180 P.3d 874 (2008). We
review only the findings to which appellant assigns error; unchallenged findings are
treated as verities on appeal. Nordstrom Credit, Inc. v. Dep't ofRevenue, 120 Wn.2d
935,941,845 P.2d 1331 (1993).
4
No. 30020-0-III; 3002l-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
Commonwealth has not assigned error to any finding of fact, so our review is
limited to determining whether the findings support the trial court's conclusions. Fenton
v. Contemporary Dev. Co.,
12 Wash. App. 345, 347,
529 P.2d 883 (1974). The
interpretation of insurance policies is a question of law that we review de novo. State
Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477,480,687 P.2d 1139 (1984).
The trial court's first conclusion of law states:
1. The Commitment was a contract for title services between the
Plaintiffs and the Defendants. The Defendants' Title policy was a
statement of terms and conditions upon which the issuer was willing to
issue its title policy. The Commitment failed to except the seventy five
(75') foot easement. Therefore, Commonwealth breached the contract with
the Plaintiffs. The Plaintiffs' damages based upon breach of contract are
$23,500.00.
Clerk's Papers (CP) at 167.
A. Alleged Error in Finding a "Duty to Except"
Commonwealth first argues that the trial court erred in concluding that the
preliminary commitment was a contract for "title services" and that Commonwealth was
required by its contract to except all matters of the public record that touched and
concerned the land. It argues that this conclusion confuses title insurance with abstracts
of title. It points out that title insurance is an indemnity contract and exceptions from
coverage are for the benefit of the insurer, not the insured. For that reason, a title insurer
is not required to except anything from coverage. Here, Commonwealth is correct.
5
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
The Washington Supreme Court recognized in Shotwell v. Transamerica Title
Insurance Co.,
91 Wash. 2d 161, 165,588 P.2d 208 (1978) that a duty to disclose title
defects might arise from the combined expectations of a title policy applicant and the
service to be performed by title insurance companies. But it declined to decide the issue
then, or in three later cases, deciding each case on other grounds. See Barstad v. Stewart
Title Guar. Co., 145 Wn.2d 528,534-35,39 P.3d 984 (2002) (citing Shotlvell,
91 Wash. 2d
161; Transamerica Title Ins. Co. v. Johnson,
103 Wash. 2d 409, 693 P .2d 697 (1985);
Klickman v. Title Guar. Co. ofLewis County,
105 Wash. 2d 526,
716 P.2d 840 (1986);
Lombardo v. Pierson, 121 Wn.2d 577,852 P.2d 308 (1993)).
Before the court could reach and decide the issue, the legislature acted. In 1997, it
amended the insurance code to clarify the distinction between preliminary reports or
commitments, on the one hand, and abstracts oftitle on the other, including to clarifY
some of the responsibilities associated with each form. LAWS OF 1997, ch. 14, § 1
(adding a new subsection (3) to RCW 48.29.010); Barstad, 145 Wn.2d at 536. As a
result of the amendment, "title policy" means, by statute, "any written instrument,
contract, or guarantee by means of which title insurance liability is assumed." RCW
48.29.010(3)(a).1 A preliminary commitment "is not a representation of the condition of
I A property purchaser is generally not required by law to obtain title insurance,
but a mortgage lender typically requires a borrower to buy title insurance in order to
protect the lender's interest in the property . WASH. STATE OFFICE OF THE INS. COMM' R,
REpORT OF THE TITLE INSURANCE REVIEW TASK FORCE, TITLE INSURANCE IN
6
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
title, but a 'statement of terms and conditions upon which the issuer is willing to issue its
title policy, if such offer is accepted.'" Barstad, 145 Wn.2d at 536 (quoting former RCW
48.29.01 0(3)(c) (1997)). By contrast, "abstract of title" means
a written representation, provided under contract, whether written or oral,
intended to be relied upon by the person who has contracted for the receipt
of this representation, listing all recorded conveyances, instruments, or
documents that, under the laws of the state of Washington, impart
constructive notice with respect to the chain of title to the real property
described.
RCW 48.29.010(3)(b). The definition of "abstract of title" expressly provides that "[a]n
abstract of title is not a title policy as defined in this subsection." ld.
