David Jackson v. Esurance Insurance Company , 412 P.3d 299 ( 2017 )

t
' 1
ST.nt E
2011DEC I I L
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DAVID JACKSON, ) No. 75506-4 -I
)
Appellant, )
) DIVISION ONE
v. )
)
ESURANCE INSURANCE COMPANY, ) UNPUBLISHED OPINION
)
Respondent. ) FILED: December 11,2017
)
MANN, J. —This case arises out of a single car accident during a training session
at Pacific Raceways, a road and drag racing facility in Kent, Washington. Appellant
David Jackson asserted a claim for collision coverage under his personal auto policy
with Esurance Insurance Company (Esurance). Esurance denied coverage based on
an exclusion in the Esurance policy excluding collision coverage "for any vehicle located
inside a racing facility for the purpose of.. . or participating in any.. . driving school,
driver training,[or] skills training." Jackson sued Esurance for seeking coverage and
asserting claims for breach of contract, bad faith, and violations of the Consumer
Protection Act(CPA)and Insurance Fair Conduct Act(IFCA).
Jackson appeals from the trial court's decision granting summary judgment and
dismissing his claims. We affirm.
No. 75506-4-1/2
FACTS
In February 2006, Jackson purchased a personal auto insurance policy with a
six-month term from Esurance. Esurance is an internet-based insurance company that
offers policyholders a paperless delivery system, whereby a policyholder can elect to
receive his or her policies, billings, and other documents through an online system
called "the online management platform." To participate in the platform, the policyholder
must affirmatively consent to receive documents electronically as opposed to through
U.S. Mail. The online management platform allows the policyholder to access and
review all prior policy documents that have been delivered at any time during the life of
the policy. A policyholder who consents to electronic delivery may request paper copies
of insurance policy documents at any time. The policyholder may also withdraw
consent; after doing so, the policyholder receives paper copies of the documents.
Jackson consented to receive his documents electronically via Esurance's paperless
delivery system when he purchased his initial policy. Jackson never withdrew his
consent or requested paper copies of documents.
Because Jackson's auto policy had a six-month term, Esurance renewed
Jackson's policy every six months by posting a "Renewal Offer" to the online
management platform and providing an e-mail notification to Jackson that the policy
was up for renewal and that he should review the terms and conditions. The e-mails
included a link to the online management platform. Esurance posts the renewal offers
at least 40 days before the effective date of the renewal policy. Each renewal offer
contains multiple documents: a renewal offer declarations page.listing all of the policy
forms that are part of the renewal policy being offered, and a copy of any new policy
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No. 75506-4-1/3
forms, amendments, or changes to policy terms. If there are no changes to the prior
policy's form, however, Esurance does not repost the prior policy form, but instead lists
the prior policy on the declarations page.1
Jackson's original February 2006 personal auto policy excluded losses that
occurred inside a racing facility when the car is driven to compete in or practice for any
race:
[Esurance] will not pay for:
13. Loss to "your covered auto" or any "non-owned auto", located
inside a facility designed for racing, for the purpose of:
a. Competing in; or
b. Practicing or preparing for any prearranged or organized
racing or speed contest.
Jackson's Esurance policy renewed every six months and remained in effect from
February 2006 through February 2010.
In January 2010, Esurance provided Jackson an offer for the policy renewal
effective February 2010. The e-mail notification included the following statement:"By
renewing your policy, you're agreeing to Esurances's current Terms and Conditions."
The phrase Terms and Conditions was set out in blue and was a hyperlink to the terms
and conditions of the renewal. The renewal offer included a copy of the policy
declarations page, renewal offer, a notice of policy changes, and a complete copy of the
new personal auto policy form. The renewal offer, and all documents, were posted to
1 This is also Esurance's practice for delivering policy documents to policyholders who choose to
receive physical paper copies of their insurance documents through the U.S. Mail.
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No. 75506-4-1/4
Jackson's online management platform. The notice of policy changes included with the
renewal offer stated:
IMPORTANT NOTICE
Explanation of Policy Changes
You Have Been Issued a New Automobile Policy
Enclosed in this renewal offer is your new Esurance Automobile Policy
(Form 1000 WA 11 08), which has been approved by the Washington
Department of Insurance. The new policy differs in many ways from your
old policy. This Explanation of Policy Changes generally describes the
changes. Your new policy contains all of the changes in full detail, so
please read your new policy carefully.
The notice of policy change explained that Esurance had expanded the racing
exclusion:
We added language excluding coverage for any vehicle while competing
in, or practicing or preparing for, any prearranged or organized racing or
speed contest.
