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3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE
9 10 VALLEY FORGE INSURANCE CASE NO. C21-0847JLR COMPANY, et al., Plaintiffs, 12 v.
13 WASHINGTON SQUARE HOTEL HOLDINGS LLC, 14 15 Defendant.
17 Before the court is Defendant Washington Square Hotel Holdings, LLC’s motion 18 for relief under Federal Rule of Civil Procedure 56(d), in which it asks the court to deny 19 Plaintiffs Valley Forge Insurance Company (“Valley Forge”) and Continental Casualty 20 Company’s (“Continental”) (collectively, “Plaintiffs”) motion for summary judgment. 21 (Mot. (Dkt. # 35); Reply (Dkt. # 39); see also MSJ (Dkt. # 30).) Plaintiffs oppose 22 WSHH’s motion for relief under Rule 56(d). (Resp. (Dkt. # 37).) WSHH opposes 1 Plaintiffs’ summary judgment motion and also moves to seal an exhibit filed in support of 2 its response brief. (See MSJ Resp. (Dkt. # 41); Seal Mot. (Dkt. # 43).) The court has
3 considered the submissions of the parties, the relevant portions of the record, and the 4 applicable law. Being fully advised,1 the court GRANTS WSHH’s motion for Rule 56(d) 5 relief; DENIES Plaintiffs’ motion for summary judgment without prejudice; and DENIES 6 as moot WSHH’s motion to seal an exhibit filed in support of its summary judgment 7 response.
9 This declaratory judgment action arises out of the construction of a Hilton Garden 10 Inn hotel in Bellevue, Washington that began in 2015 (the “Project”). (See Compl. (Dkt. 11 # 2) ¶¶ 4.2-4.4; Answer (Dkt. # 10) ¶¶ 4.2-4.4.) WSHH, the owner of the Project, seeks 12 to recover losses allegedly caused by its former general contractor, Vandervert 13 Construction, Inc. (“Vandervert”), under two policies issued by Plaintiffs to Vandervert
14 (the “Policies”). (See Compl. ¶¶ 4.2-4.4, 6.3-6.5; Answer ¶¶ 4.2-4.4.) 15 Plaintiffs filed this action on June 23, 2021 and sought a declaration that WSHH’s 16 losses are not covered by the Policies and that Plaintiffs have no obligation to pay WSHH 17 for them. (See id.; see also Compl. at 12-13.) WSHH answered the complaint on 18 September 20, 2021, and also asserted counterclaims against Plaintiffs for breach of
19 contract (Answer ¶¶ 20-22); violations of the Washington Consumer Protection Act 20 //
21 1 The parties do not request oral argument (see Mot. at 1; Resp. at 1) and the court concludes that oral argument is not necessary to dispose of the motion, see Local Rules W.D. 22 Wash. LCR 7(b)(4). 1 (“CPA”) (id. ¶¶ 22-27); negligence (id. ¶¶ 28-31); and breach of Plaintiffs’ duty to act in 2 good faith (id. ¶¶ 32-40). Plaintiffs then moved for summary judgment on the coverage
3 issue. (MSJ (Dkt. # 15).) The court granted that motion, found that WSHH was not 4 entitled to coverage under the Policies and, thus, granted Plaintiffs’ motion for summary 5 judgment. (See 2/4/22 Order (Dkt. # 22).) Subsequently, WSHH moved for leave to 6 amend its answer and counterclaims by adding a counterclaim alleging that Plaintiffs 7 violated the Washington Insurance Fair Conduct Act (“IFCA”), which the court granted 8 in an order issued on July 6, 2022. (Mot. to Amend (Dkt. # 10); 7/6/22 Order (Dkt.
9 # 45).) While WSHH’s motion for leave to amend was pending, however, Plaintiffs 10 moved for summary judgment on the existing breach of contract, bad faith, negligence, 11 and CPA counterclaims, which prompted WSHH to file the instant motion seeking relief 12 under Rule 56(d). (See MSJ; Mot.)
