Evanston Ins. v. Clartre, Inc.

158 F. Supp. 3d 1110, 2016 U.S. Dist. LEXIS 7289, 2016 WL 258520
CourtDistrict Court, W.D. Washington
DecidedJanuary 21, 2016
DocketCASE NO. 14-CV-0085-BJR
StatusPublished
Cited by7 cases

This text of 158 F. Supp. 3d 1110 (Evanston Ins. v. Clartre, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evanston Ins. v. Clartre, Inc., 158 F. Supp. 3d 1110, 2016 U.S. Dist. LEXIS 7289, 2016 WL 258520 (W.D. Wash. 2016).

Opinion

ORDER GRANTING PLAINTIFF’S MOTION FOR SÚMMARY JUDGMENT

BARBARA J. ROTHSTEIN, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Evanston Insurance Company (“Evanston”) is. the insurer for Defendants Clartre, Inc. (“Clartre”) and. Scott Clarke (“Clarke”) (collectively, “Defendants”). Defendants were sued in Whatcom County Superior Court (“the underlying litigation”) for misappropriation of trade secrets and confidential information, violation of the Lanham Act, 15 U.S.C. § 1125(a),1 violation of Washington’s Unfair . Business Practices and Consumer Protection Act, RCW § 19.86.020, and other related claims. See Decl. of David R. Greenberg, Docket No. 71, Ex. A (Amended Gompl.) ¶¶ 75-154. Plaintiff is currently providing legal defense to Defendants in the underlying action under a reservation of rights. Plaintiff now seeks a declaratory judgment that it has no duty to defend or indemnify2 Defendants in the underlying litigation. Before the Court is Plaintiffs Motion for Summary Judgment, Docket No. 30, filed on August 13, 2015. The motion is fully briefed and ripe for resolution. Having reviewed the parties’ briefs and other documents submitted to the Court together [1113]*1113with the relevant legal authorities, the Court GRANTS Plaintiffs motion. The Court’s reasoning is set forth below.

II. FACTUAL AND PROCEDURAL BACKGROUND

As indicated above, Plaintiff Evanston provides insurance to Defendants Clartre and Clarke. Compl. ¶¶ 1, 9. Defendant Clartre is one of several defendants in a lawsuit currently pending in Whatcom County Superior Court. Id. ¶ 17. Clartre, along with the other underlying defendants, are allegedly owned or controlled by Defendant Scott Clarke. Id. ¶ 18. Clartre was also a counterclaim-defendant in another lawsuit originally filed in federal court and later remanded to Whatcom County Superior Court. Id. ¶ 19. The two suits were combined into the underlying litigation because they involve substantially similar claims by the same plaintiff, Global Building Products, Ltd. (“Global”). Id. ¶ 20. In the underlying litigation Global alleges, inter alia, that the Clarke Group3 misappropriated proprietary wood-treatment chemical technology. Id. ¶¶ 21-23. Global also alleges that the Clarke Group improperly used product certifications/approvals granted by the California State Fire Marshall (“CSFM”) and ICC Evaluation Service (“ICC-ES”).4 Id. ¶¶21, 24.

On August 23, 2013, Defendant Clartre requested defense and indemnification against Global’s claims in the underlying litigation. Id. ¶ 26. Clartre asserts that the allegations against it trigger coverage pursuant to sections of the 2010, 2011, and 2012 policies issued by Plaintiff, specifically, coverage for damages caused by “advertising injury.”5 Id. Plaintiff disputes that the allegations in the underlying litigation seek damages for “advertising injury” as defined in the policies. Id. ¶29. Plaintiff further contends that even if Global’s claim in the underlying litigation can be construed as claiming damage from “advertising injury,” policy exclusions operate to prevent coverage. 'While disputing coverage, Plaintiff agreed to provide Defendants with defense- in the underlying lawsuits under a reservation of rights. Plaintiff filed suit in this Court on January 21, 2014, seeking declaratory relief, more particularly, a “declaration of no coverage” in the instant action. Compl. ¶29, Before the Court is Plaintiffs Motion for Summary Judgment.6

[1114]*1114III. STANDARD OF REVIEW

“Interpretation of insurance policies- is a question of law, in which the policy is construed as a whole and each clause is given force and effect.” Overton v. Consol. Ins. Co., 145 Wash.2d 417, 38 P.3d 322, 325 (2002). “In Washington, insurance policies are construed as contracts. An insurance policy is construed as a whole, with the policy being given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance... [a]ny ambiguities remaining after examining applicable extrinsic evidence are resolved against the drafter-insurer and in favor of the insured. A clause is ambiguous when, on its face, it is fairly susceptible to two different interpretations, both of which are reasonable.” Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wash.2d 654, 15 P.3d 115, 122 (2000) (internal quotations omitted). If the language of the policy is clear and unambiguous, the court must enforce the policy as it is written and may not modify the policy or create ambiguity where none exists. Pub. Util. Dist. No. 1 v. Int’l Ins. Co., 124 Wash.2d 789, 881 P.2d 1020, 1025 (1994) (en banc).

In determining whether the insurer has a duty to defend, courts “ ‘look at the ‘eight corners’ of the insurance contract and the underlying complaint.’ ” Nat. Union Fire Ins. Co. of Pittsburgh v. Coinstar, Inc., 39 F.Supp.3d 1149, 1156 (W.D.Wash.2014) (citing Expedia, Inc., v. Steadfast Ins. Co., 180 Wash.2d 793, 329 P.3d 59, 64 (2014) (en banc)). Because duty to defend cases turn on the purely legal questions of interpretation of insurance policies and complaints, they are routinely resolved at the summary judgment stage. See, e.g., Nat. Union Fire Ins. Co., 39 F.Supp.3d at 1156; Fed. R. Civ. P. 56(a) (summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”).

An insurer has a duty to defend “when a complaint against the insured, construed liberally, alleges facts which could, if proven, impose liability upon the insured within the policy’s coverage.” Unigard Ins. Co. v. Leven, 97 Wash.App. 417, 983 P.2d 1155, 1160 (1999). “[A]lleged claims that are clearly not covered by the policy relieve the insurer” of the duty to defend. Kirk v. Mt. Airy Ins. Co., 134 Wash.2d 558, 951 P.2d 1124, 1126 (1998). If a claim- could impose liability on the insured in a manner that is within the policy’s coverage, the court must examine the policy to determine if any policy exclusion “clearly and unambiguously applies to bar coverage.” Hayden v. Mut. of Enumclaw Ins. Co., 141 Wash.2d 55, 1 P.3d 1167, 1172 (2000) (citing Diamaco, Inc. v. Aetna Cas. & Sur. Co., 97 Wash.App. 335, 983 P.2d 707, 709-12 (1999)).

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158 F. Supp. 3d 1110, 2016 U.S. Dist. LEXIS 7289, 2016 WL 258520, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evanston-ins-v-clartre-inc-wawd-2016.