          IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON


STEPHANIE LOCK, an individual,           )      No. 79255-5-I
                                         )
                    Appellant,           )
                                         )      DIVISION ONE
                    v.                   )
                                         )
AMERICAN FAMILY INSURANCE                )
COMPANY, a Foreign Corporation,          )      PUBLISHED OPINION
doing business in Washington,            )
                                         )
                    Respondent.          )
                                         )

      MANN, A.C.J. — Stephanie Lock sued American Family Insurance Company

(American Family) seeking coverage under her uninsured motorist (UIM) policy after

she was injured in a motor vehicle accident. Her lawsuit included extra-contractual

claims for common law insurance bad faith, violation of the Washington Consumer

Protection Act (CPA), chapter 19.86 RCW, and violation of the Insurance Fair Conduct

Act (IFCA), RCW 48.30.015. After a jury verdict in Lock’s favor, the trial court granted a

judgment notwithstanding the verdict (JNOV) on the extra-contractual claims. The trial

court concluded that Lock failed to prove damages proximately caused by American
No. 79255-5-I-I/2


Family’s bad faith and failed to demonstrate injury to business or property in support of

her CPA claim. The trial court let stand the jury’s $21,000 verdict on Lock’s UIM claim.

       Lock appeals and contends (1) the trial court erred by excluding evidence of

American Family’s bad faith conduct during litigation, (2) the trial court improperly

granted a JNOV on the extra-contractual claims, and (3) the trial court improperly

vacated its order granting attorney fees to Lock.

       American Family cross appeals, contending, in part, that the trial court erred in

failing to apply an offset to the UIM verdict to take into account payments made under

Lock’s Personal Injury Protection (PIP) policy.

       We affirm in part, reverse in part, and remand for retrial on portions of Lock’s

insurance bad faith claim. We also remand for the trial court to offset the UIM verdict to

take into account payments made under Lock’s PIP policy.

                                             I.

       On February 22, 2013, Lock was rear-ended by an uninsured driver. An

emergency room visit after the accident confirmed that Lock had no head injury,

Computerized tomography (CT) scans of Lock’s neck and back also confirmed no disk

injury or fracture. Lock was discharged from the emergency room with a diagnosis of

neck and back pain.

       At the time of the accident Lock’s auto insurance policy with American Family

included PIP benefits of $35,000, available for up to 3 years of treatment, and UIM

benefits of $100,000. American Family paid for the damage to Lock’s car and extended

rental coverage while she shopped for a new car. American Family also began paying




                                             2
No. 79255-5-I-I/3


for Lock’s medical treatments. As of March 1, 2013, American Family had resolved all

of Lock’s claims other than the resolution of her PIP and UIM claims.

         Lock was treated by her long-time primary care physician, Dr. John Mayeno. At

her March 27, 2013, examination–roughly one month after the accident–Dr. Mayeno

noted full, pain free, range of motion in Lock’s neck and back. The sole remaining issue

was a trapezius spasm. Mayeno testified that Lock was fully recovered by early 2014,

and that she had not suffered any permanent injury.

         Lock was discharged from physical therapy to home exercise on December 18,

2013. Lock’s last massage therapy appointment was December 9, 2013. A January

20, 2014, discharge note stated “Reason Given: She feels like she has recovered well.”

After Lock was involved in another motor vehicle accident in May 2014, Dr. Mayeno

noted:

         Stephanie states that she was feeling much better in late December.
         Physical therapy was discontinued in late January and since early
         February she has felt well with no stiffness or pain in the neck or back.
                 ....
         Will close her claim from her [motor vehicle accident] dated 2/22/13 in
         view of her subjective clinical course of pain and spasm complaints which
         had resolved as of earlier this year, her discharge from physical therapy
         and her self-reported [independent medical exam (IME)] that was
         negative. She is in agreement with this plan. She will discuss this with
         her lawyer.

         As required under her policy with American Family, Lock submitted to an

independent medical exam (IME) with Dr. Dennis Chong in January 2014. Dr. Chong

diagnosed Lock with soft tissue injuries, which he said should have fully healed two to

three months after the accident. Dr. Chong found Lock to be “medically stationary” and

capable of performing her “functional job duties and normal activities of daily living” at




                                             3
No. 79255-5-I-I/4


the time of the examination. He indicated that “no further diagnostic testing or additional

treatment is medically necessary.”

       As a result, American Family notified Lock on January 20, 2014, that it would not

pay for any further medical treatments after January 14, 2014. The letter from American

Family informed Lock that “[a]ny reductions in your client’s billings or treatment not

considered reasonable, necessary and related to your client’s automobile accident are

subject to rebuttal on your client’s part.” Lock did not dispute the IME.

       American Family paid $13,541.98 of Lock’s PIP benefits. All of Lock’s medical

bills were paid by American Family. American Family acknowledged that Lock was still

seeking treatment for an injury in September 2013 and valued Lock’s remaining

insurance claim at up $8,500. American Family initially offered to settle for $5,000, and

then increased its offer to $7,500 on December 15, 2014. Lock did not accept the

$7,500 offer to settle.

       Lock filed a UIM lawsuit against American Family in March 2015. Lock amended

her complaint in November 2015, adding extra-contractual causes of action for violation

of the IFCA, CPA, and a common law insurance bad faith claim. Lock alleged that

American Family failed to reasonably investigate her claim, failed to explain its offer,

and failed to reasonably communicate, leading her to file the UIM suit.

