Lake Chelan Shores Homeowners Ass'n v. Fire

• Decision Date: 19 August 2013
• Docket Number: No. 66636–3–I.,66636–3–I.
• Citation: 176 Wash.App. 168,313 P.3d 408
• Court: Washington Court of Appeals
• Parties: 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.

176 Wash.App. 168

313 P.3d 408

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

v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, a foreign corporation, Respondent,andNorthern Insurance Company of New York, a foreign corporation, Defendant.

No. 66636–3–I.

Court of Appeals of Washington, Division 1.

Aug. 19, 2013.

John Thomas Petrie, Robert J. Curran, Susan Rae Fox, Ryan Swanson & Cleveland PLLC, Seattle, WA, for Appellant.

James Thomas Derrig, James T. Derrig Attorney At Law PLLC, Phillip Jason Skuda, Attorney at Law, Seattle, WA, for Respondent.

Thomas Martin Jones, Cozen O'Connor, Craig Hinton Bennion, Attorney at Law, Thomas Lether, Eric Jay Neal, Lether & Associates, PLLC, Jerret E. Sale, Bullivant Houser Bailey PC, Seattle, WA, John A. Bennett, Attorney at Law, Daniel Edward Thenell, Thenell Law Group, P.C., Portland, OR, for Defendant.

SPEARMAN, A.C.J.

[176 Wash.App. 172]¶ 1 The main issue in this insurance coverage case is whether the method by which expert witnesses for Lake Chelan Shores condominiums homeowners association (LCS) established that “collapse” conditions occurred years earlier was generally accepted within the scientific community. In its summary judgment motion, St. Paul Fire & Marine Insurance Company set forth evidence indicating the methodology of LCS's experts was not generally accepted. The burden then 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 no admissible evidence of “collapse,” a prerequisite for coverage under the policy. We affirm.

FACTS

¶ 2 St. Paul insured the premises of LCS under three annual policies, effective from August 3, 1996 to August 3, 1999. Each of those policies provided coverage for “collapse” that occurred during the policy period:

Collapse coverage. We'll insure covered property against the risk of direct physical loss or damage involving collapse of a building or any part of a building.

The collapse must be due to any of the following causes of loss:

...

• 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 other than that described in the collapse coverage under the Covered Causes Of Loss 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....

¶ 3 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. By April 2007, LCS had decided to contract for a repair project that would include removal and replacement of all siding. On July 11, 2007, LCS adopted a resolution for financing the project, and on July 27, 2007, it submitted design documents to the City of Chelan Building Department.

¶ 4 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 letter to 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 letter to St. Paul, requesting reimbursement for $303,424 in investigation costs. Three days later, on August 30, 2007, LCS sued St. Paul for breach of contract; bad faith; and Consumer Protection Act (CPA) chapter 19.86 RCW, violations.

[176 Wash.App. 174]¶ 5 In July 2009, LCS disclosed its experts' opinions. On the basis of these opinions, St. Paul denied the claim and moved for partial summary judgment as to coverage. St. Paul argued there was no coverage, because LCS's experts had no generally accepted scientific basis on which to link the current building decay to a state of “collapse” during the St. Paul policy periods. In the alternative, St. Paul asked for a Frye¹ hearing on LCS's experts' methods. The trial court agreed with St. Paul, and granted the motion.

¶ 6 LCS then moved to compel discovery as to its remaining extracontractual claims. St. Paul moved for summary judgment on the extracontractual claims. LCS sought a CR 56(f) continuance. The trial court denied LCS's motion and granted St. Paul's motion for summary judgment, dismissing the rest of the claims. LCS appeals.

DISCUSSION

Summary Judgment on Coverage Claims

¶ 7 The trial court granted St. Paul's motion for summary judgment on coverage. The court agreed that the opinions of LCS's experts that the condominiums were in “collapse” 10 years earlier was not based on any theory generally accepted in the scientific community. The trial court thus found LCS had failed to present evidence of coverage, and it granted the motion. We agree with the trial court.

¶ 8 LCS offers multiple arguments as to why this was error, but those arguments rest upon two main, interconnected premises: (1) conflicting opinion testimony offered by opposing experts cannot be resolved at summary judgment and (2) the trial court essentially weighed evidence as if it was presiding over a Frye hearing as opposed to a summaryjudgment hearing. LCS is correct that disputed opinion testimony, offered by qualified experts, cannot be resolved at summary judgment. See Postema v. Pollution Control Hearings Bd., 142 Wash.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.

¶ 9 But LCS misunderstands the nature of St. Paul's motion and the trial court's ruling. St. Paul did not ask the trial court to weigh the testimony of opposing experts and the trial court did not do so. St. Paul argued that the opinions of LCS's experts were inadmissible under Frye and in the absence of that testimony, LCS could not establish that collapse occurred during the policy period. St. Paul contended that LCS's experts' opinions were not admissible under Frye 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.

¶ 10 For expert testimony regarding novel scientific evidence to be admissible, it first must satisfy the Frye standard and then must meet the other criteria in ER 702. See State v. Gregory, 158 Wash.2d 759, 829–30, 147 P.3d 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 in the relevant scientific community of which it is a part; and (2) there are generally accepted methods of applying the theory or principle in a manner capable of producing reliable results.

State v. Sipin, 130 Wash.App. 403, 414, 123 P.3d 862 (2005). Both the theory underlying the evidence and the methodology used to implement the theory must be generally accepted in the scientific community for evidence to be admissible under Frye.Gregory, 158 Wash.2d at 829, 147 P.3d 1201. When applying the Frye test, courts do not determine if the scientific theory underlying the proposed testimony is correct; rather, courts “must look to see whether the theory has achieved general acceptance in the appropriate scientific community.” State v. Riker, 123 Wash.2d 351, 359–60, 869 P.2d 43 (1994). It is not necessary that the relevant scientific community be unanimous in its acceptance of a particular theory or methodology. State v. Gore, 143 Wash.2d 288, 302, 21 P.3d 262 (2001). To perform a Frye analysis, courts consider four sources of information:

To determine whether a consensus of scientific opinion has been achieved, the reviewing court examines expert testimony, scientific writings that have been subject to peer review and publication, secondary legal sources, and legal authority from other jurisdictions. However, “the relevant inquiry is general acceptance by the scientists, not the courts.”

Eakins v. Huber, 154 Wash.App. 592, 599–600, 225 P.3d 1041 (2010) (citations omitted) (quoting State v. Cauthron, 120 Wash.2d 879, 888, 846 P.2d 502 (1993)).

¶ 11 In its motion, St. Paul set forth what it believed showed a lack of general acceptance. The only evidence purporting to show a state of collapse from hidden decay during the St. Paul policy periods came in the form of two opinions from LCS's experts. One of the experts, Justin Franklin, was a civil engineer at Olympic Associates. Regarding whether it was possible to backdate from the present rot condition to the initial onset of a state of collapse, Franklin sent an e-mail in 2006 saying it could not be determined:

We did an investigation on a building in Chelan which has lots of rotten framing. The attorney for the [homeowner's association] would like to know if we can estimate when the rot occurred. Apparently their insurance coverage ended in 2002 and of course he would like us to state the rot was present in 2002. I told him that all we can say is that the rot presently exists but that we can not [sic] state when 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 it was uncovered during remediation in 2007–2009. He applied a formula, y = ax ² + c, to trace the progression of rot between these two times. The formula means that the percentage of decay “y,” progresses according to the square of the number of years “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...