                                                                  r'ILED
                                                          COURT,OF APPEALS     I
                                                          'STATE OF WASHINGTON

                                                           Z018 FEB 26 MI 8: 40

 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 DENNIS SCHMIDT and WENDY               )
 DEMETER, husband and wife,             )                No. 74369-4-1
                                        )
        Appellants/Cross Respondents,   )                DIVISION ONE
                                        )
              v.                        )                UNPUBLISHED OPINION
                                        )
 AMERICAN COMMERCE INSURANCE            )
 COMPANY, a foreign corporation,        )
                                        )
        Respondent/Cross Appellant,     )
                                        )
 MAPFRE USA, a foreign corporation; M&T )
 BANK CORPORATION and any               )
 assignees or successors; FIRST         )
 TENNESSEE BANK NATIONAL                )
 ASSOCIATION and any assignees or       )
 successors; AUTOMOBILE CLUB            )
 INSURANCE AGENCY d/b/a AAA             )
 INSURANCE AGENCY, a Washington         )
 corporation,                           )
                                        )
        Defendants.                     )                FILED: February 26, 2018
                                        )
      APPELWICK, J. — Schmidt's Vashon home burned down. Schmidt filed suit

against insurer, ACIC, which refused to cover his loss claim. The jury found that

Schmidt intentionally set fire to his house. Schmidt appeals. ACIC cross appeals.

                                      FACTS

      After landslides, Dennis Schmidt and Wendy Demeter (hereafter Schmidt1)

replaced the foundation and rebuilt their home. Sheryl Lux of King County Code


       I In the context of the insurance contract, the use of "Schmidt" refers to the
marital community. In the context of the facts around the fire, it is undisputed that
No. 74369-4-1/2



Enforcement was assigned to investigate Schmidt's property for reported code

violations. Lux testified that Schmidt did not have the appropriate permits for the

home, nor to tear down and rebuild the home.

       On November 28, 2010, Schmidt, a Seattle Fire Department battalion chief,

was home alone. He testified that he was trying to figure out what could run on his

home's generator, which was in the basement. He heard the generator bogging

down, so he pulled the plug to take the load off the generator. He testified that he

heard a whoosh and saw that gas cans he stored near the generator were on fire.

He testified that he initially tried to put out the fire. But, the fire extinguisher wasn't

where he remembered it being, and no water came out of the water hose because

the water was off. He had previously shut the power off to the home. Schmidt

then attempted to call 911, but the phone was dead. The fire ended up burning

the entire home. Schmidt filed an insurance claim against his insurer, American

Commerce Insurance Company (ACIC), which refused to cover his loss claim,

asserting arson.

       The jury found that Schmidt intentionally started the house fire. ACIC, in its

motion for entry ofjudgment, asked the court to award it reasonable fees and costs.

The trial court entered judgment in favor of ACIC, but granted ACIC $200.00 in

attorney fees, instead of the requested $30,009.67.




Wendy Demeter was not present, and the use of "Schmidt" refers to Dennis
Schmidt.


                                                2
No. 74369-4-1/3



       Schmidt moved for a mistrial, arguing that there was juror misconduct

where, unbeknownst to Schmidt, a juror's daughter had attended the trial. Then,

Schmidt moved for a new trial, alleging misconduct during ACIC's closing

argument. The trial court denied Schmidt's motion for a mistrial and his motion for

a new trial. Schmidt appeals. ACIC cross appeals.

                                  DISCUSSION

       Schmidt argues that the trial court erred in denying his motion for a new

trial. Citing ACIC's misconduct and evidence errors, he contends that he was

denied a fair trial. He argues that ACIC(1) argued to the jury in closing to make a

verdict on matters outside of the evidence and without consideration to the law;(2)

invited bias against Schmidt's out-of-state experts;(3) disclosed two new opinions

from ACIC's experts during trial that were beyond the scope of discovery;(4) relied

on hearsay statements in its closing; and (5) offered testimony it knew was untrue.

Finally, Schmidt argues he was denied a fair trial where the court failed to exclude

a juror's daughter from the courtroom.

       On cross appeal, ACIC makes three arguments. First, that it is entitled to

recover all of its reasonable attorney fees and costs based upon the arson finding.

Second, that the trial court erred in granting Schmidt's summary judgment motion,

finding that ACIC acted in bad faith as a matter of law regarding payment to the

lienholder.   And, third, that the trial court abused its discretion in excluding

testimony from its witness, Dale Mann.




