SCHINDLER, J.
¶ 1 Respondent Safeco Insurance Company of America filed a motion to publish the opinion filed on September 16, 2013. Third parties Farmers Insurance Company of America and Allstate Insurance Company also filed a motion to publish the opinion. A majority of the panel has determined that the motion to publish should be granted and the opinion filed on September 16, 2013 amended by the order filed on December 20, 2013 shall be published;
¶ 2 Now, therefore, it is hereby
¶ 3 ORDERED that the motion to publish is granted and the opinion filed on September 16, 2013 amended by the order filed on December 20, 2013 shall be published.
¶ 4 Joel Johnson appeals summary judgment dismissal of his claims against Safeco Insurance Co. and the order granting the CR 50 motion to dismiss his bad faith claim and claims against Mount Vernon Fire Insurance Co. under the Consumer Protection Act (CPA), chapter 19.86 RCW. We affirm.
¶ 5 The material facts are not in dispute. Joel Johnson owned a house in Edmonds located at 5703 145th Street Southwest and had a "Quality-Plus Homeowners Policy" with Safeco Insurance Co. On July 22, 2008, Johnson refinanced the Edmonds house with Taylor Bean & Whitaker Mortgage Corp. (TBW). TBW assumed responsibility for paying the insurance premium from the escrow account.
¶ 6 Johnson also owns rental property located at 9036-38 4th Avenue Southwest in Seattle. The rental property is a duplex with an upstairs unit of approximately 2,500 square feet and a small basement apartment of approximately 1,000 square feet. The mortgage payments for the rental property were $1,800 a month.
¶ 7 On September 28, 2008, Safeco sent TBW and Johnson a renewal notice for the upcoming 12-month policy period of November 17, 2008 to November 17, 2009. In October, TBW sent Safeco a check for the premium amount due to renew the policy. But TBW stopped payment on the check and did not reissue another check to pay for the premium.
¶ 8 On December 2, Safeco sent Johnson an expiration notice. The notice states that Safeco had not received the renewal premium from the mortgage company. The notice gave Johnson until January 5, 2009 to send Safeco the premium to "keep your policy in effect." Neither Johnson nor TBW paid the premium to renew the homeowners' insurance policy.
¶ 9 On January 11, 2009, Safeco sent a notice of cancellation to TBW stating that the mortgage company's interest in the policy would be cancelled on February 5. At some point after receipt of the notice of cancellation from Safeco, TBW obtained a "lender placed" homeowners' insurance policy for Johnson's house with Mount Vernon Fire Insurance Co. The policy was effective from November 17, 2008 to November 17, 2009.
¶ 10 On January 25, 2009, the chimney in Johnson's house caught fire. The fire destroyed the house and personal property.
¶ 11 When Johnson contacted Safeco, Safeco told him the policy expired because the premium was not paid. TBW informed Johnson that the Mount Vernon policy would cover the fire-related structure repairs, damaged personal property, and additional living expenses (ALE).
¶ 12 Johnson submitted a claim to Mount Vernon. Mount Vernon assigned Maureen Connor to process the claim. Mount Vernon also retained an independent local adjuster, Tony Brown. Brown inspected the property on February 6. On February 23, Brown submitted an estimate for the structural repairs of $133,041.30, plus an allowance for personal property. On February 25, Mount Vernon authorized payment for the full cost of repair. But after discovering the Safeco policy was in effect as to TBW, Mount Vernon cancelled payment. On April 27, Mount Vernon filed a claim with Safeco.
¶ 13 In early May, Johnson told Brown that he was living in his rental property and the rent was $1,800 a month. Johnson said that he moved into his unoccupied rental "to mitigate his exposure (ALE)."
¶ 14 On May 27, Connor informed Johnson that Mount Vernon needed documentation to support his ALE claim for $1,800 a month in rent. Johnson then sent a letter to Connor stating that "[t]he cost of the house I'm living in is $1,800 per month." In response, Connor told Johnson that "Mt. Vernon needed actual substantive documentation to support his claim."
¶ 15 Connor's supervisor James Ziff concluded that there was no coverage to reimburse Johnson for lost rent. But when Ziff spoke to Johnson on May 29, Ziff agreed to pay five months of ALE at $1,250 per month. Ziff also agreed to a $5,000 advance for reimbursement of the personal property loss. In August, Johnson contacted Brown to request additional ALE. On September 21, Ziff told Johnson that he had 30 days to provide documentation to support his ALE claim or Mount Vernon would close the claim.
