1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

MACLEAN TOWNHOMES, LLC, a

Washington limited liability company, as

assignee of American Heritage Builders, a

Washington corporation,

Plaintiff,

v.

CHARTER OAK FIRE INSURANCE

CO., a foreign insurance company,

Defendant and Third- Party

Plaintiff,

 v.

FIRST SPECIALTY INSURANCE

COMPANY, a foreign insurance

company,

 Third-Party Defendant.

CASE NO. C06-1093BHS

ORDER GRANTING

PLAINTIFF’S MOTION FOR

SUMMARY JUDGMENT AND

DENYING CHARTER OAK’S

MOTION FOR SUMMARY

JUDGMENT

This matter comes before the Court on Plaintiff’s Motion for Partial Summary

Judgment Re: Insurance Coverage (Dkt. 56) and Defendant Charter Oak Fire Insurance

Co.’s (“Charter Oak”) Motion for Summary Judgment of Dismissal of Plaintiff’s

Complaint (Dkt. 65). The Court has considered the pleadings filed in support of and in

opposition to the motions, the declarations filed in support and opposition of the motions,

and the remainder of the file, and hereby grants Plaintiff’s motion and denies Charter

Oak’s motion for the reasons stated herein.

Case 2:06-cv-01093-BHS Document 105 Filed 05/07/08 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER – 2

I. SUMMARY JUDGMENT STANDARD

Summary judgment is proper only if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there

is no genuine issue as to any material fact and the moving party is entitled to judgment as

a matter of law. Fed. R. Civ. P. 56(c). The moving party is entitled to judgment as a

matter of law when the nonmoving party fails to make a sufficient showing on an

essential element of a claim in the case on which the nonmoving party has the burden of

proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1985). There is no genuine issue of

fact for trial where the record, taken as a whole, could not lead a rational trier of fact to

find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 586 (1986) (nonmoving party must present specific, significant probative

evidence, not simply “some metaphysical doubt.”). See also Fed. R. Civ. P. 56(e).

Conversely, a genuine dispute over a material fact exists if there is sufficient evidence

supporting the claimed factual dispute, requiring a judge or jury to resolve the differing

versions of the truth. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253 (1986); T.W.

Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).

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

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

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

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

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

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

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

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

Serv., Inc., 809 F.2d at 630 (relying on Anderson, supra). Conclusory, nonspecific

statements in affidavits are not sufficient, and missing facts will not be presumed. Lujan

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

Case 2:06-cv-01093-BHS Document 105 Filed 05/07/08 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER – 3

II. PLAINTIFF’S MOTION

Plaintiff moves for summary judgment on the limited issue of whether the

judgment against AHB falls within the terms of Charter Oak’s policy. Dkt. 93 at 2. When

interpreting an insurance policy, the Court should give the policy “a fair, reasonable, and

sensible construction as would be given to the contract by the average person purchasing

insurance.” Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 682 (1990). When the language

of the contract is unambiguous, as is the case here, and Charter Oak has not argued to the

contrary, “the court must enforce it as written and may not modify it or create ambiguity

where none exists.” Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654,

666 (2000). 

In order to evaluate an insurance contract in Washington State the Court must

undertake a two-step process. McDonald v. State Farm Fire & Gas. Co., 119 Wn.2d 724,

731 (1992). 

The burden first falls on the insured to show its loss is within the scope of

the policy’s insured loss. If such a showing has been made, the insurer can

nevertheless avoid liability by showing the loss is excluded by specific

policy language. 

Overton v. Consolidated Ins. Co., 145 Wn.2d 417, 431-32 (2002) (citing McDonald, 119

Wn.2d at 731). In the instant matter, from the declarations and exhibits before the Court,

Plaintiff has shown some “property damage” resulting from deficiencies caused by

American Heritage Builders or their subcontractors. The Court finds that at least some of

this “property damage” does fall within the terms of Charter Oak’s policy. With respect

to whether any policy exclusions apply, Charter Oak has not contradicted Plaintiff’s

arguments that the policy exclusions do not apply at least to some of the damages

resulting from the work performed by American Heritage Builders and its subcontractors. 

However, the Court will not preclude Charter Oak from raising applicable policy

exclusions to particular damages asserted in a reasonableness hearing. The Court also

finds that under Washington law the damage resulted from multiple occurrences and is

Case 2:06-cv-01093-BHS Document 105 Filed 05/07/08 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER – 4

thus subject to the $2 million aggregate limit. The issues of the reasonableness of the

judgment or whether Charter Oak is relieved of its liability due to American Heritage

Builder’s alleged failure to allow Charter Oak to participate in the settlement of this

matter or receive its consent are not decided or disposed of here. Charter Oak may

contest the reasonableness of the settlement judgment and may argue that it is relieved of

all liability due to the alleged breach of contract by American Heritage Builders. 

III. CHARTER OAK’S MOTION

Charter Oak moves for summary judgment dismissal of Plaintiff’s claim based on

the alleged breach of contract by American Heritage Builders for failure to allow Charter

Oak to participate in settlement negotiations and for failure to receive Charter Oak’s

consent when entering into the settlement judgment with Plaintiff. Dkt. 65. The Court

finds that summary judgment is not appropriate based on the record before the Court.

Charter Oak has failed to show as a matter of law that under the circumstances present in

this case, American Heritage Builders breached its contractual duties to allow Charter

Oak to participate and consent in entering into the stipulated judgment with Plaintiff. “An

insurer cannot deprive an insured of the benefit of purchased coverage absent a showing

that the insurer was actually prejudiced by the insured’s noncompliance” with the

cooperation clause. Public Utility Dist. No. 1 of Klickitat County v. International

Insurance Co., 124 Wn.2d 789, 804 (1994). The determination of whether actual

prejudice exists is a factual determination and the burden of proof is on the insurer. Id.

Actual “prejudice will be presumed only in extreme cases.”Felice v. St. Paul Fire &

Marine Ins. Co., 42 Wn. App. 352, 359 (1986). The Court finds that Charter Oak has not

carried its burden and that this case does not warrant a presumption of actual prejudice. 

Therefore, the motion should be denied. 

Case 2:06-cv-01093-BHS Document 105 Filed 05/07/08 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ORDER – 5

IV. ORDER

It is ORDERED that Plaintiff’s Motion for Partial Summary Judgment Re:

Insurance Coverage (Dkt. 56) is hereby GRANTED as indicated herein and Defendant

Charter Oak Fire Insurance Co.’s Motion for Summary Judgment of Dismissal of

Plaintiff’s Complaint (Dkt. 65) is hereby DENIED. 

DATED this 7th day of May, 2008.

A 

BENJAMIN H. SETTLE

United States District Judge

Case 2:06-cv-01093-BHS Document 105 Filed 05/07/08 Page 5 of 5