                                            3
No. 74369-4-1/4



  I.   Schmidt's Motion for a New Trial

       Schmidt argues the trial court abused its discretion in denying his motion

for a new trial. He argues that he was deprived of a fair trial due to the cumulative

errors of ACIC's misconduct and evidence errors.

       This court reviews a trial court's order denying a new trial for abuse of

discretion. Aluminum Co. of Am. v. Aetna Cas. & Sur. Co., 140 Wn.2d 517, 537,

998 P.2d 856 (2000) ("Alcoa"). The criterion for testing abuse of discretion is

whether " 'such a feeling of prejudice [has] been engendered or located in the

minds of the jury as to prevent a litigant from having a fair trial.'" Id.(quoting Moore

v. Smith, 89 Wn.2d 932, 942, 578 P.2d 26 (1978)).

       A. ACIC's Closing Argument

       Schmidt first contends that it was misconduct when, in closing, ACIC argued

that the jury could infer Schmidt's guilt from the lack of firefighters in the gallery.

During its closing, ACIC stated,

       Let's talk about credibility and reputation. I expected at some point
       during the trial and today to look over there and see 20, 30, 40 men
       and women from the Seattle Fire Department coming to support him.
       Reputation, right?

              They knew him perhaps better than any witnesses you've
       heard. Where is [sic] the people he commanded who say,
       "Absolutely, he didn't do it"? I haven't seen them. Right?
Schmidt argues that, under Warren v. Hart, 71 Wn.2d 512, 429 P.2d 873 (1967),

a new trial is required even though he did not object to ACIC's comments during

closing.




                                              4
No. 74369-4-1/5



       Generally, when a party does not object to an opposing party's conduct at

the time it occurs, or ask the trial court to declare a mistrial or instruct the jury to

disregard counsel's statement, he waives his right to claim reversible error,

entitling him to a new trial. See Warren,71 Wn.2d at 517-18. The court in Warren

recognized an exception to the rule, where the misconduct is so flagrant and

prejudicial that no instruction to disregard it would have cured it. Id. at 518. There,

it was flagrant misconduct where counsel argued to the jury that a police officer

held a "trial on the spot" and that the jury should consider or be guided by what the

officer did or did not do. Id. at 518-19. No instruction the trial court could have

given could have cured the prejudicial effect of counsel's argument, and the

appellant did not waive her right to assert that she was deprived of a fair trial by

opposing counsel's argument to the jury. Id. at 519.

       Schmidt argues that ACIC's comments in closing were "direct argument the

jury should make a verdict on matters not in evidence and without consideration to

law." The trial court denied Schmidt's motion for a new trial, stating, in part,

             . . . The argument, I didn't see people here sitting here in
       uniform or saying he -- is that proper? Perhaps not. It does ask
       people to guess about something that isn't evidence.



              I think there is a valid criticism that this is very late for the
       Court to be able to do something.
       Collins v. Clark County Fire Dist. No. 5, 155 Wn. App. 48, 231 P.3d 1211

(2010) provides guidance. There, in closing the plaintiffs commented, "The

amount that's being sought will not in any way reduce fire services, hurt the



                                              5
No. 74369-4-1/6



department" and "[w]hat you need to do, please, is put a value on their suffering

that other departments will look up and say, 'We can't do that.' " Id. at 94

(emphasis omitted). The court held that the trial court properly denied posttrial

motions, because although the remarks were improper, they were not so

prejudicial that a timely instruction could not have cured any prejudicial effect. Id.

at 95.

         The appellants argued that the comments urged the jurors to disregard the

evidence before them and to award a higher verdict by injecting liability insurance

coverage into the trial. See id. at 95. But, the appellants did not support their

argument with briefing or legal authority, so the court declined to consider it further.

Id. at 95-96. Further, the appellants argued that the plaintiffs improperly appealed

to the jury's sympathy, passion, and prejudice, when counsel asked the jury to

"send a message." Id. at 96. The court found that, because the appellants failed

to object or request a curative instruction, they did not preserve this argument for

appeal. Id. The court concluded that the appellants not only failed to show how

the comments could reasonably have affected the jury's verdict, but that they also

failed to demonstrate how the comments were so flagrant that no instruction could

have cured the prejudicial effect. Id. at 97.

