Filed Washington State Court of Appeals Division Two
February 19, 2020 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II JOHN WILLIAM WEBB and KRISTA L. No. 52210-1-II WEBB,
Appellants, PUBLISHED OPINION v.
USAA CASUALTY INSURANCE COMPANY,
Respondent.
MAXA, C.J. – John and Krista Webb appeal the trial court’s dismissal on summary
judgment of a lawsuit they filed against their homeowners insurance company, USAA Casualty
Insurance Company (USAA). The Webbs requested a defense from USAA regarding a
complaint filed against them by their neighbors. The complaint alleged that John Webb and
others (collectively the defendants) shot guns at a target on the Webbs’ property, which
carelessly and recklessly caused bullets, bullet fragments, or ricocheted projectiles to enter the
neighbors’ property.
The trial court ruled that USAA had no duty to defend the Webbs against the trespass and
nuisance claims asserted in the complaint. The trial court also dismissed the Webbs’ claims for
bad faith and violation of the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, and the
Consumer Protection Act (CPA), chapter 19.86 RCW.
We hold that the trial court erred in granting USAA’s summary judgment motion and
denying the Webbs’ motion for partial summary judgment on the duty to defend because (1) the No. 52210-1-II
trespass and nuisance claims conceivably constituted “personal injury” as defined by the policy’s
personal injury endorsement, (2) the complaint conceivably requested damages for all claims,
including nuisance, (3) the complaint alleged conduct that conceivably constituted an
“occurrence” as defined in the policy, (4) the policy exclusion for personal injury “intended or
expected by the insured” conceivably did not preclude the duty to defend, and (5) the policy’s
criminal conduct provision conceivably did not preclude the duty to defend because the
complaint did not clearly allege conduct that was criminal in nature.
We also hold that the trial court erred in granting USAA’s summary judgment motion
and denying the Webbs’ motion for partial summary judgment on the Webbs’ extracontractual
claims because USAA’s failure to evaluate the complaint, the policy, and applicable law for
whether the policy conceivably could cover the allegations made was unreasonable and
frivolous. Therefore, as a matter of law USAA’s denial of its duty to defend constituted bad
faith, violated IFCA, and violated the CPA.
Accordingly, we reverse the trial court’s order granting summary judgment in favor of
USAA and denying the Webb’s motion for partial summary judgment. We remand for entry of
partial summary judgment in favor of the Webbs on their duty to defend, bad faith, IFCA, and
CPA claims and for further proceedings.
FACTS
Lawsuit Against the Webbs
In May 2017, Steven Hogg and Candace Ladley (Hogg/Ladley) filed a complaint in
superior court against the Webbs, a person named John Anderson, and 100 unknown defendants.
The complaint included the following allegations:
1.6 All of the properties owned by the parties herein are contiguous. ....
2 No. 52210-1-II
3.2 On January 21, 2017, Defendants and each of them . . . carelessly, recklessly, and without regard for human or animal life, caused multiple rounds of ammunition, fragments thereof and or richoteted [sic]1 projectiles to be shot and strafed across Plaintiffs’ property from the property of Defendants WEBB. Multiple rounds of ammunition, fragments, shrapnel and/or ricocheted projectiles cut through Plaintiffs’ trees. A round, fragment, or ricocheted object also landed in the bed of Plaintiffs’ pick-up truck. . . . [A visitor] stated that the gun fire sounded like it was on full automatic as it was being shot rapid fire as opposed to single shots. . . .
3.3 . . . The defendants appeared to be shooting at a small target positioned South of WEBB’S residence so that the shots fired were directed southerly, without the benefit of a back stop and/or berm or any safety precautions. Said bullets were either directed at Plaintiff’s property or were the result of ricochet.
3.4 Even though the Defendants were advised by Plaintiff HOGG that their careless and reckless conduct endangered others on the Plaintiff’s property, the Defendants continued to shoot their guns that day.
3.5 Plaintiffs have requested that Defendants cease their ultra hazardous activity of shooting their guns on Defendants’ properties as Plaintiffs fear another incident will occur where Defendants will negligently, carelessly or recklessly fire again onto Plaintiffs’ property. . . . But to no avail, Defendants continue to target practice on their properties on a regular basis and refuse to cease to do so.
3.6 . . . [S]heriff’s deputies have stated that they have advised the defendants to install a back stop and/or other safety measures to prevent other incidents of rounds, fragments and/or projectiles from entering onto Plaintiffs’ property. . . . Defendants have refused, failed and continue to refuse and fail to take any precautions to prevent any further gun fire from entering onto Plaintiffs’ property.
Clerk’s Papers (CP) at 119-20.
The Hogg/Ladley complaint asserted seven causes of action: (1) trespass, (2) assault, (3)
violation of Kitsap County Code (KCC) 10.25.020, (4) intentional infliction of emotional
distress, (5) negligent infliction of emotional distress, (6) nuisance, and (7) injunction. Relevant
here, the complaint alleged:
1 Hogg/Ladley presumably meant “ricocheted,” and simply misspelled the word. This opinion replaces “richotet” with “ricochet.”
3 No. 52210-1-II
4.2 Defendants, and each of them trespassed on Plaintiffs’ land, without the consent or authority of the Plaintiffs. ....
6.2 Plaintiffs’ real property is within five hundred yards of Defendant WEBB’S property.
6.3 On said date, Defendants discharged their guns in violation of Kitsap County Code 10.25.020 towards Plaintiffs’ barn which was occupied by people and domestic animals and which was and is also used for the storage of flammable or combustible hay and other materials. ....
9.2 Defendants, and each of their use of firearms and other deadly weapons on their properties, imminently threaten the physical safety of Plaintiffs on their property so as to essentially interfere with the comfortable enjoyment of Plaintiffs’ property, and constitutes a nuisance and should be abated.
CP at 121-23.
The Hogg/Ladley complaint requested a decree requiring the defendants to “compensate
Plaintiffs for their actual damages.” CP at 123-24. The complaint also requested punitive
damages and temporary and permanent injunctions.
