IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
LAKE CHELAN SHORES HOMEOWNERS ASSOCIATION, a Washington non-profit entity, Appellant,
v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, a foreign corporation, Respondent, and NORTHERN INSURANCE COMPANY OF NEW YORK, a foreign corporation, Defendant. No. 66636-3-1 DIVISION ONE

ORDER WITHDRAWING OPINION FILED NOVEMBER 28, 2011 AND SUBSTITUTING NEW OPINION

<jD 

### ASpecial Departmentofthe Washington State Supreme Court granted a petition for review inthe above matteron its August 7, 2012 MotionCalendarand remanded the
case to the Court ofAppeals for consideration in light ofAnderson v. Akzo Nobel Coatings. Inc.. 172 Wn.2d 593, 260 P.3d 857 (2011). 

### In light ofthe foregoing, this court has determined that the opinionfiled on November 28, 2011, shall be withdrawn and a substitute opinion be filed. Now, therefore, 

### IT IS HEREBY ORDERED thatthe unpublished opinion of this courtfiled in the above-entitled action on November 28, 2011 is withdrawn and thatthe 

### attached published opinion is substituted in its place. Dated this 19th day ofAugust, 2013.

WE CONCUR: 

# j&€tftr\*-^^JQjt Ik J^y 

# HrtfJ?/A,Qr~IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

LAKE CHELAN SHORES HOMEOWNERS ASSOCIATION, a Washington non-profit entity, Appellant,

v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, a foreign corporation, Respondent, and NORTHERN INSURANCE COMPANY OF NEW YORK, a foreign corporation, Defendant. No. 66636-3-1 DIVISION ONE

PUBLISHED OPINION

FILED: August 19.2013 —J



### SPEARMAN, A.C.J. —The main issue in this insurance coverage case iswhether 

### the method by whichexpertwitnesses for Lake Chelan Shores condominiums homeowners association (LCS) established that "collapse" conditions occurred years earlierwas generally accepted withinthe scientific community. In its summaryjudgment motion, St. Paul Fire &Marine Insurance Company setforth evidence indicating the 

### methodology of LCS's experts was not generally accepted. The burdenthen shifted to LCS to come forward with evidence the methodology was generally accepted. Because 

### LCS provided no such evidence, the trial court properly concluded there was noNo. 66636-3-1/2
admissible evidence of "collapse," a prerequisite for coverage underthe policy. We affirm. FACTS St. Paul insured the premises of LCS underthree annual policies, effective from 

### August 3, 1996 to August 3, 1999. Each ofthose policies provided coverage for "collapse" that occurred during the policy period: 

### Collapse coverage. We'll insure covered property againstthe risk ofdirect physical loss or damage involving collapse of a building or any part of a building. 

### The collapse must be due to any ofthe following causes ofloss:

• hidden decay. 

### The policies contained the following relevant exclusions from coverage: Exclusions

— Losses We Won't Cover 

### Collapse. We won't cover loss resulting from collapse otherthan that described inthe collapse coverage underthe Covered Causes OfLoss section.

Wear

— tear

— deterioration

— animals. We won't cover loss caused or made worse by:

• wear and tear;



### • deterioration, mold, wet or dry rot, rust or corrosion including fungal or bacterial contamination
.... The LCS condominiums were built between 1980 and 1994. LCS first 

### discovered a problem with rot in mid-2006. LCS hired Olympic Associates, an 

### architectural and engineering firm, to inspect and report on the problem. ByApril 2007, 2No. 66636-3-1/3


### LCS had decided to contractfor a repair projectthatwould include removal and replacement of all siding. On July 11, 2007, LCS adopted a resolution for financing the project, and on July 27, 2007, itsubmitted design documents to the City of Chelan Building Department. LCS tendered its claim to St. Paul on July 5, 2007. On July 23, a St. Paul property adjuster contacted counsel for LCS, and on July 26, the adjuster sent a letterto counsel, asking for documents relating to the loss. Counsel for LCS did not respond to the request. On August 27, counsel for LSC sent a letterto St. Paul, requesting reimbursementfor $303,424 in investigation costs. Three days later, on August 30, 2007, LCS sued St. Paul for breach ofcontract; bad faith; and Consumer Protection Act (CPA) chapter 19.86 RCW, violations. 