       After Lock added her extra-contractual claims, American Family removed the

case to federal court claiming an amount in controversy over $75,000. After a hearing,

U.S. District Court Judge James Robart remanded the case back to the King County

Superior Court on February 10, 2016.




                                             4
No. 79255-5-I-I/5


       After remand, trial was set for October 3, 2016, before King County Superior

Court Judge Beth Andrus. On August 12, 2016, Judge Andrus denied American

Family’s motion for a continuance of the trial. The court then denied American Family’s

motion for a hearing on summary judgment on shortened time and denied American

Family’s request to calendar a hearing on its motion for summary judgment before trial.

On September 1, 2016, American Family removed the case to the U.S. District Court a

second time. American Family again alleged an amount in controversy in excess of

$75,000. After removal, American Family filed the same summary judgment motion

before the U.S. District Court.

       American Family relied on Lock’s statement of damages to support its claim that

the amount in controversy exceeded $106,000. Lock’s statement of damages identified

$13,541.98 in special damages and identified that general damages for the IFCA, CPA,

and bad faith claims were unknown as they would be determined by a jury. The

statement of damages indicated that American Family had previously estimated the

general damages as being a minimum of $92,709.90. Judge Robart rejected American

Family’s reliance on its own estimate of general damages and agreed with Lock that

general damages would be determined by a jury. Judge Robart sanctioned American

Family and remanded the case again after finding that American Family “flat-out lied to

the Court” about the amount in controversy and used “cheap trial tactics” by removing

the case in order to file its motion for summary judgment.

       In superior court, on March 17, 2017, Judge Andrus set trial for May 1, 2017,

deemed discovery complete, and once again denied American Family’s request to

calendar its motion for summary judgment due to its bad faith litigation tactics.



                                             5
No. 79255-5-I-I/6


       Judge Andrus granted American Family’s motion in limine to exclude testimony

from Lock’s insurance expert, Mary Owen, about “choices litigation counsel made in this

lawsuit” as irrelevant. The trial court allowed Owen to “opine regarding the substance of

what American Family did or failed to do in investigating the Plaintiff’s UIM claim or in

explaining how it reached its decision to cut off Plaintiff’s benefits.”

       On March 30, 2017, American Family’s corporate counsel, Christopher

Strickland, mailed a check for $4,135.75 and a cover letter directly to Lock’s home. The

cover letter was on letterhead from American Family “Claims Legal Division,” and

captioned with the case name and King County Superior Court case number. The letter

stated “[e]nclosed please find a draft in the amount of $4153.75 made payable to you.

Said draft represents full and final settlement of all claims in the above-captioned

matter.”

       The case went to trial before King County Superior Court Judge Ken Schubert.

Judge Schubert adopted Judge Andrus’s pretrial order excluding evidence of American

Family’s bad faith conduct during litigation. The trial court interpreted the order to

exclude all evidence of conduct after Lock’s filing of her UIM complaint. The court

concluded that “in my understanding of the orders that have been entered in this case,

there was a clear line that’s been drawn in the sand by Judge Andrus. After the filing of

the complaint, conduct, bad faith, or good faith, doesn’t come in.” The court granted

American Family’s motions in limine excluding “evidence concerning litigation history,

motions practice, or the Court’s ruling.”

       The trial court also granted American Family’s motions in limine excluding “any

discussion of the [sanctions] check sent to Plaintiff for fees on remand.” Similarly, the



                                               6
No. 79255-5-I-I/7


trial court excluded “any reference to any emotional distress of plaintiff caused by this

litigation.”

        At trial, Lock testified that American Family cut off her benefits, making her feel

confused and betrayed. She claimed she was denied the full benefit of the PIP benefits,

which she thought she was entitled to use for three years. Lock testified

        I was not done treating. I was transferred to home exercises with the
        caveat that I would go back if needed. My understanding of the letter was
        that I would have three years, $35,000 and, if needed, I could go back and
        have access to those benefits that my family has been paying for.

 Lock confirmed that American Family paid all of the medical bills that she submitted.

She claimed that she incurred economic damages of $18,000 for her expert.

        While the pretrial motion in limine excluded discussion of the check sent by

American Family’s corporate counsel prior to trial, the trial court allowed the check and

cover letter to be admitted after American Family’s witness testified that American

Family knew, that after Ms. Lock’s attorney appeared to represent her, all contact with

Ms. Lock had to go through her attorney. During her testimony, Lock was asked about

her receipt of the check from American Family’s in-house counsel. After American

Family objected, the trial court made clear that “any kind of emotional or physical

reaction to its receipt is postlitigation conduct and is not going to come in. It’s not going

to support any kind of emotional distress.”

        On the third day of trial, the trial court ruled, and Lock’s counsel agreed, that

American Family’s decision not to pay the $7,500 it offered in late 2014, did not support

a claim for damages:

        THE COURT: The concern by American Family is that you are going to
        argue that the failure to pay either the 5,000 or the 7,500, neither of which
        were offers that were accepted by your client, that the failure to make that

                                               7
No. 79255-5-I-I/8


       payment, absent the acceptance, was actually some kind of breach by
       American Family. And that's not what I understood, necessarily, you were
       trying to say from your opening. I understand why they're concerned
       about that and why it might need to be clarified in some way to the jurors
       that you're just letting the jurors know your client never received that
       money.