USAA Homeowners Insurance Policy
USAA issued a homeowners insurance policy to the Webbs that was in effect between
August 2016 and August 2017. In the Webbs’ policy, the standard liability insurance section
was replaced by a “Personal Injury Endorsement.” CP at 93-94. The Webbs paid an additional
premium for this endorsement.
The personal injury endorsement provided:
If a claim is made or a suit is brought against any “insured” for damages because of “bodily injury”, “property damage” or “personal injury” caused by an “occurrence” to which this coverage applies, we will: ... 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent.
CP at 93.
4 No. 52210-1-II
The endorsement defined “personal injury” to mean several listed offenses, including
“wrongful entry” and “[i]nvasion of rights of privacy.” And the definition stated, “ ‘Personal
injury’ only applies when the conduct is not malicious or criminal in nature.” CP at 93.
The endorsement defined “occurrence” as follows:
a. An accident, including continuous or repeated exposure to substantially the same generally harmful conditions, which results, during the policy period, in “bodily injury” or “property damage”.
b. An event or series of events, including injurious exposure to conditions, proximately caused by an act or omission of any “insured”, which results, during the policy period, in “personal injury”, neither expected nor intended from the standpoint of the “insured”.
The endorsement contained an exclusion for personal injury “which is expected or
intended by the ‘insured’.” CP at 93.
USAA’s Denial of Duty to Defend
The Webbs notified USAA about the Hogg/Ladley lawsuit. A claims examiner, claims
manager, and in house counsel all reviewed the complaint and concluded that USAA did not
have a duty to defend under the terms of its policy.
In a June 20, 2017 letter, USAA denied coverage and a duty to defend the Hogg/Ladley
complaint. The letter stated:
USAA’s review of your policy and the lawsuit has found there is no coverage and no duty to defend under the Homeowners and Umbrella Policies because some of the allegations in the complaint do not meet the definition of an occurrence. Intentional acts and Punitive damages are excluded from the policy.
CP at 143 (emphasis added). The letter then referred to the applicable policy forms and quoted
several provisions of the policy. The letter provided no further explanation for the denial of the
duty to defend.
5 No. 52210-1-II
In September, the Webbs responded and asserted that USAA had wrongfully denied
coverage. They pointed out that USAA stated that only some of the claims in the Hogg/Ladley
complaint were excluded and that USAA had failed to provide a coherent explanation for its
denial of coverage. The Webbs claimed that “USAA has a duty to defend because, as it
admitted, at least some of the allegations [in] the complaint were not excluded from coverage.”
CP at 149. The Webbs also stated that they would be filing a lawsuit against USAA and gave
notice of an IFCA claim.
In an October 4, 2017 letter, USAA instructed the Webbs to disregard the prior denial
letter and provided an amended denial letter. The letter stated:
USAA’s review of your policy and the allegation in the lawsuit has found there is no coverage and no duty to defend under the Homeowners and Umbrella Policies. The allegations of intentional infliction of emotional distress, negligent infliction of emotional distress and nuisance are intentional acts and excluded from the policy. Punitive damages are excluded from the policy. In addition the following allegations are not covered because they do not meet the definition of an occurrence as outlined in the policy; Trespass, Assault, Violation of Kitsap County Code 10.25.020, Temporary Restraining Order and Permanent Injunction.
CP at 153. The letter again referred to the applicable policy forms and quoted several provisions
of the policy. The letter provided no further explanation for the denial of a duty to defend.
Webbs’ Lawsuit Against USAA
The Webbs filed a lawsuit against USAA, alleging that USAA had breached the
insurance policy by refusing to defend the Webbs against the Hogg/Ladley lawsuit. The Webbs
also asserted that USAA’s denial of its duty to defend them against the Hogg/Ladley lawsuit was
a violation of the common law duty of good faith, IFCA, and the CPA. The Webbs requested a
declaratory judgment that USAA had a duty to defend them against the Hogg/Ladley lawsuit and
had an obligation to pay their future defense costs.
6 No. 52210-1-II
USAA moved for summary judgment, arguing it had no duty to defend the Webbs for a
variety of reasons. USAA also argued that the Webbs’ bad faith, IFCA, and CPA claims should
be dismissed.
The Webbs also moved for partial summary judgment, arguing that the trespass and
nuisance claims in the Hogg/Ladley complaint triggered USAA’s duty to defend as a matter of
law, and that USAA’s refusal to defend was in bad faith and violated both IFCA and the CPA as
matter of law. Krista Webb submitted a declaration stating that the Webbs had incurred legal
fees because of USAA’s failure to defend.
The trial court granted USAA’s summary judgment motion regarding all the Webbs’
claims and denied the Webbs’ motion for partial summary judgment. The court stated, “USAA
. . . has no duty to defend because the claims against [the Webbs] in the underlying Complaint
arise from an intentional act and could not conceivably be covered according to particular
provisions within the policy at issue.” CP at 565. The Webbs appeal the trial court’s summary
judgment order.
ANALYSIS
A. INSURER’S DUTY TO DEFEND
1. Scope of Duty
Generally, a standard liability insurance policy imposes two distinct duties on the insurer:
the duty to defend the insured against lawsuits and the duty to indemnify the insured against
settlements or judgments. United Servs. Auto. Ass’n v. Speed, 179 Wn. App. 184, 194, 317 P.3d
532 (2014). An insurer’s duty to defend is separate from and is broader than its duty to
indemnify. Xia v. ProBuilders Specialty Ins. Co., 188 Wn.2d 171, 182, 400 P.3d 1234 (2017).
Although the duty to indemnify exists only if an insurance policy actually covers a claim, “the
7 No. 52210-1-II
duty to defend arises when the policy could conceivably cover allegations in a complaint.” Id.
An insurer’s duty to defend is “one of the principal benefits of the liability insurance policy.”
