United States District Court, W.D. Washington, Seattle
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
J. PECHMAN, UNITED STATES DISTRICT JUDGE
above-entitled Court, having received and reviewed:
1. Plaintiff's Motion for Partial Summary Judgment (Dkt.
2. Defendant's Response to Plaintiff's Motion for
Partial Summary Judgment (Dkt. No. 19);
3. Plaintiff's Reply in Support of Plaintiff's Motion
for Partial Summary Judgment (Dkt. No. 22); all attached
declarations and exhibits, and relevant portions of the
record, rules as follows:
ORDERED that the motion is GRANTED; Plaintiff is granted
summary judgment on its claims that Defendant breached its
duty to defend and that the breach constituted an act of bad
faith on Defendant's part.
(a construction company) was covered by a series of
commercial general liability (“CGL”) policies
issued by Houston Specialty Insurance Company
(“HSIC”), for periods running from
• August 23, 2011 to August 23, 2012 (“the 2011
• August 23, 2012 to August 23, 2013 (“the 2012
• August 23, 2015 to August 23, 2016 (“the 2015
27, 2012, Plaintiff entered into a contract with MCS for the
improvement of a building called the Williams Court
Apartments (“Williams Court”). In July of 2013,
MCS contacted Plaintiff regarding some leaks in the building.
Although Plaintiff's investigation lead it to believe it
was not at fault, it made some repairs and recommended some
further measures to address the problem. Afterwards,
Plaintiff was informed that the leaks continued.
light of the unresolved nature of the problem, Plaintiff
tendered a claim to Defendant on March 1, 2016. Defendant
delegated investigation of the claim to a third-party
administrator, Tri-Star Risk Management
(“Tri-Star”), which contacted Plaintiff's
counsel on March 3, requesting information and documents.
(Davis Decl., Dkt. No. 18-1, Ex. A at 16 of 26.) Plaintiff
provided documents and information on March 7. (Id.
at 12 of 26.)
April 20, 2016, MCS filed suit against 2FL, alleging that
“the Williams Court Apartments” had suffered
water damage resulting from 2FL's work. (Floren Decl.,
Dkt. No. 17- 1, Ex. B at 80-85 of 115.) Plaintiff contacted
Defendant, which acknowledged tender of the lawsuit (but
nothing else) on April 26. (Id., Ex. C at 87 of
115.) For approximately the next five months, Defendant took
no position regarding defense or coverage and hired no
counsel to defend Plaintiff. (Dkt. No. 17, Floren Decl. at
¶ 15.) Meanwhile, on May 17, 2016, MCS was granted an
order of default (Id., Ex. E at 106-108 of 115), an
action of which Plaintiff received no notice. (Id.
at ¶ 21.)
September 23, 2016, Defendant sent a letter to Plaintiff
denying all coverage. The letter contained multiple grounds
for Defendant's position that no coverage or obligation
to defend existed. (Id., Dkt. No. 17-1, Ex. D at
90-105 of 115.) Following the denial of coverage or
defense, Plaintiff tendered defense of the underlying lawsuit
to another insurer, International Insurance Company of
Hannover SE (“Hannover”), which accepted the
tender. (Id. at ¶ 18.)
March 17, 2017, the court in the underlying litigation
granted MCS's motion for default judgment in the amount
of $452, 905.51 plus fees and costs. (Id., Ex. F at
109-111 of 115.) Plaintiff received notice of the default
judgment via letter from counsel for MCS on March 21, 2017
and notified both Defendant and Hannover. (Id. at
¶ 21.) Hannover assigned an attorney (Justin Bolster of
Preg O'Donnell & Gillett) to the case. (Id.
at ¶ 22.) Without notice to Plaintiff or Plaintiff's
current counsel, Defendant contacted Hannover's lawyer in
April of 2017 and offered to join in Plaintiff's defense.
(Id. at ¶ 23.)
of 2017, apparently believing that Hannover's counsel
would not adequately represent Defendant's interests,
Defendant decided to retain its own attorney. (Davis Decl.,
Dkt. No. 18-1, Ex. A at 4 of 26.) HSIC informed Plaintiff by
letter dated May 8, 2017 of that decision. (Id., Ex.
B at 20-22 of 26.) Plaintiff responded the following day by
rejecting Defendant's offer of defense. (Id.,
Ex. C at 24-26 of 26.)
June, 5, 2017, the default judgment in the underlying
litigation was vacated (Floren Decl., Dkt. No. 17-1, Ex. G at
110) and the MCS lawsuit is proceeding with ...