       MS. SARGENT: That's right.

       THE COURT: The reason why they never received that money, is
       because your client never accepted those offers. But the failure for
       American Family to actually have paid that money to your client, you're not
       contending, supports any kind of breach. They had no obligation to
       actually write those checks absent an agreement by your client to accept a
       settlement of her UIM claim, right?

       MS. SARGENT: This is, I do believe, correct, Your Honor.

       At the conclusion of testimony, Lock requested that the jury be instructed that the

sending of the settlement check was evidence of bad faith conduct. Lock’s counsel

argued that if Lock had been allowed to testify she would have explained “when she got

this check, she called me up yelling and screaming at me, sobbing and crying and

asking me why I settled for a case behind her back for less than what they were initially

offered her. It caused conflict. It caused her lack of sleep.” The trial court denied the

request concluding that “there’s no damages.”

       During closing argument, and contrary to prior agreement, Lock’s counsel did

rely on the unaccepted $7,500 settlement offer as evidence of damages:

       [MS. SARGENT]: Question No. 8: Did American Family violate the
       Consumer Protection Act? “Yes.”
              Did Stephanie sustain any damages? Question No. 9. “Yes.”
              The damages there, Question No. 10? Well, that last offer that they
       made her, the $7,500? They should have paid that. That’s an amount
       that they figured right then and there. No, we don’t have any dispute with
       this amount. We have zero dispute with the amount of $7,500. They
       should have paid that amount.
              And those would be her damages we’re seeking.

                                             8
No. 79255-5-I-I/9



       Also during closing argument, Lock’s counsel asked the jury to impose a large

damage award, and contrary to the pretrial order in limine, effectively “send a message”

to American Family:

       MS. SARGENT: Question No. 3 is did American Family’s failure to act in
       good faith proximately cause damage to Stephanie Lock?
       The answer to that should be yes.

       And this is where I told you this is a big damages case. What you’re
       deciding here is important. What you’re deciding in this case right now is
       how insurance companies will be able to treat citizens in this state. That’s
       what this case will establish. That’s the importance of what you guys are
       doing right now. And the damages that you award have to be such that
       they don’t go back into the boardroom and go, “Phew, just the cost of
       doing business, dodged the bullet there.” It has to be such that it doesn’t
       happen again. That’s what this case was about, that’s what you guys are
       doing for the citizens of this state right now.

       That’s why the range that I suggested–and I’ll say it again–seventeen
       thousand [sic] [million] four hundred and sixty-five thousand two hundred
       and eighty dollars or $5,821,760. That’s the range. Unless you don’t think
       that’s enough. If you don’t think that would stop this sort of behavior, then
       you increase it.

       But that is why we are here. That is why we are here. We do not want
       insurance companies to do in this case ever again. We don’t want that to
       happen. We have specific laws, we have specific regulations, we have
       common law that is supposed to stop this sort of conduct. And it’s not
       often that it happens. That’s why it is important for you to stop it now.

       The jury awarded Lock $21,000 for her UIM claim. The jury also found American

Family did not act in good faith and awarded $413,575 on the bad faith claim. Similarly,

the jury found American Family had violated the CPA and awarded $8,500 on the CPA

claim. The jury found that American Family had not violated the IFCA.

       After the verdict, American Family moved for a JNOV, which the trial court

granted. The trial court’s order granting a JNOV contained 19 unchallenged findings of

fact, including:

                                             9
No. 79255-5-I-I/10


      •   Lock did not present evidence of damages to business or property
          proximately caused by American Family.

      •   All of Lock’s bills were timely paid by American Family and there was
          no evidence of out of pocket expenses not paid by American Family.

      •   There was no evidence of any damage proximately caused by
          American Family.

      •   The reserve set by American Family was $8,500 prior to litigation.

      •   American Family’s last prelitigation offer was $7,500 which Lock did
          not accept.

      •   Lock presented no evidence that she would have accepted an $8,500
          offer.

      •   Lock agreed that she was not seeking to establish extra-contractual
          liability based on the failure to pay an unaccepted settlement amount.

      •   Contrary to this agreement, Lock’s counsel argued to the jury during
          closing argument that American Family should have paid the $7,500 as
          the basis for the CPA damages.

      •   The jury found that American Family had not unreasonably denied a
          claim or benefit.

      •   Lock presented no evidence of damages proximately caused by
          American Family’s bad faith.

      •   Lock presented no evidence of damages associated with the sanctions
          check for $4,135.75 and that Lock could not argue this evidence as a
          damage to the jury.

      •   “The jury’s bad faith award of $413,575.00 uses the identical numerals
          as found in the [sanction check] but simply add two zeros on to the
          end. The jury’s decision to award $413,575.00 appears to be based
          entirely upon [the sanctions check] . . . which basis would be contrary
          to the Court’s order.”

      Based on its findings, the trial court concluded that:

             2.     Plaintiff failed to present evidence sufficient to establish a
      prima facie case for a Consumer Protection Act violation due to her failure
      to establish damage to her business or property.


                                            10
No. 79255-5-I-I/11


               3.     Plaintiff’s failure to prove evidence of damages to business
        or property renders the jury’s verdict awarding Consumer Protection Act
        damages unsupportable as a matter of law.

