                              201UUL-'/ Aii ^




     IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON



SETH LAYMAN and MOLLY
LAYMAN, husband and wife,                     No. 70540-7-I


                   Appellants,                DIVISION ONE




21st CENTURY NORTH AMERICA
INSURANCE CO.; and FARMERS                    UNPUBLISHED OPINION
INSURANCE COMPANY OF
WASHINGTON,                                   FILED: July 7, 2014

                   Respondents.




      Leach, J. — Seth and Molly Layman appeal the trial court's summary

dismissal of their claims against 21st Century North America Insurance

Company. They raise multiple issues, including a claim that 21st Century failed

to inform them properly about renewal of their automobile insurance as required

by RCW 48.18.292. Because the Laymans have demonstrated a genuine issue

of material fact about whether they agreed to receive policy renewal

communications from 21st Century through its paperless delivery system, the

trial court erred in granting summary judgment. We reverse.
No. 70540-7-1/2




                                          FACTS


        The Laymans first purchased auto insurance from 21st Century in July

2008.    In May 2010, they renewed this policy, effective July 3, 2010, through

January 3, 2011. The insurance policy included this provision:

        C. Automatic Termination
        1.    If we offer to renew or continue your policy and you or your
             representative do not accept by making timely payment of the
             premium due, this policy will automatically terminate at the end of the
             current policy period.    Failure to pay the required renewal or
             continuation premium when due shall mean that you have not
             accepted our offer.

        21st Century offers its policyholders a paperless delivery system. A

policyholder can elect to receive policy, billing, and/or correspondence

documents through this system.         A policyholder participating in the system

affirmatively chooses which categories of documents to receive electronically and

does not receive the selected categories of documents through the United States

Postal Service, unless required by law or unless 21st Century needs to deliver

physical documents, such as an insurance identification card.1           To access

electronically delivered documents, a policyholder must log onto a 21st Century

website. 21st Century does not send the documents directly to the policyholder,

either as an attachment to an e-mail or otherwise.

        On November 17, 2010, Molly Layman enrolled in 21st Century's

paperless delivery system. As explained more fully later in this opinion, the

        121st Century mailed an insurance identification card to the Laymans.

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No. 70540-7-1/3




parties dispute which      categories of documents she elected to         receive

electronically.   The Laymans never logged into the paperless delivery system

between November 17, 2010, and February 24, 2011.

       On December 1, 2010, 21st Century processed and posted to its web site

a policy renewal offer to the Laymans for the period January 3, 2011, through

July 3, 2011. This document required the Laymans to pay a $494.12 renewal

payment before January 3, 2011, to avoid expiration of their policy. Once 21st

Century posted the renewal offer, the paperless system automatically generated,

on December 2, 2010, a generic e-mail to the Laymans notifying them that

documents were available on line for their review.      The e-mail provided no

information about the nature of these documents and contained no reference to


the subject of policy renewal.      At the same time, 21st Century mailed an

insurance identification card to the Laymans as part of this renewal offer. The

Laymans received the identification card, but the record is silent about what

information, if any, 21st Century provided with it.

       On January 7, 2011, after receiving no renewal premium, 21st Century

processed and posted to its web site a second billing invoice. This document

notified the Laymans that their policy had expired for failure to pay the renewal

premium. It also notified the Laymans that they could avoid a lapse in coverage

if 21st Century received the premium before January 26, 2011.       21st Century
No. 70540-7-1/4




sent an e-mail to the Laymans on January 8, 2011, indicating that documents

were available online for review. As with the earlier e-mail, this one provided no

information about the nature of these documents and contained no reference to

the subject of policy renewal. 21st Century received no renewal premium.

