I Mary Frances Beck v. Metropolitan Property & Casualty Insurance Company, an insurance company and foreign company, Case No. C21-5108 BHS, U.S. District Court of Western District of Washington At Tacoma May 2021) after Beck's criminal indictment for arson was dismissed so that she could go into an incorrect diversion program, her insurer sued for bad faith because it denied her claim.
While in the throes of a mental health crisis, plaintiff Mary Beck set fire to her couch, which spread and engulfed her home. She was later charged with arson. She filed a claim for the loss under her MetLife insurance policy, which MetLife denied.
The charges were dismissed when Beck entered an error transfer program. Beck sued MetLife and filed extra-contractual claims related to its alleged failure to reasonably investigate, which MetLife claims are prohibited by Washington's insurance policy on immunity.
The law provides in the relevant part:
To deny a claim, an insurance company. . . which relies on a written opinion from an authorized body. . . that criminal activity related to that claim is being investigated, or that a crime has been charged, and that the applicant is a target of the investigation or has been charged with a crime, is not liable for bad faith or other non-contractual theory of damages as a result of this dependence.
Immunity under this section shall exist only as long as the event for which the applicant may be responsible is under active investigation or prosecution, or the authorized authority states its position that the claim includes or is a result of criminal activity in which the applicant was a participant. (emphasis added) [RCW 48.50.075.]
MetLife claimed it was immune to suit because it relied on the ongoing fire pursuit when it denied Beck's claim. Beck reckons that the immunity ceased when the prosecutor dismissed the burn obligation and that MetLife did not conduct a reasonable investigation into her mental health status.
On July 27, 2017, Beck set fire to his sofa with a torch. The fire engulfed the camper where she lived. The police and fire brigade responded. MetLife was notified of the fire and began its investigation. Its investigators interviewed Beck and Beck told him she had started the fire on purpose. MetLife hired a forensic science company to investigate the loss that led to Beck setting the fire.
In October 2017, Kitsap County prosecutors filed information charging Beck with arson. MetLife reviewed this and other public records as part of its investigation. MetLife then investigated Beck under oath in December 2017, after which it denied her claim by deciding that the loss was not a covered accident and invoked the exclusion for intentional or criminal acts.
In October 2018, the prosecutor moved to dismiss the allegations without prejudice because Beck entered into an incorrect redirection program.
MetLife claims that its denial is covered by the Immunity Act because it occurred during the course of the investigation, and in the alternative, criminal information represents an "authorized authority" position whose claim includes criminal activity in which Beck participated. Beck claims that the Immunity Act allows an insurer to pause its investigation while the authorities investigate a potential crime. However, she claims that MetLife should have resumed its investigation when she was not convicted.
The Court's primary obligation in statutory interpretation is to establish and implement the intention of the legislator. First, the Court should examine the simple meaning of the Charter by interpreting the Charter itself and giving effect to this simple meaning.
MetLife expects it to be statutory immune to Beck's extra-contractual claims related to any investigation (in addition to the investigation they have already conducted). MetLife claimed that dispositive details were the time of the denial – that it occurred while the prosecution was active. Otherwise, MetLife claims that this would leave the insurer vulnerable to allegations of infidelity when an indictment ends for a reason unrelated to liability, such as the defendant's death. MetLife claimed that it reasonably relied on the written statement about the prosecutor's position that Beck committed a crime.
On the facts in this case, MetLife's theory, depending on criminal information, is consistent with the normal language of the law. Therefore, MetLife had no additional obligation to examine Beck's mental health. Beck argues that since the charges were dismissed, the criminal information could not constitute a "final" or "current" position for the prosecution.
The prosecutor's proposal to dismiss the allegations against Beck clearly shows that the dismissal was without prejudice and due to Beck's enrollment in an incorrect diversion program. Registration in an incorrect redirection program would not invalidate the prosecutor's statement of criminal information that Beck "knowingly and maliciously caused a fire."
The Charter provides for two possibilities for immunity – immunity that exists as long as the incident is under active investigation or prosecution, and immunity that exists as long as the authority states its position that the claim "includes or is the result of criminal activity in which the applicant participated." Beck's argument that a criminal conviction is required is not consistent with the clear language.
Although it is possible that the language "active investigation" may require the insurer to further investigate whether the authorized authority states its position that the claim did not include or was the result of criminal activity in which the plaintiff participated, it is not what happened here. Therefore, RCW 48.50.075 immunizes MetLife from Beck's extra-contractual claims.
The state of Washington offers, like many states, immunity from insurers from the suit of a person who criminally causes loss of property, whose risk of loss was insured. The immunity was clearly applied because Beck was accused of arson, the charge was never dismissed but she was placed in an incorrect diversion program, which would include an acceptance of the fact that a crime was committed. The lawsuit against Met Life was inappropriate and the summary judgment was appropriately granted.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance. coverage, handling of insurance claims, fraud and insurance fraud almost equally for insurance companies and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
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