Rush Residential Inc v. Philadelphia Insurance Companies, No. 3:2021cv05350 - Document 38 (W.D. Wash. 2023)
Court Description: ORDER granting Defendant's 30 Motion for Summary Judgment. The Court DISMISSES RRI's claims against Philadelphia with prejudice. (Dkt. # 30 ). The parties are ORDERED to show cause by no later than 10/27/2023 why the court should not also grant summary judgment in Philadelphia's favor on its declaratory judgment claim. Signed by Judge James L. Robart. (SS)
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Rush Residential Inc v. Philadelphia Insurance Companies Doc. 38 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 RUSH RESIDENTIAL, INC., Plaintiff / Counter-Defendant, 11 12 13 14 CASE NO. C21-5350JLR-DWC ORDER v. PHILADELPHIA INSURANCE COMPANIES, Defendant / Counter-Claimant. 15 16 I. INTRODUCTION 17 Before the court is Defendant / Counter-Claimant Philadelphia Indemnity 18 Insurance Company’s (“Philadelphia” 1) motion for summary judgment. (Mot. (Dkt. 19 # 30).) Plaintiff / Counter-Defendant Rush Residential, Inc. (“RRI”) has not responded to 20 21 1 22 Philadelphia was incorrectly named in this action as “Philadelphia Insurance Companies.” (See Am. Ans. (Dkt. # 26) at 1.) ORDER - 1 Dockets.Justia.com 1 Philadelphia’s motion. (See Dkt.) The court has considered the motion, the relevant 2 portions of the record, and the governing law. Being fully advised, 2 the court GRANTS 3 Philadelphia’s motion for summary judgment. 4 II. 5 BACKGROUND This insurance dispute arises out of Philadelphia’s denial of RRI’s claim for 6 defense and indemnity related to a state-court employment lawsuit brought by an RRI 7 employee. (See generally SAC (Dkt. # 25).) Below, the court discusses the background 8 relevant to Philadelphia’s motion. 9 A 10 Relevant Policy Language Between 2017 and 2019, Philadelphia issued three separate commercial liability 11 insurance policies to RRI: (1) Policy No. PHSD1219592, effective for the policy period 12 between February 7, 2017, and December 31, 2017 (Hickman Decl. (Dkt. # 31) ¶ 2, Ex. 1 13 (“2017 Policy”) at 12 3); (2) Policy No. PHSD1296291, effective for the policy period 14 between December 31, 2017, and December 31, 2018 (id. ¶ 3, Ex. 2 (“2018 Policy”) at 15 12); and (3) Policy No. PHSD1409464, effective for the policy period between December 16 31, 2018, and December 1, 2019 (id. ¶ 4, Ex. 3 (“2019 Policy”) at 33) (together, the 17 “Policies”). Each Policy contains a coverage part for Private Company Protection Plus, 18 which includes Employment Practices Liability Insurance (“EPLI”) as Part 2. (See, e.g., 19 20 21 2 Philadelphia has requested oral argument. (See Mot. at 1.) The court finds, however, that oral argument would not be helpful to its resolution of the motion, see Local Rules W.D. Wash. LCR 7(b)(4). 3 22 The court cites the page number in the CM/ECF header when referring to the exhibits to the Hickman Declaration. ORDER - 2 1 2019 Policy at 50, 52-54. 4) The Policies’ EPLI insuring agreement provided coverage for 2 claims made against RRI and reported to Philadelphia during the Policies’ respective 3 policy periods: 4 PART 2 EMPLOYMENT PRACTICES LIABILITY INSURANCE 5 6 (To be read in conjunction with the Common Policy Definitions, Exclusions, and Conditions Sections, Part 4, 5, 6 below) 7 I. 8 INSURING AGREEMENT The Underwriter shall pay on behalf of the Insured, Loss from Claims made against the Insured during the Policy Period (or, if applicable, the Extended Reporting Period), and reported to the Underwriter pursuant to the terms of this Policy, for an Employment Practice Act. 9 10 11 (2017 Policy at 27 (emphasis in original); 2018 Policy at 27 (same); 2019 Policy at 52 12 (same).) The Polices define a “claim” as follows: 13 PART 4 COMMON POLICY DEFINITIONS 14 *** 15 B. Claim means: 16 1. a written demand for monetary or non-monetary relief; 17 *** against an Insured for a Wrongful Act, including any appeal therefrom[.] 