Woo v. Fireman’s Fund Ins. Co., 161 Wn.2d 43, 54, 164 P.3d 454 (2007).
Whether an insurer has a duty to defend a complaint “must be determined from the four
corners of the complaint and the four corners of the insurance policy.” Expedia, Inc. v. Steadfast
Ins. Co., 180 Wn.2d 793, 806, 329 P.3d 59 (2014). An insurer can consider facts outside of the
complaint only to find a duty to defend, not to deny a duty to defend. Id. at 803-04.
A duty to defend exists if the facts alleged in the complaint against the insured, if proved,
would trigger coverage under the policy. Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d
398, 404, 229 P.3d 693 (2010). The insurer must analyze the potential for coverage. Woo, 161
Wn.2d at 52-53. The insurer must defend if “on the face of the complaint and the insurance
policy, there is an issue of fact or law that could conceivably result in coverage under the
policy.” Xia, 188 Wn.2d at 182. “[I]f there is any reasonable interpretation of the facts or the
law that could result in coverage, the insurer must defend.” Am. Best Food, 168 Wn.2d at 405.
When reviewing a complaint, we must give the insured the benefit of the doubt in
determining the duty to defend, and a duty to defend will be found unless it is clear from the face
of the complaint that the policy does not provide coverage. Woo, 161 Wn.2d at 64. If the
complaint is ambiguous, it must be construed liberally in favor of triggering a duty to defend.
Expedia, 180 Wn.2d at 803. In addition, any “legal ambiguity” must be resolved in favor of the
insured. Am. Best Food, 168 Wn.2d at 411. The Supreme Court has expressly rejected the
notion that an insurer can deny a duty to defend based on a questionable or equivocal
interpretation of the law. Id. at 411-13; Woo, 161 Wn.2d at 60. An insurer cannot “[rely] on an
8 No. 52210-1-II
equivocal interpretation of case law to give itself the benefit of the doubt rather than its insured.”
Woo, 161 Wn.2d at 60.
An insurer’s duty to defend applies to any allegation in a complaint that may result in a
covered liability, even if other claims in the complaint are clearly outside the scope of coverage.
See Grange Ins. Ass’n v. Roberts, 179 Wn. App. 739, 752, 320 P.3d 77 (2013) (“The obligation
[to defend] encompasses any claim that might be covered under any permissible construction of
the policy”). In other words, an insurer has a duty to defend the claims that are conceivably
covered even though other claims are not covered.
“[A]n insurer takes a great risk when it refuses to defend on the basis that there is no
reasonable interpretation of the facts or the law that could result in coverage.” Xia, 188 Wn.2d at
182. When the allegations in the complaint or the law affecting coverage are unclear, the
insurer’s proper course of action is to defend under a reservation of rights. Am. Best Food, 168
Wn.2d at 405.
2. Policy Interpretation
We must give the language in insurance policies a fair and reasonable interpretation,
considering how an average insurance purchaser would understand that language. Xia, 188
Wn.2d at 181. We give undefined terms in insurance policies their plain, ordinary, and popular
meaning. Id. at 181-82.
However, ambiguous policy language generally will be construed against the insurer and
in favor of coverage. Kut Suen Lui v. Essex Ins. Co., 185 Wn.2d 703, 712, 375 P.3d 596 (2016).
Policy language is ambiguous “if it is susceptible to two different but reasonable interpretations.”
Id. In addition, exclusionary clauses must be strictly construed against the insurer. Am. Best
Food, 168 Wn.2d at 406.
9 No. 52210-1-II
3. Standard of Review
We review summary judgment orders de novo. Speed, 179 Wn. App. at 193. “Summary
judgment is appropriate when there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law.” Xia, 188 Wn.2d at 177.
Similarly, whether a lawsuit triggers a duty to defend is a question of law that we review
de novo. Speed, 179 Wn. App. at 194. Generally, there are no questions of fact regarding the
duty to defend. Id. at 195. Therefore, we “must decide as a matter of law either that the insurer
has a duty to defend or that no duty to defend exists.” Id. at 194.
We interpret insurance policy language as a matter of law, and we review policy
construction de novo. Expedia, 180 Wn.2d at 802.
B. DUTY TO DEFEND UNDER PERSONAL INJURY ENDORSEMENT
USAA’s personal injury endorsement provides that USAA will defend an insured “[i]f a
claim is made or a suit is brought . . . for damages because of . . . ‘personal injury’ caused by an
‘occurrence’ to which this coverage applies.” CP at 93. The policy excludes coverage for
personal injury expected or intended by the insured and states that personal injury exists only
when the conduct is not criminal in nature.
The Webbs argue that USAA had a duty to defend the Hogg/Ladley lawsuit because (1)
the trespass and nuisance claims alleged “personal injury” as defined in the policy (2) the lawsuit
was brought “for damages,” (3) the lawsuit alleged an “occurrence” – personal injury neither
expected or intended from the standpoint of the insured, (4) the exclusion for personal injury
expected or intended by the insured did not apply to the lawsuit allegations, and (5) the criminal
conduct provision did not apply to the lawsuit allegations. We agree.
10 No. 52210-1-II
1. Trespass and Nuisance as “Personal Injury”
USAA’s personal injury endorsement defines “personal injury” to include the undefined
term “wrongful entry.” CP at 93. The Webbs argue that the Hogg/Ladley claims for trespass
and nuisance constitute claims for “wrongful entry.” We agree.2
In Kitsap County v. Allstate Insurance Company, the court addressed whether an insurer
had an obligation to provide liability coverage for trespass and nuisance claims. 136 Wn.2d 567,
571-72, 964 P.2d 1173 (1998). Several of the policies at issue extended coverage to “personal
injury,” which was defined to include injury arising out of “wrongful entry.” Id. at 573-74.