              4.   Because there were no damages proven, the jury’s finding of
        a Consumer Protection Act violation is improper as a matter of law.

                5.      Plaintiff’s argument to the jury that American Family should
        have paid unaccepted settlement amounts improperly appealed to the
        prejudice of the jury when Plaintiff was aware this was not a proper basis
        for liability pursuant to the Consumer Protection Act. Plaintiff’s argument
        was directly contrary to a standing Court Order.

                6.     Plaintiff’s argument to the jury that it should punish American
        Family for Trial Exhibit 61 [the sanctions check] appealed to the prejudice
        of the jury when Plaintiff was aware this was not a proper basis for liability.
        Plaintiff’s argument was directly contrary to a standing Court Order.

               7.   Plaintiff’s failure to prove evidence of damages proximately
        caused by any bad faith action of American Family renders the jury’s bad
        faith damages award improper as a matter of law.

              8.      There is no reasonable conclusion that the jury’s award of
        $413,575.00 could have been based on anything other than the check in
        the amount of $4,135.75 that American Family sent directly to Plaintiff and
        which did not cause Plaintiff any damages.

              9.     Emotional distress damages caused by litigation are not
        recoverable as a matter of law.

                10.     As a matter of law, there is neither evidence nor a
        reasonable inference therefrom sufficient to sustain the verdicts entered in
        plaintiff’s favor. The jury founded its verdicts on mere theory or
        speculation, which verdicts cannot stand.

        The trial court dismissed Lock’s CPA and bad faith claims as a matter of law.

The trial court let stand the jury’s verdict awarding $21,000 on Lock’s UIM claim.

        The trial court then granted Lock fees for American Family’s bad faith litigation

tactics. After a motion for reconsideration the trial court vacated the award of attorney

fees.




                                              11
No. 79255-5-I-I/12


        Lock petitioned for review directly to the Washington Supreme Court. American

Family cross appealed. The Supreme Court denied review and remanded to this court.

                                              II.

        Lock argues first that the trial court erred in excluding evidence of American

Family’s litigation conduct after the filing of her UIM litigation. Lock contends that

American Family’s conduct during litigation supports her bad faith, CPA, and IFCA

claims, and the exclusion of this evidence denied her the right to present facts to the

jury.

        We review a trial court’s evidentiary rulings for an abuse of discretion. State v.

Ellis, 136 Wn.2d 498, 504, 963 P.2d 843 (1998). An abuse of discretion occurs only

when no reasonable person would take the view adopted by the trial court. Ellis, 136

Wn.2d at 504. Evidentiary determinations are within the sound discretion of the trial

judge and will not be disturbed on appeal in the absence of proof of a manifest abuse of

discretion. State v. Swan, 114 Wn.2d 613, 645, 790 P.2d 610 (1990).

        A primary purpose for the regulation of the insurance industry “is to create public

confidence in the honesty and reliability of those who engage in the business of

insurance.” Panag v. Farmers Ins. Co. of Wash, 166 Wn.2d 27, 43, 204 P.3d 885

(2009). In general, “an insurance company has an elevated or ‘enhanced’ duty of good

faith which requires it to ‘deal fairly’ giving ‘equal consideration’ to its insureds. Van Noy

v. State Farm, 142 Wn.2d 784, 794, 16 P.3d 574 (2001) (quoting Tank v. State Farm

Fire & Cas. Co., 105 Wn.2d 381, 386, 715 P.2d 1133 (1986)). As explained in the

insurance code:

        The business of insurance is one affected by the public interest, requiring
        that all persons be actuated by good faith, abstain from deception, and

                                             12
No. 79255-5-I-I/13


       practice honesty and equity in all insurance matters. Upon the insurer, the
       insured, their providers, and their representatives rests the duty of
       preserving inviolate the integrity of insurance.

RCW 48.01.030.

       The insurer’s duty, however, is different in the context of defending against UIM

claims. Unlike primary coverage, UIM insurance provides an extra layer of coverage

“designed to provide full compensation for all amounts that a claimant is legally entitled

to where the tortfeasor is underinsured.” Elwein v. Hartford Acc. & Indem. Co., 142

Wn.2d 766, 779-80, 15 P.3d 640 (2001), overruled on other grounds by Smith v. Safeco

Ins. Co., 150 Wn.2d 478, 78 P.3d 1247 (2003). “‘Legally entitled to’ is the operative

phrase, as a UIM insurer ‘stands in the shoes’ of the tortfeaser, and its liability to the

insured is identical to the underinsured tortfeasor’s up to the UIM policy limits.” Ellwein,

142 Wn.2d at 780. As a result, “UIM coverage requires that a UIM insurer be free to be

adversarial within the confines of the normal rules of procedure and ethics. To require

otherwise would contradict the very nature of UIM coverage.” Ellwein, 142 Wn.2d at

780.

       While primarily a discovery case, Richardson v. Gov’t Emps. Ins. Co., 200 Wn.

App. 705, 403 P.3d 115 (2017), review denied, 190 Wn.2d 1008, 414 P.3d 575 (2018),

is instructive on the issue of whether an attorney’s actions after the filing of a UIM

lawsuit are relevant. After being injured in an automobile accident, Christine

Richardson filed a claim for PIP coverage and UIM coverage with her insurer

Government Employees Insurance Company (GEICO). GEICO determined that an

underlying settlement and Richardson’s PIP coverage fully compensated her and

therefore denied her UIM coverage. Richardson, 200 Wn. App. at 707.



