Johnson v. Safeco Insurance Co. of America
316 P.3d 1054
Wash. Ct. App.2013Background
- Johnson owned a home in Edmonds insured by Safeco; TBW was mortgagee and responsible for paying the premium.
- TBW stopped payment on the renewal premium, and Safeco did not receive payment to renew the policy.
- Safeco sent renewal and expiration notices; Johnson and TBW failed to pay, so the policy expired.
- A lender-placed Mount Vernon policy covered the fire loss after lapse, effective November 17, 2008 to November 17, 2009.
- The chimney fire occurred January 25, 2009; Johnson claimed ALE, personal property, and structural costs under Mount Vernon; Safeco denied renewal/cancellation, and TBW’s status affected coverage.
- During litigation, Johnson submitted a fraudulent Rental Agreement to support ALE; Little vouching testimony showed no such lease; Mount Vernon and Johnson disputed ALE and damages; the trial court granted judgment as a matter of law in Mount Vernon’s favor and dismissed Safeco claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Renewal and cancellation of policy; was coverage in effect at loss? | Johnson argues policy auto-renewed on Sept 28, 2008. | Safeco maintained premium not paid; no renewal. | Policy not renewed; coverage not in effect at loss. |
| Fraud precludes bad faith/CPA claims? | Johnson contends fraud occurred after bad faith actions. | Cox controls; fraud negates bad faith/CPA claims. | Fraud bars bad faith and CPA claims. |
| Adequacy of notice and cancellation/nonrenewal compliance? | Johnson asserts improper notice. | Notice complied with policy and RCW; proper cancellation/nonrenewal. | Notice proper; policy lapse due to nonpayment. |
Key Cases Cited
- Cox v. Mutual of Enumclaw Ins. Co., 110 Wn.2d 643 (1988) (fraud precludes bad faith/CPA; estoppel not available after fraud)
- Irish v. Safeco Ins. Co., 37 Wn. App. 554 (1984) (cancellation for nonpayment; notice timing)
- Wisniewski v. State Farm General Insurance Co., 25 Wn. App. 766 (1980) (notice to lienholder required for cancellation)
- Sea-Van Invs. Assocs. v. Hamilton, 125 Wn.2d 120 (1994) (offer/acceptance requirements for contract renewal)
- Ellis v. Strother, 124 Wn.2d 1 (1994) (distinguishes equitable estoppel in life-insurance context; Cox controls)