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Chapman v. State Farm Fire and Casualty Co.

United States District Court, E.D. Washington

April 15, 2019

BARRY CHAPMAN, husband; and JESSIE NORRIS, wife, Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY COMPANY, a foreign company, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTIONS TO AMEND COMPLAINT AND TO STRIKE DECLARATION

          Rosanna Malouf Peterson, United States District Judge.

         BEFORE THE COURT is a motion for summary judgment by Defendant State Farm Fire and Casualty Company (“State Farm”), ECF No. 24; a motion to amend or correct the complaint by Plaintiffs Barry Chapman and Jessie Norris (“Chapman”), ECF No. 29; and a motion to strike, also by Chapman, ECF No. 45. Having reviewed the parties' submissions, the remaining docket, and the relevant law, the Court is fully informed.

         BACKGROUND

         Procedural History

         Before filing this lawsuit, Chapman filed and served a claim and complaint on State Farm on October 11, 2016, pursuant to the Insurance Fair Conduct Act (“IFCA”), in chapter 48.30 of the Revised Code of Washington (“RCW”). Chapman asserts that the 20-day IFCA notice “set forth the basis for the reasons for the [IFCA] claim including violations of WAC 284-30-330, RCW 48.30.015 and finally for any other violations is [sic] formal discovery in the underlying action otherwise disclosed.” ECF No. 29 at 3.

         On October 25, 2016, Chapman filed his complaint in Pierce County Superior Court, stating only claims for breach of insurance contract and breach of the duty of good faith and fair dealing. ECF No. 1-1. The complaint sought “compensatory and exemplary damages for any injury, harm, economic and non-economic damages or losses, ” as well as Chapman's attorneys' fees and costs and “such other and further relief as the Court deems just and equitable.” ECF No. 1-1 at 5. In explaining why Chapman filed the complaint fewer than twenty days after providing the IFCA notice, Chapman recounts: “Because the State Farm policy had a shorter limitation time for filing a breach of contract action, the lawsuit was required to be filed before the IFCA notice time had run.” ECF No. 29 at 3; see also ECF No. 25-2 at 8 (citing a portion of the insurance contract that provided that “[n]o action shall be brought unless there has been compliance with the policy provisions and the action is started within one year after the date of loss or damage.”).

         State Farm removed the action to this Court on June 19, 2017. ECF No. 1. The Court scheduled a bench trial scheduling conference for November 9, 2017, ECF No. 8, and the parties submitted a joint status certificate in preparation for the conference, ECF No. 9. The certificate indicated: “Plaintiffs . . . anticipate filing a motion to amend the complaint to add counts alleging violations of the Washington Insurance Fair Claims Act and the Washington Consumer Protection Act.” ECF No. 9 at 2.

         After discussion with the parties at the scheduling conference, the Court issued a bench trial scheduling order that, among other deadlines and hearings scheduled, set a December 21, 2017 deadline for moving to amend the pleadings. ECF No. 11 at 3.

         There is no dispute that despite subsequent stipulated motions to amend pretrial deadlines and continue the trial date by the parties, the December 21, 2017 deadline to move to amend pleadings remained intact. See ECF Nos. 17, 19, 21, and 22. The discovery cutoff in this matter passed on December 19, 2018. ECF No. 22. The dispositive motion deadline passed on January 10, 2019. Id. A bench trial is scheduled for May 13, 2019. ECF No. 19 at 9.

         Underlying Facts

         The following facts are undisputed, unless otherwise noted.

         Chapman owns a rental property in Spokane, Washington, that was built in 1909. ECF Nos. 1-1 at 3; 25-9 at 3. On approximately October 26, 2015, a fire next door to the property damaged Chapman's rental property, to the point that the property was uninhabitable. ECF Nos. 1-1 at 3; 36-1 at 1. The home was unoccupied at the time, while Chapman undertook a limited remodeling project. ECF No. 25-5 at 9. Thus, Chapman was not holding the property out for rent at the time of the fire. ECF No. 25-10 at 3.

         During the relevant time period, Chapman held a rental dwelling insurance policy through State Farm that insured the “residence premises” for “property damage, ” including “physical damage to or destruction of tangible property, including loss of use of [the] property.” ECF Nos. 25-1 at 8; 36-1 at 1. The policy covered damage to the dwelling (Coverage A) up to $136, 900, with 20% extra replacement cost coverage up to $13, 690, available under circumstances explained below; damage to personal property (Coverage B) up to $6, 845; and loss of rent (Coverage C) up to the amount of the actual loss. ECF No. 25-1 at 3. The parties dispute Coverage A at this stage in the lawsuit.

         With respect to Coverage A, for damage to the dwelling, an “Extra Replacement Cost Coverage Endorsement” was in place that provided:

We will settle covered losses for the amount you actually and necessarily spend to repair or replace the dwelling under Coverage A . . . up to the applicable limit of liability shown in the Declarations. If the amount spent for covered damage exceeds the applicable limit of liability stated in the Declarations, an additional 20% of the stated limit is available to cover the cost of repair or replacement.

Id. at 31.

         In addition, Coverage A was subject to the following parameter:

[State Farm] will pay the cost of repair or replacement, without deduction for depreciation, but not exceeding the smaller of the following amounts:
(a) The replacement cost of that part of the building damaged for equivalent construction and use on the same premises;
(b) The amount actually and necessarily spent to repair or replace the damaged building; or
(c) The limit stated in the Extra Replacement Cost Coverage provision.

Id. at 14 (emphasis added).

         The insurance policy defined “replacement cost” as “the cost, at the time of loss, to repair or replace the damaged property with new materials of like kind and quality, without deduction for depreciation.” ECF No. 25-1 at 21 (emphasis added). The policy did not define “equivalent construction and use” or “like kind and quality.”

         The following terms were also in place regarding payment of actual cash value (“ACV”) versus replacement cost value (“RCV”):

[State Farm] will pay the actual cash value of the damage to the buildings, up to the policy limit, until actual repair or replacement is completed.
[The insured] may disregard the replacement cost loss settlement provisions and make claim under this policy for loss or damage to buildings on an actual cash value basis and then make claim within 180 days after loss for any additional liability on a replacement cost basis. . . .
Until actual repair or replacement is completed, [State Farm] will pay only the actual cash value at the time of the loss of the damaged part of the building, up to the applicable limit of liability shown in the Declarations, not to exceed the cost to repair or replace the damaged part of the building; When the repair or replacement is actually completed, [State Farm] will pay the covered additional amount [the insured] actually and necessarily spend[s] to repair or replace the damaged part of the building, or an amount up to the applicable limit of liability shown in the Declarations, whichever is less; and To receive any additional payments on a replacement cost basis, [the insured] must complete the actual repair or replacement of the damaged part of the building within two years after the date of loss, and notify [State Farm] within 30 days after the work has been completed.

Id. at 34.

         After the fire, Chapman immediately reported the loss to State Farm, and State Farm accepted ...


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