         Here, as in Collins, there is no support for Schmidt's argument that, in

closing, ACIC directed the jury to disregard the evidence. And, as in Collins,

Schmidt fails to demonstrate how these comments were so flagrant that no

instruction could have cured the prejudicial effect. ACIC's comments more closely




                                                6
No. 74369-4-1/7



resemble those in Collins than in Warren. While ACIC's comments were improper,

there was no objection, or request for a curative instruction. In light of Schmidt's

failure to object and request a curative instruction, the trial court did not abuse its

discretion in denying Schmidt's motion for a new trial based on ACIC's comments

during its closing argument.

        B. Out-of-State Experts

       Schmidt next contends that ACIC appealed to jury bias by repeatedly

pointing out that Schmidt's experts were not from Washington. He argues that,

under Alcoa, this was misconduct and that it calls into question the credibility of

the entire lawsuit.

       The party seeking a new trial based on counsel's misconduct must establish

that (1) the conduct was misconduct, (2) the misconduct was prejudicial in the

context of the entire record,(3) ordinarily the misconduct was properly objected to

at trial, and (4) and the misconduct was not cured by the court's instructions. See

Alcoa, 140 Wn.2d at 539-40.

       On direct, Charles Miller testified that he was a licensed attorney in

California, but that he had an understanding of claims handling practices in

Washington. He also testified that he was not at trial to tell the jury what the law

is, stating,

       Well, I'm not here in the capacity of someone who is informed about
       the details of Washington law like case law,for example. We always
       look at the statutory law and the regulatory law, as I just mentioned.
       But beyond that, what we're looking -- what I'm talking about are the
       insurance industry standards. What are the standards for claims
       handling in the industry itself?



                                              7
No. 74369-4-1/8



       At the beginning of ACIC's cross-examination of Miller, ACIC first asked,

"How was your flight up from California," and, after Miller answered, ACIC asked,

"You're up here from California. Right?" At this point, Schmidt objected, stating,

"This is just a blatant appeal to prejudice and provincialism. We know he's from

California." The court overruled the objection, and Stated,"He answered all those

questions earlier. So let's move on." ACIC then reviewed Miller's credentials:

             Q.    You are an attorney down in California, but not in
       Washington. Right?

               A.    No. I'm not licensed in the State of Washington. That
       is correct.

              Q.     And you've never been. Correct?

             A.     Licensed in the State of Washington, no. I was a
      licensed adjuster, but not an attorney.

             Q.   And you're not longer a licensed adjuster in the State
      of Washington. Correct?

              A.     No. I am not.

              Q.     All right. You could be if you wanted to. Right?

              A.     No. Actually not.

              Q.     Right. You have to test for it. You could become a
       public adjuster in the State of Washington. Right?

             A.      I suppose I could, but I don't want to, so it would be
      irrelevant.

             Q.    Well, that would certainly help you understand
       Washington's obligations. Right?

              A.     No. I don't think so. I disagree with that.




                                            8
No. 74369-4-1/9



       Schmidt likens ACIC's tactic of pointing out that Schmidt's experts were

from out-of-state2 to misconduct in State v. Monday, 171 Wn.2d 667,257 P.3d 551

(2011). In Monday,the State's improper conduct was injecting racial prejudice into

the trial proceedings. Id. at 678. The court held that when a prosecutor flagrantly

or apparently intentionally appeals to racial bias in a way that undermines the

defendant's credibility or the presumption of innocence,[the court] will vacate the

conviction unless it appears beyond a reasonable doubt that the misconduct did

not affect the jury's verdict. Id. at 680. Schmidt also cites to State v. Dhaliwal, 150

Wn.2d 559, 576-77, 79 P.3d 432(2003), that discusses prosecutorial comments

that Dhaliwal argued were based on religious stereotypes. But, the "hometown

prejudice" that Schmidt argues ACIC invoked does not resemble the racial bias the

prosecutor invoked in Monday nor the religious stereotypes invoked in Dhaliwal.

Those cases are not persuasive authority here.

       ACIC repeatedly drawing attention to the bare fact that Miller resided in

California to suggest bias could have served an inappropriate purpose. However,

that is not the record. Instead ACIC established that Miller was neither licensed

as an attorney nor an adjuster in Washington. It did so to rebut Miller's direct

testimony that he was qualified to testify on practices in Washington. Even if we

were to assume ACIC's tactic of repetition was misconduct, it was not so prejudicial

in the context of the entire record that it warrants a new trial.



       2ACIC asked another of Schmidt's experts, Nina Scotti, if she had come
from California to testify, and if she was licensed as a fire investigator in
Washington. Schmidt did not object.


