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Rushforth Construction Co., Inc. v. Wesco Insurance Co.

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

April 3, 2018

RUSHFORTH CONSTRUCTION CO., INC/ d/b/a AP RUSHFORTH, a Washington Corporation, Plaintiff,
WESCO INSURANCE COMPANY, a foreign insurance company, et al., Defendant.



         This matter comes before the Court on Plaintiff's motion for partial summary judgment against Defendant Wesco Insurance Company (“Wesco”)[1] (Dkt. No. 79), Wesco's motion to continue (Dkt. No. 83), and Wesco's cross-motion for summary judgment (Dkt. No. 86). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS Plaintiff's motion (Dkt. No. 79) and DENIES Wesco's motions (Dkt. Nos. 83, 86) for the reasons explained herein.

         I. BACKGROUND

         Plaintiff Rushforth Construction Company brings suit against twelve insurers for inadequate defense and indemnification in an underlying lawsuit. (Dkt. No. 1 at 4-7.) Plaintiff served as the general contractor on the Lake Hills Village Project. (Id. at 7.) Wesco insured Sound Glass Sales, Inc. (“Sound Glass”), a subcontractor on the project. (Dkt. No. 86 at 2.) Plaintiff was an “additional insured” under Sound Glass's Wesco policy. (Id.) On October 28, 2015, Lake Hills sued Plaintiff for defective construction and subsequent damage. (Dkt. No. 1 at 8.) Lake Hills filed an amended complaint on June 20, 2015. (Dkt. No. 72 at 20.)

         On July 1, 2016, Plaintiff tendered its defense and demand for indemnity to Wesco. (Dkt. No. 73 at 7.) Wesco's third-party claim administer opened a claim, set reserves, and began gathering information. (Dkt. No. 86 at 4.) Wesco requested, and Plaintiff provided, additional information in August 2016. (Id.) Wesco prepared a draft reservation of rights letter (“ROR”) on or around September 1, 2016. (Dkt. No. 74 at 10.) The ROR was ready for approval and issuance by September 23, 2018 but was not issued at that time. (Id.) Over the next ten months, Plaintiff sent Wesco four letters requesting a coverage position. (Dkt. Nos. 79 at 5, 86 at 4) (letters dated November 11, 2016, January 18, 2017, March 7, 2017, March 24, 2017). Upon receipt of these letters, Wesco's adjuster internally requested approval of the ROR, but Wesco neither issued the ROR nor replied to Plaintiff's inquiries. (See Dkt. Nos. 79 at 6, 74 at 22, 74 at 7, 86 at 4.) On March 8, 2017, Wesco's adjuster revised and resubmitted the ROR to be finalized. (Dkt. No. 86 at 4.) Wesco took no further action at the time.

         Plaintiff filed suit against Wesco on July 13, 2017. (Dkt. No. 1.) On July 26, 2017, Wesco finalized and mailed the ROR, agreeing to defend Plaintiff. (Dkt. No. 73 at 10.) Plaintiff rejected Wesco's offer of defense on August 18, 2017. (Dkt. No. 74 at 22.) On October 27, 2017, Wesco advised Plaintiff that its offer to defend stood, and that it would pay its proportionate share of Plaintiff's expenses incurred to date. (Dkt. No. 86 at 5.) Wesco subsequently informed Plaintiff of its position that it had a right to participate in Plaintiff's defense. (Id.) Plaintiff again declined the proffered defense. (Id.)

         Plaintiff brings claims against Wesco for declaratory relief, breach of contract, insurer bad faith, insurer negligence, and violation of Washington's Consumer Protection Act. (Dkt. No. 1 at 31-38.) Plaintiff seeks partial summary judgment on the following elements of these claims: (1) whether Wesco owed and breached its duty to defend; (2) whether Wesco acted in bad faith; and (3) whether Wesco can cure its breach by offering a belated defense. (Dkt. No. 79 at 3.) In response, Wesco moves to continue Plaintiff's motion until discovery is completed. (Dkt. No. 83.) Wesco also cross-moves for summary judgment (Dkt. No. 86).


         A. Wesco's Motion to Continue

         As an initial matter, the Court finds it unnecessary to continue Plaintiff's motion for summary judgment. Wesco requests a continuance in order to complete discovery and obtain information related to harm, causation, and damages. (Dkt. No. 83 at 5.) However, Wesco has not shown how the facts it seeks are essential to its opposition of Plaintiff's motion, which explicitly excludes elements of harm, causation, and damages. (See Dkt. Nos. 94 at 5-6, 102 at 3); Fed.R.Civ.P. 56(d) (party seeking continuance of summary judgment motion must show “by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition”). The Court will not rule on elements of Plaintiff's claims not addressed by its motion.[2] Accordingly, Wesco's motion to continue is DENIED.

         B. Plaintiff's Motion for Partial Summary Judgment

         The Court may grant summary judgment on part of a claim or defense 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). The Court must view the facts and justifiable inferences to be drawn therefrom in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). Once a motion for partial summary judgment is properly made and supported, the opposing party must present specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to find for the non-moving party. Anderson, 477 U.S. at 248-49. Summary judgment is appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

         1. Breach of Duty to Defend

         Plaintiff first moves for a determination that Wesco breached its duty to defend. Wesco does not contest that it had a contractual duty to defend Plaintiff. (See Dkt. No. 86 at 4.) However, Wesco maintains it did not breach this duty because it never denied Plaintiff's tender and eventually offered to defend Plaintiff. (Id. at 5, 7.)

         An insurer's duty to defend is triggered by the filing of a covered complaint. Griffin v. Allstate Ins. Co., 29 P.3d 777, 781 (Wash.Ct.App. 2001). This duty includes the obligation to provide a “prompt and proper defense.” N.H. Indem. Co., Inc. v. Budget Rent-A-Car Sys., Inc., 64 P.3d 1239, 1243 (Wash. 2003). An insurer may breach its duty to defend by failing to respond to an insured's tender in a reasonably timely manner. Allan Windt, Insurance Claims and Disputes § 2:4 (6th ed. 2018) (collecting cases); see Cedar Grove Composting, Inc. v. Ironshore Specialty Ins. Co., Case. No. C14-1443-RAJ, slip op. at *6 (W.D. Wash. June 2, 2015) (“refusal to pay a demand for coverage reasonably promptly is [a] . . . denial of benefits”). An offer to defend after an initial denial does not erase an insurer's breach of its duty to defend. Jaco ...

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