We added an exclusion for any vehicle located inside a racing facility for
the purpose of competing in, practice or preparing for any prearranged or
organized racing or speed contest, or participating in any racing school,
driving school, driver training, skills training, race driving experience, or
racing adventure program.
The new policy included with the new offer included a broader racing exclusion that
excluded losses caused when the car was driven for any race-skills instruction program:
[Esurance] will not provide coverage for:
12. "Loss" to any vehicle located inside a facility designed for racing
or high performance driving for the purpose of:
A. Competing in;
B. Practicing or preparing for; any prearranged or organized
racing or speed contest; or
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No. 75506-4-1/5
C. Participating in any racing school, driving school, driver
training, skills training, race driving experience, or racing
adventure program.P]
Jackson accepted this policy by paying the first installment amount due on the policy.
Esurance sent Jackson a confirming e-mail thanking him for renewing his policy and
telling him he could review, save, or print his policy by logging into his account.
Jackson apparently never accessed the online portal and never read the policy.
Jackson's Esurance policy continued to renew every six months and remained in effect
from February 2010 through February 2013.
On January 6, 2013, Esurance provided Jackson another renewal offer that
included a new policy. This policy included the same racing exclusion as the February
2010 policy. Esurance posted the complete policy on Jackson's online management
platform. Jackson accepted this policy by paying the installment premium due. The
next three renewal offers (sent July 2013, January 2014, and July 2014) did not contain
a copy of the policy because Esurance did not change the policy.
In late June 2014, Jackson planned to attend an Audi driving-skills training
program offered at the Pacific Raceways racecourse. Before attending the event, he
logged into his Esurance online account to check to make sure that the insurance policy
covered any damages that might occur during the event. According to Jackson, the
only policy that he could find on the site was the pre-February 2010 policy that excluded
racing but not driving-skills training.
2(Emphasis added.)
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No. 75506-4-1/6
On June 27, 2014, Jackson was driving his car at Pacific Raceways participating
in a driving-skills event when he crashed. Jackson was instructing a passenger when
he crashed. Jackson sought coverage from Esurance for the damages to his car.
Esurance denied coverage explaining that his policy excluded coverage for participating
in any racing school, driving school, or skill training at a facility designed for racing.
Esurance's denial letter quoted the specific language from Jackson's then current
policy.
On June 25, 2015, Jackson sued Esurance, claiming it violated the IFCA,
breached the insurance contract, acted in bad faith, and violated the CPA. Esurance
moved for partial summary judgment on coverage and then moved for summary
judgment of dismissal on the remaining issues and claims. The trial court granted
summary judgment in favor of Esurance. Jackson timely appealed.
ANALYSIS
Standard of Review
We review summary judgment orders de novo. Intl Marine Underwriters v.
ABCD Marine, LLC, 179 Wn.2d 274, 281, 313 P.3d 395 (2013). Summary judgment is
appropriate where there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. CR 56(c); ABCD Marine, 179 Wn.2d at 281.
The defendant on summary judgment has the burden of showing the absence of
evidence to support the plaintiffs case. Young v. Key Pharms., Inc., 112 Wn.2d 216,
225, 770 P.2d 182(1989). Once the moving party shows an absence of a genuine
issue of material fact, the burden shifts to the nonmoving party. Young, 112 Wn.2d at
225.
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No. 75506-4-1/7
While we construe the evidence and reasonable inferences in the light most
favorable to the nonmoving party, if the nonmoving party "'fails to make a showing
sufficient to establish the existence of an element essential to that party's case, and on
which that party will bear the burden of proof at trial," summary judgment is appropriate.
Young, 112 Wn.2d at 225 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.
Ct. 2548, 91 L. Ed. 2d 2548 (1986)).
Enforceability of 2010 Amendment to the Racing Exclusion
Jackson argues first that the trial court erred in granting summary judgment for
Esurance on his claim for breach of the insurance contract because the insurance policy
was unenforceable. Washington law, he argues, requires insurers to notify the
policyholder of policy amendments via registered mail. Jackson does not dispute that
the 2010 policy change, if enforceable, would exclude coverage for his loss.
Accordingly, the only issue before us is whether the policy is enforceable.