14 WSHH seeks relief under Federal Rule of Civil Procedure 56(d) and asks the court 15 to deny Plaintiffs’ summary judgment motion because “document discovery is not 16 complete and no depositions have been taken.” (See Mot. at 2.) Below, the court sets 17 forth the relevant legal standard for motions made under Rule 56(d) and then turns to 18 consider whether WSHH should be afforded additional time to conduct discovery before
19 opposing Plaintiffs’ summary judgment motion. 20 Under Federal Rule of Civil Procedure 56(d), if the nonmoving party “shows by 21 affidavit or declaration that, for specified reasons, it cannot present facts essential to 22 justify its opposition, the court may: (1) defer considering the motion or deny it; 1 (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any 2 other appropriate order.” Fed. R. Civ. P. 56(d). To prevail on a Rule 56(d) motion, the
3 party opposing summary judgment “must make ‘(a) a timely application which 4 (b) specifically identifies (c) relevant information, (d) where there is some basis for 5 believing that the information sought actually exists.’” Emps. Teamsters Loc. Nos. 175 & 6 505 Pension Tr. Fund v. Clorox Co., 353 F.3d 1125, 1129 (9th Cir. 2004) (quoting VISA 7 Int’l Serv. Ass’n v. Bankcard Holders of Am., 784 F.2d 1472, 1475 (9th Cir.1986)). 8 Moreover, unless the party requesting a continuance “has not diligently pursued
9 discovery of the evidence,” their request “should be granted almost as a matter of 10 course.” Burlington N. Santa Fe R.R. Co. v. The Assiniboine & Sioux Tribes of the Fort 11 Peck Reservation, 323 F.3d 767, 773-74 (9th Cir. 2003) (internal quotation marks and 12 citations omitted). 13 As WSHH sets forth in an affidavit from its counsel, additional time for discovery
14 is needed to depose: (1) “Shari Bradix, the claims handler primarily responsible for 15 handling, investigating, and evaluating Vandervert’s tender and request for a defense”; 16 (2) attorneys at Lee Smart, the law firm hired by Plaintiffs to defend Vandervert, 17 regarding whether any “instructions and limitations were placed on Lee Smart” by 18 Plaintiffs; and (3) Rick Wetmore, the counsel Vandervert retained, regarding Plaintiffs’
19 efforts to defend and reach a coverage determination on behalf of Vandervert. (See 20 6/23/22 Clapham Decl. (Dkt. # 36) ¶ 8.) WSHH further asserts that these depositions 21 have not yet been scheduled because they will be most useful if they are sequenced after 22 all responsive documents have been produced. (See id.) In opposition, Plaintiffs argue 1 that Rule 56(d) relief is not warranted because Plaintiffs have produced all responsive 2 documents; the discovery WSHH claims to need from Lee Smart and Mr. Wetmore is not
3 essential to its summary judgment defense; WSHH fails to identify the information it 4 needs from Ms. Bradix; and WSHH has not diligently pursued discovery in this matter. 5 (See Resp. at 2, 5-8.) 6 As an initial matter, the information WSHH seeks from Ms. Bradix, Mr. Wetmore, 7 and Lee Smart is sufficiently identified, plainly relevant to WSHH’s defense of its 8 counterclaims, and likely to be obtained from WSHH’s discovery targets. See Emps.
9 Teamsters, 353 F.3d at 1129. For instance, WSHH wishes to depose Ms. Bradix 10 regarding, among other topics, the defense Plaintiffs provided to Vandervert and to ask 11 Ms. Bradix why Lee Smart appeared at a “mediation wholly unprepared and without 12 having retained any experts to address the damages being claimed.” (Reply at 2-3; see 13 also 6/23/22 Clapham Decl. ¶ 8.) If given additional time, WSHH would further depose
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1 2
3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE
9 10 VALLEY FORGE INSURANCE CASE NO. C21-0847JLR COMPANY, et al., Plaintiffs, 12 v.
13 WASHINGTON SQUARE HOTEL HOLDINGS LLC, 14 15 Defendant.
17 Before the court is Defendant Washington Square Hotel Holdings, LLC’s motion 18 for relief under Federal Rule of Civil Procedure 56(d), in which it asks the court to deny 19 Plaintiffs Valley Forge Insurance Company (“Valley Forge”) and Continental Casualty 20 Company’s (“Continental”) (collectively, “Plaintiffs”) motion for summary judgment. 21 (Mot. (Dkt. # 35); Reply (Dkt. # 39); see also MSJ (Dkt. # 30).) Plaintiffs oppose 22 WSHH’s motion for relief under Rule 56(d). (Resp. (Dkt. # 37).) WSHH opposes 1 Plaintiffs’ summary judgment motion and also moves to seal an exhibit filed in support of 2 its response brief. (See MSJ Resp. (Dkt. # 41); Seal Mot. (Dkt. # 43).) The court has
3 considered the submissions of the parties, the relevant portions of the record, and the 4 applicable law. Being fully advised,1 the court GRANTS WSHH’s motion for Rule 56(d) 5 relief; DENIES Plaintiffs’ motion for summary judgment without prejudice; and DENIES 6 as moot WSHH’s motion to seal an exhibit filed in support of its summary judgment 7 response.
