                                                                                                                     I- ED
                                                                                                           COURT OF APPEALS
                                                                                                              C;1VIS.

                                                                                                          2U14 JAN 28
                                                                                                          ST '          ll
                                                                                                                             1i114GT
                                                                                                          BY \ %
                                                                                                                 T   M_

               IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                                    DIVISION II


UNITED SERVICES AUTOMOBILE                                                         No. 43728 -7 -II
ASSOCIATION,


                                    Respondent,                                    wMitaZe1' 10we) 0
rIPM



ROBERT J. SPEED,


                                    Appellant.




          MAxA, J. — Robert     Speed appeals the trial court' s summary judgment dismissal of his

duty to defend, duty to explore settlement and bad faith claims against United Services

Automobile Association (USAA) arising from Speed' s allegation that a USAA insured had

deliberately assaulted him in a road rage incident. Speed had filed suit against USAA as the

assignee of the insured following entry of a stipulated judgment. We hold that ( 1) USAA had no

duty to defend Speed' s claim under either his homeowners or auto insurance policies because the

claim    did   not allege an " accident" as required        for   coverage under   the   policies, ( 2)   USAA' s


   uncertainty" whether to provide a defense did not create a duty to defend when the

unambiguous claim allegations         did   not   trigger   such a   duty, ( 3) in the absence of a duty to defend

USAA had no duty to explore settlement, and ( 4) the trial court properly denied Speed' s bad

 faith   claims.   Accordingly,   we affirm.
No. 43728 -7 -II


                                                          FACTS


Speed' s Claim


          On March 2, 2009, Dennis Geyer and Speed were involved in an altercation and Speed

suffered serious personal injuries. The State charged Geyer with second degree assault with a


deadly weapon. On August 25, 2009, Speed' s attorney sent a demand letter to Geyer seeking

    650, 000 to compensate Speed for his injuries. The letter described the incident as follows:

                                                                          Geyerl

             On March 2, 2009, Mr. Speed                  and     Dr.              were operating their motor
          vehicles   in the vicinity   of     the Tacoma Narrows Bridge.                   Dr. Geyer apparently
          became angry over something Mr. Speed had done while driving in front of him.
          Once they were on the bridge, Dr. Geyer pulled along side [ sic] Mr. Speed and
          motioned    for him to   pull over.         Frightened, Mr. Speed took the first exit after the
          bridge. Dr. Geyer followed Mr. Speed for an extended period of time before the
          two   vehicles stopped    for   a   traffic   signal.    According to witnesses, Dr. Geyer got
          out of his vehicle, opened the door of Mr. Speed' s vehicle and beat Mr. Speed
          with his fists and a metal thermos, pulling Mr. Speed from his vehicle as he did
          so. Dr. Geyer then drove away from the scene leaving Mr. Speed bleeding and
          unconscious in the street.


Clerk' s Papers ( CP)    at   56 -57. The letter       stated   that "[   t]his case is aggravated by the intentional

conduct of Dr. Geyer, including leaving Mr. Speed, potentially for dead, at the scene" and that

    w]ere this a case of negligence that was covered by insurance" Speed' s attorneys would be

seeking            figure verdict or settlement.
           a seven -                                       CP     at   61. The letter further stated that if Geyer


agreed to pay the requested amount, Speed and his attorneys would recommend to the prosecutor

that Geyer be allowed to plead guilty to a misdemeanor assault charge.

          Geyer carried homeowners and auto insurance with USAA. On October 14, 2009, seven

months after the incident, Geyer notified USAA of the incident and Speed' s claim. He requested


coverage under both policies. By that date, the settlement offer in Speed' s demand letter, by its




1
    Dennis Geyer is   a physician and         he is   often referred      to in the   record as "   Dr. Geyer."
No. 43728 -7 -II



terms, already had been revoked. A USAA adjuster interviewed Geyer the next day, and Geyer' s

statements suggested that he was claiming self -
                                               defense.