The court stated that in analyzing personal injury coverage, the focus is on the type of
offense alleged – there, trespass and nuisance. Id. at 580. If trespass and nuisance claims are
“analogous” to claims for wrongful entry, there is coverage for trespass and nuisance under the
personal injury provisions. Id. In other words, if the trespass and nuisance claims are
“equivalent” to claims for wrongful entry, they are claims for personal injury. Id. at 586.
The court reviewed dictionary definitions and noted that the term “wrongful entry”
essentially was synonymous with the word “trespass.” Id. at 587. The court concluded that “an
average purchaser of insurance would think that a trespass was a wrongful entry.” Id. at 589.
The court also concluded that a nuisance claim was equivalent to a claim for wrongful entry,
based on the similarity between trespass and nuisance claims. Id. at 592.
Here, the Hogg/Ladley complaint asserted claims for trespass and nuisance. Under
Kitsap County, those claims are the equivalent of “wrongful entry.” Id. at 589, 592. Therefore,
the complaint alleges personal injury as defined in the USAA policy.
2 The Webbs also argue that trespass and nuisance constitute the “invasion of rights of privacy,” one of the offenses listed in the definition of “personal injury.” CP at 93. Because we hold that trespass and nuisance constitute “wrongful entry,” we need not address this issue.
11 No. 52210-1-II
USAA argues that Kitsap County is distinguishable because the policies at issue in that
case defined “personal injury” to include injury “arising out of” a list of offenses that included
wrongful entry. Id. at 573. The USAA policy stated that personal injury “means” a list of
enumerated offenses that included wrongful entry. USAA contends that use of the word
“means” limits the definition of “personal injury” to the specifically enumerated offenses, and
does not include offenses that are merely equivalent to one of those enumerated offenses.
We reject this argument. Nothing in Kitsap County suggests that use of the term “arising
out of” had any significance in the court’s analysis. In any event, a reasonable interpretation of
Kitsap County is that trespass and nuisance constitute “wrongful entry” for purposes of the
definition of personal injury. “[I]f there is any reasonable interpretation of the facts or the law
that could result in coverage, the insurer must defend.” Am. Best Food, 168 Wn.2d at 405. The
Supreme Court has rejected the notion that an insurer can refuse to defend based on an
“ ‘equivocal interpretation of case law’ ” that supports its position. Id. at 412 (quoting Woo, 161
Wn.2d at 60).
Accordingly, we hold that the trespass and nuisance allegations conceivably allege a
“personal injury” as defined in USAA’s personal injury endorsement.
2. Suit “For Damages”
USAA’s personal injury endorsement provided a duty to defend if a lawsuit was brought
against the insured “for damages” because of personal injury. CP at 93. The Webbs argue that
the Hogg/Ladley complaint requested damages caused by trespass and nuisance. We agree.
The Hogg/Ladley complaint requested a decree requiring the Webbs to “compensate
Plaintiffs for their actual damages.” CP at 123-24. Therefore, the lawsuit was brought against
the Webbs “for damages.”
12 No. 52210-1-II
USAA acknowledges that the trespass claim was brought for damages. However, USAA
contends that the nuisance claim was not brought for damages. USAA points out that in
asserting the nuisance claim, the Hogg/Ladley complaint stated that the Webbs’ conduct
constituted a nuisance that “should be abated.” CP at 123. USAA states that abatement involves
the use of equity, not the award of damages.
However, the Hogg/Ladley complaint did not state that abatement was the only remedy
requested for the nuisance claim. The complaint requested both actual damages and injunctive
relief without specifying which claims related to the different types of relief. Therefore, the
complaint is at least ambiguous as to whether the nuisance claim was brought for damages, and
this ambiguity must be resolved in favor of triggering a duty to defend. See Expedia, 180 Wn.2d
at 803.
Accordingly, we hold that both the trespass and nuisance claims conceivably were
brought “for damages” as required under USAA’s personal injury endorsement.
3. “Occurrence” Requirement
USAA’s personal injury endorsement provides that USAA will defend a lawsuit brought
because of personal injury caused by an “occurrence.” CP at 93. The Webbs argue that the
Hogg/Ladley complaint alleged that the trespass and nuisance were caused by an “occurrence” as
defined in the endorsement. We agree.
a. Inapplicability of “Accident” Requirement
USAA argues that the Hogg/Ladley complaint did not allege an “occurrence” because all
claims arose from the Webbs’ deliberate, nonaccidental shooting of guns. USAA contends that
its policy defines “occurrence” as “an accident.” CP at 93. USAA then relies on well-settled
law that an accident is never present when a deliberate act is performed unless some additional
13 No. 52210-1-II
unexpected happening occurs that causes the injury, regardless of whether the insured expected
or intended any injury. E.g., Speed, 179 Wn. App. at 198-99.
USAA is correct that one definition of “occurrence” in the personal injury endorsement
requires an “accident.” However, the endorsement also includes a second definition: “An event
or series of events, including injurious exposure to conditions, proximately caused by an act or
omission of any ‘insured’, which results, during the policy period, in ‘personal injury’, neither
expected nor intended from the standpoint of the ‘insured’.” CP at 93. This definition does not
require an “accident.” The Webbs rely on this second definition, not on the first definition.
In Queen City Farms, Inc. v. Central National Insurance Company of Omaha, the
Supreme Court expressly rejected the insurers’ reliance on cases addressing an “accident”
requirement when the issue was whether the insured expected or intended damage. 126 Wn.2d
50, 68, 882 P.2d 703 (1994). “The determination of what constitutes an accident, i.e., whether
injury or damage has resulted from an ‘accident’, is not dispositive on the standard for
expectation of the damages.” Id.
As a result, USAA’s argument that the Hogg/Ladley complaint did not allege an
“accident’ is not conclusive to its duty to defend because of the second definition of
“occurrence” in the personal injury endorsement.
b. Expected/Intended Personal Injury
Under the second definition of “occurrence,” the question here is whether the
Hogg/Ladley complaint alleged that the trespass and nuisance was “expected or intended” from
the Webbs’ standpoint. Two principles guide this determination.
