Jeffrey S. & Terri Norris, V, Farmers Insurance Company Of Washington

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
)
JUNFANG HE, ) No. 76236-2-1
)
Plaintiff, ) DIVISION ONE
)
v. )
)
JEFFREY S. NORRIS and TERRI ) UNPUBLISHED
NORRIS, and the marital community )
composed thereof; and JOHN DOES ) FILED: March 19, 2018
1-5, )
)
Defendants. )
)
JEFFREY S. NORRIS and TERRI )
NORRIS, )
) :•••)
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Appellants, ) C)
) -71
v. ) .1,14
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)
FARMERS INSURANCE COMPANY ) c:3
3F:
OF WASHINGTON, a Washington ) 07
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corporation; AMY ELIZABETH )
MARCH, a Washington resident; and )
DAN ANDERSON, a Washington )
resident, )
)
Respondents. )
)
Cox, J. — Jeffrey and Terri Norris (together "Norris") appeal the trial
court's order granting summary judgment to Farmers Insurance Company of
Washington and its agents Dan Anderson and Amy Elizabeth March and
No. 76236-2-1/2
dismissing Norris's third party complaint with prejudice. Because there is neither
any showing of a duty owed by Farmers nor any genuine issue of material fact
whether a special relationship exists, summary judgment is proper. We affirm.
The material facts are largely undisputed. Norris hit Junfang He, a
pedestrian, while driving, and He sued Norris for damages that exceeded the
liability limits of their auto insurance policy with Farmers Insurance. Farmers
offered to settle with the pedestrian for the policy limits, but He refused this offer.
Norris then impleaded Farmers by a third party complaint, claiming
negligence. Farmers moved for summary judgment, arguing that it had no legal
duty and that no genuine issue of material fact existed regarding any claimed
special relationship that might have created a duty. The trial court agreed and
dismissed the third party complaint with prejudice.
Norris appeals.
DUTY
Norris argues that there are genuine issues of material fact whether
Farmers owed a duty to Norris, an essential element of the negligence claim.
Specifically, they argue that a duty arises because of a special relationship
between the parties. We disagree.
"[S]ummary judgment is appropriate where there is ``no genuine issue as to
any material fact and .. . the moving party is entitled to a judgment as a matter of
law.'"1 Although the evidence is viewed in the light most favorable to the
1 Elcon Constr., Inc. v. E. Washington Univ., 174 Wash. 2d 157, 164, 273
P.3d 965(2012)(quoting CR 56(c)).
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No. 76236-2-1/3
nonmoving party, if that party is the plaintiff and it fails to make a factual showing
sufficient to establish an element essential to its case, summary judgment is
warranted.2
Once the moving party shows there are no genuine issues of material fact,
the nonmoving party must bring forth specific facts to rebut the moving party's
contentions.3 The nonmoving party must put forth admissible evidence showing
the existence of a triable issue.4 It cannot rely on the allegations contained in its
pleadings, conclusory statements, or speculation.5 If the "nonmoving party fails
to controvert relevant facts supporting a summary judgment motion, those facts
are considered to have been established."6 Finally, loin review of an order
granting or denying a motion for summary judgment, the appellate court will
consider only the evidence and issues called to the attention of the trial court."7
2 Young v. Key Pharmaceuticals, Inc., 112 Wash. 2d 216, 225, 770 P.2d 182
(1989), overruled on other grounds by 130 Wash. 2d 160 (1996).
3 Elcon Constr., Inc., 174 Wash. 2d at 169.
"Seven Gables Corn. v. MGM/UA Entm't Co., 106 Wash. 2d 1, 13, 721 P.2d
1(1986).