¶ 16 Safeco concluded that TBW was entitled to coverage for the structural damage to Johnson's house. In June, Safeco entered into an agreement with Mount Vernon to pay 51 percent of the structural repair costs. On June 20, Safeco paid its share of its estimate of the actual cash value of the structure.
¶ 17 Mount Vernon asked an independent adjuster to review Safeco's estimate of the structural repair costs. In October, Mount Vernon paid its share of the structure repair cost based on its own estimate.
¶ 18 On November 25, an attorney representing Johnson sent a letter to Mount Vernon demanding payment of $18,000 for ALE. The attorney provided Mount Vernon with a lease agreement between Johnson and his previous renters Pete and Evon Little. According to the terms of the lease, the Littles rented the upstairs of the duplex from May 15, 2008 to November 15, 2008 for $1,800 a month. Mount Vernon denied ALE coverage on the grounds that the policy did not cover lost rent.
¶ 19 On December 18, Johnson notified Mount Vernon that he planned to file a claim under the Insurance Fair Conduct Act, chapter 48.30 RCW, for unreasonable denial or delay for ALE payments. Mount Vernon agreed to pay Johnson an additional $1,250 a month for the previous six months.
¶ 20 On May 24, 2010, Johnson filed a lawsuit against Safeco, Mount Vernon, and TBW. Johnson alleged Safeco breached the terms of the insurance policy by failing to provide proper notice to Johnson before cancellation, and refusing to pay him for the structural costs of repair, personal property damage, and ALE. Johnson alleged TBW had a contractual duty "to properly and timely make his insurance payments to avoid any cancellation of his insurance policy" with
¶ 21 Johnson also alleged that Safeco and Mount Vernon violated the insurance regulatory provisions of the Washington Administrative Code (WAC); violated the Consumer Protection Act (CPA), chapter 19.86 RCW, and the Insurance Fair Conduct Act, chapter 48.30 RCW; and breached the duty of good faith and fair dealing. After TBW filed for bankruptcy, Johnson voluntarily dismissed TBW without prejudice.
¶ 22 Safeco filed a motion for summary judgment arguing that because Johnson did not pay the premium, the homeowners' policy expired before the fire on January 25, 2009. The court granted the motion for summary judgment. The court ruled, in pertinent part:
¶ 23 The trial on the claims against Mount Vernon was scheduled to begin on October 3, 2011. On August 18, Johnson filed a motion for summary judgment on the breach of contract claim for ALE. Johnson argued that he was entitled to lost rental income of $1,800 a month.
¶ 24 On August 31, Mount Vernon took Johnson's deposition. Johnson testified that Dean Little signed the lease on May 15, 2008 and the Littles rented the upstairs portion of the duplex for $1,800 a month from May 2008 to December 2008. But Johnson later admitted that he had forged the lease and asserted the lease reflected the oral agreement he had with the Littles. Mount Vernon filed an amended answer asserting misrepresentation and fraud as an affirmative defense.
¶ 25 Mount Vernon filed a motion for entry of a judgment as a matter of law to dismiss. In support, Mount Vernon filed the affidavit of Dean Little. Little states that he and his spouse rented the basement apartment of Johnson's duplex from May 2008 to March 2009 for $750 a month, and they did not sign a lease.
¶ 26 On the first day of the scheduled trial, the court granted the CR 50 motion for judgment as a matter of law. The court ruled that "following plaintiff's factual admissions, no legally sufficient basis exists for a jury to find for the plaintiff on his contractual, extra-contractual or CPA claim." The order sets forth in detail the undisputed facts establishing Johnson intentionally misrepresented the terms of the rental agreement that was submitted to obtain ALE. The undisputed findings state, in pertinent part:
¶ 27 The court concluded there was no genuine issue of fact for trial, and under the "controlling case law authority, Mutual of Enumclaw Ins. Co. v. Cox, 110 Wn.2d 643[, 757 P.2d 499] (1988) and Onyon v. Truck Ins. Exch., 859 F.Supp. 1338 (W.D.Wash.1994); [and] Kim v. Allstate [Ins. Co., 153 Wn.App. 339, 223 P.3d 1180 (2009)],"
¶ 28 The court dismissed Johnson's complaint against Mount Vernon with prejudice because he "intentionally misrepresented material facts concerning his insurance claim with Mt. Vernon. [Johnson] is precluded from making any recovery from Mount Vernon by established law."
