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Court of Appeals Division I
State of Washington

Opinion Information Sheet

			

           IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DALJEET SOMAL,                              )       No. 64626-5-I
                                            )
                      Respondent,           )       DIVISION ONE
          v.                                )
                                            )       UNPUBLISHED OPINION
ALLSTATE PROPERTY AND                       )
CASUALTY INSURANCE COMPANY,                 )
                                            )
                      Appellant.            )       FILED:  January 17, 2012

       Schindler, J.  --  In Averill v. Farmers Insurance Co. of Washington, 155 Wn. 

App. 106, 119, 229 P.3d 830 (2010), review denied, 169 Wn.2d 1017 (2010), we held 

that when an insurer obtains a recovery in subrogation from a third party, the insured is 

not entitled to reimbursement for the deductible paid by the insured under the common 

law "made whole" rule. Because neither the common law made whole rule nor the 

insurance contract requires Allstate Property and Casualty Insurance Company to 

reimburse Daljeet Somal for the deductible he paid from funds Allstate recovered in 

subrogation from the other driver's insurance company, we reverse the order denying 

the CR 12(b)(6) motion to dismiss filed by Allstate, and the order granting partial 

summary judgment in favor of Somal.  

The Car Accident

       On January 12, 2009, Daljeet Somal's Ford Explorer was involved in a motor  

No. 64626-5-I/2

vehicle accident.  The driver of the other car involved in the accident was Steven 

Parascondola.  Allstate Property and Casualty Insurance Company insured Somal's

Ford Explorer under a motor vehicle liability insurance policy that included collision 

coverage with a $500 deductible.  State Farm Insurance Company insured 

Parascondola's car.  The total cost to repair the Ford Explorer was $1,970.76.  Allstate 

paid $1,470.76 to repair the Ford Explorer. Somal paid the $500 deductible.  

Subrogation Recovery

       In a letter dated February 12, Allstate informed Somal that under the subrogation 

provision of the policy, Allstate was seeking recovery of payment for the repair costs 

from the other driver's insurer, State Farm.  The letter also states that if it was 

determined that Somal was partially at fault for the accident, Allstate will only reimburse 

Somal the proportionate share of the deductible.  The letter states, in pertinent part:

              We are writing to let you know that we have started our efforts to 
       recover your deductible as well as the amount we paid in the loss . . . .
              . . . The recovery process, which is known as subrogation, typically 
       takes several months to complete.
              If we make a full recovery, we will refund your deductible in full.  In 
       the event we determine that you are partially responsible for the accident, 
       and we obtain only partial recovery, we will reimburse you the 
       proportionate share of your deductible.

       Allstate and State Farm agreed that Somal was 60 percent at fault for the 

accident.  State Farm paid Allstate for 40 percent of the total cost of the repairs.  In a 

letter dated March 11, Allstate informed Somal of the subrogation recovery and the 

determination that he was partially at fault.  The letter states, in pertinent part:

              We're writing to let you know that we were unable to recover the 
       entire amount of your deductible . . . . We now have concluded our 
       subrogation efforts.
              After a review of the facts of the accident, it has been determined 

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No. 64626-5-I/3

       that you were partially at fault.  For this reason, we have reduced the 
       recovery amount in proportion to your share of responsibility for the loss.  
       We will send you a check for the proportionate share of your deductible in 
       a separate mailing.  Please know the amount you receive will be the final 
       settlement of any obligation Allstate . . . has regarding the refund of your 
       deductible.

Allstate sent Somal a check for 40 percent of the deductible, or $200.  Somal cashed 

the check.

Lawsuit

       On June 23, Somal filed a class action lawsuit against Allstate for violation of the 

Washington Consumer Protection Act, chapter 19.86 RCW, bad faith, conversion, and 
breach of contract.1  Somal asserted claims on behalf of himself and others similarly 

situated and sought declaratory and injunctive relief and damages.2  Somal alleged that 

under the common law made whole rule and the insurance policy,

              13.     . . . Allstate is only entitled to recoup payments made to or 
       for plaintiff, such as the payments made here under his Collision 
       coverage, if plaintiff is first fully compensated for the applicable loss.  
       Even then, Allstate is only entitled to recoups [sic] its payments to the 
       extent the funds recovered exceed full compensation for the applicable 
       loss.
              14.     Here, plaintiff has plainly not been fully compensated for his 
       loss in regards to his property damage loss, yet Allstate has recouped 
       part of its payment under the Collision coverage.
              15.     Notwithstanding the Policy language and Washington law, 
       Allstate has taken the position that it is entitled to retain the remainder of 
       the funds received from State Farm, and is under no obligation to fully 
       compensate plaintiff for his property damage loss.

