    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                        DIVISION ONE

BROUGHTON LAW GROUP, INC.,                       No. 72566-1-1
P.S., a Washington corporation,                                                     CD        7?'

                     Appellant,                                                         en




                                                                                        «JD    CV:-

FIRE INSURANCE EXCHANGE, a                       UNPUBLISHED OPINION
California company and a resident
of Washington state,                             FILED: October 26, 2015

                     Respondent.


      Verellen, J. — Terry Parks sued attorney Janyce Fink for legal malpractice, and

Fink counterclaimed for the tort of outrage. Parks tendered the outrage counterclaim to

his homeowner's insurer, Fire Insurance Exchange (FIE). FIE initially accepted the

tender under a reservation of rights and later decided that it did not have a duty to

defend Parks under his personal liability coverage for libel, slander, and defamation.

Parks retendered several months later with additional facts, but FIE again declined to

defend.

       Parks assigned his claims against FIE to the Broughton Law Group. Broughton

then sued FIE for breach of contract and bad faith. The trial court granted FIE summary

judgment. On appeal, Broughton contends FIE breached its duty to defend Parks in the

underlying lawsuit because, under California law, there existed a bare potential or
No. 72566-1-1/2



possibility of coverage under the policy's personal liability coverage for libel, slander,

and defamation.

          We conclude FIE did not breach its duty to defend Parks. Based on the

information provided to FIE at the time of the first and second tender, Fink's outrage

counterclaim did not raise a bare potential or possibility of coverage under Parks's

policy.

          We affirm.

                                            FACTS


          In 2006, Fink prepared a will for John Balko which left most of Balko's estate to

Parks. After Balko's death, a court concluded the will was invalid.

          In January 2010, Parks sued Fink for legal malpractice. In April 2011, Fink

counterclaimed, including a claim for the tort of outrage, and filed a declaration

identifying numerous threats and insults made by Parks. In a June 2011 declaration,

Fink alleged Parks continued to threaten and criticize her. She attached an e-mail

Parks wrote to the former trial judge in the probate action and alleged Parks posted

"derogatory comments" about her on the Internet.1

          On July 1, 2011, Fink filed her ER 904 documentation with the trial court,

disclosing 31 documents. On July 5, 2011, Parks tendered Fink's counterclaims to FIE.

Parks's California homeowner's policy included a personal liability coverage section:

                  We pay those damages which an insured becomes legally
          obligated to pay because of bodily injury, property damage or personal
          injury resulting from an occurrence to which this coverage applies.
          Personal injury means any injury arising from:




          1 Clerk's Papers (CP) at 197.
No. 72566-1-1/3


              (1) false arrest, imprisonment, malicious prosecution and
              detention.


              (2) wrongful eviction, entry, invasion of rights of privacy.

              (3) libel, slander, defamation of character.

              (4) discrimination because of race, color, religion or national
              origin.[2'

       On July 14, 2011, the trial court dismissed all but Fink's outrage counterclaim.

That claim alleged Parks threatened Fink's life on several occasions but referred to only

one communication: a September 16, 2008 letter that Parks sent to Fink threatening

and insulting her.

       FIE initially accepted the tender under a reservation of rights and retained an

attorney to defend Parks. On August 8, 2011, FIE determined there was no duty to

defend. Defense counsel withdrew in early September 2011.

       Parks challenged FIE's refusal to defend, but FIE reaffirmed its position. At that

time, the only communication that formed the basis of Fink's outrage counterclaim was

the September 16, 2008 letter. FIE determined no allegations in Fink's counterclaim

suggested the September 16, 2008 letter was published to a third party.

       On November 16, 2011, Parks retendered with a September 26, 2008 e-mail

sent by Parks to Fink via Avvo.com. On November 29, 2011, FIE concluded the private

Avvo e-mail had never been posted on the Avvo website nor otherwise published to a

third party. FIE continued to ask Parks to provide any proof that the Avvo e-mail had

been published to a third party, but Parks provided none. That same day, Parks

provided copies of Fink's ER 904 documentation to FIE, including the Avvo e-mail, a


       2 CP at 59 (emphasis added).
No. 72566-1-1/4


September 26, 2008 e-mail, several undated press releases from Parks's charity,

several cartoons and a comic strip, a letter to "c. ecklund & wife," and a Halloween card.

       FIE refused the retender. Broughton sued FIE for breach of contract and bad

faith, claiming FIE breached its duty to defend.3 The trial court denied Parks's partial

summary judgment motion and granted FIE's motion for summary judgment.

       Broughton appeals.