This 1997 amendment to RCW 48.29.010 "resolve[d] the obligations associated
with a preliminary commitment and an abstract oftitle," and did so in favor of the
position of title insurers, who had "'roundly den[ied] they have the abstracter's duty,'"
and "'argue[d] that the preliminary commitment merely discloses what the policy will
and will not cover, that their only legal obligation is to pay losses under the policy, and
that an insured has no reasonable expectation of anything more. ", Barstad, 145 Wn.2d at
536,539 (quoting 18 WILLIAM B. STOEBUCK, WASHINGTON PRACTICE: REAL ESTATE:
TRANSACTIONS § 13.18, at 147 (1995)).
WASHINGTON: IMPROVING COMPETITION AND CONSUMER CHOICE at 9 (Sept. 2007).
7
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
The trial court's challenged conclusion was not that Commonwealth had a duty to
disclose the easement, but that it had a duty to except it. 2 Yet even that is not strictly
correct. The duty undertaken by Commonwealth in issuing the title policy was not to
except every limitation on title. Its duty was, instead, to indemnify against any limitation
on title that it did not except.
While Commonwealth is correct in arguing that Courchaine and the court
sometimes relied, in error, on a nonexistent "duty to except," we can look beyond that
characterization error to the essence of the complaint, the evidence, and the findings.
Breach of the duty to indemnify is the substance of Commonwealth's breach as framed
by Courchaine's contract claim, the first claim for relief set forth in the complaint. It is
the substance of Commonwealth's breach as testified to by Commonwealth's former
employee, Kennard Goodman, whom Courchaine called as a witness and who the trial
court found credible and persuasive. Goodman testified:
Q So although you could not hire an appraiser [after Fidelity acquired
Commonwealth], it was still your professional opinion that [Courchaine's]
claim should be accepted, correct?
A Yes. That's what my letter said.
Q And that is because the Bonneville Power Administration easement,
the 75 foot easement, was not disclosed?
2 Commonwealth has argued, in part, from the language of proposed conclusions
that the court modified in some respects, in light of Commonwealth's objections. We
review whether the findings support the conclusions as entered by the court and disregard
Commonwealth's arguments to the extent it relies on findings that were dropped or
modified.
8
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
A It was not excepted from the policy and I-all the preliminary
commitment does is state these are the terms on which we are willing to
give you an insurance policy. So it's not an abstract. And I try to be very
strict about that. So it's not a question of disclosure. It's an insurance
policy. It's a risk that's insured against and there is no exception for that
risk.
Q And there should have been an exception for that risk, in your
opinion?
A If the title company didn't want to cover the loss resulting from that
risk, yes, there should have been a separate exception for it.
Report of Proceedings (RP) (Mar. 7,2011) at 18-19 (emphasis added). It was a gist of
the trial court's oral decision, which it incorporated by reference into its findings and
conclusions. In its oral decision, the court stated, in part:
I cannot believe that they in goodfaith knew at that point or believed at
that point they didn't have a valid claim, that the plaintiff didn't have a
valid claim. It seems so apparent that the plaintiff had a valid claim and
yet they did playa shell game.
RP (Mar. 10,2011) at 239 (emphasis added).
On appeal, '''[w]e may affirm the [lower] court on any grounds established by the
pleadings and supported by the record.'" In re Marriage ofRideout,
150 Wash. 2d 337,
358,
77 P.3d 1174 (2003) (alterations in original) (quoting Truck Ins. Exch. v. VanPort
Homes, Inc.,
147 Wash. 2d 751, 766,
58 P.3d 276 (2002)). Commonwealth had no duty to
except the BP A easement. But it did have a duty to indemnify Courchaine against any
actual loss on account of the BPA easement ifit did not except it.
9
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
Courchaine made a claim and demonstrated actual loss. Given the pleadings, the
evidence, and the gist of the trial courf s decision, judgment on the policy can be affirmed
if the record supports Commonwealth's breach ofa contractual duty to indemnify.
B. Alleged Exclusion by Description of Covered Land
Commonwealth contends that the trial court made a further error in finding in
Courchaine's favor on the coverage issue, however. It argues that the lot purchased by
Courchaine was created by a plat, the title that it insured was defined in terms of the plat,
any restrictions or easements identified on the plat were thereby part of the legal
description of the property, and the BPA easement was reflected on the plat map. With
the insured title already subject to any limitations notated on the plat, it argues, it needed
to except only matters not disclosed by the plat. It makes a related argument that its title
commitment and policy excepted coverage for "restrictions" shown on the plat.
