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Reverse Now VII, LLC v. Oregon Mutual Insurance Co.

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

February 2, 2018



          Marsha J. Pechman United States District Judge.

         THIS MATTER comes before the Court on Defendant's Motion for Summary Judgment. (Dkt. No. 22.) Having reviewed the Motion, the Response (Dkt. No. 31), the Reply (Dkt. No. 35) and all related papers, the Court GRANTS in part and DENIES in part. The Court declines to hear oral argument on this matter.


         Plaintiff Reverse Now VII, LLC brings this action against Defendant Oregon Mutual Insurance Company (“Oregon Mutual”). Plaintiff is the owner of an apartment complex in Seattle, Washington that was insured by Oregon Mutual. (Dkt. No. 41.)

         On February 2, 2014, the apartment complex was damaged by fire. (Dkt. No. 23, Ex. D; see also Dkt. No. 32, Ex. 9 at 3.) Relevant to this dispute is damage to portions of the apartment's exterior marbleCrete. MarbleCrete is a cement, stucco-type overlay made with crushed marble, and often used in exterior surfacing.[1] (Dkt. No. 22 at 3; Dkt. No. 31 at 1.) While it is possible in some cases to “match” the color and texture of replacement marbleCrete with that of existing marbleCrete, this process, as well as the “tie in” process, was apparently complicated by the age and condition of the apartment's existing surfacing. (See Dkt. No. 32, Ex. 8.) Accordingly, although only a portion of the west elevation was damaged by the fire, Plaintiff sought to have the entire building - and at a minimum, the entire west elevation - reclad. (Dkt. No. 32, Ex. 9 at 3-4.)

         After receiving notice of the claim on February 3, 2014, Oregon Mutual accepted coverage and assigned internal adjuster James Rumppe and independent adjuster John Colvard to investigate the scope of repairs and adjust loss. (Dkt. No. 22 at 3; see also Dkt. No. 24, Exs. 2, 7.)

         On March 4, 2014, Oregon Mutual paid Plaintiff $65, 352.74, an amount representing the estimated value of repairs.[2] (Dkt. No. 22 at 4; Dkt. No. 24, Ex. 12.) Plaintiff expressed concerns about the estimate, and in particular, whether it would cover the cost of matching the replacement and existing marbleCrete. (Dkt. No. 24, Ex. 7.)

         On March 26, 2014, Plaintiff retained insurance adjuster Paul Moreland to represent it in its claim. (Dkt. No. 24, Ex. 14.) After conferring with Mr. Moreland, Mr. Colvard requested additional estimates from three marbleCrete subcontractors. (Id., Ex. 18.) Each advised Mr. Colvard that matching was “not feasible.” (Id.) According to Mr. Colvard's report to Oregon Mutual, the subcontractors agreed it would not be possible to “effectively replace[] just a portion of the west elevation with no breaking points of control joints or separated corners, ” and at a minimum, they would need to repair “the north/south elevations to the vertical control joints on those elevations.” (Id., Ex. 19.) Further, they agreed they could not “guarantee a color match on the north and south elevations.” (Id.)

         On August 6, 2014, Mr. Rumppe provided an internal report to Oregon Mutual's claim manager. (Dkt. No. 32, Ex. 9.) The internal report included the following note regarding repairs to the marbleCrete:

A partial repair of the west elevation does not appear to be a viable option; so at a minimum [best case scenario] the stucco repairs will cost at least $387, 750.63 if we do the full elevation. It's likely that we will get pulled into the west, and north/south elevations [which will take us around the ends of the building and stop at a vertical control joint at covered area]. If so, the stucco repairs will total $542, 925.43 [this is not best case scenario but would represent a good compromise].

(Id. at 4-5.)

         Mr. Rumppe's report noted that coverage for matching is “traditionally a difficult issue to fight.” (Id. at 4.) In particular:

If the marblecrete is in its natural finish most carriers have typically agreed to elevation replacement but if [it] has been painted they will not replace. In this instance, all of the marblecrete is in its natural finish. Accordingly, it's going to be a tough fight on the aesthetics.


         Finally, Mr. Rumppe reported that Mr. Moreland had agreed to a test repair, the outcome of which would determine the amount of Oregon Mutual's ACV payment for the marbleCrete. (Id. at 6.)

         Oregon Mutual claims that, despite several attempts, it was unable to contact Plaintiff or Mr. Moreland for approximately one year.[3] (Dkt. No. 22 at 5.) In March 2015, Oregon Mutual sent Plaintiff and Mr. Moreland correspondence asking if they disputed the ACV calculation and stating that if no response was received by April 2015, it would conclude there was no ongoing dispute. (Dkt. No. 22 at 6; Dkt. No. 24, Exs. 4, 16.) In May 2015, having received no response, Oregon Mutual closed the claim. (Dkt. No. 22 at 6; Dkt. No. 24, Ex. 6.)

         On November 6, 2015, Mr. Moreland reported to Mr. Colvard the results of a test repair. Mr. Moreland reported that the subcontractor had been unable to match the color, size, and texture of the existing marbleCrete, and that the WRB under the marbleCrete was not in a condition to be tied into a new section. (Dkt. No. 24, Ex. 17.) Mr. Moreland explained that, due to concerns about the tie in, the subcontractor refused to warranty the replacement marbleCrete. (Id.) Further, Mr. Moreland explained that a marbleCrete product representative stated “it would be unwise to try and tie into the existing system.” (Id.)

         On November 11, 2015, Mr. Rumppe sent Mr. Colvard a report regarding the test repair. (Id., Ex. 25.) The report noted that the test repair appeared “brighter/whiter than the surrounding material, ” and that “[t]he pebble grain and color does not quite match.” (Id.)

         On December 3, 2015, Mr. Colvard reported to Oregon Mutual that he had contacted the subcontractor who performed the test repair and learned that Plaintiff had instructed him not to attempt to match the color. (Id., Ex. 26.) The subcontractor told Mr. Colvard he thought he could have matched the color, but not the texture, of the existing marbleCrete. (Id.)

         On December 14, 2015, Mr. Moreland notified Mr. Colvard of Plaintiff's intent to enter the appraisal process. (Id., Ex. 27.) In the same correspondence, Mr. Moreland stated that “Oregon Mutual is in violation of the Washington Administrative Code, ” including WAC 284-30-330(3), (6), (7), (8), and (18); WAC 284-30-370; and WAC 284-30-380(4) and (7).[4] (Id.) Further, Mr. Moreland noted that Plaintiff “will be forced to take action under RCW 48.30.015” if Oregon Mutual failed to cure these alleged violations. (Id.) The following day, Mr. Moreland sent a letter to the Washington State ...

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