IN THE SUPREME COURT OF THE STATE OF WASHINGTON
ROBERT C. WOO, D.D.S., and ANNE M. )
WOO, husband and wife; and the marital )
community composed thereof, )
)
Petitioners, ) NO. 77684-9
)
v. )
) EN BANC
FIREMAN'S FUND INSURANCE )
COMPANY, a California corporation; and )
NATIONAL SURETY CORPORATION, )
an Illinois corporation, )
)
Respondents, )
)
DEPOSITORS INSURANCE COMPANY, ) Filed July 26, 2007
an Iowa corporation; and THE PACIFIC )
UNDERWRITERS CORPORATION,)
a Washington corporation, )
)
Defendants. )
___________________________________ )
FAIRHURST, J. -- This case arises from a practical joke that an oral surgeon,
Dr. Robert C. Woo, played on an employee, Tina Alberts, while he was performing
Woo v. Fireman's Fund Ins. Co., No. 77684-9
a dental procedure on her. Alberts brought suit against Woo as a result of the
practical joke, and Woo asked his insurer, Fireman's Fund Insurance Company1
(Fireman's), to defend him, claiming coverage under the professional liability,
employment practices liability, and general liability provisions of his insurance
policy. Fireman's refused Woo's request to defend.
Woo brought suit against Fireman's, claiming breach of duty to defend, bad
faith, and violation of the Consumer Protection Act (CPA), chapter 19.86 RCW.
The trial court granted Woo's motion for partial summary judgment, holding that
Fireman's had a duty to defend under all three provisions. After trial on the bad
faith and CPA claims, a jury found by special verdict that Fireman's failed to act in
good faith and violated the CPA. Division One of the Court of Appeals reversed,
holding that Fireman's had no duty to defend. Woo seeks review of the Court of
Appeals ruling and attorney fees and costs on appeal.
We partially reverse the Court of Appeals and reinstate the trial court's
judgment based on the jury's verdict. We hold that Fireman's had a duty to defend
1 Woo originally sued Fireman's, National Surety Corporation (a corporate affiliate of
Fireman's and provider of Woo's professional, employment practices, and general liability
coverage), Depositors Insurance Company (Woo's homeowner's and personal excess liability
insurer), and the Pacific Underwriters Corporation (Woo's insurance broker). Fireman's
stipulated that it would take responsibility for the acts and omissions of its corporate affiliate,
National Surety. Depositors defended Woo on a reservation of rights, obtained a partial summary
judgment, and assigned its rights to Woo. Woo voluntarily dismissed Pacific Underwriters from
the suit.
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
under the professional liability and general liability provisions but not under the
employment practices liability provision. We grant Woo's request for attorney fees
and costs on appeal.
I. STATEMENT OF THE CASE
Alberts worked for Woo as a dental surgical assistant for about five years.
Her family raised potbellied pigs, and she often talked about them at work. She
claims that over the course of her employment, Woo made several offensive
comments about her pigs. Woo claims his comments about Alberts' pigs were part
of a "friendly working environment" he encouraged in the office. Br. of Resp'ts at 4-
5.
The event that precipitated this case occurred during a procedure Woo agreed
to perform for Alberts to replace two of her teeth with implants. The procedure
required Woo to install temporary partial bridges called "flippers" as spacers until
permanent implants could be installed. Pet. for Review at 3. When he ordered the
flippers for Alberts' procedure, Woo also ordered a second set of flippers shaped
like boar tusks to play a practical joke on Alberts.2 While Alberts was under
2 Woo claims he was originally planning to show the boar tusk flippers to Alberts at the
time of the procedure while she was under local anesthetic. He claims, however, that because
Alberts asked for a general anesthetic the morning of the procedure, he decided instead to put
them in her mouth while she was under general anesthesia, take photographs, and show the
photographs to her afterward.
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
anesthesia, Woo and his staff removed Alberts' oxygen mask, inserted the boar tusk
flippers in her mouth and took photographs of her, some with her eyes pried open.
After taking the photographs, Woo completed the planned procedure and inserted
the normal flippers.
Woo subsequently had the photographs developed but claims that when he
saw them he concluded they were ugly and should not be shown to Alberts. He also
claims he told another surgical assistant he thought the photographs were ugly. He
claims that he did not expect his staff to give them to Alberts before talking with
him. However, about a month later, Woo's staff gave Alberts the photographs at a
gathering to celebrate her birthday. Stunned, Alberts proceeded to assist in a dental
surgery procedure after receiving the photographs but after that procedure, she went
home and never returned to her job. Woo called Alberts several times and wrote to
apologize, but Alberts did not respond.
Shortly thereafter, Alberts filed suit against Woo alleging outrage, battery,
invasion of privacy, false light, public disclosure of private acts, nonpayment of
overtime wages, retaliation for requesting payment of overtime wages, medical
negligence, lack of informed consent, and negligent infliction of emotional distress.
At the time of Alberts' suit, Woo's policy contained provisions for professional
liability, employment practices liability, and general liability.3 About five months
4
Woo v. Fireman's Fund Ins. Co., No. 77684-9
after Alberts filed suit, Fireman's notified Woo that his policy did not cover the
claims asserted in Alberts' suit and declined to fund his defense.
Fireman's refused to defend under the professional liability provision on the
grounds that the acts alleged in Alberts' complaint did not arise out of the provision
of dental services. It refused to defend under the employment practices liability
provision on the grounds that the complaint did not allege sexual harassment,
discrimination, or wrongful discharge as those terms were defined by the policy. It
refused to defend under the general liability provision on the grounds that the
alleged practical joke was intentional and was not considered a "business activity."
Pl. Ex. 25, at 7.
