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Cincinnati Specialty Underwriters Insurance Co. v. Milionis Construction Inc.

United States District Court, E.D. Washington

June 21, 2018

THE CINCINNATI SPECIALTY UNDERWRITERS INSURANCE COMPANY, an Ohio corporation, Plaintiff,
v.
MILIONIS CONSTRUCTION, INC., a Washington corporation; STEPHEN MILIONIS. an individual; and JEFFREY WOOD and ANNA WOOD, husband and wife, and the marital community composed thereof, Defendants.

          ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          SALVADOR MENDOZA, JR. UNITED STATES DISTRICT JUDGE

         Before the Court, without oral argument, is Plaintiff the Cincinnati Specialty Underwriters Insurance Company (Cincinnati) Motion for Summary Judgment, ECF No. 32. Cincinnati seeks a declaration that it has no duty to defend or indemnify Milionis in the underlying suit. Defendants Milionis Construction and Stephen Milionis oppose the motion, and defendants Jeffrey and Anna Woods separately oppose the motion. Having reviewed the pleadings and the file in this matter, the Court is fully informed and denies the motion.

         BACKGROUND

         A. Procedural background

         This case arises from a lawsuit between Jeffrey and Anna Wood and Milionis Construction Company and Stephen Milionis in Spokane County Superior Court (“the underlying suit”). The Woods engaged Milionis Construction Company (“Milionis”) to serve as the general contractor for the construction of a residential home in Newman Lake, Washington. In the underlying suit, the Woods allege that Milionis breached the parties' agreement by, among other things, failing to (a) perform in a workmanlike manner, (b) follow plans and specifications, (c) purchase and install required materials, (d) provide an accounting for fees, and (e) abandoning the job site. The Woods asserted claims for breach of contract, quantum meruit, promissory estoppel, breach of good faith and fair dealing, negligence, negligent misrepresentation, and violation of the Washington Consumer Protection Act.

         After the Woods brought the underlying suit, Milionis tendered the suit to Cincinnati for defense and indemnity. Cincinnati is currently defending the underlying suit under a reservation of rights. Cincinnati brought this suit seeking declaratory judgment that it does not have a duty to defend or indemnify.

         B. Factual background

         Cincinnati issued a commercial general liability policy, Policy Number CSU0053004 to Milionis in November 2014. The policy was effective from November 23, 2014, to November 23, 2016. The policy provides Milionis coverage for “sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies.” ECF No. 34 at 29. The policy further states that Cincinnati has “the right and duty to defend the insured against any ‘suit' seeking those damages. However, we will have no duty to defend the insured against any ‘suit' seeking damages for ‘bodily injury' or ‘property damage' to which this insurance does not apply.” Id.

         The policy also contains an Independent Contractors Limitations of Coverage Endorsement. Id. at 46. The endorsement requires Milionis to (a) obtain a formal written contract with all independent contractors and subcontractors verifying valid commercial general liability insurance, (b) obtain a formal written contract stating the independent contractor or subcontractor agrees to indemnify Milionis for any liability, and (c) verify in the contract that the independent contractor or subcontractor has named Milionis as an additional insured on the liability policy. Id. The endorsement provides “this insurance will not apply to any loss, claim or ‘suit' for any liability or any damages arising out of operations or completed operations performed for you by any independent contractors or subcontractors unless all of the above conditions are met.” Id.

         Milionis did not obtain written hold harmless agreements from its subcontractors and was not named as an additional insured on its subcontractors' policies. Cincinnati moves for summary judgment based on Milionis's failure to comply with those conditions. Milionis does not dispute these facts, but opposes summary judgment.

         LEGAL STANDARD

         Summary judgment is appropriate if 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). Once a party has moved for summary judgment, the opposing party must point to specific facts establishing that there is a genuine dispute for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the nonmoving party fails to make such a showing for any of the elements essential to its case for which it bears the burden of proof, the trial court should grant the summary judgment motion. Id. at 322. “When the moving party has carried its burden under Rule [56(a)], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . [T]he nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal citation omitted). When considering a motion for summary judgment, the Court does not weigh the evidence or assess credibility; instead, “the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Sgt. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). “In short, what is required to defeat summary judgment is simply evidence ‘such that a reasonable juror drawing all inferences in favor of the respondent could return a verdict in the respondent's favor.'” Zetwick v. Cty. of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (quoting Reza v. Pearce, 806 F.3d 497, 505 (9th Cir. 2015)).

         DISCUSSION

         A. Cincinnati has a duty to defend Milionis in ...


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