¶ 29 Johnson contends the court erred in dismissing his claims against Safeco for breach of the insurance contract, bad faith, and violation of the CPA.
¶ 30 When review summary judgment de novo. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate
CR 56(c); White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997).
¶ 31 The interpretation of an insurance contract is a question of law that we also review de novo. Bushnell v. Medico Ins. Co., 159 Wn.App. 874, 881, 246 P.3d 856 (2011). We construe insurance policies in the same manner as contracts. Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 665-66, 15 P.3d 115 (2000). In determining the legal effect of a contract, "a court must construe the entire contract together so as to give force and effect to each clause." Pub. Util. Dist. No. 1 of Klickitat County v. Int'l Ins. Co., 124 Wn.2d 789, 797, 881 P.2d 1020 (1994); Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165, 171, 110 P.3d 733 (2005) (principles of contract interpretation apply to insurance policies). If the language in an insurance contract is unambiguous, the court must enforce it as written and may not modify the contract or create an ambiguity where none exists. State Farm Mut. Auto. Ins. Co. v. Ruiz, 134 Wn.2d 713, 721, 952 P.2d 157 (1998).
¶ 32 Johnson contends the insurance policy for the 12-month period beginning November 17, 2008 became effective when Safeco sent him a copy of the renewal policy on September 28, 2008. But the renewal notice and express terms of the policy require payment of the premium in order to renew the policy. The September 28 renewal notice states:
¶ 33 The Safeco homeowners' insurance policy only applies to a loss that occurs during the policy period, and the policy may be renewed "for successive policy periods if the required premium is paid." The policy provides, in pertinent part:
¶ 34 The policy also provided that Safeco would pay claims and provide coverage only if the premiums were paid when due:
The plain and unambiguous language of the policy requires payment of the premium in order to renew the policy.
¶ 35 Further, the cases Johnson cites do not support the argument that the Safeco policy automatically renewed when Safeco sent him a copy of the policy. In Frye v. Prudential Insurance Co. of America, 157 Wn. 88, 95, 288 P. 262 (1930), the court addressed whether an insurance company was estopped from claiming the policy had expired for late payment when the insurer has a pattern of allowing the insured to make late payments. See also McGreevy v. Or. Mut. Ins. Co., 74 Wn.App. 858, 867, 876 P.2d 463 (1994) (amendments to insurance policy not effective where insured had no notice of the changes); Webster v. State Farm Mut. Auto. Ins. Co., 54 Wn.App. 492, 496, 774 P.2d 50 (1989) (no dispute that policy had been issued).
¶ 36 In the alternative, Johnson claims that mailing the renewal policy to him was an offer followed by acceptance when TBW sent payment of the premium to Safeco. Acceptance of an offer must be identical to the offer or no contract is formed. Sea-Van Invs. Assocs. v. Hamilton, 125 Wn.2d 120, 126, 881 P.2d 1035 (1994). The plain language of the policy required payment of the premium. Because there is no dispute TBW stopped payment and Johnson never paid the premium, the homeowners' policy was not renewed or in effect at the time of the fire.
¶ 37 Johnson also contends Safeco did not comply with either the policy or the statutory notice requirements. Safeco asserts that because Johnson did not pay the premium to renew the policy, it did not have an obligation to send a cancellation notice. But Safeco also asserts the December 2, 2008 notice of expiration complied with the requirement to provide notice of cancellation. We agree with Safeco.
¶ 38 In Safeco Insurance Co. v. Irish, 37 Wn.App. 554, 681 P.2d 1294 (1984), we held that the cancellation provisions of an insurance policy did not apply to the failure to pay a renewal premium.
Irish, 37 Wash.App. at 557-58, 681 P.2d 1294.
¶ 39 Here, as in Irish, Safeco did not cancel the policy during the policy period. Safeco sent a notice offering to renew the policy upon payment of the premium.
¶ 40 On December 2, 2008, Safeco notified Johnson again stating that the premium was past due and the policy had expired, but gave him until January 5, 2009 to pay the premium and "keep your policy in effect." The "HOMEOWNERS EXPIRATION NOTICE (for non-payment of premium)" sent to Johnson on December 2 states:
The December 2, 2008 notice complied with the requirements under the policy to provide notice "at least 20 days before the date cancellation takes effect"
¶ 41 The policy states, "When you have not paid the premium we may cancel at any time by notifying you at least 20 days before the date cancellation takes effect." RCW 48.18.290(1)(c) requires an insurer cancelling a policy for nonpayment of premium to send notice at least 10 days before the effective cancellation date.