Because Fireman's refused to defend him, Woo paid attorney John Versnel to
defend him against Alberts' suit and settled with Alberts just prior to trial for
$250,000. Woo then brought suit against Fireman's alleging breach of duty to
defend under the professional, employment practices, and general liability
provisions of Woo's insurance policy, bad faith, and violation of the CPA. He
further alleged that Fireman's was estopped from denying coverage under the policy
as a result of its breach of the duty to defend.
3 A complete copy of the insurance policy is included in the record. See Def. Ex. 40.
Pages of defendant exhibit 40 are designated as "NSW" and are numbered from 000001 to
000112. All references to the insurance policy in this opinion will use that designation. In
addition, all boldface emphasis contained in the exhibit has been omitted.
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
The parties submitted cross motions for summary judgment.4 The trial court
granted Woo's motion for partial summary judgment holding that Fireman's
breached its duty to defend.
Following trial on the bad faith and CPA issues, a jury found that Fireman's
failed to act in good faith, violated the CPA, and awarded Woo damages in the
amount of $750,000. The trial court entered judgment against Fireman's and
awarded damages under the jury verdict, attorney fees and costs pursuant to
Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d 37, 811 P.2d 673
(1991), and recovery of the $250,000 settlement Woo negotiated with Alberts.
Fireman's appealed to the Court of Appeals, Division One. Woo v. Fireman's
Fund Ins. Co., 128 Wn. App. 95, 114 P.3d 681 (2005). The Court of Appeals
reversed the trial court's summary judgment order regarding duty to defend and
instructed the trial court to vacate the jury's verdict and dismiss the case. The Court
of Appeals did not reach Fireman's remaining issues on appeal. Id. at 118. Woo
petitioned this court for review, which we accepted. Woo v. Fireman's Fund Ins.
Co., 156 Wn.2d 1035, 134 P.3d 1171 (2006). Woo also requests attorney fees and
costs on appeal.
4 Woo moved for partial summary judgment arguing that Fireman's breached its duty to
defend him in the tort action against Alberts. Fireman's sought summary dismissal of Woo's
claims.
6
Woo v. Fireman's Fund Ins. Co., No. 77684-9
II. ISSUES
A. Did Fireman's have a duty to defend Woo under the professional liability,
employment practices liability, and general liability provisions of his
insurance policy?
B. Do other issues raised by Fireman's at the Court of Appeals have merit?
C. Is Woo entitled to attorney fees and costs on appeal?
III. ANALYSIS
An appellate court reviews a partial summary judgment order de novo and
engages in the same inquiry as the trial court. Weyerhaeuser Co. v. Commercial
Union Ins. Co., 142 Wn.2d 654, 692 n.17, 15 P.3d 115 (2000). Interpretation of an
insurance contract is a question of law reviewed de novo. Roller v. Stonewall Ins.
Co., 115 Wn.2d 679, 682, 801 P.2d 207 (1990), overruled on other grounds by
Butzberger v. Foster, 151 Wn.2d 396, 89 P.3d 689 (2004). When we construe the
language of an insurance policy, we give it the same construction that an "average
person purchasing insurance" would give the contract. Id.
A. The duty to defend
The rule regarding the duty to defend is well settled in Washington and is
broader than the duty to indemnify. Hayden v. Mut. of Enumclaw Ins. Co., 141
Wn.2d 55, 64, 1 P.3d 1167 (2000). The duty to defend "arises at the time an action
is first brought, and is based on the potential for liability." Truck Ins. Exch. v.
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
VanPort Homes, Inc., 147 Wn.2d 751, 760, 58 P.3d 276 (2002) (emphasis added).
An insurer has a duty to defend "'when a complaint against the insured, construed
liberally, alleges facts which could, if proven, impose liability upon the insured
within the policy's coverage.'" Id. (quoting Unigard Ins. Co. v. Leven, 97 Wn.
App. 417, 425, 983 P.2d 1155 (1999)). An insurer is not relieved of its duty to
defend unless the claim alleged in the complaint is "clearly not covered by the
policy." Id. (citing Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 561, 951 P.2d 1124
(1998)). Moreover, if a complaint is ambiguous, a court will construe it liberally in
favor of "triggering the insurer's duty to defend." Id. (citing R.A. Hanson Co. v.
Aetna Ins. Co., 26 Wn. App. 290, 295, 612 P.2d 456 (1980)).5 In contrast, the duty
to indemnify "hinges on the insured's actual liability to the claimant and actual
coverage under the policy." Hayden, 141 Wn.2d at 64 (emphasis added). In sum,
the duty to defend is triggered if the insurance policy conceivably covers the
5 Fireman's argues that we should adopt a "reasonable expectations" standard in
determining whether an insurer has a duty to defend an insured. Suppl. Br. of Resp'ts at 3 (citing
E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 Wn.2d 901, 907, 726 P.2d 439
(1986)). It argues "an insurer has no duty to defend when the insured can have no reasonable
expectation of coverage." Id. It also suggests the Court of Appeals adopted such a test when it
concluded, "[n]o reasonable person could believe that a dentist would diagnose or treat a dental
problem by placing boar tusks in the mouth while the patient was under anesthesia in order to take
pictures with which to ridicule the patient." Id.; Woo, 128 Wn. App. at 103. Fireman's misreads
the Court of Appeals' statement. The court was referring to whether a reasonable patient would
believe that the dentist would put boar tusks in her mouth whereas Fireman's refers to whether a
reasonable insured would expect his policy to provide coverage. In any case, neither comports
with our established rule regarding the duty to defend, and we decline to adopt Fireman's
reasoning.
8
Woo v. Fireman's Fund Ins. Co., No. 77684-9
allegations in the complaint, whereas the duty to indemnify exists only if the policy
actually covers the insured's liability.
"There are two exceptions to the rule that the duty to defend must be
determined only from the complaint, and both the exceptions favor the insured."
