R.W. et al v. Liberty Mutual Fire Insurance Company
Filing
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ORDER denying plaintiffs' 11 Motion for Partial Summary Judgment by Judge Richard A Jones.(RS)
HONORABLE RICHARD A. JONES
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
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R.W. and R.J.T.,
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Plaintiffs,
Case No. C16-465 RAJ
v.
ORDER
LIBERTY MUTUAL FIRE INSURANCE
COMPANY,
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Defendant.
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I. INTRODUCTION
This matter comes before the Court on Plaintiffs’ R.W. and R.J.T.’s Motion for
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Partial Summary Judgment Re Breach of Contract (Dkt. # 11). For the reasons that
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follow, the Court DENIES Plaintiff’s motion.
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II. BACKGROUND
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Plaintiffs are the policyholders of a homeowner’s insurance agreement with
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Defendant Liberty Mutual Fire Insurance Company (“Liberty”). Dkt. # 13-3. The policy
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entitles them to coverage against property damage, but imposes a $5,000 limit on losses
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caused by mold. Dkt. # 13-3 at 34-35, 56-57.
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On March 9, 2014, Plaintiffs discovered that their dishwasher was leaking. Dkt.
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# 11-1 ¶ 3. They reported the leak to Liberty on March 13. Dkt. # 13-3 at 3. Liberty
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arranged for a contractor, Rainbow International (“Rainbow”), to provide remediation
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services. Dkt. # 13-1 at 3. When Rainbow arrived the following day, Plaintiffs signed a
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ORDER – 1
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work authorization permitting Rainbow to remediate the leak. Dkt. # 13-4. Rainbow
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concluded that the bottom of the dishwasher had rusted out, causing water to seep into
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parts of the kitchen and the laundry/utility room below. It used dehumidifiers to extract
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moisture from the affected areas and removed damaged cabinetry, drywall, and tiling.
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Dkt. # 13-5. During this process, Rainbow discovered mold that it believed had predated
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the dishwasher leak. Id. at 5, 14. Although Rainbow took steps to remove the mold, its
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dehumidification efforts exacerbated the problem by dispersing mold spores throughout
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portions of the house. Dkt. # 13-2 at 7-8; Dkt. # 13-10 at 3; Dkt. # 13-12 at 2-3.
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Liberty covered certain losses caused by the dishwasher leak, but asserted that the
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portion of losses attributable to mold is contractually limited to $5,000. Dkt. # 11-3 at
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69. It hired Rimkus Consulting Group, Inc. (“Rimkus”) to investigate the mold damage.
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Rimkus identified ten “moisture sources,” only one of which was the dishwasher leak.
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Dkt. # 13-2 at 5-6 (identifying dishwasher leak as “Moisture Source #1”). Rimkus also
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identified numerous locations throughout Plaintiffs’ home that exhibited signs of mold
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growth and, for each location, offered an opinion as to the cause. Id. at 5-8. It opined
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that the dishwasher leak had caused mold to grow in the kitchen and the laundry/utility
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room, as well as “a small portion of the closet in bedroom #4.” Id. at 5. According to
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Rimkus’ report, however, the dishwasher leak was not entirely to blame. In bedroom #4,
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a considerable portion of the mold was attributable to “exterior moisture intrusion.” Id.
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(identifying exterior moisture intrusion as “Moisture Source #2”). The same was true for
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the laundry/utility room. Id. at 15. As for Rainbow’s role in causing the problem,
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Rimkus confirmed that Rainbow’s remediation work had exacerbated the issue, but in a
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later report, emphasized that it was not solely at fault. Dkt. # 13-12 at 7 (“[W]e disagree
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that Rainbow’s work was solely responsible for all fungal contamination within the
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subject home. As previously mentioned, the home was plagued by numerous sources of
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historic and ongoing moisture intrusion, none of which have been addressed except for
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the dishwasher leak.”).
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ORDER – 2
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Liberty hired a contractor, Paul Davis Restoration (“Paul Davis”), to estimate the
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cost of remediating the mold problem. Dkt. # 13-8. According to Paul Davis, it would
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cost $4,252.79 to remove the mold growing in the kitchen and laundry/utility room and
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$1291.35 for the mold in bedroom #4. 1 Id. at 2, 5-9, 16-17. Remediating the mold
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throughout the remainder of the house would cost nearly $40,000. Id. at 2. Liberty
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advised Plaintiffs that the mold damage to the kitchen and laundry/utility room was
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covered under their policy, but that this damage was subject to a limit of $5,000. Id. It
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paid this amount. Id.
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On March 16, 2015, Plaintiffs filed the instant action in state court alleging claims
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against Liberty for: (1) breach of contract; (2) violation of the Washington Consumer
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Protection Act; (3) the tort of insurance bad faith; (4) and violation of the Washington
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Insurance Fair Conduct Act. Dkt. # 1-1 at 7-8. The action was then removed to this
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Court. Dkt. # 1. Plaintiffs have since filed a motion for partial summary judgment.
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Dkt. # 11. They contend there is no genuine dispute as to any material fact concerning
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Liberty’s liability for breach of contract. Liberty opposes the motion. Dkt. # 12.
