Cheung v. Allstate Vehicle & Prop. Ins. Co.

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BENNY CHEUNG; and GUANGYING CHEUNG, Plaintiffs, v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, Defendant.

No. C22-1174 TSZ

United States District Court, W.D. Washington, Seattle

December 28, 2023

ORDER

Thomas S. Zilly United States District Judge

THIS MATTER comes before the Court on Defendant Allstate Vehicle and Property Insurance Company's motion for partial summary judgment, docket no. 18, and Plaintiffs Benny Cheung's and Guangying Cheung's cross-motion for partial summary judgment, docket no. 28. Having reviewed all papers filed in support of, and in opposition to, the cross-motions, the Court enters the following order.

Background

Prior to the events at issue in this case, Plaintiffs lived in an apartment in California. Ex. G to Parrish Decl. at 17-20 (docket no. 20-7 at 5-6). In July 2021, Plaintiffs purchased real property in Mount Vernon, Washington (the “Property”).

Parrish Decl. at ¶¶ 2-3 (docket no. 20); Cheung Decl. at ¶ 4 (docket no. 21). Plaintiffs did not have a concrete plan on when they would move to and live at the Property. See Ex. G to Parrish Decl. at 33-37 (docket no. 20-7 at 9). Plaintiffs asked Ms. Cheung's cousin, who lived in Seattle, to check the Property “every few weeks.” Ex. F to Parrish Decl. at 17, 36-41 (docket no. 20-6 at 5 10-11); Ex. G to Parrish Decl. at 50-51 (docket no. 20-7 at 13). Ms. Cheung's cousin checked on the Property on at least one occasion after Plaintiffs purchased the Property. Ex. F to Parrish Decl. at 17, 36-41 (docket no. 20-6 at 5 10-11); Ex. G to Parrish Decl. at 50-51 (docket no. 20-7 at 13).

In August 2021, Plaintiffs spent one night at the Property. Ex F to Parrish Decl. at 23, 26-28 (docket no. 20-6 at 7-8); Ex G to Parrish Decl. at 42-46 (docket no. 20-7 at 11-12). During this visit, Plaintiffs brought some personal items including sleeping bags, clothes, and soap. Ex. G to Parrish Decl. at 42-46 (docket no. 20-7 at 11-12). Plaintiffs did not return to the Property until after November 20, 2021. See Ex. G to Parrish Decl. at 46 (docket no. 20-7 at 12).

On November 20, 2021, unidentified individuals broke into and damaged the Property, taking numerous items. Parrish Decl. at ¶ 4; Cheung Decl. at ¶ 4; see also Ex. C to Parrish Decl. (docket no. 20-3). That same day, Plaintiffs' neighbor called the police to report the incident. Parrish Decl. at ¶ 5; Ex. D to Parrish Decl. (docket no. 204). A few days later, Ms. Cheung's cousin went to the Property to view the destruction. Ex. G to Parrish Decl. at 52-53 (docket no. 20-7 at 13).

The Property, a single-family one-story home with a detached garage, detached carport, detached barn, and three sheds, was insured under a policy in effect from July 7, 2021, through July 7, 2022 (the “Policy”), which was issued by Allstate Vehicle and Property Insurance Company (“Allstate”). Ex. A to Bonrud Decl. (docket no. 22-1 at 8). On November 24, 2021, Mr. Cheung reported the loss to Allstate and made a claim under the Policy. Parrish Decl. at ¶ 6; Cheung Decl. at ¶ 3. The “First Notice of Loss Snapshot” prepared by Allstate describes Plaintiffs' loss as “HOUSE TO MOVE IN HAD INTERIOR STOLEN.” Ex. B to Bonrud Decl. (docket no. 22-2 at 3). In addition, the First Notice of Loss Snapshot lists the peril as “Theft - On Premises” and the subperil as “burglary.” Id. The First Notice of Loss Snapshot further notes that “41+” items were stolen.^[1]Id. at 4.

The Policy states in part:

Dwelling Protection-Coverage A Property WE Cover Under Coverage A:

1. Your dwelling, including attached structures. Structures connected to your dwelling by only a fence, utility line, or similar connection are not considered attached structures.

2. Construction materials and supplies at the residence premises for use in connection with your dwelling.

3. Wall to wall carpeting fastened to your dwelling. ....

Other Structure Protection-Coverage B Property We Cover Under Coverage B:

1. Structures at the address shown on the Policy Declarations separated from your dwelling by clear space.

2. Structures at the address shown on the Policy Declarations connected to your dwelling by only a fence, utility line, or similar connection.

3. Construction materials and supplies at the residence premises for use in connection with structures other than your dwelling.

4. Wall to wall carpeting fastened to building structures, other than your dwelling, at the address shown on the Policy Declarations.

