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Vario v. Allstate Fire & Casualty Insurance Co.

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

June 16, 2017





         This matter comes before the Court upon Defendant Allstate Fire and Casualty Insurance Company's (“Allstate”) Motion for Partial Summary Judgment. Dkt. #16. Plaintiff Michael Vario sued Allstate after his claim for underinsured motorist (“UIM”) benefits was denied. See Dkt. #1, Ex. A ¶¶ 12-23. Mr. Vario submitted this claim following his involvement in a three- car accident in which one driver was underinsured. Following the accident, Mr. Vario sued, and eventually settled, his claims against the underinsured driver and the insured driver. Given those settlements, Allstate now asks the Court to determine if it can reduce its potential UIM coverage liability by both settlement amounts. Because Mr. Vario will ask a jury to apportion fault for the accident between the underinsured motorist and the insured driver, Mr. Vario contends Allstate can only reduce its UIM coverage liability by the amount the underinsured driver, but not the insured driver, paid to settle. Considering the text and purpose of Washington State's UIM statute, along with Allstate's UIM policy, the Court agrees Allstate cannot reduce its potential UIM coverage by the insured driver's settlement amount. For the reasons stated herein, Allstate's Motion for Partial Summary Judgment is DENIED.


         On May 12, 2014, Mr. Vario was involved in a three-car accident on Interstate 5 in Whatcom County. Dkt. #1, Ex. A at ¶¶ 1, 9-11. At the time, Mr. Vario was a passenger in his co-worker's car. Id. ¶ 3. The two other drivers involved in the accident were Douglas McAcy and Homadokht Fattahi. Id. ¶¶ 2, 9-10. Mr. Vario alleges the car he was in was struck by McAcy's car, after Mr. McAcy swerved to avoid hitting Ms. Fattahi's car. Id. ¶¶ 9-11. Mr. Vario was injured in the collision. Id. ¶ 14. After the accident, Mr. Vario sued Mr. McAcy and Ms. Fattahi. Id. ¶¶ 14, 16. Ms. Fattahi's liability insurance policy limit was $3 million dollars; Mr. McAcy's liability insurance policy limit was $50, 000. Id. ¶¶ 17-18. Mr. McAcy and Ms. Fattahi denied liability. Id. ¶ 16.

         In June 2015, because Mr. Vario's co-worker's UIM policy includes passengers as “covered person[s], ” and because Mr. McAcy's liability insurance policy limit was less than the damages Mr. Vario claims Mr. McAcy caused him, Mr. Vario filed a UIM claim with Allstate for the damages caused by Mr. McAcy. Id. ¶¶ 12-14. In July 2015, Allstate denied Mr. Vario's UIM claim. Id. ¶ 15.

         In June 2016, Mr. McAcy offered to settle with Mr. Vario for $50, 000. Id. ¶ 16. Mr. Vario informed Allstate of Mr. McAcy's offer, and allowed Allstate an opportunity to buy out Mr. Vario's claim against Mr. McAcy. Id. ¶ 17. Allstate declined, and Mr. Vario settled with Mr. McAcy for $50, 000. Id. Mr. Vario eventually also settled his claim against Ms. Fattahi for $245, 000. Dkts. #16 at 4 and #19 at 2.

         After Mr. Vario settled with Mr. McAcy and Ms. Fattahi, Allstate continued to deny Mr. Vario's UIM claim. In November 2016, Mr. Vario sued Allstate in the Superior Court of Washington for Whatcom County. See Dkt. #1, Ex. A at 1. In his Complaint, Mr. Vario alleges Allstate's denial of his UIM claim violates several provisions of the Washington Administrative Code and Washington State's Insurance Fair Conduct Act. Id. ¶¶ 15, 18-23. Allstate removed Mr. Vario's suit to this Court on December 13, 2016.


         Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). When ruling on summary judgment, courts do not weigh evidence to determine the truth of the matter, but “only determine whether there is a genuine issue for trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing Fed. Deposit Ins. Corp. v. O'Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992), rev'd on other grounds, 512 U.S. 79 (1994)).

         Allstate contends, and Mr. Vario does not dispute, the question before the Court solely involves a question of law. See Dkts. #16 at 7, #19, and #22 at 2. Under Washington State law, the Court is to construe Allstate's UIM policy as a contract. Nordstrom, Inc. v. Chubb & Son, Inc., 54 F.3d 1424, 1429 (9th Cir. 1995). This means Allstate's UIM policy is “to ‘be given a fair, reasonable, and sensible construction, ' that comports with how the average purchaser of insurance would view the policy.” Id. (quoting Grange Ins. Co. v. Brosseau, 776 P.2d 123, 125 (Wash. 1989)).


         Allstate asks the Court to determine if its UIM policy allows it to reduce its potential UIM liability by the settlement amounts Mr. Vario received from Ms. Fattahi and Mr. McAcy. Dkt. #16 at 6. According to Allstate, Washington State's UIM statute, its own UIM policy language, and a recent decision in this district allow it to set off Ms. Fattahi's settlement amount. Id. at 7.

         In response, Mr. Vario concedes Allstate may reduce its UIM liability by Mr. McAcy's settlement amount, but disagrees that Allstate can set off the amount Ms. Fattahi paid to settle Mr. Vario's suit against her. Dkt. #19 at 2. To support his position, Mr. Vario relies on the Washington State Supreme Court decision in Allstate ...

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