WASHINGTON COURT FINDS NO BAD FAITH DESPITE INCORRECT ASSESSMENT BY INSURER ON COVERAGE ISSUES
Quarterly Newsletter Winter 2017 Insurers and policyholders are often faced with a situation of whether depreciation may be recovered when the insured sustains a covered loss but does not use “new construction materials” to rebuild their house. In a recent opinion, a Washington Court rejected an insurer’s position that the term “new,” in the replacement...
WASHINGTON COURT LIMITS DISCOVERY OF INSURER’S CLAIMS-HANDLING MANUALS AND GUIDELINES FOR UNRELATED LINES OF COVERAGE
Quarterly Newsletter Winter 2017 Insurers faced with a bad faith lawsuit are often asked in discovery to produce copies of claim handling manuals and guidelines. Oftentimes such discovery requests are broad and request any manuals or guidelines used by the insurer regardless of whether it specifically applies to the policy at issue. Courts in various...
The Responsibility of Corporate America Post 2016 Presidential Elections
The 2016 presidential campaigns and ultimate election of Donald Trump has caused a significant portion of the United States population to express dismay and concern about not only the potential that there is no way to have a semblance of unity in this country, but also the potential that all of those things that have...
Washington’s New Uniform Power of Attorney Act: Surety Underwriters Beware
Surety Law Update Winter 2017 A power of attorney is an incredibly powerful document that permits an individual (the “principal”) to appoint someone (the “agent” or “attorney-in-fact”) to act on the principal’s behalf. In the context of the surety-principal/indemnitor relationship, sureties rely heavily on power of attorney clauses included in general indemnity agreements (“GIA”) in...
Judgment Lien May Survive A Chapter 7 Discharge
Surety Law Update Winter 2017 In general, a Chapter 7 bankruptcy results in a discharge of pre-petition debts owed by an individual debtor. Certain obligations, however, may survive the Chapter 7 discharge order. One example is a perfected judgment lien. Even though the underlying claim for damages against an individual debtor may be discharged, a...
WASHINGTON COURT OF APPEALS REFUSES TO ALLOW PRODUCTION OF POST-LITIGATION COMMUNICATION BETWEEN INSURER AND COVERAGE COUNSEL IN DEFENSE OF UIM CLAIM
Quarterly Newsletter Fall 2017 Ever since the Washington Supreme Court rendered its decision in Cedell v. Farmers Ins. Co. of Washington, 176 Wn.2d 686, 295 P.3d 239 (2013), state and federal courts in Washington have grappled with the fallout. One of key questions is when, and to what extent, policyholders are entitled to discovery of...
USLAW Spring / Summer 2017 – THE DEVIL IS IN THE DETAILS
Parties to construction contracts have historically used indemnity clauses to shift the responsibility to pay damages from one party (the indemnitee) to another party (the indemnitor) without regard to who actually caused the damage. Over time, however, states enacted so-called “antiindemnity” statutes to limit the amount of liability that parties to construction contracts can allocate...
WASHINGTON APPELLATE COURT FINDS INSURER NOT COLLATERALLY ESTOPPED FROM CONTESTING LIABILITY ISSUES IN DECLARATORY JUDGMENT ACTION
Quarterly Newsletter Summer 2017 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...
OREGON COURT OF APPEALS RENDERS IMPORTANT DECISION ON VARIOUS COVERAGE ISSUES ARISING OUT OF CONSTRUCTION DEFECT LAWSUIT
Quarterly Newsletter Summer 2017 In an effort to stem the flood of claims for coverage arising out of construction defect lawsuits, insurers have included various exclusions and endorsements to limit coverage for such claims in their commercial general liability policies issued to construction contractors and subcontractors. One such exclusion, titled the “Multi-Unit New Residential Construction”...
Amendments to Washington’s Retainage Statute Expose Sureties to Additional Risk
Surety Law Update Summer 2017 In February 2017, the Surety Team at Williams, Kastner & Gibbs wrote an article regarding a proposed amendment to Washington’s retainage statute, RCW 60.28.011(6). House Bill 1538, which became effective on July 23, 2017, was largely supported and advanced by subcontractor trade groups in an effort to relieve cash flow...
Washington Supreme Court Decision Exposes Sureties to Increased Risk for Disputing Claims
SURETY LAW UPDATE SUMMER 2017 On July 6, 2017, the Washington State Supreme Court addressed two important issues for sureties in Washington: (1) whether extending statutory attorney fees to public works projects provides the sole fee remedy for those projects; and (2) whether the fees between King County’s claims against the principal and sureties could...
Washington State Court of Appeals Misstates Basic Surety Law Involving Release of Lien Bond Claim
Surety Law Update Summer 2017 Washington’s Release of Lien Bond statute, RCW 60.04.161, allows a property owner or contractor to “release” real property from a construction lien, prior to the lien claim being resolved, by issuing a release of lien bond. Recording the bond does not destroy the lien entirely, but instead transfers the lien...