Bergstrom v. Progressive Casualty Insurance Company, 2:20-cv-01810

Background

Plaintiff Jay Bergstrom purchased auto and motorhome policies from Progressive; he executed a Named Driver Exclusion excluding his wife, Kathleen Bergstrom, from the auto policy.
While reversing a motorhome towing the insured Jeep at the Bangor Naval Base, Jay asked Kathleen to sit in the Jeep to keep the steering straight; the Jeep was in neutral with the engine off and was later damaged after a jack-knife event.
Progressive investigated, concluded Kathleen was the "operator," denied coverage under the Named Driver Exclusion, and Plaintiff sued for breach of contract, bad faith, and violations of the Consumer Protection Act (CPA).
Both parties filed motions for partial summary judgment; Progressive relied in part on statements concluding Kathleen was operating the Jeep; Plaintiff moved to strike references to settlement negotiations in Progressive’s filings.
The magistrate judge found disputed material facts about whether Kathleen had "actual physical control" of the Jeep and whether Progressive’s investigation was unreasonable, denied both summary judgment motions, and granted Plaintiff’s motion to strike settlement negotiation evidence.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Kathleen "operated" the Jeep such that Named Driver Exclusion bars coverage	Kathleen was not in "actual physical control": engine off, transmission neutral, hands in lap, power steering disengaged	Kathleen was placed in the Jeep to keep wheels straight and thus was exercising physical control regardless of engine status	Genuine disputeof material fact exists on "operation"; summary judgment denied to both parties
Whether Progressive’s denial was bad faith or violated insurance regulations (WAC 284-30-330)	Progressive relied on faulty assumptions and made investigative errors; denial unreasonable as a matter of law	Progressive conducted an investigation and relied on statements; denial was based on information gathered	Questions of fact about the reasonableness of Progressive’s investigation preclude summary judgment on bad faith/regulatory claims
Whether Plaintiff is entitled to summary judgment on CPA claim	Breach of good faith and WAC violations satisfy first three Hangman Ridge elements; damages/causation reserved for trial	CPA requires proof of injury to business or property and causation; unresolved coverage/disputed facts preclude summary judgment	Plaintiff’s CPA motion premature; cannot establish more than nominal damages without resolving coverage issue
Motion to strike references and exhibits about settlement negotiations	Settlement communications are inadmissible under FRE 408 and were used to dispute Progressive’s coverage position	Progressive argued the references completed the narrative of claim handling	Motion to strike granted; settlement negotiation references/exhibit excluded under FRE 408

Key Cases Cited

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard; reasonable jury/principal test)
Celotex Corp. v. Catrett, 477 U.S. 317 (movant's burden to show absence of evidence)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (drawing inferences for nonmoving party)
N. Pac. Ins. Co. v. Christensen, 143 Wash.2d 43 (definition of "operator" as actual physical control)
In re Arambul, 37 Wash. App. 805 (operation requires physical control)
Xia v. ProBuilders Specialty Ins. Co., 188 Wash.2d 171 (insurance policy construed as contract; interpretation is question of law)
Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778 (five-part CPA test)
Indus. Indem. Co. of the Nw. v. Kallevig, 114 Wash.2d 907 (insurer duty of good faith; WAC/regulatory context)
Feenix Parkside LLC v. Berkley N. Pac., 8 Wash. App. 2d 381 (clear policy language must be enforced as written)