Truck Ins., 147 Wn.2d at 761. First, if it is not clear from the face of the complaint
that the policy provides coverage, but coverage could exist, the insurer must
investigate and give the insured the benefit of the doubt that the insurer has a duty to
defend. Id. Notice pleading rules, which require only a short and plain statement of
the claim showing that the pleader is entitled to relief, impose a significant burden
on the insurer to determine if there are any facts in the pleadings that could
conceivably give rise to a duty to defend. Hanson, 26 Wn. App. at 294. Second, if
the allegations in the complaint "'"conflict with facts known to or readily
ascertainable by the insurer,"'" or if "'"the allegations . . . are ambiguous or
inadequate,"'" facts outside the complaint may be considered. Truck Ins., 147
Wn.2d at 761 (quoting Atl. Mut. Ins. Co. v. Roffe, Inc., 73 Wn. App. 858, 862, 872
P.2d 536 (1994) (quoting E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co.,
106 Wn.2d 901, 908, 726 P.2d 439 (1986))). The insurer may not rely on facts
extrinsic to the complaint to deny the duty to defend--it may do so only to trigger the
duty. Id.
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
The duty to defend is a valuable service paid for by the insured and one of the
principal benefits of the liability insurance policy. Griffin v. Allstate Ins. Co., 108
Wn. App. 133, 138, 29 P.3d 777, 36 P.3d 552 (2001); Safeco Ins. Co. v. Butler,
118 Wn.2d 383, 392, 823 P.2d 499 (1992); Tank v. State Farm Fire & Cas. Co.,
105 Wn.2d 381, 390, 715 P.2d 1133 (1986); Thomas V. Harris, Washington
Insurance Law ยง 11.1, at 11-1, 11-2 (2d ed. 2006). If the insurer is uncertain of its
duty to defend, it may defend under a reservation of rights and seek a declaratory
judgment that it has no duty to defend. Truck Ins., 147 Wn.2d at 761 (citing
Grange Ins. Co. v. Brosseau, 113 Wn.2d 91, 93-94, 776 P.2d 123 (1989)).
Although the insurer must bear the expense of defending the insured, by doing so
under a reservation of rights and seeking a declaratory judgment, the insurer avoids
breaching its duty to defend and incurring the potentially greater expense of
defending itself from a claim of breach. Id.
1. Professional liability provision
Woo makes three basic arguments with regard to Fireman's duty to defend
under the professional liability provision. First, he argues that the insertion of boar
tusk flippers in Alberts' mouth constituted the practice of dentistry as defined in his
policy and RCW 18.32.020. Second, he argues that the Court of Appeals
improperly extended the "sexual misconduct" rule from Standard Fire Insurance
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
Co. v. Blakeslee, 54 Wn. App. 1, 771 P.2d 1172 (1989) in concluding that Woo's
actions did not constitute the practice of dentistry. Lastly, he argues that application
of Blakeslee to the facts of this case was uncertain and Fireman's had a duty to
defend until the rule was clarified by the court.
a. Conduct falling within the definition of the practice of dentistry
The professional liability provision states that Fireman's will defend any
claim brought against the insured "even if the allegations of the claim are
groundless, false or fraudulent." NSW at 000080. It defines "dental services" as
"all services which are performed in the practice of the dentistry profession as
defined in the business and professional codes of the state where you are licensed."
NSW at 000102. RCW 18.32.020 defines the practice of dentistry and states:
A person practices dentistry, within the meaning of this chapter, who
(1) represents himself as being able to diagnose, treat, remove stains
and concretions from teeth, operate or prescribe for any disease, pain,
injury, deficiency, deformity, or physical condition of the human teeth,
alveolar process, gums, or jaw, or (2) offers or undertakes by any
means or methods to diagnose, treat, remove stains or concretions from
teeth, operate or prescribe for any disease, pain, injury, deficiency,
deformity, or physical condition of the same, or take impressions of the
teeth or jaw, or (3) owns, maintains or operates an office for the
practice of dentistry, or (4) engages in any of the practices included in
the curricula of recognized and approved dental schools or colleges, or
(5) professes to the public by any method to furnish, supply, construct,
reproduce, or repair any prosthetic denture, bridge, appliance, or other
structure to be worn in the human mouth.
Woo argues that the Court of Appeals erred in concluding the insertion of
11
Woo v. Fireman's Fund Ins. Co., No. 77684-9
boar tusk flippers in Alberts' mouth did not constitute the practice of dentistry as
defined in RCW 18.32.020. He claims the joke was "intertwined with employee
and patient relationships, areas of Woo's ownership and operation of the dental
office." Suppl. Br. of Pet'r Woo at 5. Fireman's responds that the allegations in
Alberts' complaint unambiguously establish that Woo's practical joke was not
connected to treating Alberts' condition. It asserts the boar tusk flippers were not
intended to replace Alberts' teeth--they were intended only as a practical joke.
Fireman's also asserts that insertion of the boar tusk flippers was not covered under
the professional liability provision because Woo "interrupted his rendering of dental
services." Resp'ts' Answer to Br. of Amicus Curiae Washington State Trial
Lawyers Association Foundation (WSTLA Foundation) at 5.
The Court of Appeals based its conclusion that Fireman's had no duty to
defend Woo under the professional liability provision on two flawed premises.
First, it concluded, "[n]o reasonable person could believe that a dentist would
diagnose or treat a dental problem by placing boar tusks in the mouth while the
patient was under anesthesia in order to take pictures with which to ridicule the
patient." Woo, 128 Wn. App. at 103. As we note in footnote 5, supra, what a
reasonable patient would believe a dentist would do is irrelevant to our
determination of whether Fireman's had a duty to defend under the professional
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Woo v. Fireman's Fund Ins. Co., No. 77684-9
liability provision. Rather, the rule requires us to determine whether the complaint
alleged facts that were conceivably covered under the insurance policy.
