Allstate also investigated the collision, interviewing several witnesses who said the motorcyclist was traveling faster than the speed limit, had proceeded between cars in both lanes, and had sped into the intersection. In addition, Allstate hired an accident reconstruction firm, Traffic Collision Analysis Inc. ("TCA"), to analyze the collision. TCA found that Mr. Keodalah had stopped at the stop sign, the motorcyclist had been traveling at a minimum of 60 m.p.h., and the motorcyclist's excessive speed had caused the collision.

Mr. Keodalah asked Allstate to pay him his UIM policy limit of $25,000. Allstate refused, offering $1,600 to settle the claim based on its assessment that Mr. Keodalah was 70 percent at fault. After Mr. Keodalah asked Allstate to explain its evaluation, Allstate increased its offer to $5,000.

Mr. Keodalah sued Allstate, asserting a UIM claim. Allstate designated a claims adjuster as its representative for depositions. Although Allstate possessed both the SPD report and TCA analysis, the adjuster claimed that Mr. Keodalah had run the stop sign and had been on his cell phone. The adjuster later admitted, however, that Mr. Keodalah had not run the stop sign and had not been on his cell phone.

Before trial, Allstate offered Mr. Keodalah $15,000 to settle the claim. Mr. Keodalah again requested the $25,000 policy limit, and the case proceeded to a jury trial.

At trial, Allstate contended that Mr. Keodalah was 70 percent at fault.

The jury determined the motorcyclist to be 100 percent at fault and awarded Mr. Keodalah $108,868.20 for his injuries, lost wages, and medical expenses. The trial court entered judgment against Allstate for $25,302.95.

Mr. Keodalah filed a second lawsuit against Allstate and included claims against the Allstate adjuster. These included alleged violations of the Washington Insurance Fair Conduct Act ("IFCA"), insurance bad faith, and Consumer Protection Act ("CPA") violations.

The trial court dismissed Mr. Keodalah's claims against the adjuster, an intermediate appellate court held that the statutory duty of good faith imposed by RCW 48.01.030 applied to individual insurance adjusters and that breach of that statutory duty could serve as a basis for Mr. Keodalah's bad faith and CPA claims against the Allstate adjuster.

The dispute reached the Supreme Court of Washington.

Washington Law

RCW 48.01.030 provides:

The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.

The Washington Supreme Court's Decision

The court first held that, in light of RCW 48.01.030's "plain language," indicating that the statute was intended to benefit the general public, and the "broader statutory and historical context" in which the statute appeared, RCW 48.01.030 did "not create an implied cause of action for insurance bad faith."

Next, the court rejected Mr. Keodalah's assertion that the Allstate adjuster could be held liable under the CPA for committing specific unfair claims settlement practices, as defined in the Washington Administrative Code ("WAC"), finding that they applied only to unfair acts or practices of an insurer. The court pointed out that the adjuster was not an insurer.

Accordingly, the court ruled that adjusters employed by insurance companies were not subject to personal liability for insurance bad faith or per se claims under the CPA.

The case is Keodalah v. Allstate Ins. Co., No. 95867-0 (Wash. Oct. 3, 2019). Attorneys involved include: Gavin W Skok, Fox Rothschild, Seattle, WA, Michael Barr King, Carney Badley Spellman PS, Seattle, WA, Jason Wayne Anderson, Carney Badley Spellman PS, Seattle, WA, Irene Margret Hecht, Keller Rohrback LLP, Seattle, WA, for Petitioners. Scott David Jd Smith, Fury Duarte, Bellevue, WA, C. Steven Fury, Fury Duarte PS, Bellevue, WA, Vonda Michell Sargent, Law Offices of Vonda M Sargent, Seattle, WA, Carol Farr, The Law Offices of Vonda M. Sargent, Seattle, WA, for Respondents. Daniel L Syhre, Betts, Patterson & Mines, P.S., Seattle, WA, Michelle Elizabeth Kierce, Betts, Patterson & Mines, P.S., Seattle, WA, as Amicus Curiae on behalf of American Insurance Association. Daniel L Syhre, Betts, Patterson & Mines, P.S., Seattle, WA, Michelle Elizabeth Kierce, Betts, Patterson & Mines, P.S., Seattle, WA, as Amicus Curiae on behalf of National Association of Mutual Insurance Companies. Daniel L Syhre, Betts, Patterson & Mines, P.S., Seattle, WA, Michelle Elizabeth Kierce, Betts, Patterson & Mines, P.S., Seattle, WA, as Amicus Curiae on behalf of Property Casualty Insurers Association of America. Alfred E Donohue, Wilson, Smith, Cochran & Dickerson, Seattle, WA, David Michael Jacobi, Wilson Smith Cochran Dickerson, Seattle, WA, as Amicus Curiae on behalf of Geico General Insurance Company. Daniel Edward Thenell, Thenell Law Group, P.C, Portland, OR, as Amicus Curiae on behalf of the COAlition Against Insurance Fraud, Inc. Paul Mark Rosner, Soha & Lang, P.S., Seattle, WA, Geoffrey C Bedell, Soha & Lang PS, Seattle, WA, Terri A Sutton, Cozen O'Connor, Seattle, WA, Melissa O'Loughlin White, Expedia Inc., Bellevue, WA, as Amicus Curiae on behalf of Washington Defense Trial Lawyers. Valerie Davis Mcomie, Attorney at Law, Camas, WA, Daniel Edward Huntington, Richter-Wimberley PS, Spokane, WA, as Amicus Curiae on behalf of Washington State Association for Justice Foundation.