An original insurance policy must be delivered to the insured "within a reasonable
period of time after its issuance." RCW 48.18.260(1). Before amending or modifying an
insurance contract, an insurer must give the policyholder notice and obtain the
policyholder's agreement. McGreevy v. Oregon Mut. Ins. Co., 74 Wn. App. 858, 867,
876 P.2d 463(1994), aff'd on other grounds, 128 Wn.2d 26, 904 P.2d 731 (1995).
Washington law does not dictate the manner in which notice of changes or
amendments are to be delivered to the insured. Indeed, RCW 48.185.005 specifically
allows an insurer to deliver insurance notices and documents electronically: "Delivery of
a notice or document in accordance with this section is the equivalent to any delivery
method required under applicable law, including delivery by first-class mail; first-class
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No. 75506-4-1/8
mail, postage prepaid; certified mail; or registered mail." ROW 48.185.005(3). While
RCW 48.185.005 did not become effective until July 2015, the legislature made it clear
that electronic deliver prior to July 24, 2015, remained effective so long as the insured
"consented to receive a notice or document in an electronic form otherwise allowed by
law." ROW 48.185.005(9).
We agree with the trial court that summary judgment for Esurance was
appropriate because the policy was enforceable.
First, it is undisputed that Jackson consented to receive all policy documents and
notices electronically. This consent was lawful under ROW 48.185.005(9).
Second, it is undisputed that on January 15, 2010, Esurance sent Jackson an e-
mail informing him that his policy would be renewing soon and that by renewing his
policy he was agreeing to the "Terms and Conditions." The e-mail included a hyperlink
to the terms and conditions of renewal. The e-mail stated that by renewing, Jackson
was agreeing to all of the renewal offer's terms. Jackson did not open this e-mail.
Third, it is undisputed that in January 2010 Esurance posted a policy-renewal
offer, including the amended policy, to Jackson's online management platform. The
renewal offer included the notification of policy changes explaining the changes to the
racing exclusion. The renewal offer also included the new policy that Jackson admits,
does not cover his loss. Although he had an affirmative duty to read the policy, Jackson
admitted that he never read it. Dombrosky v. Farmers Ins. Co., 84 Wn. App. 245, 257,
928 P.2d 1127(1996)(insureds have an affirmative duty to read their policy and be on
notice of the terms and conditions of the policy).
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No. 75506-4-1/9
Fourth, it is undisputed that on January 27, 2010, Jackson accepted the renewal
offer by paying the first installment amount due under the policy. No changes were
made to the policy until January 2013.
Finally, it is undisputed that on January 6, 2013, Esurance delivered a renewal
offer for an updated policy. The racing exclusion in the January 2013 policy was
identical to the racing exclusion included in the prior policy. Jackson accepted the new
policy by paying the installment premium. This policy renewed every six months, on
July 6, 2013, January 6, 2014, and July 6, 2014, and was in force on June 27, 2014—
the day that Jackson crashed. Because Esurance provided notice within a reasonable
amount of time before amending Jackson's policy, the policy is enforceable. RCW
48.18.260(1); McGreevy, 74 Wn. App. at 867.
Jackson relies on McGreevy to argue that Washington law requires an insurer to
physically deliver a policy and any amendments to the policy to the policyholder via
registered or certified mail. Jackson misreads McGreevy. In McGreevy, after
McGreevy was killed in an auto accident his wife sought to stack uninsured motorist
(UIM) benefits under their four policies. The insurer, Oregon Mutual, claimed that nine
years earlier it had mailed an endorsement to the McGreevys that prohibited stacking
UIM benefits. In the subsequent litigation, a jury determined that Oregon Mutual had
not mailed the endorsement. Consequently, because the endorsement was not mailed
and McGreevy's wife did not receive it, the endorsement was unenforceable.
McGreevy, 74 Wn. App. at 862-63.
Oregon Mutual argued on appeal that coverage should be denied because
Oregon Mutual "was placed in the impossible position of proving that the [endorsement]
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No. 75506-4-1/10
had been mailed to the McGreevys some 9 years earlier." McGreevy, 74 Wn. App. at
868-69. The court rejected the argument and explained that Oregon Mutual made a
business decision not to maintain records of specific mailings regarding significant
changes to its policy. McGreevy, 74 Wn. App. at 869. In dicta, the court noted that
Oregon Mutual could have simply mailed the endorsement by certified or registered mail
and thus have a record of delivering notice. McGreevy, 74 Wn. App. at 69. But the
McGreevy court did not hold that an insurer is required to physical deliver endorsements
by mail; the insurer must just have evidence that the notice of policy change was
delivered.
Unlike in McGreevy, Esurance has undisputed evidence establishing that it timely
delivered notice of the change in the racing exclusion and new policy by posting to
Jackson's online policy management platform and sending e-mail notification. Jackson
consented to electronic delivery of notices and documents. Consistent with RCW
48.185.005, Esurance's electronic delivery was valid and the racing exclusion is
enforceable. Dismissal of Jackson's breach of contract claim on summary judgment
was appropriate.