                                              9
No. 74369-4-1/10



       C. Evidence Beyond Discovery

       Schmidt next contends that it was prejudicial when ACIC disclosed two new

opinions from its experts in the middle of trial. He argues that ACIC willfully violated

the trial court's order in limine to not offer opinions beyond the scope of discovery.

Schmidt contends that ACIC, in violation of the order in limine, prompted its

experts, Dale Mann and Ron Liem, to say for the first time opinions the fire was

caused by arson by Schmidt. And, Schmidt argues that the trial court abused its

discretion when it overruled his objection.

       The admission of evidence at trial is reviewed for an abuse of discretion.

Davis v. Globe Mach. Mfg. Co., 102 Wn.2d 68, 76-77,684 P.2d 692(1984). A trial

court abuses its discretion when its exercise of discretion is manifestly

unreasonable or based upon untenable grounds or reasons. Id. at 77.

       At trial, Schmit objected during Liem's direct examination:

           Q.All right. So based upon the two-day examination of the
       evidence, did you come to a conclusion regarding the electrical
       involvement of the fire?

            A. Yes. Concluded that there was no electrical involvement in
       the fire.

           Q.And so at that point, then, what were the potential causes of
       the fire?

             MR. BRIDGES: Objection, Your Honor. This is outside the
       scope of this witness, foundation.

              THE COURT: I guess I'll ask the witness, are you relying on
       your opinions or opinions of other people you've read?

              THE WITNESS: My own opinion.

              THE COURT: All right. You may state it.


                                              10
No. 74369-4-1/1 1



It appears that, to the trial court, this was an objection to foundation and it ruled on

that basis. The trial court overruled the objection after establishing that Liem was

relying on his own opinions. Counsel did not clarify or make a record that it

intended a different objection. Therefore, absent an objection to a violation of the

discovery rules, consideration of a violation under Burnet v. Spokane Ambulance,

131 Wn.2d 484, 933 P.2d 1036 (1997), has not been preserved.

       And, Schmidt's expert, Scotti, had already testified that there were only two

possible explanations for the fire. On direct she testified, "The fire was an

accident. ... He did or we do have a potential ignition source, which is the parting

arc." And, "I would have to prove the arson. It cannot be ruled out, but I would

have to prove it." On cross, she acknowledged that in her deposition she stated,

"'Arson can't be eliminated, but neither can a departing arc.'" Thus,even if ACIC's

expert's opinion as to the cause of the fire was beyond the scope of discovery,

Schmidt's expert had opened the door to ACIC's expert's testimony. Allowing the

testimony was not error.

       Schmidt also asserts this error is based on Mann's testimony that in his

opinion the fire was arson. Schmidt objected, but the objection was to redirect

testimony. Mann had already testified on direct and on cross, without objection,

that he agreed that the fire was arson, and ruled out other causes. Schmidt failed

to timely object and preserve the claimed error during Mann's testimony.

       The court did not abuse its discretion in overruling Schmidt's objection to

Liem's testimony and that Schmidt did not preserve error during Mann's testimony.




                                              11
No. 74369-4-1/12



       D. Hearsay

       Schmidt contends the trial court abused its discretion in permitting hearsay

that ACIC then relied on its closing argument. Timothy Riddle, a fire investigator,

was asked by ACIC's outside adjuster, Daniel Thenell to investigate the Schmidt

fire. Riddle testified that a cause and origin investigator named Steve Gunsoli was

initially retained to investigate the fire, until Riddle replaced him. On Schmidt's

cross-examination of Riddle this exchange occurred:

           Q.Can you listen to my question? Are you aware that Mr.
       Gunsoli told Mr. Schmidt to watch his ass?

           A. That's a lie and I'll tell you why, because I just saw Steve
       Gunsoli and I had heard that.

           Q. No. No, no.

           A. And Gunsoli said —

              MS. KOEHLER: Your Honor, I'm going to ask him to —

             THE COURT: Overruled.

             THE WITNESS: You brought it up.

              MR. LEID: Let him answer the question, then.

       BY MS. HOEHLER:

           Q.You go ahead and you tell me, then.

             THE COURT: Pardon me. Go ahead and finish.

              THE WITNESS: Okay. You brought it up and I had heard this.
      And so I was at a fire out in the islands. And Steve Gunsoli was
      there. And I told him that this was getting ready to go to trial. And I
      said,"Do you have a subpoena yet for going to trial?" And he goes,
      "No. I didn't know anything about it."