5 Elcon Constr., Inc., 174 Wash. 2d at 169; Young, 112 Wash. 2d at 225.
6 Cent. Washington Bank v. Mendelson-Zeller, Inc., 113 Wash. 2d 346, 354,
779 P.2d 697(1989).
7 RAP 9.12.
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No. 76236-2-1/4
"For a claim of negligence, the plaintiff must establish duty, breach,
causation, and damages."8 The "determination of whether a legal duty exists is
initially a question of law for the court."8
Washington law is clear—an insurance company and its agents have no
duty to review or counsel an insured on the adequacy of coverage unless there is
a special relationship between the insured and the agent.1° A special
relationship exists between the agent and insured if: "(1) the agent holds himself
out as an insurance specialist and receives additional compensation for
consulting and advice, or (2) there is a long-standing relationship, some type of
interaction on the question of coverage, and the insured relied on the agent's
expertise to the insured's detriment."11 "[I]n cases where the insured never
consulted with the agent about the adequacy of coverage and the agent never
gave any advice, courts have held that no special relationship exits."12
We review de novo a trial court's summary judgment order.13
8 Lipscomb v. Farmers Ins. Co. of Wash., 142 Wash. App. 20, 28, 174 P.3d
1182 (2007).
McClammy v. Cole, 158 Wash. App. 769, 773-74, 243 P.3d 932(2010)
9
(quoting Gates v. Logan, 71 Wash. App. 673, 676, 862 P.2d 134 (1993)).
10 McClammy, 158 Wash. App. at 774; Lipscomb, 142 Wash. App. at 28;
Shows v. Pemberton, 73 Wash. App. 107, 114-15, 868 P.2d 164 (1994); Gates, 71
Wash. App. at 678; Suter v. Virgil R. Lee & Son, Inc., 51 Wash. App. 524, 528-29, 754
P.2d 155(1988).
11 Lipscomb, 142 Wash. App. at 28; see Gates 71 Wash. App. at 677.
12 Id. at 28-29 (citing Gates, 71 Wash. App. at 677-78; Suter, 51 Wash. App. at
529).
13 Elcon Constr., Inc., 174 Wash. 2d at 164.
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No. 76236-2-1/5
Norris fails to argue persuasively that Farmers owes any duty aside from
that established by a special relationship. Any other claim would be unsupported
by well-established case law in the area of insurance.
Norris argues that there are genuine issues of material fact whether
Farmers voluntarily assumed a duty to advise them about liability limits, and then
breached that duty. In support, they cite non-insurance cases that recognize a
duty "to exercise reasonable and ordinary care."14 We refuse to consider this
argument because Norris fails to cite any authority recognizing such a duty in the
insurance context.15
Norris relies on the declaration of their expert, J. Kay Thorne, to support
their argument that they have raised a genuine issue of material fact whether
Farmers and its Agents owed them a duty to review their coverage for gaps and
inadequate liability limits. That reliance is misplaced.
Because the existence of a duty is a question of law, Thorne's statements
are insufficient to raise a genuine issue of material fact as to the existence of a
duty on the part of Farmers and its agents.16
Norris also cites to the deposition testimony of Farmers management as
support for their argument, claiming that the duty was "described and embraced
14 See, e.g., Gordon v. Deer Park Sch. Dist., No. 414, 71 Wash. 2d 119, 122,
426 P.2d 824 (1967).
15 SeeDarkenwald v. Emp't Sec. Dep't, 183 Wash. 2d 237, 248, 350 P.3d
647(2015); RAP 10.3(a)(6); King Aircraft Sales, Inc. v. Lane,68 Wn. App. 706,
717, 846 P.2d 550 (1993).
16 Suter, 51 Wash. App. at 527.
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No. 76236-2-1/6
by Farmers, its managers, and its agents." Again, because the existence of a
duty is a question of law, the testimony of Farmers Insurance management is
insufficient to raise a genuine issue of material fact whether Farmers had a duty
to advise Norris about the liability limits of their insurance policy.17
Special Relationship
Thus, the question we decide is whether there are any genuine issues of
material fact whether a special relationship exists under the circumstances of this
insurance case. We conclude that there are no such issues.