First, the question is whether the insured expected or intended personal injury, not
whether the insured expected or intended the conduct giving rise to the personal injury. See
14 No. 52210-1-II
Woo, 161 Wn.2d at 65. This principle is dictated by the language of USAA’s endorsement,
which expressly provides that the personal injury – not the insured’s conduct – must be neither
expected nor intended from the insured’s standpoint.
Second, whether an insured expected or intended personal injury is determined using a
subjective standard, not an objective standard. Queen City Farms, 126 Wn. 2d at 69. In other
words, the question is whether the insured subjectively expected or intended the personal injury.
Id. The language of the USAA endorsement adopts this principle, stating that whether personal
injury is expected or intended is based on “the standpoint of the ‘insured’.” CP at 93.
In Queen City Farms, the insured sought insurance coverage for its liability for pollution
arising from an industrial waste dump site. 126 Wn.2d at 56-59. The insured allowed various
entities to deposit hazardous waste in pits located on its property. Id. at 57. The leaking of waste
from the pits resulted in groundwater contamination. Id. at 56. Certain policies required an
occurrence, defined as an event that “unexpectedly and unintentionally results in personal
injury.” Id. at 59-60. The issue presented was whether and when the insured “expected or
intended the leakage from the pits into the groundwater”; i.e., whether and when the insured
subjectively expected or intended the groundwater contamination. Id. at 70. The Supreme Court
did not even discuss the fact that the insured clearly expected and intended the initial deposit of
hazardous waste on its property.
In Woo, the complaint alleged that the insured (an oral surgeon) had taunted the plaintiff
(the surgeon’s patient and employee) about her potbellied pigs and that he played an offensive
practical joke on her by putting boar teeth in her mouth and then taking pictures of her while she
was under anesthesia. Woo, 161 Wn.2d at 49-50, 65. The surgeon’s insurance policy covered
personal injury “neither expected nor intended from the standpoint of the insured.” Id. The
15 No. 52210-1-II
Supreme Court reasoned that, based on the language of the surgeon’s policy, he had to have
“expected” or “intended” the specific “injury” alleged in the complaint to preclude coverage. Id.
Because the patient/employee’s complaint did not clearly allege that the surgeon expected or
intended that his taunts or the practical joke would cause personal injury to her, the surgeon’s
insurance carrier had a duty to defend him. Id.
Here, like the complaint in Woo, the Hogg/Ladley complaint did not clearly allege that
the Webbs expected or intended that their target shooting would cause a trespass or a nuisance.
The complaint alleged that on January 21, 2017, John Webb and others “carelessly, recklessly,
and without regard for human or animal life, caused multiple rounds of ammunition, fragments
thereof and/or ricocheted projectiles to be shot and strafed across Plaintiffs’ property from the
property of Defendants WEBB.” CP at 119. As a result of the shooting, “[m]ultiple rounds of
ammunition, fragments, shrapnel and/or ricocheted projectiles cut through Plaintiffs’ trees. A
round, fragment, or ricocheted object also landed in the bed of Plaintiffs’ pick-up truck.” CP at
119. The complaint alleged that the defendants were shooting at a small target without using a
backstop, berm, or safety precautions. Finally, the complaint alleged that the “bullets were either
directed at Plaintiffs’ property or were the result of ricochet.” CP at 119.
These allegations did not state that on January 21 the target shooters on the Webbs’
property subjectively expected or intended that their shooting would cause personal injury to
Hogg/Ladley in the form of trespass or nuisance. The complaint alleged that the target shooters
acted carelessly and recklessly, but not that they actually knew that bullets were entering the
Hogg/Ladley property. In fact, the complaint expressly states that the bullets may have
ricocheted onto the adjoining property. Although the shooting was deliberate, the Webbs must
16 No. 52210-1-II
have expected or intended the personal injury – here trespass and/or nuisance – to negate the
existence of an occurrence. See Woo, 161 Wn.2d at 65.
Accordingly, we hold that the Hogg/Ladley complaint conceivably alleged an
“occurrence” with regard to the trespass and nuisance claims under the USAA personal injury
endorsement.3
4. Expected/Intended Exclusion
USAA’s personal injury endorsement excludes coverage for personal injury “which is
expected or intended by the ‘insured.’” CP at 93. The Webbs argue that this exclusion does not
apply to the allegations in the Hogg/Ladley complaint. We agree.
The language of this exclusion essentially is identical to the pertinent language of the
“occurrence” definition. Therefore, the analysis of “expected and intended” in the context of the
occurrence requirement applies equally here. As discussed above, with respect to the first
incident on January 21, the Hogg/Ladley complaint did not allege that the Webbs expected or
intended that trespass or nuisance would result when the defendants conducted target practice on
the Webbs’ property.
As with its argument on the “occurrence” requirement, USAA claims that the
expected/intended exclusion applies if the Webbs’ conduct was intentional. USAA repeatedly
refers to the exclusion as an “intentional act” exclusion. USAA is wrong. The exclusion says
nothing about intentional acts. The policy language makes it clear that the exclusion is for
personal injury – here, the trespass and nuisance – that the insured expects or intends, not
3 The Hogg/Ladley complaint alleges that after the initial incident on January 21, the Webbs were informed that bullets were entering the adjoining property but they refused to stop shooting. Arguably, at that point the Webbs expected or intended the trespass and nuisance. However, we need not address this issue because the initial incident conceivably constituted an occurrence.
17 No. 52210-1-II
conduct that the insured expects or intends. USAA’s argument that the exclusion focuses on the
intentionality of the conduct rather than on whether the resulting harm is expected or intended is
inconsistent with the plain policy language.
Further, the two gun shooting cases that USAA cites did not even involve an
expected/intended exclusion, but focused on whether an event was an “accident” as required in
the definition of “occurrence.” See Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383, 400-03, 823
P.2d 499 (1992); State Farm Fire & Cas. Co. v. Parrella, 134 Wn. App. 536, 540-41, 141 P.3d
643 (2006). The expected/intended exclusion in USAA’s personal injury endorsement does not
contain an accident requirement.
