Cascade Auto Glass, Inc. v. Farmers Insurance Group of Companies, No. 32609-4-II (Wash. App. 7/5/2006)

• Court: Washington Court of Appeals
• Writing for the Court: Quinn-Brintnall
• Decision Date: 05 July 2006
• Docket Number: No. 32609-4-II
• Citation: Cascade Auto Glass, Inc. v. Farmers Insurance Group of Companies, No. 32609-4-II (Wash. App. 7/5/2006), No. 32609-4-II (Wash. App. Jul 05, 2006)
• Parties: CASCADE AUTO GLASS, INC., Appellant, v. FARMERS INSURANCE GROUP OF COMPANIES, FARMERS INSURANCE COMPANY, INC., FARMERS INSURANCE COMPANY OF ARIZONA, FARMERS INSURANCE COMPANY OF IDAHO, FARMERS INSURANCE EXCHANGE, FARMERS INSURANCE COMPANY OF OREGON, FARMERS INSURANCE COMPANY OF WASHINGTON, MID-CENTURY INSURANCE COMPANY, MID-CENTURY INSURANCE COMPANY OF TEXAS, ILLINOIS FARMERS INSURANCE COMPANY, Respondents.

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Unpublished Opinion

CASCADE AUTO GLASS, INC., Appellant, v. FARMERS INSURANCE GROUP OF COMPANIES, FARMERS INSURANCE COMPANY, INC., FARMERS INSURANCE COMPANY OF ARIZONA, FARMERS INSURANCE COMPANY OF IDAHO, FARMERS INSURANCE EXCHANGE, FARMERS INSURANCE COMPANY OF OREGON, FARMERS INSURANCE COMPANY OF WASHINGTON, MID-CENTURY INSURANCE COMPANY, MID-CENTURY INSURANCE COMPANY OF TEXAS, ILLINOIS FARMERS INSURANCE COMPANY, Respondents.

No. 32609-4-II

Court of Appeals of Washington, Division Two.

Filed: July 5, 2006

Appeal from Superior Court of Clark County. Docket No: 02-2-03171-8. Judgment or order under review. Date filed: 11/01/2004. Judge signing: Hon. Diane M Woolard.

Counsel for Appellant(s), Charles Joseph Lloyd, Livgard & Rabuse PLLP, 2520 University Ave SE Ste 202, Minneapolis, MN 55414-3367.

Counsel for Respondent(s), Todd Scott Baran, Attorney at Law, 4117 SE Division St # 342, Portland, OR 97202-1646.

Paula Duggan Vraa, Rider Bennett LLP, 33 South Sixth Street, Suite 4900, Minneapolis, MN 55402.

Bruce M. White, Attorney at Law, 101 SW Main St Ste 2000, Portland, OR 97204-3230.

QUINN-BRINTNALL, C.J.

Cascade Auto Glass, Inc. sued Farmers Insurance Group of Companies, Farmers Insurance Company of Arizona, Farmers Insurance Company of Idaho, Farmers Insurance Exchange, Farmers Insurance Company of Oregon, Farmers Insurance Company of Washington, Mid-Century Insurance Company, Mid-Century Insurance Company of Texas, and Illinois Farmers Insurance Company (collectively `Farmers'),¹ claiming that Farmers failed to pay the full amount it owed for repairs which Cascade made to the windshields of Farmers' clients. In its complaint, Cascade claimed that (1) it repaired the windshields of people insured by Farmers; (2) in payment for the repairs, the insureds assigned their Farmers policy rights to Cascade; and (3) Farmers short-paid Cascade by failing to pay the full amount owed. The trial court entered summary judgment in Farmers' favor. Because genuine issues of material fact remain, we reverse the trial court's summary judgment and remand for trial.

FACTS

Cascade, an auto glass repair and replacement company, sued Farmers, claiming that Farmers refused to honor payment assignments numerous policyholders had made to Cascade for windshield replacement and repair costs. Cascade claimed that Farmers breached these assignments by refusing to pay the full amount of the repair service even though Cascade performed these repairs at a reasonable market price.

Cascade claimed that Farmers owed it $897,259.63 as of March 7, 2002.² Cascade incorporated into the complaint a 96-page exhibit summarizing the invoices not paid fully by Farmers. This summary purports to show approximately 5,360 instances of Farmers' alleged short-pays.

Farmers served Cascade with requests for production and interrogatories asking for (1) all documents relating to Cascade's claims; (2) the alleged written assignments of benefits from Farmers' insureds; (3) any written or electronic communication with Farmers' insureds; and (4) invoices and documents for services rendered and not paid in full.

Citing CR 33(c),³ Cascade replied that it would provide business records to answer the interrogatories. It also promised that it would `produce for inspection and copying all responsive, non-privileged documents within its possession, custody or control at a time and place to be agreed upon by counsel.' 2 Clerk's Papers (CP) at 269.

