Anderson v. Country Mutual Insurance Company, No. 2:2014cv00048 - Document 82 (W.D. Wash. 2015)
Court Description: ORDER denying Cross-motions 55 58 Parties' Motion for Summary Judgment, by Judge James L. Robart.(MD)
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Anderson v. Country Mutual Insurance Company Doc. 82 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 CHRISTOPHER H. ANDERSON, Plaintiff, 11 13 ORDER DENYING CROSSMOTIONS FOR SUMMARY JUDGMENT v. 12 CASE NO. C14-0048JLR COUNTRY MUTUAL INSURANCE COMPANY, 14 Defendant. 15 I. INTRODUCTION 16 Before the court are the parties’ cross-motions for summary judgment. (Pltf.’s 17 Mot. (Dkt. # 55); Def.’s Mot. (Dkt. # 58).) The court has considered the parties’ 18 submissions, the balance of the record, and the relevant law. Being fully advised, 1 the 19 court DENIES both motions. 20 21 22 1 The court finds that oral argument is unnecessary. ORDER- 1 Dockets.Justia.com 1 2 II. BACKGROUND This is an insurance coverage case arising out of a fire at a house that Plaintiff 3 Christopher H. Anderson owned in Seattle, Washington (“the House”). (See Ver. of State 4 Ct. Rec. (Dkt. # 3) Ex. 1 (Dkt. # 3-1) (“Compl.”); Anderson Decl. (Dkt. # 56) ¶ 3.) The 5 fire occurred on December 26, 2012, and caused significant damage to the House. 6 (Compl. ¶ 3.1.) The Seattle Fire Department (“SFD”) responded to the scene and 7 conducted an investigation. (See Thielbar Decl. (Dkt. # 61) ¶ 6, Ex. I (Dkt. # 61-3) 8 (“SFD Report”).) The investigation concluded that the fire occurred due to an overheated 9 electrical outlet in the basement that was rewired for an illegal marijuana growing 10 operation (“the Operation”). (See id.) 11 The Seattle Police Department (“SPD”) also conducted an investigation. (4th 12 Carsely Decl. (Dkt. # 49) ¶ 11, Ex. F. (Dkt. # 49-6) (“SPD Report”).) In the course of 13 this investigation, Detective Marco Ortiz found that the Operation was concealed within 14 the basement with false walls, that electricity was diverted to the Operation so that the 15 power used for the Operation would not show up on the electricity meter, and that an air16 filtering and venting system was installed to hide the smell of the Operation. (See SPD 17 Report at 2-4; Thenell Decl. (Dkt. # 59) ¶ 2, Ex. A (Dkt. # 59-1) (“Ortiz Dep.”) 2 at 19:1718 20:13, 21:3-22:18; Weber Decl. (Dkt. # 64) ¶ 5, Ex. D (Dkt. # 64-4) (“Lefebvre Dep.”) at 19 40:19-41:5.) 20 21 2 Detective Ortiz’s deposition transcript also appears in the record in another location. 22 (See 5th Carsley Decl. (Dkt. # 57) ¶ 7, Ex. F (Dkt. # 57-6).) ORDER- 2 1 Mr. Anderson had a homeowner’s insurance policy with Defendant Country 2 Mutual Insurance Company (“Country Mutual”) that was effective at the time of the fire. 3 (See Thielbar Decl. ¶ 3, Ex. H (Dkt. ## 61-1, 61-2) (“Policy”).) On January 3, 2013, Mr. 4 Anderson reported the fire to Country Mutual, which began its own investigation. (See 5 Theilbar Decl. ¶¶ 5-6.) Country Mutual collected SFD and SPD reports, reviewed news 6 reporting on the fire, and interviewed witnesses. (See, e.g., 5th Carsely Decl. (Dkt. # 57) 7 ¶ 2, Ex. A (Dkt. # 57-1) (“Thielbar Dep.”) at 67:24-69:12, 84-94; Weber Decl. ¶ 7, Ex. F 8 (Dkt. # 64-6) (“Lefebvre Email”); Lefebvre Decl. (Dkt. # 60) ¶ 3, Ex. G (Dkt. # 60-3) 9 (“Anderson 1/10/13 Statement”) 3.) To facilitate this investigation, Mr. Anderson signed 10 multiple releases enabling Country Mutual to obtain documents and made available a 11 number of additional documents not covered by the releases. (See, e.g., 4th Carsley Decl. 12 ¶ 19, Ex. J. (Dkt. # 49-10) (“1/9/13 Email”).) In addition, Mr. Anderson hired Paul 13 Gaouette of Adjusters International, a private adjusting firm, to assist him with the 14 presentation of his claim. (See 5th Carsley Decl. ¶ 8, Ex. G (Dkt. # 57-7) (“Gaouette 15 Dep.”) at 7:5-7.) 16 Since the outset of Country Mutual’s investigation, Mr. Anderson has maintained 17 that he did not know about the Operation and suggested that it was likely carried on by 18 his tenant, Mark Gray. (See, e.g., Anderson 1/10/13 Statement at 30; 2d Carsley Decl. 19 20 21 3 Mr. Anderson’s statement from January 10, 2013, also appears in the record at another location. (See 2d Carsley Decl. (Dkt. # 22) ¶ 7, Ex. F (Dkt. # 22-1) at 25-29; 5th Carsley Decl., 22 ¶ 3, Ex. B (Dkt. # 57-2).) ORDER- 3 1 (Dkt. # 22) ¶ 8, Ex. G (Dkt. # 22-2) at 2-13 (“Anderson 2/8/13 Statement”) 4; Pltf.’s Mot. 2 at 3-4.) Mr. Anderson told Country Mutual about his tenant around the time he gave 3 notice of the fire and provided a form lease agreement signed by Mr. Gray. (See 4 Anderson 1/10/13 Statement at 6; Lefebvre Decl. ¶ 2, Ex. E (Dkt. # 60-1) (“Lease 5 Email”), Ex. F (Dkt. # 60-2) (“Lease”).) Mr. Anderson told Country Mutual that he 6 thought Mr. Gray had lived in the House for about 19 months with his girlfriend and two 7 children. (Anderson 1/10/13 Statement at 6-7; Anderson 2/8/13 Statement at 18; Pltf.’s 8 Mot. at 3.) In addition, Mr. Anderson related that he had visited the House on several 9 occasions while Mr. Gray lived there, including to repair the deck, but had never 10 conducted a walkthrough, gone into the basement, or detected the Operation. (See 11 Anderson 1/10/13 Statement at 7-9, 26-27; Anderson 2/8/13 Statement at 28-31, 35-36.) 12 Mr. Anderson further asserted that he does not smoke marijuana and has never grown it. 13 (Anderson 2/8/13 Statement at 36-37.) 14 On January 10, 2013, Country Mutual claims handler James Lefebvre conducted 15 an initial interview with Mr. Anderson. (See generally Anderson 1/10/13 Statement.) 16 During that interview, Mr. Lefebvre asked Mr. Anderson where he was at the time of the 17 fire. (Id. at 20.) Mr. Anderson responded that he was golfing in Chelan, Washington. 18 (See id.; see also Anderson 2/8/13 Statement at 38-39.) In checking Mr. Anderson’s 19 20 21 4 Mr. Anderson’s statement from February 8, 2013, also appears in the record at another location. (See Thielbar Decl. ¶ 11, Ex. K (Dkt. # 61-5); 5th Carsley Decl. ¶ 4, Ex. C (Dkt. # 5722 3).) ORDER- 4 1 story, Country Mutual learned that the golf course was closed on December 26, 2012, due 2 to snow. (Thielbar Decl. ¶ 12.) 3 Approximately one month later, Country Mutual special investigator Chris 4 Thielbar conducted a second interview with Mr. Anderson. (See id. ¶ 11; Anderson 5 2/8/13 Statement.) Mr. Theilbar confronted Mr. Anderson with the facts about the snow, 6 to which Mr. Anderson responded that he had actually been in Roslyn, Washington, on 7 December 26, 2012, with a prostitute named Teyana Dorsey. (See Anderson 2/8/13 8 Statement at 37-41.) Mr. Anderson acknowledged that he had lied about his whereabouts 9 but explained that his only motive was to prevent his daughter from finding out that he 10 was with Ms. Dorsey. (See id. at 38-43.) 