M. Casey Law, Pllc v. Cole Wathen Leid & Hall, P.c.
74601-4
| Wash. Ct. App. | Apr 24, 2017Background
- Bonnie Alvarez reported her van stolen; Allstate investigated and scheduled examinations under oath (EUOs) under her auto and renter policies; Allstate’s counsel, Rick Wathen (Cole Wathen Leid & Hall P.C.), sent three letters in May–June 2014 requesting EUOs and documents.
- Alvarez initially did not attend scheduled EUOs; she later attended an EUO on July 30, 2014. Allstate denied the claim in October 2014; Alvarez sued Allstate and Wathen in November 2014.
- Alvarez’s amended complaint (signed by four attorneys: Labourr, Ham, Casey, Shea) asserted negligent misrepresentation and Consumer Protection Act (CPA) claims against Wathen; Wathen moved for CR 11 sanctions.
- The superior court granted summary judgment for Wathen on Alvarez’s claims and imposed CR 11 sanctions against the four individual attorneys, later fixed at $14,445; Counsel appealed only the sanctions order.
- The trial court found the negligent misrepresentation and CPA claims against Wathen were factually and legally baseless and that counsel failed to conduct a reasonable prefiling inquiry; this court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CR 11 sanctions were properly imposed for negligent misrepresentation claim | The letters to Alvarez supported a good-faith negligent misrepresentation claim (e.g., inconsistent policy references and an implication Allstate could deny coverage for refusing an EUO) | Letters did not contain materially false statements and Alvarez did not reasonably rely to her detriment; claim lacked factual and legal support | Sanctions affirmed: claim was baseless and counsel failed to conduct a reasonable inquiry |
| Whether CR 11 sanctions were properly imposed for CPA claim | Wathen’s conduct (blending duties with insurer, assisting claim denials, entrepreneurial conduct) supported a CPA claim or a good-faith argument to alter law | No factual record supports those allegations; letters objectively do not show deceptive or unfair acts toward Alvarez | Sanctions affirmed: CPA claim lacked factual support and was not warranted by existing law |
| Whether counsel had adequate notice and a fair procedure for sanction briefing/hearing | Counsel argued Wathen’s reply and later arguments raised new grounds and declarations were improperly excluded | Wathen provided pre-motion letters and motion put CR 11 at issue; trial court reasonably considered arguments and could reject late declarations | No abuse of discretion; procedure satisfied due process and no prejudice shown |
| Whether appellate sanctions under RAP 18.9(a) are appropriate | Appellant sought reversal; impliedly contested frivolousness | Wathen requested sanctions for a frivolous appeal | Denied: appeal not so totally devoid of merit to warrant sanctions |
Key Cases Cited
- Bryant v. Joseph Tree, Inc., 119 Wn.2d 210 (1992) (CR 11 requires filings be well grounded and counsel perform reasonable prefiling inquiry)
- Biggs v. Vail, 124 Wn.2d 193 (1994) (appellate review of CR 11 sanctions is for abuse of discretion)
- Van Dinter v. Orr, 157 Wn.2d 329 (2006) (elements of negligent misrepresentation require false information and reasonable detrimental reliance)
- Wade's Eastside Gun Shop, Inc. v. Dep't of Labor & Indus., 185 Wn.2d 270 (2016) (abuse of discretion standard explained)
- Hangman Ridge Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (1986) (CPA requires an act or practice in trade or commerce that is unfair or deceptive)
- Short v. Demopolis, 103 Wn.2d 52 (1984) (lawyer conduct in business aspects of practice can fall under the CPA)