The standard offer made by Commonwealth's commitment for title insurance was
set forth in the preprinted terms of its policy cover, which stated Commonwealth's
commitment to issue a policy of title insurance in favor of the proposed insured as owner
or mortgagee
of the estate or interest covered hereby in the land described or referred to
in Schedule A. upon payment of the premiums and charges therefor; all
subject to the exceptions and conditions and stipulations shown herein, the
Exclusions from Coverage, the Schedule B exceptions, and the conditions
and stipulations of the policy or policies requested.
CP at 33.
10
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
Schedule A provided that the estate or interest in the land described was "FEE
SIMPLE" and described the land as:
Lot 11~ Block 1, GUTHRIE'S VALLEY VIEW 4TH ADDITION, as per
plat recorded in Volume 3 of Plats, page 62, records of Spokane County.
CP at 36,37.
The policy that Commonwealth offered to issue, and ultimately did issue, insured
Courchaine against actual loss resulting from "COVERED RISKS" set forth in the
policy. CP at 46. Among the covered risks were that "[s]omeone else has an easement
on the Land." Id. (Covered Risk 4). Courchaine was therefore insured against actual loss
resulting from the BPA easement unless (1) coverage was limited by her title, which was
already limited by that easement, or (2) the easement was addressed in an exception,
condition, stipulation, or exclusion.
Commonwealth's argument that Courchaine's coverage was confined to the limits
of her title is readily addressed. In Shotwell, the conveyance to the insured had
concluded its description of the land conveyed with the language, "'EXCEPT right of
way for existing roads. ", 91 Wn.2d at 163 (emphasis omitted). The insured's title policy
described the land with identical language. The title insurer argued that inasmuch as the
language of the conveyance effectively excluded an existing but as-yet-unused road
easement, then the identical language, incorporated in its policy, must be sufficient to
exclude the same easement from coverage. The court disagreed, holding that "[i]n
11
No. 30020-0-III; 3002l-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
construing a policy of insurance the rules of conveyancing do not necessarily apply." 91
Wn.2d at 170.
In arriving at its holding, the Shotwell court cited, with approval, a Texas decision
rejecting an argument that is on all fours with Commonwealth's argument here. In San
Jacinto Title Guaranty Co. v. Lemmon, 417 S.W.2d 429,431 (Tex. App. 1967), the title
insurer argued that because it described the insured land as a numbered lot, '''as shown
by the map or plat Thereof now of record ... to which reference is here made for all
pertinent purposes,'" then an easement for a waterline identified on the recorded plat was
excluded from the terms of the policy without the need for a specific exception. The
Texas court rejected the argument. Our Supreme Court, in Shotwell, quoted and adopted
its reasoning:
"Unquestionably, the reference in the warranty deed to the recorded map or
plat contemplated the purposes of the deed. The description ofthe land in
the policy 'was for the purpose ofidentifYing the land covered by the policy
and not, as appellant contends, for the purpose oflimiting the insurance
protection purchased. In our opinion, this was the clear and unambiguous
meaning of the policy. To hold otherwise would, in effect, require
appellees, who have purchased title insurance, to be their own insurer in so
far as their title to the land, in the respect here under consideration, is
concerned. Such a result would not be in keeping with the principal
purpose of the policy ...."
Shotwell, 91 Wn.2d at 169-70 (quoting Lemmon, 417 S.W.2d at 431-32); cf Denny's
Restaurants, Inc. v. Sec. Union Title Ins. Co.,
71 Wash. App. 194,
859 P.2d 619 (1993)
(finding coverage even where the land covered by the insured's claim was clearly
12
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
excluded by the policy's description of land, because other provisions of the policy
reasonably implied coverage).
There is an additional reason why this argument fails in light of the terms of
Commonwealth's policy. Its commitment states that the estate or interest it offers to
insure is "fee simple," in land it proceeds to describe. A party who has a "fee simple"
interest or estate holds her interest free of easements. See Wingard v. Copeland,64
Wash. 214, 218,116 P. 670 (1911) (appellant was unable to convey full fee simple title
where his land was subject to an easement). Commonwealth's argument that the land
described by its policy was already subject to the BPA easement is irreconcilable with its
offer to insure a fee simple estate or interest in that land, subject only to the exceptions,
conditions, stipulations, and exclusions provided by the policy.