### In July 2009, LCS disclosed its experts' opinions. On the basis ofthese opinions, St. Paul denied the claim and moved for partial summaryjudgment as to coverage. St. 

### Paul argued there was no coverage, because LCS's experts had no generally accepted scientific basis on which to linkthe current building decay to a state of"collapse" during 

### theSt. Paul policyperiods. Inthealternative, St. Paul askedfor aFrve1 hearing on LCS's experts' methods. The trial court agreed with St. Paul, and granted the motion. LCS then moved to compel discovery as to its remaining extracontractual claims. St. Paul moved for summaryjudgmenton the extracontractual claims. LCS sought a

1Frvev. United States. 54App. D.C., 46, 293F. 1013(1923). 3No. 66636-3-1/4
CR 56(f) continuance. The trial court denied LCS's motion and granted St. Paul's 

### motion for summaryjudgment, dismissing the rest ofthe claims. LCS appeals. DISCUSSION Summary Judgment on Coverage Claims The trial court granted St. Paul's motion for summaryjudgment on coverage. The court agreed thatthe opinions of LCS's experts that the condominiums were in "collapse" 10 years earlierwas not based on any theory generally accepted inthe scientific community. The trial courtthus found LCS had failed to presentevidence of coverage, and itgranted the motion. We agree with the trial court. LCS offers multiple arguments as to why this was error, butthose arguments rest upon two main, interconnected premises: (1) conflicting opinion testimony offered by opposing experts cannot be resolved at summaryjudgment and (2) the trial court essentially weighed evidence as if itwas presiding over a Frye hearing as opposed to a summaryjudgment hearing. LCS is correctthat disputed opinion testimony, offered by qualified experts, cannot be resolved at summaryjudgment. See Postema v. Pollution Control Hearings Bd.. 142Wn.2d 68, 119-20, 11 P.3d 726 (2000). In its brief, LCS provides a list comparing and contrasting the expert deposition and declaration testimony of its experts versus St. Paul's expert. But LCS misunderstands the nature of St. Paul's motion and the trial court's ruling. St. Paul did not askthe trial courtto weigh the testimony ofopposing experts and the trial court did not do so. St. Paul argued that the opinions of LCS's experts wereNo. 66636-3-1/5
inadmissible under Frve and inthe absence ofthat testimony, LCS could not establish that collapse occurred during the policy period. St. Paul contended that LCS's experts' opinions were not admissible under Frve because the undisputed evidence showed that the methodology upon which LCS's experts relied to form their opinions was not generally accepted within the scientific community. The trial court agreed and dismissed LCS's collapse coverage claims. The trial court did not err. Forexperttestimony regarding novel scientific evidence to be admissible, it first must satisfy the Frye standard and then must meet the othercriteria in ER 702. See State v. Gregory. 158 Wn.2d 759, 829-30, 147 P.2d 1201 (2006). Under Frye, expert testimony is admissible where (1) the scientific theory or principle upon which the evidence is 

### based has gained general acceptance inthe relevant scientific community ofwhich it is a part; and (2) there are generally accepted methods ofapplying the theory or principle in a manner capable ofproducing reliable results. State v. Sipin. 130Wn. App. 403, 414, 123 P.3d 862 (2005). Both the theory underlying 

### the evidence and the methodology used to implementthe theory must be generally 

### accepted inthe scientific community for evidence to be admissible under Frve. Gregory, 158 Wn.2d at 829. When applying the Frve test, courts do not determine ifthe scientifictheory underlying the proposed testimony is correct; rather, courts "must look 

