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GB Auctions Inc. v. Old Republic Insurance Co.

United States District Court, E.D. Washington

August 21, 2019

GB AUCTIONS INC., a Washington corporation, Plaintiff,
v.
OLD REPUBLIC INSURANCE COMPANY, a Delaware corporation; and OLD REPUBLIC AEROSPACE INC., a Delaware corporation, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S SECOND MOTION FOR PARTIAL SUMMARY JUDGMENT

          Salvador Mendoza, JR. United States District Judge

         Before the Court is Plaintiff GB Auctions Inc.'s Second Motion for Partial Summary Judgment, ECF No. 30. Plaintiff seeks partial summary judgment in its favor on the duty and breach elements of its claims for breach of contract and violation of the Insurance Fair Conduct Act (“IFCA”), Revised Code of Washington (“RCW”) chapter 48.30. Id. at 16. Defendants Old Republic Insurance Company and Old Republic Aerospace Inc. oppose the motion. ECF No. 35.

         The Court held a hearing on the motion on August 20, 2019. ECF No. 52. In preparation for the hearing, the Court reviewed the record and relevant legal authority. At the conclusion of the hearing, the Court orally granted in part and denied in part the motion. This Order memorializes and supplements the Court's oral ruling.

         BACKGROUND

         In November 2017, the parties executed a contract for Defendants to insure Plaintiff's 1998 Beech King Aircraft Model 200. ECF No. 1 at 3; ECF No. 6 at 3. In the contract, Defendants promised to Plaintiff that “[i]f your aircraft is damaged but is not a total loss or constructive total loss, and someone else makes repairs, we will pay for the net cost to you of repairing your aircraft with material and parts of a similar kind and quality, less any deductible that applies.” ECF No. 31-1 at 49.

         The contract provides, “Proof. If we ask, you agree to let us see any damaged property. You also agree to be questioned under oath by someone we choose, and to let us see all relevant records and invoices, or copies of these if the originals are lost.” Id. at 64. Relatedly, the contract provides, Inspection and Audit

You agree to let us inspect your property and operations at any reasonable time. These inspections are made for our benefit. You cannot use them as proof or as a guarantee by us that you comply with any safety, health, or legal regulation.
You also agree to let us examine the books and records you keep that concern the use, ownership, and maintenance of your aircraft. We can make these audits:
• Up to three years after the end of the policy period; or
• Until we settle all claims for losses.

Id. at 62. Further, the contract provides, “When we will pay. We will pay for a covered loss within 30 days after we reach an agreement with you, or a final court judgment is entered, or an appraisal award is filed with us. But you must comply with all terms of this policy before we pay.” Id. at 50.

         In January 2018, the aircraft suffered partial damage while landing and Plaintiff submitted an insurance claim to Defendants. ECF No. 1 at 3; ECF No. 6 at 4. Plaintiff alleges that it elected to have a third party repair the aircraft. ECF No. 1 at 4; ECF No. 6 at 4. Plaintiff solicited repair cost estimates from three companies. ECF No. 1 at 4; ECF No. 6 at 4. Plaintiff alleges it determined the median estimate of $1, 036, 962 was the sum most likely to restore the aircraft to its prior condition while using material and parts of similar kind and quality. ECF No. 1 at 4; ECF No. 6 at 5. Plaintiff sent the repair cost estimate to Defendants. ECF No. 35-1 at 2, 84, 99-100. Defendants solicited their own repair cost estimates. ECF No. 1 at 4; ECF No. 6 at 5. Plaintiff declined Defendants' invitation for a joint inspection. ECF No. 35-1 at 3, 84.

         On June 11, 2018, Defendants offered to settle Plaintiff's insurance claim for $314, 338. ECF No. 35-1 at 4, 85, 92-93. The parties dispute the value of the insurance claim. ECF No. 1 at 5; ECF No. 6 at 6. Plaintiff alleges that “[d]uring the dispute, [Defendants have] attempted to enforce a binding arbitration provision, in violation of Washington law.” ECF No. 1 at 5; ECF No. 6 at 6. That provision reads, Appraisal

         If there is damage or loss to your aircraft and we cannot agree with you on the amount of the loss, we will use the ...


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