                                             13
No. 79255-5-I-I/14


      A year later, Richardson filed a complaint against GEICO, alleging, among other

claims, bad faith resulting from GEICO’s handling of her PIP and UIM claims. Id. at

708. During discovery, Richardson sought a copy of GEICO’s attorney’s litigation file

and sought to depose the attorney. GEICO’s attorney moved to quash the subpoena

and for a protective order, arguing that postlitigation documents were protected by

attorney-client privilege and the work product doctrine. The trial court disagreed and

ordered that Richardson could seek otherwise privileged postlitigation information. Id.

at 709-10. GEICO sought interlocutory appeal, which was granted.

      Division Two of this court reversed. The court distinguished between prelitigation

conduct and postlitigation conduct in UIM litigation based on the principle that “the UIM

insurer ‘may defend as the tortfeasor would defend’ and ‘is entitled to counsel’s advice

in strategizing the same defenses that the tortfeasor could have asserted.’” Id. at 714-

15 (quoting Cedell v. Farmers Ins. Co., 176 Wn.2d 686, 697, 295 P.3d 239 (2013)).

The court explained:

             Allowing Richardson to access privileged information between
      GEICO and its attorney as to events that occurred after GEICO made its
      decision regarding the UIM claim and made after Richardson filed suit
      would run afoul of the purpose of the attorney-client privilege, the work
      product doctrine, and the purposes of discovery. Attorney work product
      that occurs after the filing of a lawsuit often contains the lawyer’s
      assessment of the case, trial strategy, and impressions of witnesses.
      Here, the litigation file is irrelevant to Richardson’s UIM claim.

Richardson, 200 Wn. App. at 716-17. The court further explained:

      the proposition that an insurer’s privileged postlitigation materials are
      discoverable in a UIM context is contrary to public policy. We agree with
      the federal courts that have held that evidence of an insurer’s litigation
      conduct is rarely admissible because it lacks probative value and has a
      high risk of prejudice:




                                           14
No. 79255-5-I-I/15


              Allowing litigation conduct to serve as evidence of bad faith
              would undermine an insurer’s right to contest questionable
              claims and to defend itself against such claims. . . .
              [P]ermitting allegations of litigation misconduct would have a
              “chilling effect on insurers, which could unfairly penalize
              them by inhibiting their attorneys from zealously and
              effectively representing their clients within the bounds
              permitted by law.” Insurers’ counsel would be placed in an
              untenable position if legitimate litigation conduct could be
              used as evidence of bad faith.

                Other remedies are available to a plaintiff asserting such a claim
       under the rules of civil procedure. Examples of redress for improper
       litigation conduct include “motions to strike, compel discovery, secure
       protective orders, or impose sanctions.”

              We agree with the public policy concerns discussed above,
       particularly in light of the adversarial relationship between insurers and
       insureds in UIM bad faith actions.

Richardson, 200 Wn. App. at 719-20 (quoting Timberlake Const. Co. v. United State

Fid. & Guar. Co., 71 F.3d 335, 341 (10th Cir. 1995) (citations omitted) (quoting Int’l

Surplus Lines Ins. Co. v. Univ. of Wyoming Research Corp., 850 F.Supp. 1509, 1529

(D. Wyo. 1994), aff'd sub nom. Int'l Surplus Lines Ins. Co. v. Wyo. Coal Ref. Sys., Inc.,

52 F.3d 901 (10th Cir. 1995)).

       We also agree with the public policy concerns discussed in Richardson with

respect to postlitigation conduct of counsel during UIM litigation. Lock was notified on

January 20, 2014, that American Family would not pay for any further medical

treatments after January 14, 2014. Over a year later, in March 2015, Lock filed her UIM

lawsuit against American Family. With the filing of the UIM litigation, the nature of the

relationship between Lock and American Family became adversarial, bound by the

normal rules of procedure and ethics. Ellwein, 142 Wn.2d at 780. By the time Lock




                                             15
No. 79255-5-I-I/16


sued, any claim investigation and evaluation had ceased. 1 Postlitigation conduct of the

insurer’s counsel is not the basis for liability for insurance bad faith. The remedy for bad

litigation conduct is properly through motions to strike, compel discovery, secure

protective orders, or impose sanctions—such as what both Judge Robart and Judge

Andrus did here. Richardson, 200 Wn. App. at 719-20.

        The trial court did not abuse its discretion in excluding the postlitigation conduct

of trial counsel, including evidence of bad faith in the filing of untimely motions for

summary judgment and removing the case to federal court.

        The trial court did, however, abuse its discretion by excluding evidence of

damages related to American Family’s action directly sending the $4,153.75 check to

Lock. As Lock correctly points out, the adversarial nature of UIM litigation is still

bounded by a reasonable expectation of good faith. Conduct is confined by the “normal

rules of procedure and ethics.” Ellwein, 142 Wn.2d at 780. “‘The insurer must deal in

good faith and fairly as to the terms of the policy and not overreach the insured, despite

its adversarial interest.’” Ellwein, 142 Wn.2d at 780-81 (quoting Hendren v. Allstate Ins.

Co., 100 N.M. 506, 672 P.2d 1137 (Ct. App. 1983)).