11 In addition to that misrepresentation, Country Mutual claims to have discovered 12 several other irregularities in Mr. Anderson’s statements. (See Def.’s Mot. at 3-6.) For 13 example, Country Mutual asserts that Mr. Anderson has testified inconsistently about the 14 frequency and timing of his visits to the House in the months leading up to the fire and 15 about how he received and processed rent payments from Mr. Gray. (See id. at 4-6.) 16 Country Mutual highlights contradictory statements from Mr. Anderson about Mr. Gray’s 17 vehicle. (See id. at 4, 6.) Country Mutual also points out that after the fire the SPD 18 found property belonging to Mr. Anderson in the House; that the lease agreement is 19 inconsistent with Mr. Anderson’s statements because it lists Mr. Anderson as a co20 resident and prohibits children; and that the utilities for the House were in Mr. 21 Anderson’s name. (See id. at 3, 5.) Furthermore, Country Mutual has been unsuccessful 22 in locating Mr. Gray. (Thielbar Decl. ¶ 20.) ORDER- 5 1 On October 9, 2013, Country Mutual sent a letter to Mr. Anderson informing him 2 that it was denying coverage. (See 2d Carsley Decl. ¶ 15, Ex. N (Dkt. # 22-3) at 21-25. 3 (“Denial Letter”).) It based this denial on two policy exclusions. (See id. at 4.) The first 4 exclusion precludes coverage when the insured has misrepresented any material fact 5 relating to the insurance (“the misrepresentation exclusion”). (See id.; Policy at 32.) The 6 second exclusion bars coverage when the loss results from the illegal manufacture of 7 controlled substances and the insured has knowledge of such manufacture (“the 8 controlled substances exclusion”). (See Denial Letter at 4; Policy at 26, 28.) The denial 9 letter supported application of those exclusions with the following facts: Mr. Anderson 10 admitted to visiting the House on numerous occasions before the fire and misrepresented 11 his whereabouts at the time of the fire. (See Denial Letter at 3-4.) 12 During the investigation, Country Mutual made payments to Mr. Anderson 13 totaling $5,565.29 and $29,200.00. (See Thielbar Decl. ¶ 21, Ex. O (Dkt. # 61-9) 14 (“Ledger”).) The first sum was, in Country Mutual’s words, “towards the Dwelling,” 15 while the second was for rent replacement. (See id.) Also during the investigation, 16 Country Mutual paid $97,996.74 for the actual cash value (“ACV”) of the House to Mr. 17 Anderson’s mortgagee as the loss payee under Mr. Anderson’s policy. (See id.; Def.’s 18 Mot. at 14.) Mr. Anderson alleges that the denial of coverage caused him to lose the 19 property because he could no longer afford his mortgage and had to sell the property to 20 avoid foreclosure. (See Anderson Decl. ¶ 3.) Mr. Anderson also contends that if 21 coverage had not been denied, he would have retained the property and repaired or 22 ORDER- 6 1 replaced the House. (See id.; Weber Decl. (Dkt. # 64) ¶ 15, Ex. L (Dkt. # 64-12) 2 (“Neupert Dep.”) at 5, 7.) 3 On December 20, 2013, Mr. Anderson filed this lawsuit in the Superior Court for 4 King County, Washington, bringing claims against Country Mutual for breach of 5 contract, bad faith, and violation of the Consumer Protection Act (“CPA”), RCW ch. 6 19.86.010, et seq., and the Insurance Fair Conduct Act (“IFCA”), RCW 48.30.15. (See 7 generally Compl.) Country Mutual removed the case to this court on January 10, 2014. 8 (Not. of Rem. (Dkt. # 1).) Shortly thereafter, Country Mutual filed an answer and 9 asserted two counterclaims for breach of contract. (See Answer (Dkt. # 6) at 8-9.) 10 The parties filed the instant cross-motions for summary judgment on December 11 16, 2014. (See Pltf.’s Mot.; Def.’s Mot.) Mr. Anderson moves for partial summary 12 judgment on two issues. (Pltf.’s Mot. at 2.) First, Mr. Anderson asks the court to rule 13 that Country Mutual is estopped from relying on evidence other than what it stated in its 14 denial letter, provided Country Mutual knew or should have known of the additional 15 evidence at the time of the denial letter. (See id. at 11-18; Pltf.’s Reply at 2-9.) Second, 16 Mr. Anderson seeks to preclude Country Mutual from asserting the controlled substances 17 exclusion. (See Pltf.’s Mot. at 2.) Mr. Anderson argues that Country Mutual had so little 18 evidence of Mr. Anderson’s knowledge of the Operation that its conclusion in that regard 19 is unreasonable as a matter of law. (See id. at 18-23; Pltf.’s Reply at 9-12.) He points out 20 that Country Mutual lacked any direct evidence of Mr. Anderson’s knowledge, distrusted 21 Mr. Anderson, and failed to pursue avenues of investigation that might have corroborated 22 ORDER- 7 1 Mr. Anderson’s story, such as the efficacy of the various measures concealing the 2 Operation. (See Pltf.’s Mot. at 20-23; Pltf.’s Reply at 10-12.) 3 Country Mutual, in turn, moves for summary judgment on five issues. (See Def.’s 4 Mot. at 10-17.) First, it asks the court to rule that the misrepresentation exclusion applies 5 because Mr. Anderson’s initial statement about his whereabouts is a material 6 misrepresentation. (See id. at 10-11; Def.’s Reply at 2-3.) Second, it moves for summary 7 judgment on the reasonableness of its conclusion that Mr. Anderson knew about the 8 Operation and thus that the controlled substances exclusion barred coverage. (See Def.’s 9 Mot. at 13-14; Def.’s Reply at 4-5.) Third, Country Mutual argues that it is enjoys 10 immunity from Mr. Anderson’s bad faith, IFCA, and CPA claims under RCW 48.50.075. 11 (See Def.’s Mot. at 14-15; Def.’s Reply at 6-7.) That statute protects insurance 12 companies who deny coverage in reliance on a written opinion from a qualified agency 13 that the claim involves criminal activity and that the insured is the target of the 14 investigation. See RCW 48.50.075. Fourth, Country Mutual contends that Mr. 15 Anderson’s bad faith claim must fail because he has no evidence of damages. (See Def.’s 16 Mot. at 16-17; Def.’s Reply at 7.) Fifth and finally, it requests a determination that it has 17 fulfilled its obligations under the contract by paying the ACV of the House to Mr. 18 Anderson’s mortgagee. (See Def.’s Mot. at 14; Def.’s Reply at 5-6.) 