18 19 *** 20 21 22 4 The three Policy exhibits contain the same forms and virtually identical language, except that the 2019 Policy exhibit contains some additional forms that are not included in the 2017 and 2018 Policy exhibits. (See Mot. at 3 n.1.) ORDER - 3 1 A claim shall be considered made when an Insured first receives notice of the Claim. 2 (2017 Policy at 31 (emphasis in original); 2018 Policy at 31 (same); 2019 Policy at 56 3 (same).) The following language governs requirements for reporting claims: 4 5 PART 6 COMMON POLICY CONDITIONS 6 *** 7 IV. NOTICE/CLAIM REPORTING PROVISIONS 8 *** 9 A. In the event that a Claim is made against the Insured, the Insured shall, as a condition precedent to the obligations of the Underwriter under this Policy, give written notice to the Underwriter as soon as practicable after any of the directors, officers, governors, trustees, management committee members, or members of the Board of Members first become aware of such Claim, but, not later than 60 days after the expiration date of this Policy, Extension Period, or Run-Off Policy, if applicable. B. If during this Policy Period an Insured first becomes aware of any circumstances which may subsequently give rise to a Claim being made against any Insured for a specific alleged Wrongful Act, and as soon as practicable thereafter, but before the expiration or cancellation of this Policy, gives written notice to the Underwriter of the circumstances and the reasons for anticipating such a Claim, with full particulars as to the Wrongful Act, dates and persons involved, then any Claim which is subsequently made against the Insured arising out of such Wrongful Act will be considered made during this Policy Period. 10 11 12 13 14 15 16 17 18 19 20 (2017 Policy at 39 (emphasis in original); 2018 Policy at 39 (same); 2019 Policy at 64 21 (same).) Part 5 of the Policies, regarding exclusions, was amended by an endorsement as 22 ORDER - 4 1 follows: 2 PART 5 COMMON POLICY EXCLUSIONS 3 4 The Underwriter shall not be liable to make any payment for Loss in connection with any Claim made against the Insured: 5 *** F. 6 arising out of, based upon or attributable to: 7 (2017 Policy at 35 (emphasis in original); 2018 Policy at 35 (same); 2019 Policy at 60 8 (same).) 9 1. any litigation or demand against an Insured pending on or before the respective Prior and Pending Date set forth in Item 5 of the Declarations Page, or the same or essentially the same facts as alleged in such prior litigation; or 2. any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other similar policy in which this Policy is a renewal or replacement. 10 11 12 13 (2017 Policy at 45 (emphasis in original); 2018 Policy at 45 (same); 2019 Policy at 70 14 (same).) 15 B. Factual Background 5 16 On November 9, 2017, attorney J. Roderik Stephens sent a letter to RRI regarding 17 employment-related claims that his client, Beth Cruz, intended to file against RRI. 18 (Hickman Decl. ¶ 5, Ex. 4 (“Stephens Letter”).) Mr. Stephens attached to his letter an 19 unfiled complaint in which Ms. Cruz alleged claims against RRI and its officers under 20 21 22 5 Because RRI has not responded to Philadelphia’s motion (see Dkt.), the court considers Philadelphia’s assertions of fact undisputed for the purposes of this motion, Fed. R. Civ. P. 56(e)(2). ORDER - 5 1 Washington state law for failure to pay wages, 6 wrongful termination in violation of 2 public policy, hostile work environment sexual harassment, and retaliation. (Id. at 2-16.) 3 RRI alleges that it received the letter and unfiled complaint on November 17, 2017. 4 (SAC ¶ 5.2.) 5 On May 29, 2018, Ms. Cruz filed in Pierce County Superior Court a revised 6 version of her complaint in which she alleged claims for failure to pay wages, wrongful 7 termination in violation of public policy, hostile work environment sexual harassment, 8 and retaliation arising from conduct beginning in approximately October 2016 and 9 ending with her constructive discharge in October 2017. (SAC ¶ 5.3; Hickman Decl. ¶ 6, 10 Ex. 5 (“Cruz Complaint”).) She sought, as remedies, emotional distress damages, back 11 pay, front pay, health care expenses, attorney’s fees, and pre- and post-judgment interest. 12 (See Cruz Complaint at 13-14.) 13 RRI tendered Ms. Cruz’s employment-related claims to Philadelphia by email on 14 approximately July 27, 2019. (SAC ¶ 5.4; Hickman Decl. ¶ 7, Ex. 6 (“Notice of Claim”) 15 (attaching a copy of the November 9, 2017 demand letter and unfiled complaint).) RRI 16 alleges that it also issued a formal tender letter to Philadelphia on August 8, 2019. (See 17 SAC ¶ 5.5. 7) On August 14, 2019, Philadelphia denied RRI’s insurance claim because 18 RRI had tendered it after the applicable policy had expired. (SAC ¶ 5.7; Hickman Decl. ¶ 19 20 21 6 RRI does not seek coverage in this lawsuit for the portion of Ms. Cruz’s claim relating to unpaid wages. (SAC ¶ 5.2.) 7 22 Although RRI mentions the formal tender letter in its second amended complaint, that letter is not in the record before the court. ORDER - 6 1 10, Ex. 9 (August 14, 2019 email from Amanda Bozza).) RRI alleges that it made 2 subsequent demands for coverage, to no avail. (SAC ¶ 6.1.) 3 According to RRI, Ms. Cruz’s lawsuit was resolved in mediation on November 21, 4 2019, and the parties entered into a written settlement agreement on November 28, 2019. 5 (Id. ¶ 5.9.) RRI alleges that it sustained damages resulting from Philadelphia’s denial of 6 coverage “in an amount to be established at trial, but, in no event, less than $300,000.00.” 7 (Id. ¶ 5.10.) 8 On November 23, 2020, RRI served written notice to Philadelphia and the 9 Washington Insurance Commissioner of its intent to bring an action against Philadelphia 10 pursuant to the Washington Insurance Fair Conduct Act (“IFCA”), ch. 48.30 RCW. 11 (SAC ¶ 5.11; see Hickman Decl. ¶ 11, Ex. 10 (IFCA cover sheet).) 12 C. 13 Procedural Background RRI filed its original complaint in this matter in Pierce County Superior Court on 14 May 5, 2021. (Compl. (Dkt. # 1-1).) On May 11, 2021, Philadelphia removed the case to 15 this court on the basis of diversity subject matter jurisdiction. (Not. of Removal (Dkt. 16 # 1).) RRI amended its complaint on May 17, 2021, and asserted declaratory judgment 17 and breach of contract claims. (Am. Compl. (Dkt. # 7) ¶¶ 7.1-8.3.) On May 28, 2021, 18 Philadelphia answered RRI’s amended complaint and asserted a counterclaim for a 19 declaration that it does not have a duty to defend or indemnify RRI with respect to Ms. 20 Cruz’s underlying claims. (Ans. (Dkt. # 11) at 7-8.) RRI did not answer Philadelphia’s 21 counterclaim. (See generally Dkt.) 22 ORDER - 7 1 On April 20, 2022, the parties stipulated to allow RRI to further amend its 2 complaint. (Stip. (Dkt. # 23); 4/22/22 Order (Dkt. # 24).) In its second amended 3 complaint, RRI added new claims for violations of the duty of good faith, the IFCA, and 4 the Washington Consumer Protection Act (“WCPA”), ch. 19.86 RCW. (SAC 5 ¶¶ 9.1-11.5.) In its answer, Philadelphia amended its declaratory judgment counterclaim 6 to seek declarations that it did not breach its contract with RRI and did not violate the 7 duty of good faith, the IFCA, and the WCPA. (Am. Ans. (Dkt. # 26) at 9-10.) RRI again 8 did not answer Philadelphia’s amended counterclaim. (See generally Dkt.) 9 On April 4, 2023, the parties filed a stipulated motion to continue the trial date and 10 pretrial deadlines to allow time for them to engage in efforts to resolve the matter and 11 conduct discovery. (4/4/23 Mot. (Dkt. # 27).) The court granted the motion; continued 12 the parties’ bench trial from October 2, 2023, to March 4, 2024; and reset all unexpired 13 pretrial deadlines in accordance with the new trial date. (4/5/23 Order (Dkt. # 28); see 14 also 4/6/23 Sched. Order (Dkt. # 29).) 