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Atlantic Casualty Insurance Co. v. Bellinger

United States District Court, E.D. Washington

September 8, 2017

ATLANTIC CASUALTY INSURANCE COMPANY, a North Carolina corporation, Plaintiff,
BRAD BELLINGER, an individual d/b/a LILAC CITY VAPOR; LILAC CITY VAPOR, a Washington limited liability company; MARLENE RUBERTT, an individual, Defendant.



         Before the Court is Plaintiffs Motion for Summary Judgment, ECF No. 26. A hearing was held on September 6, 2017 in Yakima, Washington. Plaintiff was represented by Mary DeYoung. Defendants Brad Bellinger and Lilac City Vapor, LLC were represented by Benjamin McDonnell and Defendant Marlene Rubertt by Liz McLafferty. This Order memorializes the Court's oral ruling.


         Plaintiff Atlantic Casualty Insurance Company (Atlantic) filed this Declaratory Judgment Action on December 1, 2016 seeking a declaration that, under an applicable insurance policy, Defendants Brad Bellinger (Bellinger) and Lilac City Vapor, LLC (LCV) are not entitled to insurance coverage for claims made by Defendant Marlene Rubertt (Rubertt) in an underlying state court products liability lawsuit and that it has no duty to defend. On February 6, 2017, Defendants moved to dismiss the complaint or, alternatively, stay this case pending resolution of the underlying lawsuit. The Court denied the motion and Plaintiff filed the present motion for summary judgment on June 2, 2017.


         The material facts are not in dispute. On October 13, 2016, Rubertt filed a lawsuit captioned Marlene Rubertt v. Lilac City Vapor, LLC et al. in Spokane County Superior Court alleging the following: Rubertt purchased an electronic cigarette and related parts from LCV. On January 30, 2016, Rubertt was home watching television and brought the electronic cigarette to her mouth to inhale from the device when the electronic cigarette suddenly exploded in her face. As a result, Rubertt suffered severe, traumatic injuries to her mouth and face, along with burns to her neck, chest, face, and the roof of her mouth. Following the explosion, Rubertt was driven to the emergency room and given an IV and pain medication. She continued to receive treatment and care for her injuries, including bone reconstruction in her jaw, a sinus lift, and three surgical extractions of roots and broken teeth. Pieces of the electronic cigarette plastic were also removed from her upper lip. She will require additional surgery.

         On February 16, 2016, attorney Dayle Andersen sent a letter notifying LCV and Bellinger that the Andersen Law Office had been retained to represent Rubertt (then going by Ms. Garcia) in her claim for personal injuries against LCV. After receiving notification, Atlantic, through its agent American Claims Service, Inc., sent LCV a letter dated March 29, 2016 in which it denied coverage for Rubertt's claim. The claim was denied due to applicable insurance policy exclusions.

         Rubertt's Complaint stated causes of actions for products liability and negligence. On October 21, 2016, LCV sent a Demand for Defense Letter to Atlantic Casualty Insurance Company. Atlantic tendered a defense subject to a reservation of rights by letter dated November 3, 2016. Rubertt filed a First Amended Complaint for Damages on December 7, 2016. She again stated causes of action for products liability and negligence.

         Legal Standard

         Summary judgment is appropriate if the pleadings, discovery, and affidavits demonstrate there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing Fed.R.Civ.P. 56(c)). There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The moving party has the burden of showing the absence of a genuine I issue of fact for trial. Celotex, 477 U.S. at 325.

         When considering a motion for summary judgment, the Court neither weighs evidence nor assesses credibility; instead, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255. When relevant facts are not in dispute, summary judgment as a matter of law is appropriate, Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999), but “[i]f reasonable minds can reach different conclusions, summary judgment is improper.” Kalmas v. Wagner, 133 Wn. 2d 210, 215 (1997).


         Interpretation of an insurance policy is a question of law that may be i resolved on summary judgment. Reliable Credit Ass'n, Inc. v. Progressive Direct Ins. Co., 171 Wn.App. 630, 638 (2012). Because insurance policies are contracts, the rules of contract interpretation apply. Id. When interpreting an insurance policy, the Court should consider the contract as a whole and arrive at a "fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance." Id. (quoting Quadrant Corp. v. Am. States Ins. Co., 154 Wn. 2d, 165, 171 (2005)) (internal quotation marks omitted). If the language of the insurance policy is unambiguous, the Court must enforce it as written. Id. (citing Quadrant Corp., 154 Wn. 2d at 171). Exclusionary clauses in an insurance policy must be strictly construed against the insurer; "[w]here there is room for two constructions of an exclusionary clause, one favorable to the insured and one favorable to the insurer, courts must adopt the construction favorable to the insured." Id. at 638-39 (citing Murray v. W. Pac. Ins. Co., 2 Wn. App. 985, 992 (1970)).

         Under Washington law, a "duty to defend 'arises at the time an action is first brought, and is based on the potential for liability.'" Woo v. Fireman's Fund Ins. Co.,161 Wn. 2d 43, 52 (2007) (quoting Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn. 2d 751, 760 (2002)). An insurer has a duty to defend "when a complaint against the insured, construed liberally, alleges facts which could, if proven, impose liability within the policy's coverage." Id. at 52-53 (citing Truck Ins. Exch., 147 Wn. 2d at 760) (internal quotation marks omitted). "An insurer is not relieved of its duty to defend unless the claim alleged in the complaint is 'clearly not covered by the policy.'" Id. at 53 (quoting Truck Ins. Exch., 147 Wn.2d at 760)). Thus, the duty to defend must be determined from the complaint. However, "[t]here are two exceptions to ...

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