Second, the Court of Appeals erred in concluding Fireman's had no duty to
defend Woo under the professional liability provision because Woo's actions "could
not conceivably be considered a means or method 'to diagnose, treat, remove stains
and concretions from teeth, operate or prescribe for any disease, pain, injury,
deficiency, deformity, or physical condition.'" Woo, 128 Wn. App. at 103 (quoting
RCW 18.32.020). The court's definition of what Woo's policy conceivably covers
was overly constrained. In addition to covering the rendering of dental services, the
professional liability provision covers ownership, maintenance, or operation of an
office for the practice of dentistry and Alberts' complaint alleged Woo's practical
joke took place while Woo was conducting his dental practice. The insertion of the
boar tusk flippers was also intertwined with Woo's dental practice because it
involved an interaction with an employee. In fact, that employee interaction was as
much a part of his dental practice as the rendering of dental services to his patients.
Moreover, Woo's practical joke did not interrupt the dental surgery
procedure, as Fireman's argues. After administering anesthesia and preparing
Alberts for surgery, Woo inserted the boar tusk flippers, took photographs, removed
the boar tusk flippers, and inserted another set of flippers. The acts that comprised
13
Woo v. Fireman's Fund Ins. Co., No. 77684-9
the practical joke were integrated into and inseparable from the overall procedure.
In sum, Alberts' complaint alleges that Woo inserted a flipper, albeit oddly
shaped, during a dental surgery procedure while he was operating an office for the
practice of dentistry. The rule for determining whether an insurer has a duty to
defend only requires the complaint to allege facts that could impose liability on the
insurer. Truck Ins., 147 Wn.2d at 760. Because RCW 18.32.020 defines the
practice of dentistry so broadly, the fact that his acts occurred during the operation
of a dental practice conceivably brought his actions within the professional liability
provision of his insurance policy.
We conclude that Fireman's had a duty to defend under Woo's professional
liability provision because the insertion of boar tusk flippers in Alberts' mouth
conceivably fell within the policy's broad definition of the practice of dentistry.
b. Extension of Blakeslee
Woo next argues that in concluding that his practical joke did not constitute
the practice of dentistry, the Court of Appeals improperly extended Blakeslee to
include more than just sexual assault. He argues that Blakeslee should apply only in
a sexual assault context because sexual contact during dental treatment presumes
intent to injure whereas the same does not hold true for "an innocently conceived
group joke." Suppl. Br. of Pet'r Woo at 8. Fireman's counters that Blakeslee
14
Woo v. Fireman's Fund Ins. Co., No. 77684-9
merely stands for the general proposition that an insured should not expect insurance
coverage to apply to problems that fall outside the policy coverage. It also claims
the court did not apply the "intent to injure" rule of sexual assault cases with regard
to the professional liability provision--it only applied settled law to a unique set of
facts. Resp'ts' Answer to Amicus Curiae WSTLA's [Foundation] Memo. in
Support of Pet. for Review at 3.
Blakeslee involved a dentist accused of sexually assaulting a patient during a
dental procedure while the patient was under the influence of nitrous oxide. 54 Wn.
App. at 2. The court noted that medical malpractice insurance policies do not cover
a physician's sexual contact with a patient. Id. at 8-9 (citing Wash. Ins. Guar. Ass'n
v. Hicks, 49 Wn. App. 623, 627, 744 P.2d 625 (1987) (a gynecologist's sexual
assault of a patient)). It concluded, therefore, that because there could be no
legitimate course of treatment involving sexual contact between a dentist and a
patient, the dentist's insurance policy did not cover his actions. Id. at 9.
The Court of Appeals analogized the facts of this case to Blakeslee by noting
that, like Blakeslee, Woo took advantage of Alberts' anesthetized state for his own
purposes. Woo, 128 Wn. App. at 104. It also analogized this case to Blakeslee on
the grounds that the professional services that Woo rendered were not the proximate
cause of Alberts' injuries. Id.
15
Woo v. Fireman's Fund Ins. Co., No. 77684-9
We conclude the Court of Appeals improperly analyzed the significance of
the act at issue by focusing only on the facts that Woo inserted the boar tusk flippers
for his own purposes and the injuries did not arise from the treatment Alberts
requested. It ignored the fact that application of Blakeslee to other contexts could
inappropriately narrow the duty to defend. It also failed to consider that sexual
contact is never an appropriate component of dental treatment whereas other actions
could conceivably fall within the broad definition set out in the insurance policy and
RCW 18.32.020.6
Additionally, the Court of Appeals failed to recognize that the Blakeslee
analysis was based on the duty to indemnify, not the duty to defend. Woo, 128 Wn.
App. at 103. The insurer in Blakeslee properly defended under a reservation of
rights and sought a declaratory judgment. Blakeslee, 54 Wn. App. at 3. Blakeslee's
analysis, therefore, focused on whether the insurance policy actually provided
coverage. In contrast, our focus in this case is whether the facts alleged in the
6 Blakeslee expressly recognized a distinction between factual situations in which sexual
contact is necessitated by the treatment being provided and those in which it is not, citing a case
involving improper sexual contact by a gynecologist. Blakeslee, 54 Wn. App. at 9 (citing St. Paul
Fire & Marine Ins. Co. v. Asbury, 149 Ariz. 565, 720 P.2d 540 (Ct. App. 1986)). The Asbury
court concluded that because the improper sexual contact was "intertwined with and inseparable
from" a gynecologist's services, it fell within the gynecologist's professional liability policy. Id.
Although the Blakeslee court rejected Asbury, we note that the facts here are more analogous to
those in Asbury than they are to Blakeslee. Woo's insertion of the boar tusk flippers was
intertwined with and inseparable from the real treatment he performed on Alberts whereas the
sexual contact by the dentist in Blakeslee was not.
16
Woo v. Fireman's Fund Ins. Co., No. 77684-9
complaint conceivably triggered a duty on the part of Fireman's to defend. Thus,
Blakeslee does not even provide the proper framework for our analysis.
