Allstate Insurance Co. v. Lighthouse Law P.S., Inc., 2:15-cv-01976

Background

Allstate sued Lighthouse Law P.S., its owner/manager Patty Thammalaiviroj (California-licensed), and others, alleging they ran a sham law firm to profit from fraudulent insurance claims and settlements.
Allstate originally filed a complaint that was dismissed with leave to amend; the amended complaint adds factual detail and defendants.
Allegations include: Lighthouse submitted over 200 false claims/settlement demands that incorporated false medical bills and misrepresented counsel and firm credentials; Lighthouse paid for claimant referrals; and Thammalaiviroj and non-lawyers held ownership/received profits despite lacking Washington bar licenses.
Allstate seeks relief under Washington’s Consumer Protection Act (CPA), common-law fraud, the Washington Criminal Profiteering Act (RCW 9A.82), and unjust enrichment, alleging more than $600,000 in settlement payments resulting from defendants’ misrepresentations.
Defendants moved to dismiss for failure to state claims, challenging causation/standing on the CPA, Rule 9(b) particularity on fraud, sufficiency of predicate acts and intent for criminal profiteering, and causation for unjust enrichment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Allstate pleaded a CPA claim	Defendants ran a deceptive scheme (sham firm, trafficking, false settlement demands) that caused Allstate’s monetary loss	No adequate causal link between defendants’ conduct and Allstate’s losses; lack of standing	Denied. Court found Allstate plausibly alleged deceptive acts in trade/commerce, public interest, injury, proximate causation, and standing.
Whether fraud was pleaded with required particularity (Rule 9(b))	Alleged specific misrepresentations (sham firm, false billing) and identifies roles of Thammalaiviroj and Lighthouse and profits received	Complaint lumps defendants and lacks particularized false statements as to each defendant	Denied. Court held allegations identify roles and specific misconduct sufficient under Rule 9(b) and Washington fraud elements.
Whether Criminal Profiteering Act claim (RCW 9A.82.060 and .080) was sufficiently pleaded	Alleged pattern of criminal profiteering: multiple predicate offenses (insurance trafficking, unlawful practice of law) by >3 persons, receipt and reinvestment of proceeds	Fail to allege trafficking, unlawful practice of law, or intent; RCW 9A.82.080 allegations too vague	Partially denied. Court found sufficient allegations of trafficking and unlawful practice predicates and intent for RCW 9A.82.060; RCW 9A.82.080 claim (reinvestment of proceeds) was dismissed as too conclusory.
Whether unjust enrichment was pleaded	Defendants were enriched at Allstate’s expense by receiving settlement payments induced by misrepresentations	No causal link tying payments to defendants’ misconduct	Denied. Court held unjust enrichment adequately pleaded given alleged causal link to misrepresentations and settlement payments.

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim for relief)
Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59 (elements for private CPA action)
Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27 (non-consumer plaintiffs may bring CPA claims)
Schnall v. AT&T Wireless Servs., Inc., 171 Wn.2d 260 (proximate cause standard under CPA)
Swartz v. KPMG LLP, 476 F.3d 756 (role-identification approach to Rule 9(b) where multiple defendants participate in a scheme)
Bly-Magee v. California, 236 F.3d 1014 (sufficiency of notice for fraud allegations)
State Farm Fire & Cas. Co. v. Hyunh, 92 Wn. App. 454 (insurer standing to bring CPA claim based on false claim submissions)