### to see whetherthe theory has achieved general acceptance inthe appropriate scientific community." State v. Riker. 123 Wn.2d 351, 359-60, 869 P.2d 43 (1994). It is not necessarythatthe relevant scientific community be unanimous in its acceptance of aNo. 66636-3-1/6 particulartheory or methodology. State v. Gore, 143 Wn.2d 288, 302, 21 P.3d 262 (2001). To perform a Frve analysis, courts considerfour sources ofinformation: To determine whether a consensus of scientific opinion has been achieved, the reviewing court examines experttestimony, scientific writings that have been subjectto peer review and publication, 

### secondary legal sources, and legal authority from otherjurisdictions. However, "the relevant inquiry is general acceptance by the scientists, not the courts." Eakins v. Huber. 154 Wn. App. 592, 599-600, 225 P.3d 1041 (2010) (citations omitted) 

### (quoting State v. Cauthron. 120Wn.2d 879, 888, 846 P.2d 502 (1993)). In its motion, St. Paul setforth what itbelieved showed a lack ofgeneral 

### acceptance. The only evidence purporting to show a state ofcollapse from hidden 

### decay during the St. Paul policy periods came inthe form of two opinions from LCS's experts. One ofthe experts, Justin Franklin, was a civil engineer at Olympic 

### Associates. Regarding whether itwas possible to backdate from the present rot condition to the initialonset of a state ofcollapse, Franklin sent an e-mail in2006 saying it could not be determined: 

### We did an investigation on a building inChelan which has lots of rotten framing. The attorney forthe [homeowner's association] would like to know ifwe can estimate when the rot occurred. Apparently their 

### insurance coverage ended in2002 and ofcourse he would like us to state the rotwas presentin2002. Itold himthat all we can say is thatthe rot 

### presently exists butthatwe can not [sic] statewhen the rot and subsequent SSI [substantial structural impairment] occurred. 

### At his 2009 deposition, however, he claimed to be able to trace the progression of decay at the LCS properties with only two pieces of information: (1) the date each 

### building was built and (2)the depth of the rot when itwas uncovered during remediation 

### in 2007-2009. He applied aformula, y =ax2 + c, to trace theprogression ofrotbetweenNo. 66636-3-1/7
these two times. The formula means that the percentage ofdecay "y," progresses according to the square ofthe number ofyears "x," times a decay rate "a," plus a constant "c." The constant "c" allows for a time lag between completion of construction and the start of decay, which Franklin assumed to be one year. 

### Franklinthenapplied theformula y =ax2 + 1 toevery area in which Olympic Associates had identified a collapse condition during its 2007-2009 inspection. This 

### application resulted in a series ofcurves purporting to plotthe progression of rot at each location from the time ofconstruction to the time the rot was discovered by Olympic 

### Associates. Franklin assigned a "collapse" point at the first point the rot reached a collapse condition, and then compared that date to policy periods. 

### Franklin's equation did not come from any scientific literature. Instead, he got it from another Olympic Associates engineer, Lee Dunham. When asked, "What work has Mr. Dunham done to verifythe accuracy ofthatequation thatyou know of?", Franklin testified, "I don't know." Franklin also testified thatthe engineers at Olympic 

### Associates simply assumed decay began one year afterconstruction was complete. He did not testifythatthe assumption was generally accepted inthe scientific community. Franklin described his calculations as "educated guesses" and was unable to identify 

