Joann Caskey v. Old Republic Surety Co.
38017-3
| Wash. Ct. App. | Mar 17, 2022Background
- Joann Caskey hired Bud's & Doug's Mobile Home Service (a registered contractor) to set up a manufactured home; the contractor was bonded with Old Republic for $12,000.
- Caskey alleges defective installation causing failed inspection and damages; she later hired others to correct the work and the contractor dissolved its LLC.
- In April 2019 Caskey’s attorney sent a demand letter to Old Republic seeking bond proceeds; Old Republic replied that any claim against the bond must be pursued by filing suit in superior court under RCW 18.27.040.
- Caskey did not sue the contractor or the bond; instead she sued Old Republic in July 2020, alleging violations of the Consumer Protection Act (CPA) via RCW 18.27.117(3) and the Insurance Fair Conduct Act (IFCA).
- The superior court granted summary judgment for Old Republic dismissing all claims; Caskey appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RCW 18.27.117(3) creates a private CPA remedy and a duty on sureties to investigate claims made by injured parties | RCW 18.27.117(3) creates a per se CPA violation and a private cause of action against a bonding company that fails to reasonably investigate injured parties' claims | Tank and related precedent bar third-party tort suits against insurers/sureties and enforcement rests with the Insurance Commissioner | Court: RCW 18.27.117(3) creates a derivative private CPA cause against sureties and imposes a duty to reasonably and professionally investigate claims made against the bond |
| What constitutes a "claim made by injured parties" under RCW 18.27.117(3) — is a demand letter sufficient? | Caskey: a demand letter suffices; the statute does not foreclose extrajudicial claims | Old Republic: a "claim" against the bond requires filing suit under RCW 18.27.040 and service through the Department; a letter is insufficient | Court: a claim against the bond requires a lawsuit under RCW 18.27.040(3); demand letter did not ripen the surety's statutory duty to investigate |
| Whether IFCA (RCW 48.30.010-.015) applies — was Caskey a "first-party claimant" | Caskey: she was a first-party claimant entitled to IFCA protections against unreasonable claim denial | Old Republic: Caskey is a third-party claimant (not a party to the bond) and thus not covered by IFCA first-party protections | Court: Caskey was not a first-party claimant; IFCA claim fails |
| Whether Old Republic's response letter independently violated the CPA as misleading or unfair | Caskey: the letter misled and was an unfair/deceptive practice | Old Republic: the letter correctly stated the statutory process and was not misleading | Court: because suit is the exclusive method to make a bond claim, the letter was not misleading; independent CPA claim fails |
Key Cases Cited
- Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381 (1986) (third-party bad-faith actions against insurers/sureties are generally not recognized)
- Bennett v. Hardy, 113 Wn.2d 912 (1990) (three-part test for implying a private remedy in a statute)
- Cosmopolitan Eng’g Grp., Inc. v. Ondeo Degremont, Inc., 159 Wn.2d 292 (2006) (statutory interpretation is a question of law reviewed de novo)
- Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383 (1992) (standard for summary judgment review in Washington)
- Stenge v. Clarke, 89 Wn.2d 23 (1977) (interpretation of the word "may" in statutory context)
- Int’l Com. Collectors, Inc. v. Carver, 99 Wn.2d 302 (1983) (contractor registration and bond requirements under the RCA)