NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS AUG 29 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

RUTH JELINEK, No. 16-36057

Plaintiff-Appellant, D.C. No. 2:15-cv-00779-RAJ

v.

MEMORANDUM*

AMERICAN NATIONAL PROPERTY

AND CASUALTY COMPANY, DBA

ANPAC Insurance Company, a foreign corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Western District of Washington Richard A. Jones, District Judge, Presiding

Argued and Submitted June 14, 2018 Seattle, Washington

Before: M. SMITH and WATFORD, Circuit Judges, and RAYES,** District Judge.

This case involves a dispute between Plaintiff-Appellant Ruth Jelinek and her

automotive insurer, Defendant-Appellee American National Property and Casualty

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Douglas L. Rayes, United States District Judge for the District of Arizona, sitting by designation. Company (“ANPAC”), over ANPAC’s handling of Jelinek’s underinsured motorist

(“UIM”) coverage claim following an automobile accident in October 2012. Jelinek

appeals from the district court’s order granting summary judgment in favor of

ANPAC on Jelinek’s extracontractual claims for breach of the duty of good faith and

fair dealing and violations of the Washington Insurance Fair Conduct Act (“IFCA”),

the Washington Consumer Protection Act (“CPA”), and various provisions of the

Washington Administrative Code (“WAC”). We have jurisdiction pursuant to 28

U.S.C. § 1291, and we reverse the district court’s grant of summary judgment and

remand for further proceedings.

We review a district court’s grant of summary judgment de novo, “applying

the same standard of review as the district court under Federal Rule of Civil

Procedure 56.” Flores v. City of San Gabriel, 824 F.3d 890, 897 (9th Cir. 2016).

Summary judgment is appropriate when there is no genuine dispute as to any

material fact and, viewing those facts in a light most favorable to the nonmoving

party, the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

A fact is material if it might affect the outcome of the case, and a dispute is genuine

if a reasonable jury could find for the nonmoving party based on the competing

evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Villiarimo v.

Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002).

2 16-36057 We first review the legal standards governing Jelinek’s extracontractual

claims.

Under IFCA, an insured “who is unreasonably denied a claim for coverage or

payment of benefits by [her] insurer” may file an action for damages. Wash. Rev.

Code 48.30.015. A delay in payment due to a good-faith dispute over the value of a

claim does not amount to a denial of benefits under IFCA. See Bealsey v. State Farm

Mut. Auto. Ins. Co., No. C13-1106RSL, 2014 WL 1494030, at *6 (W.D. Wash. Apr.

16, 2014). But “[w]here the insurer pays or offers to pay a paltry amount that is not

in line with the losses claimed, is not based on a reasoned evaluation of the facts (as

known or, in some cases, as would have been known had the insurer adequately

investigated the claim), and would not compensate the insured for the loss at issue,

the benefits promised in the policy are effectively denied.” Morella v. Safeco Ins.

Co. of Ill., No. C12-0672RSL, 2013 WL 1562032, at *3 (W.D. Wash. Apr. 12,

2013).

Washington also recognizes that “an insurer has a duty of good faith to its

policyholder and violation of that duty may give rise to a tort action for bad faith.”

Smith v. Safeco Ins. Co., 78 P.3d 1274, 1276 (Wash. 2003). In UIM cases, “[t]hese

duties of good faith and fair dealing ‘require the insurer to conduct any necessary

investigation in a timely fashion and to conduct a reasonable investigation before

denying coverage.’” Edmonson v. Popchoi, 228 P.3d 780, 785 (Wash. Ct. App.

3 16-36057 2010) (quoting Coventry Assocs. v. Am. States Ins. Co., 961 P.2d 933, 938 (Wash.

1998)). Whether an insurer acted in bad faith is a question of fact. Smith, 78 P.3d

at 1277. “Violation of Washington’s insurance regulations is evidence of bad faith.”

Seaway Props., LLC v. Fireman’s Fund Ins. Co., 16 F. Supp. 3d 1240, 1253 (W.D.

Wash. 2014) (citing Coventry, 961 P.2d at 935).

Finally, to prevail in a CPA action, “a plaintiff must establish five distinct

elements: (1) unfair or deceptive act or practice; (2) occurring in trade or commerce;

(3) public interest impact; (4) injury to plaintiff in his or her business or property;

(5) causation.” Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719

P.2d 531, 533 (Wash. 1996). A plaintiff may establish the first two elements by

proving a violation of WAC 284-30-330, which enumerates specific unfair claims

settlement practices. Indus. Indem. Co. of the Nw., Inc. v. Kallevig, 792 P.2d 520,

529 (Wash. 1990); Torina Fine Homes, Inc. v. Mut. of Enumclaw Ins. Co., 74 P.3d

648, 652–53 (Wash. Ct. App. 2003). Of particular import here, WAC 284-30-330(4)

provides that it is unfair for an insurer to refuse “to pay claims without conducting a

reasonable investigation.”

With these principles in mind, Jelinek’s extracontractual claims share a

common allegation that ANPAC effectively denied her claim by failing to

reasonably investigate it, and by making an unreasonably low settlement offer

designed to avoid litigation rather than fairly compensate Jelinek based on a

4 16-36057 reasonable evaluation of the evidence. In granting summary judgment for ANPAC,

the district court concluded that ANPAC acted reasonably and merely had a good-

faith disagreement over the value of Jelinek’s claim.

The district court’s order reflects one reasonable view of the evidence, which

is favorable to ANPAC. But viewing the evidence in the light most favorable to

Jelinek, as we must as this stage, a jury reasonably could find that ANPAC only

superficially reviewed the records that had been provided to it, and that its settlement

offers were based on litigation avoidance without reference to Jelinek’s actual

injuries. For example, despite conducting a lengthy examination under oath

(“EUO”) of Jelinek in March 2015, the EUO transcript evidently was not made part

of the claim file, and there is no evidence that anyone other than an ANPAC attorney

reviewed the full transcript. Additionally, on April 21, 2015, “[i]n the interest of

trying to keep this matter out of the courthouse,” ANPAC offered Jelinek “$25,000

in full settlement of [her] UIM claim,” but warned that this “offer is the most that

ANPAC will pay.” ANPAC made this final offer despite having not yet received all

materials it had requested and to which it was entitled under the policy, such as an

independent medical examination. A jury reasonably could find that, by the time

Jelinek filed suit, ANPAC had decided it would not value her claim at more than

$25,000, regardless of what the evidence might show, and that the offer was based

on a desire to avoid litigation rather than a good-faith appraisal of Jelinek’s injuries.

5 16-36057 Because a jury reasonably could draw inferences in favor of either party based on

the evidence presented, the district court erred in granting summary judgment in

favor of ANPAC on Jelinek’s extracontractual claims.

REVERSED AND REMANDED.

6 16-36057