Washington Insurers May Be Liable for Agent’s Unlawful Solicitation


In Chicago Title Insurance Co. v. Washington State Office of the Insurance Commissioner, ___ P.3d ___, 2013 WL 3946060 (Wash. Aug. 1, 2013), the Supreme Court of Washington held that Chicago Title Insurance Company was liable for regulatory violations committed by its agent, Land Title Insurance Company.

Land Title was a duly appointed agent of Chicago Title in Washington for the purpose of selling Chicago Title’s title insurance policies.  Pursuant to a contract between Land Title and Chicago Title, Land Title was authorized to sign, countersign, and issue Chicago Title’s title assurances in certain designated counties in Washington.

After an investigation by Washington’s Office of the Insurance Commissioner, Land Title was found to have violated anti-inducement statutes by offering favors to real estate agents, builders, and mortgage lenders, in the form of meals, golf outings, auction purchases, and tickets to sporting events.  Chicago Title refused to sign and pay a proposed consent following the investigation, arguing that it was not liable for Land Title’s violations.  Litigation commenced shortly thereafter.  An Insurance Commission review judge and the trial court held for the Insurance Commissioner, but the Washington Court of Appeals reversed, holding that Chicago Title was not vicariously liable for Land Title’s statutory violations.

The Supreme Court of Washington disagreed, finding that Land Title’s violations of the anti-inducement statutes were a form of solicitation for which Chicago Title was liable as principal.  The court noted that, under the Washington Insurance Code, an agent has a statutory duty to solicit policies for its principal.  The court explained, “Land Title is doing what [Chicago Title] appointed it to do pursuant to the statute.  When Land Title solicits in an unlawful way, [Chicago Title] is responsible.

The court rejected Chicago Title’s argument that Land Title was a “limited” agent with no authority to market for Chicago Title, explaining that “authority to solicit necessarily includes the authority to market.”  The court noted that it is well established that an agent has implied authority to perform acts necessary toward achieving the principal’s objective or which are customary for agents performing the work.  Thus, Land Title was Chicago Title’s general agent under common law and had implied authority to solicit applications, as this was customary for insurance agents.