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III. LEGAL STANDARD
Summary judgment is appropriate if there is no genuine dispute as to any material
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fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
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56(a). The moving party bears the initial burden of demonstrating the absence of a
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genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
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Where the moving party will have the burden of proof at trial, it must affirmatively
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demonstrate that no reasonable trier of fact could find other than for the moving party.
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Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). If the moving
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party meets the initial burden, the opposing party must set forth specific facts showing
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Plaintiffs assert that the estimated cost of remediating bedroom #4 was $1,144.
Dkt. # 14 (citing report of Paul Davis). They calculate this figure by adding certain itemized
costs pertaining to bedroom #4. In doing so, however, Plaintiffs ignore that the report of Paul
Davis includes a separate itemization of the costs required to remediate the closet.
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that there is a genuine issue of fact for trial in order to defeat the motion. Anderson v.
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Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court must view the evidence in the
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light most favorable to the nonmoving party and draw all reasonable inferences in that
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party’s favor. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150-51 (2000).
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IV. DISCUSSION
Plaintiffs contend that summary judgment should be granted on their claim for
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breach of contract. In their view, the evidence indisputably shows the dishwasher leak
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caused more than $5,000 in mold damage. Relying upon this characterization of the
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evidence, Plaintiffs argue that Liberty’s denial of coverage for mold damage exceeding
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$5,000 breached the insurance agreement because it violated the “efficient proximate
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cause” rule of insurance law. 2
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Washington follows the “efficient proximate cause” rule in analyzing coverage.
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Efficient proximate cause is the “predominant cause which sets into motion the chain of
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events producing the loss.” Graham v. Pub. Employees Mut. Ins. Co., 656 P.2d 1077,
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1081 (Wash. 1983). “If the efficient proximate cause of the loss is insured against, the
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loss is covered even though other events within the chain of causation are excluded from
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coverage.” Churchill v. Factory Mut. Ins. Co., 234 F. Supp. 2d 1182, 1187 (W.D. Wash.
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2002). Whether a particular peril constitutes the efficient proximate cause of a loss is a
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question of fact. Graham, 656 P.2d at 1081. “[O]nly when the facts are undisputed and
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the inferences therefrom are plain and incapable of reasonable doubt or difference of
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opinion that it may be a question of law for the court.” Id.
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The Court cannot resolve Plaintiffs’ breach of contract claim on summary
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judgment because it is a genuinely disputed issue whether the dishwasher leak was the
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efficient proximate cause of more than $5,000 in mold damage. 3 According to Rimkus,
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As emphasized in their Reply, “Plaintiffs are not arguing that Liberty Mutual should
have covered any pre-existing mold that was unrelated to the dishwasher leak.” Dkt. # 14 at 2.
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Plaintiffs, however, are correct that Liberty cannot use the $5,000 policy limit on mold
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the dishwasher leak caused mold to grow in three locations: (1) the kitchen; (2) the
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laundry/utility room; and (3) bedroom #4. Dkt. # 13-2 at 5, 15. But the dishwasher leak
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was only partially to blame for the mold problem in the laundry/utility room and bedroom
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#4. Id. at 15. The mold in those rooms was also attributable to exterior moisture that had
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seeped through the walls. Id. According to the estimate provided by Paul Davis, the
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combined cost of repairing the kitchen and laundry/utility room was $4,252.79.
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Dkt. # 13-8 at 2, 5-9. At this stage, it is impossible to apportion which of those losses
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were predominantly caused by the dishwasher leak as opposed to the intrusion of exterior
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moisture. That is a task for the factfinder. The same goes for bedroom #4. Paul Davis
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estimated that it would cost $1291.35 to remediate bedroom #4, id. at 17, but there is
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evidence that the mold damage caused by the dishwasher leak was limited to the closet,
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Dkt. # 13-8 at 15. In fact, the report of Paul Davis indicates that remediating the closet
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would cost only $146.10. Dkt. # 13-8 at 17.
As for Rainbow’s detrimental remediation efforts, there is no undisputed evidence
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establishing the extent to which their involvement contributed to the growth of mold in
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Plaintiffs’ home. Although Liberty stated in a letter to Plaintiffs that Rainbow was
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responsible for spreading mold to the kitchen and laundry/utility room, Dkt. # 10 at 3,
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this does not change Rimkus’ conclusion there were additional causes for the mold in
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those rooms. In any event, even Plaintiffs acknowledge it is “arguable” whether
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Rainbow’s exacerbation of the mold problem is a “third force” in the chain of events
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linking the dishwasher leak to the mold damage. Dkt. # 14 at 8. Because there are
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genuinely disputed issues of material fact whether the dishwasher leak was the efficient
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proximate cause of more than $5,000 in losses, Plaintiffs are not entitled to summary
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judgment on their claim for breach of contract.
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damage to circumvent the efficient proximate cause rule. Under that rule, Liberty must cover
any losses that were predominantly caused by the dishwasher leak.
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V. CONCLUSION
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For the reasons stated above, the Court DENIES Plaintiffs’ Motion for Partial
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Summary Judgment Re Breach of Contract (Dkt. # 11).
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DATED this 26th day of September, 2016.
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A
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The Honorable Richard A. Jones
United States District Judge
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