### any otherperson or literature stating his formula is a properequation for estimating rot progression. 

### LCS's second expertwas Kevin Flynn, a wood scientistfrom California. Flynn 

### could not identifyany support inthe scientific community forthe proposition that decayNo. 66636-3-1/8


### advances according to the square ofthe number ofyears as is setforth in Franklin's 

### equation. LCS hired Flynn because itclaimed Flynn's use of a software package called "TimberLife" validated Franklin's equation. But neither Flynn nor any otherwitness testified that itwas generally accepted inthe scientific community to use TimberLife to determine orconfirm when a state of collapse began by working backward from present rot conditions. Instead, Flynn testified thatTimberLife is a design tool intended to guide building designers in selecting appropriate building materials. In its response to the summaryjudgment motion, LCS argued thatthe opinions of its experts were not subjectto a Frye analysis because the opinions were based on the experts knowledge, experience and training, and because they were not based on novel
or new science. Furthermore, even ifthe opinions were subjectto Frve, they were nonetheless admissible because they were based on "accepted scientific knowledge of the process ofwood rot...." Clerk's Papers (CP) at 912. And the "use ofequations 

### similarto the one used by Mr. Franklin to model the progress ofwood decay has been accepted inthe scientific community." CP at 913. Insupportof its opposition to St. Paul's motion, LCS submitted a declaration from Franklin, in which one paragraph 

### addresses whether his formula was generally accepted within the scientific community: This is a formula defining an exponential curve which approximates 

### my observations, and those ofotherengineers inthe field. Thus, this formula is merely an equation for graphing the wood rot's lag phase and accelerated growth phase that is universally accepted inthe scientific community. Equations such as this are commonly used by engineers and others for various applications.

8No. 66636-3-1/9
While Franklin states that it is generally accepted inthe scientific community that rot has a lag phase and an accelerated growth phase, he does not say thatthe formula is generally accepted within the scientific community as a method ofbackdating when rot has progressed to the point ofcollapse. Likewise, in Flynn's declaration only one paragraph appears to discuss the merits of St. Paul's allegations regarding the general acceptance of Franklin's formula: Thus, while no single mathematical model has been accepted to the exclusion ofothers, the concept ofapplying a mathematical model such as Mr. Franklin's to approximate the exponential curve that describes the progress ofwood decay is generally accepted inthe scientific community. 

### Here, Flynn simply states that models approximating exponential curves that describe wood decay are generally accepted. He does not address the critical issue: whetherthe
use ofsuch formulas, and in particular, Franklin's formula, to backdate to the onsetof the collapse condition, is generally accepted inthe scientific community. LCS is correctthat in general, the moving party on summaryjudgment bears the 

### initialburden ofshowing the absence ofan issue ofmaterial fact. Young v. Key Pharm., Inc.. 112 Wn.2d 216, 225, 770 P.2d 182 (1989). However, where a plaintiff'"fails to 

### make a showing sufficientto establish the existence of an elementessential to that 

### party's case, and on whichthatparty will bearthe burden of proof at trial,'"the trial court should grantthe motion. ]d. at 225 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986)). A moving defendant may meetthe initial 

### burden by "'showing'—that is, pointing out to the [trial] court—thatthere is an absence ofevidence to supportthe nonmoving party's case." 225 n.1, (quoting Celotex. 477 9No. 66636-3-1/10


### U.S. at 325). That is exactly what happened here: St. Paul pointed to an absence of evidence thatthe bases ofthe opinions offered by LCS's experts were generally accepted and LCS failed to respond. In light ofthis unrebutted evidence, the trial court did not err in concluding thatthe opinions were inadmissible and that LCS could not prove a collapse condition existed during the coverage period. Accordingly, the trial court properly granted St. Paul's summaryjudgment motion. LCS also contends that Anderson v. Akzo Nobel Coatings, Inc.. 172 Wn.2d 593, 260 P.3d 857 (2011), which was decided shortly before oral argument inthis case, is 

### directlyonpointandrequires reversal.2 We disagree. InAkzo, theSupreme Court reversed the trial court, which had dismissed on grounds that plaintifffailed to 

### demonstrate general acceptance of its theory that a child's mental abnormalities were 

### caused by inutero exposure to toxic materials. The Court held "that the Frye test is not implicated ifthe theory and the methodology relied upon and used bythe expertto 

### reach an opinion on causation is generally accepted by the relevant scientific community." Akzo. 172 Wn.2d at 597. Thus, underAkzo. so long as the science and methods used to generate the opinions aboutcausation are generally accepted inthe relevant scientific community, Frye does not require a similarconsensus on the ultimate issue of causation.