Ex. A to Bonrud Decl. at 7 (docket no. 22-1 at 18). The Policy further states in part:

Losses We Cover Under Coverages A and B:

We will cover sudden and accidental direct physical loss to the property described in Dwelling Protection-Coverage A and Other Structures Protection-Coverage B except as limited or excluded in this policy.

Losses We Do Not Cover Under Coverages A and B:

Under Dwelling Protection-Coverage A and Other Structures Protection-Coverage B of this policy, we do not cover any loss caused by or resulting in any manner from any of the following excluded events as described in 1 through 26 below. Loss will be considered to have been caused by an excluded event if that event:

(a) directly and solely results in loss; or

(b) initiates a sequence of events that results in loss, regardless of the nature of any intermediate or final event in that sequence.

....

16. Any substantial change or increase in hazard, if changed or increased by any means within the control or knowledge of an insured person.

....

24. Vandalism or malicious mischief if your dwelling is vacant or unoccupied for more than 30 consecutive days immediately prior to the vandalism or malicious mischief. A dwelling under construction is not considered vacant or unoccupied.

Ex. A to Bonrud Decl. at 7-10 (docket no. 22-1 at 18-21). With respect to personal property, the Policy states in part:

Personal Property Protection-Coverage C Property We Cover Under Coverage C:

1. Personal property owned or used by an insured person anywhere in the world. When personal property is located away from the residence premises, coverage is limited to 10% of Personal Property Protection-Coverage C.

....

Property We Do Not Cover Under Coverage C:

....

8. Vandalism and malicious mischief.

We do not cover vandalism or malicious mischief if your dwelling has been vacant or unoccupied for more than 30 consecutive days immediately prior to the vandalism or malicious mischief. A dwelling under construction is not considered vacant or unoccupied.

Ex. A to Parrish Decl. at 10-11 (docket no. 20-1 at 16-17).

Upon receiving Plaintiffs' claim, Allstate began investigating the facts of the loss. Parrish Decl. at ¶ 7. Allstate's investigation included taking photographs of the Property, reviewing the Skagit County Sheriff report, reviewing purchase and sale documents, and retaining a personal investigator to interview neighbors and canvas the area. Id. In December 2021, Allstate retained Rory Leid, an attorney, to conduct an examination under oath (“EUO”) of each Plaintiff pursuant to the terms of the Policy. Id. at ¶ 8. Leid conducted the EUOs of Plaintiffs on January 7, 2022. Parrish Decl. at ¶ 11; Ex. F to Parrish Decl. (docket no. 20-6); Ex. G to Parrish Decl. (docket no. 20-7).

Plaintiffs submitted to Allstate estimates and bids from contractors to repair the house, garage, shop, outbuildings, and fixtures. Parrish Decl. at ¶ 10; Ex. E to Parrish Decl. (docket no. 20-5). Plaintiffs sought insurance coverage for roughly $200,000 in damages to the dwelling and structures, which included the cost to replace various appliances, and an additional $1,310 for the value of other stolen personal property, including certain tools and clothing. Interrogatory No. 15, Ex. B to Case Decl. (docket no. 19-2 at 5-6).

On February 10, 2022, Allstate denied Plaintiffs' insurance claim. Letter by Rory Leid, Ex. H to Parrish Decl. (docket no. 20-8). Allstate's denial letter focused only on whether coverage was owed for the dwelling and other structures and did not cite to the Policy provisions that discuss personal property. Id. With respect to the dwelling and other structures, Allstate asserted that the Policy's vandalism exclusion applied because the Property was vacant for more than 30 consecutive days before the loss. Id.; see also Def.'s Mot. at 7 (docket no. 18). Allstate, however, offered no basis for denying coverage as to any personal property, which Allstate now concedes includes stand-alone appliances such as the washer, dryer, microwave, and refrigerator.^[2]Def.'s Mot. at 5 n.4 (docket no. 18).

In August 2022, Plaintiffs initiated this lawsuit, and they now assert claims for breach of contract, violation of Washington's Consumer Protection Act (“CPA”), insurance bad faith, negligence, and violation of Washington's Insurance Fair Conduct Act (“IFCA”). See Compl. (docket no. 1); Am. Compl. at ¶¶ 21-25 (docket no. 16). Allstate moves for partial summary judgment, asking the Court to rule that coverage is not owed for the approximately $200,000 required to repair the dwelling and structures and to replace certain “fixtures, utilities, appurtenances, systems, and furnishings,” as well as various appliances. See Def.'s Mot. at 2 (docket no. 18). Plaintiffs cross-move for partial summary judgment, seeking findings that, as a matter of law, their dwelling and structure losses are covered, Allstate breached the Policy in denying coverage, and Allstate breached various provisions of the Washington Administrative Code (“WAC”). See Pls.' Mot. at 3 (docket no. 28).

Discussion

A. Summary Judgment Standard

The Court shall grant summary judgment if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the...