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Wall v. Country Mutual Insurance Co.

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

May 17, 2018

DANIEL and CARI WALL, Plaintiffs,


          Marsha J. Pechman, United States Senior District Court Judge.

         The above-entitled Court, having received and reviewed:

1. Plaintiffs' Motion for Summary Judgment (Dkt. No. 18), Defendant Country Mutual's Response to Plaintiffs' Motion for Summary Judgment (Dkt. No. 29), and Plaintiffs' Reply in Support of Motion for Summary Judgment (Dkt. No. 31);
2. Defendant Country Mutual's Motion for Summary Judgment (Dkt. No. 25), Plaintiffs' Opposition to Defendant's Motion for Summary Judgment (Dkt. No. 35), and Defendant Country Mutual's Reply in Support of Motion for Summary Judgment (Dkt. No. 38);

         all attached declarations and exhibits; and relevant portions of the record, rules as follows:

         IT IS ORDERED that Plaintiffs' motion for summary judgment is DENIED.

         IT IS FURTHER ORDERED that Defendant's motion for summary judgment is PARTIALLY GRANTED and PARTIALLY DENIED. Plaintiffs' claim for equitable estoppel will be DISMISSED.


         In 2011, Plaintiffs purchased a “jewelry endorsement” addendum to their coverage with Defendant; among the items covered was Mrs. Walls' wedding ring (appraised at approximately $41, 000). (Dkt. No. 19, Dan Wall Declaration at ¶ 3.) The policy contained a provision which required them to bring any claims under the policy within one year of the date of “occurrence” of the loss. (Dkt. No. 27-4, Defendant Ex. 8 at 34-36.)

         In July 2016, Mrs. Wall took the ring to Ben Bridge Jewelers in preparation for replacing the center stone with a larger one. (Dkt. No. 20, Cari Wall Declaration at ¶ 2.) A salesperson at Ben Bridge informed Mrs. Wall that the diamond was a fake (moissanite). Believing that their original diamond had been replaced sometime after purchase[1], Plaintiffs reported a theft to Defendant within TWO days of their discovery. (Dkt. No. 21-2.)

         Defendant assigned an adjuster (Volak) to the claim within 24 hours. Defendant's Claim Activity Log indicates that Volak spoke with Mrs. Wall, who informed him that, outside of leaving the ring for an afternoon with Anthony's Jewelry in January 2009 (to replace the center stone) and having it re-tipped “with in the last 5 years” (again, leaving it for an afternoon), the ring had not been out of her possession. (Id. at 26.) Volak determined that, as there had not been a covered loss reported within 12 months from when the loss might have occurred, the claim would be denied. (Dkt. No. 26, Declaration of Thielbar at ¶ 6.)

         Defendant says it “decided to continue to investigate the claim” (Id. at ¶ 8); Plaintiffs say Defendant investigated further because they threatened to cancel all their Country Mutual policies (the threat is reflected in Claim Activity Log; Dkt. No. 21-2 at 23). The claim was assigned to an investigator in Special Investigations Unit (Thielbar).[2] Thielbar interviewed Mrs. Wall, who indicated at that point that the last time the ring was out of her possession was sometime between November 2015 and February 2016 when it was taken to Anthony's Jewelry in Covington and cleaned; it was out of her possession approximately 15 minutes. (Dkt. No. 21-2 at 16.) He interviewed the owner of Anthony's Jewelry, who said that a ring could be removed and reset in approximately 5-10 minutes, but that he was the only one in the store with that level of skill (and he denied doing anything improper). He also said that such a process would leave pry marks that would need to be sanded or polished off. (Id. at 13-14.)[3] The owner also said that the store kept no records of cleanings. (Thielbar Depo at 46:23 - 47:15.)

         Defendant concluded that Plaintiffs had still not established that the loss had occurred within the 12 months prior to their filing of the claim and on August 30, 2016 sent Plaintiffs a “Notice of Denial of Coverage.” (Dkt. No. 21-5, Ex. F.) The reason stated for the denial was the absence of any proof that the ring had been worked on (i.e., out of Mrs. Walls' possession) any time during the 12 months preceding the filing of the claim. (Id.)

         The Walls hired an attorney who contacted Defendant to complain about the denial, accusing Defendant's investigators (among other things) of “not conduct[ing] any investigation other than speaking with the Walls.” (Dkt. No. 21-6, Ex. G; “December 6 letter”.) Defendant's response detailed an investigation which had included interviews with the Walls, Anthony's Jewelry, Ben Bridge Jewelers, the appraiser at Exquisite Jewelry Appraisal Service and the King County Sheriff's Department. (Dkt. No. 26-3, Ex. 3; “December 9 letter.”) The letter also indicated that Mrs. Wall had told the investigator that the cleaning had taken approximately 15 minutes, and “[a]ccording to the jewelers we spoke to this is not enough time to exchange the stone and repair the pry marks on the tips that would have been done during this process.” (Id. At 2.)[4]

         Plaintiffs filed suit in King County Superior Court on February 17, 2017, alleging violations of the Insurance Fair Conduct Act (“IFCA”) and the Consumer Protection Act (“CPA”), bad faith, breach of contract and equitable estoppel. The matter was then removed to this district. (Dkt. Nos. 1-4.) When deposed, both Plaintiffs indicated that they had not suffered any damages other than the loss of the ring. (Dkt. No. 27-1, Depo of Cari Wall at 29:6-24; Dkt. No. 27-2, Depo of Dan Wall at 49:12-51:5.)

         However, during the course of pretrial discovery, Defendant employed an expert (Irwin) from the Northwest Gemological Laboratory, who inspected the ring on December 7, 2017 and determined that it was a genuine diamond. (Dkt. No. 28, Declaration of Irwin at ¶¶ 8-11; Ex. 7.) At this point, it is undisputed that the diamond in Mrs. Walls' wedding ring is the original diamond; i.e., there was no theft. Plaintiffs had also paid, in preparation for litigation, a jewelry expert to assess whether it was possible to swap out the diamond and cover up the pry marks in the 15 minutes a cleaning would have taken (answer: Yes; Dkt. Nos. 21-8 and 21-9).


         Standard of review

         Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Galen v. Cnty of L.A., 477 F.3d 652, 658 (9th Cir. 2007). The moving party bears the initial burden of showing there is no genuine issue of material fact and that he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323. If the moving party meets its burden, the burden shifts to the non-moving party to “make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial.” Galen, 477 F.3d at 658. The court is “required to view the facts and draw reasonable inferences in the light most favorable to the [non-moving] party.” Scott v. Harris, 550 U.S. 372, 378 (2007).

         Defendant has moved for summary judgment on all claims; Plaintiffs have moved for partial summary judgment on the IFCA, CPA and bad faith claims.

         Plaintiff's Motion for Summary Judgment

         The Insurance Fair Conduct Act (RCW 48.30.015) provides:

(1) Any first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action… to recover the actual damages sustained, together with the costs of the action, including reasonable attorneys' fees and litigation costs…

         Certain violations of the Washington Administrative Code (“WACs”) governing insurance claims investigation and settlement, while they do not constitute IFCA violations per se, can trigger the punitive damages award sections of the statute. WAC 284-30-330 lists a number of practices which it defines as “unfair methods of competition and unfair or deceptive acts or practices of the insurer in the business of insurance, ” and those can be introduced as evidence of unreasonableness as well. Plaintiffs point to three subsections in particular:

(1) Misrepresenting pertinent facts or insurance policy provisions
(4) Refusing to pay claims without conducting a reasonable investigation.
(13) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for ...

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