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Overton v. Consolidated Insurance Company8/1/2000
Cas. & Sur. Co., 77 Wn.2d 850, 853, 467 P.2d 847 (1970).
Here, the Gisselbergs' complaint alleged that PCBs were deposited in the soil during the coverage period, and that Spokane Transformer is strictly liable for the cleanup costs by statute. These are facts which, if proved, will trigger the duty to indemnify. The filing of the complaint, therefore, triggered the duty to defend. Baugh, 836 F.2d at 1168.
Bad Faith and CPA Claims
Insurers have a statutory duty of good faith. RCW 48.01.030. The insurer's duty of good faith is based on a fiduciary relationship which involves more than the usual 'honesty and lawfulness of purpose' which constitutes the standard definition of good faith. 'It implies 'a broad obligation of fair dealing', and a responsibility to give 'equal consideration' to the insured's interests.' Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 385-86, 715 P.2d 1133 (1986) (citation omitted). Good faith by an insurer is a question of fact. Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383, 395, 823 P.2d 499 (1992). Summary judgment may be appropriate, however, if reasonable minds could reach only one conclusion. Briscoe v. Travelers Indem. Co., 18 Wn. App. 662, 667, 571 P.2d 226 (1977) (not bad faith to refuse to defend intentional assault claim under personal injury accident policy).
An insurer breaches its duty if it acts without reasonable justification in handling a claim. Villella v. Public Employees Mut. Ins. Co., 106 Wn.2d 806, 821, 725 P.2d 957 (1986). But denial of coverage based on a reasonable interpretation of the policy is not bad faith. Id. Spokane Transformer contends the failure to defend was unreasonable and, therefore, gave rise to a valid bad faith claim under the CPA. Transcontinental Ins. v. Washington Pub. Util. Dists.' Util. Sys., 111 Wn.2d 452, 470, 760 P.2d 337 (1988).
To prevail in a CPA action, the plaintiff must establish that the defendant has engaged in an 'unfair or deceptive' act or practice occurring in trade or commerce that impacts the public interest and causes the plaintiff injury in his or her business or property. RCW 19.86.020; Industrial Indem. Co. of the Northwest, Inc. v. Kallevig, 114 Wn.2d 907, 920-21, 792 P.2d 520, 7 A.L.R.5th 1014 (1990). The bad faith breach of the duty to defend constitutes a per se violation of the 'unfair or deceptive acts or practices' of the CPA. Salois v. Mutual of Omaha Ins. Co., 90 Wn.2d 355, 359, 581 P.2d 1349 (1978).
We will not find bad faith where the legal sufficiency of the insurer's reasons for denying coverage is unclear. Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 155, 930 P.2d 288 (1997); Pub. Util. Dists.' Util. Sys., 111 Wn.2d at 470.
Spokane Transformer's tender of defense triggered a duty to defend. The allegations set out in this complaint arguably placed the loss within the terms of the policy. However, the coverage questions raised by the insurance companies are reasonable given the EPA's notice to Mr. Overton in 1976--or, at least, not so unreasonable as to amount to bad faith.
Attorney Fees
Spokane Transformer claims fees and costs under Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991). If it prevails on remand, it is entitled to fees.
The summary judgment of the trial court is reversed.
Sweeney, J.
WE CONCUR:
Brown, A.C.J.
Kato, J.
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