Cross Motions

       1 Although Somal filed the lawsuit as a class action, the parties agreed to first file motions to 
address the legal issue. 
       2 The class is comprised of the following:
       All persons in the State of Washington who had a motor vehicle liability insurance policy 
       issued by Allstate that included Collision coverage, where Allstate obtained any measure 
       of reimbursement for payments made under that coverage before its insureds were first 
       fully compensated for the losses related to those payments. 
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No. 64626-5-I/4

       Allstate filed a CR 12(b)(6) motion to dismiss for failure to state a claim.  Allstate 

asserted that Somal has no legal or contractual right to receive reimbursement for the

entire deductible he paid. Allstate argued that neither the common law made whole

rule, the insurance commission regulations, nor the insurance contract supported the 

premise of the claim that, regardless of fault, Somal was entitled to reimbursement of 

the entire amount of the deductible from the funds Allstate received in subrogation.

       Somal filed a motion for partial summary judgment, arguing that as a matter of 

law, the common law made whole rule, the insurance commission regulations, and the 

insurance agreement required Allstate to compensate him for the entire deductible.  

Somal argued that Allstate had a duty to pay him the full amount of the deductible from 

the funds Allstate obtained in subrogation from State Farm in order to fully compensate 

him for the property damage. 

       The court denied the CR 12(b)(6) motion to dismiss and granted partial summary 

judgment in favor of Somal. The trial court ruled that the common law made whole rule

required Allstate to compensate Somal the full amount Somal paid as a deductible.  But 

the court reserved ruling on the measure of damages or the scope of relief.  The partial 

summary judgment order states, in pertinent part:

       Somal is entitled to be made whole for his property damage loss before 
       Allstate, as his property damage insurer, is entitled to retain funds 
       recovered from the third party tortfeasor representing payment for 
       Somal's property damage loss.

Discretionary Review
       Allstate filed a motion for discretionary review.3 Allstate asserted that under 

       3 RAP 2.3(b)(2) permits discretionary review where "[t]he superior court has committed probable 
error and the decision of the superior court substantially alters the status quo or substantially limits the 
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No. 64626-5-I/5

RAP 2.3(b)(2), the trial court's decision on partial summary judgment constituted

probable error that substantially altered the status quo and improperly precluded

Allstate from recovering payments made on behalf of partially at-fault insureds. 

       A commissioner of this court granted Allstate's motion for discretionary review 

but stayed the appeal pending the decision in a case that presented the same issue, 

Farmer's Insur. Co. v. Averill, No. 62767-8-I. The order states, in pertinent part:

              Allstate filed a motion for discretionary review of a trial court order 
       granting partial summary judgment for respondent Da[l]jeet Somal and 
       denying Allstate's motion to dismiss Somal's complaint.  The key issue is 
       whether Allstate is obligated to fully reimburse Somal for his deductible 
       after a subrogation recovery when Somal was partially at fault for the 
       accident.  On February 9, 2011, a commissioner of this court granted 
       discretionary review and stayed review pending the decision in Farmer's 
       Insur. Co. v. Averill, No. 62767-8-I.

After the decision in Averill was filed on March 15, 2010, we lifted the stay and 

scheduled the appeal in this case for oral argument.

Averill

       Allstate contends our decision in Averill governs and that Somal is not entitled to 

reimbursement for his entire collision deductible from the recovery Allstate received in 

subrogation for the total cost of repairs under the common law made whole rule.  We 

agree with Allstate.

       In Averill, we held that an insurer does not have an obligation under the common 

law made whole rule to reimburse the insured for the deductible from the recovery the

insurer obtained in subrogation from the other driver's insurer.  Averill, 155 Wn. App. at 

114.  "[T]he made whole doctrine does not apply when the insurance company has 

freedom of a party to act."  
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No. 64626-5-I/6

pursued recovery of its subrogation interests." Averill, 155 Wn. App. at 112.  Here, as 

in Averill, the made whole rule does not apply to Allstate's recovery in subrogation.

Insurance Contract

       Allstate also asserts the subrogation provision of the insurance agreement does 

not require it to reimburse Somal for the deductible from the recovery Allstate obtained 

in subrogation from a third party. 

       Interpretation of an insurance contract is a question of law subject to de novo 

review.  Overton v. Consol. Ins. Co., 145 Wn .2d 417, 424, 38 P.3d 322 (2002).  "The 

insurance contract must be viewed in its entirety; a phrase cannot be interpreted in 

isolation."  Allstate Ins. Co. v. Peasley, 131 Wn.2d 420, 424, 932 P.2d 1244 (1997).  