2LCS first made thisargumentin a motion for reconsideration to thiscourt. Wedenied themotion for reconsideration. The Supreme Court granted LCS's petition for review and remanded to us for reconsideration in lightofAzko. Byseparate order, the previous opinionfiled on November 28, 2011 is withdrawn and this opinion is substituted in its place. 10No. 66636-3-1/11
LCS contends this case is likeAzko. Itargues thatthe science ofwood decay is not new or novel but instead is well known and well established. And further, that the mathematical equation used by its experts relies upon that accepted science to draw conclusions aboutwhen the rot caused certain buildings to reach a state ofcollapse. LCS contends the trial court below, like the trial court in Azko, improperly required general acceptance of its experts' conclusions. LCS also argues that because its experts' opinions are based on practical experience and knowledge, Frve is inapplicable. LCS is mistaken on both counts. 

### Contraryto LCS's arguments, general acceptance ofthe science ofwood decay is not at issue in this case. Rather, the issue here is whether LCS's experts' application ofthat science, i.e. the formula Franklin used to backdate the decay process to the point 

### ofcollapse, is generally accepted. See Akzo. 172 Wn.2d at 603 ("Boththe scientific theory underlying the evidence and the technique or methodology used to implementit 

### mustbe generally accepted inthe scientific community forevidenceto be admissible under Frve"). Stated anotherway, the issue here is not the scientific community's 

### general acceptance of Franklin's and Flynn's conclusions regarding the onset of the state ofcollapse, but instead whetherthe methodology by which those conclusions 

## were reached is generallyaccepted. Thus, Akzo is ofno helptoLCS.3

3In statements of supplementalauthority, LCS also cites Lakevv. PuqetSoundEnergy, Inc., 176 Wn.2d 909, 296 P.3d 860 (2013) and Advanced Health Care. Inc. v. Guscott, 173 Wn. App. 857, 295 P.3d 816 (2013). Given both ofthese cases reiterate the holding in Azko. they have no application here for the reasons stated above. 11No. 66636-3-1/12
LCS next contends that even if its experts' opinions were properly excluded to the extent they relied upon the mathematical formula, its experts would have reached the same conclusions based solely on their knowledge and practical experience. LCS argues that Frve is inapplicable to opinions founded on this basis. LCS is incorrect. Knowledge and experience are relevantfactors when determining the admissibility ofexpert opinion testimony under ER 702. But ifthe testimony concerns novel scientific evidence, the first hurdle to its admissibility is whether itmeets the Frye test. See Riker. 123 Wn.2d at 360 n.1 ("Nevertheless, in this state, we continue to adhere to the view thatthe Frye analysis is a threshold inquiry to be considered in 

### determining the admissibility ofevidence under ER 702"). Only if Frve is satisfied do ER 702 considerations, such as knowledge and experience become relevant. State v. Gregory, 158 Wn.2d at 829-30. Moreover, it makes little sense to conclude that an 

### expert could avoid the application of Frve simply by eschewing the use ofany particular methodology ortechnique and purporting to rely only on their knowledge and experience. SeeWatkins v. Telsmith, Inc., 121 F.3d 984, 991 (5th Cir. 1997). Here, having failed to satisfy Frve, the knowledge and experience ofLCS's experts are irrelevant and not a basis for the admission oftheir opinion testimony. Summary Judgment on Extracontractual Claims 

### LCS next argues the trial courterroneously granted St. Paul's motion for 

### summaryjudgmenton its extracontractual claims, namely the claims for bad faith and CPA violations arising fromthe alleged failure to adequately investigate, both under a
12No. 66636-3-1/13