           I said, "Well, you're an issue at [sic] this because, supposedly,
       you told Mr. Schmidt when you heard that I was assigned to this case


                                           12
No. 74369-4-1/13


       and Ronnie Liem was assigned to this case, that 'you better watch
       out', or'you better watch your ass', or'you better do something'," and
       he said,"That is a lie." And he said, "I want to go to court and tell my
       side of it."
Schmidt argues that ACIC relied on this hearsay in closing, citing to when ACIC

stated,

       And then we heard the allegation that Gunsoli (phonetic) allegedly
       said, watch my ass. But you heard from Tim Riddle [that] Gunsoli
       absolutely positively denies making that statement. Right? And why
       didn't they call Gunsoli if they're going to say he said that, allegedly
       he did? Have him come in.

       Schmidt invited the hearsay testimony when he asked Riddle whether he

was aware of what Gunsoli allegedly told Schmidt. In argument, counsel may rely

on evidence that is in the record. Beam v. Beam, 18 Wn. App. 444, 450, 569 P.2d

719(1977). Under such circumstances, Schmidt cannot complain that ACIC relied

in its closing on the testimony he had brought into the record.

       E. Relying on False Testimony

       Next, Schmidt argues that ACIC engaged in misconduct when it offered

evidence it knew was untrue. He relies on two cases: Hayes v. Brown, 399 F.3d

972,978(9th Cir. 2005)and In re Pers. Restraint of Yates, 177 Wn.2d 1,296 P.3d

872 (2013). In Hayes, the court noted that a criminal defendant is denied due

process of law when a prosecutor either knowingly presents false evidence or fails

to correct the record to reflect the true facts when unsolicited false evidence is

introduced at trial. 399 F.3d at 984 And, in Yates, the court recognized that, in the

context of closing arguments, misconduct includes making arguments that are

unsupported by the admitted evidence. 177 Wn.2d at 58.




                                             13
No. 74369-4-1/14



       Here, Schmidt contends that at trial ACIC argued that Schmidt obstructed

the investigation. He states, "ACIC and its attorney knew that was objectively

false. Every person directly involved on behalf of ACIC admitted the Schmidts did

not refuse access and could provide no explanation for the conduct of its outside

adjuster Thenell claiming otherwise." Schmidt argues that ACIC offered the

"knowingly false testimony" when Riddle claimed he was prevented by Schmidt

from further excavation and testing of the basement. Schmidt's asserts that

ACIC's argument in its closing was knowingly false.

       But, Schmidt did not object to this portion of Riddle's testimony when it was

given. Instead, Schmidt played pretrial depositions of ACIC's employees to

contradict Riddle's claim that there was obstruction. The argument made for the

first time on appeal that this testimony was knowingly false is based on those same

depositions. This was not evidence discovered only after being presented at trial.

Schmidt knew what the depositions said well before Riddle testified. Schmidt was

not forced to wait until the end of trial to object to testimony it believed was

knowingly false. The remedy for misconduct on the part of anyone during the

progress of a trial is to call the attention of the presiding judge to the alleged

misconduct and move by some proper procedure to have the matter corrected.

Kasev v. Suburban Gas Heat of Kennewick, Inc., 60 Wn.2d 468, 477, 374 P.2d

549(1962). It is not timely to await the result of the trial and then complain only in

the case of an adverse verdict. Id. Failure to raise an issue before the trial court

generally precludes a party from raising it on appeal. Wilcox v. Basehore, 187




                                             14
No. 74369-4-1/15



Wn.2d 772, 788, 389 P.3d 531 (2017); RAP 2.5. While this rule insulates some

errors from review, it encourages parties to make timely objections, gives the trial

judge an opportunity to address an issue before it becomes an error on appeal,

and promotes the important policies of economy and finality. Basehore, 187

Wn.2d at 788. Therefore, it was incumbent on Schmidt to object to the testimony

if he believed it was knowingly false and make an offer of proof in order to exclude

it.

       Schmidt also read into the record the deposition in which Thenell stated that

Schmidt had either not allowed or had delayed ACIC's investigation. Schmidt

cannot complain that ACIC relied in its closing on the testimony he had brought

into the record. See Beam, 18 Wn. App. at 450.

       The challenge to the evidence should have been raised at trial, not for the

first time on appeal. We do not reach the merits of the falsity claim.

