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Park Meridian Condominium Association v. State Farm Fire & Casualty Co.

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

August 13, 2019

PARK MERIDIAN CONDOMINIUM ASSOCIATION, Plaintiff,
v.
STATE FARM FIRE & CASUALTY COMPANY, Defendant.

          ORDER

          JOHN C. COUGHENOUR, UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Defendant State Farm Fire & Casualty Company's motion for partial summary judgment (Dkt. No. 10). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby DENIES the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiff maintains the Park Meridian condominium complex, which consists of nine buildings and 77 condo units (the “Complex”). (Dkt. No. 1 at 1-2.) The ground-floor condo units have concrete patios, while the second- and third-floor condo units have wood decks. (Dkt. No. 18 at 6.) Defendant sold insurance policies covering the Complex to Plaintiff, effective from May 15, 1987 to May 15, 2006, subject to a series of renewals (the “Policy”). (See Dkt. No. 1 at 2-3.)

         Records of the 1987 to 1990 policy provisions are unavailable. (See Dkt. No. 19-7 at 3.) As of May 1990, the Policy enumerated a number of losses caused by water that were not covered, including “continuous or repeated seepage or leakage of water that occurs over a period of time; . . . [and] collapse, except as provided in the Extensions of Coverage.” (Dkt. No. 12 at 49-51.) From May 1990 to May 1998, the Policy's Extension of Coverage for Collapse provided that “[Defendant] will pay for any accidental direct physical loss to covered property involving collapse of a building or any part of a building caused only by . . . hidden decay[] . . . .” (Dkt. No. 19-7 at 4-5.) The 1998 Policy renewal included Amendatory Collapse Endorsement, FE-6551, which provided that:

[Defendant] insure[s] only for direct physical loss to covered property involving the sudden, entire collapse of a building or any part of a building.
Collapse means actually fallen down or fallen into pieces. It does not include settling, cracking, shrinking, bulging, expansion, sagging or bowing.
The collapse must be directly and immediately caused only by . . . hidden decay of a supporting or weight-bearing structural member of the building[] . . . .

(Id. at 5-6.)

         In July 1998, Plaintiff submitted a claim to Defendant for coverage of decay occurring in decks of various units of the Complex (the “1998 Claim”). (See Dkt. Nos. 10 at 3-4, 19-1, 19-2.) Defendant retained Pacific Engineering to investigate the 1998 Claim. (Dkt. Nos. 10 at 3, 19-3, 19-4.) Based on Pacific Engineering's reports, Defendant decided that some, but not all, of the decay would be covered under the Policy's Extension of Coverage for Collapse (collectively, the “1998-99 Decisions”). (See Dkt. Nos. 10 at 2-4, 12 at 47-112.) Defendant paid $275, 448.17 for coverage of the 1998 Claim. (Dkt. No. 19-7 at 2.)

         Defendant's 2002 Policy renewal included Amendatory Collapse Endorsement, FE-6573, which “removed hidden decay as a covered cause of collapse loss under the Extension of Coverage for Collapse.” (Id. at 6.)

         In September 2017, Plaintiff hired J2 Building Consultants (“J2”) to investigate the Complex for decay or damage. (See Dkt. No. 1 at 3.) J2 issued a Findings Report “detail[ing] water damage to exterior wall sheathing and framing as well as hidden damage to decks throughout the [Complex]” (the “J2 Report”). (Id.; see also Dkt. No. 20-1.) In October 2017, Plaintiff submitted a claim to Defendant “for hidden damage detailed in the J2 [R]eport, ” seeking coverage for losses due to “wind-driven rain and/or collapse” (the “2017 Claim”). (Dkt. Nos. 10 at 3, 21-4 at 2.) Defendant retained Jim Perrault of JRP Engineering to investigate the 2017 Claim, and Mr. Perrault issued a report on June 29, 2018 detailing his findings (the “Perrault Report”). (Dkt. No. 19-7 at 2-3.)

         Defendant alleges that it did not evaluate potential coverage under Policy terms effective from May 15, 1987 to May 15, 1990 because it failed to locate the Policy in effect at that time. (Dkt. No. 19-7 at 3.) Plaintiff alleges that “[Defendant] was aware that [] from 1987-1990 special form 3 policy covered because it did not exclude damage from water intrusion, but refused to inform [Plaintiff] of this coverage . . . .” (Dkt. No. 1 at 4.) Plaintiff believes that “special form 3” describes Defendant's all-risk coverage form. (Id. at 3.) Plaintiff states that “[o]n information and belief the loss or damage to the [Complex] was incremental and progressive. New damage commenced during each year of the [Policy].” (Id. at 4.) However, according to the Perrault Report, the decay discovered in 2017 did not result from damage occurring between May 15, 1998 and May 15, 2002. (See Dkt. No. 21-5.)

         Based on the Perrault Report, on July 12, 2018 Defendant denied coverage of the 2017 Claim under the Policy terms effective from May 15, 1990 to May 15, 2006 (the “2018 Decision Letter”). (Dkt. Nos. 10 at 3, 19-7 at 9.) Plaintiff filed suit on November 13, 2018, seeking declaratory relief and alleging state law claims for breach of contract, bad faith, and violation of the Washington Consumer Protection Act (“CPA”). (See Dkt. No. 1.) Defendant moves for partial summary judgment, asserting that “Plaintiff's [2017 Claim] relating to [Defendant's 1998-99 Decisions] [is] now barred by ...


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