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American Commerce Insurance Co. v. Ladenburg

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

April 30, 2018

CHADBOURNE LADENBURG, et al., Defendants.


          Ronald B. Leighton, United States District Judge.

         THIS MATTER is before the Court on Plaintiff ACIC's Motion for Summary Judgment. [Dkt. # 7]. This declaratory judgment action arises out of the sale of Defendant Ladenburg's[1] Gig Harbor home. The home was insured under an ACIC homeowners' policy.

         Ladenburg listed the home for sale with a real estate agent, Wetter. Ladenburg apparently negotiated with one potential buyer, Hoffnagle, before selling the home to a different buyer, Brandt. In December 2017, Hoffnagle sued Ladenburg in Pierce County Superior Court, asserting only a breach of contract claim[2].

         Ladenburg made a claim under his homeowners' policy, asking ACIC to defend him from Hoffnagle's claim, and potentially, to indemnify him for any damages. ACIC commenced this Declaratory Judgment action in January, seeking a declaration that its policy provides Ladenburg no coverage for Hoffnagle's breach of contract claim.

         Around the same time, Hoffnagle amended his Pierce County complaint. He added Wetter and Brandt as defendants, and asserted breach of contract (duties of good faith and fair dealing), specific performance, civil conspiracy, and fraud claims against Ladenburg. He sued Wetter (as Ladenburg's agent) for tortious interference, civil conspiracy, and fraud. The fraud and civil conspiracy claims assert that Ladenburg and Wetter concealed damage to the home[3].

         ACIC moves for summary judgment, arguing that its policy does not provide coverage for Hoffnagle's breach of contract claim. Ladenburg argues that the Motion does not address the second amended complaint and its various claims. ACIC argues in reply that each of the new claims sounds in intentional tort and none are covered under the policy as a matter of law.

         A. Discussion.

         Summary 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 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. There is no requirement that the moving party negate elements of the non-movant's case. Lujan v. National Wildlife Federation, 497 U.S. 871 (1990). Once the moving party has met its burden, the non-movant must then produce concrete evidence, without merely relying on allegations in the pleadings, that there remain genuine factual issues. Anderson, 477 U.S. 242, 248 (1986).

         The interpretation of an insurance policy is a question of law. Overton v. Consolidated Ins., 145 Wn.2d 417, 423 (2002). Insurance policies are contracts which are construed as a whole with the terms interpreted in the way that an average insurance buyer would understand. Id. If the language is clear and unambiguous, the court must enforce it as written and may not create ambiguity where none exists. Am. Nat'l Fire Ins. v. B&L Trucking & Constr. Co., 134 Wn.2d 413, 419 (1998).

         Determining whether insurance coverage exists is a two-step process. McDonald v. State Farm Fire & Cas., 119 Wn.2d 724, 727 (1992). The insured must first demonstrate that “the loss falls within the scope of the policy's insured losses.” Id. To avoid coverage, the insurer must then show that the loss is excluded by specific policy language. Id. at 728. In Washington, the duty to defend is broader than the duty to indemnify. Hayden v. Mutual of Enumclaw Ins., 141 Wn.2d 55 (2000). A duty to defend exists where the complaint against the insured, construed liberally, alleges facts which could impose liability upon the insured within the policy's coverage. Truck Ins. Exch. v. VanPort Homes, 147 Wn.2d 751 (2002). The duty to defend is not, however, limitless. E-Z Loader v. Travelers Ins., 106 Wn.2d 901, 910 (1986) (“We decline to impose on an insurer coverage of a liability not set forth in the policy.”). A claim that is clearly outside of the policy's coverage relieves the duty to defend. Woo v. Fireman's Fund Ins. Co., 161 Wn.2d 43, 53 (2007). The duty to indemnify, unlike the duty to defend, turns on whether the facts of the underlying matter are “actually covered.” American Best Foods v. Alea London, 168 Wn.2d 398 (2010).

         An insurer may not put its own interests ahead of its insured's. Mut. of Enumclaw Ins. Co. v. T&G Const., Inc., 165 Wash.2d 255, 269 (2008). To that end, it must defend until it is clear that the claim is not covered. Truck Ins. Exch., 147 Wash.2d at 765.

         ACIC argues, and demonstrates, that its homeowners' policy specifically excludes coverage for damages or liability resulting from intentional acts. The policy's “Property Coverages” exclude losses caused even in part by intentional acts:

1. "We" do not pay for loss if one or more of the following exclusions apply to the loss, regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same ...

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