                                        ANALYSIS


       This appeal presents the question whether FIE breached its duty to defend Parks

on Fink's outrage counterclaim.4

                                      Choice of Law

       The parties contend California law governs. We agree. An insurance policy is a

contract between an insurer and an insured.5 We apply the most significant relationship

test to contract choice-of-law issues.6 We consider the place of contracting, the place of

negotiation, the place of performance, the location of the subject matter of the contract,

and the residence and place of business of the parties.7


       3At some point between March 2012 and October 2013, Parks assigned his
claims against FIE to Broughton.
       4 Broughton assigns error to the trial court's denial of his motion for partial
summary judgment. FIE contends the denial of a partial summary judgment is not
appealable as a matter of right under RAP 2.2(a) because it is neither a "final judgment"
nor a "written decision affecting a substantial right. . . that in effect determines the
action and prevents a final judgment or discontinues the action." This dispute is of no
consequence because the appeal of summary judgment in favor of FIE brings up on
appeal the same issues that would be presented in an appeal of the denial of
Broughton's motion for partial summary judgment.
       5 State Farm Gen. Ins. Co. v. Emerson. 102 Wn.2d 477, 480, 687 P.2d 1139
(1984).
       6 Mulcahv v. Farmers Ins. Co. of Wash., 152 Wn.2d 92, 100, 95 P.3d 313 (2004).
       7 Restatement (Second) of Conflict of Laws § 188 (1971).
No. 72566-1-1/5


       The insurance policy here was negotiated, executed, and issued to protect a risk

in California. The subject matter of the insurance policy was Parks's home in California.

Parks is a resident of California, and FIE has its principal place of business in California.

We conclude California law applies to this insurance policy.

                                        Duty to Defend

       Broughton contends FIE had a duty to defend Parks against Fink's outrage

counterclaim. We disagree.

       We review a summary judgment order de novo, performing the same inquiry as

the trial court.8 We view the facts and all reasonable inferences in the light most

favorable to the nonmoving party.9 Summary judgment is proper if there are no genuine

issues of material fact.10

       Personal injury coverage generally applies to "injury which arises out of the

commission of certain enumerated acts or offenses."11 Coverage is "triggered by the

offense," not the injury that a plaintiff suffers.12 The policy here provides coverage for

"personal injury," defined to include "any injury arising from . . . libel, slander, [and]

defamation of character."13




       8 McDevitt v. Harborview Med. Ctr., 179 Wn.2d 59, 64, 316 P.3d 469 (2013).
       9 Fulton v. Dep't of Soc. & Health Servs.. 169 Wn. App. 137, 147, 279 P.3d 500
(2012).
       10 Lowman v. Wilbur, 178 Wn.2d 165, 168-69, 309 P.3d 387 (2013).
      11 Fibreboard Corp. v. Hartford Accident & Indem. Co., 16 Cal. App. 4th 492, 511,
20Cal. Rptr. 2d 376 (1993).
       12 Id,
       13 CP at 427.
No. 72566-1-1/6


       Liability insurance typically imposes two separate contractual duties on an

insurer: to indemnify its insured against third party claims covered by the policy and to

defend such claims.14 "The duty to defend is broader than the duty to indemnify."15

Even when "'coverage is in doubt and ultimately does not develop,'" the duty to defend

may exist.16

      The duty to defend arises upon tender.17 "'[A] bare "potential" or "possibility" of

coverage'" triggers the duty.18 The insurer must consider all facts the insurer knows or

becomes aware of at the time of tender.19 If any facts stated or fairly inferable from the

third party's counterclaim or otherwise known or discovered by the insurer suggest a

potentially covered claim under the policy, the insurer has a duty to defend.20

       An insurer satisfies its duty to defend by reviewing the policy, the facts alleged in

the counterclaim, and any extrinsic facts known at the time of tender.21 If the insurer

makes an informed decision that there is no potential for coverage under the policy, the




       14 Howard v. Am. Nat'l Fire Ins. Co., 187 Cal. App. 4th 498, 519, 115 Cal. Rptr.
3d 42 (2010).
       15 \± at 520.
       16 Montrose Chem. Corp. v. Superior Court, 6 Cal. 4th 287, 295, 861 P.2d 1153,
24 Cal. Rptr. 2d 467 (1993) (quoting Savlin v. California Ins. Guarantee Ass'n. 179 Cal.
App. 3d 256, 263, 224 Cal. Rptr. 493 (1986)).
       17 Buss v. Superior Court, 16 Cal. 4th 35, 46, 939 P.2d 766, 65 Cal. Rptr. 2d 366
(1997).
       18 Howard, 187 Cal. App. 4th at 520 (alteration in original) (quoting Montrose, 6
Cal. 4th at 300).
       19 Jon Davler, Inc. v. Arch Ins. Co., 229 Cal. App. 4th 1025, 1032, 178 Cal. Rptr.
3d 502 (2014).
       20 \±
       21 See Baroco W., Inc. v. Scottsdale Ins. Co., 110 Cal. App. 4th 96, 103, 1 Cal.
Rptr. 3d 464 (2003).