We conclude that the Court of Appeals improperly extended Blakeslee to a
nonsexual assault context.
c. Refusal to defend when there was an undetermined rule of law
Finally, Woo argues that application of Blakeslee to the facts of this case was
uncertain at best and Fireman's had a duty to defend until and unless application of
the rule in this particular context was clarified by the court. Amicus WSTLA
Foundation agrees, arguing that under the "complaint allegation rule," an insurer is
obligated to err in favor of defending the insured if the law is uncertain "at the time
[the insurer] was required to decide whether to provide [the insured] a defense." Br.
of Amicus Curiae WSTLA Foundation at 21 (emphasis omitted). WSTLA
Foundation also challenges Fireman's argument to the Court of Appeals that if a
legal issue is "fairly debatable" at the time an insured requests defense, the insurer
may refuse. Id. at 22; Appellants Opening Br. at 24-26 & n.12, 49-53.
Fireman's obtained a formal written legal opinion from attorney Stephen G.
Skinner, who advised that Fireman's did not have a duty to defend under the
professional liability provision based on Blakeslee and Hicks. Skinner's opinion
acknowledged, however, that neither Blakeslee nor Hicks were entirely on point and
17
Woo v. Fireman's Fund Ins. Co., No. 77684-9
that a court reviewing them might conclude they relate only to cases involving
sexual assault.
Fireman's reliance on Skinner's equivocal advice regarding the application of
Blakeslee or Hicks to this case flatly contradicts one of the most basic tenets of the
duty to defend. The duty to defend arises based on the insured's potential for
liability and whether allegations in the complaint could conceivably impose liability
on the insured. Truck Ins., 147 Wn.2d at 760. An insurer is relieved of its duty to
defend only if the claim alleged in the complaint is "clearly not covered by the
policy." Id. Moreover, an ambiguous complaint must be construed liberally in
favor of triggering the duty to defend. Id.
Fireman's is essentially arguing that an insurer may rely on its own
interpretation of case law to determine that its policy does not cover the allegations
in the complaint and, as a result, it has no duty to defend the insured. However, the
duty to defend requires an insurer to give the insured the benefit of the doubt when
determining whether the insurance policy covers the allegations in the complaint.
Here, Fireman's did the opposite--it relied on an equivocal interpretation of case law
to give itself the benefit of the doubt rather than its insured.
We conclude that Fireman's inappropriately relied on Blakeslee to deny Woo
a defense.
2. Employment practices liability provision
18
Woo v. Fireman's Fund Ins. Co., No. 77684-9
The employment practices liability provision states that Fireman's will defend
any claim brought against the insured "even if the allegations of the claim are
groundless, false or fraudulent." NSW at 000094. It further states, in pertinent part,
that Fireman's will "pay all sums which you . . . are legally required to pay as
damages as a result of sexual harassment, discrimination, or wrongful discharge that
arise out of a wrongful employment practice." Id. Woo and Fireman's do not argue
that anything other than wrongful discharge applies here. "Wrongful discharge" is
defined, in pertinent part, as "the unfair or unjust termination of an employment
relationship which . . . inflicts emotional distress upon the employee, defames the
employee, [or] invades the employee's privacy." NSW at 000106. "Wrongful
employment practice" is defined, in pertinent part, as "any negligent act, error,
omission, or breach of duty committed in the course of . . . relations with
employees." Id.
Woo argues Fireman's had a duty to defend him under the employment
practices liability provision because Alberts' complaint can reasonably be read to
include allegations of negligent acts that led to an involuntary or constructive
discharge.7 Fireman's counters that even if the joke qualified as a wrongful
7 Woo also takes issue with the Court of Appeals' statement that Fireman's had no duty to
defend him under the employment practices liability provision if it determined the complaint
alleged no "cognizable cause of action." Pet. for Review at 15-17 (citing Woo, 128 Wn. App. at
105). He notes that the duty to defend focuses on "the allegations of the complaint and the
19
Woo v. Fireman's Fund Ins. Co., No. 77684-9
employment practice, it did not trigger the duty to defend because the complaint did
not allege that the wrongful discharge arose out of the wrongful employment
practice and that the emotional distress resulted from the wrongful discharge.
Instead, Fireman's argues Alberts alleged that the wrongful employment practice
caused her emotional distress and the emotional distress caused her to leave her
job. The Court of Appeals agreed, basing its conclusion that Alberts did not allege
constructive discharge on the fact that the complaint did not allege violation of an
employment contract--only violation of the insurance policy to which she was not a
party. Woo, 128 Wn. App. at 105.
Alberts' complaint alleged that Woo frequently taunted her about her
potbellied pigs. It also alleged that after the office staff showed her the photographs
she assisted with a surgical procedure and during that procedure Woo told her she
could take the boar tusk flippers home as a trophy. After the procedure, Alberts
collapsed in tears and then told the office manager not to have anyone contact her,
went home, and never returned. These facts indicate that Alberts' emotional
policy, not on whether a claim happens to be 'cognizable.'" Pet. for Review at 17. The insurance
policy states that Fireman's will "defend any claim brought against you . . . seeking damages that
are covered under this section of this policy . . . even if the allegations of the claim are
groundless, false or fraudulent." NSW at 000094 (emphasis added). Woo seems to be
suggesting that insurers should not be involved in determining whether claims are legally
cognizable, but that concern does not change the fact that Alberts' complaint did not allege a
claim for wrongful discharge as defined by Woo's insurance policy. Therefore, we need not reach
this argument.
20
Woo v. Fireman's Fund Ins. Co., No. 77684-9
distress resulted from the taunting and the practical joke, not from a wrongful
discharge. Thus, they do not meet the definition of wrongful discharge under Woo's
policy.