Accordingly, we hold that the exclusion for expected and intended personal injury in
USAA’s personal injury endorsement conceivably does not apply.
5. Criminal Conduct Provision
The USAA personal injury endorsement stated that personal injury coverage “only
applies when the conduct is not malicious or criminal in nature.” CP at 93.4 The Webbs argue
that this provision does not apply to the allegations in the Hogg/Ladley complaint. We agree.
“[A] criminal act exclusion does not apply to all acts technically classified as crimes, but
only to serious criminal conduct ‘done with malicious intent, from evil nature, or with a
wrongful disposition to harm or injure other persons or property.’ ” Allstate Ins. Co. v. Raynor,
143 Wn.2d 469, 477, 21 P.3d 707 (2001) (quoting Van Riper v. Constitutional Gov’t League, 1
Wn.2d 635, 642, 96 P.2d 588 (1939)). “[T]he average [insurance] purchaser would not think
4 USAA refers to this provision as an exclusion. However, it is not identified as an exclusion in the personal injury endorsement. It appears to be part of the definition of personal injury.
18 No. 52210-1-II
‘criminal acts’ means any and all criminal acts in the technical sense.” Allstate Ins. Co. v.
Peasley, 131 Wn.2d 420, 434, 932 P.2d 1244 (1997) (Madsen, J., concurring).
USAA argues that the criminal conduct provision precludes a duty to defend because the
Webbs’ conduct as alleged in the Hogg/Ladley complaint violated KCC 10.25.020 and RCW
9.41.230.
First, KCC 10.25.020(2)(c) prohibits the discharge of firearms in the unincorporated
areas of the county “[t]owards any building occupied by people or domestic animals . . . where
the point of discharge is within five hundred yards of such building.” Under KCC 1.12.010,
“[a]ny person violating any of the provisions or failing to comply with any of the mandatory
requirements of the resolutions or ordinances of Kitsap County is guilty of a misdemeanor.”
The Hogg/Ladley complaint contains a cause of action alleging that the Webbs’ conduct
violated KCC 10.25.020. The criminal conduct provision arguably would preclude coverage for
that cause of action.
However, regarding the trespass and nuisance claims, the complaint does not allege acts
sufficient to establish a violation of KCC 10.25.020. The complaint alleges that Hogg’s property
was within 500 yards of the Webbs’ property. But KCC 10.25.020 only prohibits shooting if the
point of discharge is within 500 yards of an occupied building. The complaint does not contain
any allegations about the distance between the point of discharge and an occupied building.
Therefore, it is not clear from the face of the complaint that the criminal conduct provision
precludes coverage based on a violation of KCC 10.25.020. The complaint is at least ambiguous
in this regard, and that ambiguity must be resolved in favor of a duty to defend. Expedia, 180
Wn.2d at 803.
19 No. 52210-1-II
Second, RCW 9.41.230(1) provides that anyone who “[w]illfully discharges any firearm,
air gun, or other weapon, or throws any deadly missile in a public place, or in any place where
any person might be endangered thereby. . . . is guilty of a gross misdemeanor.” RCW
9.41.230(1)(b) specifies that “[a] public place shall not include any location at which firearms are
authorized to be lawfully discharged.”
The Hogg/Ladley complaint does not allege a violation of RCW 9.41.230, nor does the
complaint allege facts sufficient to establish a violation. A violation of RCW 9.41.230 requires
“[w]illfully” discharging a firearm, but as stated above, the Hogg/Ladley complaint alleges that
the Webbs discharged their guns “carelessly, recklessly, and without regard for human or animal
life.” CP at 119. A violation of RCW 9.41.230 also requires discharge of a firearm in a public
place or a place where a person might be endangered. But the Hogg/Ladley complaint alleges
that the Webbs shot their guns on their own property, not in a public place. And whether target
shooting on the Webbs’ property might endanger other people is a subjective determination that
is not necessarily resolved by the complaint allegations.
However, even if the Webbs’ conduct as alleged did violate one of these laws, the
complaint does not allege that their actions constituted “serious criminal conduct” done with a
“ ‘malicious intent’ ” or a “ ‘wrongful disposition’ ” to harm “ ‘persons or property.’ ” Raynor,
143 Wn.2d at 477 (quoting Van Riper, 1 Wn.2d at 642). On the contrary, the complaint alleges
that the Webbs “carelessly” and “recklessly” caused rounds of ammunition, fragments, and
ricocheted projectiles to enter Hogg’s property. CP at 119. And the complaint does not allege
that the Webbs were charged with a crime in relation to these incidents.
USAA does not even acknowledge the Supreme Court’s decision in Raynor, which is
controlling authority regarding a criminal act exclusion. Instead, USAA cites to the Court of
20 No. 52210-1-II
Appeals decision in Raynor and to the plurality opinion in Peasley, 131 Wn.2d at 420. But a
majority of the justices in Peasley adopted the same rule confirmed in Raynor – that criminal act
exclusions apply only to serious crimes involving some malicious or wrongful mental state.
Peasley, 131 Wn.2d at 433 (Madsen, J., concurring), 438 (Johnson, J., dissenting).
Accordingly, we hold that the personal injury endorsement’s criminal conduct provision
conceivably does not preclude a duty to defend the Hogg/Ladley complaint.
6. Summary
We conclude that USAA had a duty to defend the Webbs for the trespass and nuisance
claims in the Hogg/Ladley complaint because none of the arguments USAA makes to support its
refusal to defend the Webbs has merit. Accordingly, we hold that the trial court erred in granting
USAA’s summary judgment motion and denying the Webbs’ motion for partial summary
judgment on the Webbs’ duty to defend claim.
C. BAD FAITH CLAIM
The Webbs argue that the trial court erred in granting USAA’s summary judgment
motion and denying their summary judgment motion regarding their claim that USAA’s refusal
to defend them was in bad faith. We agree.
