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Boag v. Farmers Insurance Company of Washington7/7/2005
Kathleen Boag settled a claim against an underinsured motorist for his insurance policy limits. She also sought personal injury protection (PIP) and underinsured motorist (UIM) benefits from her insurer, Farmers Insurance Company of Washington. Farmers paid her $74,883.16 in PIP benefits. Through arbitration, she received a $137,095.11 UIM award. Boag appeals a trial court order offsetting $62,788.05 of Farmers' PIP payments against her UIM award. We affirm.
FACTS
An underinsured driver injured Boag in a motor vehicle accident. The tortfeasor-driver had $25,000 liability insurance limits for injury to any one person. Boag settled her claim against the tortfeasor-driver in exchange for his $25,000 in policy limits. Boag had underinsured motorist coverage (UIM) and personal injury protection (PIP) benefits on her policy through Farmers. Boag's UIM coverage had a $100,000 limit.
Initially, Farmers paid Boag $65,783.16 in PIP benefits. Boag sued Farmers, seeking an additional $9,100 in PIP benefits. Farmers paid Boag this amount in 2003 following litigation in which we held Farmers liable for the additional amount. Farmers paid Boag $74,883.16 in total PIP benefits.
Boag also sought UIM benefits from Farmers through arbitration. The arbitration award totaled $137, 095.11. Following the arbitration, a dispute arose between Boag and Farmers regarding offsets against her award.
Boag filed a complaint for declaratory relief and damages. Boag moved for summary judgment, asserting that no genuine issue of material fact precluded entering judgment as a matter of law. The trial court delayed its decision pending the outcome of her lawsuit against Farmers for the $9,100 in PIP benefits.
In arguing her summary judgment motion, Boag claimed that Farmers could not offset more than $25,000, the tortfeasor's policy limit. Farmers argued that it could offset $74,883.06, the entire amount of PIP benefits it had paid Boag.
In determining the offset, the trial court reviewed Boag's recovery worksheets that included attorney fees and costs based on Winters v. State Farm Mutual Automobile Insurance Co., 144 Wn.2d 869, 31 P.3d 1164 (2001). One worksheet calculated a $28,794.29 net recovery if the court accepted Boag's legal arguments. Another worksheet calculated a $5,115.73 net recovery if the court accepted the insurer's legal arguments.
The court declined to adopt Boag's reasoning and awarded Boag a $5,115.73 net recovery, plus prejudgment interest from July 26, 2002, and costs. It awarded attorney fees and costs on reconsideration.
Boag appeals.
ANALYSIS
Summary Judgment
Boag contends that, under the terms of her insurance policy with Farmers, Farmers may offset PIP payments up to $25,000, the amount equal to what Boag recovered from the tortfeasor-driver, reduced by the amount of attorney fees Boag incurred in obtaining the $25,000 recovery. She raises two arguments.
First, she asserts that Farmers waived its right to an offset under the 'offset clause' in her insurance policy because it did not obtain her written agreement. At oral argument, Farmers agreed that it did not obtain her written agreement and that the PIP 'offset clause' does not apply. Nevertheless, Farmers argues that under its subrogation or 'right to recover' clause, it may offset the payments it made. Farmers Ins. Co. v. Lautenbach, 93 Wn. App. 671, 679, 963 P.2d 965 (1998), review denied, 138 Wn.2d 1012 (1999); Price v. Farmers Ins. Co., 82 Wn. App. 20, 24, 916 P.2d 949 (1996), rev'd on other grounds, 133 Wn.2d 490 (1997).
Second, Boag asserts that under the 'righ
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