Washington Counties Risk Pool v. Clark County

Case No. 91154-1
Oral Argument May 10, 2016

On Direct Appeal from Cowlitz County Superior Court

Issues as Framed by Petitioners Larry Davis and Alan Northrop:

  1. Where a risk pool issues primary liability insurance policies to its members, particularly where such policies are fully reinsured by private commercial liability insurers, must the courts apply Washington’s insurance common law to the interpretation of the risk pool policies, and the policies of the risk pool’s excess carrier that follow the terms and conditions set forth in the risk pool’s policies, and the claims both contractual and extracontractual arising out of them?
  2. Where wrongfully convicted and incarcerated individuals brought claims against a county and its deputy sheriff under theories involving express allegations of both discrete and continuous actions and injuries during the risk pool’s policy coverage, did the risk pool owe them a defense?
  3. Where a risk pool and its excess carrier breached their contractual duties to a county and its deputy sheriff, were the county and that deputy sheriff entitled to take whatever steps necessary to protect their interests including entering into a covenant judgment settlement with wrongfully convicted and incarcerated individuals and assigning to them their contractual and extracontractual claims against the risk and its excess carrier, notwithstanding an anti-assignment provision in the interlocal agreement creating the risk pool, given Washington law permitting such assignments , generally and allowing such assignments specifically in the insurance context?

Issues as Framed by Petitioners Clark County and Donald Slagel:

  1. Whether the primary liability insurance policies issued by WCRP are to be governed and construed according to Washington’s common law of insurance, when all Washington appellate courts, as well as both WCRP and AIG, have at all prior times treated these policies as subject to Washington’s insurance common law, the policies contain a Washington choice of law clause, and the policies are 100% reinsured by private insurance companies?
  2. Whether the excess policies issued by AIG are to be governed and construed according to Washington’s common law of insurance, when they purport to follow the terms and provisions of the primary liability insurance policies issued by WCRP?
  3. Whether there was an “occurrence” alleged in the Underlying Case during the period of any of the primary policies issued between 2002 and at least 2010, such that WCRP owed a duty to defend the County & Slagle when Davis & Northrop brought claims based upon express allegations of wrongful acts and injuries taking place each year between 2002 and at least 2010.
  4. Whether the County & Slagle were permitted to validly assign their claims for damages against WCRP and AIG to Davis Northrop, when WCRP and AIG refused to perform their defense and other legal and contractual obligations to the County & Slagle?
  5. Where Article 22 of the WCRP Interlocal Agreement provides only for the recovery of reasonable attorney fees and costs in an “action instituted to enforce any term” of the Interlocal Agreement, is WCRP entitled to recover its attorney fees incurred “as a result of the breach of a breach Interlocal Agreement”?
  6. Whether the County & Slagle are entitled to reasonable attorney’s fees on appeal?

Issues as Framed by Respondent Washington Counties Risk Pool:

  1. The Washington Counties Risk Pool is “not an ‘insurer,’” RCW 48.01.050, but a joint governmental self-insurance program organized under RCW Ch. 48.62 by member counties who are jointly responsible for all liabilities of the Pool, cooperatively determine the scope and terms of their joint liability coverage, decide whether risks should be reinsured or covered by excess insurance, and, through an Executive Committee, vote on whether a tendered claim is covered by the Pool’s joint self-insurance. Is the Pool subject to the extra-contractual duties and liabilities of a commercial liability insurer?
  2. Is the anti-assignment clause of the Pool’s Interlocal Agreement, which prohibits any “assignee or third-party beneficiary of any county” from obtaining “any right, claim or title to any part, share, interest, fund, premium or asset of the Pool,” valid and enforceable against a member county that purports to assign contract, tort and statutory claims against the Pool as an “insurer” to tort plaintiffs in settlement of damages claims against the county?
  3. Does a former county employee, whose statutory right to a defense and indemnity for liability claims arising during employment under RCW 4.96.041 is enforceable only against the county, have any direct contractual or extra-contractual right to a defense and indemnity by the joint governmental self-insurance program in which the county is a member?
  4. In 2012 Clark County tendered to the Pool a civil rights complaint alleging that in 1993 the County and its detective wrongfully arrested, tried, convicted and imprisoned two individuals who were exonerated in 2010. Did the complaint, or an amended complaint filed on the eve of trial, allege an “occurrence” after August 2002, when the County first joined the Pool?
  5. Are the Pool and its county members entitled to enforce the benefit of their bargain, including the right to attorney fees incurred as a result of a member county’s breach of the Interlocal Agreement?

Respondent Lexington Insurance Company did not submit a separate statement of issues in its “Brief of Respondent.”

Briefs:

Oral Argument of May 10, 2016: