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Grange Ins. Ass'n v. Roberts

Court of Appeals of Washington, Division 3

October 28, 2013

Grange Insurance Association, Respondent ,
v.
Elizabeth Roberts et al ., Appellants

Order Granting Motion to Publish March 10, 2014.

Page 78

[Copyrighted Material Omitted]

Page 79

[Copyrighted Material Omitted]

Page 80

Appeal from Superior Court Snohomish County. Docket No(s): 10-2-07609-1. Judgment or other matter being reviewed: Summary Judgment. Judge signing: Joseph P. Wilson. Date entered: July 22, 2011.

We affirm summary judgment dismissal and deny Roberts attorney fees and cost on appeal.

Elena L. Garella ; and Patrick L. Vail (of Cogdill Nichols Rein Wartelle Andrews Vail ), for appellants.

Michelle Menely (of Gordon Thomas Honeywell LLP ), for respondent.

AUTHOR: Lau, J. WE CONCUR: Dwyer, J., Becker, J.

OPINION

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[179 Wn.App. 743] Lau, J.

¶ 1 An insurer's duty to defend arises " if the insurance policy conceivably covers the allegations in the complaint, whereas the duty to indemnify exists only if the policy actually covers the insured's liability." Woo v. Fireman's Fund Ins. Co., 161 Wn.2d 43, 53, 164 P.3d 454 (2007) (emphasis omitted). Grange Insurance Association issued an insurance policy to Jane and Wes Roberts. [1] The policy imposes on Grange a duty to defend its insureds but excludes intentional conduct from the duty to defend. Rebecca Brandis sued Roberts, alleging various torts stemming [179 Wn.App. 744] from Roberts's intentional conduct. The trial court ruled in a declaratory judgment action that Grange owed Roberts no duty to defend against the Brandis complaint. Because Roberts's insurance policy provides no conceivable coverage for the allegations in the Brandis complaint, the trial

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court properly granted declaratory judgment in Grange's favor.

FACTS

¶ 2 This coverage dispute began with litigation between siblings. The Trust and Estate Dispute Resolution Act, chapter 11.96A RCW, lawsuit involved sisters Rebecca Brandis, Suella Hershaw, Myra Converse, and Myrna Seifert [2] against their sister, Jane Roberts, and her husband, Wes. Brandis sought to set aside transfers of real and personal property their now deceased mother, Elizabeth, made to Roberts. The Brandis complaint also sought damages alleging that Roberts obtained the property transfers by engaging in fraudulent acts, exerting undue influence over their mother, " actively interfer[ing]" with their mother, and making false statements and " bad mouth[ing]" them. The complaint also alleged that Roberts's conduct resulted in the loss of an expected inheritance, loss of a parent-child relationship, and emotional distress/outrage.

¶ 3 Regarding interference and outrage, the complaint alleged:

Jane isolated Elizabeth from her longtime friends and family. Jane actively interfered with the relationship between Elizabeth and her family and friends, including her other children. Jane made false statements about and " badmouthed" those other parties in order to so intentionally interfere with their relationships. Jane's behavior towards the other family members, including making false accusations regarding prior child abuse claims, went beyond the bounds of decency, [was] atrocious, and [was] intolerable. The family and friends experienced [179 Wn.App. 745] extreme emotional distress as a result of Jane's interference with their relationships with Elizabeth, which were adversely affected.

The complaint's request for relief sought, among other things, " a judgment for damages based on [Roberts's] tortious interference with expected inheritance," " a judgment for damages based on [Roberts's] tortious interference with the parent/child relationship," and " a judgment for damages based on outrage caused by [Roberts's] outrageous conduct which proximately caused severe emotional distress."

¶ 4 Roberts's Grange policy provisions provide coverage--subject to certain exclusions--for bodily injury and property damage liability (coverage H) and personal and advertising injury liability (coverage I). Coverage H provides in relevant part:

COVERAGE H - BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that an insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies. We will have the right and duty to defend an insured against any suit seeking those damages.
However, we will have no duty to defend an insured against any suit seeking damages for bodily injury or property damage to which this insurance does not apply.
... .
b. This insurance applies to bodily injury and property damage only if:
(1) The bodily injury or property damage is caused by an occurrence ... .

... .

[179 Wn.App. 746] 2. Exclusions

This insurance does not apply to:

a. Expected Or Intended Injury
Bodily injury or property damage expected or intended from the standpoint of an insured. ...

SECTION V - DEFINITIONS

... .
2. Bodily injury means bodily injury, sickness or disease sustained by a person, and includes death resulting from any of these at any time.
... .
17. Occurrence means an accident, including continuous or repeated exposure

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to substantially the same general harmful conditions.

¶ 5 Coverage I provides in relevant part:

COVERAGE I - PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. We will pay those sums that an insured becomes legally obligated to pay as damages because of personal and advertising injury to which this insurance applies. We will have the right and duty to defend an insured against any suit seeking those damages.
However, we will have no duty to defend an insured against any suit seeking damages for personal and advertising injury to which this insurance does not apply.
... .
2. Exclusions
This insurance does not apply to personal and advertising injury:
a. Knowing Violation Of Rights Of Another
Caused by or at the direction of an insured with the knowledge that the act would violate the rights of [179 Wn.App. 747] another and would inflict personal and advertising injury.
b. Material Published With Knowledge Of Falsity
Arising out of oral or written publication of material, if done by or at the direction of an insured with knowledge of its falsity.
... .
SECTION V - DEFINITIONS
... .
18. Personal and advertising injury means injury, including consequential bodily injury, arising out of one or more of the following offenses:
... .
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or services.
e. Oral or written publication, in any manner, of material that violates a person's right of privacy.

¶ 6 In June 2010, Roberts tendered defense of the Brandis lawsuit to Grange. Grange accepted the tender under a full reservation of rights and retained defense attorney Tom Heller to represent Roberts. Grange informed Roberts that their policy may not provide coverage and asserted its right to " file a declaratory judgment action asking a court of law to determine that Grange has no duty to defend the potential lawsuit and/or to pay any judgment or settlement of the claims being asserted."

¶ 7 In September 2010, Grange filed an action for declaratory relief seeking a determination of its duty to defend and indemnify Roberts in the underlying action. The complaint alleged that Grange had no duty to defend or indemnify Roberts because no " occurrence" happened as defined under the insurance policy; some or all of Brandis's claims alleged no " bodily injury" or " property damage" [179 Wn.App. 748] within the policy's coverage; and exclusions applied to those claims falling under " bodily injury," " property damage," or " personal and advertising injury." Summonses were sent to Roberts and each of the Brandis plaintiffs in the underlying suit. [3]

¶ 8 In June 2011, Roberts filed an answer, affirmative defenses, and a counterclaim alleging bad faith by Grange. The counterclaim alleged, " By filing the Coverage Action, Grange has breached its fiduciary duties to [Roberts] and committed the tort of insurance bad faith. For Grange to prevail in the Coverage Action, Grange will necessarily be required to allege facts that, if proved true, would be detrimental to [Roberts's] defense in the Underlying Tort Action." Roberts argued, " By seeking to prevail in the Coverage Action, Grange ...


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