       F. Failure to Exclude Juror's Daughter

       Finally, Schmidt argues that he was denied a fair trial because of the trial

court's contact with a juror's daughter. He argues that the trial court was aware

for a substantial time that a juror's daughter was present at trial, and that she was

present when the jury was excluded. He argues that the presiding judge spoke

with the juror's daughter on September 23. He argues the trial court abused its

discretion by denying his motion for a mistrial, despite the juror misconduct.




                                            15
No. 74369-4-1/16



       The right of trial by jury means a trial by an unbiased and unprejudiced jury,

free of disqualifying jury misconduct. Robinson v. Safeway Stores, Inc., 113 Wn.2d

154, 159, 776 P.2d 676(1989). The test to determine whether the verdict may be

impeached and a new trial warranted is first whether the alleged information

actually constituted misconduct and, second, if misconduct did occur whether it

affected the verdict. Richards v. Overlake Hosp. Med. Ctr., 59 Wn. App. 266, 270,

796 P.2d 737(1990). The injection of information by a juror to fellow jurors that is

outside the recorded evidence of the trial and not subject to protections and

limitations of open court proceedings, constitutes juror misconduct. Id. The trial

court has discretion to decide whether juror misconduct occurred, whether it is

prejudicial, and whether a mistrial is declared. Id. at 271. The decision of the trial

court will be overturned on appeal only for abuse of discretion. Id.

       In State v. Murphy, a juror's daughter attended the trial. 44 Wn. App. 290,

295, 721 P.2d 30 (1986). The juror relayed a conversation she had with her

daughter during a trial recess about the guilt or innocence of the defendant. Id. at

295-96. The court held that communications by or with jurors constitute

misconduct. Id. at 296. Once established, there is a presumption of prejudice. Id.

But, this presumption is not conclusive and may be overcome if the trial court

determines such misconduct was harmless to the defendant. Id. The court found

support for the inference that there was no reasonable possibility of prejudice,

because the conversation with the juror's daughter was not discussed during

deliberation and the juror originally voted for acquittal. Id. at 297. And, it found




                                             16
No. 74369-4-1/17



that the trial judge was in a better position to determine whether the misconduct

was prejudicial, affirming its decision to deny the motion to vacate. Id.

       After the jury returned its verdict for ACIC, Schmidt moved for a mistrial. At

the hearing on his motion, Schmidt argued "there's no way they didn't talk about

it," referring to the juror and her daughter discussing the trial. But, Schmidt does

not point to any evidence that establishes that the juror's daughter communicated

with the juror about the trial. In his brief, Schmidt admits that he does not have a

declaration on whether the juror's daughter and the juror discussed the trial. And,

Schmidt states, "But frankly, even if both the juror and her daughter were sworn

and denied it, on a human level some things are unworthy of belief." In Murphy,

the juror told the trial court that she discussed the defendant's innocence or guilt

with her daughter. 44 Wn. App. at 295. Here, there is no such evidence of

misconduct. And, in Murphy, the court found that even with that misconduct, the

trial court did not abuse its discretion in denying the motion to vacate.

       Here, the trial court stated,

              I don't have any reason to think that Juror No. 5 or anybody
       else had conversation, research, or anything else that was
       inappropriate, that in any way affected their deliberations, their
       understanding of the case, their view of counsel, their view of the
       parties. I certainly wouldn't trust my memory even if I knew that the
       daughter was here for jury instructions or some motion that we had
       when we were trying to decide whether So-And-So could come back
       and testify or some documents coming in, which happens during a
       trial.

                I'm not just talking about pretrial. If she were here, again, I
       have no evidence to show that any of the people who were present
       at trial, including the daughter, talked to Juror No. 5 or to anybody
       else about anything about this case, about any of the parties



                                             17
No. 74369-4-1/18


       involved, any of the attorneys, much less a factual or legal issue. For
       that reason, you know, I take the motion as respectful. I don't find it
       frivolous at all.

       Schmidt asked the court to inquire further on the alleged juror misconduct:

              And we would ask you to call Juror No. 5 and her daughter
       back and to ask her that. I appreciate what you're saying about, well,
       we haven't given you anything, but I would also suggest you're kind
       of presenting mission impossible for us because I think I'm going to
       call her and say,"Hey, did you talk to your daughter?" Well, what do
       we expect her to say? She's going to tell me no. I need the black
       robe with her on the stand.

             That's our best chance to get at the truth and ultimately that's
       what our goal is, the truth. I'd ask you to do that. ...



