United States District Court, W.D. Washington
MARKET PLACE NORTH CONDOMINIUM ASSOCIATION, a Washington non-profit corporation, Plaintiff,
AFFILIATED FM INSURANCE COMPANY, Defendant.
ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR
PARTIAL SUMMARY JUDGMENT
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE
matter comes before the Court on Plaintiff Market Place North
Condominium Association (“the Association”)'s
Motion for Partial Summary Judgement against Defendant
Affiliated FM Insurance Company (“AFM”). Dkt.
#19. The Association asks the Court to rule as a matter of
law that “the Association's 2015-16 AFM all-risk
property policy covers both water intrusion damage and mold,
” that AFM owes coverage to the Association under the
insurance contract, and that AFM's denial of coverage
violates Washington's Insurance Fair Conduct Act
(“IFCA”). Defendant opposes this Motion and
alternatively seeks relief under Rule 56(d). Dkt. #27. For
the reasons set forth below, the Court GRANTS IN PART the
in 1982, the Market Place North Condominium is located in
downtown Seattle. Dkt. #22 (Peter Danelo Declaration), ¶
3. The property consists of a high-rise tower, a set of
townhomes, a parking garage, and four commercial spaces.
Id. There are 90 units, 86 of which are residential.
Id. The property is managed by an Association, which
is acting as the Plaintiff in this case. The Association is
governed by a volunteer board of directors. Id. at
¶ 4. In August 2015, the Association undertook certain
outdoor deck repairs of the high-rise tower. Id. at
¶ 5. Those repairs were completed in spring 2016 and
cost the Association approximately $400, 000. Damage
uncovered during those deck repairs led the Association to
investigate other portions of the building. Id. at
¶ 6. After learning in the summer of 2016 that water
intrusion damage, or at least signs of it, existed throughout
the property, the Association put its insurer, Defendant in
this case, on notice. Id. at ¶ 7.
Association's investigation team met in person with AFM
in early December 2016 to show damage already uncovered at
the property, indicators that additional damage existed, and
to discuss the Association's proposed intrusive
investigation plan that it wanted AFM to participate in.
See Dkt. 20-3. AFM rejected the Association's
proposal, indicating that it did not believe it had a legal
obligation “to investigate potential damage, as opposed
to actual damage.” Dkt. #20-4 at 2. The Association
then sent AFM a notice under Washington's Insurance Fair
Conduct Act based on AFM's failure to investigate. Dkt.
#20-5. AFM did not change its position, and the Association
filed a Complaint in King County Superior Court in March of
2017. See Dkt. #6. AFM removed to this Court in
April of 2017. Dkt. #1.
intrusive investigation was scheduled to begin in May of
2017, and AFM eventually agreed to participate and pay half
of the associated costs, estimated to be around $150, 000.
See Dkt. #20-6. The investigation consisted of
approximately 40 openings throughout the property and
produced at least some evidence of long-term and ongoing
water intrusion damage, including at the framing and
sheathing. Dkt. #21 (Moe Declaration) at ¶5. In June,
around the time the investigation was ending, AFM advised
that it had changed its position and was now unwilling to pay
any of the costs associated with the investigation.
See Dkt #20-6. The parties attempted to proceed with
alternative dispute resolution, which was unsuccessful. After
extension of certain deadlines in this case, on September 22,
2017, AFM denied coverage in a letter to the Association.
Dkt. #20-7. It is unclear if this letter was a final
decision. Although AFM stated coverage decisions and
conclusions it also stated that it was providing
“preliminary analysis of potential coverage issues,
” and that it “finds itself in the position of
attempting to analyze coverage in the absence of a fully
supported and documented claim.” Id. That
letter was accompanied by a report from AFM's consultant,
WJE, which documented the presence of water intrusion
“deterioration” and “decay” at the
property. See Dkt. #20-8. AFM's letter primarily
relied upon three coverage exclusions: defective
construction, faulty maintenance, and/or wear and
tear/corrosion/deterioration. See Dkt. #20-7. AFM
also discussed evidence that the Association may have known
about the water damage on an ongoing basis and stated,
“[g]iven the large volume of documents the Association
has produced, AFM's careful review of the documentation
is still ongoing.” Id. at 14-15.
response to AFM's apparent coverage denial, the
Association provided another IFCA notice in October 2017.
Dkt. #20-9. The Association later produced to AFM a scope of
repair and cost document estimating that repair costs will
exceed $27 million. Dkt. #20 (Miller Declaration) at
Association amended its complaint on January 4, 2018, to add
an IFCA claim. Dkt. #18. The current Amended Complaint has
causes of action for declaratory relief, breach of insurance
contract, common law bad faith, breach of the state Consumer
Protection Act (“CPA”), negligence, and IFCA.
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)).
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,