          On February 23, 2011, the Laymans' son was involved in a motor vehicle

accident. The other driver's insurance company filed a claim with 21st Century

on February 24, 2011. In a letter mailed to the Laymans' home dated February

25, 2011, 21st Century denied the claim, stating, "Our records reveal and

investigation confirms your policy cancelled for nonpayment of premium effective

January 3, 2011. Therefore, since the cancellation was prior to the loss, we will

be unable to consider any claims made by or against you as a result of this

loss."2

          On March 2, 2011, the Laymans complained to the Washington State

Office of the Insurance Commissioner about the denial of the insurance claim.

21st Century responded to this complaint, asserting, "Mrs. Layman signed up for

the paperless system and in doing so agreed to receive policy notifications via




          2 After 21st Century notified the other driver's insurance company that no
coverage was available, that insurance company sought payment from the
Laymans directly. The Laymans have not paid the claim. We note that although
both the insurance policy and the legislature use the British spelling,
"cancellation," we use the American English spelling, "cancelation."
No. 70540-7-1/5




e-mail."    The Office of the Insurance Commissioner found no violation of the


Washington insurance regulations, explaining,

          [21st Century] has provided a brief chronology of the handling of your
          account.    They have concurred that you switched your account to
          paperless billing, policy and correspondence on November 17, 2010. The
          company sent you an email that advised that those items would now be
          sent electronic paperless. The company sent a notice that you had
          electronic documents to view in your account. The company included
          copies of the policy renewal notice, reminder and notice that your policy
          had expired effective 1-3-11.

          The company is maintaining the denial of coverage for your accident as
          your policy was not in force at the time of the accident.

          On February 29, 2012, the Laymans filed this lawsuit against 21st

Century. They requested a declaration that 21st Century's paperless delivery

system did not satisfy the notice requirements of RCW 48.18.291 for policy

cancelation and that 21st Century's policy provided coverage for the February

23, 2011 claim. They also asserted claims for breach of contract, violation of the

Consumer Protection Act,3 violation of the Insurance Fair Conduct Act,4 and bad

faith.5




          3Ch. 19.86 RCW.
          4 Ch. 48.30 RCW.
      5 21st Century removed this action to federal court. At the close of
discovery, the parties filed cross motions for summary judgment. On March 12,
2013, the United States District Court for the Western District of Washington
remanded the case to state court for lack of subject matter jurisdiction. The court
concluded that the disputed coverage amount was $15,000. 21st Century failed
to show by a preponderance of the evidence that the amount in controversy
exceeded $75,000.
No. 70540-7-1/6




       The parties filed cross motions for summary judgment.           The trial court

denied the Laymans' motion for partial summary judgment and granted 21st

Century's motion for summary judgment, dismissing the case with prejudice.6

       The Laymans appeal.

                             STANDARD OF REVIEW

       We review summary judgment orders de novo, engaging in the same

inquiry as the trial court.7 Summary judgment is proper if, viewing the facts and

reasonable inferences in the light most favorable to the nonmoving party, no

genuine issues of material fact exist and the moving party is entitled to judgment

as a matter of law.8 A genuine issue of material fact exists if reasonable minds

could differ about the facts controlling the outcome of the litigation.9

       In reviewing summary judgment orders, we consider supporting affidavits

and other admissible evidence based upon the affiant's personal knowledge.10 A

party opposing a motion for summary judgment may not rely upon speculation,

argumentative assertions that unresolved factual issues remain, or its affidavits




       6 The court awarded no costs or attorney fees.
       7 Michak v. Transnation Title Ins. Co.. 148 Wn.2d 788, 794, 64 P.3d 22
(2003).
      8 CR 56(c); Michak, 148 Wn.2d at 794-95.
      9 Martin v. Dematic. 178 Wn. App. 646, 653, 315 P.3d 1126(2013) (citing
Hulbert v. Port of Everett. 159 Wn. App. 389, 398, 245 P.3d 779 (2011)), review
granted, 180 Wn.2d 1009 (2014).
      10 Int'l Ultimate. Inc. v. St. Paul Fire & Marine Ins. Co.. 122 Wn. App. 736,
744, 87 P.3d 774 (2004).