15 Philadelphia filed this motion for summary judgment on August 10, 2023. (Mot.) 16 RRI did not file a timely response. (See generally Dkt.) On September 1, 2023—the 17 original noting date for the motion—RRI filed an unopposed motion to continue the 18 briefing schedule by approximately four weeks because its attorney was moving between 19 law firms and did not see that the summary judgment motion had been filed. (1st Mot. to 20 Continue (Dkt. # 34).) The court granted that motion. (9/5/23 Order (Dkt. # 35).) The 21 parties subsequently agreed to—and the court approved—a second extension of the 22 briefing schedule that set the deadline for RRI’s response on September 27, 2023, and ORDER - 8 1 Philadelphia’s reply on October 6, 2023. (9/20/23 Order (Dkt. # 37).) Neither party, 2 however, filed any additional briefing regarding Philadelphia’s motion for summary 3 judgment. (See Dkt.) 4 III. 5 ANALYSIS Philadelphia asserts that it has no duty to defend or indemnify RRI because RRI 6 failed to give Philadelphia timely notice of Ms. Cruz’s claims. The court agrees. Below, 7 the court sets forth the relevant legal standards and then analyzes Philadelphia’s motion 8 for summary judgment. 9 A. 10 Legal Standards Three sets of legal standards apply here: the summary judgment standard, the 11 rules for interpreting insurance contracts, and the rules for determining when an insurer 12 has a duty to defend or indemnify the insured. The court discusses each in turn. 13 1. 14 Under Federal Rule of Civil Procedure 56, either “party may move for summary 15 judgment, identifying each claim or defense—or the part of each claim or defense—on 16 which summary judgment is sought.” Fed. R. Civ. P. 56(a). Summary judgment is 17 appropriate if the evidence, when viewed in the light most favorable to the non-moving 18 party, demonstrates “that there is no genuine dispute as to any material fact and the 19 movant is entitled to judgment as a matter of law.” Id.; see Celotex Corp. v. Catrett, 477 20 U.S. 317, 322 (1986). A dispute is “genuine” if “the evidence is such that a reasonable 21 jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 22 477 U.S. 242, 248 (1986). A fact is “material” if it “might affect the outcome of the suit ORDER - 9 Summary Judgment 1 2 under the governing law.” Id. The moving party bears the initial burden of showing that there is no genuine 3 dispute of material fact and that it is entitled to prevail as a matter of law. Celotex, 477 4 U.S. at 323. If the moving party meets this burden, the burden then shifts to the 5 nonmoving party to identify specific facts from which a factfinder could reasonably find 6 in the nonmoving party’s favor. Id. at 324; Anderson, 477 U.S. at 250. Where, as here, 7 the nonmoving party “fails to properly support an assertion of fact or fails to properly 8 address another party’s assertion of fact . . . the court may . . . consider the fact 9 undisputed for purposes of the motion.” Fed. R. Civ. P. 56(e)(2); see Heinemann v. 10 Satterberg, 731 F.3d 914, 917 (9th Cir. 2013) (“If there is a failure to respond, [Rule 56] 11 ‘authorizes the court to consider a fact as undisputed.’” (citing Fed. R. Civ. P. 56 12 advisory committee’s notes to 2010 amendment)). Nevertheless, the court must still 13 “assess whether ‘the motion and supporting materials’ entitle the movant to summary 14 judgment.” Heinemann, 731 F.3d at 917 (quoting Fed. R. Civ. P. 56(e)(3)); see Local 15 Rules W.D. Wash. LCR 7(b)(2) (“Except for motions for summary judgment, if a party 16 fails to file papers in opposition to a motion, such failure may be considered by the court 17 as an admission that the motion has merit.”). 18 2. 