               THE COURT: Okay. I guess what I'm going to suggest -- and
       I don't know whether you want to take me -- and, again, the time
       almost couldn't be worse. It's that if you want to draft a letter -- and
       of course, again, have it reviewed by everybody -- and you want the
       Court to send that letter saying this is a question that we have, and
       see if anything comes from that, I mean, I hesitate to have a hearing
       where I again really don't have a reason to think.. . .



              MR. BRIDGES: I understand. You've been very gracious with
       your time. But I mean, what I'm hearing from you -- you're not going
       to give us an evidentiary hearing to put these two individuals under
       oath to ask them what the contact was.

              THE COURT: Well, on the basis of what I have so far, no.

Schmidt then declined the court's offer to send the jurors a letter. Instead, he

asked for the juror's contact information and a protective order. The court denied

Schmidt's motion for a mistrial, but in its order wrote that Schmidt could continue

to inquire on the issue further.




                                             18
No. 74369-4-1/19



         Later, at a hearing on Schmidt's motion for reconsideration,3 the court

denied the motion, ruling, "I don't think we have enough here to grant a mistrial for

either ex parte communication or juror misconduct."

         Schmidt has asked us to impute improper communication between a trial

spectator, the juror's daughter, and a juror. There is no evidence that any improper

communication occurred, nor evidence of a reasonable possibility of prejudice. No

case has held that the mere possibility of improper communication is sufficient,

and we decline to adopt such a rule. The trial court did not abuse its discretion in

denying the motion for a mistrial, nor the motion for reconsideration.

  II.    Schmidt's Request for Fees

         Schmidt requests attorney fees and costs as sanctions for ACIC's

misconduct. ACIC's conduct was not improper, and we therefore deny Schmidt's

request.

 III.    ACIC's Request for Fees

         On cross appeal, ACIC argues that it is entitled to recover all of its

reasonable attorney fees and costs based upon the arson finding. It argues that

under RCW 48.01.030 and RCW 48.30.230, it is entitled to reasonable attorney

fees and costs incurred in the investigation and defense of the fraudulent claim.

RCW 48.01.030 establishes that it is in the public interest that insureds as well as

insurers act in good faith. RCW 48.30.230 prescribes criminal penalties for false




         3 This   hearing was before a judge other than the one that presided over the
trial.


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or fraudulent claims. Neither statute expressly provides for the award of attorney

fees in the course of civil litigation of coverage claims.

       ACIC relies on State Farm Fire & Casualty Co. v. Huynh, 92 Wn. App. 454,

962 P.2d 854 (1998), to assert entitlement to attorney's fees under the Consumer

Protection Act (CPA), RCW 19.86.020. There, this court held that the insurer,

State Farm, had standing to sue a chiropractor under the CPA for filing a fraudulent

insurance claim. Id. at 457-58,461-62. Both the chiropractor and the insurer were

engaged in the course of business. Id. at 458. Recovery against the chiropractor,

a provider of services, for fraudulent claim is covered by the CPA. Huvnh, 92 Wn.

App. at 459; RCW 48.01.030. The Huynh case does not support a conclusion that

an insured (Schmidt) and the provider (Huynh) are similarly situated under the

CPA. Huvnh does not provide a basis to award fees to ACIC.

       ACIC also asserts entitlement to attorney fees and costs under RAP 14.2

and RAP 18.1(j) for prevailing at trial. And, it argues that this court should award

it attorney fees under RAP 18.9, because Schmidt failed to properly cite to

evidence in his brief. Finally, it argues that this court should award it fees and

costs as a sanction to Schmidt under RAP 18.7.

       Under RAP 14.2, the appellate court will award costs to the party that

substantially prevails on review, unless the appellate court directs otherwise. RAP

18.1(j) applies when this court awards attorney fees and expenses to the party

who prevails and the Supreme Court denies the other's party's petition for review.

RAP 18.1(j) is not relevant here. RAP 18.9(a), in relevant part, states that this




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court may order a party or counsel who fails to comply with these rules to pay

compensatory damages to any other party who has been harmed by the failure to

comply. Any errors in Schmidt's briefing do not rise to this level, nor was ACIC

harmed by any failure by Schmidt to comply with the rules. Similarly, we do not

award fees and costs as a sanction to Schmidt under RAP 18.7 for failing to sign

and date any filings.

       We deny ACIC's request for attorney fees and costs.

