Gochev v. First Am. Prop. & Cas. Ins. Co.

1

HRISTO GOCHEV, et al., Plaintiffs, v. FIRST AMERICAN PROPERTY AND CASUALTY INSURANCE CO., Defendant.

No. C22-159-MLP

United States District Court, W.D. Washington, Seattle

January 19, 2024

ORDER

MICHELLE L. PETERSON UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

This matter is before the Court on: (1) Plaintiff Hristo “Chris” Gochev's (“Plaintiff”) “Motion Regarding Attorney Fees and Costs and for Enhanced Damages under the Insurance Fair Conduct Act” (“IFCA”) (“Plaintiff's Fees Motion”) (Pl.'s Fees Mot. (dkt. # 82)); (2) Plaintiff's “Motion to Modify Judgment” (Pl.'s Mot. (dkt. # 86)); and (3) Defendant First American Property & Casualty Insurance Company's (“First American”) “Rule 50(b) Motion for Judgment as a Matter of Law” (“First American's Motion”) (Def.'s Mot. (dkt. # 88)).^[1] Having considered the parties' submissions, the balance of the record, and the governing law: (1) Plaintiff's Fees Motion (dkt. # 82) is GRANTED in part and DENIED in part; (2) Plaintiff's Motion to Modify Judgment (dkt. # 86) is GRANTED in part and DENIED in part; and (3) First American's Motion (dkt. # 88) is DENIED, as further explained below.

II. BACKGROUND

The Court conducted a jury trial in this matter on Plaintiff's claims against First American for insurer bad faith, violation of the Washington Consumer Protection Act (“CPA”), and violation of IFCA. (See dkt. ## 58, 65, 70.) The Court has previously detailed the background of this case in its previous Order on summary judgment. (See dkt. # 34 at 2-8.)

Relevant to the parties' motions, on December 7, 2021, Plaintiff's counsel issued an IFCA notice of claim to First American alleging First American unreasonably delayed claim payment. (Monroe Decl., Ex. 5 (dkt. # 22-5); First Brooks Decl. (dkt. # 24) at ¶ 3.) The issued IFCA notice provides in part that:

Mr. Gochev and Kaiser Enterprises reported a loss to First American earlier this year. Shortly after the claim was reported, First American started causing delay, and refused to clarify what was covered and what was not covered. Then, First American demanded Mr. Gochev undergo an unnecessary examination under oath, and only after that did they state what amount was covered and offered what was clearly from the beginning a covered loss.

It is clear from the fact of this case that [First American's] handling of this claim has led to damages that should never have occurred had this file been properly handled from the start. From the beginning, you have delayed the investigation of the claim, failed to promptly act, and failed to communicate with your insured.

You also delayed payment unnecessarily by not promptly adjusting and paying what was owed to your insured. Additionally, you have put your own interest ahead of the interest of your insured.

(Monroe Decl., Ex. 5 at 1-2.)

On August 14, 2023, on summary judgment, First American argued that Plaintiff's IFCA claim should be dismissed because: (1) Plaintiff failed to allege a wrongful denial or underpayment of benefits as required for an IFCA claim; and (2) Plaintiffs' IFCA notice was ineffective. (Def.'s Summ. J. Mot. (dkt. # 20) at 13-14.) Specifically, First American argued that Plaintiff's IFCA claim failed as a matter of law because IFCA does not create an independent cause of action solely for violations of the Washington Administrative Code. (Id. at 13 (citing Perez-Crisantos v. State Farm Fire & Cas. Co., 187 Wn.2d 669, 680 (Wash. 2017).) First American additionally argued that Plaintiff's 20-day IFCA notice was ineffective because it failed to set forth what First American could do to avoid suit or fix the alleged wrongful denial or underpayment of benefits. (Id. at 13-14.)

On September 27, 2023, this Court denied First American's challenge to the IFCA claim on summary judgment. (Dkt. # 34 at 17-19.) The Court noted that Plaintiff's IFCA notice clearly outlined the basis for Plaintiff's complaints with First American's delay in investigating and adjusting his insurance claim in his written notice, as required by RCW 48.30.015(8), prior to filing an IFCA action.^[2](Id. at 19.) In addition-based on authority provided by Plaintiff (see dkt. # 23 at 9-11) and left unrebutted by First American (see dkt. # 29 at 3-4)-the Court found that this District has recognized that “a refusal to pay a demand for coverage reasonably promptly is an unreasonable denial of benefits, even if only temporary” for IFCA claims. (Dkt. # 34 at 19 (quoting Taladay v. Metro. Grp. Prop. & Cas. Ins. Co., 2016 WL 3681469, at *2 (W.D. Wash. July 6, 2016)).) The Court therefore concluded that a genuine issue of material existed as to whether First American acted unreasonably in handling Plaintiff's claim for the alleged IFCA claim, distinct from Plaintiff's alleged insurance regulatory violations. (Id.)