USAA 's Reservation ofRights and Investigation

          In   a   letter dated October 19, 2009, USAA informed Geyer that "[ t]he current facts of this


incident give rise to potential coverage issues under both your automobile and homeowner' s


policies" and that it was investigating his claim under a reservation of its right to deny coverage.

CP at 210. With regard to the homeowners policy, the letter stated that the incident facts

indicated that Speed' s injuries may not have been the result of an " occurrence" as defined in the

policy because Speed alleged that Geyer had intentionally and deliberately struck him in the

head. The letter also stated that the policy may not provide coverage because of the intentional

act exclusion. With regard to the auto policy, the letter stated that Speed' s claim might not be

the result of an " auto accident" as defined in the policy and that the policy may not provide

coverage under the intentional act exclusion. CP at 213 -14.

          USAA did not retain counsel to defend Geyer at this time and did not advise Geyer


whether or not it believed that it had a duty to defend Speed' s claim. USAA apparently assumed

that it had no duty to defend until a lawsuit was filed. However, USAA did undertake a liability

and coverage investigation regarding Speed' s claim. USAA also informed Speed' s attorney that

it had   received notice of      the claim   and   that "[    a] ny pending claim( s) is unresolved because we

continue       to investigate   coverage and      liability   in this   matter."   CP at 566.


          USAA continued to monitor and investigate Speed' s claim for the next several months.


The trial on Geyer' s criminal charges occurred in February 2010. Geyer admitted that he had

deliberately hit Speed, but claimed he was acting in self -
                                                          defense. A jury found Geyer guilty of

third    degree     assault.   Following   the   verdict,   USAA        obtained a coverage opinion   from   an
No. 43728 -7 -II



attorney. In a May 5 letter, the attorney concluded that USAA should not have a duty to defend

or provide indemnity for Speed' s claim, but that the " safest course of action" would be to

provide a       defense   under a reservation of rights.      CP at 620.


Settlement Negotiations


           On April 13, 201.0, Speed offered to release Geyer from all claims if USAA would agree


to pay the combined policy limits under Geyer' s homeowners and auto insurance policies,

totaling $800, 000. In a May 10, 2010, letter, USAA explained to Geyer why it would not pay

the demand. USAA stated that it was unlikely that it had a duty to indemnify Geyer because

Speed' s injuries were not caused by an accident or an auto accident and the policies excluded

coverage for an intentional or purposeful act. However, the letter also stated:


                Although USAA is rejecting the demand, neither the rejection nor this letter
           should be read as a final denial of all policy benefits which might be available to
           you.      Our previous letter of October 19, 2009, informed you that coverage is
           questionable.      Since that date, we have received and reviewed the criminal trial
           transcripts, and coverage is still questionable.

CP   at   81.   USAA ultimately did make a $ 25, 000 settlement offer, which Speed rejected.

           On January 20, 2011, Geyer and Speed agreed to a settlement. Geyer stipulated to the

entry     of a $   1. 4 million judgment in exchange for Speed' s covenant not to execute the judgment


against Geyer' s assets. Geyer also assigned all his potential breach of contract and bad faith

claims against USAA to Speed.


Litigation


            On January 24, 2011, USAA filed a complaint for declaratory judgment against Speed,

seeking a declaration that it had no duty to defend or indemnify Geyer for the claim, was not

estopped        from   denying   coverage, and   had   no   duty to   pay the $ 1. 4 million stipulated'judgment.


Speed      counterclaimed,       alleging that USAA     acted   in bad faith in   failing   to defend, properly
No. 43728 -7 -II



investigate or settle the Speed claim and that USAA violated the Insurance Fair Conduct Act

 IF CA), chapter 48. 30 RCW, and the Unfair Claims Settlement Practices Regulation, chapter


284 -30 WAC.


          On February 8, Speed filed a separate personal injury complaint against Geyer, alleging

that Geyer had negligently caused Speed' s injuries. However, the only relief requested was a

ruling that the settlement amount was reasonable. After Speed filed the complaint, USAA

provided Geyer with a defense attorney. The trial court concluded that the settlement was

reasonable.




