In Anderson v. Farmers Insurance, the Washington Court of Appeals issued a significant opinion clarifying when injured plaintiffs may pursue claims against an at-fault driver’s insurance company—especially after a bankruptcy complicates the process. The case began when Cristina Anderson suffered catastrophic injuries after being hit by a vehicle in Sumner, Washington. A jury awarded Anderson $21 million against the at-fault driver, Wendy Gibson. After the verdict, Gibson filed for Chapter 7 bankruptcy, and Anderson purchased Gibson’s potential legal claims from the bankruptcy trustee.
Anderson then sued Farmers, Gibson’s insurer, asserting insurance bad faith, IFCA violations, CPA claims, negligence, declaratory relief, garnishment, and more. Farmers responded by arguing that all the claims—no matter how labeled—were effectively assigned legal malpractice claims arising from Gibson’s trial counsel’s alleged errors. Under Washington law, legal malpractice claims cannot be assigned to an adversary from the underlying litigation, and the trial court agreed, dismissing the entire case under CR 12(b)(6).
On appeal, the Court of Appeals partially reversed, making several important clarifications. First, the court held that legal malpractice claims cannot be sold through bankruptcy to an adversary, and therefore any claim Anderson acquired that was truly a malpractice claim remained barred under Kommavongsa v. Haskell. The court extended the Kommavongsa rule to involuntary, post-verdict bankruptcy transfers, reinforcing that public policy prohibits pursuing malpractice claims against defense counsel through assignment—even indirectly. [D2 60382-9…ed Opinion | PDF]
However, the court also ruled that not all of Anderson’s claims were malpractice-based. Many were grounded in Farmers’ own actions—including allegations of failing to negotiate in good faith, refusing to investigate other responsible parties, and prioritizing its own financial interests over Gibson’s exposure. These are classic insurance bad faith theories, and the court held that such claims survive because Kommavongsa applies only to assigned legal malpractice claims, not to insurer misconduct. As a result, Anderson’s bad faith, IFCA, and certain CPA theories must be allowed to move forward on remand.
The Court of Appeals also revived Anderson’s independent claims—that is, claims she brought in her own right rather than as an assignee. These include requests for declaratory judgment, garnishment, and potentially injunctive relief. Because these claims were not acquired from the bankruptcy estate, the rule against assigning malpractice claims did not apply. The court emphasized that Washington’s notice-pleading standard requires only enough detail to put the insurer on notice of the claims—not full factual development at the motion-to-dismiss stage.
For injury victims and policyholders, Anderson v. Farmers reinforces a crucial principle: insurance companies can still face liability for their own bad faith conduct—regardless of what happens to the insured defendant in bankruptcy. At KND Law, we help clients pursue every available avenue of recovery, including insurer bad faith, IFCA violations, CPA actions, and post judgment remedies such as declaratory relief and garnishment. If you are facing an insurance company that refuses to act in good faith, our attorneys are ready to protect your rights and maximize your recovery.