Cox et al v. Continental Casualty Company, No. 2:2013cv02288 - Document 73 (W.D. Wash. 2014)
Court Description: ORDER denying 68 Motion for Reconsideration filed by Continental Casualty Company, & 70 MOTION for Reconsideration filed by Patricia O'Neal, Laurel Stuart, Nadine Smith, Nicole Tiedeman, Satoko Prigmore, Derry Tiedeman, Sarah Hollingsworth, Tracy Zickuhr, Chris Stuart, Thomas Prigmore, Sandy Zickuhr, Dale Hollingsworth, Robert Walla, Kathryn Cox, Cheryl Grant, Kristine Walla, David Huber, Zoe Zickuhr, Ruth Hollingsworth, Thomas Huber, Jill Ortiz, Richard Hawley, Daniel O'Neal, Megan Walla, Douglas Sundby, Cyndi Sundby, Daryl Stuart, William Mark Smith, Beverly Hawley regarding 56 Order on Motion to Dismiss, Order on Motion to Compel; by Judge Marsha J. Pechman.(RM)
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 KATHRYN COX, et al., 11 12 13 Plaintiffs, CASE NO. C13-2288 MJP ORDER DENYING MOTIONS FOR RECONSIDERATION v. CONTINENTAL CASUALTY COMPANY, 14 Defendant. 15 16 THIS MATTER comes before the Court on Continental’s Motion for Reconsideration of 17 various discovery issues (Dkt. No. 68) and the Cox Plaintiffs’ Motion for Reconsideration (Dkt. 18 No. 70) of the Court’s Order (Dkt. No. 56) on Continental’s Motion to Dismiss (Dkt. No. 13). 19 Having considered the motions and all related papers, the Court hereby DENIES both motions 20 for reconsideration. 21 Background 22 This case was brought by the Cox Plaintiffs, assignees of Dr. Duyzend, against Dr. 23 Duyzend’s insurer, Continental Casualty Company, alleging bad faith and related issues with 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 1 1 respect to Continental’s failure to settle claims by the Cox Plaintiffs and other patients in their 2 dental malpractice suit against Dr. Duyzend. On May 16, this Court issued an order granting in 3 part and denying in part Continental’s Motion to Dismiss (Dkt. No. 13) and disposing of various 4 discovery issues. (Dkt. No. 56.) Continental now brings a Motion for Reconsideration 5 challenging two discovery issues (Dkt. No. 68), and the Cox Plaintiffs bring a Motion for 6 Reconsideration challenging the Court’s dismissal of their Insurance Fair Conduct Act claim 7 (Dkt. No. 70.) 8 9 10 Discussion I. Legal Standard Pursuant to Local Rule 7(h)(1), motions for reconsideration are disfavored, and will 11 ordinarily be denied unless there is a showing of (a) manifest error in the ruling, or (b) facts or 12 legal authority which could not have been brought to the attention of the court earlier, through 13 reasonable diligence. Continental’s Motion 14 II. 15 Continental recycles two arguments from its initial motion to dismiss. First, Continental 16 argues that causation expands the scope of relevancy in a bad faith claim so that documents 17 relating to the parties’ willingness to settle become “vital” even though subjective attitudes 18 toward settlement play no part in the conduct giving rise to liability. (Dkt. No. 68 at 2–3.) The 19 Court previously analyzed this exact question. (Dkt. No. 56 at 12–13.) Continental cites no new 20 authority on this question, but merely insists that this Court’s conclusion that the proximate 21 cause of the excess judgment can be adequately proven or disproven using non-privileged 22 communications amounted to manifest error. Moreover, Continental fails to wrestle with the only 23 9th Circuit case on point, Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1326– 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 2 1 27 (9th Cir. 1995), which applied Alaska law to hold in the face of an explicit causation 2 argument that subjective willingness to settle is not sufficiently vital to meet the third prong of 3 the issue injection test where there was evidence that the plaintiff made an offer to settle—as an 4 attorney representing a plurality of Dr. Duyzend’s patients did here. Continental’s argument fails 5 to reveal manifest error in the Court’s ruling. 6 Second, Continental contends the Court erroneously failed to address its argument 7 regarding a waiver of attorney-client privilege that allegedly occurred when Continental told 8 Plaintiffs to acquire attorney-client privileged materials from Dr. Duyzend’s attorneys and Mr. 9 Harper handed over the documents. The Order did not address the waiver argument because 10 regardless of any waiver, documents sought to be compelled must first be relevant and 11 reasonably calculated to lead to the discovery of admissible information. Fed. R. Civ. P. 26(b). 12 Mr. Harper’s allegedly privileged documents are not, for reasons discussed in the initial Order. 