On February 23, 2016, Judge Stanley A. Bastian for the United States District Court for the Eastern District of Washington rendered a potentially important decision on how insurance bad faith claims that may otherwise be time barred by the three-year statute of limitations may survive under Washington’s four-year statute of limitations for Consumer Protection Act (CPA) claims.
In Taylor v. Allstate Ins. Group and Allstate Prop. and Cas. Ins. Co., 2016 U.S. Dist. LEXIS 22065, the Court had previously granted the insurers’ motion for summary judgment dismissing the policyholder’s contractual-based claims because the lawsuit was not filed until after the one-year suit limitation provision in the insurance contract. On the insurer’s subsequent motion for dismissal of the remaining extra-contractual claims, the Court granted the insurer’s motion for summary judgment regarding the insurer’s claims under the Insurance Fair Conduct Act (IFCA) and insurance bad faith, both of which have three-year statute of limitations. Citing to Moraitti ex rel. Tarutis v. Famers Ins. Co. of Wash., 162 Wn. App. 495, 502 (2011), the Court found that the insured submitted no evidence of conduct that violated IFCA or constituted insurance bad faith that occurred within three years prior to the filing of the lawsuit.
However, the Court found that the insured had submitted evidence pertinent to a possible a CPA violation within the four-year statute of limitations. The Court also found that because a bad faith claim could be predicated on a CPA claim under Salois v. Mut. of Omaha Ins. Co., 90 Wn.2d. 355, 359 (1978), the insured may be able to pursue the insurance bad faith claim despite the fact that it would be otherwise barred by the three-year statute of limitations.
The Court stopped short of ruling that the bad faith claims in that case could survive while finding that “ruling on the merits of those issues is beyond the scope of this order.” However, this is a significant ruling as it could allow policyholders to boot-strap bad faith claims that would otherwise be barred by the three-year statute of limitations to CPA claims that may survive a statute of limitations defense.