Williams v. Foremost Insurance Company Grand Rapids Michigan

Filing 18

ORDER granting Plaintiff's 9 Motion for Partial Summary Judgment, signed by Judge Ricardo S Martinez. (SWT)

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  1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 12 13 14 15 16 19 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT Plaintiff, v. FOREMOST INSURANCE COMPANY GRAND RAPIDS MICHIGAN, an insurance company, Defendant. I. 17 18 Case No. C17-1113RSM TABITHA WILLIAMS, a person, INTRODUCTION This matter comes before the Court on Plaintiff Tabitha Williams’ Motion for Partial Summary Judgment. Dkt. #9. Defendant Foremost Insurance Company Grand Rapids 20 21 Michigan (“Foremost”) opposes this Motion. The Court has determined that oral argument is 22 unnecessary. For the reasons below, the Court GRANTS Plaintiff’s Motion. 23 II. 24 25 BACKGROUND On March 3, 2017, Ms. Williams purchased a house located at 18820 AP Tubbs Road E. in Carbonado, Washington. Dkt. #9 at 9; Dkt. #13-2 at 2. Around the same time, Ms. 26 27 28 Williams purchased a homeowner’s insurance policy from Farmers Insurance to cover this house. Dkt. #9 at 9. Prior to purchase, Ms. Williams knew that the house was “occupied,” ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 1   1 although the former owner had passed away, but “did not know if the occupants were squatters 2 illegally occupying the house or if they were actual tenants.” Id. at 9–10. Ms. Williams 3 subsequently visited the house and learned that the occupants were not paying rent. Id. at 10. 4 Ms. Williams hired an attorney to send a letter to the occupants asking for documentation 5 6 7 showing they had a written rental agreement or had paid rent. The occupants did not provide any such evidence, so Ms. Williams commenced eviction proceedings in Pierce County 8 Superior Court. 9 declaration that they “are legal tenants,” while at the same time referring to being tenants of the 10 11 12 13 Id.; Dkt. #13-2. In the eviction proceedings, the occupants stated via prior owner. Dkt. #13-3 at 4. The occupants presented no evidence that they had a rental agreement with Ms. Williams. The occupants were ordered to leave by May 2, 2017 after filing a stipulation. Dkt. #9 14 at 10; Dkt. #13-5. 15 “someone had left the upstairs bath faucet running and clogged the drain, which caused water 16 On May 3, 2017, Ms. Williams inspected the house and found that to flood the entire house.” Dkt. #9 at 10. Someone had also damaged the HVAC system “by 17 18 dumping cat litter and sawdust into the vents.” Id. None of this damage was noticeable in Ms. 19 Williams’ prior visit to the house. Ms. Williams notified Farmers Insurance that day, making a 20 claim of vandalism. Id. At no time did the occupants pay rent or enter into a rental agreement 21 with Ms. Williams. Id. 22 23 24 Defendant Foremost Insurance Company, on behalf of Farmers Insurance, handled the claim. On May 17, 2017, Foremost informed Ms. Williams via letter that “there is no coverage 25 for your claim based on the facts known to us at the present time as tenant who vandalism [sic] 26 a home is specifically excluded by your policy.” Id. at 15. Foremost then stated “[i]f you have 27 any other evidence that clearly shows these tenant [sic] where [sic] only living in the home a 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 2   1 2 short peroid [sic] of time and knew they had no legal right to live in the home then please send that information in so it can be reviewed.” Id. 3 Ms. Williams’ insurance policy covers “[v]andalism or malicious mischief, meaning the 4 intentional and willful damage or destruction of property by anyone other than the owner of the 5 6 7 8 property,” but explicitly excludes “[a]ny loss caused by, resulting from, contributed to or aggravated by intentional acts of any tenant or any roomers and boarders of your premises…” Dkt. #13-2 at 14. 9 10 11 12 III. DISCUSSION A. Legal Standard Summary judgment is appropriate where “the movant shows that there is no genuine 13 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. 14 R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Material facts are 15 those which might affect the outcome of the suit under governing law. Anderson, 477 U.S. at 16 248. In ruling on summary judgment, a court does not weigh evidence to determine the truth of 17 18 the matter, but “only determine[s] whether there is a genuine issue for trial.” Crane v. Conoco, 19 Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing Federal Deposit Ins. Corp. v. O’Melveny & 20 Meyers, 969 F.2d 744, 747 (9th Cir. 1992)). 21 22 23 24 On a motion for summary judgment, the court views the evidence and draws inferences in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255; Sullivan v. U.S. Dep't of the Navy, 365 F.3d 827, 832 (9th Cir. 2004). The Court must draw all reasonable 25 inferences in favor of the non-moving party. See O’Melveny & Meyers, 969 F.2d at 747, rev’d 26 on other grounds, 512 U.S. 79 (1994). However, the nonmoving party must make a “sufficient 27 showing on an essential element of her case with respect to which she has the burden of proof” 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 3   1 to survive summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Further, 2 “[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be 3 insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” 4 Anderson, 477 U.S. at 251. 