19 The court construes an insurance policy as a contract, and the interpretation of that Interpretation of Insurance Contracts 20 contract is a question of law. State Farm Gen. Ins. Co. v. Emerson, 687 P.2d 1139, 21 1141-42 (Wash. 1984). Policies must be construed as a whole and the terms within 22 “given a ‘fair, reasonable, and sensible construction as would be given to the contract by ORDER - 10 1 the average person purchasing insurance.’” Weyerhaeuser Co. v. Commercial Union Ins. 2 Co., 15 P.3d 115, 122 (Wash. 2000) (quoting Am. Nat’l Fire Ins. Co. v. BL Trucking 3 Constr. Co., 951 P.2d 250, 256 (Wash. 1998)). The court is bound by the definitions 4 provided in the policy. Austl. Unlimited, Inc. v. Hartford Cas. Ins. Co., 198 P.3d 514, 5 517 (Wash. Ct. App. 2008) (citing Overton v. Consol. Ins. Co., 38 P.3d 322, 326 (Wash. 6 2002)). Undefined terms in a policy are interpreted by courts based on their ordinary 7 meaning or common law definitions. Boeing Co. v. Aetna Cas. & Sur. Co., 784 P.2d 507, 8 511 (Wash. 1990). Where the language is clear, the court must enforce the policy as 9 written and may not create ambiguity where none exists. Quadrant Corp. v. Am. States 10 Ins. Co., 110 P.3d 733, 737 (Wash. 2005). A clause is ambiguous only if it is susceptible 11 to two or more reasonable interpretations, and ambiguities are resolved in favor of the 12 insured. Id. 13 The insured has the initial burden to show the insurance policy covers its loss. 14 Overton, 38 P.3d at 329 (citing McDonald v. State Farm Fire & Cas. Co., 837 P.2d 1000, 15 1003-04 (Wash. 1992)). If the insured meets this burden, the insurer must prove that 16 specific policy language excludes the insured’s loss. Id. Exclusionary clauses, however, 17 “are to be most strictly construed against the insurer.” Am. Best Food, Inc. v. Alea 18 London, Ltd., 229 P.3d 693, 697 (Wash. 2010) (quoting Phil Schroeder, Inc. v. Royal 19 Globe Ins. Co., 659 P.2d 509, 511 (Wash. 1983)). 20 3. 21 An insurer has a duty to defend “when a complaint against the insured, construed 22 Duties to Defend and Indemnify liberally, alleges facts which could, if proven, impose liability upon the insured within the ORDER - 11 1 policy’s coverage.” Woo v. Fireman’s Fund Ins. Co., 164 P.3d 454, 459 (Wash. 2007) 2 (quoting Truck Ins. Exch. v. VanPort Homes, Inc., 58 P.3d 276, 281-82 (Wash. 2002)). 3 An insurer’s duty to defend is based on “the potential for liability,” and is triggered if the 4 policy “conceivably covers the allegations in the complaint.” Id. (emphasis in original) 5 (internal citations omitted). In Washington, an insurer’s “duty to defend generally is 6 determined from the ‘eight corners’ of the insurance contract and the underlying 7 complaint.” Expedia, Inc v. Steadfast Ins. Co., 329 P.3d 59, 64 (Wash. 2014). When an 8 insurer has no duty to defend a claim against an insured, the insurer’s failure to defend 9 does not constitute bad faith. United Servs. Auto. Ass’n v. Speed, 317 P.3d 532, 542 10 (Wash. Ct. App. 2014). Thus, “[w]hen an insurer correctly denies a duty to defend, there 11 can be no bad faith claim based on that denial.” Id. (citing Wellman & Zuck, Inc. v. 12 Hartford Fire Ins. Co., 285 P.3d 892, 899 (Wash. Ct. App. 2012)). 13 The insurer’s duty to indemnify the insured is narrower than its duty to defend: it 14 “hinges on the insured’s actual liability to the claimant and actual coverage under the 15 policy.” Woo, 164 P.3d at 459 (citing Hayden v. Mut. of Enumclaw Ins. Co., 1 P.3d 16 1167, 1171 (Wash. 2000)) (emphasis in original). Thus, if there is no duty to defend, 17 then there is no duty to indemnify. Id. 18 B. 19 Philadelphia’s Motion for Summary Judgment Philadelphia argues that coverage for Ms. Cruz’s claim against RRI is barred 20 because RRI failed to give Philadelphia notice of the claim during the relevant policy 21 period. The court agrees. 22 ORDER - 12 1 The Policies define a “claim” to mean “a written demand for monetary or 2 non-monetary relief . . . against an Insured for a Wrongful Act” and provide that a 3 “claim shall be considered made when an Insured first receives notice of the Claim.” 4 (2017 Policy at 31; 2018 Policy at 31; 2019 Policy at 56.) The Policies require the 5 insured to “give written notice to the Underwriter as soon as practicable after [certain 6 officers of the insured] first become aware of the claim,” but no later than 60 days after 7 the Policy’s expiration date. (2017 Policy at 39; 2018 Policy at 39; 2019 Policy at 64.) 