¶ 42 Johnson claims he did not receive the December 2 notice. The unrebutted evidence establishes Safeco mailed the December 2 notice to Johnson. Under the policy and RCW 48.18.293(2), proof of mailing is proof of notice. See also Trinity Universal Ins. Co. v. Willrich, 13 Wn.2d 263, 273, 124 P.2d 950 (1942) (holding policy provision providing that mailing of notices was
¶ 43 Next, Johnson claims that because Safeco did not properly notify TBW, the policy was in effect as to both TBW and himself on January 25, 2009. We disagree.
¶ 44 Under the terms of the policy, TBW had a separate interest.
¶ 46 Consistent with the terms of the policy, on January 11, 2009, Safeco sent TBW a notice of cancellation. The notice states:
¶ 47 The court did not err in granting the summary judgment dismissal of the claims against Safeco.
¶ 48 Johnson contends the trial court erred in granting the CR 50 motion for judgment as a matter law. Johnson alleged Mount Vernon breached the duty "to pay for fire related repairs, personal property damage, and additional living expenses" in violation of the WAC and the CPA.
¶ 49 Johnson does not challenge dismissal of his contract claims. Nor can he. It is well established that if the insured commits fraud with the intent of deceiving the insurance company, the insured forfeits any claim under the policy. Cox, 110 Wash.2d at 652-53, 757 P.2d 499; see also William E. Shipley, Annotation, Overvaluation In Proof of Loss of Property Insured As Fraud Avoiding Fire Insurance Policy, 16 A.L.R.3D 774, § 2 (1967). Accordingly, the Mount Vernon policy expressly states, in pertinent part:
¶ 50 Nonetheless, Johnson asserts the court erred in dismissing his bad faith and CPA claims because his fraud occurred after
¶ 51 We review a CR 50 motion for judgment as a matter of law de novo. Goodman v. Goodman, 128 Wn.2d 366, 371, 907 P.2d 290 (1995). The decision to grant a motion for judgment as a matter of law is appropriate when, viewing the evidence most favorable to the nonmoving party, the court can say as a matter of law that there is no substantial evidence or reasonable inference to sustain a verdict for the nonmoving party. Guijosa v. Wal-Mart Stores, Inc. 144 Wn.2d 907, 915, 32 P.3d 250 (2001).
¶ 52 Johnson does not challenge any of the undisputed and extensive findings of fact set forth in the "Order Granting Defendant Mount Vernon's Motion for Judgment as a Matter of Law." The undisputed findings establish he intentionally misrepresented material facts during the course of his claim with Mount Vernon by submitting a fraudulent lease "in order to obtain ALE benefits under the Mt. Vernon policy."
¶ 53 In Cox, the insured purchased a homeowners' policy from Mutual of Enumclaw (MOE) that provided coverage for his home and $137,000 in unscheduled personal property. Cox, 110 Wash.2d at 645, 757 P.2d 499. The policy contained a provision stating that the entire policy was void if an insured willfully concealed or misrepresented any material fact or circumstance. Cox, 110 Wash.2d at 646, 757 P.2d 499.
¶ 54 A fire destroyed the house and its contents. Cox, 110 Wash.2d at 645, 757 P.2d 499. The insured Cox submitted an itemized inventory in the amount of $324,420 for personal property destroyed by the fire. Cox, 110 Wash.2d at 645, 757 P.2d 499. MOE "found no trace of certain items claimed lost," including jewelry and bronze statutes valued at $35,000 to $40,000. Cox, 110 Wash.2d at 646, 757 P.2d 499.
¶ 55 MOE filed a declaratory judgment action asserting that under the terms of the policy, the fraudulent claim voided coverage. Cox, 110 Wash.2d at 646, 757 P.2d 499. Cox filed a counterclaim alleging MOE committed bad faith and unfair and deceptive practices while processing his claim in violation of the WAC and the CPA. Cox, 110 Wash.2d at 646-47, 757 P.2d 499.
