Western District of Washington Finds That An Independent Adjuster Can Be Sued For Bad Faith

In Lease Crutcher Lewis WA LLC v. National Union Fire Co. of Pittsburgh, Western District of WA, Dkt No. 2:08-cv-01862-RSL, Order on Motion to Dismiss dated October 20, 2009, Judge Robert Lasnik ruled that an independent adjuster could be liable for bad faith claim handling, but could not be independently sued under Washington's Insurance Fair C onduct Act ("IFCA").

Bad Faith

The independent adjuster filed a motion to dismiss based on the theory that an independent adjuster, hired by an insurance company to handle a claim, owes no duty and has no personal liability to an insured for actions taken on behalf of the insurer. The court found that this proposition was completely unsupported by authority. Citing to agency law Washington's insurance code, the court found that the independent adjuster "had a statutory duty to act in good faith toward [the insured], [and that] the Court need not determine whether the parties had a fiduciary relationship or whether a common law duty of good faith also existed in these circumstances."

IFCA

After considering the IFCA statute and legislative history, the Court concluded "that the legislature intended to create a private cause of action for damages and attorney’s fees against only the insurer, not its employees or agents."

By Misty Edmundson