Bernd Moving Systems owned a warehouse in Yakima, Washington. American Guarantee & Liability Insurance Company insured Bernd under a policy that included coverage of “Personal property of others in your care, custody and control.” Before storing property in the warehouse, William and Colleen Merriman were told that their goods would be fully insured. Later, a fire destroyed the warehouse and the Merrimans’ property. American Guarantee did not inform them of Bernd’s coverage, however. In addition, representatives of American Guarantee advised the Merrimans to file a claim under their homeowners’ insurance and told them there would likely be no coverage under Bernd’s policy. [ Merriman v. American Guarantee & Liability Insurance Company, 198 Wash.App. 594, 396 P.3d 351 (Div. 3 2017)] (See The Insurance Contract.)
(a) On what grounds might the Merrimans base a legal action against American Guarantee?
(b) Are there sufficient grounds to argue that the insurer acted unethically? Discuss.
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