                                              6
No. 72566-1-1/7



insurer has no continuing duty to investigate.22 But doubt as to whether an insurer owes

a duty to defend is resolved in the insured's favor.23 When the third party's counterclaim

"'can by no conceivable theory'"24 create a "'bare "potential" or "possibility" of

coverage,'"25 an insurer has no duty to defend.

       A. Initial Tender on July 5, 2011

       We must determine whether the allegations in the counterclaim and all of the

facts known by FIE at the time of the initial tender created a bare potential or possibility

of coverage under Parks's policy. We compare the allegations in Fink's counterclaim

and any extrinsic facts known by FIE at the time of tender with the terms of the policy.

       Fink's outrage counterclaim focused upon the September 16, 2008 letter that

Parks sent to her; specifically, on Parks's "death threats and insults."26 On July 5, 2011,

Parks tendered the outrage counterclaim to FIE. At that time, FIE had no facts other

than those alleged in Fink's counterclaim on which to base its coverage decision. Parks

provided no other information to FIE about the underlying circumstances of the outrage

counterclaim. FIE did not know nor had reason to know of any extrinsic facts that

potentially formed the basis of Fink's outrage counterclaim.




      22 Gunderson v. Fire Ins. Exch., 37 Cal. App. 4th 1106, 1114, 44 Cal. Rptr. 2d
272(1995).
       23 John Davler, 229 Cal. App. 4th at 1032.
       24 id at 1032-33 (quoting Hartford Casualty Ins. Co. v. Swift Distrib., Inc., 59 Cal.
4th 277, 288, 326 P.3d 253, 172 Cal. Rptr. 3d 653 (2014).
       25 Howard, 187 Cal. App. 4th at 520 (quoting Montrose, 6 Cal. 4th at 300).
       26 CP at 298.
No. 72566-1-1/8



       Under California law, a claim of libel, slander, or defamation requires publication

of the alleged defamatory communication to a third party.27 Absent an allegation of

publication or facts potentially supporting publication, an insurer does not have a duty to

defend a third party's counterclaim for libel, slander, or defamation.28 Fink's

counterclaim did not allege any publication of the September 16, 2008 letter.

       Broughton argues his policy does not define "defamation" to require a

publication. He contends an ordinary person would reasonably expect "libel" to mean

the dictionary definition of "a written or oral defamatory statement or a representation or

suggestion that conveys an unjustly unfavorable impression."29 But the plain meaning

of a "defamatory statement" is a communication that "constitutes an injury to

reputation."30 No injury to reputation arises from a private letter between two parties

about each other.


       Broughton contends an insurer has constructive knowledge of every pleading

and document in any court file and has a continuing duty to investigate unknown

extrinsic facts, but he cites no authority for these propositions.31 Extrinsic facts may


       27 Lindsevv. Admiral Ins. Co., 804 F. Supp. 47, 52 (N.D. Cal. 1992); accord
Shivelv v. Bozanich, 31 Cal. 4th 1230, 1242, 80 P.3d 676, 7 Cal. Rptr. 3d 576 (2003);
Total Call Int'l, Inc. v. Peerless Ins. Co., 181 Cal. App. 4th 161, 169, 104 Cal. Rptr. 3d
319 (2010); Barnettv. Fireman's Fund. Ins. Co., 90 Cal. App. 4th 500, 510 n.5, 108 Cal.
Rptr. 2d 657 (2001).
       28 See Shanahan v. State Farm Gen. Ins. Co., 193 Cal. App. 4th 780, 789, 122
Cal. Rptr. 3d 572 (2011) (insurer had no duty to defend when the third party "complaint
did not allege a publication, a necessary element of slander").
       29 Appellant's Br. at 29-30.
       30 Shivelv, 31 Cal. 4th at 1242.
        31 At oral argument, Broughton suggested a California statute purportedly puts a
person on constructive notice of any public records. To the extent that Broughton was
referring to California Civil Code § 19, it provides: "Every person who has actual notice
of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has


                                             8
No. 72566-1-1/9


give rise to a duty to defend, but such facts must be known by the insurer at the time of

tender. Broughton conceded at oral argument that absent knowledge of Fink's April and

June 2011 declarations, there is no possible claim of libel, slander, or defamation. No

evidence suggests that at the time of tender, FIE knew the contents of the court file,

including the two declarations.