5 6 7 B. Analysis Ms. Williams brings this Motion for the Court to rule as a matter of law that she was 8 covered for the vandalism damage above and that Foremost breached the insurance contract 9 when it denied coverage. Dkt. #9 at 1. Ms. Williams argues that she has clearly met her 10 11 12 burden of establishing that vandalism, a covered loss, occurred. Id. at 6. She argues that Foremost is unable to meet its burden of establishing that an exclusion applies because “there is 13 no evidence that the people who vandalized the house were ‘tenants’ at the time of the loss.” 14 Id. Therefore coverage exists as a matter of law. 15 16 In Response, Foremost acknowledges that it is “undisputed that this claim involves alleged vandalism,” but argues that there is a genuine issue of material fact whether the 17 18 individuals that Plaintiff claims caused the damage were “tenants, roomers or boarders as 19 opposed to third parties who were unlawfully on the premises.” 20 argues that “[a]t all material times, they were legally living in the home as tenants,” because 21 “they had a tenancy agreement with the former owner and under clear Washington law, they 22 23 24 Dkt. #11 at 2. Foremost were allowed the legal occupation of the home after the transfer of ownership.” Id. Foremost cites to a Washington State statute defining “tenant” as “any person who is entitled to occupy a 25 dwelling unit primarily for living or dwelling purposes under a rental agreement.” Id. at 11 26 (citing RCW 59.18.030(27)). Foremost argues that Washington law does not require that 27 occupants have a written or documented rental agreement in order to be considered tenants. Id. 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 4   1 at 12. Foremost argues that the occupants who refused to leave were legally entitled to not less 2 than 60 days to vacate the premises. Id. at 12–13 (citing RCW 61.24.060). Foremost argues 3 that these occupants were thus “continuing their prior tenancy” during the 60 day period where 4 Ms. Williams alleges the vandalism occurred. Id. at 13. Even if they were not legally tenants, 5 6 7 Foremost argues that these occupants, through their negotiations with Ms. Williams allowing them to stay at the property until the end of May 2, 2017, were tenants, roomers or boarders. 8 Id. at 13–14. Foremost also argues that Ms. Williams has failed to discuss the necessary 9 elements for the Court to find in her favor on a breach of contract claim, including a discussion 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 of damages. Id. at 15–16. On Reply, Ms. Williams argues that her Motion should be granted even if all of the facts cited by Foremost are true. Specifically, Ms. Williams argues: Even if the squatters were arguably “tenants” of the prior owner, they were only tenants before the foreclosure and sale of the house. They were not Plaintiff’s tenants at the time of the vandalism – which occurred after Plaintiff’s purchase of the house. The timing of the vandalism is relevant and dispositive. It is Plaintiff’s position that the insurance contract intended “tenant” to mean a tenant of the homeowner/insured at the time of the vandalism. Almost everyone has been a tenant at some point in their life. It would be nonsensical if the policy term “tenant” was intended to mean anyone who has ever been a tenant at any property. To the extent that the word “tenant” was ambiguous concerning whether it included the prior tenants of prior owners of the house, that ambiguity must be construed in favor of Williams. Panorama, 144 Wn.2d at 137. It is undisputed that the squatters never had a tenant-landlord relationship with Williams. 25 Dkt. #15 at 4. 26 purchasing insurance would not interpret ‘tenant’ to include people impermissibly occupying a 27 Looking at the policy, Ms. Williams argues that “[t]he average person house after it has been foreclosed upon and sold” because ‘[t]enant’ implies consent and 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 5   1 permission by the owner, along with the payment of rent.” Id. at 3. Ms. Williams also argues 2 that Foremost has never explicitly taken the position that the damage was caused by “roomers” 3 or “boarders,” and to the extent that Foremost takes such a position, the terms are ambiguous 4 and any ambiguities must be construed in favor of the insured. Id. at 2 n.2. Ms. Williams 5 6 7 reminds the Court that because the tenant provision is an exclusion under the policy, it is Foremost’s burden to prove the vandalism was caused by a tenant. Id. at 4 (citing Brown v. 8 Snohomish County Physicians Corp., 845 P.2d 334, 340, 120 Wn.2d 747, 758–59 (1993)). Ms. 9 Williams highlights the fact that Foremost’s May 17, 2017, letter denying coverage conceded 10 11 12 that the occupants “might not have a legal right to live at the home”. Id. at 5 (citing Dkt. #9 at 15). Ms. Williams makes the observation that Foremost has failed to actually show that the 13 occupants caused the vandalism, as opposed to some third party. Id. at 6. Finally, Ms. 14 Williams argues that her Motion effectively shows why a part of her breach of contract claim 15 should be granted on summary judgment (finding coverage and breach but not an amount of 16 damages). Id. at 7–8. 