We conclude Fireman's had no duty to defend under Woo's employment
practices liability provision because Alberts' complaint clearly did not allege actions
that met the definition of wrongful discharge under the policy.
3. General liability provision
The general liability provision covers bodily injury, personal injury,
advertising injury, and property damage. Only the bodily injury and personal injury
portions apply in this case.
a. Bodily injury
"Bodily injury" is defined as "bodily harm, sickness or disease," NSW at
000102, and is covered under the general liability coverage if "caused by an
occurrence." NSW at 000032. "Occurrence" is defined as "[a]n accident, including
continuous or repeated exposure to substantially the same general harmful
conditions." NSW at 000045. "Accident" is defined as a "fortuitous circumstance,
event or happening that takes place and is neither expected nor intended from the
standpoint of the insured." NSW at 000043.
Woo argues that Alberts' complaint should be construed liberally in his favor
21
Woo v. Fireman's Fund Ins. Co., No. 77684-9
as triggering a duty to defend because the complaint alleged both intentional and
negligent conduct resulting in bodily injury.8 Fireman's counters that the inclusion
of negligence causes of action in Alberts' complaint did not render the complaint
ambiguous regarding whether Woo's conduct was intentional. Fireman's suggests
that any ambiguity must be found in the complaint's factual allegations, arguing that
none of the conduct alleged in the complaint was accidental or fortuitous.
The Court of Appeals agreed with Fireman's and concluded that any bodily
injury alleged in Alberts' complaint9 did not result from an accident as defined in the
policy because the complaint alleged exclusively intentional conduct. Woo, 128
Wn. App. at 106. It also concluded that even if Woo had second thoughts about
giving Alberts the photographs, that fact would not render the allegations in Alberts'
complaint ambiguous because the conduct related to taking the photographs was
intentional. Id.
Alberts' complaint alleged that Woo repeatedly taunted her about her pigs
8 Woo also argues that Fireman's denial of coverage under the general liability provision
contradicts its denial of coverage under the professional liability provision, calling Fireman's
denial of coverage a "flip flop." Pet. for Review at 12. He claims Fireman's denied coverage
under the professional liability provision because Woo was not providing dental services and
simultaneously denied coverage under the general liability provision because Woo was providing
professional services. Id.; Pl. Ex. 25, at 9. Fireman's does appear to have denied coverage under
the two provisions for contradictory reasons but because this case does not involve Fireman's
duty to indemnify, we need not reach this issue.
9 In her complaint, Alberts alleged facts that arguably constitute bodily harm, such as acute
and chronic depression, anxiety, panic attacks, nightmares, and suicidal ideation.
22
Woo v. Fireman's Fund Ins. Co., No. 77684-9
and that Woo or an assistant working under his supervision ordered boar tusk
flippers, placed the flippers in her mouth, pried her eyes open, took photographs of
her with the flippers in her mouth, had the photographs developed, and gave the
photographs to her. However, three of the claims listed in Alberts' complaint
alleged negligent causes of action--medical negligence, lack of informed consent,
and negligent infliction of emotional distress.
The insurer's duty to defend is triggered if a complaint is ambiguous. Truck
Ins., 147 Wn.2d at 760. The insured must be given the benefit of the doubt if it is
not clear from the face of the complaint that the policy does not provide coverage.
Id. at 761. In short, if it is not clear that the complaint does not contain allegations
that are not covered by the policy, the insurer has a duty to defend.
Woo's policy covers bodily injury that is caused by an "accident," which is
defined as a "fortuitous circumstance, event or happening that takes place and is
neither expected nor intended from the standpoint of the insured." NSW at 000043
(emphasis added). The Court of Appeals limited its analysis of the bodily injury
coverage to whether Alberts' complaint alleged exclusively intentional conduct.
However, based on the language of Woo's policy, he had to have "expected or
intended" the specific "event or happening" alleged in the complaint. Thus, he
would have to have intended not only the "event or happening" of photographing
23
Woo v. Fireman's Fund Ins. Co., No. 77684-9
her with the boar tusk flippers in her mouth but also the "event or happening" that
Alberts would sustain the specific injuries she alleged in her complaint. Although
Woo's conduct was likely intentional, it is conceivable that Woo did not intend that
conduct to result in Alberts' injuries.
Moreover, Woo's policy covers "continuous or repeated exposure to
substantially the same general harmful conditions." NSW at 000045. Woo's
"taunts" and the practical joke could have been part of Woo's "continuous or
repeated" efforts to cultivate a "friendly working environment" in the office. NSW
at 000045; Br. of Resp'ts at 4-5.
We conclude it is not clear that Alberts' complaint does not contain
allegations that are not covered by Woo's policy and Fireman's had a duty to defend
him under the bodily injury portion of the general liability provision.
b. Personal injury
"Personal injury" is defined, in pertinent part, as "harm that arises out of one
or more of the following offenses: assault, battery, mental anguish, mental shock or
humiliation; . . . [or] invasion of an individual's right of privacy." NSW at 000105.
Personal injury is covered under the general liability coverage if it is "caused by an
offense arising out of your business." NSW at 000032 (emphasis added).
"Offense" is defined as "a fortuitous, inadvertent or mistaken business activity
24
Woo v. Fireman's Fund Ins. Co., No. 77684-9
giving rise to . . . personal injury neither expected nor intended from the standpoint
of the insured." NSW at 000045. "Your business" is defined as "the trade,
profession or occupation in which you are engaged and which is shown on the
declarations page." NSW at 000047.
Our analysis of Woo's intent to cause personal injury is comparable to our
analysis of his intent to cause bodily injury. Alberts' complaint alleged that Woo
taunted her about her pigs and that he played an arguably offensive practical joke on
her but Woo claims he did so only in an effort to create a "friendly working
environment" in his business office. Br. of Resp'ts at 4-5. As with bodily injury,
Woo's policy covers personal injury if caused by a "fortuitous, inadvertent or
mistaken business activity giving rise to . . . personal injury neither expected nor
intended from the standpoint of the insured." NSW at 000045 (emphasis added).
