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Terhune Homes, Inc. v. Nationwide Mutual Insurance Co.

United States District Court, W.D. Washington, Seattle

April 30, 2014

TERHUNE HOMES, INC., Plaintiff,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY Defendant.

ORDER

RICHARD A. JONES, District Judge.

I. INTRODUCTION

This matter comes before the court on cross-motions for summary judgment filed by plaintiff Terhune Homes, Inc. ("Terhune" or "plaintiff") and defendant Nationwide Mutual Insurance Company ("Nationwide" or "defendant"). Dkt. ## 15, 19. Terhune argues that it is entitled to summary judgment because defendant unreasonably and in bad faith breached its duty to defend it as an additional insured under the Artwall Designs and Construction Company Inc. ("Artwall") insurance policy. Dkt. # 19 at 1. Nationwide argues that it is entitled to summary judgment on all claims related to the insurance policy to Ruslan Yefimchuk ("Ruslan") because Terhune was not an additional insured under that policy. Dkt. # 15 at 2. Nationwide also argues that it is entitled to summary judgment on all claims related to the Artwall policy because Terhune failed to provide timely notice to Nationwide, which caused it prejudice, and that its claim decision and handling were reasonable under the circumstances. Id. at 2. With respect to the Ruslan policy, there is no evidence before the court that Terhune was an additional insured under that policy. Accordingly, Nationwide is entitled to summary judgment as to all claims under the Ruslan Policy.

Having reviewed the motions, exhibits, and the record herein, the court GRANTS in part and DENIES in part Nationwide's motion for summary judgment, and DENIES plaintiff's motion for summary judgment.

II. BACKGROUND

In 2005, Terhune contracted with Richard and Mary Weglin ("Weglins") for the construction and improvement of the Weglins' real property. Dkt. # 16-5 at 3 (Ex. 5 to Halstead Decl., Findings of Fact & Conclusions of Law ¶¶ 4-5). In April 2005, Terhune began construction. Id. (¶ 6). At some point, a dispute arose with respect to the construction, and the Weglins did not pay all amounts owed. Id. at 3-4 (¶¶ 7-12). On August 21, 2006, Terhune recorded a Claim of Lien against the property for the amount owed. Id. at 4 (¶ 13). In April 2007, Terhune filed an action against the Weglins for breach of contract and to foreclose the claim of lien. Id. (¶ 15); Dkt. # 16-3 (Ex. 3 to Halstead Decl.). In June 2007, the Weglins filed a counterclaim for breach of contract. Dkt. # 16-4 (Ex. 4 to Halstead Decl.). In May 2010, the Honorable Timothy Bradshaw entered findings of fact and conclusions of law. Dkt. # 16-5 (Ex. 5 to Halstead Decl.). In November 2010, the trial court entered an corrected judgment. Dkt. # 15-6 (Ex. 6 to Halstead Decl.).

In July 2012, Terhune sent a "tender of defense" as an additional insured under the Artwall policy to the insurance agency that had issued the Artwall policy. Dkt. # 21-3 (Ex. C to Beecher Decl.). Nationwide contends that it did not receive the July 2012 tender until November 2012 when the Office of Insurance Commissioner sent it to Nationwide. See Dkt. # 16-8 at 2 (Ex. 8 to Halstead Decl.). In December 2012, Nationwide denied the "tender of defense, " which it viewed as a request for reimbursement for past defense costs. Id. Terhune filed this action in April 2013 in King County Superior Court, and defendant removed the case to this court. Dkt. # 1.

III. ANALYSIS

A. Legal Standard

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district court that there is an absence of evidence to support the non-moving party's case. Celotex Corp., 477 U.S. at 325. If the moving party meets the initial burden, the opposing party must set forth specific facts showing that there is a genuine issue of fact for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150-51 (2000).

B. Evidentiary Analysis

In resolving a motion for summary judgment, the court may only consider admissible evidence. Orr v. Bank of America, 285 F.3d 764, 773 (9th Cir. 2002). However, at the summary judgment stage, a court focuses on the admissibility of the evidence's content, not on the admissibility of the evidence's form. Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003).

Terhune moves to strike an offer of settlement made by Terhune "to show that part of Terhune's demand was based on coverage fees" based on Federal Rule of Evidence 408. Dkt. # 22 (Plf.'s Opp'n) at 12; Dkt. # 16-11 at 2-3 (Ex. 11 to Halstead Decl.). Rule 408 prohibits the admissibility of offers of compromise "to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or contradiction[.]" Fed.R.Evid. 408(a). However, offers of compromise may be admitted "for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution." Id. 408(b). Nationwide argues that it provides the offer of settlement, not to prove or disprove the validity or amount of the claim or to impeach, but to demonstrate prejudice to Nationwide. Dkt. # 24 (Def.'s Reply) at 3. The court agrees that the offer of compromise is offered to demonstrate prejudice to Nationwide that Terhune attempted to be reimbursed for coverage fees incurred when it was not notified until after coverage counsel had been engaged to pursue claims against another insurer.

The court also notes that the two declarations submitted by Terhune are not admissible. Dkt. ## 20, 21. Ms. Evans's declaration does not swear that her statements are true and correct, and therefore, does not comply with 28 U.S.C. § 1746. Mr. Beecher's declaration is not signed. Accordingly, the court has not considered these declarations. Nevertheless, since Ms. Evans and Mr. Beecher could properly ...


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