreme court has recently reaffirmed this principal,

holding that “[w]hether in the context of a reimbursement request, offset, or direct subrogation

action, a fault-free insured must be made whole for their entire loss before an insurer may offset

or recover its own payments.” Id. at 576. Therefore, the right to reimbursement does not exist for

an insurer until the insured is fully compensated. Mahler, 135 Wn.2d at 417 (citing Thiringer, 91

Wn.2d at 219-20).

       Here, there is no dispute that Kosovan had not been fully compensated for damages by the

time Praxis sent its letter to USAA. The settlement offer from USAA was submitted after Praxis

sent its letter. And USAA’s offer of policy limits did not fully compensate Kosovan for her

damages. Moreover, Omni’s policy expressly provided that Omni was entitled to subrogation

                                                 22
No. 54904-2-II

“only after the person has been fully compensated for damages.” CP at 53. Consequently, Omni

had no right to recovery under the terms of its own policy or under general public policy principles.

See Daniels, 193 Wn.2d at 572.

       Omni and Praxis contend however, that even if Omni had no right to recover, Omni and

Praxis were entitled to pursue Omni’s subrogation claim before Kosovan was fully compensated

for her losses as a matter of law. This argument is without merit because it undermines the very

purpose of the made whole doctrine, which seeks to avoid conflicts arising from the simultaneous

pursuit of claims arising from the same injury against a single tortfeasor. Id. at 570; see also

Mahler, 135 Wn.2d at 414.

       Omni and Praxis rely on Hamilton v. Farmers Insurance Co., 107 Wn.2d 721, 734, 733

P.2d 213 (1987) and Daniels in arguing that an insurer may attempt recover on subrogation before

an insured is made whole. Both cases are distinguishable and neither case stands for the general

assertion that an insurer can pursue a subrogation claim to recover its own expenditure without

any regard to the insured’s right to be fully compensated.

       In Hamilton, the insured negotiated a settlement with the tortfeasor for its policy limits, but

the settlement included a release of all claims against the tortfeasor. 107 Wn.2d at 724. The insurer

argued that the insured would be in breach of its policy because in agreeing to a release, the insured

prejudiced the insurer’s rights to subrogation from the tortfeasor. Id. at 725. The court held that

the insurer could protect its subrogation interest and “succeed to the rights of its insured against

the tortfeasor” in such circumstances by paying the underinsured motorists benefits and

“substituting a payment to the insured in an amount equal to the tentative settlement.” Id. at 734.

The insurer can “then can pursue the insured’s rights against the tortfeasor,” and any recovery over

                                                 23
No. 54904-2-II

the amount of the substituted settlement must first apply to the insured’s remaining uncompensated

damages. Id.

       Although the Hamilton court contemplated a circumstance where an insurer could pursue

subrogation before an insured was fully compensated, the court first required the insurer to pay the

insured an amount equivalent to the settlement that would have been reached before the insurer

had any right to subrogation. Id. The court, in so holding, did not allow an insurer to freely pursue

subrogation claims to recover a benefit it paid to its insured without regard to whether its insured

had been compensated for damages.

       In Daniels, the insurer paid the insured for the entire cost of the damage to her vehicle, less

the amount of her deductible. 193 Wn.2d at 568. The court held that the insurer was required to

refund the insured for the value of the deductible before it recovered or offset its own payment. Id.

at 576. Although the insurer could attempt to recoup its payment before its insured was technically

whole because the deductible was an outstanding damage, the court did not suggest that an insurer

was free to pursue its subrogation claim irrespective of whether its insured had been fully

compensated, as Omni and Praxis contend. Id.

