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Scottsdale Insurance Co. v. Mayer

United States District Court, E.D. Washington

July 9, 2018

SCOTTSDALE INSURANCE COMPANY, Plaintiffs,
v.
TERRI MAYER D/B/A STEPS REENTRY; STEPS RE-ENTRY, A WASHINGTON NON-PROFIT CORPORATION; TERRI MAYER AND BRENT MAYER AND THE MARITAL COMMUNITY COMPRISED THEREOF; KENNETH WENHAM, AN INDIVIDUAL; LINCOLN CAPITAL, LLC, A WASHINGTON LIMITED LIABILITY COMPANY, Defendants.

          ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          Stanley A. Bastian, United States District Judge

         Before the Court is Plaintiff's Motion for Summary Judgment, ECF No. 13. Defendants do not oppose the motion, which was heard without oral argument. For the reasons stated herein, the Court grants Plaintiff's motion and enters judgment in its favor.

         Background

         On June 27, 2018, Plaintiff filed a Complaint for Declaratory Relief seeking a declaratory judgment that it has no obligation to defend or otherwise indemnify Defendants in an underlying action.[1] ECF No. 1. On November 16, 2017, Plaintiff notified the Court that Defendants Brent Mayer and Terri Mayer filed for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the Eastern District of Washington. ECF No. 10. As a result, this action was automatically stayed. 11 U.S.C. § 362. On February 27, 2018, the Bankruptcy Court granted Plaintiff's motion for relief from stay, ECF No. 12, and Plaintiff filed its Motion for Summary Judgment, ECF No. 13. No answer or opposition to Plaintiff's motion has been filed.

         Facts

         The underlying action at issue in this case arises from the business operations of Defendants' Steps Re-entry, Terri Mayer, and Brent Mayer (collectively “Steps”), for which Plaintiff provided a policy of insurance. In the state court complaint, Defendants Kenneth Wenham and Lincoln Capital, LLC (collectively “Lincoln Capital”) allege Steps was a vendor for the Washington Department of Corrections (“DOC”) providing housing for clients participating in the Voucher Program. ECF No. 14-1. Steps allegedly requested Lincoln provide housing for approximately thirty clients in exchange for payment. Lincoln provided that housing. However, for four months, Steps received payment from the DOC and failed to forward that payment to Lincoln after repeatedly promising to do so. Lincoln states claims for breach of oral contract, fraud, unjust enrichment, conversion, negligent misrepresentation, and violations of the Washington Consumer Protection Act, Wash. Rev. Code. §§ 19.86.010.

         Plaintiff is defending Steps in the underlying action subject to a reservation of rights. It now seeks a declaration that it owes no duty to defend or indemnify pursuant to the terms of the applicable insurance policy. The relevant terms of the insurance policy are as follows:

SECTION I - COVERAGES COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have 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. . . .
COVERAGE B - PERSONAL AND ADVERTISING INJURY LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “personal and advertising injury” to which this insurance applies. We will have 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 “personal and advertising injury” to which this insurance does not apply. . . .
SECTION V - DEFINITIONS . . .
3. “Bodily injury” means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. . . .
14. “Personal and advertising injury” means injury, including consequential “bodily injury”, arising out of one ...

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