19 The parties’ cross-motions are now before the court. For the reasons stated below, 20 the court finds that summary judgment is inappropriate on the issues raised by the parties 21 and therefore DENIES the parties’ cross-motions for summary judgment. 22 ORDER- 8 1 III. DISCUSSION 2 A. Summary Judgment Standard 3 Summary judgment is appropriate if the evidence, when viewed in the light most 4 favorable to the non-moving party, demonstrates “that there is no genuine dispute as to 5 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 6 P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Galen v. Cnty. of L.A., 7 477 F.3d 652, 658 (9th Cir. 2007). A fact is “material” if it might affect the outcome of 8 the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is 9 “genuine” if the evidence is such that reasonable persons could disagree about whether 10 the facts claimed by the moving party are true. Aydin Corp. v. Loral Corp., 718 F.2d 11 897, 902 (9th Cir. 1983). 12 13 14 [T]he issue of material fact required . . . to be present to entitle a party to proceed to trial is not required to be resolved conclusively in favor of the party asserting its existence; rather, all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial. 15 First Nat. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968). 16 The court is “required to view the facts and draw reasonable inferences in the light 17 most favorable to the [non-moving] party.” Scott v. Harris, 550 U.S. 372, 378 (2007). 18 The court may not weigh evidence or make credibility determinations in analyzing a 19 motion for summary judgment because these are “jury functions, not those of a judge.” 20 Anderson, 477 U.S. at 249-50. 21 The moving party bears the initial burden of showing there is no genuine issue of 22 material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. ORDER- 9 1 at 323. If the moving party meets his or her burden, the non-moving party “must make a 2 showing sufficient to establish a genuine dispute of material fact regarding the existence 3 of the essential elements of his case that he must prove at trial.” Galen, 477 F.3d at 658. 4 B. Mr. Anderson’s Knowledge of the Operation 5 Both Country Mutual and Mr. Anderson move for summary judgment on the issue 6 of whether Country Mutual reasonably concluded that Mr. Anderson knew about the 7 Operation. (See Def.’s Mot. at 13-14; Pltf.’s Mot. at 18-23.) As described above, 8 Country Mutual invoked the controlled substances exclusion as one of its bases for 9 denying coverage. (See Denial Letter at 4.) In doing so, it relied on its conclusion that 10 Mr. Anderson knew about the Operation. (See id.) Mr. Anderson now alleges that 11 Country Mutual’s denial of coverage on that basis amounts to bad faith because Country 12 Mutual lacked a reasonable basis for its determination that Mr. Anderson knew about the 13 Operation. (See Pltf.’s Mot. at 20-23.) 14 An insurer has an obligation to act in good faith when dealing with its insureds. 15 See RCW 48.01.030; Indus. Indem. Co. of the Nw., Inc. v. Kallevig, 792 P.2d 520, 526 16 (Wash. 1990). “This fiduciary duty . . . is fairly broad and may be breached by conduct 17 short of intentional bad faith or fraud.” Kallevig, 792 P.2d at 526 (citing Phil Schroeder, 18 Inc. v. Royal Globe Ins. Co., 659 P.2d 509 (Wash. 1983)). “Thus, an insurer’s denial of 19 coverage, without reasonable justification, constitutes bad faith.” Id. Notably, however, 20 bad faith is an issue of fact that is rarely appropriate for summary judgment. See Hell 21 Yeah Cycles v. Ohio Sec. Ins. Co., 16 F. Supp. 3d 1224, 1235 (E.D. Wash. 2014) (citing 22 Smith v. Safeco Ins. Co., 78 P.3d 1274, 1277 (Wash. 2003)). ORDER- 10 1 In raising this issue on summary judgment, therefore, each party is effectively 2 arguing that, even viewing the facts in the light most favorable to the opposing side, no 3 reasonable jury could disagree about the reasonableness (or unreasonableness) of Country 4 Mutual’s determination regarding Mr. Anderson’s knowledge. See Hell Yeah Cycles, 16 5 F. Supp. 3d at 1235; Smith, 78 P.2d at 1277-78. Both parties are mistaken. Viewing the 6 evidence as it must at summary judgment, see Scott, 550 U.S. at 378, the court finds that 7 reasonable minds could differ regarding the reasonableness of Country Mutual’s decision 8 to invoke the controlled substances exclusion. See Hell Yeah Cycles, 16 F. Supp. 3d at 9 1235. Summary judgment is therefore inappropriate. 10 Country Mutual points to the following facts to support its position that Mr. 11 Anderson knew about the Operation: Mr. Anderson admitted to visiting the House in the 12 months leading up the fire, the SPD discovered items belonging to Mr. Anderson at the 13 House, few other items consistent with tenancy were found at the House, the utilities 14 remained in Mr. Anderson’s name, the lease agreement lists Mr. Anderson as a resident, 15 Mr. Anderson misrepresented his whereabouts on the night of the fire, Mr. Anderson 16 waited a week to inform Country Mutual of the fire, and Mr. Gray has not been located. 17 (See Def.’s Mot. at 13; Def.’s Resp. at 9-10.) Based on those facts, Country Mutual 18 argues that it reasonably concluded that Mr. Anderson knew about the Operation. (See 19 Def.’s Mot. at 13-14; Def.’s Resp. at 9-10.) 20 Mr. Anderson, on the other hand, relies on weaknesses in Country Mutual’s 21 evidence and on his own repeated and consistent denials of knowledge. For example, 22 Mr. Anderson notes that Country Mutual’s conclusion depends entirely on inferences ORDER- 11 1 from circumstantial evidence and total disbelief of Mr. Anderson’s denials of knowledge. 2 (See Pltf.’s Mot. at 21-23; Pltf.’s Reply at 10-12; Pltf.’s Resp. at 16-18.) Mr. Anderson 3 further points out that Country Mutual failed to investigate aspects of the claim that might 4 have corroborated Mr. Anderson’s denial, such as the efficacy of the measures used to 5 hide the Operation. (See, e.g., Pltf.’s Mot. at 22.) On the basis of these arguments, Mr. 6 Anderson contends that Country Mutual’s conclusion regarding his knowledge of the 7 Operation amounts to nothing more than unreasonable speculation. (See Pltf.’s Mot. at 8 22-23.) 