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IDS Property and Casualty Insurance Co. v. Fellows

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

April 6, 2017

IDS PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
CHARLES H. FELLOWS, Defendant.

          ORDER

          Thomas S. Zilly United States District Judge.

         THIS MATTER comes before the Court following entry of a verdict reached by the jury, docket no. 201. In light of the jury's factual findings and damage awards, the Court enters the following order.

         Background

         In this declaratory judgment action, plaintiff IDS Property and Casualty Insurance Company ("IDS") seeks a ruling that, under a homeowners' policy issued to defendant Charles H. Fellows and his ex-wife, Michaela Osborne, which was in effect from May 10, 2015, through May 10, 2016, it does not owe coverage for the following losses: (i) damage to the residence located at 10021 SE 192nd Place in Renton, Washington, which was caused sometime prior to August 31, 2015, when Fellows was entitled to take possession of the dwelling after dissolution proceedings had concluded, (ii) additional living expenses ("ALE") necessarily incurred to reside elsewhere while the dwelling was uninhabitable; and (iii) removal from the home of Fellows's personal property, including business attire and formal wear. Fellows brought six counterclaims, two of which (for constructive fraud and negligence) were dismissed with prejudice on IDS's oral motion pursuant to Federal Rule of Civil Procedure 50(a). See, Minute Order (docket no. 198). The jury reached a verdict in favor of Fellows on the remaining four counterclaims for (i) breach of contract, (ii) violation of the Insurance Fair Conduct Act ("IFCA"), (iii) violation of Washington's Consumer Protection Act ("CPA"), and (iv) insurance bad faith. The Court now declares "the rights and other legal relations" of the parties pursuant to 28 U.S.C. § 2201, and addresses the issue of increased or treble damages under the CPA and the IFCA.

         Discussion

         A. Coverage

         Under Washington law, a coverage determination is a two-step process. Diamaco, Inc. v. Aetna Cas. & Sur. Co., 97 Wn.App. 335, 337, 983 P.2d 707 (1999). First, the insured must show that the loss falls within the scope of the policy's insured perils or losses. See id The burden then switches to the insurer to prove that the loss "is excluded by specific policy language." See McDonald v. State Farm Fire & Cas. Co., 119Wn.2d 724, 731, 837 P.2d 1000 (1992); Diamaco, 97 Wn.App. at 337.

         The policy at issue is a "named-peril" policy as to personal property and an "all-risk" policy as to the residence. See Ex. 1 to Compl. (docket no. 1-1 at 16); see also Fisher Commc 'ns, Inc. v. Travelers Prop. Cas. Co. of Am., 2012 WL 12883115 at *2 (W.D. Wash. Sep. 4, 2012) (discussing the distinction between "named-peril" and "all- risk" policies). The Court has previously concluded that Fellows did not carry his initial burden of proving that the loss of his personal property, including business attire and formal wear, was within the scope of a named peril. See, Minute Order at ¶ 1(c) (docket no. 198). As to the loss of personal property, the Court will enter declaratory judgment in favor of IDS and against Fellows, indicating that coverage is not owed under the policy at issue for the items identified in Trial Exhibit 17.

         With respect to the damage to the home and the related ALE, the parties do not dispute that such loss is within the scope of the risks insured by the policy. Indeed, the policy covers "direct physical loss to property insured under the Dwelling and Other Structures Coverages except for losses excluded elsewhere, " and in the event that a covered loss makes the residence uninhabitable, "the reasonable increase in your living expenses necessary to maintain your normal standard of living while you live elsewhere." Ex. 1 to Compl. (docket no. 1-1 at 15 & 16). IDS seeks to avoid coverage by relying on the following exclusion:

Intentional loss, meaning any loss arising out of any act an insured person commits or conspired to commit with the intent to cause a loss. . . .
[T]his exclusion will not apply to deny an insured person's claim for an otherwise covered property loss under this policy if such a loss is caused by an act of domestic violence by another insured person under this policy and the insured person claiming the property loss:
a) did not cooperate in or contribute to the creation of the loss; and
b) cooperates in any investigation relating to the loss.

         Policy Exclusions at ¶ 9 (docket no. 1-1 at 18). The above-quoted "domestic violence" exception to the "intentional loss" exclusion is required by ...


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