Because, as we concluded above, Alberts' complaint did not clearly allege that Woo
expected or intended that his taunts or the practical joke would cause personal
injury to Alberts, Fireman's had a duty to defend him.
Woo also argues the Court of Appeals erroneously applied a Louisiana case
when it concluded that any personal injury alleged in Alberts' complaint was not
caused by an "offense arising out of your business," NSW at 000032, because "the
particular activities engaged in at the time of the injury were ordinarily incident to
25
Woo v. Fireman's Fund Ins. Co., No. 77684-9
business pursuits." Woo, 128 Wn. App. at 107 (citing Jackson v. Frisard, 96-0547
(La. App. 1 Cir. 1996 12/20/96); 685 So. 2d 622, 629). Woo disputes the court's
interpretation of Jackson and argues that because there was no exception to the
policy for practical jokes, it covered anything that occurred in the context of running
a dental office. He claims the court's focus ignored all conduct unrelated to the core
functions of the business. Fireman's counters that the mere fact that an employer
plays a joke on an employee at the office does not convert it into a business
activity.10
Jackson involved an injury incurred when state troopers engaged in horseplay
during a defensive training session. 685 So. 2d at 624. The insurance provision at
issue excluded coverage for bodily injury arising out of business pursuits of the
insured, but the exclusion did not apply to "'activities which are ordinarily incident
to non-business activities.'" Id. at 629 (quoting policy). Jackson held that the
trooper's actions were the type of activity that were "ordinarily incident to non-
business pursuits," and were not subject to the policy exclusion. Id. at 631. Thus,
10 Amicus WSTLA Foundation also urges us to address the broader issue of whether
practical jokes generally fall outside an insurer's duty to defend. It argues that the Court of
Appeals ruling inappropriately implied that practical jokes are outside insurance coverage as a
matter of law. It also argues that such a holding disregards the principle of fortuity--in other
words, practical joking cannot be considered outside insurance coverage if no injury is intended.
We decline to reach the broad issue urged by WSTLA Foundation because we have limited
briefing on it and need not reach it to resolve the specific case before us. Moreover, because the
issue was raised only by amicus curiae, we need not consider it. Seeley v. State, 132 Wn.2d 776,
808 n.20, 940 P.2d 604 (1997).
26
Woo v. Fireman's Fund Ins. Co., No. 77684-9
contrary to Woo's assertion, the Court of Appeals properly interpreted the insurance
policy in Jackson as providing coverage for personal injury arising from acts that
were not ordinarily incident to business pursuits. It also properly concluded that
the policy in this case provided coverage for personal injury arising from the
business. Woo, 128 Wn. App. at 107.
We conclude the Court of Appeals erred in determining that Woo's conduct
did not arise from his business and, therefore, Fireman's had a duty to defend him
under the personal injury portion of the general liability provision. Alberts'
complaint alleged that Woo's staff participated in playing a practical joke on a
colleague during the course of a dental procedure that was undoubtedly part of
Woo's business. Woo's policy language provides broad coverage for personal
injuries "arising from" his business, and the definition of "your business" is equally
broadly defined.
We partially reverse the Court of Appeals and reinstate the trial court's
judgment based on the jury's verdict. We hold that the court erred in concluding
that Fireman's had no duty to defend Woo under the professional liability and
general liability provisions but it did not err in concluding that Fireman's had no
duty to defend under the employment practices liability provision. We also hold
that the court improperly extended Blakeslee to a nonsexual assault context and
27
Woo v. Fireman's Fund Ins. Co., No. 77684-9
Fireman's improperly relied on Blakeslee as a basis for refusing to defend Woo.
B. Other issues Fireman's raised at the Court of Appeals
The Court of Appeals did not resolve certain issues because it determined that
Fireman's had no duty to defend Woo. RAP 13.7 requires us to either consider and
decide those issues or remand the case to the Court of Appeals to decide them. We
elect to decide them rather than remand to the Court of Appeals.
Fireman's raised four additional arguments at the Court of Appeals: (1) that
the jury's bad faith and CPA violation verdict could not be upheld on appeal if the
Court of Appeals found that Fireman's correctly declined to defend Woo on only
some of the policy provisions, (2) that the jury verdict could not be upheld because
the trial court erred in instructing the jury that Fireman's had breached its duty to
defend, (3) that the trial court erred in resolving its claim of collusion in the
settlement between Woo and Alberts, and (4) that the trial court erred in denying
relief from emotional distress damages the jury awarded to Woo based on Fireman's
refusal to defend him.
1. A new trial is not warranted if the Court of Appeals is reversed on only
some provisions of the insurance policy
Fireman's argues that if the Court of Appeals reversed on only some of the
duty to defend claims, it should remand for new trial because there was insufficient
proof of bad faith if Fireman's correctly refused to defend with regard to some of
28
Woo v. Fireman's Fund Ins. Co., No. 77684-9
the claims. Fireman's admits, however, that the bulk of Woo's case revolved
around the professional liability provision. Woo argues that Fireman's waived this
issue because it failed to propose a special verdict identifying the coverages under
which the jury found bad faith.
Because Fireman's acknowledges that the bulk of Woo's case related to the
professional liability provision and we reverse the Court of Appeals with respect to
that provision, we conclude the jury's verdict that Fireman's acted in bad faith is not
compromised and a new trial is not warranted.
2. The trial court did not err in instructing the jury that Fireman's
breached its duty to defend
Fireman's claims that the trial court erred in instructing the jury that
Fireman's breached its duty to defend. The trial court's instruction stated:
The issues for you to decide are whether defendant Fireman's
Fund failed to act in good faith in handling and investigating Dr. Woo's
claim, and whether defendant Fireman's Fund violated the Washington
Consumer Protection Act. The Court has already determined that
defendant Fireman's Fund erred in not defending Dr. Woo. However,
an insurance company can be in error in its determination on the duty to
defend and not be in bad faith so long as its determination was not
unreasonable, frivolous or unfounded. The Court's earlier decision on
the duty to defend does not control your decisions in this case.