        In Ellwein, for example, during its investigation of an accident involving its

insured, Nancy Ellwein, Hartford Insurance retained an accident reconstruction expert,

William Cooper. Based on statements from witnesses, Cooper opined that Ellwein was

not at fault. Ellwein, 142 Wn.2d at 769. Hartford used Cooper’s report as the basis of

submitting its demand to Safeco Insurance. Unbeknownst to Ellwein, however, at the



        1Lock contends that American Family continued to process the claim based on trial counsel’s
settlement offer of $15,000 during litigation. We agree with American Family that settlement offers made
by counsel during litigation are not claims investigations.

                                                   16
No. 79255-5-I-I/17


same time it was processing Ellwein’s claim, Hartford also was preparing for an

anticipated UIM claim by Ellwein. Hartford provided Cooper with additional information

regarding the accident. After Ellwein submitted a UIM arbitration demand, Hartford

provided a revised declaration by Cooper opining that the accident was solely the fault

of Ellwein. Id. at 771.

        The Supreme Court found Hartford’s conduct bad faith as a matter of law. First,

because Hartford clearly understood that Cooper was Ellwein’s expert and intended to

manipulate his conclusions in their favor. Id. at 781. And second, because, as a rule,

an insurer cannot use and manipulate an insured’s expert during the time when the

“insurer clearly owes the insured a duty to not self-deal.” Id. at 782.

        Here, in contrast to the postlitigation conduct of trial counsel, American Family’s

corporate counsel directly communicated with Lock by mailing a check that purported to

“represent full and final settlement of all claims.” This direct communication by

American Family’s corporate counsel was a violation of the IFCA as a “defined unfair or

deceptive act[ ] or practice[ ] of the insurer.” WAC 284.30.330(19). 2 Direct contact by

American Family’s corporate counsel also violates the Rules of Professional Conduct.

RPC 4.2. 3 As American Family’s representative Wade Nielson confirmed in his

testimony, American Family knew that it was prohibited from having direct contact with

Lock once she was represented. This conduct was outside the “normal rules of




         2 WAC 284.30.330(19) defines as an unfair or deceptive act “Negotiating or settling a claim

directly with any claimant known to be represented by an attorney without the attorney’s knowledge and
consent.”
         3 “In representing a client, a lawyer shall not communicate about the subject of the representation

with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has
the consent of the other lawyer or is authorized to do so by law or a court order.”

                                                    17
No. 79255-5-I-I/18


procedure and ethics” and outside an insured’s reasonable expectation of good faith

conduct.

        While the trial court did not err in admitting American Family’s letter and check, it

erred in excluding evidence of damages, including emotional distress that Lock may

have experienced in response. We remand for retrial of Lock’s claim for common law

insurance bad faith based on American Family’s conduct directly contacting Lock

pretrial. 4

                                                    III.

        Lock argues next that the trial court erred in granting a JNOV on the extra-

contractual claims. We disagree.

        We review a JNOV under the same standard as the trial court. Goodman v.

Goodman, 128 Wn.2d 366, 371, 907 P.2d 290 (1995). A JNOV is only appropriate

where the court can find, “as a matter of law, that there is neither evidence nor

reasonable inference therefrom sufficient to sustain the verdict.” Brashear v. Puget

Sound Power & Light Co., 100 Wn.2d 204, 208-09, 667 P.2d 78 (1983) (quoting Hojem

v. Kelly, 93 Wn.2d 143, 145, 606 P.2d 275 (1980)). “A motion for a JNOV admits the

truth of the opponent's evidence and all inferences that can be reasonably drawn

therefrom, and requires the evidence be interpreted most strongly against the moving

party and in the light most favorable to the opponent. No element of discretion is

involved.” Goodman, 128 Wn.2d at 371.



        4
           Lock also argued that the trial court erred in vacating its order granting her attorney fees for
American Family’s bad faith litigation tactics. Because we are remanding for trial on Lock’s claim of bad
faith, we also vacate the trial court’s order awarding or denying attorney fees. Any claims for fees should
be addressed on remand.


                                                    18
No. 79255-5-I-I/19


                                                  A.

       Lock contends that the trial court substituted its judgment for the jury’s in finding

that she failed to prove damages proximately caused by American Family’s bad faith.

This is so, she asserts because the jury (1) knew American Family cut off her benefits,

(2) knew that American Family failed to investigate fairly by not providing Dr. Chong with

all of her medical records and not consulting with her treating physician, (3) knew that

she had to hire an expert whose bill was in excess of $18,000, and (4) knew it was

improper for American Family’s corporate counsel to send the check claiming to settle

all claims directly to her.

       First, there was no evidence American Family denied or cutoff Lock’s insurance

benefits. The jury was asked by special verdict “Did American Family unreasonably

deny a claim or benefit?” The jury responded “no.” Further, Lock did not present

evidence of any medical treatment that American Family did not pay. Nor did she

present evidence of any out-of-pocket expenses.

       Second, there was no evidence that Lock was damaged by the IME review and

conclusion. Lock’s treating physician, Dr. Mayeno, testified that by February 2014, Lock

reported being pain free. Mayeno further testified that between February 2014 and her

second accident in May 2014, Lock had fully recovered and that there was no

permanent injury of any kind.

