THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 TRAVELERS PROPERTY CASUALTY CASE NO. C19-1050-JCC COMPANY OF AMERICA, a foreign 10 insurance company; THE CHARTER OAK ORDER 11 FIRE INSURANCE COMPANY, a foreign insurance company, 12 Plaintiffs, 13 v. 14 H.D. FOWLER COMPANY, a Washington 15 Corporation; and KIEWIT INFRASTRUCTURE WEST CO., a Delaware 16 Corporation, 17 Defendants. 18
19 This matter comes before the Court on Defendant H.D. Fowler’s motion for summary 20 judgment (Dkt. No. 13). Having considered the parties’ briefing and the relevant record, the 21 Court hereby GRANTS the motion for the reasons explained herein. 22 I. BACKGROUND 23 This case arises from a project to construct a utility conveyance system linking the 24 Kent/Auburn corridor. (See Dkt. No. 1 at 3–4.) On March 24, 2017, Fowler contracted with 25 Defendant Kiewit Infrastructure West Co., the general contractor on the project, to supply sewer 26 and water pipe for the conveyance system. (Dkt. No. 30-1 at 4–11.) Fowler purchased the pipe 1 from Diamond Plastics Corporation and had the pipe delivered to the project cite. (Dkt. No. 14 at 2 2–3.) Once the pipe was delivered, Tunista Construction, a subcontractor, began installing it. 3 Tunista soon experienced problems with the installation. (Id. at 3.) Those problems caused 4 delays and other costs for which Kiewit back-charged Fowler $1,564,698.73. (Id.) 5 In April 2018, Fowler tendered a liability claim to Plaintiffs Travelers Property Casualty 6 Company of America and Charter Oak Fire Insurance Company (collectively, “Travelers”). (Id. 7 at 4.) On June 28, 2018, Travelers sent Fowler a reservation of rights letter. (See generally Dkt. 8 No. 30-9.) The letter laid out Travelers’s then-current understanding of the facts giving rise to 9 Kiewit’s claim, the provisions of Fowler’s insurance contract, and how those provisions might 10 apply to Kiewit’s claim. (Id. at 2–11.) The letter concluded, “based on the potential for property 11 damage arising from an occurrence within the Travelers policy period, Travelers has agreed to 12 provide H.D. Fowler with an attorney to assist with the retention of an expert and to protect the 13 interests of H.D. Fowler.” (Id. at 9.) The letter also warned that “Travelers may issue a partial or 14 complete declination of coverage in the referenced matter should it determine that coverage does 15 not apply.” (Id. at 10.) 16 Over the next year, Travelers investigated the claim without ever denying coverage. (See 17 Dkt. Nos. 30-12–30-18.) While Travelers was investigating the claim, Fowler and other parties 18 agreed to mediate the matter. (Dkt. No. 29 at 5.) But before mediation occurred or anyone sued 19 Fowler, Travelers filed a complaint seeking a declaration that it had no duty to defend or 20 indemnify Fowler from claims relating to the construction project. (Dkt. No. 1 at 15–20.) Fowler 21 now moves for summary judgment dismissal of Travelers’s complaint. (Dkt. No. 13.) 22 II. DISCUSSION 23 Fowler argues that the Court should dismiss this case for three reasons: (1) by filing a 24 declaratory action before completing its investigation, Travelers acted in bad faith and is 25 therefore estopped from denying Fowler coverage, (see Dkt. No. 13 at 11–14, 18–20); (2) 26 Washington law prohibits an insurer from filing a declaratory action unless the insurer is already 1 defending a suit under a reservation of rights, (see id. at 14–15, 17); and (3) there is no “actual 2 controversy” within the meaning of Article III because Fowler has not yet been sued, (see id. at 3 16–17). 