The claim is based on the argument that a long-standing relationship
between the parties existed, the interactions between Norris and the agents on
questions of coverage, and Norris's reliance on the agents' expertise. A careful
review of the record shows these claims have no basis in fact.
In support of its summary judgment motion, Farmers submitted
declarations from both agents. The declarations established that neither agent
ever received compensation or consideration from Norris for consultation or
advice on issues involving coverage or policy limits. Norris never discussed
liability coverage limits with the agents. Norris did not ask the agents either to
recommend higher or lower limits with regards to their auto insurance liability or
whether excess or umbrella coverage might be available until after the accident.
Instead, Norris only communicated with the agents to add or remove vehicles
from the policy or to discuss claims.
17 Id.
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No. 76236-2-1/7
Farmers also submitted portions of Norris's deposition testimony where
Norris acknowledged that they never paid any money to the agents for providing
advice on insurance issues. Norris never discussed policy limits for liability
coverage with the agents or asked them about the sufficiency of the liability
policy limits. They never spoke either with them or anyone working with them
about what would be an appropriate amount of liability coverage, and the agents
never offered an opinion on that issue.
In opposition to summary judgment, Norris submitted affidavits of their
own as well as from Thorne. They also submitted excerpts from the deposition
testimony of Farmers Insurance management. But none of their submissions
controvert the material facts supporting the summary judgment motion. That is
because the submissions fail to show that Norris discussed their policy liability
limits with the agents.18 Even Thorne admits that there was no evidence of any
interaction between Norris and the agents on the issue of auto liability limits.
Thus, Norris failed to establish any genuine issue of material fact whether they
had a special relationship with the agents.18
Norris relies on their long term relationship with Farmers, but case law is
clear that, in order to raise a genuine issue of material fact on the existence of a
special relationship, the insured must introduce some evidence showing that
they interacted with the insurance agent regarding the adequacy of coverage.
For example, in Lipscomb v. Farmers Insurance Co. of Washington, William
18 See Cent. Washington Bank, 113 Wash. 2d at 354.
18 Seven Gables Corp., 106 Wash. 2d at 13.
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No. 76236-2-1/8
Lipscomb purchased a property and casualty insurance policy for his rental
property that had a $100,000 liability limit.20 Lipscomb's tenant was badly burned
when the rental property caught fire, and the damages exceeded the policy
limits.21 Lipscomb sued Farmers and the agent who sold him the policy for
negligently failing to ensure that he was adequately insured and failing to advise
him of an appropriate liability limit.22
Lipscomb claimed that he had a special relationship with his insurance
agent because they had a long term relationship, they discussed coverage limits,
and the agent had assured him that he was adequately covered.23 He argued
that he relied on his agent's assurances that he was covered and never thought
to ask about the adequacy of that coverage.24
This court concluded that the record failed to establish any genuine issues
of material fact about the existence of a special relationship.25 There was no
evidence that the agent received additional compensation, and Lipscomb failed
to establish that he and the agent ever discussed the adequacy of the policy
limits.26 Although the insured and the agent discussed coverage, there was no
20142 Wash. App. 20, 22, 174 P.3d 1182(2007).
21 Id. at 23.
22 Id.
23 Id.
24 Id. at 25.
25 Id. at 29.
26 Id.
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No. 76236-2-1/9
special relationship as a matter of law because the insured "did not request
advice about whether he should increase his policy limits."27
Likewise, in McClammy v. Cole, Division Three of this court held that even
though there was an actual exchange between the agent and the insured about
improvements to the insured's home and the homeowner's policy limits, there
was no special relationship as a matter of law.28 After making the home
improvements, Richard and Mary Lou McClammy(McClammy) went to their
insurance agent's office to discuss an increase in their policy premiums.29 The
agent also emailed McClammy regarding premiums and factors that go into the
calculation of coverage and rates, but McClammy admitted that they never asked
the agent to increase the limits on their homeowner's policy.39
The court concluded that there was no special relationship because there
was no evidence of any interaction about the adequacy of coverage.31
McClammy's request for information and the agent's act of providing an
estimated cost of replacement figure was not enough.32
In their response opposing summary judgment below and in their briefing
on appeal, Norris fails to address Lipscomb, McClammy or any of the earlier
27 Id.
28 158 Wash. App. 769, 774-76, 243 P.3d 932(2010).
