United States District Court, W.D. Washington
ORDER GRANTING SUMMARY JUDGMENT RE ACTUAL CASH
B. Leighton, United States District Judge.
MATTER is before the Court on Plaintiff Allstate's Motion
for Summary Judgment. [Dkt. # 14]. In March 2016, Defendants
Richard and Sandie Pennant purchased from Allstate an Actual
Cash Value (AVC) homeowner's insurance policy for their
rental Property in Hoquiam, Washington. The policy's
limit of liability is $144, 281. The Pennants had tried to
purchase a “replacement cost” policy, but
Allstate would not issue such a policy for this specific
property. The Pennants own several other properties similarly
covered by Allstate ACV policies.
November 24, 2016, an electrical fire caused significant
damage to the Property. The Pennants submitted a fire loss
claim the next day. Allstate accepted coverage and processed
the claim. The Property's value was submitted to
appraisal, and that process returned two possible valuations:
$158, 288.23 for “replacement cost less depreciation,
” and $64, 500 for “fair market value” at
the time of the loss. The Pennants claim they are entitled to
the higher number under their policy. Allstate seeks judgment
as a matter of law that the Pennants are entitled to only
$58, 500, what it claims is the fair market value
of the property, less the Pennants' $500 deductible.
policy provides coverage for the smallest of three
possible scenarios: (1) the actual cash value of the
damaged, destroyed or stolen property at the time of loss;
(2) the amount necessary to repair or replace the
damaged, destroyed or stolen property with other of the like
kind and quality; or (3) the policy's limit of
liability. [Dkt. # 14, p. 3].
only issue is the meaning of “actual cash value”
under the policy.
judgment is proper “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c). In determining whether an issue of fact
exists, the Court must view all evidence in the light most
favorable to the nonmoving party and draw all reasonable
inferences in that party's favor. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248-50 (1986); Bagdadi v.
Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine
issue of material fact exists where there is sufficient
evidence for a reasonable factfinder to find for the
nonmoving party. Anderson, 477 U.S. at 248. The
inquiry is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of
law.” Id. At 251-52. The moving party bears
the initial burden of showing that there is no evidence which
supports an element essential to the nonmovant's claim.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Once the movant has met this burden, the nonmoving party then
must show that there is a genuine issue for trial.
Anderson, 477 U.S. at 250. If the nonmoving party
fails to establish the existence of a genuine issue of
material fact, “the moving party is entitled to
judgment as a matter of law.” Celotex, 477
U.S. at 323-24.
Court's task in interpreting an insurance contract is
well-settled: it looks to the whole contract, giving it a
fair, reasonable, and sensible construction. Holden v.
Farmers Ins. Co., 169 Wn.2d 750, 755-56 (2010).
Washington law provides that an “[i]nsurance contract
should be given a practical and reasonable, rather than a
literal, interpretation, and should not be given a
construction which would lead to an absurd conclusion or
render the policy nonsensical or ineffective.”
Wash. Pub. Util. Dists.' Utils. Sys. v. Pub. Util.
Dist. No. 1 of Clallam Cnty., 112 Wn.2d 1, 11 (1989).
Put another way, a court “may not give an insurance
contract a strained or forced construction which would lead
to an extension or restriction of the policy beyond what is
fairly within its terms.” McAllister v. Agora
Syndicate, Inc., 103 Wn.App. 106, 109 (2000) (quoting
Tewell, Thorpe, & Findlay, Inc. v. Cont'l Cas.
Co., 64 Wn.App. 571, 576 (1992)). The rule that
ambiguous contract language is to be construed in favor of
the insured and most strongly against the insurer should not
be permitted to have the effect of making a plain agreement
ambiguous. McAllister, 103 Wn.App. At 110 (citing
West Am. Ins. Co. v. State Farm Mut. Auto. Ins. Co.,
80 Wn.2d 38, 44 (1971).
To define actual cash value as anything but fair market value
undermines the force and effect of the policy.
Pennants argue that because the ACV policy language includes
a reference to “deprecation” it necessarily
follows that “actual cash value” means
“replacement cost less depreciation.” But the
policy provides only that depreciation may play a
role, not that it necessarily will:
property . . . will be settled on an actual cash value basis.
This means there may be a deduction for
depreciation. Payment will not exceed the smallest of:
a) the actual cash value of the damaged, destroyed or stolen
property at the time of the loss;
b) the amount necessary to repair or replace the damaged,
destroyed or stolen property with other of like ...