       Here, unlike in Daniels, Omni did not fully compensate Kosovan for the damages she

sustained less an insurance deductible. Rather, Omni paid Kosovan $10,000 in PIP benefits when

her total damages, as Kosovan identified in her PIP benefit request form, were over $38,000. Thus,

there is at least a genuine issue of material fact that when Omni and Praxis sought to recover the

$10,000 in PIP benefits Omni paid to Kosovan, the direct subrogation action was intended only to

compensate Omni for its payment and was made without any consideration of whether Kosovan

had outstanding, uncompensated damages. Such pursuit of a direct subrogation claim can create a

                                                 24
No. 54904-2-II

conflict with the insured’s right to recovery and violates the made whole doctrine. See id. at 572

(explaining that the made whole doctrine “‘embodies a policy deemed socially desirable in this

state,’ as it prioritizes the indemnification of victims of automobile accidents, and, in doing so,

helps to reduce the potential conflicts between insurers and insureds.”) (quoting Thiringer, 91

Wn.2d at 220).

       Kosovan raises a genuine issue of material fact with regard to whether Omni breached the

duty to exercise good faith. Given that the made whole doctrine is well established and that Omni’s

policy expressly incorporates the made whole policy in its terms, reasonable minds could conclude

that Omni and Praxis acted without reasonable justification, and thereby in breach of the statutory

duty in RCW 48.01.030 when Omni transferred the subrogation claim to Praxis for collection and

when Praxis asserted Omni’s right to recovery in the letter to USAA. See id. at 576; see also

Kallevig, 115 Wn.2d at 917.

       The record reflects that neither Omni nor Praxis investigated whether Kosovan had

received full compensation for her damages, and the record conflicts with regard to which entity

bore the responsibility to determine when the right to subrogation accrued. If Omni was

responsible for investigating when subrogation may be sought against a third-party tortfeasor, a

genuine issue of fact remains as to whether it acted without reasonable justification when it

prematurely submitted the subrogation claim to Praxis for collection. Even if Praxis was

responsible for investigating the subrogation potential of the claim, because Omni cannot delegate

its duty to exercise good faith under RCW 48.01.030, a genuine issue of material fact nevertheless

                                                25
No. 54904-2-II

remains as to whether Omni was vicariously liable for Praxis’ attempt to assert Omni’s subrogation

right without regard to whether that right existed.8

         Because a genuine issue of material fact remains as to whether Omni engaged in conduct

that could amount to a per se unfair and deceptive trade practice, we cannot resolve the first two

elements of Kosovan’s CPA claim against Omni as a matter of law.

         2. Licensing as a Collection Agency

         Kosovan argues that Praxis committed a separate per se unfair or deceptive trade practice

because Praxis operated as a collection agency in Washington without first obtaining the requisite

license under former RCW 19.16.440 (1994)9 of the CAA. Praxis responds that it was not

collecting a “claim” under the CAA, nor was it a “collection agency” as defined under the CAA.

8
  Distinct from the limitation on the right to seek subrogation based on the made whole doctrine,
Kosovan also relies on Mahler to argue that Omni and Praxis could not pursue the subrogation
claim because she had not yet abandoned her own claim against the tortfeasor. Omni and Praxis
contend that there is no general prohibition against seeking subrogation until an injured insured
has abandoned a claim against the tortfeasor. Omni and Praxis further assert that Omni’s policy
likewise does not contain a provision limiting the right to seek subrogation based on whether the
insured has decided not to pursue a claim against the tortfeasor. Omni and Praxis are correct.
        The court in Mahler did not proclaim, as a matter of general public policy, that insurers
cannot seek subrogation unless the insured abandons all claims against the tortfeasor. See 135
Wn.2d at 419. Instead, the court analyzed specific policy language and concluded that based on
that language, the insurer “reserved a traditional subrogation right to sue in the shoes of the insured
only when it makes PIP payments to the insured and the insured does not pursue a tortfeasor.” Id.
at 421. Omni’s policy did not contain a similar limitation on its right to subrogation. Instead, there
was a limitation of Omni’s right to seek subrogation based on the made whole doctrine.
9
    Former RCW 19.16.440 provides,
                 The operation of a collection agency or out-of-state collection agency
         without a license as prohibited by RCW 19.16.110 and the commission by a
         licensee or an employee of a licensee of an act or practice prohibited by RCW
         19.16.250 are declared to be unfair acts or practices or unfair methods of
         competition in the conduct of trade or commerce for the purpose of the application
         of the Consumer Protection Act found in chapter 19.86 RCW.
                                                  26
No. 54904-2-II