       Third, while attorney fees and expert costs are a recoverable damage in a bad

faith claim for insurance coverage denial under Olympic S.S. Co., Inc., v. Centennial

Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991), Lock’s claim was based on the value paid

for her claim. Value disputes are not coverage denials. “[T]he Olympic S.S. Co. rule



                                             19
No. 79255-5-I-I/20


applies only to disputes over coverage, and not to disputes over the amount of a claim.”

Gossett v. Farmers Ins. Co., 133 Wn.2d 954, 982, 948 P.2d 1264 (1997) (citing Dayton

v. Farmers Ins. Group, 124 Wn.2d 277, 280-81, 876 P.2d 896 (1994)).

       However, as discussed above, the trial court erred in excluding evidence of

damages that might have resulted from American Family’s direct contact with Lock.

The trial court’s conclusion in its JNOV that there was no evidence of damages to

support Lock’s claim of bad faith insurance coverage was erroneous.

                                              B.

       Lock next contends that the trial court erred in finding and concluding that she

failed to prove evidence of damages to business or property which rendered her CPA

claim unsupportable as a matter of law. Lock asserts that she: “felt betrayed and was

inconvenienced, she had to file a lawsuit, prepare her case, attend depositions and hire

an insurance expert whose bill was already $18,000 at the time of trial.” We disagree.

       In order to maintain an action for a private CPA violation, the plaintiff must prove

(1) an unfair or deceptive act or practice, (2) in the conduct of trade or commerce, (3)

which impacts the public interest, (4) injury to the plaintiff in their business or property,

and (5) a causal link between the unfair or deceptive act and the injury suffered.

Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780,

719 P.2d 531 (1986).

       At issue is whether Lock demonstrated injury to her business or property. While

“the injury need not be great, it must be established.” Mason v. Mortgage America, Inc.,

114 Wn.2d 842, 854, 792 P.2d 142 (1990). Monetary damages are not necessary,

“nonquantifiable injuries, such as loss of goodwill” suffice. Nordstrom, Inc. v.



                                              20
No. 79255-5-I-I/21


Tampourlos, 107 Wn.2d 735, 740, 733 P.2d 208 (1987) (injury to reputation and

goodwill sufficient); Mason, 114 Wn.2d at 855 (temporary loss of title to property is an

“injury to property”).

        Lock relies on St. Paul Fire & Marine Ins. Co. v. Updegrave, 33 Wn. App. 653,

658-59, 656 P.2d 1130 (1983), to support her argument that the inconvenience and

financial considerations of preparing her case, time spent in court, litigation costs, and

expert witness fees, are sufficient evidence of injury to support a CPA claim. St. Paul

Fire, was decided prior to our Supreme Court holding in Hangman Ridge, that evidence

of injury to business or property was required. As this court subsequently explained in

Sign-O-Lite Signs, Inc. v. DeLaurenti Florists, Inc., 64 Wn. App. 553, 563-64, 825 P.2d

714 (1992), the holding in St. Paul Fire, was too broad. Involvement in prosecuting a

CPA claim is insufficient to show injury to business or property. Sign-O-Lite, 64 Wn.

App at 564. See also Demopolis v. Galvin, 57 Wn. App. 47, 54-55, 786 P.2d 804 (1990)

(the cost of instituting a CPA action to challenge an underlying loan agreement could

not, itself, constitute injury); Panag, 166 Wn.2d at 60. Lock’s claim of the inconvenience

and expense of prosecuting her CPA claim does not support a claim for injury to

business or property. 5

        Lock also contends that she was denied the opportunity to present evidence of

emotional distress damages resulting from her receipt of the check from American

Family’s counsel. But “[p]ersonal injuries, as opposed to injuries to ‘business or

property,’ are not compensable and do not satisfy the injury requirement.” Panag, 166


        5 In Sign-O-Lite, we agreed that the evidence supported injury to the business where the plaintiff,

who was self-employed, testified that she was unable to tend her store and was drawn away from her
business and consulting work in order to address her claims against the defendant. 64 Wn. App. at 564.
Lock did not demonstrate a similar injury to her business.

                                                    21
No. 79255-5-I-I/22


Wn.2d at 57. “Thus, damages for mental distress, embarrassment, and inconvenience

are not recoverable under the CPA.” Id.

          The trial court did not err in concluding that Lock failed to present evidence of

injury to her business or property and thus the jury’s verdict awarding CPA damages

was unsupportable as a matter of law.

                                                     IV.

          On cross appeal, American Family argues that it was entitled to offset the jury’s

$21,000 UIM award with the payments it made for Lock’s medical bills under her PIP

coverage. We agree.

          Construction of an insurance policy is a question of law for the courts that we

review de novo. Wood v. Mut. of Enumclaw Ins. Co., 97 Wn. App. 721, 723, 986 P.2d

833 (1999). The insurance policy is construed as a whole. Safeco Ins. Co. v. Woodley,

102 Wn. App. 384, 391, 8 P.3d 304 (2000), review granted in part, cause remanded,

145 Wn.2d 1032, 42 P.3d 1278 (2002). “An ‘offset’ refers to a credit to which an insurer

is entitled for payments made under one coverage against claims made under another

coverage within the same policy.” Winters v. State Farm Mut. Auto. Ins. Co., 144 Wn.2d

869, 876, 31 P.3d 1164 (2001). When an insurance contract contains a clear offset

clause, the contract clause should be given effect “to the extent that the insured remains

fully compensated for his or her damages.” Wood, 97 Wn. App. at 724. 6

          In Woodley, Denise Woodley appealed a declaratory judgment permitting her

insurer to offset her UIM benefits with the benefits the insurer had already paid in PIP

benefits to prevent Woodley from receiving a double recovery. Woodley, 102 Wn. App.