          The trial court consolidated Speed' s personal injury suit and USAA' s declaratory

judgment action. Speed moved for partial summary judgment, asking the trial court to rule that

USAA had a duty to defend Geyer upon receiving notice of Speed' s personal injury claim and

that USAA' s failure to provide counsel to Geyer constituted bad faith. The trial court denied

Speed' s summary judgment motion, ruling that the issue of whether USAA had a duty to defend

was " subordinate to the issue as to finding that there is policy coverage under the facts of this

case."    CP at 630.


          USAA subsequently moved for partial summary judgment, asking the trial court to

declare   as a matter of   law that ( 1) there   was no coverage under either   policy, ( 2) USAA had no


duty   to defend Geyer, ( 3)   USAA' s. failure to defend was not in bad faith, and ( 4) USAA was not


estopped from denying coverage. The trial court granted the motion and dismissed Speed' s

claims for bad faith failure to defend, settle, or indemnify. USAA then moved to dismiss

Speed' s statutory and regulatory bad faith claims. Speed did not oppose the motion and agreed

that those claims were " inextricably tied to USAA' s duties to defend, settle or indemnify which

the Court    has   now   dismissed   with prejudice."   CP   at   947.
No. 43728 -7 -II



          Speed appeals the trial court' s orders denying his summary judgment motion, granting

USAA' s summary judgment motion, and granting USAA' s motion to dismiss his remaining bad

faith claims.


                                                        ANALYSIS


          The trial court dismissed Speed' s claims on summary judgment. We review a summary

judgment       order   de   novo,   engaging in the    same   inquiry   as   the trial   court.   Woo v. Fireman' s Fund


Ins. Co., 161 Wn.2d 43, 52, 164 P. 3d 454 ( 2007). In addition, the interpretation of an insurance


policy generally is         a question of   law that   we review   de   novo.     Woo, 161 Wn.2d at 52.


A.        DUTY To DEFEND


          1.     Introduction


          Most standard liability insurance policies impose upon the insurer two distinct duties: the

duty to defend the insured against lawsuits or claims and the duty to indemnify the insured

against   any   settlements or       judgments. See St. Paul Fire & Marine Ins. Co.                 v.   Onvia, Inc., 165


Wn.2d 122, 129, 196 P. 3d 664 ( 2008).             Significantly, the duty to defend is different from and

broader than the duty to indemnify. Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398,

404, 229 P. 3d 693 ( 2010).           The duty to defend exists if the policy conceivably covers the claim

allegations, while the duty to indemnify exists only if the policy actually covers the claim. Am.

Best Food, 168 Wn.2d at 404. An insurer' s duty to defend is " one of the principal benefits of the

liability   insurance policy." Woo, 161 Wn.2d             at   54. "   The entitlement to a defense may prove to

be   of greater   benefit to the insured than      indemnity."         Am. Best Food, 168 Wn.2d at 405.


          We generally examine only the allegations against the insured and the insurance policy

provisions to determine whether the duty to defend is triggered. See Woo, 161 Wn.2d at 53 -54;

Holly Mountain Res,           Ltd. v. Westport Ins.     Corp., 130 Wn. App. 635, 647, 104 P. 3d 725 ( 2005),

                                                               C
No. 43728 -7 -II



overruled on other grounds            by Nat' l Sur. Corp.   v.    Immunex   Corp., 176 Wn.2d 872, 297 P. 3d 688

 2013).    Therefore, whether a claim triggers a duty to defend is a question of law that we review

de novo. See Woo, 161 Wn.2d at 52 ( interpretation of insurance contract is question of law

subject   to de   novo review).       Based on a review of the allegations against the insured and the


insurance policy      provisions,     the trial   court —and   this   court on   de   novo review —  must decide as a


matter of law either that the insurer has a duty to defend or that no duty to defend exists. While

the duty to indemnify may depend upon resolution of factual issues, there generally are no

questions of fact for the duty to defend.