Br. of Resp’t Praxis at 29. We agree with Praxis that because the CAA does not apply to

subrogation claims, Praxis did not commit a per se unfair or deceptive trade practice when it did

not obtain a license to operate as a collection agency.

       In Panag v. Farmers Insurance Co., 166 Wn.2d 27, 52, 204 P.3d 885 (2009), the court held

that the CAA does not “regulate[ ] the collection of insurance subrogation claims.” It explained

that under the CAA, a “‘[c]laim’ [is defined] as an obligation ‘arising out of any agreement or

contract, express or implied.’” Id. (alteration in original) (quoting RCW 19.16.100(5)).

“[S]ubrogation exists only with respect to rights of the insurer against third persons.” Mahler, 135

Wn.2d at 419. Because a subrogation claim asserted against a third party does not arise out of any

agreement between the insurer and the third party, a subrogation claim does not fit the definition

of a claim within the CAA. Panag, 166 Wn.2d at 52.

       Praxis provides subrogation recovery services to Omni. Therefore, Praxis’ subrogation

recovery activities are not governed by the CAA and Praxis is not obligated under the CAA to

satisfy its licensing requirements. See id. Consequently, Kosovan’s assertion that Praxis engaged

in a per se unfair or deceptive trade practice when it failed to obtain a license to operate as a

collection agency fails as a matter of law.

       3. Unfair or Deceptive Trade Practice Summary

Kosovan’s CPA claim against Praxis was properly dismissed on summary judgment as a matter of

law because Praxis did not engage in a per se unfair trade practice under either theory Kosovan

alleges. Because Kosovan did not assert either of the two remaining methods for establishing the

first element of a CPA claim against Praxis, Kosovan did not meet her burden on summary

                                                 27
No. 54904-2-II

judgment of presenting sufficient evidence as to every element essential to her claim on which she

would bear the burden of proof at trial. See Burton, 171 Wn.2d at 223.

       With regard to Omni, however, there remains a genuine dispute of material fact as to

whether it breached its duty as Kosovan’s insurer to exercise good faith under RCW 48.01.030.

Because an insurer that breaches its duty in RCW 48.01.030 has engaged in a per se unfair or

deceptive trade practice, Kosovan’s claim withstands summary judgment with respect to the first

two elements of a CPA claim. See Tank, 105 Wn.2d 381; Hangman Ridge, 105 Wn.2d at 785-86.

We must therefore move on to consider whether a genuine issue of material fact exists, precluding

summary judgment, as to the remaining three elements of Kosovan’s CPA claim against Omni.

B. EFFECT ON PUBLIC INTEREST

       Kosovan argues that she has established the public interest element of her CPA claim

because RCW 48.01.030 contains a legislative declaration of public interest and breach of the duty

to exercise good faith under RCW 48.01.030 satisfies the public interest requirement in the CPA

per se. Both Omni and Praxis argue that a single letter sent between two insurance companies does

not implicate the public interest. We agree with Kosovan.

       The third element of a CPA claim may be established per se by showing a violation of a

statute that “contains a specific legislative declaration of public interest impact.” Hangman Ridge,

105 Wn.2d at 791. As expressly set forth in RCW 48.01.030, “The business of insurance is one

affected by the public interest.” Violation of RCW 48.01.030, therefore, implicates the public

interest and satisfies the third element of a CPA claim per se. Hangman Ridge, 105 Wn.2d at 791;

see also Keodalah, 194 Wn.2d at 350. Because a genuine dispute of material fact remains as to

whether Omni engaged in conduct that could amount to a breach of the duty to exercise good faith

                                                28
No. 54904-2-II

in RCW 48.01.030, a genuine dispute of material fact likewise remains as to whether Omni

engaged in unfair or deceptive trade practice that implicates the public interest.