C. Alleged Exception as a Restriction
Commonwealth must therefore identify an exception, condition, stipulation, or
exclusion that prevents the BPA easement from falling within the scope of the policy's
coverage. It relies on only the following exception, included in Schedule B to the
commitment and policy:
RESTRICTIONS contained on the face of [the Guthrie's Valley View] plat,
but omitting any covenants or restrictions, if any, based upon race, color,
religion, sex, sexual orientation, familial status, marital status, disability,
handicap, national origin, ancestry, or source of income, as set forth in
applicable state or federal laws, except to the extent that said covenant or
restriction is permitted by applicable law.
13
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
CP at 39.
Courchaine argues that the trial court's findings adopt trial testimony from
Commonwealth's former employee, Goodman, that easement and restriction are "two
different terms of art" and that "there is a difference between restrictions as noted in
schedule B # 7 of the preliminary title report and easements." CP at 164, 166 (Findings
of Fact 16,25). Commonwealth has not assigned error to these two findings, which are
verities on appeal.
Even if we examine the meaning of "restriction" as an issue of insurance policy
construction and therefore an issue of law, Commonwealth's position is not persuasive.
"Restriction" is not defined by either the commitment or the policy. If there were no
policy, its meaning in the commitment might be ambiguous. But the policy treats
easements and restrictions as separate and distinct. "Easement" is defined by the policy,
to mean "the right of someone else to use the Land for a special purpose." CP at 50.
"Restriction," on the other hand, is used in the policy to refer to a rule or condition
for the owner's use of the land. The policy treats "restrictions" as things that can be
violated or enforced. One of the covered risks under the policy is:
Your Title is lost or taken because of a violation of anv ... restriction,
which occurred before You acquired Your Title, even if the covenant,
condition or restriction is excepted in Schedule B.
CP at 46 (Covered Risk 13) (emphasis added). Another is:
14
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
Someone else tries to enforce a discriminatory ... restriction that they
claim affects Your Title which is based upon race, color, religion, sex,
handicap, familial status, or national origin.
Id. (Covered Risk 23) (emphasis added).
Easements are addressed separately, as presenting distinct risks. Consistent with
the policy's definition, "easement" is used to refer to rights of other parties. Reference to
easements appears first in the covered risk triggering coverage in this case:
Someone else has an easement on the Land.
Id. (Covered Risk 4). Elsewhere, easements present a covered risk if:
You are forced to remove Your existing structures because they encroach
onto an easement or over a building set-back line, even if the easement or
building set-back line is excepted in Schedule B.
Your existing structures are damaged because of the exercise of a right to
maintain or use any easement affecting the Land, even if the easement is
excepted in Schedule B.
Id. (Covered Risks 20, 21).
Interpretation of insurance policies is a question of law; the policy is construed as
a whole with the court giving force and effect to each clause in the policy. Am. Star Ins.
Co. v. Grice,
121 Wash. 2d 869, 874,854 P.2d 622 (1993). The language of an insurance
policy is to be interpreted in accordance with the way it would be understood by the
average person, rather than in a technical sense. Id. (citing Boeing Co. v. Aetna Cas. &
Sur. Co.,
113 Wash. 2d 869, 881,
784 P.2d 507 (1990)). Ifpolicy language is clear and
unambiguous, the court may not modity the contract or create an ambiguity. Id.
15
No. 30020-0-III; 30021-8-111
Courchaine v. Commonwealth Land Title Ins. Co.
We find no ambiguity. A "restriction," as that term is used in Commonwealth's
commitment and policy, is fundamentally different from an easement. Given its
meaning, it cannot be understood to include easements. And if we were to find an
ambiguity, well-settled principles of insurance policy construction would require us to
give the commitment and policy a meaning and construction favorable to the insured.
Bordeaux, Inc. v. Am. Safety Ins. Co.,
145 Wash. App. 687, 694,186 PJd 1188 (2008).
Coverage exclusions "are contrary to the fundamental protective purpose of insurance,"
"will not be extended beyond their clear and unequivocal meaning," and "should also be
strictly construed against the insurer." Stuart v. Am. States Ins. Co.,
134 Wash. 2d 814, 818
19,953 P.2d 462 (1998).
Because Commonwealth's policy did not exclude or except the BPA easement, it
breached its duty to indemnify Courchaine when it failed to compensate her loss. The
trial court correctly found in her favor in light of her breach of contract claim.
