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McCullough v. The Travelers Home and Marine Insurance Co.

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

December 27, 2017




         This matter comes before the Court on Plaintiff's motion to amend her complaint and remand to state court (Dkt. No. 16). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion for the reasons explained herein.

         I. BACKGROUND

         In early 2015, Helen McCullough's (“McCullough”) house began to settle around her two-story fireplace. (Dkt. No. 17 at 7.) At all relevant times, McCullough had a homeowner's insurance policy issued by Travelers Home and Marine Insurance Company (“Travelers”). (Dkt. No. 1-2 at 2.) After an initial inspection, Travelers determined that the settling damage was a loss covered by McCullough's policy (Dkt. No. 17 at 8.)

         Travelers hired an independent consultant, Done Right Construction (“Done Right”), to prepare a repair estimate for McCullough's home. (Id.) Done Right provided Travelers with an initial scope of repair estimate totaling $57, 437.65. (Dkt. No. 17 at 16.) Travelers accepted the estimate and issued payment to McCullough. (Id.) McCullough subsequently hired Done Right to be the general contractor for the repair of her house. (Id.)

         From the outset, McCullough experienced construction delays that appeared to be caused by Done Right. (Id. at 7, 16.) McCullough, Travelers, and Done Right repeatedly exchanged correspondence to determine the progress of the repairs. (See generally Id. at 46-53.) In December 2016, Done Right submitted an updated scope of work estimate totaling $144, 122.14 (Id. at 17.) Travelers accepted the estimate and issued payment to McCullough. (Id.)

         McCullough eventually terminated Done Right after she made several attempts to get the company to finish the repairs to her house. (Id. at 17-18.) In May 2017, McCullough filed suit against Travelers in Snohomish County Superior Court alleging the company had breached its contract, violated the Washington Consumer Protection Act, and acted in bad faith. (Dkt. No. 1-2 at 3-5.) Travelers removed the case to this Court on August 15, 2017. (Dkt. No. 1.)

         After filing suit, McCullough hired a third-party contractor to provide an updated scope of repair estimate. (Dkt. No. 17 at 18.) The contractor provided an estimate totaling $291, 165.90-an amount well above McCullough's policy limit for structural damage. (Id.) In light of that estimate, McCullough requested that Travelers pay her the policy limit. (Id.) Travelers declined. (Id.) McCullough subsequently filed notice with Travelers and the Washington Insurance Commission that alleged Travelers violated the Washington Insurance Fair Conduct Act (“IFCA”), Revised Code of Washington § 48.30.015. (Id. at 15.)

         McCullough now moves the Court for three things: (1) leave to amend her complaint to add a claim against Travelers for violation of IFCA; (2) leave to amend her complaint to join Done Right as a defendant and assert claims of breach of contract, conversion, and violation of the Consumer Protection Act; and (3) assuming the Court joins Done Right, to remand the case to Snohomish County Superior Court because there would no longer be complete diversity of citizenship. (Dkt. No. 16 at 1.) The Court addresses these issues in turn.


         A. Amendment to Add IFCA Claim

         District courts are afforded discretion to grant leave to amend and “should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). The generosity in granting leave to amend is “to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003). Courts are to consider five factors in granting leave to amend: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment, and (5) whether the pleading has previously been amended. See United States v. Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011).

         The above factors weigh in favor of granting McCullough leave to amend her complaint to add an IFCA claim against Travelers. McCullough does not seek to amend in bad faith: she wants to add this claim based on Traveler's denial of her request for the policy limit, which occurred after she filed her lawsuit. (Dkt. No. 17 at 18.) She did not act with undue delay: her amendment comes less than two months after she gave statutorily-required notice to Travelers that she planned to file an IFCA claim and less than a month after Travelers refused to settle the claim. (Id. at 7-11.) Travelers is not prejudiced by the amendment: McCullough provided notice that she intended to file the claim and it arises out of the same insurance dispute as her other claims. McCullough has not previously amended her complaint and her IFCA claim would not be futile.

         Travelers raises a single objection to McCullough's amendment. The IFCA states that “Twenty days prior to filing an action based on this section, a first party claimant must provide written notice of the basis for the cause of action to the insurer and office of the insurance commissioner.” Rev. Code of Wash. § 48.30.015(8)(a). Because McCullough filed her lawsuit months before she filed her IFCA notice, Travelers argues that her claim is untimely. The Court disagrees with Travelers' narrow reading of the statute. The statute requires a party to provide timely notice of the basis for bringing an IFCA claim-whether the 20-day notice occurs before a ...

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