          2.      Trigger of Duty To Defend

          Most Washington cases recite that the insurer' s duty to defend is triggered when a

complaint      is filed   against   the insured. E.g., Mut. of Enumclaw Ins. Co.           v.   USF Ins. Co., 164


Wn.2d 411, 420       721,   191 P. 3d 866 ( 2008);     see also Woo, 161 Wn.2d at 52 ( duty to defend arises

when an " action"         is brought). The    cases reference a " complaint "          because most standard


policies   only   require    the insurer to defend    a " suit "    against the insured. See Weyerhaeuser Co. v.


Aetna Cas. & Sur. Co., 123 Wn.2d 891, 902, 874 P. 2d 142 ( 1994).


           However, in this case USAA' s homeowners and auto policies both provided that USAA' s


duty   to defend    arose not   only    when a " suit"   was brought against the insured, but also when any

 claim" was made for damages arising from acts covered under the policies. USAA argued

below that its duty to defend arose only when Speed filed a lawsuit, but concedes on appeal that

the language in these policies triggered a duty to defend when Speed asserted a claim.

Accordingly, here any duty to defend was triggered when Speed sent his demand letter to Geyer,

and the duty to defend is based on the allegations in that letter.



                                                               7
No. 43728 -7 -II


          3.       Scope of Duty To Defend

          Our Supreme Court repeatedly has confirmed that insurers have a broad duty to defend.

E.g., Am. Best Food, 168 Wn.2d at 404; Woo, 161 Wn.2d at 52 -54. These cases have

emphasized the following rules:

          1.   The    duty to     defend generally " `       must be determined only from the complaint.' "

Woo, 161 Wn.2d             at   53 ( quoting Truck Ins. Exch.        v.   VanPort Homes, Inc., 147 Wn.2d 751, 761,


58 P. 3d 276 ( 2002)).            The insurer cannot rely on facts extrinsic to the complaint to deny a duty to

defend. Woo, 161 Wn.2d at 54.


          2. A duty to defend exists if the facts alleged in the complaint against the' insured, if

proven, would trigger coverage under the policy. Am. Best Food, 168 Wn.2d at 404.

          3.      If the complaint is ambiguous, it must be construed liberally in favor of triggering a

duty to   defend. Woo, 161 Wn.2d at 53.


          4. The       duty     to defend is based     on   the   potential   for   coverage.   Woo, 161 Wn.2d at 52 -53.


The duty is triggered if the insurance policy conceivably covers the allegations in the complaint.

Am. Best Food, 168 Wn.2d at 404.

           5. The insured must be given the benefit of the doubt and a duty to defend will be found

unless    it is    clear   from the face   of   the   complaint     that the policy does    not provide coverage.   Woo,


161 Wn.2d at 64.

           6. "[    I] f there is any reasonable interpretation of the facts or the law that could result in

coverage,      the insurer       must   defend." Am. Best Food, 168 Wn.2d at 405.


           There are two exceptions to the rule that the duty to defend must be determined only from

the complaint. First, if the complaint allegations are unclear, the insurer must investigate to


determine if there are any facts in the complaint that could conceivably give rise to a duty to

                                                                     8
No. 43728 -7 -II



defend. Woo, 161 Wn.2d at 53 -54. Second, if the complaint allegations conflict with known


facts or are ambiguous or inadequate, the insurer may consider facts outside the complaint in

order   to trigger —but       not   to   deny —a duty to      defend. Woo, 161 Wn.2d at 54.


           Despite these broad rules favoring the insured, insurers do not have an unlimited duty to

defend. "       Although this duty to defend is broad, it is not triggered by claims that clearly fall

outside    the policy." Immunex, 176 Wn.2d at 879.



           Because the duty to defend is determined based on the allegations in the complaint (or in

this case, in the demand letter) and is broader than the duty to indemnify, whether or not a court

subsequently finds no duty to indemnify is irrelevant to the existence of a duty to defend. The

duty to    defend    arises when         the   claim   is first brought.   Woo, 161 Wn.2d at 52. If a duty to defend

exists, the insurer must defend until a determination of no coverage. Am. Best Food, 168 Wn.2d

at   405. " `     Once the duty to defend attaches, insurers may not desert policyholders and allow

them to incur       substantial     legal      costs while   waiting for   an   indemnity   determination.' "   Am. Best


Food, 168 Wn.2d          at   405 ( quoting VanPort Homes, 147 Wn. 2d                at   760). If an insurer does


defend; a finding of no coverage eliminates the duty to defend only from that point forward.

