Payton O. Hoff v. Safeco Ins. Co. Of Illinois

Court of Appeals of Washington·Decided September 24, 2019·No. 50850-8·Published

Opinion

Filed

Washington State

Court of Appeals

Division Two

September 24, 2019

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II

PAYTON O. HOFF, No. 50850-8-II

Respondent, ORDER GRANTING MOTIONS TO PUBLISH OPINION

v.

SAFECO INSURANCE COMPANY OF ILLINOIS,

Appellant.

The parties in this case move to publish the opinion filed in this matter on May 29, 2019.

After review, it is hereby ORDERED that the final paragraph, which reads as follows, shall be deleted: “A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.” It is further ORDERED that this opinion is now published.

Panel: Worswick, Maxa, Glasgow FOR THE COURT:

MAXA, C.J.

Filed

Washington State

Court of Appeals

Division Two

May 29, 2019

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II

PAYTON O. HOFF, No. 50850-8-II

Respondent, UNPUBLISHED OPINION v.

SAFECO INSURANCE COMPANY OF ILLINOIS,

Appellant.

GLASGOW, J. — Payton Hoff was a passenger in a vehicle that was hit by a drunk driver.

She received a settlement from the at-fault driver’s insurer and personal injury protection payments from Safeco Insurance. She then made an underinsured motorist claim with Safeco. Hoff objected to Safeco’s low offers of settlement and eventually filed a complaint in superior court alleging unfair claims settlement practices and bad faith.

After some discovery, Safeco removed the suit to federal district court on the basis of diversity jurisdiction. The federal court remanded to the superior court, finding that the required minimum amount in controversy had not been established.

On remand, Hoff argued that Safeco’s removal attempt itself supported the bad faith claim, and she moved to compel Safeco to produce all information the company or its attorneys possessed concerning the decision to remove her superior court lawsuit to federal court. The superior court granted the motion to compel and ordered Safeco to produce for in camera review all information—including attorney-client privileged materials and work product—concerning

Safeco’s decision to remove the case to federal court. We granted Safeco’s motion for discretionary review.

Under the facts of this case, information about Safeco’s decision to remove the case to federal court is not discoverable under Richardson v. GEICO, a case decided after the superior court made its ruling here. 200 Wn. App. 705, 403 P.3d 115 (2017), review denied, 190 Wn.2d 1008 (2018). In addition, under Cedell v. Farmers Insurance Co., in order to pierce the attorney- client privilege and attorney work product protections, a party seeking protected information must make a factual showing adequate to support a reasonable good faith belief that the party’s conduct was fraudulent. 176 Wn.2d 686, 295 P.3d 239 (2013). This is a high bar and Hoff fails to meet it here.

We reverse the superior court’s order compelling discovery and remand for further proceedings.

FACTS

A. Accident and Underinsured Motorist Claim In May 2011, a drunk driver drifted across the center line and collided head on with a vehicle in which Hoff was a passenger. Hoff sustained multiple soft tissue injuries. The drunk driver died. Safeco insured the vehicle and provided personal injury protection and underinsured motorist (UIM) coverage to Hoff.

The drunk driver’s insurer settled Hoff’s bodily injury claim for the policy limit of $25,000. Safeco also paid over $15,000 in personal injury protection benefits.1

1 Personal injury protection coverage applies regardless of fault, and provides benefits for claims involving medical and hospital expenses, wage loss, loss of services, and funeral expenses.

Hoff subsequently filed a UIM bodily injury claim with Safeco.2 The UIM bodily injury coverage had a policy limit of $50,000.

Throughout Safeco’s claim investigation, Hoff reported ongoing neck, back, shoulder, and hip pain. She also reported that she was experiencing emotional trauma. Hoff continued to seek and receive chiropractic and other medical care and anticipated she would need ongoing care into the future.

Safeco completed a bodily injury evaluation and offered Hoff $2,500 to settle her UIM claim. Hoff rejected the offer and demanded $100,000, which was double the UIM policy limit. Safeco replied that they would be at an impasse until Hoff countered with a more reasonable demand.

Hoff filed a complaint in superior court. She alleged that Safeco had violated WAC 284-

30-330(a)(7), which prohibits an insurance company from forcing a claimant to litigate by offering substantially less than the amounts ultimately recovered in the proceeding. She also relied on RCW 48.30.010(7) and the Insurance Fair Conduct Act, chapter 48.30 RCW.3 Hoff alleged that her damages “far exceed[ed] Safeco’s available UIM limits.” Clerk’s Papers (CP) at 4. Hoff’s prayer for relief requested “judgments for general and special damages, all in such

2 UIM coverage provides compensation when the insured is injured by another driver whose bodily injury liability coverage is insufficient to fully compensate the injured person. 3 The complaint and amended complaint cite to RCW 48.40.010(7), but that provision appears to be part of an unrelated chapter that has been repealed. RCW 48.30.010(7) prohibits insurance companies from unreasonably denying claims made by first party claimants, including people claiming they are entitled to payment as a covered person under an insurance policy. RCW 48.30.010(7), .015(4).

amounts as will be proven at time of trial herein” and “other relief as to the Court seems fair, just, and equitable.” CP at 5. B. Amount in Controversy Safeco propounded its first set of discovery requests. In answering Safeco’s requests for admission, Hoff denied that the total amount of her damages payable by Safeco exceeded $75,000. She also denied that Safeco “[had] any exposure to pay [her] in excess of $75,000.” CP at 69.

In her answers to Safeco’s first interrogatories and requests for production, Hoff claimed that her special medical damages totaled at least $12,455, not including $4,733 of other medical bills, and that she anticipated she would require future medical care. She claimed that “[g]eneral damages are unknown at this time[,] . . . [but] the value is $75,000 exclusive of the third party recovery.” CP at 63. When asked whether she sought a trebling or any multiplier of damages, she responded, “Yes. Both general and special damages. The amounts will be determined by a jury based upon the longevity of symptoms, their severity and the manner in which [Hoff’s] claim was treated by defendant Safeco through its employees and practices.” CP at 64. Hoff also asserted that “[i]n the event of a determination that [the Insurance Fair Conduct Act] was violated,” she planned to “seek punitive damages in an amount a finder of fact deems appropriate.” CP at 64.

Although the amount in controversy had the potential to exceed $75,000, Hoff acknowledged that she was disinclined to litigate in federal court. Therefore, she offered to sign a CR 2A stipulation that the amount in controversy did not exceed $75,000. Nevertheless, she maintained that the jury could award her an “aggregate verdict” of far more than $75,000, but

that Safeco could not be required to pay anything greater than $75,000. CP at 1301. Safeco proposed the following CR 2A stipulation language:

1. Now, therefore, Plaintiff and Safeco stipulate that the sum total of all monetary relief that Plaintiff will seek in this action, whether costs, attorney’s fees, expert expenses or otherwise, is $75,000.00 or less.

2. Plaintiff and Safeco further stipulate to the entry of an order in limine that limits Plaintiff from seeking any monetary relief in this action, damages, attorney’s fees, costs, or otherwise, in excess of $75,000.

CP at 567.

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Payton O. Hoff v. Safeco Ins. Co. Of Illinois, (Wash. Ct. App. 2019).

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