Clerk's Papers (CP) at 3559.
Fireman's seems to think the instruction was erroneous because it left the jury
to wonder about coverage. However, the jury was not asked to determine if the
29
Woo v. Fireman's Fund Ins. Co., No. 77684-9
policy provided coverage. Woo sought a declaration that Fireman's was estopped
from denying coverage based on the duty to defend determination. The jury was
asked only to determine if Fireman's acted in bad faith and in violation of the CPA
by refusing to defend.
We conclude the trial court did not err in instructing the jury that Fireman's
breached its duty to defend.
3. The trial court did not err in resolving Fireman's claim of collusion in
the settlement between Woo and Alberts
Fireman's claims the trial court erroneously resolved its claim of collusion in
the settlement between Woo and Alberts. It argues that the court conflated the
purpose of the reasonableness hearing with the question of whether the agreement
was the result of fraud or collusion, thereby failing to conduct the appropriate
analysis.
Woo responds that the court analyzes collusion twice, (1) in evaluating the
reasonableness of the settlement and (2) in determining whether the settlement was
the result of fraud or collusion. Once the court determines the settlement is
reasonable, Fireman's has the burden of proving collusion and it failed to provide
such evidence at trial. Truck Ins., 147 Wn.2d at 765. In contrast, Woo cited
testimony of attorney John Versnel, who stated unequivocally that the settlement
was "devoid of any bad faith, collusion or fraud." Br. of Resp'ts at 48-49. Woo
30
Woo v. Fireman's Fund Ins. Co., No. 77684-9
challenged the list of cases cited by Fireman's in which the insured escaped liability,
noting that he did not, and noted that Fireman's never provided any suggestions
regarding what a reasonable settlement would have been. Finally, Woo pointed to
extensive evidence that he mounted a vigorous defense prior to settling with Alberts.
We conclude the trial court did not err in resolving Fireman's collusion claim
regarding the settlement between Woo and Alberts.
4. The trial court did not err in denying relief from emotional distress
damages the jury awarded to Woo based on Fireman's refusal to
defend him
Fireman's argues that the trial court erred in denying relief from the jury's
award of damages for emotional distress based on Fireman's refusal to defend him.
Appellants' Opening Br. at 66-67. It claims that Woo failed to present evidence
about his emotional distress, other than his own testimony. Id. The court
acknowledged that the damages could be viewed as "extraordinarily high given the
absence of any medical, psychiatric or expert testimony," but noted that Fireman's
provided "virtually no authority or support for [its] argument" and the court could
not substitute its judgment for that of the jury. CP at 3969.
We conclude the trial court did not err in denying Fireman's relief from the
jury's damages award.
C. Attorney fees and costs on appeal
31
Woo v. Fireman's Fund Ins. Co., No. 77684-9
The trial court awarded Woo fees under Olympic Steamship for Fireman's
breach of the common law duty of good faith and under the CPA. Woo requested
fees on appeal in his brief to the Court of Appeals and in his supplemental brief to
this court under Svendsen v. Stock, 143 Wn.2d 546, 560, 23 P.3d 455 (2001) and
Amazon.com International, Inc. v. American Dynasty Surplus Lines Insurance Co.,
120 Wn. App. 610, 619-20, 85 P.3d 974, review denied 152 Wn.2d 1030, 103 P.3d
200 (2004).11
Attorney fees are recoverable at trial, and if the plaintiff prevails on appeal,
under the CPA. Svendson, 143 Wn.2d at 560. In a duty to defend action, an
insured is entitled to fees on appeal, pursuant to RAP 18.1, because the insurer
"compels the insured to assume the burden of legal action, to obtain the full benefit
of his insurance contract." Olympic Steamship, 117 Wn.2d at 53. Under RAP
18.1, a party has a right to recover reasonable attorney fees or expenses on review
before the Supreme Court if granted by applicable law. The party must request fees
and costs in its opening brief, but a request made at the Court of Appeals is
11 It is unclear why Woo cites Amazon.com as the basis for his claim of attorney fees and
costs rather than Olympic Steamship. In Amazon.com, American Dynasty sued Atlantic claiming
that Atlantic should have defended Amazon.com. 120 Wn. App. at 614. American Dynasty
prevailed on appeal and requested attorney fees under Olympic Steamship. Id. at 619. The court
held that as an excess insurer, American Dynasty had the same rights as the insured and was
entitled to fees. Id. In this case, Woo is the insured, not an excess insurer. Woo, 128 Wn. App.
at 97.
32
Woo v. Fireman's Fund Ins. Co., No. 77684-9
considered a continuing request at the Supreme Court. RAP 18.1(b). Because Woo
prevails on appeal and we hold that Fireman's improperly refused to defend him, we
grant Woo attorney fees and costs on appeal.
IV. CONCLUSION
We partially reverse the Court of Appeals and reinstate the trial court's
judgment based on the jury's verdict. We hold that Fireman's had a duty to defend
under the professional liability and general liability provisions but not under the
employment practices liability provision. We further hold that the Court of Appeals
improperly extended Blakeslee to a nonsexual assault context and Fireman's
improperly relied on Blakeslee as a basis for refusing to defend Woo. Fireman's
additional issues are without merit. We grant Woo attorney fees and costs on
appeal.
33
Woo v. Fireman's Fund Ins. Co., No. 77684-9
AUTHOR:
Justice Mary E. Fairhurst
WE CONCUR:
Justice Tom Chambers
Justice Susan Owens
Justice Richard B. Sanders
Justice Bobbe J. Bridge
34