4 Under Article III, federal courts may decide only “cases” and “controversies.” U.S. 5 Const. art. III, § 2. For a case or controversy to exist, a party must have standing to bring a claim 6 and the claim must be ripe for review. Colwell v. Dep’t of Health & Human Servs., 559 F.3d 7 1112, 1123 (9th Cir. 2009). “Standing and ripeness . . . are closely related,” id., and the inquiries 8 often overlap in cases where a plaintiff asks a court to decide a legal issue whose relevancy is 9 contingent on future events, see Thomas v. Anchorage Equal Rts. Comm’n, 220 F.3d 1134, 10 1138–39 (9th Cir. 2000). In such cases, the plaintiff will not have standing to raise the issue 11 unless the future event is “certainly impending.” See Clapper v. Amnesty Int’l, 568 U.S. 398, 12 1147–49 (2013) (holding plaintiffs could not challenge a provision of the Foreign Intelligence 13 Surveillance Act because they failed to show with enough certainty that the Government would 14 use the provision to intercept their communications). Similarly, the issue will not be ripe “if it 15 rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at 16 all.’” Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 793 (9th Cir. 2012) (quoting Texas 17 v. United States, 523 U.S. 296, 300 (1998)) (holding petitioners could not challenge the terms of 18 a contract because it was uncertain whether the contract would ever come into effect). 19 Here, Travelers asks the Court to resolve legal issues relating to “future events that may 20 not occur as anticipated, or indeed may not occur at all.” Id. Those issues center around whether 21 Travelers has a duty to defend and indemnify Fowler against hypothetical claims made against 22 Fowler in connection with the Kent/Auburn conveyance system. (See Dkt. No. 1 at 15–20.) 23 Those claims might never be brought because Fowler might settle them or potential claimants 24 might choose not to pursue them.1 And even if claims are brought against Fowler, the claims
25 1 The Court is aware of a lawsuit filed by Fowler against Diamond Plastics in King County 26 Superior Court. See H.D. Fowler Co. v. Diamond Plastics Corp., Case No. 19-2-08572-0 KNT. Neither Fowler nor Travelers have discussed this lawsuit in their briefing, and Fowler told the 1 might not be the ones Travelers anticipates: a claimant might, for example, allege property 2 damage that comes within the terms of Fowler’s insurance policy with Travelers. Because 3 Travelers raises legal issues that “rest[] upon ‘contingent future events that may not occur as 4 anticipated, or indeed may not occur at all,’ those issues are not ripe for review.” Alcoa, 698 F.3d 5 at 793 (quoting Texas, 523 U.S. at 300). 6 The Court’s conclusion is consistent with both the ordinary principles of standing and 7 ripeness and the way courts have applied those principles in similar cases. In Progressive 8 Northern Insurance Co. v. Chambers, 2020 WL 59608, slip op. at 2 (D.S.C. 2020), for example, 9 the district court held that a duty-to-defend issue was not ripe because a suit had not been filed 10 against the insured and the insurer had failed to show that a suit was imminent. Likewise, in 11 Hartford Insurance Co. of the Midwest v. Dana Transport Inc., 2018 WL 10152321, slip op. at 12 4–5 (D.N.J. 2018), the district court held that an insurer’s duty to defend was not ripe because 13 there was neither an underlying lawsuit nor a threatened lawsuit against the insured. Although 14 those courts did not hold that a duty-to-defend issue is ripe only if a lawsuit has been filed 15 against the insured, they did require that a lawsuit at least be imminent. See Progressive N. Ins. 16 Co., 2020 WL 59608, slip op at 2; Hartford Ins. Co., 2018 WL 10152321, slip op. at 4–5; see 17 also Colony Ins. Co. v. Hucks Pool Co., 2018 WL 902295, slip op. at 2–3 (D.S.C. 2018) 18 (concluding that a case or controversy existed because a lawsuit against the insured was 19 imminent). Travelers has offered no evidence to show that a lawsuit against Fowler is imminent. 20 Accordingly, Travelers’s claims are not ripe for review.