          6   In Wood, the court held that a UIM award may be offset by PIP payments. Wood, 97 Wn. App.
at 724.

                                                     22
No. 79255-5-I-I/23


at 386. The insurance contract included a right to recover provision. Woodley, 102 Wn.

App. at 392. Woodley argued that Safeco waived its right to offset and that the

insurance policy did not unambiguously permit Safeco to offset the full amount of her

settlement. Woodley, 102 Wn. App. at 391, 393. The court held that Safeco did not

waive its right to make the UIM offsets because Safeco had notified Woodley of its

intent to offset. Woodley, 102 Wn. App. at 393. The court held that because “the

average person purchasing insurance would understand that medical and PIP benefits

paid under the policy will reduce the insured’s UIM recovery,” the trial court did not err

by deducting the amount of the liability settlement from the award. Woodley, 102 Wn.

App. at 391, 395.

       Here, the trial court granted Lock’s motion to amend her complaint on November

25, 2015. On April 14, 2017, American Family answered Lock’s amended complaint.

American Family filed the answer and affirmative defenses to the amended complaint

after the close of discovery and after multiple trial continuances. American Family

pleaded the following defenses:

       Affirmative defense 4: “Plaintiff’s recovery, if any, is limited to the terms and
       conditions of the Insurance Contract.”

       Affirmative defense 7: “To the extent that Defendant overpaid on any of
       Plaintiff’s claims, Defendant is entitled to an offset.”

       Relevant to affirmative defense 4, Lock’s insurance contract with American

Family provides: “No one will be entitled to duplicate payments for the same elements of

loss. Any amount we pay under this Part to or for an injured person will be reduced by

any payment made to that person under any other Part of this policy.” Thus, both

affirmative defenses provided for an offset.



                                               23
No. 79255-5-I-I/24


       Lock moved to strike American Family’s answer and affirmative defenses. The

trial court addressed each affirmative defense separately. The court denied the motion

to strike affirmative defense 4, finding that it was not an affirmative defense that must be

specifically pleaded. The court granted the motion to strike affirmative defense 7,

finding that RCW 4.32.150 requires a defendant to plead the right to a setoff and that

American Family failed to do so until after the close of discovery.

       Thus, while the court found that American Family waived its right to assert an

offset, it also found that the plaintiff’s recovery was limited to the terms of the insurance

contract. The insurance contract prohibits double payments for the same injury. The

jury granted Lock $21,000 for her UIM claim. American Family had paid Lock

$13,129.55 per her PIP benefits prior to trial.

       Similar to Woodley, Lock was on notice about American Family’s intent to offset,

due to the insurance contract and the affirmative defense that American Family

asserted. An average person reading Lock’s insurance contract would understand that

PIP benefits paid under the policy would reduce the insured’s UIM recovery. The court

found that Lock’s UIM claim is governed by her contract with American Family. The

insurance contract contains a clear offset clause. Because the trial court found that

Lock’s recovery was limited by the terms of the insurance contract, it erred by failing to

apply the contractual offset to the UIM award. On remand, the trial court should offset

the UIM award.

                                             V.

       American Family raises several additional issues on cross appeal. We address

each in turn.



                                             24
No. 79255-5-I-I/25


       American Family first claims that the trial court erred in concluding that it was not

the prevailing party under CR 68. Because we reverse the trial court’s dismissal of

Lock’s insurance bad faith claims and remand for retrial, a determination of the

prevailing party is premature.

        American Family next contends that the trial court erred in allowing introduction

of exhibit 61—the $4,135.75 check and cover letter—as impeachment evidence.

American Family’s argument is based on the assumption that the pretrial order

excluding evidence of the check was correct. As discussed above, evidence of

American Family’s direct contact with Lock, and any resulting damages, should have

been admissible to support her bad faith insurance claim. Thus, we need not address

American Family’s argument that it was inadmissible as impeachment evidence.

       Finally, American Family argues that the trial court erred in failing to bifurcate trial

on the insurance bad faith claim and UIM claim. Because we reverse only the order

dismissing Lock’s insurance bad faith claim, we need not address this issue.

                                             VI.

       We affirm the trial court’s order excluding postlitigation conduct of trial counsel.

We also affirm the trial court’s JNOV dismissing Lock’s CPA claim.

       We reverse the trial court’s order excluding evidence of American Family’s direct

contact with Lock during litigation, and any resulting damages supporting her insurance

bad faith claim. We also reverse the trial court’s JNOV dismissing Lock’s insurance bad

faith claim.

       We remand for a new trial on Lock’s insurance bad faith claim based on

American Family’s direct contact during litigation.



                                              25
No. 79255-5-I-I/26


      We remand for the trial court to offset the jury’s award on Lock’s UIM claim by

the amount paid under her PIP policy.

      We vacate the trial court’s decision on attorney fees.

      Because neither party fully prevails on appeal we decline to award attorney fees

on appeal.

      Affirmed in part, reversed in part, and remanded.




WE CONCUR:




                                           26