C. INJURY

       Kosovan argues that she has established an injury within the meaning of the CPA because

her settlement from USAA was delayed by Praxis’ assertion of Omni’s subrogation claim.

Kosovan contends that in addition to the delay of her settlement, she suffered an injury related to

the time expended by her attorney in investigating and addressing Praxis and Omni’s subrogation

demand, including the nominal expense incurred in postage used to submit a complaint to the

insurance commissioner.

       Omni responds that the cost of litigating a CPA claim does not constitute an actionable

injury under the CPA, and Kosovan’s postage expenditure in submitting a complaint to the

insurance commissioner is such a cost. Praxis adds that Kosovan’s unsupported assertion that her

counsel spent time and took steps to investigate the subrogation demand does not provide sufficient

evidence of injury to withstand summary judgment. We agree with Kosovan that she has

established a genuine issue of material fact as to whether she suffered a cognizable injury under

the CPA.

       1. Legal Principles

       Under the CPA, a compensable injury is limited to an “‘injury to [the] plaintiff in his or

her business or property.’” Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d 412, 431, 334 P.3d

529 (2014) (alteration in original) (quoting Hangman Ridge, 105 Wn.2d at 780). Injuries that raise

an actionable claim under the CPA are “relatively expansive,” and include those that are “both

                                                 29
No. 54904-2-II

minimal and temporary.” Id. Claimants are not required to demonstrate a quantifiable monetary

loss because the CPA addresses injuries as opposed to damages. Id.

        Expenses incurred in investigating an unfair or deceptive act can establish an injury under

the CPA. Univ. of Wash. v. Gov’t Emps. Ins. Co., 200 Wn. App. 455, 476, 404 P.3d 559 (2017).

However, costs expended in instituting the CPA action itself do not make out an injury under the

CPA. Panag, 166 Wn.2d at 60.

        2. Application

        The time that elapsed between USAA’s provision of a settlement offer to Kosovan and

execution of the settlement can amount to an injury under the CPA. See Mason v. Mortgage

America Inc., 14 Wn.2d 842, 854, 792 P.2d 142 (1990) (“A loss of use of property which is

causally related to an unfair or deceptive act or practice is sufficient injury to constitute the fourth

element of a Consumer Protection Act violation.”). Even a transient injury to business or property

can constitute an injury under the CPA. See Frias, 181 Wn.2d at 431.

        Here, USAA submitted a letter containing its offer to settle and referencing a need for

Omni’s waiver of its subrogation claim on November 7, 2017. Praxis’ recovery adjuster did not

contact USAA to let USAA know that Praxis did not intend to pursue the subrogation claim until

February 19, 2018. USAA then executed the settlement after April 25, 2018, when Kosovan

submitted a letter in which Praxis disclaimed its intent to pursue subrogation in writing. There is,

therefore, a genuine dispute of material fact as to whether Kosovan experienced an injury within

the scope of the CPA based on the delay she experienced in receiving the settlement.

        In addition, the cost of postage Kosovan expended in submitting a notice to the insurance

commissioner regarding the subrogation claim could also establish an injury under the CPA

                                                  30
No. 54904-2-II

because it was related to investigating the unfair act or practice. See Univ. of Wash., 200 Wn. App.

at 476. Kosovan sent her IFCA notice to the insurance commissioner, asserting that Omni

improperly attempted to recover its subrogation claim. The CPA is a separate legislative enactment

from the IFCA, and reasonable minds could differ as to whether the notice Kosovan’s counsel filed

pursuant to the IFCA had anything to do with institution of Kosovan’s CPA violation claim.