8 9 In this case, Mr. Stephens sent RRI a demand letter and draft complaint on behalf of Ms. Cruz in November 2017. (Stephens Letter (dated November 9, 2017); see SAC 10 ¶ 5.2 (alleging that Ms. Cruz “made claims against RRI” on November 17, 2017).) Thus, 11 RRI received notice of Ms. Cruz’s claim while the 2017 Policy was in effect. (See 2017 12 Policy at 12 (stating that policy was in effect from February 2, 2017, through December 13 31, 2017).) As a result, RRI was required to provide written notice of the claim “not later 14 than 60 days after the expiration date of” the 2017 Policy. (Id. at 39.) RRI, however, did 15 not report Ms. Cruz’s claim to Philadelphia until approximately July 27, 2019, long after 16 the reporting deadline. (See Notice of Claim at 1; see also SAC ¶ 5.4 (alleging that RRI 17 provided notice to Philadelphia of “Cruz’s complaint and the litigation” on July 27, 18 2019).) Therefore, RRI’s notice of Ms. Cruz’s claim was untimely and Philadelphia had 19 no duty to defend or indemnify RRI against that claim. 20 Philadelphia makes several arguments in anticipation of what RRI might have 21 argued had it responded to the motion for summary judgment. (See Mot. at 9-14.) The 22 court agrees with Philadelphia that none of those potential arguments support denial of ORDER - 13 1 the motion for summary judgment. First, Philadelphia posits that RRI would have argued 2 that the court should apply the “notice/prejudice rule,” which requires insurers to show 3 actual prejudice when denying coverage based on the lack of timely notice. (Id. at 9-10.) 4 The Washington Court of Appeals, however, has held that the notice/prejudice rule does 5 not apply to claims-made policies like the ones at issue in this case. See Safeco Title Ins. 6 Co. v. Gannon, 774 P.2d 30, 35 (Wash. Ct. App. 1989) (noting that because claims-made 7 policies “require notice be given during the policy period itself,” allowing an extension of 8 the reporting deadline “in effect rewrites the contract between the two parties” (quoting 9 Gulf Ins. Co. v. Dolan, Fertig & Curtis, 433 So.2d 512, 515-16 (Fla. 1983))); see also 10 Westport Ins. Corp. v. Markham Grp. Inc. PS, 403 F. App’x 264, 265-66 (9th Cir. 2010) 11 (“We are satisfied that the Washington Supreme Court would agree with [Gannon’s] 12 reasoning.”). Therefore, the court declines to apply the notice/prejudice rule to the 13 Policies at issue in this action. 14 Second, Philadelphia anticipates that RRI would have argued that the Policies’ 15 “Prior and Pending” exclusion “acts to extend the coverage period of each Policy back to 16 the Prior and Pending Date in Item 5 of the Declarations.” (Mot. at 10-11.) This 17 exclusion excludes coverage for “any litigation or demand against an Insured pending on 18 or before the respective Prior and Pending Date set forth in Item 5 of the Declarations 19 Page, or the same or essentially the same facts as alleged in such prior litigation.” (2019 20 Policy at 70.) For all three Policies, the Prior and Pending Date is February 7, 2017. (See 21 2017 Policy at 12; 2018 Policy at 12; 2019 Policy at 33.) The court agrees with 22 Philadelphia that the Prior and Pending exclusion is just that: an exclusion that bars ORDER - 14 1 coverage for “any litigation or demand pending on or before February 7, 2017, or any 2 litigation or demand concerning essentially the same facts as alleged in any prior 3 litigation or demand.” (Mot. at 11); see Faithlife Corp. v. Phila. Indem. Ins. Co., No. 4 C18-1679RSL, 2020 WL 7385722, at *5 (W.D. Wash. Dec. 16, 2020) (interpreting 5 similar policy language and holding that “[t]he language does not ensure that every claim 6 arising after [the Prior and Pending Date] will be covered.” (emphasis in original)). 