Naxos, LLC v. American Family Insurance Company

District Court, W.D. Washington·Decided March 4, 2020·No. 2:18-cv-01287·Unknown

Opinion

1 The Honorable James L. Robart 2 3 4 5 ‘ 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 NAXOS, LLC, d/b/a Spiros Greek Restaurant, - 10 Plaintiff, No. 2:18-cy-01287-JLR il v. [PROBOSED) PRETRIAL ORDER □□□□□□□□ 12 AMERICAN FAMILY INSURANCE 13 || COMPANY, a foreign insurer, a. □□ □□□ 14 Defendant. 15 16 L JURISDICTION 17 Jurisdiction is vested in this Court by virtue of 28 U.S.C. § 1332 on the basis of diversity— _ 18 || Plaintiff Naxos, LLC (“Naxos”) is a citizen of the State of Washington and Defendant American 19 || Family Insurance Company (“American Family”) is a citizen of the State of Wisconsin—and the 20 amount in controversy exceeding the jurisdictional amount of $75,000. 2] IL. CLAIMS AND DEFENSES 22 A. Plaintiff Naxos, LLC. 23 Plaintiff Naxos will pursue at trial the following claims against Defendant American.

25 Family: 26 1, American Family committed the tort of insurance bad faith by failing to perform a| _

[PROPOSED] PRETRIAL ORDER KELLER ROHRBACK L.L.P. (2:18-cv-01287-JLR) - 1 1204 Third Avenua, Suite 3209 Seattle, WA 98101-3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384

11) full and fair investigation of Naxos’s insurance claim and by elevating its interests above Naxos’s □

21! interests. 3 2. American Family committed the tort of negligence by failing to perform a full and 4 fair investigation of Naxos’s insurance claim and by elevating its interests above Naxos’s interests. 3. American Family violated the Consumer Protection Act both by committing an q unfair or deceptive act or practice in trade of commerce causing injury to Naxos’s property and by |

g || violating WAC 284-30-330; WAC 284-30-370; and WAC 284-30-380. 9 4, American Family violated the Insurance Fair Conduct Act by unreasonably denying 101) Naxos’s insurance claim and by unreasonably denying payment of benefits and American Family is liable for exemplary damages based on this and its violation of WAC 284-30-330; WAC 284- 30-370; and WAC 284-30-380. 4 5. American Family breached the insurance contract by failing to perform contractual

15 || duties when due.

16 Plaintiff Naxos will pursue the following affirmative defenses: 17 1. American Family is estopped from contesting coverage. 18 2. Naxos did not commit fraud or make any intentional misrepresentations in the 9 application for insurance or the claim for insurance benefits. B. Defendant American Family. Defendant American Family will pursue at trial the following claims against Plaintiff 93 || Naxos: 4 1. Naxos breached the terms of the applicable insurance contract by its representatives 25 || making material misrepresentations and concealing material information from American Family, 261) both in the inception of the contract and in the investigation of Naxos’s insurance claim. [PROPOSED] PRETRIAL ORDER KELLER ROHRBACK L.L.P. Gil8ev-01287-I1R) -2 reo ata ue TEER GAD Sat ae

1 2, Naxos has an affirmative duty to provide accurate, honest and complete 2 information, and failed to do so. This failure has caused American Family to incur damages as a 3 result. 4 3, Naxos has committed bad faith and violated the CPA through its actions of misrepresentation and concealment. 7 Defendant American Family wiil pursue the following affirmative defenses: g 1, At all times material, American Family’s investigation and adjustment of the claims 9 || have been reasonable, in compliance with the terms and conditions of the insurance contract, and in compliance with Washington State law in light of the facts and circumstances surrounding the loss and claims submitted. As a result, all of Naxos’s extra-contractual claims are without merit. 2. At all times relevant American Family’ s actions were justified.

1 3. To the extent that American Family had any duties to the Naxos, American Family 15 fulfilled those duties. 16 4. Naxos’s damages, if any, were proximately caused or contributed to by Naxos’s own acts and/or omissions. 18 5. Naxos has failed to mitigate its damages. 19 6. Any injuries suffered by Naxos were caused in whole or in part by Naxos, individually, and/or third persons or entities and American Family is entitled to allocation of fault

99 under RCW 4.22 et seq. 3 7, Naxos’s loss, if any, may have been caused or contributed to by superseding and/or 24 || intervening acts over which American Family had no control or responsibility. 25 8. Should Naxos recover any damages, American Family is entitled to setoff in the 26 amount of any money already paid to Naxos, [PROPOSED] PRETRIAL ORDER KELLER ROHRBACK L.L.P. (2:18-cv-01287-JLR) - 3 1204 Thire Avenue, Sulle 3200 TREE NONE GOS

1 9. Naxos made intentional misrepresentations and/or concealments of material fact to

2\| American Family. 3 10. Naxos breached their respective obligations of good faith and fair dealing and 4 therefore is not entitled to any recovery. 5 6 11. Naxos acted in bad faith. 7 Naxos’s claims are barred, in whole or in part, by the doctrine of unclean hands. g WW. ADMITTED FACTS 9 _ The following facts are admitted or otherwise undisputed between the parties: 10 1, This case involves a black water event occurring at Spiros Greek Restaurant in the ll summer of 2015. 12 2. Spiros Greek Restaurant was operated by Naxos, LLC, 4 3, As a result, all business activities at Spiros were shut down.

15 4, Naxos notified American Family of the loss on August 6, 2015. 16 5. Naxos. held a Businessowners Policy issued by American Family, numbered 17 |} 46X2414102, which was in effect at the time of the loss. 18 6. Naxos retained 1-800 Water Damage, a water mitigation company, to mitigate and 19 . remediate the loss. 20 7. American Family retained Servpro to inspect the site and review 1-800 Water 21 94 Damage’s scope of repair. 33 8. Servpro concurred with 1-800’s proposed scope, which included removal of the 24 || flooring in the kitchen/pantry area, flood cutting the walls, and removal of Naxos’s kitchen 25 || equipment. 26 9. On August 31, 2015, in response to a request from American Family, 1-800 advised

|| PROPOSED] PRETRIAL ORDER KELLER ROURBACK L.L.P. (2:18-cv-01287-ILR) - 4 1201 Third Avenue, Suile 3200 Seattle, WA 98101+3062 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384

1 that the cost of remediation would be between $85,000 and $100,000, plus pump out and solid removal. 3 10. On September 4, 2015, American Family retained an independent adjuster, who ‘ speculated that the leak may have been ongoing prior to the reported loss. 11, American Family hired an engineer, Scott Thomas of CASE Forensics, and issued || a Reservation of Rights letter on September 11, 2015, indicating there might not be coverage for g || the loss. 9 12. Naxos contacted American Family on September 15, 2015, expressing concern 10] shout the delay in the investigation of the loss. iM 13. On October 1, 2015, American Family advised engineer Scott Thomas that he may cease investigation into the cause of the loss.

14 14, Thomas recommended that an industrial hygienist be contacted if questions surface 15 || regarding proper remediation. 16 15. American Family first issued payment to Naxos related to the structural loss on 171 October 22, 2015, in the amount of $43,732.48. 18 16. By February 1, 2016, Naxos had hired Armata Construction out of its own funds to 8 take over remediation from 1-800. 17, In March 2016, Naxos retained Dudley Gaouette, a public adjuster with Adjusters International. ,

23 18.

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Naxos, LLC v. American Family Insurance Company, (W.D. Wash. 2020).

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