Barron v. American Family Mutual Insurance Company

Filing 61

ORDER by Judge Benjamin H. Settle granting in part and denying in part 44 Motion for Summary Judgment; denying 55 Motion for Partial Summary Judgment.(TG)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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STEVE E. BARRON, et al.,

CASE NO. C16-5576 BHS

Plaintiffs,
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v.
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY,

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Defendant.
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ORDER GRANTING IN PART
AND DENYING IN PART
DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ MOTION
FOR PARTIAL SUMMARY
JUDGMENT

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This matter comes before the Court on Defendant American Family Mutual

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Insurance Company’s (“American Family”) motion for summary judgment (Dkt. 44) and

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Plaintiffs Steve E. Barron, Christine L. Hillestad, Marc W. Hillestad, Raymond Owens,

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Tammy Owens, and Frank E. Schoen’s (“Plaintiffs”) motion for partial summary

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judgment (Dkt. 55). The Court has considered the pleadings filed in support of and in

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opposition to the motions and the remainder of the file and hereby rules as follows:

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I. PROCEDURAL HISTORY

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On June 28, 2016, Plaintiffs filed a class action complaint against American

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Family asserting numerous causes of action. Dkt. 1. All of the causes of action are based

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on the theory that American Family failed to pay the actual cash value for damaged items

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because American Family improperly depreciated the value of these items based solely

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on the age of the items. Id. ¶¶ 29, 30.

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On February 15, 2017, American Family filed a motion for summary judgment.

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Dkt. 44. On March 6, 2017, Plaintiffs responded. Dkt. 53. On March 9, 2017, Plaintiffs

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filed a cross-motion for summary judgment. Dkt. 55. On March 10, 2017, American

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Family replied to Plaintiffs’ response. Dkt. 56. On March 27, 2017, American Family

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responded to Plaintiffs’ motion. Dkt. 59. On March 31, 2017, Plaintiffs replied. Dkt. 60.

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II. FACTUAL BACKGROUND

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Plaintiffs entered into individual contracts of insurance with American Family. It

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is undisputed that each contract obligated American Family to pay the insured the

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“Actual Cash Value” (“ACV”) of damaged property in certain circumstances. Dkt. 44 at

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34; Dkt. 53 at 3. The policies define ACV as “the amount it costs to repair or replace

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property with property of like kind and quality less depreciation for physical deterioration

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and obsolescence.” Id.

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III. DISCUSSION

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As a threshold matter, the parties appear to be ships passing in the night.

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American Family seeks a ruling that straight-line age-based depreciation is appropriate

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for every instance of attributable depreciation while Plaintiffs seek a ruling that straight-

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line age-based depreciation can never be a factually accurate determination of

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depreciation. Based on the current record, the true answer lies somewhere in the middle

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of these positions. For example, age may be the only relevant factor in depreciating an

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item, whereas in other situations age has no relevance whatsoever in determining an

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item’s obsolescence. Accordingly, the issue is not amenable to resolution as a matter of

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law and, in the absence of further evidence, may only be determined on an item-by-item

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basis.

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A.

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Summary Judgment Standard
Summary judgment is proper only if the pleadings, the discovery and disclosure

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materials on file, and any affidavits show that there is no genuine issue as to any material

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fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

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The moving party is entitled to judgment as a matter of law when the nonmoving party

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fails to make a sufficient showing on an essential element of a claim in the case on which

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the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317,

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323 (1986). There is no genuine issue of fact for trial where the record, taken as a whole,

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could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec.

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Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must

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present specific, significant probative evidence, not simply “some metaphysical doubt”).

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See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists

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if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or

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jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477

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U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d

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626, 630 (9th Cir. 1987).