D. Liability of Fidelity for the Policy
The trial court also imposed liability on Fidelity to indemnify Courchaine against
loss under the policy. Fidelity assigns error to that part of Courchaine's judgment,
pointing out that Courchaine presented no evidence or argument as to a basis on which it
could be liable for the policy it did not issue. Courchaine provides no rationale for
Fidelity's liability in her response.
16
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
To the extent that the judgment imposes liability against Fidelity under the policy,
it appears inconsistent with the court's conclusions oflaw, which state, "The
Commitment failed to except the seventy five (75') ,foot easement. Therefore,
Commonwealth breached the contract with the Plaintiffs. The Plaintiffs' damages based
upon breach of contract are $23,500.00." CP at 167. There being no evidence ofa basis
for Fidelity's liability for Commonwealth's policy, that portion of the judgment against it
must be reversed.
II
Commonwealth and Fidelity also challenge the trial court's conclusions that they
violated the CPA. The CPA provides that "[ u]nfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce are hereby declared
unlawful" and provides for a private right of action. RCW 19.86.020, .090. To prevail
on a CPA claim alleging an unfair or deceptive act or practice, the plaintiff must establish
that (1) the defendant has engaged in an unfair or deceptive act or practice, (2) in trade or
commerce, (3) that impacts the public interest, (4) the plaintiff has suffered injury in his
or her business or property, and (5) a causal link exists between the unfair or deceptive
act and the injury suffered. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins.
Co., 105 Wn.2d 778,780,719 P.2d 531 (1986). Commonwealth and Fidelity challenge
the sufficiency of the evidence to support an unfair or deceptive act or practice that
impacts the public interest.
17
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
The public interest impact element may be satisfied per se, by showing that a
statute has been violated that contains a specific legislative declaration of public interest
impact. Id. at 791. In RCW 48.01.030 the legislature has provided that "[tJhe business of
insurance is one affected by the public interest, requiring that all persons be actuated by
good faith, abstain from deception, and practice honesty and equity in all insurance
matters." See Salois v. Mut. a/Omaha Ins. Co., 90 Wn.2d 355,359 & n.1,
581 P.2d 1349
(1978). The public interest impact element is therefore satisfied per se.
An unfair trade practice may also be established per se, by showing that the
defendant has engaged in an act or practice that the legislature has declared to constitute
an unfair or deceptive act in trade or commerce. Hangman Ridge, 105 Wn.2d at 786. In
addition, and because the CPA expressly applies to "actions and transactions prohibited
or regulated under the laws administered by the insurance commissioner," an unfair trade
practice may be established per se by showing that it has been declared an unfair practice
in regulations adopted by the insurance commissioner. RCW 19.86.170 (emphasis
added); Indus. Indem. Co. a/the Nw., Inc. v. Kallevig, 114 Wn.2d 907,920,792 P.2d 520
(1990). The insurance commissioner has declared a number of claims settlement
practices unfair or deceptive in WAC 284-30-330. The trial court's findings do not
include a finding of a per se unfair trade practice.
Where a plaintiff cannot point to a statute or regulation declaring an act or practice
unfair or deceptive, she may still independently demonstrate that the practice is unfair or
18
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
deceptive by showing that the practice has the capacity to deceive a substantial portion of
the pUblic. Hangman Ridge, 105 Wn.2d at 785. While the CPA does not define the term
"deceptive" the court has held that "implicit in that term is 'the understanding that the
actor misrepresented something of material importance.'" Stephens v. Omni Ins. Co.,
138 Wash. App. 151, 166, 159 PJd 10 (2007) (quoting Hiner v. BridgestonelFirestone,
Inc.,
91 Wash. App. 722, 730,
959 P.2d 1158 (1998), rev'd in part on other grounds,
138
Wash. 2d 248, 264,978 P.2d 505 (1999», aff'd sub nom. Pangv. Farmers Ins. Co.,
166
Wash. 2d 27,
204 P.3d 885 (2009).
The trial court's second and third conclusions of law identified the following acts
or practices that it concluded violated the CPA:
2. Defendant Commonwealth violated the [CPA] by unfair or
deceptive acts or practices, namely failing to include and except in the title
insurance policy the easement filed of record in September of 1945, under
recording number 666726A . . .. Commonwealth also failed to issue the
final title policy for six (6) months. When they finally issued the final
policy in April of2009, it was back dated to October 17, 2008.
3. Defendant Fidelity failed to pay the Plaintiffs' claim when said
failure to except the BPA easement was brought to Fidelity'S attention.