On October 11, 2023, the parties submitted agreed and disputed jury instructions prior to trial. (Dkt. # 50.) As part of the agreed submitted instructions, the parties provided instructions on “Violation of [IFCA]” and “Unreasonable Delay in Payment.” (See id. at 3.) The “Violation of [IFCA]” instruction provided the elements for the jury to find a violation of IFCA pursuant to a modified version of Washington Pattern Civil Jury Instruction 320.06.01.^[3](Id. at 26.) The “Unreasonable Delay in Payment” instruction instructed that an unreasonable delay in payment can constitute an unreasonable denial of benefits based on Taladay and other authority from this District. (Id. at 3, 29-30.)

On October 16, 2023, the first day of trial, Plaintiff testified as to damages he incurred based on the storage costs of property he was asked by First American to maintain for its examination. (See Day 1 Trial Tr. (dkt. # 103) at 157:7-159:1.) As to storage costs, Plaintiff testified:

Q: Do you know -- well, about how much space -- well, what would be the value -- are you familiar with the value of storage spaces in Snohomish County?

A: 8-by-20, 400 bucks a month, for a storage unit, I think.

Q: And if you had to rent storage space to store all these items, how much would it cost you in Snohomish County?

A: Well, everything was in roughly three containers. So it would be three storage units.

(Day 1 Trial Tr. at 157:7-14.) During this portion of Plaintiff's testimony, First American objected to Plaintiff's counsel providing leading questions, but did not object on any other basis as to Plaintiff's testimony. (See id. at 157:7-159:1.)

At the close of Plaintiff's case on the second day of trial, First American made several motions pursuant to Federal Rule of Civil Procedure 50(a). First, First American moved for a directed verdict as to all claims brought against it by Kaiser Enterprises, which the Court granted as stipulated by the parties. (See Day 2 Trial Tr. (dkt. # 104) at 364:10-365:3.)

Second, First American moved for a directed verdict as to Plaintiff's IFCA claim on the basis that Plaintiff failed to present evidence of damages. (See Day 2 Trial Tr. at 365:4-8.) The Court reserved its ruling, and the IFCA claim was ultimately submitted to jury.^[4] (Id. at 366:13-15.)

Third, First American moved for a directed verdict based on Plaintiff's alleged failure to file a 20-day notice of intent to file suit pursuant to IFCA. (See Day 2 Trial Tr. at 365:16-20.) The Court denied First American's motion given Plaintiff's citation to the mailed notice being admitted into evidence. (Id. at 365:21-368:4; see also Tr. Ex. List (dkt. # 72) at 1 (“Communications by Defendant”).)

Fourth, First American moved for a directed verdict on the basis that the 20-day notice of intent to file suit pursuant to IFCA was insufficient because Plaintiff failed to identify any wrongful denial or underpayment of benefits that could have been cured by First American in the notice. (See Day 2 Trial Tr. at 368:5-369:6.) The Court reserved its ruling, and the claim was submitted to the jury. (Id. at 369:7-8.)

Finally, First American moved for a directed verdict on Plaintiff's CPA claim, arguing that Plaintiff failed to demonstrate an unfair or deceptive act that proximately caused Plaintiff's storage costs. (See Day 2 Trial Tr. at 369:13-370:8.) The Court reserved its ruling on the motion, and the claim was submitted to jury. (Id. at 372:12-13.)

On October 18, 2023, the last day of trial, the Court conducted a jury instruction settling conference. (Day 3 Trial Tr. (dkt. # 105) at 375:20-382:4.) Neither party raised issues with the IFCA instruction nor its treatment on the verdict form at that conference. (See id.) As a result, the parties' agreed instruction on the IFCA claim was provided as Jury Instruction No. 12: “Violation of the IFCA-Burden of Proof” and the parties' instruction on unreasonable delay was provided as Jury Instruction No. 14: “Unreasonable Delay in Payment.” (Compare dkt. # 50 at 26, 29 with dkt. # 71 at 14, 16.)

During the jury's deliberations, the jury returned a question about Plaintiff's IFCA claim and whether an unreasonable delay in payment satisfied the verdict form question for the IFCA claim.^[5](Dkt. # 74.) Specifically, the jury asked whether the first proposition to be proved in Jury Instruction No. 12 for the IFCA claim-that First American unreasonably denied a claim for coverage or payment of benefits-should also state “delaying” as indicated by the verdict form. (Id. at 2.) After consulting with the parties and receiving no objection (see Day 3 Trial Tr. at 474:20-475:5), the Court submitted an answer back to the jury that the parties agreed Jury Instruction No. 12 for the IFCA claim should include “or unreasonably delayed payment” as provided by Jury Instruction No. 14. (Dkt. # 74 at 3.)

The jury returned a verdict in Plaintiff's favor on Plaintiff's insurer bad faith and IFCA claims, and in...