Robbins v. Mason County Title Insurance Co., 050720 WASC, 96726-1
|Opinion Judge:||WIGGINS, J.P.T.|
|Party Name:||LESLIE W. and HARLENE E. ROBBINS, husband and wife, Respondents, v. MASON COUNTY TITLE INSURANCE COMPANY; and RETITLE INSURANCE COMPANY, Petitioners.|
|Judge Panel:||MADSEN, J. (dissenting) GORDON McCLOUD, J. (concurring in dissent)|
|Case Date:||May 07, 2020|
|Court:||Supreme Court of Washington|
WIGGINS, J.P.T. [*]
We are asked to decide whether Mason County Title Insurance Company (MCTI) had a duty to defend insured property owners when a Native American tribe announced it planned to assert its treaty right to harvest shellfish from the property. Further, this case asks whether a moving party seeking summary judgment on liability must specifically move for summary judgment on affirmative defenses.
The duty to defend is broad and if an insurance policy conceivably provides coverage, the insurer must defend or be found to have breached the duty. If this breach is unreasonable, the insurer acted in bad faith.
In the present case, we affirm the Court of Appeals and remand to the superior court for further proceedings consistent with this opinion. We hold that because the insurance policy conceivably covered the treaty right and no exceptions to coverage applied, MCTI owed the property owners a duty to defend and, in failing to do so, breached the duty. Because this breach was unreasonable given the uncertainty in the law, MCTI acted in bad faith. Further, because the property owners did not seek summary judgment on MCTI's affirmative defenses, we remand to the superior court for consideration of the defenses. Accordingly, we decline to rule on the property owners' request for attorney fees as premature.
Facts and Procedural History
In 1854, the Washington Territory and nine Native American tribes, including the Squaxin Island Tribe (the Tribe), entered into the 1854 Treaty of Medicine Creek (the Treaty). See 10 Stat. 1132. Under the Treaty, the nine tribes relinquished their rights to the land but retained "the right of taking fish at all usual and accustomed grounds and stations . . ., in common with all citizens of the Territory." Clerk's Papers (CP) at 67. The District Court for the Western District of Washington has interpreted "fish" under the Treaty to include shellfish. United States v. Washington, 873 F.Supp. 1422, 1430 (W.D. Wash. 1994), aff'd in part, reversed in part, 135 F.3d 618 (9th Cir.1998). The Ninth Circuit agreed that this right to take fish includes the right to harvest shellfish from private lands within the usual and accustomed places with naturally occurring shellfish beds, but not artificial shellfish beds. Washington, 135 F.3d at 643, 645-46. The Tribe's treaty right is not disputed in this case.
In 1978, Leslie and Harlene Robbins (Robbins) purchased property in Mason County that included tidelands with manila clam beds. CP at 224. In connection with the purchase of the property, Robbins obtained a standard policy of title insurance from MCTI.2 The policy provides that MCTI will insure Robbins "against loss or damage sustained by reason of: . . . [a]ny defect in, or lien or encumbrance on, said title existing at the date hereof." Id. at 229. Specifically, [MCTI] shall have the right to, and will, at its own expense, defend the insured with respect to all demands and legal proceedings founded upon a claim of title, encumbrance or defect which existed or is claimed to have existed prior to the date hereof and is not set forth or excepted herein.
Id. at 232. Under "[g]eneral [e]xceptions," the policy excludes from coverage "public or private easements not disclosed by the public records." Id. at 231. "[P]ublic records" is defined under the policy as "records which, under the recording laws, impart constructive notice with respect to said real estate." Id. at 232. No other pertinent terms are defined under the policy.
For years Robbins had contracted with commercial shellfish harvesters to enter Robbins's property to harvest shellfish from the tidelands. Id. at 224. In 2015, after another contract expired, Robbins began negotiations with a different shellfish harvester. Id. at 225. Although the harvester had reason to believe Robbins's clam beds were not natural and, thus, not part of the Treaty, he notified the Tribe of his intent to harvest shellfish from Robbins's property. Id. at 225-26. The Tribe responded that it needed more information about the tidelands, that it disagreed with the harvester's assertion that Robbins's tidelands did not include natural clam beds, and referred him to the Tribe's rights under the 2002 Shellfish Implementation Plan. Id. at 234-35.
