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Mid-Century Insurance Company v. Hunt's Plumbing & Mechanical LLC

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

September 17, 2019

MID-CENTURY INSURANCE COMPANY, Plaintiff,
v.
HUNT'S PLUMBING & MECHANICAL LLC, et al., Defendants.

          ORDER

          JAMES L. ROBART UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the court is Plaintiff Mid-Century Insurance Company's (“Mid-Century”) unopposed motion for summary judgment. (MSJ (Dkt. # 20).) Defendants Hunt's Plumbing & Mechanical, LLC (“Hunt's Plumbing”), Beacon Plumbing & Mechanical, Inc. (“Beacon”), Jason Hunt, and Sari Hunt have appeared in this action (see Dkt. ## 5-6, 11) but did not file answers or responses to Mid-Century's motion (see generally Dkt.). Mid-Century seeks (1) a declaration that Mid-Century has no duty to defend or indemnify Hunt's Plumbing, Mr. Hunt, and Ms. Hunt (collectively, the “Insureds”) in the lawsuit currently pending in King County Superior Court, entitled Beacon Plumbing & Mechanical, Inc. v. Hunt's Plumbing & Mechanical, LLC, et al., No. 18-2-14205-9 KNT (the “Liability Action”); (2) a declaration that Mid-Century may withdraw from its defense of the Insureds in the Liability Action; and (3) a ruling that it is entitled to reimbursement of the monies it has already paid to defend Insureds in the Liability Action. (MSJ at 7.) The court has considered the motion, Mid-Century's submissions in support of the motion, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court RESERVES RULING on Mid-Century's motion and GRANTS Mid-Century 15 days from the filing date of this order to submit a response to this order on the issue of what impact, if any, the Insureds' Cyber Liability and Data Breach Response Coverage form has on its entitlement to summary judgment. The court also GRANTS the Insureds five days from the date of Mid-Century's filing, if any, to submit a response to any arguments raised in Mid-Century's response.

         II. BACKGROUND

         A. The Insurance Policy

         Mid-Century issued Policy No. 605127771 to Hunt's Plumbing for the policy period from August 23, 2017 to August 23, 2018 (the “Policy”). (See Am. Compl. (Dkt. # 13) ¶ 2.2; Edmundson Decl. (Dkt. # 21) ¶ 5, Ex. 3.) Two of the coverage forms included in the Policy are potentially relevant here: (1) the Businessowners Liability Coverage, Form BP00060197-as modified by the Personal and Advertising Injury Coverage Amendatory Endorsement, Form E3342-ED2; the Multiple or Enhanced Damages Exclusion, Form E2042-ED2; and the Washington Changes, Form W7912-ED4 (Edmundson Decl. ¶ 5, Ex. 3 at 126-140 (Businessowners Liability Coverage); id. at 143-145 (Personal and Advertising Injury Coverage Amendatory Endorsement); id. at 287 (Multiple or Enhanced Damages Exclusion); id. at 205-210 (Washington Changes)); and (2) the Cyber Liability and Data Breach Response Coverage, Form J7155-ED1-as modified by the Washington Amendatory Endorsement, Form W2276-ED1 (id. at 64-87 (Cyber Liability and Data Breach Response Coverage); id. at 62-63 (Washington Amendatory Endorsement)).

         1. Businessowners Liability Coverage

         The Businessowners Liability Coverage form provides coverage, in pertinent part, as follows:

A. Coverages
1. Business Liability
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury”, “property damage” or “personal and advertising injury” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury, ” “property damage” or “personal and advertising injury” to which this insurance does not apply. . . .
**********
If we initially defend an insured or pay for an insured's defense but later determine that none of the claims, for which we provided a defense or defense costs, are covered under this insurance, we have the right to reimbursement for the defense costs we have incurred.
The right to reimbursement under this provision will only apply to the costs we have incurred after we notify you in writing that there may not be coverage and that we are reserving our rights to terminate the defense or payment of defense costs and to seek reimbursement for defense costs.

(Edmundson Decl. ¶ 5, Ex. 3 at 126, ¶ A.1 (Businessowners Liability Coverage); id. at 143, ¶ A (amending paragraph A.1 of the Businessowners Liability Coverage); id. at 208, ¶ B.1 (amending paragraph A.1.a of the Businessowners Liability Coverage).)

         The Businessowners Liability Coverage form defines the key terms in paragraph A.1.a.-“bodily injury, ” “property damage, ” and “personal and advertising injury”-as follows:

F. Liability and Medical Expenses Definitions
**********
3. “Bodily injury” means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
**********
13. “Personal and advertising injury” means injury, including consequential “bodily injury”, arising out of one or more of the following offenses:
**********
f. The use of another's advertising idea in your “advertisement”; or
g. Infringing upon another's copyright, trade dress or slogan in your “advertisement”.
Damages because of “personal and advertising injury” do not include disgorgement, restitution or any other similar monetary amount based, in whole or in part, on an insured's unlawful gain or profit, alleged or otherwise.
**********
15. “Property damage” means:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.

(Id. at 137, ¶ F.3 (defining “[b]odily injury”); id. at 145, ¶ 2 (defining “[p]ersonal and advertising injury”); id. at 139, ¶ F.15 (defining “[p]roperty damage”).)

         In addition, the Businessowners Liability Coverage contains the following exclusions:

B. Exclusions
1. Applicable to Business Liability Coverage
This insurance does not apply to:
**********
p. Personal and Advertising Injury

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