Insurer’s Claims Manuals Were Not Trade Secrets

Woo v. Fireman's Fund Insurance (March 5, 2007)

Fireman’s Fund’s claims manuals were admitted as exhibits at trial in a bad faith action. When the plaintiff wanted to use them in a seminar, Fireman’s Fund moved to have the exhibits sealed on the ground that they were trade secrets. That motion was denied, and the court of appeals affirmed.

The court found that the testimony submitted by Fireman’s Fund regarding the value derived from the secrecy of its claims manuals and the potential prejudice from their distribution was speculative and conclusory. The court observed that the manuals “simply set out good claims practices and philosophies that would be obvious to any insurance company setting out to prepare a claims manual.” The court also observed that Woo wanted to distribute the manuals because they “directly contradict insurers’ frequent claims about what is reasonable claim handling.” The court characterized Woo’s interest in the manuals as “similar to a newspaper’s interest in publicizing documents deemed newsworthy,” which is “not the same as proving that the document itself deprives independent economic value from not being known.”

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Insurer-Assignee May Invoke “Late Tender Rule”

Mutual of Enumclaw v. USF Insurance Company (February 26, 2007)

A condominium homeowners’ association brought construction defect claims against developer Dally Homes. Dally tendered the claims to two of its insurers, Mutual of Enumclaw (MOE) and Commercial Underwriters (CU), which settled with the homeowners’ association. As part of the settlement, Dally assigned its rights to MOE and CU. MOE and CU then tendered the claim to USF, a third insurer to which Dally had not tendered the claim.

Under the “late tender rule,” when an insured makes a late tender, the insurer must demonstrate actual prejudice before it will be relieved of its duties to the insured. The trial court held that MOE and CU were not entitled to the benefit of that rule because Dally chose not to tender the claim to USF. However, the court of appeals reversed because Dally assigned its rights to MOE and CU, which stepped into Dally’s shoes without limitation.

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