State Farm Fire & Casualty Company v. William D. Morgan
199 Wash. App. 435
| Wash. Ct. App. | 2017Background
- On June 9, 2010, William Morgan confronted Robert Justus and Joseph Tobeck taking Morgan’s metal pipes; William pointed a pistol, fired multiple shots at the pickup (killing Tobeck), and later detained Justus at gunpoint. Justus sued William more than two years later alleging, among other things, negligent wrongful detention.
- The Morgans had an umbrella liability policy with State Farm; State Farm defended under reservation of rights and later filed a declaratory action denying coverage for William’s conduct.
- Justus and the Morgans entered a covenant judgment: the Morgans stipulated to judgment in favor of Justus, Justus agreed not to execute against them, and the Morgans assigned all claims against State Farm to Justus; the settlement court approved the settlement but expressly declined to decide whether William’s conduct was negligent or intentional.
- In the coverage bench trial the trial court found the unchallenged facts established that William’s acts were intentional (false arrest/false imprisonment), and those intentional torts were time-barred by the two‑year statute of limitations; the court concluded State Farm owed no indemnity.
- Justus sought the Morgans’ State Farm claim file to support extra-contractual (bad faith, CPA, IFCA) claims assigned to him; the trial court denied the motion to compel (because the Morgans had not waived privilege) and granted summary judgment to State Farm on those extra-contractual claims.
- The Court of Appeals affirmed the coverage ruling (intentional acts/time-barred) but reversed the denial of the motion to compel and the summary judgment on extra-contractual claims, directing an in camera review/redaction under Cedell and further proceedings.
Issues
| Issue | Plaintiff's Argument (Justus) | Defendant's Argument (State Farm / Morgans) | Held |
|---|---|---|---|
| Whether the settlement court’s approval collaterally estops the coverage court from deciding if William’s conduct was negligent or intentional | Settlement court already established liability; trial court cannot relitigate intent/negligence | Settlement court expressly declined to decide negligence vs. intent and State Farm had not been bound | Not estopped — settlement court declined to decide intent/negligence; coverage court could decide issue. |
| Whether William’s conduct could support a negligent wrongful detention (coverage) | William’s initial assessment and request to call 911 support a negligence theory for wrongful detention | Unchallenged facts show deliberate pointing and multiple shootings; conduct was intentional (substantial certainty of restraint/harm) | Trial court correctly found conduct intentional (false arrest/imprisonment), not negligent; those intentional torts are time‑barred; no coverage. |
| Whether Justus (assignee) could compel production of the Morgans’ claim file in State Farm’s possession | Assignment and cooperation provisions in covenant judgment place Justus in Morgans’ shoes; Cedell allows access to claim file for bad‑faith discovery | Claim file contains Morgans’ privileged communications; State Farm cannot produce without Morgans’ waiver | Denial of motion to compel was an abuse of discretion; Court extends Cedell to assignees and orders in camera review/redaction and disclosure as appropriate. |
| Whether summary judgment dismissal of extra‑contractual claims (bad faith, CPA, IFCA) was proper without claim file discovery | Summary judgment was premature; claim file may contain evidence supporting extra‑contractual claims | Without the claim file and with privilege asserted, extra‑contractual claims fail | Reversed; summary judgment vacated and remanded for disclosure procedure and renewed consideration of extra‑contractual claims. |
Key Cases Cited
- Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801 (unchallenged findings are verities on appeal)
- Fisher v. Allstate Ins. Co., 136 Wn.2d 240 (insurer bound by liability findings if given notice and opportunity to litigate)
- Mutual of Enumclaw Ins. Co. v. T & G Constr., Inc., 165 Wn.2d 255 (insurer bound where liability issue was substantially resolved)
- Green v. City of Wenatchee, 148 Wn. App. 351 (limitations on binding effect when insurer preserves right to challenge)
- Heckart v. City of Yakima, 42 Wn. App. 38 (false arrest/false imprisonment are intentional torts subject to two‑year limitation)
- Cedell v. Farmers Ins. Co. of Wash., 176 Wn.2d 686 (framework for discovery of insurer claim file in bad‑faith/CPA claims; in camera review and redaction protocol)
- Christensen v. Grant County Hosp. Dist. No. 1, 152 Wn.2d 299 (elements and purpose of collateral estoppel)