9 Neither party has shown that the undisputed facts entitle it to judgment as a matter 10 of law on the reasonableness of Country Mutual’s conclusion. See Hell Yeah Cycles, 16 11 F. Supp. 3d at 1235. Country Mutual relies on inferences from circumstantial evidence 12 and judgments about Mr. Anderson’s credibility. (See Def.’s Mot. at 13; Def.’s Resp. at 13 9-10.) Yet viewing the facts in the light most favorable to Mr. Anderson, the court 14 cannot say that reasonable minds could only agree with Country Mutual. Rather a 15 reasonable jury could potentially find that Country Mutual’s inferences from the evidence 16 and mistrust of Mr. Anderson were unwarranted, based on an inadequate investigation, 17 and unreasonable. See Anderson, 477 U.S. at 455 (“Credibility determinations, the 18 weighing of the evidence, and the drawing of legitimate inferences from the facts are jury 19 functions, not those of a judge . . . on a motion for summary judgment . . . .”); see also, 20 e.g., Safeco Ins. Co. of Am. v. JMG Rests., Inc., 680 P.2d 409, 417-418 (Wash. Ct. App. 21 1984). Conversely, viewing the facts in the light most favorable to Country Mutual, a 22 jury could find that Mr. Anderson lacks credibility and conclude that Country Mutual ORDER- 12 1 reached a reasonable conclusion based on the available information. See Anderson, 477 2 U.S. at 455. Accordingly, summary judgment is not appropriate for either party on this 3 issue. 5 4 C. Materiality of Mr. Anderson’s Misrepresentation 5 Country Mutual contends that there is no genuine dispute of material fact that Mr. 6 Anderson’s misrepresentation regarding his whereabouts on the day of the fire constitutes 7 a material misrepresentation that precludes coverage. (See Def.’s Mot. at 10-11.) In 8 addition to the controlled substances clause, Country Mutual denied coverage on the 9 basis of the misrepresentation clause. (Denial Letter at 4.) That clause precludes 10 5 The parties are somewhat unclear about the particular issue on which they seek 11 summary judgment. Some of the language in the cross-motions suggests that the parties want 12 13 14 15 16 17 18 19 20 21 22 summary judgment on the issue of whether Mr. Anderson in fact knew about the operation. (See, e.g., Pltf.’s Mot. at 18 (“Mr. Anderson is entitled to summary judgment on the application of the policy’s controlled substances exclusion.”); Def.’s Mot. at 1 (“Country Mutual . . . asks that this [c]ourt find that an exclusion for coverage exists . . . .”).) Other language suggests that the parties merely seek a ruling on the reasonableness of Country Mutual’s decision to invoke the controlled substances exclusion in light of the information then available. (See, e.g., Pltf.’s Mot. at 19-20 (“Country Mutual did not act with reasonable justification in denying Mr. Anderson’s claim on the basis of the policy’s controlled substances exclusion.”); Def.’s Mot. at 1-2 (“Country Mutual had a reasonable basis to conclude that . . . Plaintiff knew [about the Operation].”). The former issue relates to Mr. Anderson’s basic breach of contract claim, while the latter relates to his bad faith claim. See, e.g., Scanlon v. Life Ins. Co. of N. Am., 670 F. Supp. 2d 1181, 1194 (W.D. Wash. 2009) (noting that breach of contract is erroneous denial of coverage while bad faith is, at least in some cases, unreasonable denial of coverage); Glamuzina v. Glens Falls Ins. Co., No. C07-5011 FDB, 2008 WL 2719564, at *3 (W.D. Wash. July 10, 2008) (“The fact that a jury could ultimately determine the insureds are entitled to coverage does not require that the insurer acted unreasonably in denying coverage.”). The court has thus far construed the cross-motions as seeking a determination on the bad faith issue only; however, to the extent the parties move for summary judgment on the breach of contract issue, the court denies that request for largely the same reasons as described above with reference to bad faith. In considering whether Mr. Anderson in fact knew of the Operation, the court notes Country Mutual’s contention that Mr. Anderson made further misrepresentations that it discovered after it denied coverage. (See, e.g., Def.’s Mot. at 4-7.) Those additional misrepresentations are insufficient, however, to show the absence of a genuine dispute of material fact regarding Mr. Anderson’s knowledge. ORDER- 13 1 coverage under Mr. Anderson’s policy where the insured “intentionally misrepresent[s] 2 any material fact . . . relating to this insurance.” (Policy at 32.) Mr. Anderson contends 3 that his misrepresentation regarding his whereabouts was not material. (See Pltf.’s Resp. 4 at 14-15.) 5 Key to resolving this issue is what constitutes a material misrepresentation. “A 6 misrepresentation is material ‘if a reasonable insurance company, in determining its 7 course of action, would attach importance to the fact misrepresented.’” See Ki Sin Kim v. 8 Allstate Ins. Co., 223 P.3d 1180, 1188-99 (Wash. Ct. App. 2009) (internal quotation 9 marks omitted) (quoting Onyon v. Trucks Ins. Exch., 859 F. Supp. 1338, 1341 (W.D. 10 Wash. 1994)) (“A misrepresentation is material if it involves a fact that is relevant to a 11 claim or the investigation of a claim.”); Allstate Ins. Co. v. Huston, 94 P.2d 358, 363 12 (Wash. Ct. App. 2004) (“[A] misrepresentation is material ‘when it concerns a subject 13 relevant and germane to the insurer’s investigation as it was then proceeding at the time 14 the inquiry was made.’” (internal quotation marks omitted) (quoting Tran v. State Farm 15 Fire & Cas. Co., 961 P.2d 358 (Wash. 1998) (construing materiality as a limitation on the 16 insured’s duty to cooperate))); Huston, 94 P.2d at 363 (“[A] misrepresentation is material 17 if, when made, it could have affected the insurer’s investigation . . . .” (emphasis in 18 original)). Prejudice to the insurer is not an element of materiality. See Ki Sin Kim, 223 19 P.3d at 1188. In addition, “materiality is generally a mixed question of law and fact” that 20 may be decided as a matter of law only “‘if reasonable minds could not differ on the 21 question.’” Onyon, 859 F. Supp. at 1341 (quoting Long v. Ins. Co. of N. Am., 670 F.2d 22 930, 934 (10th Cir. 1982)). ORDER- 14 1 The misrepresentation at issue here occurred when Mr. Anderson told Country 2 Mutual in his initial interview that he was golfing in Chelan, Washington, on the day of 3 the fire. (See Def.’s Mot. at 11; compare Anderson 1/10/13 Statement at 20 with 4 Anderson 2/8/13 Statement at 37-41.) As Mr. Anderson later admitted, he was actually 5 in Roslyn, Washington, with a prostitute named Teyana Dorsey. (See Anderson 2/8/13 6 Statement at 37-41.) Country Mutual does not dispute the accuracy of Mr. Anderson’s 7 second statement. Instead, Country Mutual argues that the initial misrepresentation was 8 material because it concerned a subject that was relevant to its investigation at that 9 time—namely, Mr. Anderson’s whereabouts at the time of the fire. (See Def.’s Mot. at 10 11; Def’s Reply at 2-3.) 