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Beck v. Farmers Insurance Co. of Wa.9/6/2002
Concurring: David H. Armstrong, J. Robin Hunt
PUBLISHED IN PART
The main question in this case is whether, under the facts and circumstances present here, an UnderInsured Motorist (UIM) insurer is bound by the outcome of a lawsuit in which the parties were the UIM insured and a tortfeasor, and in which the UIM insurer did not appear or participate. For the reasons that follow, the answer is no.
In June 1992, Clyde Beck and two of his daughters, one of whom was eight-year-old Tara, were rear-ended by Gertrude Dawson. All three were entitled to UIM and Personal Injury Protection (PIP) coverage through Farmers Insurance Company of Washington (Farmers). Dawson had liability coverage through National General Insurance Company (NGIC). According to the trial court's later findings, Dawson was wholly responsible for the accident.
Acting through Clyde, Tara made a liability claim against Dawson, and UIM and PIP claims against Farmers. She initially described her injuries as being 'neck and upper back.' A year or so later, she also claimed a head injury.
In 1995, Tara sued Dawson. She and Dawson agreed to arbitrate rather than litigate, and in August and September 1997, she and Dawson participated in an arbitration hearing. It is disputed whether Farmers had notice of the lawsuit, but it is undisputed that Farmers did not appear or participate in the arbitration hearing. The arbitrator ruled that Tara had sustained $307,627.75 in damages due to Dawson's negligence.
After the arbitration award, Tara demanded that Farmers pay its UIM limits of $100,000. She based her demand on Finney v. Farmers Ins. and Fisher v. Allstate Ins. Co., which hold that the insurer is 'bound by the 'findings, conclusions and judgment' entered in the action against the tortfeasor when it has notice and an opportunity to intervene in the underlying action against the tortfeasor{.}' Farmers responded that it was not bound by the Dawson arbitration award because it had not received notice of the Dawson lawsuit. It offered to settle for $20,000, or to arbitrate if that offer was not acceptable.
On June 17, 1998, Tara filed the present lawsuit. She alleged in part that Farmers was bound by the Dawson arbitration award; that she was entitled to recover the $100,000 UIM policy limits; and that she was entitled to a judgment so declaring. A bench trial ensued, at which Tara bore the burden of proving that Farmers had received notice of the Dawson lawsuit within the meaning of Finney and Fisher.
Tara offered several items of evidence in an effort to prove such notice. First, she offered evidence that Farmers knew the basic facts about the accident and its aftermath. Those facts included (a) that the accident had occurred; (b) that it had involved a 'hard hit;' (c) that Clyde, Tara, and Tara's sister were all claiming serious injuries; (d) that Clyde and Tara were claiming serious brain, neck, and back injuries; and (e) that Clyde, Tara, and Tara's sister were all represented by the same law firm, which was aggressively pursuing all available benefits.
Second, Tara offered evidence of a phone conversation between two attorneys that occurred on November 1, 1995. The attorneys, A. Clarke Johnson and Mark Dietzler, were engaged in separate private practices. Johnson was currently representing Dawson, but being paid by NGIC. Dietzler was not currently representing Farmers, Dawson or any of the Becks, although in 1994 he had represented Farmers in an arbitration hearing involving PIP claims brought by Clyde Beck. Johnson initiated the phone call and, after identifying himself as the attorney for Dawson, asked whether Dietzler had deposed Clyde
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