Consumer Protection Act
Jackson next claims that the court improperly dismissed his CPA claim on
summary judgment. Again, we disagree.
Washington's CPA makes "unfair methods of competition and unfair or deceptive
acts or practices in the conduct of any trade or commerce" unlaigul. RCW 19.86.020.
To prevail on a CPA claim, the plaintiff must prove five elements:(1) an unfair or
deceptive act or practice;(2) that occurs in trade or commerce;(3) which affects the
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No. 75506-4-1/11
public interest;(4) injury to the insured's business or property; and (5) a causal link
between the unfair or deceptive act and the injury. Hangman Ridge Training Stables,
Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 784-85, 719 P.2d 531 (1986).
Jackson focuses his argument on the first element—that Esurance's website and
how a policyholder accesses policy documents on Esurance's online platform are
deceptive. In order to establish the first element, a plaintiff must only establish that the
act in question "had the capacity to deceive a substantial portion of the public."
Hangman Ridge, 105 Wn.2d at 785. Jackson claims that summary judgment was not
appropriate because "a jury could find Esurance's practices to be misleading and
deceptive based upon the inherent difficulty [Jackson] had in locating the most basic
and essential component of insurance—his insurance policy." Jackson's argument
lacks merit.
The undisputed evidence establishes that Jackson's inability to locate his policy
was a result of his own voluntary conduct: Jackson agreed to electronic delivery of all
communications and policy documents, Esurance provided instructions at the outset of
how he could access his policy documents, Esurance told Jackson from the outset how
to print his policy documents and save them to his computer for later reference, and
Esurance informed Jackson that he could opt out of electronic notice and have all
documents sent by U.S. Mail. Instead, Jackson chose to ignore e-mails sent from
Esurance and chose not to open or read renewal offers. It is undisputed that Jackson
only opened one of the 111 e-mails Esurance sent to him between the time he first
purchased his policy in February 2005 to the end of 2010. The sole e-mail he opened
during that time frame was an e-mail dated February 27, 2006—two days after he first
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No. 75506-4-1/12
purchased his policy. Jackson admits that he had only seen "a few" of the renewal
offers sent to him. Had he opened and read the renewal offers and opened and read
the notifications and policy documents posted to his online management platform, he
would have seen the policies.
Jackson's argument further fails because his inability to find his current policy
online is, in effect, no different than someone's inability to find a paper copy of their
current policy if it had been mailed. Assuming that Jackson had elected to receive
physical copies of his insurance documents, he still would have,faced the same problem
that he raises now. He would have had to open the envelope, read, file, and save the
policy documents and notifications. Because Esurance does not resend the prior policy
forms to policyholders each time it renews the insurance contract if there are no
changes, determining the policy in effect requires the insured to sort through the
previous renewal offers in order to find the policy that is currently in force. Jackson
alleges that the online platform was deceptive, but it is not: using the online platform
yields the same result as physical delivery does.
Jackson consented to electronic delivery, was notified about how to use the
online platform, and was notified at every renewal. He had a duty to read his policies,
but chose not to do so. Jackson cannot demonstrate that his decision not to review his
policies and notifications at renewal establishes that Esurance's online delivery process
has the capacity to deceive a substantial portion of the public. Hangman Ridge, 105
Wn.2d at 784-85. Jackson's CPA claim fails.
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Insurance Fair Conduct Act
Finally, Jackson next contends that the trial court improperly dismissed his claim
under the IFCA. We disagree.
IFCA provides a remedy for insureds when insurers unreasonably deny a
coverage claim or benefit payment. RCW 48.30.015(1). If an insurer either
unreasonably denies a claim or benefit payment and violates any regulation listed in
RCW 48.30.015(5), then the court may award triple damages to the insured. RCW
48.30.015(2),(5). But in the absence of an unreasonable denial of coverage or benefits
the IFCA does not create an independent cause of action for alleged regulatory
violations. Perez-Chrisantos v. State Farm Fire & Cas. Co., 187 Wn.2d 669, 680, 389
P.3d 476 (2017).
Esurance reasonably denied coverage because the policy's racing-facility
exclusion clearly excluded the loss. Because Esurance acted reasonably Jackson
cannot establish an IFCA claim. Accordingly, we need not address Jackson's argument
that Esurance committed a regulatory violation.
We affirm.
WE CONCUR:
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