11 Mr. Anderson counters that his whereabouts were not material to Country 12 Mutual’s investigation at that time. (See Pltf.’s Resp. at 14-15.) In support of this 13 contention, Mr. Anderson explains that at the time of the misrepresentation, all of the 14 information in Country Mutual’s possession indicated that the fire was accidental and had 15 resulted from an overheated electrical outlet. (See id. at 4, 7-9, 14 (citing Lefebvre Dep. 16 at 36:4-11; Lefebvre Email; Thielbar Dep. at 68:1-16 (noting Mr. Thielbar’s receipt on 17 1/10/13 of the SFD’s opinion that the fire was accidental)).) Thus, Mr. Anderson argues, 18 Country Mutual knew that arson had not caused the fire and could not have cared about 19 his whereabouts at the time of the fire. (See Pltf.’s Resp. at 14-15.) Country Mutual 20 responds that it was entitled to conduct its own investigation and had not yet determined 21 the cause of the fire. (See Def.’s Reply at 2-3.) Yet, as Mr. Anderson points out, this 22 argument suffers in light of the absence of any independent opinion or analysis on the ORDER- 15 1 cause of the fire in the cause and origin report that Country Mutual later issued. (See 2 Pltf.’s Resp. at 15; Weber Decl. ¶ 10, Ex. H (Dkt. # 64-8) (“Kreg Report”).) 3 Viewing the record in the light most favorable to Mr. Anderson, the court cannot 4 say that reasonable minds would invariably conclude that Mr. Anderson’s 5 misrepresentation of his whereabouts was material. See Onyon, 859 F. Supp. at 1341. 6 Instead, a rational jury could conclude that a reasonable insurance company in Country 7 Mutual’s position would not attach importance to the fact misrepresented. See Ki Sin 8 Kim, 223 P.3d at 1188-99. In particular, a jury could look at the information that Country 9 Mutual had before it at the time of the misrepresentation, including the SFD opinion on 10 the fire’s cause, and conclude that Mr. Anderson’s location was not a material fact. (See 11 Thielbar Dep. at 68:1-16.) Accordingly, the court denies summary judgment on the 12 materiality of Mr. Anderson’s misrepresentation of his whereabouts. 6 13 14 15 16 17 18 19 20 21 22 6 Allstate Insurance Co. v. Huston, 94 P.3d 358 (Wash. Ct. App. 2004) is instructive in demonstrating the extent to which materiality is not appropriate for summary judgment in this case. There, the Hustons’ house burned down, and investigators determined that arson was to blame. Huston, 94 P.3d at 359. Allstate denied coverage on the basis of policy exclusions for arson and material misrepresentations by the insured. Id. at 360. The misrepresentations at issue related to (1) a possible motive to burn the house down, (2) whether Mr. Huston had disabled the smoke alarm, (3) threats of arson by a third party, and (4) whether Ms. Huston could see Mr. Huston at the moment when he was last in the location where the fire started. See id. at 359-60. Throughout the litigation Allstate maintained that the Hustons were guilty of arson, see id., yet the Washington Court of Appeals held that a rational trier of fact could have looked at the evidence and “found or declined to find” that the Hustons’ misrepresentations were material when made, id. at 363-64. Here, the facts are even less supportive of materiality. There is no evidence that anyone suspected arson at any point during the investigation, nor is there any other explanation of why Mr. Anderson’s presence in Roslyn as opposed to Chelan was relevant to Country Mutual’s investigation. ORDER- 16 1 D. Equitable Estoppel 2 Mr. Anderson moves for summary judgment on the issue of whether Country 3 Mutual can rely on grounds for denying coverage that it did not state in its denial letter. 4 (See Pltf.’s Mot. at 11-18; Pltf.’s Reply at 2-9.) As a basis for barring Country Mutual 7 5 from doing so Mr. Anderson asserts the doctrine of equitable estoppel. (See Pltf.’s Mot. 6 at 11-14.) This doctrine prevents an insurer from raising grounds to support a denial of 7 coverage that it did not assert in its denial letter if (1) the insurer knew or should have 8 known of the additional grounds when it denied coverage, and (2) the insured 9 demonstrates that it suffered prejudice from the insurer’s failure to raise the new grounds 10 in its initial letter. See Hayden v. Mut. of Enumclaw Ins. Co., 1 P.3d 1167, 1171 (Wash. 11 2000) (citing Bosko v. Pitts & Still, Inc., 454 P.2d 229, 234 (Wash. 1969)). 12 The parties’ dispute on this issue centers on what constitutes new grounds for 13 denying coverage. They agree that equitable estoppel may preclude an insurer from 14 justifying its denial of coverage on the basis of a policy provision not asserted in the 15 denial letter. (Compare Pltf.’s Reply at 4 with Def.’s Resp. at 6-7.) They dispute, 16 however, whether this doctrine can preclude the insurer from introducing new evidence 17 7 Mr. Anderson refers to the doctrine on which he relies as “mend the hold”; however, it 18 appears to the court that Washington has not recognized that doctrine. See Integrated Health 19 20 21 22 Professionals, Inc. v. Pharmacists Mut. Ins. Co., 422 F. Supp. 2d 1223, 1228 n.2 (E.D. Wash. 2006). Rather it appears that Washington recognizes the related doctrine of equitable estoppel applied in the context of insurance disputes. See Hayden v. Mutual of Enumclaw Ins. Co., 1 P.3d 1167, 1171 (Wash. 2000). The doctrines are similar but distinct. Both doctrines bind a party to a prior position during subsequent litigation. See Robert H. Sitkoff, Comment, “Mend the Hold” and Erie: Why an Obscure Contracts Doctrine Should Control In Federal Diversity Cases, 65 U. Chi. L. Rev. 1059, 1062-63 (1998). Yet the majority version of mend the hold is an absolute bar on changes of position, whereas equitable estoppel requires the party asserting it to show prejudice from the change. Id. ORDER- 17 1 to support denial under the provision cited in the denial letter. (Compare Pltf.’s Reply at 2 4-8 with Def.’s Resp. at 6-9.) Mr. Anderson contends that the language of the opinions 3 applying equitable estoppel is broad enough to encompass new evidence (see Pltf.’s 4 Reply at 4-7), while Country Mutual argues that such an interpretation of the doctrine is 5 unprecedented and would impose an unfair sanction on insurers who continue to 6 diligently develop a defense after litigation has begun (see Def.’s Resp. at 7). 7 Precisely what evidence is in issue remains unclear from the parties’ filings. 