1. Legal Principles
“An insurer acts in bad faith if its breach of the duty to defend was unreasonable,
frivolous, or unfounded.” Am. Best Food, 168 Wn.2d at 412. A breach of the duty to defend
does not automatically constitute bad faith. See id. at 413 n.5. There is no bad faith where the
insurer denies coverage or fails to provide a defense based on a reasonable interpretation of the
insurance policy. Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 777, 58 P.3d 276
(2002).
21 No. 52210-1-II
An insurer is not automatically liable for bad faith if it wrongfully denies a duty to
defend. See Am. Best Food, 169 Wn.2d at 413 n.5. But in order to avoid bad faith liability for
wrongfully denying a duty to defend, an insurer must show that it had a reasonable, nonfrivolous
argument that there was no “reasonable interpretation of the facts or the law that could result in
coverage.” See id. at 413. The insurer also must show that it “did not put its own interest ahead
of its insured when it denied a defense.” Id.
An insurer’s failure to defend based on a “questionable interpretation of law” or an
“arguable interpretation of its own policy” is unreasonable and constitutes bad faith as a matter
of law. Id. at 413-14.
2. Bad Faith Analysis
USAA raised several grounds for denying the duty to defend. As discussed above, we
hold that none of these grounds provide a legitimate basis for denying a duty to defend the
Webbs. The question regarding the Webbs’ bad faith claim is whether these grounds were
“unreasonable, frivolous, or unfounded.” Am. Best Food, 168 Wn.2d at 412.
USAA’s second denial letter only referenced one ground for denying a defense of the
trespass claim and one ground for denying a defense of the nuisance claim. But the letter
provided no explanation, and did not address the more recently asserted grounds. Therefore, we
must look to USAA’s appellate briefing to determine the reasonableness of its positions.
a. Trespass and Nuisance as “Personal Injury”
USAA argued that neither trespass nor nuisance falls within the policy definition of
“personal injury” because neither was specifically included in the list of offenses that constituted
personal injury under the policy definition. However, as discussed above, wrongful entry is
included in the policy definition of “personal injury.” CP at 93. And in Kitsap County, the
22 No. 52210-1-II
Supreme Court unequivocally held that both trespass and nuisance are equivalent to wrongful
entry. 136 Wn.2d at 589, 592.
USAA argued that Kitsap County can be distinguished based on a difference in the policy
language. But even if the argument has some merit, denying a duty to defend despite a
controlling Supreme Court case to the contrary is a classic example of an insurer putting “its own
interest ahead of its insured” based on a questionable interpretation of case law. Am. Best Food,
168 Wn.2d at 413. That constitutes bad faith as a matter of law. Id.
Finally, it is worth noting that USAA did not even reference the definition of “personal
injury” in either denial letter or in the trial court. Instead, USAA on appeal attempted to assert a
new – and meritless – ground for denying a duty to defend that had nothing to do with its initial
refusal to defend the Webbs.
Therefore, we conclude that USAA’s position regarding the personal injury definition is
unreasonable and frivolous and constitutes bad faith as a matter of law.
b. Suit “for Damages” – Nuisance
USAA argued that the nuisance claim was not asserted “for damages” as required under
the personal injury endorsement. This argument was based on an allegation in the complaint that
the nuisance should be abated, which is equitable relief. However, as stated above, the
complaint specifically requested an award of actual damages and did not limit that request to
only certain claims. And the complaint did not state that abatement was the only remedy
requested for the nuisance claim.
The complaint was at least ambiguous regarding whether Hogg/Ladley sought damages
for the nuisance claim. USAA was required to liberally construe that ambiguity in favor of
triggering a duty to defend. Woo, 161 Wn.2d at 53. Instead, USAA construed the ambiguity in
23 No. 52210-1-II
favor of itself and placed its own interests ahead of its insured’s interests. That constitutes bad
faith as a matter of law. See Am. Best Food, 168 Wn.2d at 413.
Finally, even if USAA’s position had been correct on the “for damages” requirement,
USAA acknowledged that its position only applied to the nuisance claim. USAA still had an
obligation to defend the trespass claim, which clearly was brought “for damages.”
Therefore, we conclude that USAA’s position regarding the “for damages” requirement is
unreasonable and frivolous and constitutes bad faith as a matter of law.
c. Occurrence Definition
USAA argued that the alleged trespass and nuisance did not did not fall within the policy
definition of an “occurrence” because the defendants deliberately fired the guns and therefore
there was no “accident.” USAA relied on the first definition of “occurrence” in the personal
injury endorsement, which requires that an “accident” result in bodily injury or property damage.
However, as discussed above, USAA relied on the wrong definition of “occurrence.”
The second definition does not require an “accident,” and instead requires an “event or series of
events” that results in personal injury “neither expected nor intended” by the insured. CP at 93.
And regarding the second definition, the Supreme Court in Queen City Farms made it clear that
“whether injury or damage has resulted from an ‘accident’, is not dispositive on the standard for
expectation of the damages.” 126 Wn.2d at 68.
Therefore, we conclude that USAA’s position regarding the occurrence definition is
unreasonable and frivolous and constitutes bad faith as a matter of law.
d. Expected/Intended Exclusion
USAA argued that the trespass and nuisance claims are excluded from coverage under an
“intentional act” exclusion because the Hogg/Ladley complaint alleged the defendants
24 No. 52210-1-II
intentionally shot the guns. However, as discussed above, there is no “intentional act” exclusion;
the expected/intended exclusion says nothing about intentional acts. The policy language states
that the exclusion applies to personal injury that the insured expects or intends, not conduct that
the insured expects or intends. USAA’s argument that the exclusion focuses on the intentionality
of the conduct rather than on whether the resulting harm is expected or intended is inconsistent
with the plain policy language. Denying a duty to defend based on a questionable interpretation
of policy language that gives the insurer rather than the insured the benefit of the doubt
constitutes bad faith as a matter of law. Am. Best Food, 168 Wn.2d at 413-14.
