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American Alternative Insurance Corp. v. Goodwill of Olympics

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

May 14, 2019

AMERICAN ALTERNATIVE INSURANCE CORPORATION, Plaintiff,
v.
GOODWILL OF THE OLYMPICS AND RAINIER REGION, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO AMEND COMPLAINT, REALIGN THE PARTIES AND DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

          BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Defendants Sun Theresa Choe (“Choe”) and Goodwill of the Olympics and Rainier Region's (“Goodwill”) motion to amend complaint, realign the parties and dismiss for lack of subject matter jurisdiction. Dkt. 27. The Court has considered the pleadings filed in support of and in opposition to the motion and the remainder of the file and hereby grants in part and denies in part the motion for the reasons stated herein.

         I. PROCEDURAL HISTORY

         On November 22, 2017, Plaintiff American Alternative Insurance Corporation (“American”) filed a declaratory judgment action against Defendants Goodwill, Choe, Enrique Hernandez Franco (“Franco”), Jane Doe Hernandez Franco, and Non Profit Insurance Program (“Risk Pool”) seeking a declaration that there is no duty to defend, indemnify, or reimburse Goodwill or the Risk Pool based on allegations in an underlying complaint. Dkt. 1.

         In the underlying matter, Choe alleged that Franco backed over her at a Goodwill location in Tacoma, Washington and that Goodwill failed to maintain its premise in a lawful manner. Id., ¶¶ 3.5-3.12. Choe and Goodwill entered into a settlement shortly after American filed this declaratory judgment action.

         On April 13, 2018, the Risk Pool answered, Dkt. 14, and Goodwill and Choe answered and asserted counterclaims against American, Dkt. 17. On May 11, 2018, American answered the counterclaims. Dkt. 20.

         On February 7, 2019, Goodwill and Choe filed the instant motion to amend, realign the parties, and dismiss for lack of jurisdiction. Dkt. 27. On February 25, 2019, the Risk Pool responded and moved to strike the Declaration of Micah LeBank, Dkt. 29, and American responded and moved to strike the Declaration of Micah LeBank, Dkt. 31. On March 1, 2019, Goodwill and Choe replied. Dkt. 33.

         II. DISCUSSION

         A. Motions to Strike

         Both the Risk Pool and American moved to strike the Declaration of Micah LeBank. Goodwill and Choe respond that both motions are based on broad generalizations about the content of the declaration and fail to provide the Court with specific citations to inadmissible evidence contained with the declaration. Dkt. 33 at 1 n.1. The Court agrees with Goodwill and Choe and denies the motions to strike because the inclusion of some inadmissible evidence does not warrant striking otherwise admissible evidence within the same declaration.

         B. Motion to Amend

         Goodwill and Choe move to amend their counter-complaint to add claims against the Risk Pool. Dkt. 27 at 6-8. American argues that Goodwill and Choe's proposed claims are “unavailing.” Dkt. 31 at 8. The Rick Pool argues that the Court should deny the motion for procedural and substantive reasons. Dkt. 29 at 10-13. Regarding the former, the Risk Pool contends that the Court should deny the motion because Goodwill and Choe failed to file a red-lined version of the proposed amended crossclaims. Id. at 10. While the Court agrees that Goodwill and Choe failed to technically comply with the Local Rules, the Risk Pool has failed to show any prejudice from the error.

         Regarding the substantive reasons, the Risk Pool argues that the Court should deny the motion because Goodwill and Choe's proposed claims are futile for numerous reasons. Nunes v. Ashcroft, 348 F.3d 815, 818 (9th Cir. 2003) (“Futility alone can justify the denial of a motion to amend.”). First, the Risk Pool argues that Choe's claims are futile because the settlement agreement limits her recovery only to claims against American. Dkt. 29 at 11. The Risk Pool's argument is without merit because the agreement provides that Choe reserves the right to proceed against American and its associated entities “including but not limited to [the Risk Pool] who is entitled to coverage under the [American] Policy.” Dkt. 30 at 50, ¶ 1. Even if this does not explicitly allow Choe's claims, there is at least a question of interpretation overcoming any argument that the claims are futile as alleged.

         Second, the Risk Pool argues that the claims are futile because, under Jones v. St. Paul Fire & Marine Ins. Co., 15-531-MJP, 2015 WL 4508884 (W.D. Wash. July 24, 2015), it is not an insurer. Dkt. 29 at 11. This is a mistaken application of the holding in Jones. In Jones, the Court held that the plaintiff's claims failed against the Washington Rural Counties Insurance Program (“WRCIP”) and its claims administrator because “Washington statutorily excludes governmental risk-pooling organizations like WRCIP from being considered insurers.” Id. at *4 (citing RCW 48.01.050). The Risk Pool fails to show that it is a government risk-pooling organization or that Jones extended the Washington statute to cover nonprofit corporations operating as a joint insurance purchasing program. Dkt. 1, ¶ 1.2. Similarly, the Risk Pool's argument that it is immune because it is a “self-insurance risk pool” is flawed because “Washington courts also hold that generally ‘self-insurance' provisions are not insurance.'” Id. at *4 (quoting Bordeaux, Inc. ...


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