8 Nevertheless, it is clear that the disputed evidence would support the applicability of the 9 controlled substances and misrepresentation exclusions. (See Denial Letter at 3-4; Def.’s 10 Resp. at 6-7.) Accordingly, the court will discuss whether additional evidence would 11 constitute a new ground for denial with reference to each of those exclusions. 12 1. Additional Misrepresentations 13 In its denial letter, Country Mutual stated that it was denying coverage in part 14 under the misrepresentation exclusion. (See Denial Letter at 3-4.) The letter explained 15 that “Mr. Anderson misrepresented his whereabouts at the time of the loss and the 16 identity of the person he was with at the time. . . . Based on Mr. Anderson’s 17 misrepresentations of material facts during the claims process there is no coverage under 18 the applicable policy.” (Id. at 4.) The letter mentions no other alleged 19 misrepresentations, yet Country Mutual has apparently identified additional 20 misrepresentations. (See, e.g., Pltf’s Mot. at 14; Def.’s Mot. at 5-7.) The parties now 21 dispute whether Country Mutual may avoid coverage by showing that Mr. Anderson 22 made other material misrepresentations. ORDER- 18 1 The court finds that each alleged material misrepresentation is an independent 2 ground for denying coverage. Notably, “[a]n insured need only make one material 3 misrepresentation to void all coverage under the policy.” Ki Sin Kim, 223 P.3d at 1188 4 (citing Onyon, 859 F. Supp. at 1341). Thus, each new material misrepresentation 5 constitutes a discrete and independently sufficient ground on which the insurer may deny 6 coverage. See id. Moreover, another court in this district has held that an insurer claims 7 a new basis for rejecting an insured’s claim when the insured asserts misrepresentations 8 beyond those on which it relied at the onset of litigation. See Karpenski v. Am. Gen. Life 9 Ins. Cos., 999 F. Supp. 2d 1235, 1245-46 (W.D. Wash. 2014). Country Mutual attempts 10 to distinguish Karpenski by pointing out that Karpenski dealt with rescission of an 11 insurance policy rather than denial of coverage based on a policy exclusion. (See Def.’s 12 Resp. at 7-8.) Yet Country Mutual fails to articulate why this distinction is pertinent. 13 (See id.) 14 Nevertheless, the court denies Mr. Anderson’s motion. Mr. Anderson has the 15 burden on summary judgment to show that there is no genuine dispute of material fact 16 that Country Mutual knew or should have known of a particular misrepresentation at the 17 time of the denial letter, and that Country Mutual’s failure to raise that misrepresentation 18 in the denial letter has prejudiced him. See Celotex, 477 U.S. at 323; Hayden, 1 P.3d at 19 1171. He has not met that burden. Instead, he simply references several subjects to 20 which additional misrepresentations might relate, and two pages later describes some 21 aspects of Country Mutual’s discovery timeline. (See Pltf.’s Mot. at 14, 16.) Without 22 further analysis or explanation, Mr. Anderson’s motion fails to show that Country Mutual ORDER- 19 1 knew or should have known about any particular misrepresentation when it sent the 2 denial letter. See Hayden, 1 P.3d at 1171; Karpenski, 999 F. Supp. 2d at 1245-47. 3 Mr. Anderson likewise fails to carry his burden of demonstrating prejudice. In his 4 motion, Mr. Anderson contends that he initiated litigation and has prepared his case in 5 reliance on Country Mutual’s denial letter. (See Pltf.’s Mot. at 15.) He argues that 6 Country Mutual’s failure to raise additional misrepresentations in its denial letter “has 7 significantly prejudiced [his] ability to develop an effective litigation strategy and prepare 8 for trial.” (Id. at 17.) Yet Mr. Anderson admits that he learned of Country Mutual’s 9 intention to rely on additional misrepresentations in discovery (see id. at 14-15), and he 10 does not explain why he has nevertheless had insufficient time to adapt his strategy and 11 preparation. Indeed, Mr. Anderson provides no evidence and almost no argument to 12 show prejudice. (See id. at 15-18.) As such, the court finds that genuine issues of fact 13 remain and that summary judgment is therefore inappropriate. See also Time Oil Co. v. 14 Cigna Prop. & Cas. Ins. Co., 743 F. Supp. 1400, 1419 (W.D. Wash. 1990) (citing Bosko, 15 454 P.2d 229 (Wash. 1969)) (noting that, as a general matter, estoppel claims are 16 inappropriate for summary judgment because they implicate factual issues such as 17 whether the insured suffered actual prejudice). 18 2. Additional Evidence that Mr. Anderson Knew of the Operation 19 In addition to the misrepresentation exclusion, Country Mutual rests its denial of 20 coverage on the controlled substances exclusion. (See Denial Letter at 3-4.) The denial 21 letter explains that “[t]he evidence shows that Mr. Anderson knew of the marihuana 22 grow.” (Id. at 4.) Earlier paragraphs also cite several facts that presumably are intended ORDER- 20 1 to support that conclusion—namely, that Mr. Anderson admitted to visiting the House 2 and lied about his whereabouts on the day of the fire. (See id. at 3-4.) Beyond those 3 facts, the letter refers only to “the evidence.” (See id.) Mr. Anderson now seeks to 4 preclude Country Mutual from introducing any other evidence of his knowledge, 5 provided that Country Mutual knew or should have known of the evidence when it wrote 6 the denial letter and that he is prejudiced by Country Mutual’s failure to raise the 7 evidence in the denial letter. 8 8 The court finds that additional evidence of Mr. Anderson’s knowledge does not 9 amount to a new ground for denial in the context of equitable estoppel. Unlike an 10 additional material misrepresentation, additional evidence of knowledge is not a discrete 11 and sufficient basis for denying coverage. Cf. Ki Sin Kim, 223 P.3d at 1188 (noting that a 12 single material misrepresentation is enough to preclude coverage). Instead, such 13 evidence is merely support for a previously articulated basis. Further, the court’s 14 research has not uncovered a single case in which a court has held that an insurer is 15 equitably estopped from presenting evidence to support its previously articulated position 16 simply because that evidence was not mentioned in a denial letter. 17 The court agrees with Country Mutual that Mr. Anderson’s new evidence theory 18 of equitable estoppel would constitute an unprecedented extension of the law and would 19 8 Mr. Anderson also expresses concern that Country Mutual might rely on the policy exclusion for an insured who actually engages in the manufacture of controlled substances. (See Pltf.’s Mot. at 18-19 n.6.) In its response memorandum, however, Country Mutual repeatedly 21 refers to its bases for denial solely as material misrepresentations and Mr. Anderson’s knowledge of the Operation (see Def.’s Resp. at 5-7), and makes no mention of its intention to rely on the 22 actual manufacture exclusion. The court will hold Country Mutual to that position at trial. 