Further, in determining a contract's legal effect, "a court must construe the entire 

contract together so as to give force and effect to each clause." Pub. Util. Dist. No. 1 of 

Klickitat County v. Int'l Ins. Co., 124 Wn.2d 789, 797, 881 P.2d 1020 (1994).

       Because insurance policies are contracts, the principles of contract 

interpretation apply.  See, e.g., Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165, 

171, 110 P.3d 733 (2005).  " 'The cardinal rule with which all interpretation begins is 

that its purpose is to ascertain the intention of the parties.' "  Berg v. Hudesman, 115 

Wn.2d 657, 663, 801 P.2d 222 (1990) (quoting Arthur L. Corbin, The Interpretation of 

Words and the Parol Evidence Rule, 50 Cornell L. Quar. 161, 162 (1965)).  If the

language in an insurance contract is not ambiguous, the court must enforce it as written 

and may not modify the contract or create an ambiguity where none exists. State Farm 

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No. 64626-5-I/7

Mut. Auto. Ins. Co. v. Ruiz, 134 Wn.2d 713, 721, 952 P.2d 157 (1998).  A provision is 

ambiguous if, on its face, it is fairly susceptible to more than one reasonable 

interpretation.  Daley v. Allstate Ins. Co., 135 Wn.2d 777, 784, 958 P.2d 990 (1998).

And while ambiguity is construed against the drafter, a strict application should not 

trump the plain, clear language such that a strained or forced construction results. See

Findlay v. United Pac. Ins. Co., 129 Wn.2d 368, 374, 379, 917 P.2d 116 (1996);

Transcont. Ins. Co. v. Wash. Pub. Util. Dists.' Util. Sys., 111 Wn.2d 452, 457, 760 P.2d 

337 (1988).

       Part VII of the Allstate insurance policy, "Subrogation Rights, Protection Against 

Loss to the Auto," states, in pertinent part:

              When we pay, your rights of recovery from anyone else become 
       ours up to the amount we have paid.  However, we may recover only the 
       excess amount you have received after being fully compensated for the 
       loss.[4]

       The plain language of the first sentence unambiguously refers to Allstate's

subrogation right to recover from "anyone else" including the right to recover from third 

parties.  Allstate has a right to assert its subrogation interest.  Mahler v. Szucs, 135 

Wn.2d 398, 413, 957 P.2d 632, 966 P.2d 305 (1998).  An insurer may enforce its 

subrogation interest "by an action by the subrogee/insurer in the name of the insured 

against the tortfeasor" or by "a type of lien against the subrogor/insured's recovery from 

a tortfeasor." Mahler, 135 Wn.2d at 417-18.  The language in the first sentence clearly 

informs the insured that when Allstate pays for a loss under the terms of the insurance 

agreement, it has the right to seek recovery in subrogation of the funds it paid from 

       4 (Bold in original.)

                                               7 

No. 64626-5-I/8

third parties.

        The second sentence addresses Allstate's right of recovery when the insured, 

instead of Allstate, obtains a recovery from a third party.  Where the insured obtains a 

recovery from a third party, Allstate "may recover only the excess amount you have 

received after being fully compensated."  This unambiguous language is consistent with 

the common law made whole rule. "The made whole doctrine is a limitation on the 

recovery of the insurer when it seeks reimbursement from its insured for a loss it has 

previously paid to the insured."  Averill, 155 Wn. App. at 114.  

       Here, there is no dispute that Allstate paid Somal for the loss, and Allstate was 

entitled to pursue its rights in subrogation to obtain reimbursement for the amount 

Allstate paid for the loss.  There is also no dispute that Somal did not seek recovery

from a third party.  The plain and unambiguous language of the policy does not entitle 

Somal to recovery of his deductible from the recovery Allstate obtained in subrogation 

from the other driver's insurance company.  

       We reverse the order denying Allstate's CR 12(b)(6) motion to dismiss and the 
order granting Somal's motion for partial summary judgment.5 On remand, the court 

shall enter an order dismissing Somal's lawsuit with prejudice.

       5 In supplemental briefing, the parties address a change to the insurance commission's 
regulations, WAC 284-30-393.  Allstate argues the new WAC provision supports the argument that the 
trial court erred in ruling that Somal was entitled to full reimbursement of his deductible.  See Wash. St. 
Reg. 11-13-029 (June 7, 2011) (amending WAC 284-30-393 to allocate subrogation recoveries first to 
the insured for "any deductible(s) incurred in the loss, less applicable comparable fault").  Because we 
conclude Somal is not entitled to full reimbursement under Averill or his insurance contract, we need not 
address the effect of the amendment to WAC 284-30-393.
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No. 64626-5-I/9

WE CONCUR:

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