Immunex, 176 Wri.2d at 885 -86 ( insurer has no right to obtain reimbursement of defense costs

based on a later determination of no coverage). 2

           4.      USAA Homeowners Insurance Policy

           USAA' s homeowners insurance policy provided coverage for bodily injury caused by an




2
  The trial court concluded that the issue of USAA' s duty to defend was " subordinate to the issue
as to finding that there is policy coverage under the facts of this case." CP at 630. To the extent

that the trial court was suggesting that USAA had a duty to defend only if there was a duty to
indemnify, this is an incorrect statement of the law.

                                                                   7
No. 43728 -7 -II


  occurrence ",          which the policy defines as " an accident, including continuous or repeated

exposure to substantially the same general harmful conditions, which results, during the policy

period,     in ...   bodily injury."           CP   at   210 -11.     The question here is whether it is conceivable that


the incident described in Speed' s demand letter could be considered an " accident."

            Our Supreme Court has               referenced           two   similar   definitions   of   the term " accident   "   in


insurance      coverage cases: (        1) "   an unusual, unexpected, and unforeseen                     happening,"   Grange Ins.


Co.   v.   Brosseau, 113 Wn.2d 91, 95, 776 P. 2d 123 ( 1989);                           and ( 2) a   loss that happens " `        without




design, intent,      or obvious motivation.' "                   Roller     v.   Stonewall Ins. Co., 115 Wn.2d 679, 685, 801


P. 2d 207 ( 1990) (       quoting Federated Am. Ins. Co. v. Strong, 102 Wn.2d 665, 674, 689 P. 2d 68

 1984)),     overruled on other grounds by Butzberger v. Foster, 151 Wn.2d 396, 89 P. 3d 689

 2004).      Whether an event constitutes an accident is determined objectively and does not depend

on   the insured'     s subjective perspective.                 Roller, 115 Wn.2d         at   685. "   Either an incident is an


accident or      it is   not."   Roller, 115 Wn.2d at 685.


            In applying the accident requirement Washington courts repeatedly have held that the

insured' s deliberate conduct generally does not constitute an accident.

              A] n accident is never present when a deliberate act is performed unless some
            additional               independent and unforeseen happening occurs which
                            unexpected,

            produces or      brings   the result of injury or death. The means as well as the
                                        about


            result must be unforeseen, involuntary, unexpected and unusual."

Safeco Ins. Co. of-
                  4m.            v.   Butler, 118 Wn.2d 383, 401, 823 P. 2d 499 ( 1992) ( internal quotation


marks omitted) ( quoting              Detweiler          v.   J.C.   Penney Cas.      Ins. Co., 110 Wn.2d 99, 104, 751 P. 2d


282 ( 1988)).        Under this standard, there is no accident even if the insured did not expect or intend

any injury. See Butler, 118 Wn.2d at 400 -01 ( no accident even assuming injury resulted from an
unintentional ricochet of             bullet); State Farm Fire &                  Cas. Co. v. Parrella, 134 Wn. App. 536,


                                                                            10
No. 43728 -7 -II



541, 141 P. 3d 643 ( 2006) ( no accident even though it was undisputed that insured did not intend


to injure claimant).


            Safeco Ins. Co. ofAm. v. Dotts, 38 Wn. App. 382, 685 P. 2d 632 ( 1984) is illustrative. In

that case, the insured slapped a person he found at his girlfriend' s home in order to get the


person' s attention. Dotts, 38 Wn. App. at 383 -84. The insured.testified that he was not angry

and   did   not   intend to hurt the   person.     Dotts, 3 8 Wn. App. at 3 84. The person seemed

unaffected, but later lapsed into a coma and died. Dotts, 38 Wn. App. at 384. Division Three of

this court held that because the slap was a deliberate act, the death did not result from an

accident. Dotts, 38 Wn. App. at 385 -87.