¶ 56 The jury found in favor of Cox. In the special interrogatories, the jury found that Cox committed fraud but that MOE was "estopped by its acts and conduct from voiding the insurance policies," and that MOE "act[ed] in bad faith in the handling of defendant's claim under the provisions of the Consumer Protection Act" and the WAC. Cox, 110 Wash.2d at 647-48, 757 P.2d 499. The trial court granted MOE's motion for judgment notwithstanding the verdict. Cox, 110 Wash.2d at 648, 757 P.2d 499. The trial court ruled that Cox's fraud precluded the use of estoppel. Cox, 110 Wash.2d at 648, 757 P.2d 499.
¶ 57 The Washington Supreme Court affirmed. Cox, 110 Wash.2d at 654, 757 P.2d 499. The Court held that the insured was not entitled to assert estoppel and that after finding that the insured committed fraud, the jury should not have considered the claims that MOE committed bad faith, violated the WAC, and violated the CPA. Cox, 110 Wash.2d at 652, 757 P.2d 499.
¶ 58 The Court held that where the insured intentionally misrepresents material facts during the claims process, the insured is not entitled to pursue bad faith or CPA claims. Cox, 110 Wash.2d at 652-53, 757 P.2d 499. In rejecting the insured's argument that the finding of fraud should not preclude his bad faith and CPA claims, the court states that the insured's fraud precludes any actions for bad faith or violation of the CPA. Cox, 110 Wash.2d at 652-53, 757 P.2d 499.
Cox, 110 Wash.2d at 652-53, 757 P.2d 499.
¶ 59 Here, because there is no dispute that Johnson committed fraud during the claim process, he is not entitled to pursue the bad faith and CPA claims against Mount Vernon. See also Tornetta v. Allstate Ins. Co., 94 Wn.App. 803, 806-07, 810, 973 P.2d 8 (1999) (where the insured misrepresented the value of the jewelry and falsified a receipt from the jewelry store but alleged the insurance company committed bad faith and violated the CPA during the investigation of his claim for the allegedly stolen items, the court held that a plaintiff who commits fraud may not "pursue a bad faith or CPA claim"); Kim, 153 Wash.App. at 361, 223 P.3d 1180 (insured's material misrepresentations "negate a finding that Allstate acted in bad faith or in violation of the CPA"); and Wickswat v. Safeco Ins. Co., 78 Wn.App. 958, 971, 904 P.2d 767 (1995) (where the insured intentionally misrepresented material facts during the claims process, under Cox, the insured is not entitled to sue the insurer for bad faith or violation of the CPA).
¶ 60 Strother v. Capitol Bankers Life Insurance Co., 68 Wn.App. 224, 842 P.2d 504 (1992), and Ellis v. William Penn Life Assurance Co. of America, 124 Wn.2d 1, 873 P.2d 1185 (1994), do not support Johnson's argument that despite his fraud, he is entitled to pursue the bad faith and CPA claims.
¶ 61 In Ellis, the Supreme Court consolidated and considered two cases, Ellis and Strother. Ellis, 124 Wash.2d at 3, 873 P.2d 1185. The Court distinguished Cox and held that in the context of a replacement life insurance policy, the insured's fraud does not prevent an innocent beneficiary from asserting equitable estoppel against an insurer who has acted in bad faith. Ellis, 124 Wash.2d at 14, 873 P.2d 1185. Ellis stands for the proposition that in the context of replacement life insurance, it would be unfair to bar an innocent beneficiary from relying on equitable estoppel where both the insurer and insured engaged in wrongful acts. See Wickswat, 78 Wash.App. at 975, 904 P.2d 767. But the same fairness and policy considerations do not apply in either Cox or here where no third party beneficiary is involved. See Wickswat, 78 Wash.App. at 975, 904 P.2d 767.
¶ 62 Johnson's reliance on Oregon Mutual Insurance Co. v. Barton, 109 Wn.App. 405, 36 P.3d 1065 (2001), is also misplaced. In Barton, the court addressed whether a settlement between an insurer and the insured was enforceable. The insurance company attempted to void the policy after the settlement, claiming the insured had made material misrepresentations. Barton, 109 Wash.App. at 411, 36 P.3d 1065. The court concluded the alleged misrepresentations could not have induced the settlement because the misrepresentations occurred after the settlement. Barton, 109 Wash.App. at 416, 36 P.3d 1065.
¶ 63 We conclude the trial court did not err in granting Mount Vernon's motion for judgment as a matter of law.
¶ 64 We affirm dismissal of Johnson's lawsuit against Safeco and Mount Vernon.
WE CONCUR: LAU, and DWYER, JJ.
