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Asko Processing, Inc. v. Kibble & Prentice Holding Co.

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

February 7, 2018

ASKO PROCESSING, INC., a Washington corporation, Plaintiffs,
KIBBLE & PRENTICE HOLDING COMPANY, a Washington company; and CITIZENS INSURANCE COMPANY OF AMERICA, a foreign company, Defendant.



         This matter comes before the Court on the parties' Motions for Summary Judgment. Dkts. #12 and #15. Plaintiff Asko Processing, Inc. (“Asko”) argues for partial summary judgment on its claims for reformation and breach of contract, citing to evidence of mutual mistake in the insurance contract's formation. Dkt. #12. Defendant Citizens Insurance Company of America (“Citizens”) opposes that Motion and argues in a separate Motion that all of Asko's claims should be dismissed. Dkts. #24 and #15. For the reasons set forth below, the Court DENIES both parties' Motions for Summary Judgment.

         I. BACKGROUND

         Plaintiff Asko provides electroplating, anodizing, and other related metal finishing treatment services for the aerospace and electronics industries. Dkt. #13 at 1-2. Asko operates out of several locations in the Puget Sound area of Western Washington. For the time period relevant to this case, these locations included three buildings located at 434, 456, and 462 North 35th Street in Seattle. Id. at 2. For clarity, the parties refer to the buildings by address. The 456 location served as a shipping and receiving terminal for Asko's customer's parts before and after work was performed on them, housed Asko offices, and provided storage for supplies. Id. Parts from Asko's customers were stored at the 462 location before being processed at the 434 location and then returned to 456 for shipment back to Asko's customers. Id. Asko has testified that the 462 location served as its “warehouse” on the 400 block of N. 35th Street, storing “customers' merchandise.” Id.; Dkt. #14-1, Ex. A at 183:23-184:8.

         On September 30, 2011, Asko first obtained insurance on its properties from Defendant Citizens through its broker, Kibble & Prentice (“Kibble”). See Dkt. #16-1 at 118. Throughout the relevant time period, Citizens provided $200, 000 in business income (“BI”) coverage[1] for the 462 location and $1, 190, 000 in BI coverage for the 456 location. Asko renewed that coverage annually. How those two coverage figures came to be applied to those two addresses is at issue. Representatives from Citizens and K&P have testified at deposition that they intended for Citizens to provide BI coverage for Asko's “warehouse” on the 400 block of North 35th Street in the amount of $1, 190, 000. Dkt. #14-1, Ex. C, at 68:24-69:11; Ex. D, at 63:10-64:2. However, the parties do not appear to agree that Asko's 462 location-and that location alone-served as Asko's warehouse on the 400 block of N. 35th Street. See Dkt. #14-1, Ex. C at 43:22-44:4 (“Q. Can you agree that on the date of the loss there was no warehouse at 456 North 35th Street in Seattle? A. I don't know that I can agree with that. My understanding is there is storage at that facility.”); Dkt. #13 at 2. In any event, the $1, 190, 000 in BI coverage was placed on the 456 location explicitly, which Citizens' underwriting documents described as a warehouse. Dkt. #14-1, Ex. B at 42:16-21.

         Since at least 2005, and before Defendant Citizens involvement, the property at 462 had BI insurance in the amount of $200, 000. See Dkt. #16-1, Ex. B at 20:14-21:4, and Ex. J. Kibble prepared annual insurance summaries for Asko that showed the $200, 000 BI limit on 462. Dkt. #16-1, Ex. B at 77:23-78:18. Kibble also prepared “statements of value” (“SOV”), which reflect the amount of insurance coverage, including BI limits, associated with each of Asko's properties. These SOV's show a $200, 000 BI limit on 462. Dkt. #16-1, Ex. J. Importantly, these SOV's listed the Asko property at 456 N 35th as “ASKO - Warehouse.” Id.

         On September 30, 2014, a fire occurred at Asko's 462 location. Id. at 3. This fire was significant enough to “essentially shut down Asko's entire operation.” Id.

         Following the fire, Kibble sought reformation of the policy on Asko's behalf so that there would be $1, 190, 000 in BI limits for the damaged 462 building instead of just $200, 000. Citizens refused to reform the policy. Dkt. #14-1, Ex. I and Ex. J. Asko originally filed this suit in King County Superior Court; Citizens removed on September 15, 2017. Dkt. #1. Asko brings claims against Citizens for reformation, breach of contract, insurance bad faith, and claims under the Insurance Fair Conduct Act (“IFCA”) and Washington State's Consumer Protection Act (“CPA”). Dkt. #1-3. On October 26, 2017, Asko and Citizens each filed a Motion for Summary Judgment. Dkts. #12 and #15. Pursuant to stipulation, Responses were filed on November 13, 2017, and no reply briefs were filed. See Dkt. #11.


         A. Legal Standard

         Summary judgment is appropriate where “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); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Material facts are those which might affect the outcome of the suit under governing law. Anderson, 477 U.S. at 248. In ruling on summary judgment, a court does not weigh evidence to determine the truth of the matter, but “only determine[s] whether there is a genuine issue for trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing Federal Deposit Ins. Corp. v. O'Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992)).

         On a motion for summary judgment, the court views the evidence and draws inferences in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255; Sullivan v. U.S. Dep't of the Navy, 365 F.3d 827, 832 (9th Cir. 2004). The Court must draw all reasonable inferences in favor of the non-moving party. See O'Melveny & Meyers, 969 F.2d at 747, rev'd on other grounds, 512 U.S. 79 (1994). However, the nonmoving party must make a “sufficient showing on an essential element of her case with respect to which she has the burden of proof” to survive summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Further, “[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 251.

         B. Reformation of the Insurance Contract

         Under Washington law, insurance contracts are subject to reformation like any other contract when there is a showing of mutual mistake. Rocky Mt. Fire & Cas. Co. v. Rose, 62 Wn.2d 896, 902, 385 P.2d 45 (1963). A trial court may use its equitable power to reform a contract where there is clear, cogent and convincing evidence of a mutual mistake or a unilateral mistake together with inequitable conduct. Wilhelm v. Beyersdorf, 100 Wn.App. 836, 843, 999 P.2d 54 (2000); See also Wash. Mut. Savings Bank v. Hedreen, 125 Wn.2d 521, 886 P.2d 1121 (1994). “Mutual mistake occurs if the intention of the parties is identical at the time of the transaction and the writing executed by them does not express that intention.” Wilhelm, 100 Wn.App. at 843. In order to reform a contract on this basis, a court must find not only that a mistake has occurred, but also that the ...

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