In Workland & Witherspoon, PLLC v. Evanston Ins. Co., 141 F. Supp. 3d 1148 (E.D. Wash. 2015), an insured law firm and one of its attorneys-employees sued their malpractice carrier. The carrier had denied them a defense in the underlying malpractice case.
The Chief Judge of the Federal Eastern District of Washington rejected a contrary holding by a different District Judge in the same District and, moreover, predicted Washington State law in the absence of controlling State Court precedent. The Chief Judge held that there is no implied statutory claim under a provision of Washington's Insurance Fair Conduct Act ("IFCA"), Wash. Rev. Code § 48.30.015(5).
The Court began by repeating the test established by the Supreme Court of Washington for implying a statutory claim. This test follows the clear majority view on the issue:
The Supreme Court of Washington utilizes the following three-part test to determine whether to recognize an implied cause of action: “first, whether the plaintiff is within the class for whose ‘especial’ benefit the statute was enacted; second, whether legislative intent, explicitly or implicitly, supports creating or denying a remedy; and third, whether implying a remedy is consistent with the underlying purpose of the legislation.”
Workland & Witherspoon, PLLC v. Evanston Ins. Co., 141 F. Supp. 3d 1148, 1153 (E.D. Wash. 2015).
In the eyes of the Chief Judge, Subsection (5) did not provide a sufficient basis for an implied statutory cause of action. Subsection (5) simply provided a list of potential violations which could trigger a discretionary award of treble damages, or a mandatory award of attorney's fees and costs to the prevailing party under one or both of two other statutory subsections. It did not confer a cause of action in its own right, express or implied. Workland & Witherspoon, PLLC v. Evanston Ins. Co., 141 F. Supp. 3d 1148, 1155 (E.D. Wash. 2015).
Clearly repeating that this holding rejected the other District Judge's contrary conclusion on the implied-statutory-claim issue, the Chief Judge granted the malpractice carrier's motion to dismiss "Plaintiffs' IFCA Count." Workland & Witherspoon, PLLC v. Evanston Ins. Co., 141 F. Supp. 3d 1148, 1156-57 (E.D. Wash. 2015).
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