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No. 70540-7-1/7




considered at face value.11 Rather, the nonmoving party must set forth specific

facts that sufficiently rebut the moving party's contentions and disclose that a

genuine issue of a material fact exists.12

       The denial of a summary judgment "has no preclusive effect on further

proceedings . . . . It does not end proceedings, but rather permits them to

proceed. The denial of a summary judgment motion is not a final order that can

be appealed."13

                                    ANALYSIS


       The trial court accepted 21st Century's argument that it had fully complied

with the statute it claimed controls this case, RCW 48.18.292, titled "Refusal to

renew private automobile insurance by insurer—Change in amount of premium

or deductibles." (Boldface omitted.) The Laymans make 11 assignments of error

to the dismissal of their claims. These include claims that (1) RCW 48.18.291

instead of RCW 48.18.292 applies, (2) 21st Century cannot comply with RCW

48.18.292 by electronic delivery of documents, and (3) the record shows a

genuine issue of material fact about what documents the Laymans agreed to


       11 Herman v. Safeco Ins. Co. of Am.. 104 Wn. App. 783, 787-88, 17 P.3d
631 (2001) (quoting Seven Gables Corp. v. MGM/UA Entm't Co.. 106 Wn.2d 1,
13,721 P.2d 1 (1986)).
       12 Herman. 104 Wn. App. at 788 (quoting Seven Gables. 106 Wn.2d at
13).
       13 In re Estate of Jones. 170 Wn. App. 594, 605, 287 P.3d 610 (2012)
(citing Zimnv v. Lovric. 59 Wn. App. 737, 739, 801 P.2d 259 (1990)); Roth v. Bell,
24 Wn. App. 92, 104, 600 P.2d 602 (1979)); RAP 2.2(a).
No. 70540-7-1/8




receive electronically.   Because we agree with the Laymans that the record

shows a genuine issue of material fact about what documents they agreed to

receive electronically, we reverse and remand without deciding many of the

issues they present.

       As a threshold matter, we agree with 21st Century that RCW 48.18.292

instead of RCW 48.18.291 applies to this case.

       RCW 48.18.291(1) states:

       A contract of insurance predicated wholly or in part upon the use of a
       private passenger automobile may not be terminated by cancellation by
       the insurer until at least twenty days after mailing written notice of
       cancellation to the named insured at the latest address filed with the
       insurer by or on behalf of the named insured, accompanied by the reason
       therefor. If cancellation is for nonpayment of premium, or is within the first
       thirty days after the contract has been in effect, at least ten days['] notice
       of cancellation, accompanied by the reason therefor, shall be given. In
       case of a contract evidenced by a written binder which has been delivered
       to the insured, if the binder contains a clearly stated expiration date, no
       additional notice of cancelation or nonrenewal is required.[14]

       In Safeco Insurance Co. v. Irish.15 the court explained that the term

"cancellation" "refers to a unilateral act of the insurer terminating coverage during

the policy term."      The court determined that neither RCW 48.18.291 nor

insurance policy provisions addressing cancelation applied to a situation where




       14
            The Laymans do not allege that 21st Century unilaterally refused to
renew their insurance contract either under the terms of the policy or under RCW
48.18.292(1)(a).
       15 37 Wn. App. 554, 558, 681 P.2d 1294 (1984).

                                         -8-
No. 70540-7-1/9




the insured fails to pay a premium as a condition of renewal.16 The court held,

"Thus, the general rule is that failure of an insured to pay a renewal premium by

the due date results in a lapse of coverage as of the last day of the policy

period."17

       The court in Irish held that RCW 48.18.292(1 )(b) governs situations

involving nonrenewal of continuous private automobile insurance.18             This

provision states,

       Each insurer shall be required to renew any contract of insurance subject
       to RCW 48.18.291 unless one of the following situations exists:

              (b) At least twenty days prior to its expiration date, the insurer has
       communicated its willingness to renew in writing to the named insured,
       and has included therein a statement of the amount of the premium or
       portion thereof required to be paid by the insured to renew the policy,
       including the amount by which the premium or deductibles have changed
       from the previous policy period, and the date by which such payment must
       be made, and the insured fails to discharge when due his or her obligation
       in connection with the payment of such premium or portion thereof.1191




       16 jrish, 37 Wn. App. at 558 (citing Shelly v. Strait. 634 P.2d 1017 (Colo.
App. 1981); Sampson v. State Farm Mut. Ins. Co.. 205 Neb. 164, 286 N.W.2d 746
(1980); Farmers Ins. Co. v. Hall. 263 Ark. 734, 567 S.W.2d 296, (1978); Sereno
v. Lumbermens Mut. Cas. Co.. 132 Ariz. 546, 647 P.2d 1144 (1982)). Irish's
insurance provision governing cancelation stated, "AUTOMATIC TERMINATION.
If we offer to renew and you or your representative do not accept, this policy will
automatically terminate at the end of the current policy period. Failure to pay the
required renewal premium when due shall mean that you have not accepted our
offer." Irish. 37 Wn. App. at 556 (emphasis omitted).
        17 Irish. 37 Wn. App. at 558 (citing Thomason v. Schnorr. 41 Colo. App.
546, 587 P.2d 1205 (1978)).
       18 Irish, 37 Wn. App. at 558.
       19RCW48.18.292(1)(b).
No. 70540-7-1/10




       The Laymans argue, "When the 21st Century Claim Manager was

questioned on the reasons why 21st Century denied this claim, he specifically

disclaimed non-renewal as a basis for the denial, reiterating that it was canceled

by the insurer for non-payment of the premium." They claim, "21st Century now

argues that the Laymans 'elected' not to renew their policy, and that 21st

Century's conduct should be evaluated under RCW 48.18.292. ... 21st Century

should be estopped from making this argument."      The record indicates that the

claim manager testified in a deposition, in response to a question about the

reason for denying the insurance claim, "The letter says the policy canceled for

nonpayment of a premium."

       Although the letter and the claim manager used the term "canceled," the

purpose of the letter was to notify the Laymans that (1) they did not accept 21st

Century's offer to renew their automobile insurance policy, (2) the policy lapsed,

and (3) 21st Century would not cover the loss, which occurred after the automatic

termination date. This case involves the Laymans' failure to renew the insurance

contract by failing to pay the premium by the due date, not cancelation.       No

evidence shows that 21st Century terminated the coverage unilaterally during the

policy term.

       As the moving party, 21st Century has the initial burden of showing that it

complied with RCW 48.18.292 when it did not renew the Layman policy.           To




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No. 70540-7-1/11




meet this burden, 21st Century presented to the trial court evidence that it

claimed established as a matter of law the Laymans' consent to receive policy

renewal information electronically and the electronic delivery of that information.

This evidence consisted of the declaration of Diana Yeager, a 21st Century

employee, and various attachments to her declaration.

       Ms. Yeager stated that the Laymans "elected to receive policy documents,

billing documents, and correspondence documents via the paperless delivery

system, as shown in their paperless delivery system history." To support this

assertion Ms. Yeager identified and described four documents attached to her

declaration.    The first, a chronological log titled "Paperless Delivery CSR

Interface,"    has   four   columns,   labelled   "Date,"   "Action," "CSRID,"   and

"Comments."      Under the action heading, it contains a brief summary of each

policyholder action. This is the only document in the record purporting to show

which documents Molly Layman elected to receive electronically.          It has four

entries for November 17, 2010. The first reads, "Customer elects to suppress

billing documents paper mailings," and a second reads "Customer elects to

suppress policy paper mailings." The third reads, "Customer enrollment with a

prerequisite of accepting policy Terms and Conditions" and the fourth reads,

"Customer elects to suppress correspondence documents paper mailings."