20 ORDER- 21 1 impose harsh and unfair limitations on insurers. (See Def.’s Resp. at 7.) In effect, Mr. 2 Anderson’s theory would require insurers to exhaustively list in their denial letters every 3 shred of evidence supporting their basis for denial lest they forfeit that evidence in 4 subsequent litigation. As such, the court denies Mr. Anderson’s motion for summary 5 judgment insofar as it seeks to preclude Country Mutual from introducing evidence of 6 Mr. Anderson’s knowledge that does not appear in the denial letter. 9 7 E. Immunity under RCW 48.50.075 8 Country Mutual also moves for summary judgment on the ground that under RCW 9 48.50.075 it enjoys immunity from Mr. Anderson’s extra-contractual claims. (See Def.’s 10 Mot. at 14-15.) RCW 48.50.075 provides immunity from extra-contractual claims, such 11 as bad faith, to an insurer who [1] “[i]n denying a claim . . . relies [2] upon a written 12 opinion [3] from an authorized agency specifically enumerated in RCW 48.50.020(1)(a) 13 through (g) [4] that criminal activity that is related to that claim is being investigated . . . 14 and [5] that the claimant is a target of the investigation . . . .” RCW 48.50.075. The 15 immunity exists, however, “only so long as [6] the incident for which the claimant may 16 be responsible is under active investigation . . . .” Id. Country Mutual argues that the 17 9 In addition, Mr. Anderson requests that the court bar Country Mutual “from relying 18 upon the files and testimony . . . identified in its answer to Interrogatory No. 8 because these 19 20 21 22 documents are not responsive to the interrogatory.” (Pltf.’s Mot. at 15 n.4.) Interrogatory No. 8 requested a specific, detailed description of the facts on which Country Mutual bases its denial of coverage but which it did not include in the denial letter, yet Country Mutual responded with a citation to almost 5,000 pages of documents. (See id.) Mr. Anderson now takes issue with the generality of Country Mutual’s response. (See id.) The court, however, rejects Mr. Anderson’s request as untimely. The deadline for discovery motions was October 17, 2014. (See Sched. Ord. (Dkt. # 10).) If Mr. Anderson objected to the sufficiency of Country Mutual’s interrogatory responses, he should have raised the issue by that date, not in a footnote to a motion for partial summary judgment filed on December 16, 2014. (See Pltf.’s Mot. (Dkt. # 55).) ORDER- 22 1 immunity applies here because in conducting its investigation and deciding to deny Mr. 2 Anderson’s claim it relied on reports from the SPD. (See Def.’s Mot. at 15.) Country 3 Mutual points out that the Operation was illegal and contends that Mr. Anderson was the 4 “person of interest” in the SPD’s investigation into the Operation. (Id.) 5 Country Mutual’s argument for RCW 48.50.075 immunity fails for multiple 6 reasons. First, although the SPD is an authorized agency under the statute, see RCW 7 48.50.020(1)(c), Country Mutual admits that no written SPD opinion identifies Mr. 8 Anderson as the target of the SPD investigation into the Operation (see Def.’s Mot. at 9 15). Detective Ortiz ultimately stated that Mr. Anderson was of interest to the SPD’s 10 investigation; however, that statement came during a deposition that Country Mutual 11 conducted over one year after it denied coverage. (Compare Ortiz Dep. at 1, 31:13-22, 12 33:17-34:10 with Denial Letter at 1.) Thus, even if Detective Ortiz’s deposition was in 13 some sense a “written opinion,” a proposition that the court does not endorse, Country 14 Mutual has not demonstrated that it relied on that opinion “[i]n denying [Mr. Anderson’s] 15 claim.” RCW 48.50.075. Finally, Country Mutual offers no evidence or even argument 16 to suggest that the SPD’s investigation of the Operation was ongoing at the time Country 17 Mutual denied coverage. 18 Country Mutual’s assertion of RCW 48.50.075 immunity relies on a mix-and- 19 match approach to the immunity. According to this approach, the immunity applies 20 where its discrete components exist even if they do not bear the required connection to 21 one another. (See Def.’s Mot. at 14-15.) Thus, if a police officer has an opinion that the 22 insured was of interest to a criminal investigation, that opinion need not be in written ORDER- 23 1 form, and the insurer need not have actually relied on that opinion in denying coverage. 2 (See id.) Country Mutual offers no support for this interpretation of RCW 48.50.075, and 3 the court has found none. The plain language of the statute requires that in denying 4 coverage the insurer rely upon a written opinion identifying the insured as the target of a 5 criminal investigation. See RCW 48.50.075. Because Country Mutual fails to make such 6 a showing, the court denies its motion for summary judgment with respect to immunity 7 under RCW 48.50.075. 8 F. Evidence of Damages from Bad Faith 9 In addition, Country Mutual asks the court to grant it summary judgment on Mr. 10 Anderson’s bad faith claim because, according to Country Mutual, Mr. Anderson has no 11 allegations or evidence of damages, an essential element of a bad faith claim. (See Def.’s 12 Mot. at 16-17.) Country Mutual is right on the law but wrong on the facts. Damages 13 attributable to bad faith are indeed an essential element of a bad faith claim. Coventry 14 Assocs. v. Am. States Ins. Co., 961 P.2d 933, 935-36 (Wash. 1998). Yet Mr. Anderson 15 has made allegations and produced evidence sufficient to create a genuine issue of 16 material fact as to whether he suffered damages from Country Mutual’s alleged bad faith. 17 In his complaint, Mr. Anderson alleges wrongful denial of coverage amounting to 18 bad faith and prays for compensation for “all consequential losses he has suffered or may 19 suffer as a result of Country Mutual’s breaches.” (See Compl. at 2-3.) Furthermore, Mr. 20 Anderson provides a declaration in which he suggests that he would have retained the 21 House had Country Mutual not denied coverage. (See Anderson Decl. ¶ 3.) He also 22 offers testimony from a proposed expert who asserts that Mr. Anderson has lost money ORDER- 24 1 by failing to retain the House and use it as a rental property. (See Neupert Dep. at 5, 7.) 