IV.    Bad Faith Summary Judgment Against ACIC

       Next, ACIC argues on cross appeal that the trial court erred in granting

Schmidt's summary judgment motion, finding that ACIC acted in bad faith as a

matter of law regarding payment to the lienholder. ACIC contends that the trial

court erred because ACIC acted in accordance with the court's previous order,

where it held that Schmidt lacked standing to demand payment pursuant to the

loss payable provision of the insurance contract.

       This court reviews a trial court's summary judgment ruling de novo,

engaging in the same inquiry as the trial court. Reliable Credit Ass'n v. Progressive

Direct Ins. Co., 171 Wn. App.630,637, 287 P.3d 698(2012). Summary judgment

is proper when the pleadings, depositions, and admissions on file—together with

the affidavits, if any—show there is no genuine issue as to any material fact and

that the moving party is entitled to judgment as a matter of law. Id. If the language

in an insurance policy is unambiguous, we must enforce it as written; we may not

modify it or create ambiguity where none exists. Id. at 638.




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No. 74369-4-1/22



      The trial court found that ACIC failed to timely identify the availability of loss

payable coverage arising under Schmidt's policy, violating WAC 284-30-350,

constituting bad faith, and in violation of the CPA and IFCA (Insurance Fair

Conduct Act), RCW 48.30.010. ACIC argues that Schmidt did not have standing

to demand payment on behalf of the loss payee because the loss payable

provision is for the benefit of the mortgagee. Further, it contends that there was a

contract between ACIC and M & T Bank, and that Schmidt did not have standing

to enforce the contract to which they were not a party. Citing Kim v. Allstate

Insurance Co., it argues that material misrepresentations or fraud by the insured

preclude findings of bad faith, IFCA, and CPA violations. 153 Wn. App. 339, 365,

223 P.3d 1180(2009).

       In Kim, the court reversed summary judgment for Kim, because it found that

Kim made misrepresentations to Allstate regarding the extent and nature of her

injuries as well as her ability to work. Id. Kim is distinguishable, because it does

not address whether an individual can assert a third party benefit.

       Here, when the trial court granted summary judgment regarding loss

payable coverage in September 2015, the jury had not yet found that Schmidt

intentionally set fire to the house. The court found that, as a matter of law, ACIC

acted in bad faith in not timely identifying the availability of the loss payable

coverage.

      The trial court also found,

             ACIC did not provide an appropriate reply to plaintiffs'
       requests that it pay its Loss Payable coverage when it (a)


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No. 74369-4-1/23


      misrepresented the coverage was not intended to provide coverage
      if an insured engaged in intentional conduct, more specifically arson,
      (b) refused to take action to adjust the claim by asserting it only had
      a duty to do so if asked by a lien holder,(c)failed to identify any facts,
      policy it relied on, or an explanation applying the facts to the policy
      for its refusal to pay, and (d) not addressing the claim when it
      communicated its final coverage decision despite telling Schmidts it
      would do so. That conduct violates WAC 284-30-360(3) and (13)
      constituting bad faith, a violation of the CPA, and IFCA.
Finally, it found that ACIC failed to pay its loss payable coverage when that

coverage liability became reasonably clear in violation of WAG 284-30-330(6)

constituting bad faith, a violation of the CPA, and IFCA.

       ACIC did not identify loss payable coverage it in its coverage letter. ACIC's

first substantive response on the matter, a month and a half after Schmidt inquired,

was that only the mortgagee can make this claim. This was more than seven

months after the fire. The trial court found that ACIC had duties as a matter of law

under WAG 284-30-330(6). In the earlier order denying Schmidt's motion for

partial summary judgment, it ruled that Schmidt did not have standing to enforce

payments of lienholder claims. But, that is a different issue from whether ACIC

had failed to meet duties it owed as a matter of law. Because these issues are

different, ACIC did not properly rely on the earlier ruling, so the trial court did not

err in granting summary judgment regarding bad faith relative to the loss payable

coverage.

 V.    ACIC's Testimony Exclusion Claim

       Finally on cross appeal, ACIC argues that the trial court abused its

discretion in excluding testimony from its witness, Mann. It argues that Mann's

testimony should not have been excluded because (1) it did not willfully withhold



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information, (2), Schmidt was not prejudiced by the testing, and (3) it was an

improper remedy. Because we affirm, we need not address ACIC's challenge to

the exclusion of expert Mann's testimony on his supplemental report.

      We affirm.




WE CONCUR:



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