       Broughton also suggests Fink's declarations were provided to defense counsel

retained by FIE. He relies on the declaration of Parks's former attorney that the

attorney discussed the allegations in Fink's counterclaim with defense counsel and

"provided her with whatever assistance she needed, including giving her my thoughts

and access to all pleadings/documents in this matter."32 But "access to" pleadings and

documents is not the same as providing those pleadings and documents. No evidence

suggests FIE knew or had reason to know of Fink's declarations at the time of tender.

       Gunderson v. Fire Insurance Exchange33 is helpful. The court in Gunderson

recognized that the test for the duty to defend is whether the facts known to the insurer

at the time of tender created a potential for coverage under the policy.34 The court

determined that most of the extrinsic evidence of a potential claim under the plaintiffs'

policy arose after the third party's complaint was tendered to the insurer.35 An insurer


constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he
might have learned such fact." But Broughton does not provide, and we are not aware
of, any duty-to-defend case that has applied this statute to conclude that an insurer has
constructive notice of a court file in the underlying lawsuit that may trigger an insurer's
duty to defend.
       32 CP at 42 (emphasis added).
       33 37 Cal. App. 4th 1106, 44 Cal. Rptr. 2d 272 (1995).
       34 Id at 1113-14.

       35 Id. at 1117.
No. 72566-1-1/10


may base its determination on whether to accept tender on the facts available to it at

that time.36 Once an insured makes an informed decision that there is no potential for

coverage, it does not have a continuing duty to investigate or monitor the lawsuit.37

Absent any retender alleging new facts extrinsic to the third party complaint, the insurer

has "no way to know of [any] new extrinsic facts, and no obligation to find them out by

itself."38

        As in Gunderson, FIE ultimately concluded on the basis of the information

provided to it at the time of tender to refuse the tender. The only information known to

FIE at the time of tender was that the September 16, 2008 letter had not been published

to a third party. FIE had no duty to defend Parks because there was no potential for

coverage under the policy. Therefore, we conclude FIE did not have a duty to defend

Parks against Fink's outrage counterclaim based on the initial July 5, 2011 tender.

         B. Tender of Post-Declination Information

             The duty to defend is generally determined from all of the information available

to the insurer at the time of tender.39 But "later developments may impact the insurer's

duty to defend."40 If an insured retenders new information, the insurer has a duty to

analyze whether the information potentially triggers coverage under the policy. The




         36 Id at 1114.
         37 \± at 1115-17.
         38idat1117.
         39 Howard, 187 Cal. App. 4th at 519.
         40 Id. at 519-20.



                                                 10
No. 72566-1-1/11



insured must bring to the insurer's attention new facts indicating a potential for

coverage.41

       On November 16, 2011, four months after Fink's counterclaim had been

tendered to FIE, Parks identified the Avvo e-mail as allegedly triggering coverage. This

communication was a private e-mail sent from Parks to Fink via Avvo.com on

September 26, 2008. Fink alleged in her April 2011 declaration that this communication

was published on Avvo's website. But Parks did not provide that declaration to FIE, and

FIE determined the e-mail had not been posted on Avvo's website. Because the only

extrinsic evidence known to FIE was that the e-mail was private, similar to an e-mail

sent through any other e-mail provider, there was no suggestion that the e-mail had

been published to any third party. Therefore, we conclude FIE did not have a duty to

defend based on the Avvo e-mail.

       As to Parks's September 11, 2008 letter to the former trial judge in the probate

action, Parks did not provide this letter to FIE at the time of his initial tender nor as part

of his post-declination tender. The record does not support that FIE was aware of or

knew about the existence of this letter until Broughton filed his motion for partial

summary judgment, long after his tender and retender to FIE. Absent some additional

tender of defense, FIE "had no way to know of these extrinsic facts, and no obligation to

find them out by itself."42 Therefore, FIE did not have a duty to defend Parks based on

extrinsic facts that were never provided to it.




       41 See Gunderson, 37 Cal. App. 4th at 1117.
       42 Id.



                                               11
No. 72566-1-1/12


       On November 29, 2011, Broughton provided FIE copies of Fink's ER 904

documentation. This documentation included the September 16, 2008 letter, the Avvo

e-mail, a September 26, 2008 e-mail from Parks to Fink, undated press releases,

several cartoons and a comic strip, a letter to "c. ecklund & wife," and a Halloween card.