2 In other words, Mr. Anderson has produced evidence showing that Country Mutual’s 3 alleged bad faith denial of coverage has cost him money by preventing him from 4 retaining and renting out the House. (See Pltf.’s Resp. at 20-21.) The court therefore 5 finds that a genuine issue of material fact exists regarding damages attributable to bad 6 faith, and denies summary judgment on that question. 7 G. Fulfillment of Contractual Obligations 8 Finally, Country Mutual contends that there is no genuine issue of material fact 9 that it has fulfilled its obligations under the contract and, therefore, that Mr. Anderson has 10 no damages for breach of contract. (See Def.’s Mot. at 14.) This argument hinges on a 11 provision in Mr. Anderson’s policy that conditions payment of replacement costs on 12 actual repair or replacement by the insured. (See id.; Policy at 30.) Absent actual repair 13 or replacement, the insured is entitled only to the ACV of the property. (See Policy at 14 30.) Because Country Mutual paid the ACV to Mr. Anderson’s mortgagee, Country 15 Mutual argues that it has discharged its obligations under the policy. (See Def.’s Mot. at 16 14.) 17 Mr. Anderson disputes Country Mutual’s reasoning on several grounds (see Pltf.’s 18 Resp. at 18-20), but the court finds it necessary to focus on only one to resolve this aspect 19 of Country Mutual’s motion. Specifically, Mr. Anderson argues that Country Mutual 20 cannot rely on his failure to repair or replace when its own wrongful denial of coverage 21 prevented repair or replacement. (See id. at 19-20.) Mr. Anderson claims that he would 22 have kept the House and repaired or replaced it if Country Mutual had not denied ORDER- 25 1 coverage. (See id. at 19; Anderson Decl. ¶ 3; Neupert Dep. at 5, 7.) Following Country 2 Mutual’s denial, however, Mr. Anderson lacked the funds to repair the House or even 3 stay current on his mortgage. (See Pltf.’s Mot. at 19; Anderson Decl. ¶ 3.) He ultimately 4 sold the House to avoid foreclosure. (See Pltf.’s Mot. at 19; Anderson Decl. ¶ 3.) 5 Mr. Anderson relies on three out-of-state cases to support the notion that Country 6 Mutual cannot rely on his failure to perform the repair condition where its wrongful 7 denial caused that failure. (See Pltf.’s Mot. at 19-20 (citing Zaitchick v. Am. Motorists 8 Ins. Co., 554 F. Supp. 209, 216-217 (S.D.N.Y. 1982); Rockford Mut. Ins. Co. v. Pirtle, 9 911 N.E.2d 60, 64-67 (Ind. Ct. App. 2009); McCahill v. Commercial Union Ins. Co., 446 10 N.W.2d 579, 584-85 (Mich. Ct. App. 1989)).) Country Mutual counters that such cases 11 are “not controlling and . . . thus irrelevant.” (Def.’s Reply at 6.) 12 Although the court agrees that the authority to which Mr. Anderson cites is not 13 controlling, the court nevertheless finds it to be persuasive. All three opinions are 14 grounded in the unremarkable proposition that an insurer cannot withhold replacement 15 value because the insured has not actually repaired or replaced where the insured was 16 unable to repair or replace due to the insurer’s wrongful conduct. See Zaitchick, 554 F. 17 Supp. at 216-217; Pirtle, 911 N.E.2d at 64-67; McCahil, 446 N.W.2d at 584-85. 18 Furthermore, Washington contract law recognizes the equitable principle underlying 19 these out-of-state cases. Under Washington law, when a party prevents the occurrence or 20 fulfillment of a condition precedent, the condition is excused. See Highlands Plaza, Inc. 21 v. Viking Invest. Corp., 435 P.2d 669, 676-77 (Wash. 1967); Tacoma Northpark, LLC v. 22 NW, LLC, 96 P.3d 454, 459 n.4 (Wash. Ct. App. 2004) (“Failure to satisfy a condition ORDER- 26 1 precedent does not excuse the promisor’s performance if the failure was the result of 2 misconduct or fault of the promisor.”). 3 Applying that principle to this case, the court concludes that genuine issues of 4 material fact remain regarding whether Country Mutual has fulfilled its obligations under 5 the contract. Mr. Anderson contends that he would have repaired or replaced the House 6 if Country Mutual had not wrongfully denied coverage. (See Pltf.’s Resp. at 19; 7 Anderson Decl. ¶ 3; Neupert Dep. at 5, 7.) Although Country Mutual maintains that it 8 properly denied coverage (see Def.’s Mot. at 14), the court has denied Country Mutual’s 9 motion for summary judgment on that issue (see supra Parts III.B-C, E), and thus a jury 10 could decide that denial was improper. Country Mutual also contends that Mr. Anderson 11 could not have repaired in any case because his mortgagee would not have allowed it. 12 (See Def.’s Reply at 5.) Yet Country Mutual fails to explain that contention or provide 13 evidence to demonstrate its merit. (See id.) In light of Mr. Anderson’s testimony and the 14 testimony of his expert witness indicating that he would have repaired or replaced, the 15 court finds that a genuine issue of material fact exists on this issue. 10 Consequently, the 16 17 10 Country Mutual also faults Mr. Anderson for failing to establish that he ever collected 18 rental payments and thus was ever entitled to rent replacement (see Def.’s Reply at 5), which Mr. 19 20 21 22 Anderson claims he would have used to maintain ownership of the House (see Pltf.’s Resp. at 19; Anderson Decl. ¶ 3). This argument fails for the same reason as Country Mutual’s other arguments on this topic. Namely, Country Mutual has not shown the absence of a genuine issue of material fact. Mr. Anderson claims that he had a paying tenant and has provided a lease signed by his alleged tenant. (See Anderson 1/10/13 Statement at 6; Lease Email; Lease; Anderson 2/8/13 Statement at 29-30.) Country Mutual has pointed to contrary evidence and weaknesses in Mr. Anderson’s position (see, e.g., Def.’s Mot. at 5-7); however, it has not thereby demonstrated its entitlement to summary judgment. Viewing the evidence in the light most favorable to Mr. Anderson, the court finds that genuine issues of material fact remain regarding ORDER- 27 1 court denies summary judgment on the issue of whether Country Mutual has fulfilled its 2 obligations under the contract. 3 4 IV. CONCLUSION For the foregoing reasons, the court DENIES the cross-motions for summary 5 judgment (Dkt. ## 55, 58). 6 Dated this 18th day of February, 2015. 7 A 8 9 JAMES L. ROBART United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 whether Mr. Anderson had a paying tenant. Country Mutual may present its arguments and 22 evidence to the jury. ORDER- 28
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