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No. 70540-7-1/12




      The second and third attachments are screen shots of specimen pages

from 21st Century's web site purporting to illustrate the forms completed by a

policyholder enrolling in the paperless delivery system. The page illustrated by

the second attachment allows the policyholder to select the categories of

documents to be received electronically by checking a box next to each of three

categories, "Policy," "Billing," and "Correspondence."      The record does not

contain any copies of these forms as completed by Molly Layman. Ms. Yeager

described the process for completing these forms to illustrate her testimony

about how Ms. Layman enrolled in 21st Century's paperless system.

      The fourth attachment is a copy of "Paperless Terms and Conditions,"

which includes the following provisions pertinent to the parties' arguments:

      Which documents will I receive electronically?
       You will only receive the categories of documents that you have elected to
       receive electronically. There may be some documents that we cannot
       deliver electronically due to legal and technological constraints in your
       state. These documents will be delivered to you via USPS to your postal
       address.


       How do I access my documents?
       Your bills are sent to you via e-mail and provide the option to pay online
       (login required) or over the phone (via our Automated Billing System). If
       you have selected the documents and bills option, we will send you an e-
       mail message with a link to our Web site when new documents are
       available to review, print, or save to your computer.            It is your
       responsibility to log in to our Web site to view your documents.

       To controvert 21st Century's contention that Molly Layman elected to

receive all three categories of documents electronically by checking all three



                                        -12-
No. 70540-7-1/13




boxes, the Laymans provided the trial court with excerpts from a transcript of

Molly Layman's deposition testimony.        She testified that she only checked the

box for "Correspondence" and not the boxes labelled "Policy" or "Billing" when

completing the form shown in attachment 2 to Yeager's declaration.

      21st Century offers the following argument why Molly Layman's testimony

does not create a disputed issue of fact.

      Although the Laymans claim they only elected to receive
      "correspondence" documents via the 21st Century paperless delivery
      system, their contention is contrary to the unrebutted testimony of how
      enrollment in the paperless delivery system works and the documented
      elections that the Laymans made with respect to the enrollment process.
      The Laymans provide no documentary evidence that they only signed up
      to receive correspondence documents via the paperless delivery system,
      and they cannot provide competent testimonial evidence because they
      admit that they never logged on to the system to confirm their delivery
       elections or review the documents they were sent.

       21st Century offers no explanation why Molly Layman's deposition

testimony is not competent testimonial evidence of which boxes she did and did

not check when she enrolled in the paperless delivery system.         21st Century

cites no authority for its claim that the Laymans must produce documentary

evidence to dispute how Molly Layman completed the electronic form.             We

assume that 21st Century searched and found none. We find 21st Century's

contention somewhat ironic when, as the party with the burden of proving the

contents of that completed form, it has not produced a copy.

       21st Century relies upon the claimed consent of the Laymans to justify its
purported compliance with the requirements of RCW 48.18.292 with electronic

                                        -13-
No. 70540-7-1/14



documents.      Because the record demonstrates a genuine issue of fact as to

whether the Laymans provided this consent, the trial court erred by granting

summary judgment. In view of our resolution of this issue, we do not reach the

remaining issues raised by the Laymans, including whether the requirements of

RCW 48.18.292 can be satisfied with electronic documents.20

         The Laymans have requested attorney fees and damages under Olympic

Steamship Co. v. Centennial Insurance Co..21 RCW 48.30.015, and RCW

19.86.090. Because neither party has yet prevailed in this case, this request is

premature.

                                   CONCLUSION


         Because the Laymans raised a genuine of material fact about which

documents they agreed to receive electronically from 21st Century, we reverse

and remand for further proceedings consistent with this opinion.




                                                     vuLase~J(
WE CONCUR:
                                                                 ^
         W



         20 Neither party has addressed the applicability of 15 USC § 7001 to this
issue.
         21 117 Wn.2d 37, 53-54, 811 P.2d 673 (1991).

                                         -14-
