Richardson v. Wells Fargo Ins. Servs. United States, Inc., C16-1228 TSZ

RANDY RICHARDSON AND LESLIE RICHARDSON, Plaintiffs, v. WELLS FARGO INSURANCE SERVICES USA, INC., Defendant.

C16-1228 TSZ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

July 26, 2017

ORDER

THIS MATTER comes before the Court on defendant Wells Fargo Insurance Services USA, Inc.'s ("WFIS") Motion for Summary Judgment, docket no. 15. Having reviewed all papers filed in support of, and in opposition to, defendant's motion the Court enters the following Order.

Background

Plaintiffs utilized the brokerage services of WFIS from April 2012 through June 16, 2016. Declaration of Randy Richardson, docket no. 20, ¶ 2. During that period, WFIS procured approximately eleven insurance policies for plaintiffs which covered multiple residential properties and personal vehicles, a boat, and a recreational vehicle, including eight policies with Allied Insurance Company ("Allied").¹ Id.; Declaration of Shirley Gordon, docket no. 17, Ex. 1 at 3 (listing policies). In December of 2014, an issue arose with the renewal of a policy on plaintiffs' primary residence in Woodinville, Washington. Declaration of Stephen G. Skinner, docket no. 16, Ex. A (Deposition of Randy Richardson at 47:10 - 50:23). Plaintiffs spoke initially with Nicole McDonald in WFIS's Service Center in Minneapolis, Minnesota, who put them in contact with Taw Jackson, an account representative working in WFIS's Seattle office. Skinner Decl., Ex. A (Richardson Dep. at 51:15-53:17). Mr. Jackson ultimately resolved the renewal issue with Allied and the renewal policy on the plaintiffs' primary residence was issued. Id. (Richardson Dep. at 53:11-53:20).

On March 13, 2015, Allied sent a Notice of Cancellation for Non-Payment of Premium (the "Notice") to plaintiffs' PO Box in Woodinville, Washington. Gordon Decl., Ex. 1. The Notice indicated that unless payment was received on or before March 29, 2015, plaintiffs' insurance policies with Allied would be cancelled. Id. Plaintiffs did not make payment, and thereafter Allied cancelled the eight policies listed in the Notice.² The policy at issue in this lawsuit covered plaintiffs' vacation home in Manson, Washington (the "Manson Property") from November 5, 2014, to November 5, 2015, and was one of the policies cancelled in March of 2015. Gordon Decl., Ex. 1 (Notice of Cancellation) Ex. 2 (Policy for the Manson Property). There is no evidencethat WFIS received a copy of the Notice or was otherwise informed of the pending cancellation.

Over the next fifteen months, Mr. Richardson had several communications with Mr. Jackson regarding the Allied policies. Richardson Decl., ¶ 7. In December of 2015, Mr. Richardson received notice from Wells Fargo Bank, the mortgagee on plaintiffs' vacation home in Lake Havasu, Arizona, (the "Lake Havasu Property") that it had purchased a lender's policy and would be charging plaintiffs for the premiums. Richardson Decl., ¶ 8; Skinner Decl., Ex. A (Richardson Dep. at 94:1-96:14). The mortgagee explained that the policy had been purchased because the mortgagee received notice that plaintiffs' homeowner's policy had been cancelled for non-payment. Id.

Although the policy covering the Lake Havasu Property was among those cancelled by Allied in March of 2015, Mr. Jackson "assured" Mr. Richardson that his residential properties were covered, and without contacting Allied, submitted evidence of insurance coverage to the mortgagee reflecting, incorrectly, that the Lake Havasu Property was insured through November 15, 2016. Richardson Decl., ¶ 8; Skinner Decl., Ex. A (Richardson Dep. at 96:19-25); Declaration of Robert Green, docket no. 19, Ex. A (Deposition of Taw Jackson at 85:5-86:12; 118:17-119:25). After receiving and accepting proof of insurance from Mr. Jackson, the mortgagee refunded the premiums it had charged plaintiffs for the lender's policy. Skinner Decl., Ex. A (Richardson Dep. at 96:23-97:18).

In January of 2016, believing that he had misplaced his insurance card for his Mercedes, plaintiff requested a replacement card from Mr. Jackson. Id. (Richardson Dep.at 100:19-101:22). Although the policy covering the Mercedes was among those cancelled in March of 2015, Mr. Jackson issued an auto insurance card reflecting that the vehicle was covered through November 5, 2016.³ Id. (Richardson Dep. at 104:18-21).

