United States District Court, W.D. Washington, Seattle
C. COUGHENOUR UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant Mutual of Enumclaw
Insurance Co.'s (“MOE”) motion for partial
summary judgment (Dkt. No. 21), Defendant Country Mutual
Insurance Company's (“Country”) joinder and
motion for partial summary judgment (Dkt. No. 24), and
Defendant Safeco Insurance Company of America's
(“Safeco”) motion for partial summary judgment
(Dkt. No. 28). Having thoroughly considered the parties'
briefing and the relevant record, the Court finds oral
argument unnecessary and hereby GRANTS in part and DENIES in
part the motions for the reasons explained herein.
Island Scenic Estates Community Club (“LISECC”)
is a residential community with approximately 400 dues-paying
lots, which share a water supply system and community marina.
(Dkt. No. 35 at 2-3.) LISECC's bylaws provide that
members of its board of directors (the “LISECC
board”) “shall not be individually liable except
for a Director's own bad faith, dishonesty, or
fraud.” (Dkt. No. 23 at 13.)
Arch Insurance Company issued four successive Water District
Insurance Program Policies (collectively,
“Plaintiff's policies”) to LISECC. (Dkt. No.
35 at 2; see Dkt. Nos. 37-1-37-4.) Plaintiff's
policies were in effect from May 16, 2011 to May 16, 2015.
(See Dkt. Nos. 37 at 2, 37-1-37-4.) Plaintiff's
policies' definition of “insured” included
LISECC as the named insured and “All persons who were,
now are or shall be elected, appointed or employed as members
of your board, commission or agency while acting within the
scope of their duties.” (See Dkt. Nos. 37-1 at
13, 37-2 at 14.)
policies obligated Plaintiff to “pay on behalf of the
Insured those sums that the Insured becomes legally obligated
to pay as damages because of ‘bodily injury',
‘property damage', ‘personal injury',
‘advertising injury', ‘professional
liability', ‘wrongful acts' or ‘acts,
errors or omissions' to which” Plaintiff's
policies applied. (See Dkt. Nos. 37-1 at 10, 37-2 at
“Wrongful Act” was broadly defined, and included
any actual or alleged error, omission, misstatement,
misleading statement, neglect or breach of duty by any
Insured in the discharge of his/her duties for
[LISECC].” (Dkt. Nos. 37-1 at 20, 37-2 at 21.) The
definition excluded “willful commission of a crime or
other dishonest, fraudulent, or malicious act[s], ”
wrongful financial gain, or erroneous preparation or approval
of “maps, plans, reports, surveys, designs, bid
documents, or specifications . . . .” (Id.)
LISECC paid $8, 967.00 in premiums for Plaintiff's policy
covering May 16, 2014 to May 16, 2015. (See Dkt. No.
23 at 95.)
issued personal lines homeowners policies to J. Timothy
Slater and Kiersten Slater (collectively, the
“Slaters”) from 2002 to 2013. (Dkt. No. 21 at 6.)
The policy covering the period of April 25, 2012 to April 25,
2013 (the “MOE policy”) applied to the Slaters
and certain residents of their household. (Dkt. No. 22 at 9.)
The MOE policy's personal liability section covered
“bodily injury” and “property damage”
caused by a qualifying “occurrence, ” and
obligated MOE to defend and indemnify the Slaters
(Id. at 23.) The Slaters' total premium for the MOE
policy was $856.62. (Dkt. No. 22 at 5.)
on March 15, 2013, Country issued successive 12-month
homeowners insurance (the “Country homeowner
policy”) and personal umbrella liability insurance (the
“Country umbrella policy”) policies
(collectively, the “Country policies”) to the
Slaters. (Dkt. Nos. 25 at 1-2, 25-1, 25-2.) The Country
homeowner policy covered “bodily injury” or
“property damage” resulting from a qualifying
“occurrence, ” and obligated Country to defend
and indemnify the Slaters. (Dkt. No. 25-1 at
The Country umbrella policy granted Country the right to join
an insured and an underlying insurer in defending a claim or
suit that could involve Country, and obligated Country to
“assume control of the defense or settlement . .
.[w]hen underlying insurance is exhausted for an occurrence;
and . . . [n]o other excess insurance applies to the claim or
suit.” (Dkt. No. 25-2 at 11-12) (alteration
omitted). The Slaters' total premium for the
Country homeowner policy commencing in March 2015 was
$591.14, and their total premium for the Country umbrella
policy commencing in March 2015 was $505. (Dkt. Nos. 25-1 at
2, 25-2 at 2.)
on October 1, 2012, Safeco issued annual individual
homeowners policies to Bridged Lott. (Dkt. No. 29-3 at 2.)
Under the policy issued by Safeco commencing on October 1,
2014 (the “Safeco policy”), the personal
liability section obligated Safeco to defend or indemnify Ms.
Lott for “bodily injury” or “property
damage” arising out of a qualifying occurrence. (Dkt.
No. 29-5 at 26) (alterations omitted). The Safeco policy
applied to Ms. Lott and qualifying residents of the residence
premises. (Id. at 36.) Ms. Lott's total premium
for the Safeco policy was $1, 536. (Id. at 8.)
The Underlying Litigation
December 2014, a group of LISECC homeowners sued LISECC and
various past and present members of the LISECC board,
including Ms. Lott and Mr. Slater (the “underlying
litigation”). See Ortego v. LISECC, No.
C14-1840-RSL, Dkt. Nos. 1, 13 (W.D. Wash. 2014). The
complaint primarily alleged that LISECC and the LISECC board
improperly collected dues and misused collected dues to
subsidize LISECC's water supply, which only benefitted a
minority of LISECC's lot owners. See generally
Ortego, No. C14-1840-RSL, Dkt. No. 13. The complaint
brought claims under the federal Racketeer Influenced and
Corrupt Organization Act, 18 U.S.C. §§ 1961 et
seq.; the Washington Consumer Protection Act, Wash. Rev.
Code §§ 19.86 et seq.; and state law
claims of breach of fiduciary duties, negligence, intentional
infliction of emotional distress, and unjust enrichment.
See id. at 51-66. The complaint sought dissolution
of LISECC and various forms of damages. Id. at
February 2015, Plaintiff agreed to defend LISECC and the
directors named as defendants in the underlying litigation
pursuant to Plaintiff's policies. (See Dkt. No.
38-1 at 2.) Plaintiff reserved its right to limit or deny
coverage for the underlying litigation. (Id.) Ms.
Lott and Mr. Slater were named as individual defendants.
See Ortego, No. C14-1840-RSL, Dkt. No. 1 at 1.
Plaintiff ultimately ...