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Eagle Harbour Condominium Association v. Allstate Insurance Co.

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

April 12, 2017

EAGLE HARBOUR CONDOMINIUM ASSOCIATION, Plaintiff,
v.
ALLSTATE INSURANCE COMPANY, Defendant.

          ORDER ON MISC. MOTIONS DKT. #146, 147, 161

          Ronald B. Leighton United States District Judge

         THIS MATTER is before the Court on the following motions:

• Eagle Harbour's Motion for Partial Summary Judgment against Defendants Commonwealth's and Fireman's Fund late notice defense [Dkt. #146];
• Eagle Harbour's Motion for Summary Judgment against Commonwealth's and Fireman's suit limitations defenses [Dkt. #147]; and
• Commonwealth's Motion to Strike Eagle Harbour's Summary Judgment Motions against it [Dkt. #161].

         Plaintiff Eagle Harbour Condominium Association seeks dismissal of Defendants Commonwealth's and Fireman's Fund affirmative late notice and suit limitations defenses. [Dkt. ##146, 147]. Commonwealth asks the Court to strike the Association's contemporaneous motions, [Dkt. #161], and Fireman's joins the motion to strike. [Dkt. #182 at 2].

         I. DISCUSSION

         A. Factual Background.

         The Association manages two stucco-clad condominium buildings built in approximately 1980 on Bainbridge Island. The buildings suffered from ongoing and progressive damage: decades of water intrusions caused hidden decay. The Association sues its insurers for denying coverage. At issue is whether Commonwealth's and Fireman's defenses that the Association tendered its claim too late and that the policy's limitations period expired before it sued have merit. Commonwealth insured the Association from 2005 to 2007, and Fireman's insured it from 2010 to 2012.

         The Association periodically addressed the water damage brought to its attention. For example, between 2004 and 2007, it paid over $2 million to repair all damage identified by Building Envelope Technology & Research. It also applied an elastomeric coating in September 2007 to prevent future damage. This coating failed years before expected, and the Association continued to have problems with mold and decay. In November 2013, the Association discovered mold in a stair tower. It tendered a claim to Commonwealth (and others) for this damage in July 2014, entered into a tolling agreement, and invited Commonwealth to participate in its investigation of a potential larger problem.

         In August 2014, the Association hired BET&R to investigate whether the buildings' exterior walls' sheathing and framing continued to suffer from hidden water damage. At that time, the Association realized Eagle Harbour's buildings' envelope suffered from a systemic problem. Commonwealth denied coverage on July 6, 2015. Once the Association realized Fireman's insured it, the Association alleges, it tendered a claim and entered into a tolling agreement with it, too: in March 2016. Fireman's denied coverage on November 30, 2016.

         The Association seeks to prevent Commonwealth and Fireman's from asserting their defenses that (1) the Association tendered its claim late, prejudicing each, and (2) the limitation period on each policy ran before the Association sued. First, the Association argues it tendered its claims within a “practicable” and “prompt” time after learning of Eagle Harbour's hidden and systemic damage under Greenlake Condominium Association v. Allstate Insurance Company, No. C14-1860-BJR, at *7-8 (W.D. Wash. Apr. 25, 2016), but even if it did not, neither Commonwealth nor Fireman's were prejudiced: Commonwealth identified no prejudice, as is its onus, and Fireman's could have paid to investigate the damage if it had needed to gather its own or additional information.

         Commonwealth argues that whether it and Fireman's were prejudiced is a question for the factfinder. Fireman's claims it was prejudiced because it did not receive notice until after Eagle Harbour's hidden damage had been investigated. Both argue whether the Association provided late notice concerns its potential entitlement to Olympic Steamship fees, a question not yet before the Court.

         Second, the Association argues it tendered its claim to Commonwealth and to Fireman's within each policy's limitations period by suing Commonwealth one year after finding hidden damage at Eagle Harbour and suing Fireman's within two years of that date, August 2014, in accordance with each policy and Panorama Village Condominium Owners Association ...


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