7 Finally, the court agrees with Philadelphia that the Washington Supreme Court’s 8 recent decision in Preferred Contractors Insurance Company, Risk Retention Group, 9 LLC v. Baker & Son Construction Inc., 514 P.3d 1230, 1232 (Wash. 2022), does not 10 apply to the Policies at issue here. Preferred Contractors involved purported 11 claims-made commercial liability policies that provided coverage only for losses that 12 both occurred and were reported to the insurer during the one-year policy period; the 13 policies did not provide any retroactive coverage for losses that occurred during one 14 policy period and were reported in a subsequent policy period. Id. at 1236. The court 15 held that the policies at issue in that case created “limited one-year windows for claims to 16 occur and be reported to qualify for coverage” and that “[s]uch restrictive coverage 17 violates Washington’s public policy.” Id. at 1237. Here, by contrast, the Policies at issue 18 require only that the insured report the loss no later than 60 days after the expiration of 19 the policy period in which the insured received notice that the loss occurred—even if the 20 loss occurred during an earlier policy period. (See, e.g., 2017 Policy at 39.) Such 21 claims-made policies “generally do not violate public policy,” Preferred Contractors, 22 514 P.2d at 1237 (citing Gannon, 774 P.2d at 36), and the court sees no reason to hold ORDER - 15 1 otherwise in this case. 2 In sum, the court concludes that Philadelphia has met its burden to show, as a 3 matter of law, that the Policies do not provide coverage for Ms. Cruz’s employment claim 4 because RRI failed to timely report that claim to Philadelphia. Furthermore, because 5 Philadelphia had no duty to defend or indemnify RRI for Ms. Cruz’s claim, its denial of 6 coverage was not in bad faith and did not violate the IFCA. Speed, 317 P.3d at 542-43; 7 see RCW 48.30.015 (providing a cause of action to “[a]ny first party claimant to a policy 8 of insurance who is unreasonably denied a claim for coverage or payment of benefits by 9 an insurer”). And because there is no genuine issue of material fact regarding whether 10 Philadelphia engaged in an unfair or deceptive act or practice when it denied RRI’s 11 request for coverage, Philadelphia’s conduct did not violate the WCPA. See Hangman 12 Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986) 13 (stating that the elements of a WCPA claim are (1) an unfair or deceptive act or practice, 14 (2) occurring in trade or commerce, (3) impacting the public interest, (4) injury to the 15 plaintiff’s business or property, and (5) causation); RCW 19.86.020. Therefore, the court 16 GRANTS Philadelphia’s motion for summary judgment and DISMISSES RRI’s claims 17 against Philadelphia with prejudice. 18 In light of these holdings, the court ORDERS the parties to show cause why the 19 court should not also grant summary judgment in Philadelphia’s favor on its declaratory 20 judgment counterclaim. (See Am. Ans. at 9-10 (seeking a declaration that Philadelphia 21 (1) has no duty to defend or indemnify RRI with respect to Ms. Cruz’s claims and (2) has 22 not breached its contract with RRI, breached the duty of good faith, violated the IFCA, or ORDER - 16 1 violated the WCPA)); Fed. R. Civ. P. 56(f)(3) (empowering the court to consider 2 summary judgment on its own after giving notice and a reasonable time to respond). 3 4 IV. CONCLUSION For the foregoing reasons, the court GRANTS Philadelphia’s motion for summary 5 judgment and DISMISSES RRI’s claims against Philadelphia with prejudice. (Dkt. 6 # 30). The parties are ORDERED to show cause by no later than October 27, 2023, why 7 the court should not also grant summary judgment in Philadelphia’s favor on its 8 declaratory judgment claim. 9 Dated this 17th day of October, 2023. 10 11 A 12 JAMES L. ROBART United States District Judge 13 14 15 16 17 18 19 20 21 22 ORDER - 17
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