            Here, Speed' s demand letter unambiguously described Geyer' s conduct as deliberate.

The letter alleged that Geyer chased after Speed in his vehicle for an extended period and, when

the vehicles stopped for a traffic signal, Geyer got out of his vehicle and beat Speed with his fists


and a metal thermos. The letter also stated that the case was aggravated by Geyer' s " intentional

conduct" and was not a case            involving   negligence.      CP    at   61.   Further, the letter provides no


allegations       that   would support   the   conclusion    that there   was an " ` additional, unexpected,




independent         and unforeseen   happening' " that would convert Geyer' s deliberate acts into an

accident.        Butler, 118 Wn.2d     at   401 ( internal   quotation marks omitted) (        quoting Detweiler, 110

Wn.2d       at   104).   Even interpreting the allegations liberally and resolving doubts in favor of a duty

to defend, the USAA homeowners policy does not conceivably cover the allegations in Speed' s

demand letter.


            Even if USAA were required to consider evidence outside the demand letter, that


evidence only confirmed that Geyer' s conduct was deliberate. Geyer testified in his criminal

trial that he did deliberately hit Speed, but contended that he was acting in self -
                                                                                   defense.

                                                               11
No. 43728 -7 -II



However, Washington law is clear that no accident exists even when the insured' s deliberate

conduct is performed in self -
                             defense. Brosseau, 113 Wn.2d at 96 ( insured' s claim that he was


acting in self -
               defense when causing intentional bodily injury to another " in no way negates the

deliberate nature of his act" and does not bring the conduct within the definition of an " accident

       And although Geyer' s third degree assault conviction was based on a criminal negligence


standard, this fact establishes only that the jury was not convinced beyond a reasonable doubt

that Geyer intended to injure Speed. The conviction does not change the deliberate nature of


Geyer' s conduct. And as noted above, the insurer' s intent to cause injury does not affect the

    accident "   analysis. Further, we rejected a similar argument in Allstate Ins. Co. v. Bauer, 96


Wn. App. 11, 16, 977 P. 2d 617 ( 1999)

          We hold that USAA had no duty to defend against Speed' s demand letter under its

homeowners policy because as a matter of law, the incident described in the letter did not
                                                               3
constitute an " accident" as          the policy   required.



          5.          USAA Auto Insurance Policy

          Geyer'      s auto   insurance policy    provided coverage        for bodily injury   caused   by   an "   auto




accident."       CP   at   213.   A duty to defend exists only if it is conceivable that the incident described

in Speed' s demand letter could be considered an " auto accident."


          The policy does          not   define " auto   accident."     However, as discussed above the term


    accident" has an established meaning in Washington. Our holding that Speed' s claim did not


3
    We need not address whether coverage also would be precluded under the intentional act
exclusion in USAA' s homeowners policy, which excludes coverage for injury " caused by the
intentional or purposeful acts of any insured, including conduct that would reasonably be
expected to result in bodily injury to any person." CP at 212 ( boldface omitted). We do note

that the demand letter unambiguously alleges purposeful acts, and hitting someone with fists and
a metal thermos reasonably would be expected to cause injury.
                                                                   12
No. 43728 -7 -II



allege an accident for purposes of the homeowners policy applies equally to the " auto accident "

requirement in USAA' s auto policy. See, e. g., Roller, 115 Wn.2d at 685 ( vehicle intentionally

ramming another vehicle was not an accident).


          We hold that USAA had no duty to defend against Speed' s demand letter under its auto

policy because as a matter of law, the incident described in the letter did not constitute an " auto
                                                   4
accident"    as   the policy        required.




