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Eagle Harbour Condominium Association v. Allstate Insurance Company

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

April 10, 2017

EAGLE HARBOUR CONDOMINIUM ASSOCIATION, Plaintiff,
v.
ALLSTATE INSURANCE COMPANY, et al., Defendants.

          ORDER DKT. ##12O, 13O, 131, 137, 139, 141

          Ronald B. Leighton United States District Judge

         THIS MATTER is before the Court on the following motions:

● Defendant Fireman’s Fund Insurance Company’s Motion for Summary Judgment [Dkt. #120];
● Defendant St. Paul Fire and Marine Insurance Company’s Motion for Summary Judgment [Dkt. #130];
● Plaintiff Eagle Harbour Condominium Association’s Motion for Partial Summary Judgment against St. Paul [Dkt. #131];
● Eagle Harbour’s Motion for Partial Summary Judgment against Commonwealth Insurance Company [Dkt. #137];
● Defendant Commonwealth’s Motion for Summary Judgment [Dkt. #139]; and
● Defendant Eagle West Insurance Company’s Motion for Partial Summary Judgment [Dkt. #141].

         Plaintiff-Insured Eagle Harbour Condominium Association sues Defendants St. Paul, Commonwealth, Fireman’s Fund, and Eagle West each for denying that its policy[1] covered hidden water damage at the Eagle Harbour Condominium complex. The complex comprises two buildings on Bainbridge Island built in the late seventies and early eighties. At one building, the exterior walls are clad with cement plaster stucco over building paper over gypsum sheathing. At the other, the exterior walls are clad with cement plaster stucco over building paper attached directly to the framing.

         Six companies have insured the complex:

Allstate (September 1, 1988–97 and September 1998–2005);
St. Paul (September 1, 1997–1998);
Commonwealth (August 31, 2005–06 and August 31, 2006–07);
Farmers (August 31, 2005 to March 1, 2010);
Fireman’s Fund (March 1, 2010–11 and March 1, 2011–12); and
Eagle West (March 1, 2012–13, March 1, 2013–14, and March 1, 2014–15).

         The Association has settled its claim with Allstate and Farmers, but sues the other four. The Defendants’ policies are “all-risk” policies that cover all fortuitous losses not explicitly excluded. Commonwealth’s all-risk policy is a supplemental, difference-in-conditions policy that explicitly excludes coverage for any losses contemporaneously covered by Farmers.

         The Association claims the Defendants wrongfully denied it coverage. It asserts wind-driven rain and inadequate construction allowed water to penetrate the buildings’ sheathing and framing, causing decades of deterioration and decay, until the damage was exposed to view in August 2014. It claims the damage was incremental and progressive and occurred during each policy period, worsening with each of 60 storm events. The testimony of its expert, Michael Ludwig, and the technical consulting firm that investigated the buildings’ damage, Building Envelope Technology & Research (BET&R), supports its claims.

         Broadly, the Defendants claim the Association’s loss results from its poor decisions to construct and inadequately maintain a stucco building in the wet and windy Pacific Northwest. Each argues it appropriately denied coverage because no covered peril caused the Association’s loss. Eagle West, St. Paul, and Commonwealth each argue its policy excludes coverage for weather-related water damage, and even if it does not, wind-driven rain is not a fortuitous, covered peril. Commonwealth also argues it is not liable for the Association’s loss because Farmers’ policy covered it. Fireman’s Fund argues the Association cannot demonstrate any damage commenced during its policy period.

         The Association argues the Defendants’ policies do not explicitly exclude, so cover, damage caused by wind-driven rain. It asks the Court to engage in an efficient proximate cause analysis to determine that no matter whether inadequate construction or wind-driven rain caused its loss, the loss is covered. It also argues the Defendants are joint and severally liable for its loss.

         I. DISCUSSION

         A. Standard of Review.

         Summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In determining whether an issue of fact exists, the Court must view all evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986); see also Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact exists where there is sufficient evidence for a reasonable factfinder to find for the nonmoving party. See Anderson, 477 U.S. at 248. The inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251–52. The moving party bears the initial burden of showing no evidence exists that supports an element essential to the nonmovant’s claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the movant has met this burden, the nonmoving party then must show the existence of a genuine issue for trial. See Anderson, 477 U.S. at 250. If the nonmoving party fails to establish the existence of a genuine issue of material fact, “the moving party is entitled to judgment as a matter of law.” Celotex, 477 U.S. at 323–24.

         B. Interpreting ...


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