But none of these communications triggered a duty to defend.

       The September 26, 2008 e-mail reveals only a private e-mail from Parks to Fink.

No evidence suggests this e-mail was published to a third party.

       The cartoons and the comic strip generally criticizing lawyers and lawyers

involved in preparing wills were drawn by an artist. Parks sent these communications

only to Fink. No evidence in the record suggests these communications were published

to a third party. And a defamation claim requires that the defamatory statement

"'specifically refer to, or be "of and concerning," the plaintiff in some way.'"43 Absent an

express reference to the plaintiff, there must be a "reasonable implication" that the

plaintiff is the person referred to in the communication.44 "There is no single test for

making this determination. 'Each case must stand on its own facts.'"45
       Here, the artist did not expressly identify or refer to Fink. Although Broughton

claims Parks must have communicated defamatory information to the artist, there is no




       43Total Call Intl. 181 Cal. App. 4th at 170 (quoting Blattvv. N.Y. Times Co., 42
Cal. 3d 1033, 1042, 728 P.2d 1177, 232 Cal. Rptr. 542 (1986)); Tamkin v. CBS
Broadcasting, Inc., 193 Cal. App. 4th 133, 146, 122 Cal. Rptr. 3d 264 (2011) (to be "of
and concerning" the plaintiff, the test is whether a reasonable person would have
understood the communications as referring to the plaintiff).
       44 Hartford Cas. Ins. Co. v. Swift Distrib., Inc., 59 Cal. 4th 277, 293, 326 P.3d
253, 172 Cal. Rptr. 3d 653 (2014).
       45 Tamkin, 193 Cal. App. 4th at 146 (quoting Bindrim v. Mitchell. 92 Cal. App. 3d
61,78, 155 Cal. Rptr. 29 (1979)).


                                             12
No. 72566-1-1/13


reasonable implication that Parks mentioned Fink by name to the artist. Nor would a

reasonable person have understood that the cartoons referred to Fink.

       The Halloween card was sent by Parks to Fink. No evidence suggests the card

was published to a third party.

       In his letter to "c. ecklund &wife,"46 Parks wrote, "You, and all the greedy lawyers

involved with this have ruined my, and my families, life."47 Parks did not expressly

identify Fink. No evidence suggests a reasonable person would have understood these

communications as referring to Fink.

       The undated "press releases" do not name Fink but include negative references

to "the main estate lawyer," "my cousin's estate lawyer," "estate lawyer," "the lawyer,"

"several other Seattle lawyers," "my own lawyer," and "his main estate lawyer."48 We do

not know who authored the relevant portions of the press releases or that they were

ever actually made available to the press, but there is a possibility they were accessible

on the Internet. As previously noted, a defamatory statement must "'specifically refer to,

or be "of and concerning," the plaintiff in some way.'"49 And California law looks to

whether there is a reasonable implication that the person claiming defamation is

referred to in the communication.50 Broughton provides no authority that the reasonable

implication standard depends upon a reasonable person who is aware of all the

background information in the underlying lawsuits. And it appears that several



       46 Craig Ecklund was a beneficiary of Balko's will in the probate action.
       47 CP at 163 (emphasis added).
       48 CP at 185-86.
       49 Total Call Int'l, 181 Cal. App. 4th at 170 (quoting Blattv, 42 Cal. 3d at 1042).
       50 Hartford Cas. Ins. Co., 59 Cal. 4th at 293.



                                             13
No. 72566-1-1/14


attorneys were involved in Balko's probate, including Broughton, whom Parks hired to

assist him in some of those proceedings. The references to lawyers in the press

releases do not expressly identify Fink by name. We are not convinced a reasonable

person would conclude that the press releases reasonably implied that Fink was one of

the lawyers referred to. Therefore, on the authority cited by Broughton, we conclude

FIE did not have a duty to defend as to the press releases.

       Lastly, Broughton seeks attorney's fees. But Broughton has not prevailed and is

not entitled to attorney's fees on appeal.51

                                      CONCLUSION


      We conclude FIE did not have a duty to defend Parks against Fink's outrage

counterclaim.


      Affirmed.




WE CONCUR:




  JP^UJ /Vy^ ^J.




       51 See Olympic Steamship Co., Inc. v. Centennial Ins. Co., 117 Wn.2d 37, 52-53,
811 P.2d 673 (1991) (extending "the right of an insured to recoup attorney fees that it
incurs because an insurer refuses to defend" an insured).


                                               14