13 (Dkt. No. 56 at 14–15.) Continental does not attempt explain how the documents might have 14 newly acquired relevance a few weeks later. Continental further misapprehends the reason the 15 Court discussed the Pappas standard for issue injection—it was because Continental relied on 16 that standard in its “alternative argument” (Dkt. No. 56 at 15; see Dkt. No. 48 at 11–13), not 17 because the Court believed vital importance was the standard for either discoverability or waiver 18 by disclosure. The Court need not modify the original Order on the grounds suggested by 19 Continental. Cox Plaintiffs’ Motion 20 III. 21 The Cox Plaintiffs argue that in the absence of any standing argument from Continental 22 with respect to the IFCA claim, they did not have a chance to argue that “first party claimant” as 23 used in the IFCA can apply to an insured with a third-party insurance contract as long as the 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 3 1 party bringing the claim is a first party with respect to the contractual rights (via assignment from 2 the original insured, for example). (Dkt. No. 70 at 2–4.) Plaintiffs take advantage of the Motion 3 for Reconsideration to propound this argument. But their contention is easily answered by resort 4 to the text of the statute, which defines “‘[f]irst-party claimant’” as “an individual, corporation, 5 association, partnership or other legal entity asserting a right to payment as a covered person 6 under an insurance policy or insurance contract or insurance contract arising out of the 7 occurrence of the contingency or loss covered by such a policy or contract.” RCW 48.30.015(4) 8 (emphases added). As the Court previously noted in the Order on the Motion to Dismiss (Dkt. 9 No. 56), Washington law clearly distinguishes between first and third-party insurance: “Third10 party coverage ‘indemnif[ies] an insured for covered claims which others [third-party claimants] 11 file against him.’ By contrast, first-party coverage ‘pay[s] specified benefits directly to the 12 insured when a “determinable contingency” occurs,’ ‘allow[ing] an insured to make her own 13 personal claim for payment against her insurer.’” Mut. of Enumclaw Ins. Co. v. Dan Paulson 14 Const., Inc., 161 Wn.2d 903, 914 n.8 (2007) (citing Thomas W. Harris, Washington Insurance 15 Law § 1.2 (2d ed. 2006)). Plaintiffs contend the Court has conflated “first party claimant” with 16 first party coverage—“i.e., a claim that must be paid directly to the insured such as property 17 damage under a homeowner[’]s policy” (Dkt. No. 70 at 3)—but they fail to recognize that the 18 text of the IFCA defines “first party claimant” in a narrow way that applies only to first-party 19 insurance. In the definition, the IFCA requires the claimant to hold a policy requiring the insurer 20 to “pay[ ]” benefits to that individual or entity upon the occurrence of a “contingency or loss.” 21 See RCW 48.30.015(4). Third-party insurance such as a malpractice policy does not conform to 22 this definition, which is why it seemed awkward to say that Dr. Duyzend was ever denied a 23 “payment of benefits” by Continental. RCW 48.30.015(1). 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 4 1 Plaintiffs cite Trinity Universal Ins. Co. of Kansas v. Ohio Cas. Ins. Co., 176 Wn. App. 2 185, 200–01 (2013) to argue the “first party” phrase in the IFCA merely requires claims to be 3 brought by the insured or the insured’s assignee, rather than a third party. The definition of “first 4 party claimant” does so limit the class of persons who may bring suit under the IFCA, according 5 to Trinity. But that fact does not mean the class is not further limited, and the definition 6 concerning the insured’s “right to payment” and insurance coverage triggered by the “occurrence 7 of [a] contingency or loss” narrows the class to first-party insurance policies as well. 8 Plaintiffs also cite Tim Ryan Constr., Inc. v. Burlington Ins. Co., 2012 WL 6567586 9 (W.D. Wash. Dec. 17, 2012), as an example of a court applying the IFCA provision at issue to a 10 third-party insurance contract. While the federal district court in Tim Ryan did apply the IFCA to 11 a third-party insurance contract, it did not discuss whether the insured in that case qualified as a 12 “first party claimant” as the IFCA defines the term. 13 Finally, Plaintiffs point out that the WAC’s enumerated “specific unfair claims settlement 14 practices” constitute a per se violation of paragraphs (2) and (3) of the IFCA. See RCW 15 48.30.015(5). However, the standing requirement that the party be a “first party claimant” is 16 found in paragraph (1), and the definition of “first party claimant” is found in paragraph (4). 17 Paragraphs (2) and (3) do not give rise to liability under the IFCA in the absence of the standing 18 conferred by paragraph (1), and the fact that parties may encounter WAC violations that fall 19 short of IFCA violations is not statutory surplussage merely because some plaintiffs lack 20 standing under other, nonwaivable requirements of the IFCA. 21 22 23 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 5 1 2 Conclusion Because neither Plaintiffs nor Defendant has shown manifest error or new facts or 3 authority mandating reconsideration, the Court DECLINES to reconsider either the dismissal of 4 the IFCA claim or the discovery issues discussed above. 5 6 The clerk is ordered to provide copies of this order to all counsel. 7 Dated this 6th day of June, 2014. 8 A 9 10 Marsha J. Pechman Chief United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ORDER DENYING MOTIONS FOR RECONSIDERATION- 6
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