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Barstad v. Stewart Title Guaranty Co.2/14/2002
f the type of defense it has undertaken.' Tank, 105 Wn.2d at 387. In Tank we reasoned that the potential conflict of interest in this type of defense mandates a higher standard of care. Id. Additionally, we stated 'an insurance company's duty of good faith rises to an even higher level than that of honesty and lawfulness of purpose toward its policyholders: an insurer must deal fairly with an insured, giving equal consideration in all matters to the insured's interests.' Id. at 386. In Tank we addressed a specialized area in the insurance industry, defense under a reservation of rights. We determined that because of the potential conflict of interest in this particular area, it warranted a heightened good faith obligation. Id. at 387. Because this case does not present such an inherent conflict of interest, Tank is distinguishable and we refrain from extending its general principles.
Van Noy involved an insurance company's retroactive denial of personal injury protection coverage more than a month after receiving notice of the insureds' claims and after the insureds had already begun treatment for their injuries. Van Noy, 142 Wn.2d at 785. We held that the insurers had a quasi-fiduciary duty to deal fairly with the insureds and to give equal consideration to their interests in all matters. Id. at 793. We determined that even though the appellate court's decision referred to the duty as an 'enhanced fiduciary obligation,' the use of that terminology was not intended to impose a novel fiduciary duty on the insurer. Id. at 794. Thus, we did not impose a new duty in Van Noy and the relationship between an insured and insurer in the context of a preliminary commitment for title insurance does not warrant applying an enhanced fiduciary duty now.
The insureds also rely on RCW 48.01.030 as a conduit to impose an enhanced fiduciary duty in these circumstances. RCW 48.01.030 holds persons in the insurance industry to a good faith standard and has been frequently applied when an insurer denies claim coverage or acts unreasonably when processing a claim. See generally Gingrich v. Unigard Sec. Ins. Co., 57 Wn. App. 424, 788 P.2d 1096 (1990); Safeco Ins. Co. of Am. v. JMG Rest., Inc., 37 Wn. App. 1, 680 P.2d 409 (1984). We have interpreted 'bad faith,' potentially in violation of RCW 48.01.030, as an act that is unreasonable, frivolous or unfounded. Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 560, 951 P.2d 1124 (1998). In this case, the title insurance companies had reason to believe that Evergreen, acting as the investors registered agent, would disclose the information they provided to Evergreen to the investors. Additionally, industry practice supported the title insurance companies' belief that the information would be disclosed elsewhere, such as in an abstract of title. Because the title insurance companies had a well-founded, reasonable basis for not including this information in their preliminary commitments, therefore, we cannot find that RCW 48.01.030 has been violated.
CONCLUSION
Viewing RCW 48.29.010 as curative and intended by the Legislature to apply retroactively, we now apply it retroactively and refuse to impose a general disclosure duty in preliminary commitments on title insurance companies. Accordingly we reverse the trial court's partial denial of summary judgment. The insureds' request for attorney fees pursuant to RCW 19.86.090 and RAP 18.1 is denied.
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