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Hawthorne v. Mid-Continent Casualty Co.

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

July 31, 2017

PATRICIA S. HAWTHORNE, individually and as assignee of Oklahoma Court Services, Inc., Plaintiff,
v.
MID-CONTINENT CASUALTY COMPANY, OKLAHOMA SURETY COMPANY, an Oklahoma Insurance Company, Defendant.

          ORDER DENYING IN PART AND GRANTING IN PART CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT, AND GRANTING PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT

          A Robert S. Lasnik United States District Judge

         This matter comes before the Court on defendant Oklahoma Surety Company's “Motion for Partial Summary Judgment on Choice of Law and Claims Brought in Plaintiff's Individual Capacity, ” Dkt. # 54, on plaintiff Patricia S. Hawthorne's “Renewed Motion for Partial Summary Judgment Re: The Duty to Defend, ” Dkt. # 58, and on plaintiff's “Motion for Leave to File Second Amended Complaint, ” Dkt. # 44. Having considered the parties' briefing and the remainder of the record, the Court denies in part and grants in part the parties' cross-motions for partial summary judgment, and grants plaintiff's motion for leave to amend.

         I. BACKGROUND

         In November 2016, acting in her individual capacity and as assignee of various insurance claims by Oklahoma Court Services, Inc. (“OCS”), plaintiff filed this action in King County Superior Court against OCS's insurer, Oklahoma Surety Company (“Oklahoma Surety”), for bad faith, violation of Washington's Consumer Protection Act, and breach of the contractual duties to defend, settle, and indemnify. Dkt. # 1-1. On December 21, 2016, Oklahoma Surety removed this case to federal court, Dkt. # 1, and shortly thereafter moved to dismiss the case for lack of personal jurisdiction, Dkt. # 9. The Court denied that motion on April 4, 2017. Dkt. # 39.

         On April 20, 2017, plaintiff moved for leave to file a second amended complaint, specifically to add a claim under Washington's Insurance Fair Conduct Act (IFCA) because the required 20 days had elapsed since plaintiff submitted notices to the Washington Insurance Commissioner and to Oklahoma Surety and Mid-Continent Casualty Company, as required by RCW 48.030.015(8)(a). Dkt. # 44. Oklahoma Surety opposed plaintiff's motion, arguing that Oklahoma law applies in this case rather than Washington law, but that an IFCA claim would be futile in any event. Dkt. # 52.

         On May 4, 2017, just three days after filing its response to plaintiff's motion for leave to amend, Oklahoma Surety moved for partial summary judgment on the question of choice of law. Dkt. # 54. As in its opposition to plaintiff's motion for leave to amend, Oklahoma Surety argues that Oklahoma rather than Washington law applies to all of plaintiff's claims. Oklahoma Surety also asks the Court to dismiss the claims that plaintiff has brought “individually, ” as opposed to as assignee of OCS. A week later, plaintiff renewed her motion for partial summary judgment, which seeks resolution both of the choice-of-law issue and of the merits question whether Oklahoma Surety breached its duties under the applicable law. Dkt. # 58.[1]

         II. DISCUSSION

         Because the choice-of-law issue bears on plaintiff's motion for leave to add a Washington IFCA claim, this order addresses the parties' cross-motions for partial summary judgment first, before turning to plaintiff's motion for leave to file a second amended complaint.

         A. The Parties' Cross-Motions for Partial Summary Judgment

         Both Oklahoma Surety and plaintiff seek partial summary judgment on the question whether Washington or Oklahoma law applies in this case. Oklahoma Surety also seeks dismissal of plaintiff's claims to the extent she brings them in her individual capacity rather than as assignee of OCS's claims arising from its insurance contract with Oklahoma Surety.

         Summary judgment is appropriate if, viewing the evidence in the light most favorable to the nonmoving party, “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); L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012). The moving party “bears the initial responsibility of informing the district court of the basis for its motion.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has satisfied its burden, it is entitled to summary judgment if the non-moving party fails to designate “specific facts showing that there is a genuine issue for trial.” Id. “The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient”; the opposing party must present probative evidence in support of its claim or defense. Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991). “An issue is ‘genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (internal citations omitted).

         1. Plaintiff's Claims in Her Individual Capacity

         Oklahoma Surety asks the Court to dismiss plaintiff's claims to the extent she brings them in her individual capacity rather than as assignee of OCS. The Court agrees that because plaintiff is not insured by Oklahoma Surety, she lacks standing to bring individual claims for breach of the contractual duties to defend, settle, and indemnify. And as a third party, plaintiff also lacks standing to bring a bad faith claim in her individual capacity against Oklahoma Surety for its failure to defend OCS against plaintiff's lawsuit. See Tank v. State Farm & Cas. Co., 105 Wn.2d 381, 391-94 (1986) (“We hold that third party claimants may not sue an insurance company directly for alleged breach of duty of good faith under a liability policy.”). Neither party addresses plaintiff's standing to bring a claim under Washington's Consumer Protection Act, RCW 19.86.010 et seq., but plaintiff does not appear to dispute that she lacks standing to bring any of her claims in her individual capacity. Dkt. # 69 at 36. Accordingly, she may litigate this suit only as assignee of OCS's claims against Oklahoma Surety. Oklahoma Surety's motion for partial summary judgment on this point is GRANTED.

         2. C ...


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