Although costs expended in instituting a CPA action are not compensable injuries under the CPA,

the expense incurred in filing the IFCA notice was not necessarily such a cost. See Panag, 166

Wn.2d at 60. Consequently, a genuine issue of material fact exists as to whether the nominal

expense Kosovan incurred in filing the IFCA notice amounts to an injury within the scope of the

CPA.

D. PROXIMATE CAUSATION

       Kosovan argues that the injury she suffered related to the delay in her settlement was

proximately caused by Omni and Praxis’ actions in improperly attempting to recover on Omni’s

subrogation claim. Omni and Praxis respond that the only evidence that Kosovan’s settlement was

delayed by the attempt to recover Omni’s subrogation claim is an inadmissible hearsay statement

contained in a declaration from Kosovan’s counsel.

       In addition, Omni asserts that any delay in finalizing the settlement was proximately caused

by Kosovan because Kosovan did not alert Omni or Praxis that Kosovan had not yet been made

whole after Kosovan received a copy of the subrogation claim letter, and Kosovan did not attempt

to directly resolve the dispute with Omni or Praxis when she received the settlement offer from

USAA. Praxis argues that USAA proximately caused the delay in settlement because it should

                                                31
No. 54904-2-II

have known that Omni would have no right to assert a subrogation claim when it paid the policy

limits to Kosovan.

       We agree with Kosovan. A genuine issue of material fact exists as to whether the delay in

settling Kosovan’s claim against the tortfeasor was proximately caused by Omni and Praxis’

attempt at subrogation recovery. In addition, a genuine issue of material fact exists with regard to

whether Omni and Praxis’ attempt at subrogation recovery was the proximate cause of the

Kosovan’s nominal injury in expending postage costs when she sent an IFCA notice.

       To establish the causation element of a CPA claim, “[a] plaintiff must establish that, but

for the defendant’s unfair or deceptive practice, the plaintiff would not have suffered an injury.”

Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 83, 170 P.3d 10

(2007). In addition, “[p]roximate cause is a factual question to be decided by the trier of fact.” Id.

Generally, proximate cause issues are “‘not susceptible to summary judgment.’” Swank v. Valley

Christian Sch., 188 Wn.2d 663, 685, 398 P.3d 1108 (2017) (quoting Owen v. Burlington N. Santa

Fe R.R. Co., 153 Wn.2d 780, 788, 108 P.3d 1220 (2005)).

       Here, the USAA letter and Praxis’ conduct upon learning that Kosovan had not been made

whole by the tortfeasor presents some evidence that Kosovan’s settlement was impacted by Omni

and Praxis’ assertion of their subrogation right. Omni and Praxis are thus incorrect in arguing that

the only evidence showing a causal connection between their attempt at subrogation recovery and

the delay in settlement was a hearsay statement in a declaration submitted by Kosovan’s counsel.

       USAA’s letter offering a settlement to Kosovan referenced Omni’s subrogation claim,

stating that the $25,0000 settlement was a “a total offer which would include any and all liens . . .

Also we received a PIP subrogation in the amount of $10,000.00. If you are able to have get

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No. 54904-2-II

Omni\Praxis waive the subrogation please have them fax USAA a letter.” CP at 191. Reasonable

minds could conclude that the language in USAA’s letter indicated that provision to Kosovan of

the entire $25,000 settlement offer was contingent on Omni and Praxis waiving their subrogation

claim in a writing submitted to USAA.