Having learned of the Tribe's letter and having consulted with counsel, Robbins ultimately tendered a claim to MCTI to defend against the Tribe's demand to enter Robbins's property to harvest clams. Id. at 225. On July 26, 2015, the Tribe sent Robbins a formal letter to notify them of the Tribe's plan to enter their property and harvest shellfish in accordance with the federal court's interpretation of the Treaty in Washington4 and the 2002 Shellfish Implementation Plan. Id. at 225, 241.
MCTI denied Robbins's request for a defense because, in MCTI's view, the Tribe's asserted right is an "easement" and "[a] treaty between the federal government and a Native American Indian tribe is not a record that imparts constructive notice pursuant to Washington law." Id. at 225, 244. Thus, MCTI claimed the Tribe's treaty rights were "not within the scope of this policy." Id. at 245.
Robbins then filed suit against MCTI in Mason County Superior Court, alleging in pertinent part that MCTI breached its duty to defend. Id. at 321. MCTI denied the allegations, arguing that the policy did not cover the circumstances alleged and raised 10 additional affirmative defenses.5 Id. at 300-04.
MCTI moved for summary judgment, asking the court to dismiss the complaint with prejudice on the ground that there is no duty to defend because there is no coverage under the policy. Id. at 274-81. Robbins filed a cross motion for partial summary judgment, urging the court to find that MCTI had a duty to defend and, by not doing so, that MCTI breached its duty. Id. at 272.
The superior court granted MCTI's motion for summary judgment, denied Robbins's motion for partial summary judgment, and dismissed Robbins's claims with prejudice. Id. at 4-5.
Robbins appealed again, alleging that MCTI breached the duty to defend because the Tribe's letter was a demand under the policy, and the asserted right is not an easement and is disclosed by public record. Robbins also asked for reasonable attorney fees under Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d 37, 811 P.2d 673 (1991). MCTI again argued that there was no duty to defend as the Tribe did not initiate legal proceedings and the asserted right is an easement not disclosed by the public records. MCTI also noted that the superior court had not yet considered MCTI's affirmative defenses.
The Court of Appeals reversed the order granting summary judgment, holding that the Tribe's letter was a "demand" under the policy that triggered the duty to defend, the Tribe's asserted right is a profit à prendre (hereinafter "profit") and that a profit is not an easement. Robbins v. Mason County Title Ins. Co., 5 Wn.App. 2d 68, 425 P.3d 885 (2018). The Court of Appeals did not reach whether the Tribe's Treaty rights were "disclosed by the public records." Id. at 79. Finding the breach of the duty to defend "unreasonable," the Court of Appeals held that as a matter of law, MCTI acted in bad faith. Id. at 82-83. The Court of Appeals remanded to the superior court for consideration of MCTI's affirmative defenses as Robbins did not specifically move for summary judgment on the affirmative defenses. Id. at 84-85. Accordingly, the Court of Appeals did not rule on attorney fees because they would be premature until affirmative defenses were decided on remand. Id. at 85.
MCTI petitioned this court for review of whether MCTI had a duty to defend, whether the Tribe's right was excluded from coverage, and whether the Court of Appeals properly considered the issue of whether MCTI acted in bad faith when it was not raised by either party at the trial court. MCTI's Pet. for Discr. Review at 2. In their answer to the petition for review, Robbins opposed review but asked that if we granted review, we also grant review of the Court of Appeals' remand for consideration of MCTI's affirmative defenses, and Robbins again asked for attorney fees. Robbins's Ans. to Pet. for Review at 1-2. We granted review of all issues in the petition for review and the answer to the petition for review.
I. Whether MCTI had a duty to defend against the Tribe's asserted right.
II. Whether MCTI acted in bad faith in failing to defend.
III. Whether MCTI was required to create a genuine issue of material fact as to its affirmative defenses even when Robbins did not move for summary judgment on the defenses.
IV. Whether Robbins is entitled to attorney fees.
We review an order for summary judgment de novo and engage in the same inquiry as the superior court. Woo v. Fireman's Fund Ins. Co., 161 Wn.2d 43, 52, 164 P.3d 454 (2007).
"We interpret insurance policy provisions as a matter of law." Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398, 404, 229 P.3d 693 (2010) (citing Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567, 575, 964 P.2d 1173 (1998)). When interpreting an insurance policy, we give the language its plain meaning, construing the policy as the average person purchasing insurance would. Woo, 161 Wn.2d at 52. Any ambiguity in the policy is interpreted in favor of the insured. Am. Best Food, 168 Wn.2d at 411.
In the insurance context, the duty to defend is broader than the duty to indemnify. Woo, 161 Wn.2d at 52. An insurance company has the duty to indemnify...
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