In May of 2016, plaintiffs discovered a significant water leak at the Manson Property which flooded both floors, causing extensive damage. Id. (Richardson Dep. at 112.21-113:4; 114:21-115:3). Based on information Mr. Richardson received from the local water company and Servpro, the company who provided mitigation services for the Manson Property, water had been leaking from the freezer "for probably four months at least." Id. (Richardson Dep. at 113:7-25). Plaintiffs had not visited the Manson Property during that time period because it was primarily a summer vacation house. Id. (Richardson Dep. at 115:13-116:8).

Mr. Richardson initially reached out to Mr. Jackson to report the water damage, but was unable to reach him. Id. (Richardson Dep. at 117:2-19). Mr. Richardson then contacted Allied, who informed him that Allied had no record of an insurance policy covering the property. Id. (Richardson Dep. at 117:2-118:20). When Mr. Richardson reached Mr. Jackson after the holiday weekend, he informed Mr. Jackson of the water damage and his discussion with Allied. Id. (Richardson Dep. at 118:4-121:5). Mr. Jackson assured Mr. Richardson that the Manson property was "insured" and agreed to look into the matter on Mr. Richardson's behalf. Id. (Richardson Dep. at 119:23-121:5) Over the course of two weeks, Mr. Jackson learned, apparently for the first time,that plaintiffs' policies with Allied had been cancelled in March of 2015. On June 16, 2016, Mr. Jackson informed plaintiffs that there was no policy providing coverage on the Manson Property. Id. (Richardson Dep. at 136:17-137:25).

Plaintiffs filed the instant lawsuit on July 6, 2016, in King County Superior Court, seeking to recover the costs incurred as a result of the uninsured damage to the Manson Property. Thereafter, WFIS removed the action to the Western District of Washington. Plaintiffs allege that as a result of WFIS's conduct, the water damage to the Manson Property was uninsured. Plaintiffs' complaint asserts four theories of recovery: (1) breach of contract, (2) negligence; (3) gross negligence, and (4) negligent misrepresentation. Complaint, docket no. 1-1, Ex. B, ¶¶ 19-36.

Discussion

I. Legal Standard

The Court should 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(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). While "all justifiable inferences" are to be drawn in favor of the non-moving party, id. at 255, when the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party, summary judgment is warranted. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted).

II. Analysis

A. Negligence and Gross Negligence

When a broker's negligence leads to inadequate coverage, he or she is liable for money damages to the insured for the resulting loss. AAS-DMP Mgmt., L.P. Liquidating Trust v. Accordia Nw., Inc., 115 Wn. App. 833, 838-39 (2003). To recover against an insurance broker for negligence, the insured must prove: (1) that the agent had a duty of care to protect the insured against a certain risk; (2) a breach of that duty; and (3) that the breach was the proximate cause; (4) of the insured's damages. Peterson v. Big Bend Ins. Agency, Inc., 150 Wn. App. 504, 515 (2009). Gross negligence means negligence "substantially and appreciably greater than ordinary negligence." Nist v. Tudor, 67 Wn.2d 322, 331 (1965). There can be "no issue of gross negligence unless there is substantial evidence of serious negligence." Id.

Plaintiffs allege that WFIS was negligent in (1) procuring a "Primary Residence Policy" on the Manson Property despite plaintiffs' request for insurance on their vacation home; and (2) failing to advise plaintiffs that the Manson Property was uninsured.

1. Procurement

Plaintiffs' allegation that WFIS was negligent in procuring the insurance coverage for the Manson Property fails as a matter of law—plaintiffs cannot show that defendant's alleged breach was the proximate cause of the lack of insurance coverage for the water damage to the Manson Property. To establish proximate cause, plaintiffs must prove that the damage would have been covered "by the policy that would have been in effect except for the negligence of the broker." Pacific Dredging Co. v. Hurley, 65 Wn.2d 394,401 (1964). This requires plaintiffs to establish that "the loss would have been within the risks insured against in the policy" if the "insurance broker had obtained the insurance requested" by the insureds. Id. at 400. Plaintiffs have not adduced any evidence that policies specific to vacation homes were available at the time the policy on the Manson Property was procured (or at any time thereafter) or that such policies would have covered the water damage claim had they been procured. Without any such evidence, plaintiffs cannot meet their burden of showing that WFIS's failure to procure a vacation home policy proximately caused the water damage claim to be uninsured. Speculation and conjecture are insufficient to support a claim for negligence. See Kristjanson v. City of Seattle, 25 Wn. App. 324, 326-27 (1980). And any conclusion that WFIS's failure to procure an unspecified vacation home policy caused the lack of coverage would be entirely speculative in light of the complete lack of evidence...