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THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 TRAVELERS PROPERTY CASUALTY CASE NO. C19-1050-JCC COMPANY OF AMERICA, a foreign 10 insurance company; THE CHARTER OAK ORDER 11 FIRE INSURANCE COMPANY, a foreign insurance company, 12 Plaintiffs, 13 v. 14 H.D. FOWLER COMPANY, a Washington 15 Corporation; and KIEWIT INFRASTRUCTURE WEST CO., a Delaware 16 Corporation, 17 Defendants. 18
19 This matter comes before the Court on Defendant H.D. Fowler’s motion for summary 20 judgment (Dkt. No. 13). Having considered the parties’ briefing and the relevant record, the 21 Court hereby GRANTS the motion for the reasons explained herein. 22 I. BACKGROUND 23 This case arises from a project to construct a utility conveyance system linking the 24 Kent/Auburn corridor. (See Dkt. No. 1 at 3–4.) On March 24, 2017, Fowler contracted with 25 Defendant Kiewit Infrastructure West Co., the general contractor on the project, to supply sewer 26 and water pipe for the conveyance system. (Dkt. No. 30-1 at 4–11.) Fowler purchased the pipe 1 from Diamond Plastics Corporation and had the pipe delivered to the project cite. (Dkt. No. 14 at 2 2–3.) Once the pipe was delivered, Tunista Construction, a subcontractor, began installing it. 3 Tunista soon experienced problems with the installation. (Id. at 3.) Those problems caused 4 delays and other costs for which Kiewit back-charged Fowler $1,564,698.73. (Id.) 5 In April 2018, Fowler tendered a liability claim to Plaintiffs Travelers Property Casualty 6 Company of America and Charter Oak Fire Insurance Company (collectively, “Travelers”). (Id. 7 at 4.) On June 28, 2018, Travelers sent Fowler a reservation of rights letter. (See generally Dkt. 8 No. 30-9.) The letter laid out Travelers’s then-current understanding of the facts giving rise to 9 Kiewit’s claim, the provisions of Fowler’s insurance contract, and how those provisions might 10 apply to Kiewit’s claim. (Id. at 2–11.) The letter concluded, “based on the potential for property 11 damage arising from an occurrence within the Travelers policy period, Travelers has agreed to 12 provide H.D. Fowler with an attorney to assist with the retention of an expert and to protect the 13 interests of H.D. Fowler.” (Id. at 9.) The letter also warned that “Travelers may issue a partial or 14 complete declination of coverage in the referenced matter should it determine that coverage does 15 not apply.” (Id. at 10.) 16 Over the next year, Travelers investigated the claim without ever denying coverage. (See 17 Dkt. Nos. 30-12–30-18.) While Travelers was investigating the claim, Fowler and other parties 18 agreed to mediate the matter. (Dkt. No. 29 at 5.) But before mediation occurred or anyone sued 19 Fowler, Travelers filed a complaint seeking a declaration that it had no duty to defend or 20 indemnify Fowler from claims relating to the construction project. (Dkt. No. 1 at 15–20.) Fowler 21 now moves for summary judgment dismissal of Travelers’s complaint. (Dkt. No. 13.) 22 II. DISCUSSION 23 Fowler argues that the Court should dismiss this case for three reasons: (1) by filing a 24 declaratory action before completing its investigation, Travelers acted in bad faith and is 25 therefore estopped from denying Fowler coverage, (see Dkt. No. 13 at 11–14, 18–20); (2) 26 Washington law prohibits an insurer from filing a declaratory action unless the insurer is already 1 defending a suit under a reservation of rights, (see id. at 14–15, 17); and (3) there is no “actual 2 controversy” within the meaning of Article III because Fowler has not yet been sued, (see id. at 3 16–17). 4 Under Article III, federal courts may decide only “cases” and “controversies.” U.S. 5 Const. art. III, § 2. For a case or controversy to exist, a party must have standing to bring a claim 6 and the claim must be ripe for review. Colwell v. Dep’t of Health & Human Servs., 559 F.3d 7 1112, 1123 (9th Cir. 2009). “Standing and ripeness . . . are closely related,” id., and the inquiries 8 often overlap in cases where a plaintiff asks a court to decide a legal issue whose relevancy is 9 contingent on future events, see Thomas v. Anchorage Equal Rts. Comm’n, 220 F.3d 1134, 10 1138–39 (9th Cir. 2000). In such cases, the plaintiff will not have standing to raise the issue 11 unless the future event is “certainly impending.” See Clapper v. Amnesty Int’l, 568 U.S. 398, 12 1147–49 (2013) (holding plaintiffs could not challenge a provision of the Foreign Intelligence 13 Surveillance Act because they failed to show with enough certainty that the Government would 14 use the provision to intercept their communications). Similarly, the issue will not be ripe “if it 15 rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at 16 all.’” Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 793 (9th Cir. 2012) (quoting Texas 17 v. United States, 523 U.S. 296, 300 (1998)) (holding petitioners could not challenge the terms of 18 a contract because it was uncertain whether the contract would ever come into effect). 19 Here, Travelers asks the Court to resolve legal issues relating to “future events that may 20 not occur as anticipated, or indeed may not occur at all.” Id. Those issues center around whether 21 Travelers has a duty to defend and indemnify Fowler against hypothetical claims made against 22 Fowler in connection with the Kent/Auburn conveyance system. (See Dkt. No. 1 at 15–20.) 23 Those claims might never be brought because Fowler might settle them or potential claimants 24 might choose not to pursue them.1 And even if claims are brought against Fowler, the claims