Further, as discussed above USAA relies on two cases that address an “accident”
requirement, not an expected/intended exclusion. See Butler, 118 Wn.2d at 400-03; Parrella,
134 Wn. App. at 540-41. Denying a duty to defend based on a questionable interpretation of
case law constitutes bad faith as a matter of law. Am. Best Food, 168 Wn.2d at 413.
Therefore, we conclude that USAA’s position regarding the expected/intended exclusion
is unreasonable and frivolous and constitutes bad faith as a matter of law.
e. Criminal Conduct Provision
USAA argued that the criminal conduct provision precluded a duty to defend the trespass
and nuisance claims because the Webbs’ conduct as alleged in the Hogg/Ladley complaint
violated KCC 10.25.020 and RCW 9.41.230. However, as discussed above, the Hogg/Ladley
complaint did not clearly allege that the conduct giving rise to the trespass and nuisance claims
involved criminal conduct. And the case law is clear that only serious criminal conduct that
involves a malicious intent or wrongful disposition to commit harm to persons or property will
support the denial of coverage under a criminal conduct provision. Raynor, 143 Wn.2d at 477.
25 No. 52210-1-II
The complaint makes no such allegation regarding the initial incident. And USAA did not even
acknowledge the Supreme Court’s decision in Raynor even though it is controlling authority.
Denying a duty to defend based on a questionable interpretation of policy language or
case law that gives the insurer rather than the insured the benefit of the doubt constitutes bad
faith as a matter of law. Am. Best Food, 168 Wn.2d at 413-14. Therefore, we conclude that
USAA’s position regarding the criminal conduct provision is unreasonable and frivolous and
constitutes bad faith as a matter of law.
f. Summary
When an insurer evaluates whether to defend a lawsuit against its insured, Washington
law is clear that the insurer must ask if there is any conceivable way that one or more of the
claims asserted in the lawsuit is covered under the applicable policy. Xia, 188 Wn.2d at 182.
USAA did just the opposite, seemingly asking whether there was any conceivable way that its
policy did not provide coverage for the Hogg/Ladley complaint.
USAA’s disregard of its clear duty to defend the trespass and nuisance claims asserted
against its insureds constitutes bad faith as a matter of law. Accordingly, we hold that the trial
court erred in granting USAA’s summary judgment motion and denying the Webbs’ motion for
partial summary judgment on the Webbs’ bad faith claim.
D. IFCA CLAIM
The Webbs argue that the trial court erred in granting USAA’s summary judgment
motion and denying their motion for partial summary judgment regarding their claim that
USAA’s denial of its duty to defend the Webbs under the personal injury endorsement violated
IFCA. We agree.
26 No. 52210-1-II
Under IFCA, a “first party claimant” can recover damages if an insurer “unreasonably
denie[s] a claim for coverage or payment of benefits.” RCW 48.30.015(1). A “first party
claimant” includes an individual “asserting a right to payment as a covered person under an
insurance policy.” RCW 48.30.015(4). If an insurer acted unreasonably in denying a claim for
coverage, the trial court may award up to three times the actual damages and shall award
attorney fees to the claimant. RCW 48.30.015(2), (3).
As discussed above, we hold that each of USAA’s arguments to support its refusal to
defend the Webbs is unreasonable as matter of law. A refusal to defend constitutes a denial of a
claim for coverage. Therefore, USAA is liable to the Webbs under IFCA. We hold that the trial
court erred in granting USAA’s summary judgment motion and denying the Webbs’ motion for
partial summary judgment on the Webbs’ IFCA claim.
E. CPA CLAIM
The Webbs argue that the trial court erred in granting USAA’s summary judgment
motion and denying their motion for partial summary judgment regarding their claim that
USAA’s denial of its duty to defend them violated the CPA. We agree.
The CPA provides that “[u]nfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce are . . . unlawful.” RCW 19.86.020. The
purposes of the CPA are “to protect the public and foster fair and honest competition.” RCW
19.86.920. The CPA must to be liberally construed. RCW 19.86.920.
To prevail on a CPA claim, “ ‘a plaintiff must establish five distinct elements: (1) unfair
or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4)
injury to plaintiff in his or her business or property; (5) causation.’ ” Perez-Crisantos v. State
27 No. 52210-1-II
Farm Fire & Cas. Co., 187 Wn.2d 669, 685, 389 P.3d 476 (2017) (quoting Hangman Ridge
Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986)).
RCW 48.30.010(1) prohibits unfair practices and deceptive acts for those engaged in the
business of insurance. A violation of RCW 48.30.010 is per se an unfair trade practice and
satisfies the first element of the five-part test for bringing a CPA action. Indus. Indem. Co. of the
NW, Inc. v. Kallevig, 114 Wn.2d 907, 920-23, 792 P.2d 520 (1990). Because USAA’s
arguments supporting its refusal to defend the Webbs were unreasonable and frivolous, the
Webbs established the first element of a CPA claim as a matter of law.
The Webbs also presented sufficient evidence of the remaining elements of the CPA
claim for summary judgment: (1) the Webbs’ interaction with USAA occurred in the insurance
trade, (2) the public has an interest in fair insurance practices, (3) the Webbs were injured when
they incurred legal fees in defending themselves against the Hogg/Ladley suit, and (4) USAA’s
denial of the duty to defend was the cause of their injury. USAA does not dispute the existence
of these elements. We hold that the trial court erred in granting USAA’s summary judgment
motion and denying the Webbs’ motion for partial summary judgment on the Webbs’ CPA
claim.
CONCLUSION
We reverse the trial court’s order granting summary judgment in favor of USAA and
denying the Webbs’ motion for partial summary judgment. We remand for entry of partial
28 No. 52210-1-II
summary judgment in favor of the Webbs on their duty to defend, bad faith, IFCA, and CPA
claims and for further proceedings.
MAXA, C.J.
We concur:
MELNICK, J.
GLASGOW, J.