Further, both Defendants misled the Plaintiffs into believing that they were
two separate legal entities acting independent of one another.
CP at 167-68.
A. Commonwealth's Liability Under the CPA
We first address Commonwealth's liability under the CPA. In concluding that
Commonwealth was liable for trebled damages, attorney fees, and costs under the CPA,
19
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
the trial court relied upon (1) Commonwealth's failure to identify the BP A easement as
an exception to coverage in its commitment and policy; (2) its failure to issue the final,
back-dated title policy for six months; and (3) along with Fidelity, its misleading
Courchaine into believing that the two companies were separate legal entities acting
independent of one another.
As already addressed, Commonwealth had no duty to identify the BP A easement
as an exception to coverage in its commitment and policy. Given the clear language of
RCW 48.29.01 0(3)(c) that a preliminary commitment "is not a representation as to the
condition of the title," Commonwealth's nondisclosure of the BPA easement cannot be
considered unfair or deceptive.
As to the delay in issuing the title policy, the trial court does not address in its
findings how or why the delay in issuing or transmitting the policy was unfair or deceptive.
The trial court's oral decision, incorporated in the findings, reveals only speculation that
the delay in receipt of the policy might have been to create obstacles or inconvenience for
the insured. 3 Review of the record reveals that the only testimony addressing the delay
noted the fact of the delay, but without indicating that it presented any problem.
3 The trial court stated in its oral decision:
[TJwo months later comes [aJn e-mail on March 24 of '09 from someone
who says all ofa sudden "I'm the new claims adjuster. You're dealing with
me, and by the way, you get me Commonwealth's information and give it
to me," which is a total mystery. Was that meant to deceive or infer to the
plaintiff that Fidelity was not affiliated with Commonwealth because they
20
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
Finally, the trial court's conclusion that Commonwealth violated the CPA on
account of confusion created as to the relationship between Commonwealth and Fidelity
relies on findings that upon assuming responsibility for the claim, Lisa Leick, acting for
Fidelity, corresponded with Courchaine and first asked Courchaine to provide materials
from Commonwealth, later stating that the claim submitted to Commonwealth '''is now
handled by Fidelity.'" CP at 166 (Findings of Fact 27,30). The trial court also found
that
28. Janice Courchaine and [her mother] believed they were working
with a separate entity regarding the claim.
29. Although Commonwealth is a subsidiary of Fidelity, they acted
in such a manner that it was reasonable for the Plaintiffs to believe they
were separate, unrelated entities.
31. [The newly-assigned adjuster], an employee and agent of
Fidelity, led Janice Courchaine to believe that Fidelity ... was not affiliated
with Commonwealth or Spokane County Title.
34. The Defendants played a shell game with the Plaintiffs by ...
delay[ ] and obfuscation regarding who the Plaintiffs were dealing with.
CP 166-67.
The record reveals that Commonwealth is a subsidiary of Chicago Title Insurance
Company, which is a subsidiary of Chicago Title and Trust Company, which is a
subsidiary of Fidelity. They are reportedly separate companies, with separate operations,
couldn't get records from Commonwealth, the client had to? Or was it to
create a hoop and a delay for the plaintiff. It's just really unclear to me.
RP (Mar. 10,2011) at 236.
21
No. 30020-0-III; 30021-8-III
Courchaine v. Commonwealth Land Title Ins. Co.
and generally do act independently of each other. Evidently they use a common claims
processing center for handling insurance claims.
The trial court did not find that the representations about the two companies'
independent operations were false, and apparently they were not. The findings do not
support a violation of the CPA.
The findings are insufficient to support the conclusion that Commonwealth is
liable for a violation of the CPA.
B. Fidelity's Liability
In concluding that Fidelity was separately liable for violating the CPA, the trial
court relied on (1) its failure to accept the claim and pay the loss once it assumed the
claim adjustment responsibility, and (2) along with Commonwealth, misleading
Courchaine into believing the companies were separate legal entities acting
independently. We have already addressed the insufficiency of the findings to sustain the
second basis for CPA liability.