B.        EFFECT         OF   USAA'        s"   UNCERTAINTY "           REGARDING COVERAGE


          Speed argues that even if the language of his demand letter did not trigger a duty to

defend, USAA             still   had   a   duty   to defend because it          was " uncertain[ ] "   regarding coverage. Br.

of   Appellant      at   27 -28.       Speed emphasizes that after USAA received Speed' s demand letter, it

informed Geyer that' his claim was still unresolved because " we continue to investigate coverage

and    liability in this         matter."       CP at 566. USAA later told Geyer that coverage was


    questionable" under            both     policies,   CP   at   81,   and    that "[   c] overage may be precluded" under both

policies.    CP     at   781 (    emphasis added).           Speed argues that because USAA made these statements


and because USAA' s adjusters allegedly were unsure about coverage, USAA "admitted the




4
    Because there      was no " accident " here, we need not decide whether Speed' s injury was caused


by    an " auto "    accident. We note that Speed' s injuries did not involve the use of an auto, but
rather,   his   vehicle was         the "    mere situs "    of the assault. Mut. ofEnumclaw Ins. Co. v. Jerome,
 122 Wn.2d 157, 163, 856 P. 2d 1095 ( 1993) (                     addressing issue under policy requiring that a claim
arise out of      the    use of a vehicle).            And as with the homeowners policy, we need not decide
whether coverage also would be precluded under the intentional act exclusion in USAA' s auto
policy, which excludes coverage if the insured " intentionally acts or directs to cause [ bodily
injury] or who acts or directs to cause with reasonable expectation of causing [ bodily injury]."
 CP at 214. Again, we note that the demand letter unambiguously alleges intentional acts, and
hitting someone with fists and a metal thermos reasonably would be expected to cause injury.
                                                                          13
No. 43728 -7 -II


potential    for   coverage"   and created     the " uncertainty "          regarding coverage necessary to trigger
                                                                                        5
the   duty   to defend. Br.    of   Appellant      at   25, 27 -28. We disagree.


         Speed' s argument apparently derives from American Best Food, where the court stated

that " any uncertainty     works     in favor   of       providing   a   defense to   an    insured."        168 Wn.2d at 408.


But Speed fails to cite any authority suggesting that the insurer' s uncertainty regarding coverage

can trigger a duty to defend. As stated above, the existence of a duty to defend is a question of

law for the    court,   based solely    on   the   claim allegations.         Woo, 161 Wn.2d            at   52 -53. The court in


American Best Food was addressing uncertainty in the applicable law, not an insurer' s

uncertainty regarding       coverage.        168 Wn.2d at 408. What the insurer believes about the duty to

defend or policy coverage is immaterial to the court' s duty to defend determination.

         Further, to allow an insurer' s conduct to give rise to the duty to defend would conflict

with the rule that insurance coverage cannot be created by equitable estoppel. See Shows v.

Pemberton, 73 Wn.         App. 107,     111, 868 P. 2d 164 ( 1994) (" `[              U] nder no conditions can.. .


coverage or restrictions on the coverage be extended by the doctrine of waiver or estoppel.' " )

 quoting Carew, Shaw & Bernasconi                   v.   Gen. Cas. Co.      ofAm.,     189 Wash. 329, 336, 65 P. 2d 689


 1937)).


         We reject the argument that an insurer' s subjective uncertainty regarding coverage can

trump the court' s legal determination that no duty to defend exists based on the claim allegations
and   the policy language. We hold that USAA'                   s statements     indicating "       uncertainty "      regarding


5 We note that USAA' s alleged " uncertainty" appeared to derive from its mistaken belief that it
did not need to decide whether a duty to defend existed until Speed filed suit. As a result, it
made sense for USAA to continue to investigate and to hold open the possibility of coverage
while awaiting a formal complaint. In fact, as USAA conceded on appeal, USAA had a duty to
defend against Speed' s demand letter if its allegations raised a potential for coverage. As
discussed below, we need not address whether USAA could be subject to bad faith liability even
in the absence of a duty to defend when it failed to make a defense decision upon receiving
 Speed' s demand letter. That issue was not raised in this case.
                                                                 14
No. 43728 -7 -II



coverage have. no bearing on our holding that USAA had no duty to defend Speed' s claim as a

matter of law based on the claim allegations and USAA' s policy language.

C.       DUTY TO EXPLORE SETTLEMENT


         Speed argues that the insurer' s duty to defend includes a duty to make affirmative efforts .

to settle claims against its insured. Washington courts have recognized that under certain

circumstances an insurer must make reasonable efforts to pursue settlement. See Moratti v.