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The determination of the existence of a material fact is often a close question. The

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Court must consider the substantive evidentiary burden that the nonmoving party must

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meet at trial – e.g., a preponderance of the evidence in most civil cases. Anderson, 477

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U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual

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issues of controversy in favor of the nonmoving party only when the facts specifically

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attested by that party contradict facts specifically attested by the moving party. The

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nonmoving party may not merely state that it will discredit the moving party’s evidence

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at trial, in the hopes that evidence can be developed at trial to support the claim. T.W.

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Elec. Serv., Inc., 809 F.2d at 630 (relying on Anderson, 477 U.S. at 255). Conclusory,

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nonspecific statements in affidavits are not sufficient, and missing facts will not be

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presumed. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888-89 (1990).

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B.

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ACV
The Court construes an insurance policy as a whole, giving the policy a “fair,

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reasonable, and sensible construction as would be given to the contract by the average

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person purchasing insurance.” Amer. Nat. Fire Ins. Co. v. B & L Trucking and Constr.

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Co., Inc., 134 Wn.2d 413, 427 (Wn. 1998) (internal quotations omitted). If the language

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is clear and unambiguous, the Court must enforce it as written. Id. at 429. If the clause is

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ambiguous, the Court may look to extrinsic evidence of the parties’ intent to resolve the

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ambiguity. Id. The Court resolves any remaining ambiguities against the drafter-insurer

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and in favor of the insured. Id. A clause is ambiguous when, on its face, it is fairly

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susceptible to two reasonable interpretations. Id. When the Court relies on inferences

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drawn from extrinsic evidence, contract interpretation is a question of fact. Viking Bank v.

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Firgrove Commons 3, LLC, 183 Wn. App. 706, 712 (2014). Absent disputed facts, the

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legal effect of a contract is a question of law. Id.

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In this case, the relevant contract language is clear and unambiguous. American

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Family may calculate depreciation by considering “physical deterioration and

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obsolescence.” Merriam-Webster defines “obsolescence” as “a loss in the utility or value

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of property that results over time from intrinsic limitations (as outmoded facilities) or

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external circumstances.” https://www.merriam-webster.com/dictionary/obsolescence

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(last visited April 26, 2017). “In this state, legal technical meanings have never trumped

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the common perception of the common man.” Boeing Co. v. Aetna Cas. & Sur. Co., 113

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Wn.2d 869, 881 (1990). Accordingly, the Court agrees with American Family that the

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common definition of obsolescence confers the idea of property losing value over time

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and depreciation by obsolescence may include age as a factor. In other words, the

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contract language does not preclude American Family from considering age when

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calculating depreciation. Therefore, on the issue of contract interpretation, the Court

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grants American Family’s motion and denies Plaintiffs’ motion.

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The remaining issue is a matter of fact whether the age of a piece of damaged

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property directly correlates with obsolescence depreciation. American Family argues that

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it is entitled to summary judgment on all of Plaintiffs’ claims. Dkt. 44 at 17. Plaintiffs,

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however, assert that they are “entitled to payment under the insurance policy for the full

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amount to which each class member is entitled under the personal-property coverage.”

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Dkt. 10, ¶ 55. They argue that each “policy allows depreciation, but the insurance

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company must ground any depreciation in the actual physical deterioration or

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obsolescence of the item at the time of loss,” and “[i]f the passage of time (age) or other

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factors did not cause physical deterioration or obsolescence in an item, there is no

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depreciation.” Dkt. 60 at 2. The Court agrees on both points. More importantly,

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American Family has failed to show that no questions of fact exist as to every item

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claimed by Plaintiffs. Therefore, to the extent that American Family has failed to

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properly compensate Plaintiffs under each contract of insurance, the Court denies

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American Family’s motion on all of Plaintiffs’ claims.

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IV. ORDER

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Therefore, it is hereby ORDERED that American Family’s motion for summary

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judgment (Dkt. 44) is GRANTED in part and DENIED in part and Plaintiffs’ motion

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for partial summary judgment (Dkt. 59) is DENIED.

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Dated this 27th day of April, 2017.

A

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BENJAMIN H. SETTLE
United States District Judge

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