As a threshold matter, Fidelity argues that any CPA liability on its part must rely
on a theory of vicarious liability or corporate disregard, because it had no direct
involvement in the handling of the claim. Yet most of the claim handling evidence
admitted at trial supports direct involvement by Fidelity. Two pieces of electronic mail
admitted at trial were from Leick, who identified herself in those communications as
"Claims Administrator, Fidelity National Title Group." Ex. 16. In corresponding with
22
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
Courchaine, Leick stated that the claim Courchaine submitted to Commonwealth is "now
being handled by Fidelity National Title." Id. Leick also indicated that she did not have
access to the Commonwealth paperwork and requested that Courchaine mail ittoher.ld.
Ample evidence supported a finding by the trial court that denial of the claim, if an unfair
trade practice, was the responsibility of Fidelity.
The criteria for deciding whether an insurer is liable for bad faith failure to pay a
claim are well settled. An insurer's denial of coverage without reasonable justification
constitutes an unfair act under the CPA. Kallevig, 114 Wn.2d at 917. "[R]efusal must be
based upon reasonable grounds." Safeco Ins. Co. ofAm. v. JMG Restaurants, Inc.,
37
Wash. App. 1, 15,
680 P.2d 409 (1984). However, if a denial of coverage is incorrect but
based on reasonable conduct of the insurer, it does not constitute an unfair trade practice.
Villella v. Pub. Emps. Mut. Ins. Co., 106 Wn.2d 806,821,725 P.2d 957 (1986). Acts
performed in good faith under an arguable interpretation of existing law do not constitute
unfair conduct that violates the consumer protection law. Perry v. Island Savs. & Loan
Ass'n, 101 Wn.2d 795,810,684 P.2d 1281 (1984). The question of whether a particular
action gives rise to a CPA violation is a question of law. Seattle Pump Co. v. Traders &
Gen. Ins. Co., 93 Wn. App. 743,752,970 P.2d 361 (1999).
The trial court found that Fidelity acted in bad faith when it failed to abide by
Kennard Goodman's initial assessment and cover the claim. The court credited
Goodman's testimony, as Courchaine's witness, that Leick's explanation of Fidelity's
23
No. 30020-0-III; 30021-8-II1
Courchaine v. Commonwealth Land Title Ins. Co.
basis for denial was "horrible l" and that ifhe ",vas teaching a class and [her letter] was
the final exam, [he] would give her a D or F." RP (Mar. 7,2011) at 24,40.
The trial court found that "Fidelity knew that the Plaintiffs had a valid claim." CP
at 167 (Finding of Fact 33). It found that the actions by Fidelity were "frivolous and
unfounded" and there was "no reasonable justification for denying the claim and a good
faith mistake was not made." Id. Fidelity has not assigned error to these findings.
The fact that an insurer reexamines its coverage position and rejects a claim after
first accepting it is not, standing alone, insurance bad faith. But here, Fidelity does not
even attempt to defend several of the bases for denying the claim identified by Leick's
letter denying coverage. And the two arguments that it offers in support of denying
coverage fail in light of existing law and the plain terms of its policy, as discussed in
section I.B and C, supra. Substantial evidence supports the trial court's finding of a bad
faith denial of the claim.
III
Courchaine seeks attorney fees and costs on appeal as the prevailing party under
the CPA. RCW 19.86.090. Commonwealth and Fidelity assert that the award of attorney
fees based on RCW 19.86.090 was erroneous and must be reversed because there was no
violation of the CPA.
The findings do not support Commonwealth's violation of the CPA, so the trial
court's award of attorney fees and costs against it is reversed.
24
No. 30020-0-III; 30021-S-III
Courchaine v. Commonwealth Land Title Ins. Co.
Where a statute or contract allows an award of attorney fees at trial, an appellate
court has authority to award fees on appeal. Standing Rock Homeowners Ass In v. Misich,
106 Wash. App. 231, 247,
23 P.3d 520 (2001). The CPA provides a basis for an award of
attorney fees for those portions of the appeal related to the CPA claim against Fidelity.
Because the trial court will need to revisit the amount of attorney fees and costs awarded
Courchaine for proceedings in the trial court, we direct that the amount of fees and costs
on appeal be determined by the trial court at the same time. RAP IS.I(i).
We reverse judgment against Commonwealth on the CPA claim, reverse judgment
against Fidelity on the contract claim, and otherwise affirm. We award attorney fees and
costs of appeal against Fidelity, and remand for proceedings consistent with this opinion.
A majority of the panel has determined that this opinion will not be printed in the
Washington Appellate Reports but it will be filed for public record pursuant to RCW
2.06.040.
Sid~/?t-
WE CONCUR:
Ko smo, C.J.
25