       In addition, Praxis knew at least by January 23, 2018, when Kosovan filed her CPA lawsuit,

that Kosovan had not been fully compensated for her injuries by the offer of policy limits from

USAA and that Praxis and Omni’s subrogation “lien” may have impeded Kosovan’s settlement

with USAA. CP at 139. Praxis responded to the suit by asking whether, if it submitted a letter

releasing the subrogation claim, Kosovan would dismiss her CPA suit. However, it was not until

February 19, 2018, after USAA contacted Praxis to let Praxis know that it would not reimburse

Omni for the PIP benefit, that Praxis informed USAA it did not intend to pursue the subrogation

claim. And Praxis’ recovery adjuster informed USAA that because it would not seek

reimbursement, “USAA could settle its claim with [Kosovan].” Id. at 410. USAA did not furnish

the settlement until after April 25, 2018, when Kosovan provided USAA with a letter in which

Praxis affirmed its intent to no longer pursue subrogation. This evidence, when considered in the

light most favorable to Kosovan, raises a genuine issue of material fact as to whether Omni and

Praxis’ attempt at subrogation recovery delayed the settlement.

       The parties’ dispute with respect to whether USAA, Kosovan, or Omni and Praxis were

responsible for the delay in effectuating Kosovan’s settlement further illuminates the genuine issue

of material fact that persists with regard to proximate causation. Determining who among them

caused the delay should be left to the trier of fact and cannot be resolved now as a matter of law.

See Indoor Billboard, 162 Wn.2d at 83.

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No. 54904-2-II

       Separately, when Kosovan filed her IFCA notice, she explained that the basis of her claim

was Omni’s attempt to recover its subrogation claim from the tortfeasor. To the extent that postage

expenditure is a compensable injury under the CPA, Kosovan has raised a genuine issue of material

fact as to whether Omni and Praxis’ attempt to recover subrogation was a proximate cause for that

injury. Id. That is to say, Kosovan would have not had to submit an IFCA notice but for Omni and

Praxis’ attempt to recover subrogation. See id.

       Proximate causation is the fifth and final element of Kosovan’s CPA claim on which

Kosovan bears the burden of proof at trial. See Hangman Ridge, 105 Wn.2d at 785. As set forth in

the foregoing discussion, Omni has failed to satisfy its initial burden of demonstrating the absence

of a genuine issue of material fact with regard to each element of Kosovan’s CPA claim against

Omni, and Omni is not entitled to summary judgment as a matter of law.

                                       ATTORNEY FEES

       Kosovan argues that she is entitled to attorney fees on appeal under RCW 19.86.090 as a

successful CPA claimant. RCW 19.86.090 provides in relevant part that,

               Any person who is injured in his or her business or property by a violation
       of RCW 19.86.020 . . . may bring a civil action in superior court to enjoin further
       violations, to recover the actual damages sustained by him or her, or both, together
       with the costs of the suit, including a reasonable attorney’s fee.

       We disagree that Kosovan is entitled to attorney’s fees on appeal. Kosovan is not yet a

successful CPA claimant as we have not determined whether Omni’s acts or practices give rise to

a CPA violation. Rather, we have determined only that the trial court erred in dismissing

Kosovan’s CPA claims against Omni as a matter of law.

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No. 54904-2-II

                                         CONCLUSION

       We hold that because a genuine issue of material fact remains as to each element of

Kosovan’s CPA claim asserted against Omni, the trial court erred when it dismissed Kosovan’s

claims against Omni as a matter of law. However, we hold that because Praxis did not commit a

per se unfair or deceptive trade practice under either theory Kosovan alleged, and because Kosovan

did not assert one of the remaining non-per se methods for establishing the unfair or deceptive act

element of her CPA claim against Praxis, the trial court properly granted Praxis’ motion for

summary judgment.

       Accordingly, we reverse the trial court’s order granting summary judgment in favor of

Omni, affirm the trial court’s order granting summary judgment in favor of Praxis, and we remand

for further proceedings consistent with this opinion.

                                                     CRUSER, J.
 I concur:

WORSWICK, J.

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No. 54904-2-II

        LEE, C.J. (concurring in part, dissenting in part) — I agree with the majority’s decision

reversing the order granting summary judgment as to Omni Insurance Company (Omni).