29 Id. at 772.
38 Id.
31 Id. at 774.
32 Id. at 775.
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No. 76236-2-1/10
cases establishing that, in the absence of a special relationship, an insurance
agent has no obligation to review or counsel the insured on insurance liability
limits.33 We must assume Norris has knowledge of these cases, but no means to
rebut them with anything that is material.
Instead they rely on Shah v. Allstate Ins. Co. as support for their
argument.34 Such reliance is misplaced.
In Shah, both the trial court and this court appear to have assumed that
there was a legally recognized duty.35 In any event, neither the trial court nor this
court identified any authority for that proposition. Thus, we conclude that case is
of little or no value in considering the question now before us.
In any event, the insurance agent in Shah specifically told Ratilal and
Lalita Shah (Shah)that their insurance premiums were for replacement cost
coverage of their property.36 Because Shah specifically asked about the
adequacy of coverage, there were genuine issues of material fact whether the
agent was negligent in failing to advise Shah that they had inadequate
coverage.37 Also, because the agent provided Shah with erroneous advice, there
was a genuine issue of material fact whether the agent's failure to verify his
33 See, e.g., Shows, 73 Wash. App. at 114-15; Gates, 71 Wash. App. at 677-
78; Suter, 51 Wash. App. at 528-29.
34 130 Wash. App. 74, 121 P.3d 1204 (2005).
36 130 Wash. App. at 81-83.
36 Id. at 79.
37 Id. at 83-85.
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No. 76236-2-1/11
calculations for the necessary amount of replacement cost coverage caused
Shah to underinsure.38 The record here is unlike that case.
Likewise, Norris misplaces reliance on Peterson v. Big Bend Insurance
Agency, Inc.39 In that case, Roger and Larae Peterson (Peterson) expressly
stated that they wanted to insure their home for its full replacement value, and
the insurance agent agreed to calculate the replacement cost value.40 The agent
incorrectly advised Peterson on how replacement value would be calculated.41 In
concluding that there was a genuine question of material fact whether a duty
existed, the court distinguished cases that "did not involve a specific promise by
an agent as part of the agency relationship."42
Here, there is no evidence that Norris asked the agents about the
adequacy of their insurance. So Norris's reliance on the holdings in Shah and
Peterson is misplaced. Because Norris never consulted with the agent about the
adequacy of coverage and the agent never gave any advice, Norris failed to
establish a genuine issue of material fact whether they had a special relationship
with the agents.43
38 Id. at 82.
39 150 Wash. App. 504, 202 P.3d 372(2009).
40 Peterson, 150 Wash. App. at 510.
41 Id. at 514.
42 Id. at 517.
43 McClammy, 158 Wash. App. at 774 (quoting Lipscomb, 142 Wash. App. at
28-29).
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No. 76236-2-1/12
FAILURE TO TRAIN AND SUPERVISE
Norris argues that there are genuine issues of material fact whether
Farmers failed to train, supervise, and monitor its agents and whether it failed to
take reasonable steps to enforce compliance with the standards that Farmers
expects from its agents. We disagree.
Norris concedes that Famers agents are independent contractors. They
fail to cite to any authority imposing an obligation on an insurance company to
train or supervise an independent contractor. Accordingly, we reject this
argument without further discussion."
We affirm the trial Court's order granting summary judgment.
WE CONCUR:
c/tc
44 See Darkenwald, 183 Wash. 2d at 248.
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