GB Auctions Inc. v. Old Republic Ins. Co.
Decision Date | 11 January 2019 |
Docket Number | No. 2:18-cv-00237-SMJ,2:18-cv-00237-SMJ |
Citation | 357 F.Supp.3d 1087 |
Court | U.S. District Court — District of Washington |
Parties | GB AUCTIONS INC., a Washington Corporation, Plaintiff, v. OLD REPUBLIC INSURANCE COMPANY, a Delaware Corporation; and Old Republic Aerospace Inc., a Delaware Corporation, Defendants. |
Casey M. Bruner, Michael Douglas Currin, Timothy Michael Lawlor, Witherspoon Kelley Davenport & Toole, Spokane, WA, for Plaintiff.
Robert P. Alpert, Pro Hac Vice, Morris Manning & Martin LLP, Atlanta, GA, Bradley Edward Smith, Steven W. Huges Attorney at Law, Spokane, WA, for Defendants.
ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Before the Court is Defendants Old Republic Insurance Company and Old Republic Aerospace Inc.'s Motion to Dismiss, ECF No. 8, and Plaintiff GB Auctions Inc.'s Motion for Partial Summary Judgment, ECF No. 11. These motions present one main issue: whether, under Washington state law, the parties' insurance contract contains an enforceable appraisal provision or an unenforceable binding arbitration provision. Defendants argue the provision at issue here requires appraisal, this requirement is enforceable, and the Court must dismiss the complaint because it fails to allege Plaintiff complied with this requirement. Plaintiff argues the provision at issue here requires binding arbitration, this requirement is unenforceable, and the Court must grant partial summary judgment declaring this requirement void.
The Court held a hearing on these motions on January 8, 2019. ECF No. 21. In preparation for the hearing, the Court reviewed the record and relevant legal authority. At the conclusion of the hearing, the Court orally denied Defendants' motion and granted Plaintiff's motion. This Order memorializes and supplements the Court's oral ruling.
In November 2017, the parties executed a contract for Defendants to insure Plaintiff's 1998 Beech King Aircraft Model 200. ECF No. 1 at 3. The contract provides that if the aircraft suffers physical damage not amounting to total loss, Plaintiff may have a third party repair it and Defendants will pay the net cost of repairing it with material and parts of similar kind and quality. Id.
On January 23, 2018, the aircraft suffered partial physical damage while landing. Id. Plaintiff submitted an insurance claim to Defendants the next day. Id. Plaintiff elected to have a third party repair the aircraft. Id. at 4. Plaintiff solicited repair cost estimates from three companies. Id. Plaintiff selected the median estimate and notified Defendants of its selection. Id. Defendants expressed their refusal to pay the estimated repair cost. Id. Instead, Defendants solicited their own repair cost estimates. Id.
ECF No. 8-1 at 12; accord ECF No. 10 at 3–4. Elsewhere, the contract provides, "[y]ou agree not to bring any suit or legal action against us to recover payment unless you have complied with the terms of this policy." ECF No. 8-1 at 23.
On July 27, 2018, Plaintiff sued Defendants, alleging breach of contract, insurance bad faith, and violations of the Insurance Fair Conduct Act and Consumer Protection Act. ECF No. 1 at 6–9.
A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under Rule 12(b)(6), the Court must dismiss the complaint if it "fail[s] to state a claim upon which relief can be granted."
In deciding a Rule 12(b)(6) motion, the Court construes the complaint in the light most favorable to the plaintiff and draws all reasonable inferences in its favor. Ass'n for L.A. Deputy Sheriffs v. County of Los Angeles , 648 F.3d 986, 991 (9th Cir. 2011). Thus, the Court must accept as true all factual allegations contained in the complaint. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). But the Court may disregard legal conclusions couched as factual allegations. See id.
To survive a Rule 12(b)(6) motion, the complaint must contain "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Id. (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Facial plausibility exists where the complaint pleads facts permitting a reasonable inference that the defendant is liable to the plaintiff for the misconduct alleged. Id. Plausibility does not require probability but demands more than a mere possibility of liability. Id. While the complaint need not contain detailed factual allegations, threadbare recitals of a cause of action's elements, supported only by conclusory statements, do not suffice. Id. Whether the complaint states a facially plausible claim for relief is a context-specific inquiry requiring the Court to draw from its judicial experience and common sense. Id. at 679, 129 S.Ct. 1937.
Under Rule 56, a party is entitled to summary judgment where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate if the record establishes "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
The moving party has the initial burden of showing no reasonable trier of fact could find other than for the moving party. Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets its burden, the nonmoving party must point to specific facts establishing a genuine dispute of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine dispute of material fact is "one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." SEC v. Seaboard Corp. , 677 F.2d 1301, 1306 (9th Cir. 1982). In deciding a Rule 56 motion, the Court does not weigh the evidence or assess credibility but, rather, believes the nonmoving party's evidence and draws all justifiable inferences in its favor. Anderson , 477 U.S. at 255, 106 S.Ct. 2505.
Under Revised Code of Washington ("RCW") § 48.18.200, "[n]o insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state, shall contain any condition, stipulation, or agreement ... depriving the courts of this state of the jurisdiction of action against the insurer." RCW 48.18.200(1)(b). Further, "[a]ny such condition, stipulation, or agreement in violation of this section shall be void, but such voiding shall not affect the validity of the other provisions of the contract." RCW 48.18.200(2).
In 1974, the Washington State Court of Appeals, Division I, held "the policy provision concerning appraisal is not void under [ RCW 48.18.200 ]." Keesling v. W. Fire Ins. Co. of Fort Scott , 10 Wash.App. 841, 520 P.2d 622, 625 (1974). But in 2013, the Washington State Supreme Court held " RCW 48.18.200 prohibits binding arbitration agreements in insurance contracts." State v. James River Ins. Co. , 176 Wash.2d 390, 292 P.3d 118, 123 (2013). Here, the Court must decide whether the provision at issue is an enforceable appraisal provision or an unenforceable binding arbitration provision.
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