J C v. Temporary Housing Inc, 2:21-cv-00174

Background

On August 11, 2018 Plaintiffs’ home burned down; they were insured by Liberty Mutual, which provided Additional Living Expenses (ALE) coverage.
Liberty Mutual retained CRS Temporary Housing (Defendant) to assist with ALE; Plaintiffs allege CRS was incentivized to minimize ALE payments and failed to disclose its financial relationship.
Plaintiffs allege CRS provided substandard temporary housing (short hotel stays, a non-winterized trailer), terminated ALE after 12 months, and forced the family to relocate out of state.
Plaintiffs filed an amended complaint asserting: breach of duty of good faith, negligent claims handling, Washington Consumer Protection Act (CPA) claims (including injunction), and constructive fraud.
Defendant moved to dismiss all claims under Fed. R. Civ. P. 12(b)(6); the court found Plaintiffs failed to plead facts showing CRS was an ‘‘adjuster’’ or that CRS owed statutory/common‑law duties outside contract, but the non‑per se CPA claim survived.
The court dismissed claims for breach of duty of good faith, negligent claims handling, and constructive fraud for failure to allege a duty, granted leave to amend within 21 days, and held amendments asserting a statutory insurer duty or per se CPA would be futile against a non‑insurer.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether CRS is an "adjuster" under RCW 48.17.010(1)	CRS’s role assisting with ALE could fall within the statutory definition and plaintiffs left the theory open for later finding	CRS was only hired to "assist" with ALE; amended complaint lacks factual allegations that CRS performed adjuster functions	Not pled adequately; complaint lacks sufficient factual allegations that CRS is an adjuster under Washington law
Whether CRS owed statutory or common‑law duties (bad faith, negligent claims handling, constructive fraud)	CRS had duties arising from its alleged role and conduct toward insureds and children; breach caused harm	CRS owed no duties to plaintiffs outside any contract and is not the insurer, so statutory insurer duties and related claims don't apply	Dismissed: plaintiffs failed to allege a duty independent of contract, so these tort‑based claims fail
Whether Plaintiffs plausibly pleaded a CPA claim (non‑per se)	CRS engaged in unfair/deceptive acts in trade or commerce that harmed plaintiffs and implicated the public interest	CPA claim is conclusory, overlaps a contract dispute, and lacks a duty outside contract	Denied: non‑per se CPA claim survives; allegations show deceptive/unfair acts, trade or commerce, public‑interest factors, injury and causation
Whether leave to amend should be allowed and limits of amendment	Plaintiffs should be permitted to amend to cure defects	Amendments asserting statutory insurer bad‑faith duty or a per se CPA claim against a non‑insurer are futile	Court grants leave to amend but warns statutory bad‑faith and per‑se CPA claims against a non‑insurer are futile

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim; conclusory allegations insufficient)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must contain more than labels and conclusions)
Keodalah v. Allstate Ins. Co., 194 Wash. 2d 339 (2019) (limits statutory bad‑faith and per‑se CPA claims to insurer‑insured relationship)
Panag v. Farmers Ins. Co. of Washington, 166 Wash. 2d 27 (2009) (non‑per‑se CPA claims do not require contractual privity)
Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778 (1986) (elements and public‑interest analysis for CPA claims)
Trujillo v. Nw. Tr. Servs., 183 Wash. 2d 820 (2015) (factors for assessing public interest in private CPA suits)
Klem v. Washington Mut. Bank, 176 Wash. 2d 771 (2013) (definition of unfair acts under CPA)
Glanville v. McDonnell Douglas Corp., 845 F.2d 1029 (9th Cir. 1988) (burden on movant in 12(b)(6))
In re Stac Elecs. Sec. Litig., 89 F.3d 1399 (9th Cir. 1996) (conclusory allegations cannot defeat a motion to dismiss)
Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008) (limits on materials considered on a motion to dismiss)