Snowpocalypse: Negligence and Bad Faith

SFE Attorney: Kyle D. Riley

Plaintiff Attorney: Michael Watkins, Joel Hanson

City, Co., State: Western District of Washington (District Court)

Claims Alleged: Personal Injury

Injuries Alleged: Property Damage

Admitted Liability: No

Amount Claimed: Excess of $1.3 million

Brief Overview

The case was a very complicated insurance and mortgage related dispute that was carried out in the western district of Washington. It involved several parties and complicated factors. Smith Freed Eberhard partner Kyle riley was successful in getting all three of his clients dismissed from the suit.

The Background

The case was a very complicated insurance and mortgage related dispute that was carried out in the western district of Washington. The plaintiffs were homeowners whose home had sustained a fire during the Washington “snowpocalypse” of 2008. They sought $1.3 million in damages plus attorney fees.  Kyle riley represented three bank defendants (a mortgagee, the loan servicer, and the parent company) who were accused of negligently allowing their personal insurance policy to lapse.  He also represented an insurance company (a lender placed carrier) for breach of contract and bad faith claims arising from allegations of improper claims handling for the fire loss.

Plaintiffs Theme

Plaintiffs attempted to play the sympathy and ignorance cards in order to recover damages against all three defendants. They said they were not aware of any cancellation in their policy until they “properly” submitted their claim after the fire. When confronted with this fact of the cancelled policy, plaintiffs alleged they were not properly notified of any cancellation. They even went a step further in alleging the insurance company failed to properly investigate after the fire loss. Plaintiffs’ claims heavily relied on the idea that the each of the defendants didn’t pay plaintiffs their money they were supposedly entitled to.

Our Strategy

During the course of discovery, the plaintiffs could not deny that the bank’s agents had sent them notices that their insurance policy had been cancelled and that a replacement policy should be added.  The plaintiffs also could not dispute that they were paid approximately $15,000 in benefits and that they had failed to use those funds towards any meaningful repair of the home.  Coincidentally, shortly before being paid these funds, the plaintiffs had just returned from a vacation to Mexico.

Kyle’s main objective was to show the court that his clients were not proper parties to the action. He sought out to demonstrate that not only were the claims against his clients inadequate, plaintiffs themselves were unreliable and attempting to obtain money they did not deserve.

The Outcome

The court dismissed the plaintiff’s bad faith claims and claims for breach of contract against the lender placed carrier after determining that the plaintiffs were not third party beneficiaries of the lender placed policy.  Thus, the court held that they did not have standing to make claims against the insurance carrier.

The court dismissed the claims against the lender defendants because the record demonstrated that the lender never had notice that the premium had changed or that the policy was going to be cancelled prior to the policy’s cancellation.  Also, the plaintiffs could not provide evidence demonstrating that the lender failed to promptly notify them after the cancellation.

Finally, as part of a resolution, the plaintiffs agreed to pay a portion of the funds they had received from the insurer and bank back to the insurer after they resolved claims they had against their personal insurer for wrongful cancellation.

In a very hard fought battle, each of Kyle’s clients were dismissed by the court through successful motions and one of his clients even received money back from the plaintiffs for benefits paid to them that were never used to repair the home.