United States District Court, W.D. Washington, Tacoma
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, DENYING
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND DENYING
PLAINTIFF'S MOTION FOR SANCTIONS
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant American Family
Mutual Insurance Company's (“American
Family”) motion for summary judgment (Dkt. 7) and
Plaintiff Tom Sparks's (“Sparks”)
cross-motion for summary judgment (Dkt. 9). Also before the
Court is Sparks's motion for Rule 11 sanctions. Dkt. 17.
The Court has considered the pleadings filed in support of
and in opposition to the motions and the remainder of the
file and for the reasons stated below (1) denies American
Family's motion for summary judgment, (2) denies
Sparks's motion for sanctions, and (3) grants in part and
denies in part Sparks's motion for summary judgment.
November 27, 2015, a fire significantly damaged Sparks's
home in Bonney Lake, Washington. Dkt. 1-2 at 2. The fire also
destroyed his personal property in the home. Id.
made a claim for his covered property under the “Gold
Star Homeowners Policy” he purchased through American
Family, which provided dwelling, personal property, and loss
of use coverage. Dkt. 8-1 at 5-6. The policy allowed Sparks
to recover the “Actual Cash Value” of his damaged
or destroyed personal property under the following settlement
1. REPLACEMENT COST. Except for property listed in 2. or 3.
below the following applies:
a. until you make the actual repair or
replacement, we will pay only the actual cash
value of the damaged property;
b. After you complete repair or replacement,
we will pay the difference between the actual cash
value of the damaged property and the cost to repair
or replace such property;
c. If property is not repaired or replaced within two years
after the date of loss, we will pay only the actual
cash value of the damaged property.
Dkt. 8-1 at 30. The policy defines “Actual Cash
Value” as follows: “Actual Cash
Value means the amount it costs to repair or replace
property with property of like kind and quality less
depreciation for physical deterioration and
obsolescence.” Dkt. 8-1 at 3.
policy also requires that, after a loss, claimants submit to
American Family “a detailed inventory of the damaged
property, showing the quantities, when and where acquired,
original cost, current value and the amount of loss, ”
attaching “to the inventory bills, receipts and related
documents that substantiate all amounts.” Dkt. 8-1 at
public adjuster compiled an inventory of personal property on
behalf of Sparks and transmitted the inventory to American
Family. Dkt. 10-1 at 34-75. The inventory included the room
in which the personal property was located; a description of
the property including brand, type, and model if known; the
source or URL of the website from which the items were
available or purchased; prices; taxes and shipping; and
miscellaneous notes that sometimes detailed information such
as whether an item was “new, ” “hand made,
” “no longer made.” Id. The
inventory estimated the replacement cost total of
Sparks's destroyed property at $108, 783.23. Id.
6, 2016, American Family responded to the public adjuster and
confirmed that it had received the inventory. Dkt. 10-1 at
77. American Family also noted that the inventory did not
reference the age of the listed property. Id.
therefore, American Family requested that the adjuster
“[p]lease add an additional column to [the] worksheet
and provide the age of each item.” Id.
January 16, 2017, American Family returned its own estimate
of Plaintiff's loss. Dkt. 10-2. American Family estimated
the replacement cost value as $89, 452.90. Id. at 2.
American Family also estimated that Sparks's personal
property had sustained $52, 111.75 in depreciation, resulting
in an estimated actual cash value of $36, 007.70.
Id. American Family's inventory included a
description of each item, unit prices, estimated replacement
cost, estimated depreciation, and estimated actual cash
value. Id. at 7-137. The depreciation estimate also
included a notation of the age of the covered item and a
generic estimate of the items' expected lifespan.
Id. Accordingly, a sample of American Family's
estimate appears as follows:
10-2 at 137.
a review of the estimate shows that American Family's
depreciation estimate was obtained simply by dividing the
item's price by the number of years for its estimated
lifespan, multiplying that number by the item's estimated
age, and then subtracting that number from the item's
price. The formula can be expressed as Replacement Cost - Age
x (Replacement Cost / Estimated Lifespan) = Actual Cash
Value. For instance, in regards to Sparks's Werner
24' Aluminum Extension Ladder, the total replacement cost
estimate of $172.99, divided by the estimated lifespan of 20
years, yields a value of $8.6495. Because the ladder was only
one year old, the price of $172.99 less the total of $8.6495
multiplied by one year, equals American Family's
estimated actual cash value of $164.3405. Similarly, the
estimated total replacement cost of Sparks's assorted
potting containers ($81.60) divided by their expected
lifespan (10 years), multiplied by the containers' age (4
years), and then subtracted from the estimated replacement
cost value ($81.60), yields American Family's estimated
actual cash value ($48.96).
January 17, 2017, the public adjuster responded via email to
American Family's estimate. Dkt. 10-3 at 3-4. The public
adjuster noted that there was a “significant
depreciation taken on a number of items, including 100%
depreciation taken on several items.” Id.
Accordingly, the public adjuster requested that American
Family explain the formula it used to calculate depreciation.
Id. at 4.
January 20, 2017, American Family responded via email,
stating that its depreciation calculations were “based
on [the items'] age over their expected lifespan.”
Dkt. 10-3 at 2-3. Additionally, American Family's email
stated that in response to the public adjuster's email
they had “changed the depreciation from 100% to 90% to
give some value to those” items that American Family
had deemed worthless based on their age. Id. at 3.
On February 8, 2017, the adjuster replied by email to state,
“I don't see anywhere in your policy that states
age is a consideration in determining depreciation or Actual
Cash Value of the personal property.” Id. at
2. The adjuster also noted that, in a case before the Western
District of Washington, the court had recently found that
American Family's use of age to calculate depreciation
was improper. Id. Accordingly, the adjuster
requested that American Family confirm whether its
depreciation calculation was “solely age
April 26, 2017, the public adjuster again responded to
American Family's communications. Dkt. 10-3 at 7-8. The
public adjuster stated that American Family had calculated
“an unreasonably high depreciation amount” and
stated that American Family's use of age as the
“sole consideration in American Family's
application of depreciation . . . runs contrary to the clear
and unambiguous language in the policy that depreciation can
be determined by physical deterioration and
obsolescence.” Id. at 7 (emphasis added).
December 21, 2017, American Family had not changed its
position regarding its depreciation calculations, so Sparks
commenced this action by filing his complaint in Pierce
County Superior Court. Dkt. 1-2. Sparks alleges that American
Family's depreciation calculation constitutes (1) a
breach of the applicable policy's terms, (2) bad faith,
and (3) a violation of Washington State's Consumer
Protection Act (“CPA”). Id. On January
17, 2018, American Family removed the case to federal court
pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1441.
February 7, 2018, American Family filed its present motion
for summary judgment. Dkt. 7. On February 26, 2018, Sparks
filed his response and the present cross-motion for summary
judgment. Dkt. 9.
March 2, 2018, American Family replied on its motion for
summary judgment and filed an answer to the complaint. Dkts.
11, 12. On March 19, 2018, American Family filed its response
to Sparks's cross-motion for summary judgment. Dkt. ...