WASHINGTON APPELLATE COURT FINDS INSURER NOT COLLATERALLY ESTOPPED FROM CONTESTING LIABILITY ISSUES IN DECLARATORY JUDGMENT ACTION

In Washington, insurers can be subject to collateral estoppel, which bars litigation of the same issue in a subsequent declaratory judgment action, when that issue was actually litigated in the underlying proceeding. The circumstances that allow collateral estoppel to apply vary on a case-by-case basis, but generally turn on whether the insurer had an actual opportunity to litigate the merits of liability in the underlying case. Also, if the court in the underlying case ruled on issues that substantially resolved liability, even if not to finality, the insurer may be bound by those rulings in a subsequent coverage action. However, an insurer will not be bound to findings and conclusions concerning liability if the insurer attempted to challenge the liability findings and the trial court in the underlying action failed to adjudicate the merits of the substantive claims.

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