### common law duty to investigate and a Washington Administrative Code-imposed duty to investigate. We reject LCS's arguments. Generally, "[a]n insurer must make a good faith investigation ofthe facts supporting a claim and may not deny coverage if a reasonable investigation would have proved the insurer's defense to be without merit." Capelouto v. Valley Forge Ins. Co., 98 Wn. App. 7, 18-19, 990 P.2d 414 (1999) (citing Indus. Indem. Co. v. Kallevig. 114 Wn.2d 907, 917, 792 P.2d 520 (1990)). LCS contends that because St. Paul did not undertake its own investigation ofthe rot, i.e., by removing the exterior cladding on the condominiums to try to determine when the "collapse" occurred, LCS was forced to "incurthe fullcost of stripping and recladding all 21 buildings at Lake Chelan Shores." We disagree. As is described above, the method by which LCS claims St. Paul should have attempted to determine the date of "collapse" a decade earlierwas not generally accepted inthe scientific community. It is difficult to say the trial court erred in 

### concluding such an investigation would not have been "reasonable." jd. at 19. Moreover, any costs LCS incurred in recladding the buildings was not proximately 

### caused by any alleged failure to investigate by St. Paul. Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27, 64, 204 P.3d 885 (2009) ("Ifthe investigative expense would have been incurred regardless ofwhether a violation existed, causation cannot be established") citing Samborv. Omnia Credit Servs., Inc.. 183 F. Supp. 2d 1234 (D. Haw. 2002). Indeed, it is undisputed that LCS had decided by April 2007, about three months
13No. 66636-3-1/14
before LCS even tendered to St. Paul, to contractfor a repair projectthat would include removal and replacement of all siding. The trial courtthus properly dismissed LCS's extra-contractual claims. Denial ofMotions To Compel and Continue LCS also contends the trial court abused its discretion by denying two motions: 

### (1) a CR 56(f) continuance of St. Paul's summaryjudgmentmotion on the extracontractual claims and (2) a motion to compel discovery regarding St. Paul's 

### investigation of LCS's claims. We rejectthe arguments for the reasons described herein.A trial court's denial of a motion to compel or a CR 56(f) motion for a continuance

are reviewed for an abuse ofdiscretion. See Clarke v. Office ofAttorney Gen., 133 Wn. 

### App. 767, 777, 138 P.3d 144 (2006); Mossman v. Rowley. 154 Wn. App. 735, 742, 229 P.3d 812 (2009). "Acourt abuses its discretion when itbases its decision on 

### unreasonable or untenable grounds." Clarke, 133 Wn. App. at 777 (citing Brand v. Dep't of Labor & Indus., 139 Wn.2d 659, 665, 989 P.2d 1111(1999)). 

### Here, the CR 56(f) motion sought a continuance of St. Paul's summaryjudgment motion on extracontractual claims "until a reasonable date following St. Paul Fire & 

### Marine's compliance with any order issued by this Courtfollowing hearing on the Plaintiffs Motion to Compel Discovery." The motion to compel discovery sought "St. Paul's "subrogation file," documents "relating to the investigation of this claim in an

14No. 66636-3-1/15 

### unredacted condition," and supplemental responses to interrogatories about St. Paul's 

### involvement inotherclaims regarding backdating of rot. The motion to compel thus sought information relating to St. Paul's alleged 

### deficient investigation. Butas is described above, the method by which LCS claims St. Paul should have attempted to investigate was notgenerally accepted in the scientific community, and any costs LCS incurred inrecladding the buildings were not 

### proximately caused by an alleged failure to investigate by St. Paul. In short, the motion sought information not reasonably calculated to lead to admissible evidence, see CR 

### 26(b)(1), and there was no need to continue the summaryjudgmenthearing to obtain such information. As such, the trialcourtdid not abuse its discretion by denying the motion to compel and the CR 56(f) motion for a continuance. Affirmed. 

# .W///w^ff\\Q.

WE CONCUR: 

# %SL^wojL 9$

15