Farmers Ins. Co. of Wash., 162 Wn.              App.   495, 504, 254 P. 3d 939 ( 2011), review denied, 173


Wn.2d 1022 ( 2012);        Truck Ins. Exch. of the Farmers Ins. Grp. v. Century Indem. Co., 76 Wn.

App. 527, 534, 887 P. 2d 455 ( 1995).

         But here, as a matter of law USAA had no duty to defend against Speed' s demand letter. .

Speed cites no authority for the proposition that an insurer has a duty to explore settlement under

these circumstances.


D.       BAD FAITH CLAIMS


         Because USAA had no duty to defend against Speed' s demand letter, we, hold that

USAA' s failure to defend did not constitute bad faith. When an insurer correctly denies a duty to

defend, there   can   be   no   bad faith    claim   based   on   that denial. See Wellman & Ack, Inc. v.


Hartford Fire Ins. Co., 170 Wn.              App.   666, 677, 285 P. 3d 892 ( 2012) ( because insurer did not


breach   duty to defend,     trial   court   properly dismissed bad faith      claim),   review denied, 176 Wn.2d


1019 ( 2013).


         Speed' s coverage by estoppel claim fails for the same reason. Estoppel to deny coverage

is one remedy for breaching a duty to defend in bad faith. Butler, 118 Wn.2d at 392 -94. But in

the absence of bad faith, coverage by estoppel does not apply. Mut. ofEnumclaw Ins. Co. v.

T &G Constr., Inc., 165 Wn.2d 255, 267 n.4, 199 P. 3d 376 ( 2008).


                                                              15
No. 43728 -7 -II



           Although Speed has no bad faith claim arising from USAA' s failure to defend, an insured

can assert bad faith claims that are not dependent on the duty to defend, settle, or indemnify.

Onvia, 165 Wn.2d at 132. Below, Speed did assert other bad faith claims against USAA based

on chapter 284 -30 WAC, which may not have been directly related to USAA' s failure to defend.

And in his briefing Speed argued that USAA mishandled his claim in a number of ways. Speed

assigns error to the trial court' s dismissal of these claims. However, in the trial court Speed did

not oppose the dismissal of his bad faith claims because those claims were " inextricably tied to

USAA' s duties to defend, settle or indemnify which the Court has now dismissed with

prejudice."     CP    at   947.   Moreover, Speed has not presented any argument on appeal to support

his assignment of error on this issue so we decline to consider it further. RAP 10. 3( a)( 6);

Kadoranian v. Bellingham Police Dep' t, 119 Wn2d 178, 191, 829 P.2d 1061 ( 1992).

           Similarly, Speed asserted a claim against USAA for violation of the IFCA. RCW

48. 30. 015( 1).     As with the other bad faith claims, Speed did not oppose dismissal of the IFCA


claim and does not present any argument on appeal on this claim. Accordingly, we do not

consider the issue further.

E.         ATTORNEY FEES


           Speed requests attorney fees in the trial court and on appeal under Olympic Steamship

Co.   v.   Centennial Insurance Co., 117 Wn.2d 37, 811 P. 2d 673 ( 1991).            Under Olympic


Steamship, " an award of fees is required in any legal action where the insurer compels the

insured to assume the burden of legal action, to obtain the full benefit of his insurance contract."

117 Wn.2d       at   53.   Because Speed is not the prevailing party, he is not entitled to fees under

Olympic      Steamship.       Humleker   v.   Gallagher Bassett Servs. Inc.,   159 Wn. App. 667, 686, 246

P. 3d 249 ( 2011).


                                                           16
No. 43728 -7 -II



        Speed also requests attorney fees under the IFCA. RCW 48. 30.015( 3) allows an insured

to recover attorney fees as the prevailing party in an IFCA, action. But because Speed is not the

prevailing party here, he is not entitled to fees under the IFCA.

        We affirm the trial court' s summary judgment orders




                                                   MAXA, J.
We concur:




             A.C. J.




i                           4




    y




                                                  17