17 18 Under Washington law, interpretation of an insurance contract is a question of law. 19 Overton v. Consol. Ins. Co., 145 Wn.2d 417, 424, 38 P.3d 322 (2002). Determining whether 20 coverage exists is a two-step process. The insured must first show the loss falls within the 21 scope of the policy’s insured losses. McDonald v. State Farm Fire & Casualty Co., 119 Wn.2d 22 23 24 724, 731 837 P.2d 1000, 1003-1004 (1992). To avoid coverage, the insurer must then show the loss is excluded by specific policy language. Id. When interpreting an insurance policy, 25 “ambiguities are resolved in favor of the policyholder.” Eurick v. Pemco Ins. Co., 108 Wn.2d 26 338, 340, 738 P.2d 251, 252 (1987) (citing E-Z Loader Boat Trailers, Inc. v. Travelers Indem. 27 Co., 106 Wn.2d 901, 907, 726 P.2d 439 (1986)). In addition, “exclusionary clauses are to be 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 6   1 construed strictly against the insurer.” Id. (citing Farmers Ins. Co. v. Clure, 41 Wn. App. 212, 2 215, 702 P.2d 1247 (1985)). “The terms of a policy should be given a fair, reasonable, and 3 sensible construction as would be given to the contract by the average person purchasing 4 insurance.” Overton, 145 Wn.2d at 424. 5 6 7 The parties have apparently agreed on several key details, including that the vandalism occurred while Ms. Williams was covered under the insurance policy. The only real issue 8 before the Court is whether Ms. Williams has met her burden on summary judgment to 9 establish that Foremost cannot meet its burden of showing that the tenant exclusion applies. 10 11 12 The Court is persuaded by Ms. Williams’ argument that the average person would interpret the policy’s use of “tenant” to refer to a tenant of the insured rather than a tenant of a prior owner. 13 Any ambiguity in this term is resolved in favor of Ms. Williams, and because it is contained in 14 an exclusionary clause, it will be construed strictly against Foremost as the insurer. Eurick, 15 supra. Foremost’s response of citing to RCW 59.18.030(27) is not helpful, because there is no 16 evidence that the occupants of Ms. Williams’ house were “entitled” to occupy the premises 17 18 under a rental agreement at the time the vandalism occurred, as opposed to having a legal right 19 not to be immediately evicted. As Ms. Williams’ succinctly notes, “[b]eing a defendant in an 20 eviction proceeding does not automatically make a person a “tenant.” 21 Foremost’s evidence does not create a question of material fact as to this issue. Although the 22 23 24 Dkt. #15 at 5. occupants believed they were legal tenants at the time of the eviction, a complete reading of their declaration submitted Pierce County Superior Court makes clear that they claimed a 25 tenant relationship with the prior owner only. Ms. Williams’ subsequent efforts to enter into a 26 rental agreement with the occupants failed, so they never became her tenants. The stipulation 27 allowing the occupants until the end of the day on May 2, 2017, to vacate was perhaps an 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 7   1 “agreement” but not a “rental agreement.” For all of these reasons, Foremost has failed to 2 make a sufficient showing on this essential element for which it has the burden of proof, and 3 thus summary judgment is properly granted. See Celotex, supra. Accordingly, the Court finds 4 that Ms. Williams was covered for the vandalism that occurred, and that Foremost breached the 5 6 7 8 9 10 11 12 13 14 15 16 insurance contract by failing to pay. There is no legitimate dispute that this failure damaged Ms. Williams by depriving her of the insurance payment needed to repair the vandalism damage. The amount of damages remains an issue for another day. Finally, the Court notes that Foremost has stated, via footnote, that it “reserves the right to file a separate Motion for Summary Judgment seeking an affirmative ruling that Plaintiff is not entitled to coverage as a matter of law after further discovery.” Dkt. #11 at 2 n.1. This statement is insufficient to satisfy Rule 56(d). IV. CONCLUSION Having reviewed the relevant pleadings, the declarations and exhibits attached thereto, and the remainder of the record, the Court hereby finds and ORDERS that Plaintiff Williams’ 17 18 Motion for Partial Summary Judgment (Dkt. #9) is GRANTED. The Court rules as a matter of 19 law that Foremost breached the insurance contract by denying coverage. The amount of 20 damages based on this claim remains an issue to be decided. 21 22 23 DATED this 3 day of October, 2017. 24 25 26 27 A RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE 28 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 8

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