Farmers' counsel went to Cascade's storage facility to inspect the documents.⁴ There Cascade had approximately 50 boxes of documents relating to work it performed from 1999 to 2003. Each invoice was approximately four to six pages in length. Cascade claimed that these boxes contained the information Farmers requested in the interrogatories described above.⁵

At Farmers' request, Cascade segregated five typical sample claims documents. These contained Cascade work orders, invoices directed to Farmers, and documents labeled `Glass Breakage Reports' which included a section titled `Assignment Of Proceeds And Authorization To Pay.' 2 CP at 111.

The `assignment of proceeds' section on Cascade's glass breakage report read in part:

I authorize my insurance company to release policy coverage and other information to {Cascade}. I hereby authorize and direct my insurance company to pay this invoice directly to Cascade . . . and I assign any and all claims in connection with this automobile glass installation or repair against my insurance company and all policy proceeds due for this installation or repair to Cascade. I agree that if my insurance company should ignore this directive to pay and the assignment of the policy proceeds and issue payments to me that I will immediately forward payment to Cascade.

Sealed CP at 474.

Farmers then made numerous requests for Cascade to segregate and identify documents specifically pertaining to each of the 5,360 claims in the complaint. Farmers stated that Cascade had the burden to furnish the supporting documents for each of Cascade's individual claims and that it was not its job to `find a needle in a haystack.' 2 CP at 113. Farmers claimed it could not conduct discovery until Cascade segregated the documents because it was not practical to look through all the documents as they were kept.

Citing CR 34,⁶ Cascade refused to segregate the documents on each claim and argued that it complied with Farmers' discovery request by producing documents for inspection as they were kept in the ordinary course of business.

Farmers moved for summary judgment on each of the 5,360 claims for which Cascade had not segregated the evidence of the material facts disputed. Farmers asserted that, by refusing to segregate and produce documents supporting each claim, Cascade `failed to produce any evidence that the . . . policyholders actually assigned their claims to Cascade, had work done by Cascade, submitted claims to {Farmers}, and were paid less than what they were entitled to.' 2 CP at 107.

Farmers characterized Cascade's case as 5,360 individual claims. It argued that to defeat summary judgment, Cascade must produce evidence sufficient to show it has material facts in dispute for each claim in which it sought additional payment. According to Farmers, Cascade failed to produce any evidence supporting the claims other than the five segregated sample claims; and Cascade's invitation to review its stored records was an improper attempt to shift the burden of discovery onto Farmers.

In response to Farmers' summary judgment motion, Cascade submitted an affidavit from its Vice President, Bradley Nelson. That affidavit established that when Cascade performs glass services for Farmers' policyholders, it obtains an assignment of the proceeds Farmers owes its policyholders as payment for the repair work done and submits an invoice directly to Farmers along with a copy of the assignment document. Nelson stated further that:

It is our company's policy and our custom and practice to obtain the assignment of insurance proceeds in every instance where we are doing work for a customer who has insurance to cover some or all of the cost of the repair or replacement of the damaged automobile glass. Examples of the actual assignments obtained from our customers were attached as {sealed exhibit in the record}. That same assignment language has been submitted to Farmers on literally thousands of claims each year. I am not aware of a single instance in which we have submitted an invoice to Farmers that did not contain the executed assignment. That is not to say that there are not individual instances where that has occurred. If it has, that would be contrary to our policy and practice.

3 CP at 407-08.

Nelson also prepared a 96-page summary as evidence of Farmers' short-pays to Cascade. The summary was compiled from Cascade's business records database and included the invoice number, customer name, shop date, loss date, policy number, insurance company, total due, amount paid, and the amount remaining unpaid. Nelson's 96-page report was incorporated by reference in the complaint and summarized Cascade's business records that were stored in boxes in the company's Vancouver storage facility. These were the records that had been made available to Farmers. Nelson stated that the summary's supporting documents are so voluminous that in-court examination of the thousands of invoices, each containing more than one page per invoice, would be inconvenient.

The trial court agreed with Farmers' contention that each invoice represented a separate claim that must be pleaded and proved and granted Farmers' motion for summary judgment. It entered a written order granting summary judgment because Cascade `failed to make a sufficient showing by competent evidence of the existence of elements essential to prove the thousands of individual breach of contract claims.' 3 CP at 491. Cascade appeals.

We address whether evidence of Cascade's routine business practice and its 96-page summary are sufficient to demonstrate disputed issues of material facts necessary to withstand Farmers' motion for summary judgment.

ANALYSIS

Washington law favors resolution of cases on their merits. See Smith v. Arnold, 127 Wn. App. 98, 103, 110 P.3d 257 (2005). In reviewing the trial court's grant of summary judgment, we engage in the same inquiry as the trial court. Marincovich v. Tarabochia, 114 Wn.2d 271, 274, 787 P.2d 562 (1990). Summary judgment is appropriate only if the pleadings, affidavits, depositions, and admissions on file demonstrate the absence of any genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c). The moving party has the burden to show that no genuine issue of material fact exists.⁷ Young v. Key Pharm., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989). It can meet this burden by showing that there is an absence of evidence from which the nonmoving party can make out its...