United States District Court, W.D. Washington, Tacoma
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
BENJAMIN H. SETTLE, District Judge.
This matter comes before the Court on Plaintiff Insurance Company of the West's ("ICW") motion for summary judgment (Dkt. 12). The Court has considered the pleadings filed in support of and in opposition to the motion and the remainder of the file and hereby grants the motion in part and denies it in part for the reasons stated herein.
I. PROCEDURAL HISTORY
On April 29, 2014, ICW filed an indemnification action against Defendants Afford-A-Home, Inc., Harold Janaszak, and Donna Janaszak ("Defendants"). Dkt. 1. ICW alleges that Defendants breached their Indemnity Agreement with ICW by failing to indemnify ICW for payments made on a performance bond. Id . ¶ 12.
On July 1, 2014, ICW moved for summary judgment. Dkt. 12. On July 28, 2014, Defendants responded. Dkt. 17. On August 1, 2014, ICW replied. Dkt. 20.
On September 23, 2014, the Court issued an order requesting additional briefing from the parties on a provision in the Indemnity Agreement. Dkt. 23. The Court also denied Defendants' request to dismiss the case for lack of subject matter jurisdiction, and reserved ruling on ICW's motion. Id.
On October 20, 2014, the parties filed additional briefing. Dkts. 27, 30. On October 27, 2014, ICW filed a reply brief. Dkt. 32.
II. FACTUAL BACKGROUND
In 2007, ICW posted two surety bonds-a performance bond and a maintenance bond-to the City of Buckley ("City") for the construction of a subdivision. Dkt. 1 ¶¶ 8-9. The performance bond guaranteed the construction of the subdivision in the amount of $541, 296.25. Dkt. 14, Declaration of Leonard Huseby ("Huseby Dec."), Ex. 2. The maintenance bond guaranteed the replacement or correction of items constructed in the subdivision in the amount of $486, 521.05. Id.
In consideration for posting these bonds, Defendants executed an Indemnity Agreement in favor of ICW. Huseby Dec., Ex. 1. Under the Indemnity Agreement, Defendants agreed to indemnify and hold ICW harmless from all losses resulting from posting the bonds. Id. at 1. Defendants also agreed that if claims were made on the bonds they would, upon demand, deposit funds with ICW sufficient to indemnify ICW from all anticipated claims. Id. at 1-2.
The developer failed to complete the subdivision. Dkt. 21, Supplemental Declaration of Leonard Huseby ("Supp. Huseby Dec."), Ex. 6. On July 27, 2009, the City made claims in the amount of $541, 000 on the performance bond. Id. After receiving the City's claims, ICW contacted Defendants on several occasions. Supp. Huseby Dec. ¶ 3. During these communications, Defendants indicated that they planned to offer the City $207, 000 to resolve the matter. Id .
On November 8, 2013, the City sent ICW a demand letter. Huseby Dec., Ex. 3. In its letter, the City stated that it was "unwilling to wait any longer for ICW's response, " and demanded that ICW take action within twenty days. Id. at 2. The City further stated that it intended to sue ICW if ICW failed to fulfill its obligations under the bond. Id.
In response to the City's letter, ICW contacted Defendants again about resolving the City's claims. Supp. Huseby Dec. ¶ 5. Defendants told ICW that they would meet with the City to see whether the City would accept $207, 000. Id. ICW told Defendants that it did not think the City would agree to a settlement in that amount. Dkt. 28, Supplemental Declaration of Harold Janaszak ("Supp. Janaszak Dec."), Ex. 1 at 8.
On January 14, 2014, ICW followed up with Defendants. Supp. Huseby Dec., Ex.
8. ICW explained that it was "under a time limit" and needed to resolve the City's claims. Id. ICW also noted that it had no indication that Defendants were attempting to settle the City's claims. Id. ICW reiterated that it did not think the City would accept an offer of $207, 000. Id. Defendants told ICW that they were arranging a meeting with the City. Supp. Janaszak Dec., Ex. 1 at 12.
On January 30, 2014, ICW informed Defendants that ICW intended to resolve the City's claims and seek indemnification from Defendants unless they resolved the matter before the City's deadline. Supp. Huseby Dec., Ex. 9. On April 2, 2014, ICW demanded that Defendants post collateral in the amount of $541, 000. ...