However, I disagree with the majority’s determination that the superior court properly granted

summary judgment against Praxis Consulting, Inc. (Praxis). Contrary to the majority’s opinion, I

would hold that Praxis, as the firm assigned to recover Omni’s subrogation claim, owed a duty of

good faith to Kosovan. Therefore, I would reverse the order granting summary judgment in favor

of Praxis.

        The majority relies on Keodalah v. Allstate Insurance Company, 194 Wn.2d 339, 449 P.3d

1040 (2019), to support the conclusion that Praxis is not bound by the duty to exercise good faith

in RCW 48.01.030. However, Keodalah addressed whether an individual employee of an insurer

could be personally liable under the Consumer Protection Act (CPA). Id. at 349. The court held

“that employee adjusters are not subject to personal liability for insurance bad faith or per se claims

under the CPA.” Id. at 353 (emphasis added). This case does not involve an individual employee

of an insurer, but rather an assignment of an insurer’s subrogation claim to another corporation.

Therefore, the law articulated in Merriman v. American Guarantee & Liability Insurance

Company, 198 Wn. App. 594, 396 P.3d 351, review denied, 189 Wn.2d 1038 (2017), is applicable

to the facts of this case.

        In Merriman, Division Three of this court held that the statutory duty of good faith in RCW

48.01.030 has been imposed on the entire insurance industry and, therefore, applied to adjusters

contracted to represent an insurer. Id. at 611-13. RCW 48.01.030 states:

        The business of insurance is one affected by the public interest, requiring that all
        persons be actuated by good faith, abstain from deception, and practice honesty and
        equity in all insurance matters. Upon the insurer, the insured, their providers, and
        their representatives rests the duty of preserving inviolate the integrity of insurance.

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No. 54904-2-II

Merriman explained why this statute applied to York Risk Services Group, the adjuster hired by

the insurer, American Guarantee & Liability Company:

       As an adjuster contracted by American Guarantee to act as its claims administrator,
       York was, at all relevant times, a “person” engaged in “the business of insurance”
       and a representative of American Guarantee.

Merriman, 198 Wn. App. at 612. The court held that “RCW 48.01.030 unambiguously applies to

insurance adjusters.” Id.

       Here, like York in Merriman, Praxis actively engaged in administering the subrogation

claim to recover Personal Injury Protection (PIP) benefits paid to Kosovan. Praxis did this because

Omni assigned to Praxis its subrogation claim to recover PIP benefits paid to Kosovan. In its letter

to United Services Automobile Associate to recover the PIP benefits paid to Kosovan, Praxis

plainly represented itself as responsible for administering Kosovan’s subrogation claim:

       Our investigation of the accident referenced below indicates that liability rests with
       your insured. Your files should now reflect that we are handling this file. On behalf
       of our client we now turn to you for reimbursement under the provisions of the
       Personal Injury Protection Law for benefits and expenses incurred by them to date
       in the amount of $10,000.00.

               ....

       Our Insured     KOSOVAN, ALLA                 Our Claim Number        2015-96242

               ....

       Please make your check payable to Praxis Consulting, Inc. A/S/O OIC and forward
       to the address above. Please include our claim number on your check.

CP at 134 (boldface omitted) (emphasis added).

       Praxis, pursuant to the assignment from Omni, clearly considered Kosovan as its insured,

and the claim to be its claim. Thus, Praxis was engaged in the business of insurance as the third-

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No. 54904-2-II

party administrating Omni’s subrogation claim. RCW 48.01.030, by its plain language, imposes

a duty of good faith on “all persons,” including an insurer’s representative. Therefore, like York

in Merriman, Praxis is bound by the duty of good faith in RCW 48.01.030.

           Because Praxis is bound by the duty of good faith in RCW 48.01.030, I would reverse the

superior court’s order granting summary judgment for Praxis. Accordingly, I respectfully dissent

in part.

                                                      Lee, C.J.

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