Sundet v. Chicago Title Insurance Company

• Court: District Court, W.D. Washington
• Decided: July 8, 2022
• Docket: 2:22-cv-00341
• Status: Unknown

Opinion

THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 KYLE SUNDET, CASE NO. C22-0341-JCC 10 Plaintiff, ORDER 11 v. 12 CHICAGO TITLE INSURANCE COMPANY, 13 Defendant. 14 15 This matter comes before the Court on Defendant’s Rule 12(b)(1) motion to dismiss, or 16 in the alternative, to stay (Dkt. No. 11). Having thoroughly considered the motion and the record 17 before it, the Court hereby DENIES the motion to dismiss and GRANTS the motion to stay for 18 the reasons described herein. 19 I. BACKGROUND 20 In August 2021, Plaintiff Kyle Sundet purchased a property in Tacoma for which he 21 procured title insurance from Defendant Chicago Title Insurance Company. (Dkt. No. 1 at 2.) 22 After closing sale, Plaintiff learned of an undisclosed title encumbrance and submitted a written 23 claim to Defendant. (Id.) Defendant confirmed coverage and secured counsel to represent 24 Plaintiff in resolving the title issue. (Id. at 3.) In November 2021, this counsel filed suit in Pierce 25 County Superior Court on Plaintiff’s behalf asserting causes of action for rescission of the 26 1 breached purchase agreement, breach of statutory warranty deed, and fraud and intentional 2 misrepresentation. (Dkt. No. 11 at 3.) Plaintiff, dissatisfied with Defendant’s actions in resolving 3 his demand, filed suit with this Court, seeking timely relief for the escalating costs of 4 maintaining the encumbered property while the Pierce County suit plays out. (Dkt. No. 1 at 4.) 5 As a result, in the instant suit, Plaintiff alleges the following acts by Defendant: breach of 6 contract, violation of Washington’s Insurance Fair Conduct and Consumer Protection Acts, and 7 insurance bad faith. (Id. at 5–10.) 8 II. DISCUSSION 9 The Court has the “inherent power to control the disposition of the causes on its docket in 10 a manner which will promote economy of time and effort for itself, for counsel, and for 11 litigants.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). In considering whether to 12 exercise this power by granting a stay, the Court weighs competing interests including “the 13 possible damage which may result from the granting of a stay, the hardship or inequity which a 14 party may suffer in being required to go forward, and the orderly course of justice measured in 15 terms of the simplifying or complicating of issues, proof, and questions of law which could be 16 expected to result from a stay.” Id. 17 Defendant claims litigating this case presently constitutes “premature adjudication.” (Dkt. 18 No. 11 at 2–3.) It points to Paragraph 9(b) of the insurance policy’s conditions, which state that 19 “In the event of any litigation, including litigation by the Company or with the Company’s 20 consent, the Company shall have no liability for loss or damage until there has been a final 21 determination by a court of competent jurisdiction, and disposition of all appeals, adverse to the 22 Title, as insured.” (Dkt. No. 11 at 5.) This express language, which binds both parties, 23 necessitates a stay of this case until there has been a final determination in the underlying 24 lawsuit. While Plaintiff claims that this suit is a cost recovery action and does not attempt to cure 25 title, (Dkt. No. 13 at 7), one of the causes of action of the underlying suit is for breach of 26 statutory warranty deed. (Dkt. No. 11 at 3.) Therefore, the underlying lawsuit falls within the 1 express language of Paragraph 9(b), (see id. at 5), and pursuant to the parties’ agreement, the 2 present suit must be stayed until the underlying suit’s adjudication. Furthermore, resolving the 3 underlying case will clarify Defendant’s liability and obligations. For example, to succeed on his 4 bad faith claim, Plaintiff must demonstrate a “duty, breach of that duty, and damages 5 proximately caused by any breach of duty.” Smith v. Safeco Ins. Co., 78 P.3d 1274, 1277 (Wash. 6 2003). Plaintiff cannot prevail if he is unable to demonstrate what damages Defendant’s alleged 7 breach caused. 8 To note: in its motion, Defendant asserts that Plaintiff’s Comsumer Protection Act cause 9 of action should be dismissed for failing to state a claim. (Dkt. No. 11 at 6.) However, this 10 argument is not appropriate for a motion challenging the Court’s subject matter jurisdiction. See 11 Fed. R. Civ. P. 12(b)(1). And, because Defendant failed to move pursuant to Rule 12(b)(6) prior 12 to answering Plaintiff’s complaint, (see Dkt. No. 9), Defendant is precluded from so doing at this 13 point. See Aetna Life Ins. Co. v. Alla Medical Services, Inc., 855 F.2d 1470, 1474 (9th Cir.1988). 14 III. CONCLUSION 15 Accordingly, Defendant’s motion to dismiss is DENIED, Defendant’s motion to stay in 16 the alternative is GRANTED. This case is hereby STAYED pending the resolution of the 17 underlying action in Pierce County Superior Court. The parties are ORDERED to filed a joint 18 status report with the Court within thirty (30) days of a final resolution of the Pierce County 19 matter. 20 21 DATED this 8th day of July 2022. A 22 23 24 John C. Coughenour 25 UNITED STATES DISTRICT JUDGE