25 1 The Court is aware of a lawsuit filed by Fowler against Diamond Plastics in King County 26 Superior Court. See H.D. Fowler Co. v. Diamond Plastics Corp., Case No. 19-2-08572-0 KNT. Neither Fowler nor Travelers have discussed this lawsuit in their briefing, and Fowler told the 1 might not be the ones Travelers anticipates: a claimant might, for example, allege property 2 damage that comes within the terms of Fowler’s insurance policy with Travelers. Because 3 Travelers raises legal issues that “rest[] upon ‘contingent future events that may not occur as 4 anticipated, or indeed may not occur at all,’ those issues are not ripe for review.” Alcoa, 698 F.3d 5 at 793 (quoting Texas, 523 U.S. at 300). 6 The Court’s conclusion is consistent with both the ordinary principles of standing and 7 ripeness and the way courts have applied those principles in similar cases. In Progressive 8 Northern Insurance Co. v. Chambers, 2020 WL 59608, slip op. at 2 (D.S.C. 2020), for example, 9 the district court held that a duty-to-defend issue was not ripe because a suit had not been filed 10 against the insured and the insurer had failed to show that a suit was imminent. Likewise, in 11 Hartford Insurance Co. of the Midwest v. Dana Transport Inc., 2018 WL 10152321, slip op. at 12 4–5 (D.N.J. 2018), the district court held that an insurer’s duty to defend was not ripe because 13 there was neither an underlying lawsuit nor a threatened lawsuit against the insured. Although 14 those courts did not hold that a duty-to-defend issue is ripe only if a lawsuit has been filed 15 against the insured, they did require that a lawsuit at least be imminent. See Progressive N. Ins. 16 Co., 2020 WL 59608, slip op at 2; Hartford Ins. Co., 2018 WL 10152321, slip op. at 4–5; see 17 also Colony Ins. Co. v. Hucks Pool Co., 2018 WL 902295, slip op. at 2–3 (D.S.C. 2018) 18 (concluding that a case or controversy existed because a lawsuit against the insured was 19 imminent). Travelers has offered no evidence to show that a lawsuit against Fowler is imminent. 20 Accordingly, Travelers’s claims are not ripe for review. 21 Travelers disagrees, arguing that it is “well-established” under Washington law that “an 22 insurer may file a declaratory judgment action whenever coverage is uncertain.” (Dkt. No. 29 at 23 19.) But the Washington cases Travelers points to all involved or contemplated declaratory 24
25 Court on March 11, 2020, that “no suit or arbitration has been filed against Fowler.” (Dkt. No. 31 at 2.) Accordingly, the Court assumes that Fowler’s lawsuit against Diamond Plastics does not 26 involve a claim against Fowler that might trigger Travelers’s duty to defend. 1 judgment actions brought by insurance companies after their insured had been sued. See Nat’l 2 Sur. Corp. v. Immunex Corp., 297 P.3d 688, 689–90 (Wash. 2013); Woo v. Fireman’s Fund Ins. 3 Co., 164 P.3d 454, 459–60 (Wash. 2007); Truck Ins. Exch. v. Vanport Homes, Inc., 58 F.3d 276, 4 280–81 (Wash. 2002). More importantly, Washington law does not decide the Court’s power to 5 entertain a declaratory judgment action; Article III does. See Principal Life Ins. Co. v. Robinson, 6 394 F.3d 665, 669 (9th Cir. 2005). And under Article III, a federal court may resolve the 7 uncertainties in a contract only if “there is a substantial controversy, between parties having 8 adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a 9 declaratory judgment.” Id. at 671 (quoting Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 10 U.S. 270, 273 (1941)). No such controversy exists here because Fowler has not been sued, it is 11 unclear if Fowler will be sued, and it is uncertain what a lawsuit against Fowler might entail.2 12 See Alcoa, 698 F.3d at 793; Progressive N. Ins. Co., 2020 WL 59608, slip op at 2; Hartford Ins. 13 Co., 2018 WL 10152321, slip op at 4–5. 14 III. CONCLUSION 15 For the foregoing reasons, the Court GRANTS Fowler’s motion for summary judgment 16 (Dkt. No. 13) and DISMISSES this case without prejudice. The Court also DENIES the parties’ 17 stipulated motion to dismiss Kiewit (Dkt. No. 36) as moot. 18 DATED this 14th day of July 2020. A 19 20 21 John C. Coughenour 22 UNITED STATES DISTRICT JUDGE
24 25 2 Because the Court concludes that it lacks the power to hear Travelers’s lawsuit, the Court does 26 not reach Fowler’s other arguments in its motion for summary judgment.