9 This declaratory judgment action arises out of the construction of a Hilton Garden 10 Inn hotel in Bellevue, Washington that began in 2015 (the “Project”). (See Compl. (Dkt. 11 # 2) ¶¶ 4.2-4.4; Answer (Dkt. # 10) ¶¶ 4.2-4.4.) WSHH, the owner of the Project, seeks 12 to recover losses allegedly caused by its former general contractor, Vandervert 13 Construction, Inc. (“Vandervert”), under two policies issued by Plaintiffs to Vandervert
14 (the “Policies”). (See Compl. ¶¶ 4.2-4.4, 6.3-6.5; Answer ¶¶ 4.2-4.4.) 15 Plaintiffs filed this action on June 23, 2021 and sought a declaration that WSHH’s 16 losses are not covered by the Policies and that Plaintiffs have no obligation to pay WSHH 17 for them. (See id.; see also Compl. at 12-13.) WSHH answered the complaint on 18 September 20, 2021, and also asserted counterclaims against Plaintiffs for breach of
19 contract (Answer ¶¶ 20-22); violations of the Washington Consumer Protection Act 20 //
21 1 The parties do not request oral argument (see Mot. at 1; Resp. at 1) and the court concludes that oral argument is not necessary to dispose of the motion, see Local Rules W.D. 22 Wash. LCR 7(b)(4). 1 (“CPA”) (id. ¶¶ 22-27); negligence (id. ¶¶ 28-31); and breach of Plaintiffs’ duty to act in 2 good faith (id. ¶¶ 32-40). Plaintiffs then moved for summary judgment on the coverage
3 issue. (MSJ (Dkt. # 15).) The court granted that motion, found that WSHH was not 4 entitled to coverage under the Policies and, thus, granted Plaintiffs’ motion for summary 5 judgment. (See 2/4/22 Order (Dkt. # 22).) Subsequently, WSHH moved for leave to 6 amend its answer and counterclaims by adding a counterclaim alleging that Plaintiffs 7 violated the Washington Insurance Fair Conduct Act (“IFCA”), which the court granted 8 in an order issued on July 6, 2022. (Mot. to Amend (Dkt. # 10); 7/6/22 Order (Dkt.
9 # 45).) While WSHH’s motion for leave to amend was pending, however, Plaintiffs 10 moved for summary judgment on the existing breach of contract, bad faith, negligence, 11 and CPA counterclaims, which prompted WSHH to file the instant motion seeking relief 12 under Rule 56(d). (See MSJ; Mot.)
14 WSHH seeks relief under Federal Rule of Civil Procedure 56(d) and asks the court 15 to deny Plaintiffs’ summary judgment motion because “document discovery is not 16 complete and no depositions have been taken.” (See Mot. at 2.) Below, the court sets 17 forth the relevant legal standard for motions made under Rule 56(d) and then turns to 18 consider whether WSHH should be afforded additional time to conduct discovery before
19 opposing Plaintiffs’ summary judgment motion. 20 Under Federal Rule of Civil Procedure 56(d), if the nonmoving party “shows by 21 affidavit or declaration that, for specified reasons, it cannot present facts essential to 22 justify its opposition, the court may: (1) defer considering the motion or deny it; 1 (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any 2 other appropriate order.” Fed. R. Civ. P. 56(d). To prevail on a Rule 56(d) motion, the
3 party opposing summary judgment “must make ‘(a) a timely application which 4 (b) specifically identifies (c) relevant information, (d) where there is some basis for 5 believing that the information sought actually exists.’” Emps. Teamsters Loc. Nos. 175 & 6 505 Pension Tr. Fund v. Clorox Co., 353 F.3d 1125, 1129 (9th Cir. 2004) (quoting VISA 7 Int’l Serv. Ass’n v. Bankcard Holders of Am., 784 F.2d 1472, 1475 (9th Cir.1986)). 8 Moreover, unless the party requesting a continuance “has not diligently pursued
9 discovery of the evidence,” their request “should be granted almost as a matter of 10 course.” Burlington N. Santa Fe R.R. Co. v. The Assiniboine & Sioux Tribes of the Fort 11 Peck Reservation, 323 F.3d 767, 773-74 (9th Cir. 2003) (internal quotation marks and 12 citations omitted). 13 As WSHH sets forth in an affidavit from its counsel, additional time for discovery
14 is needed to depose: (1) “Shari Bradix, the claims handler primarily responsible for 15 handling, investigating, and evaluating Vandervert’s tender and request for a defense”; 16 (2) attorneys at Lee Smart, the law firm hired by Plaintiffs to defend Vandervert, 17 regarding whether any “instructions and limitations were placed on Lee Smart” by 18 Plaintiffs; and (3) Rick Wetmore, the counsel Vandervert retained, regarding Plaintiffs’
19 efforts to defend and reach a coverage determination on behalf of Vandervert. (See 20 6/23/22 Clapham Decl. (Dkt. # 36) ¶ 8.) WSHH further asserts that these depositions 21 have not yet been scheduled because they will be most useful if they are sequenced after 22 all responsive documents have been produced. (See id.) In opposition, Plaintiffs argue 1 that Rule 56(d) relief is not warranted because Plaintiffs have produced all responsive 2 documents; the discovery WSHH claims to need from Lee Smart and Mr. Wetmore is not
3 essential to its summary judgment defense; WSHH fails to identify the information it 4 needs from Ms. Bradix; and WSHH has not diligently pursued discovery in this matter. 5 (See Resp. at 2, 5-8.) 6 As an initial matter, the information WSHH seeks from Ms. Bradix, Mr. Wetmore, 7 and Lee Smart is sufficiently identified, plainly relevant to WSHH’s defense of its 8 counterclaims, and likely to be obtained from WSHH’s discovery targets. See Emps.
9 Teamsters, 353 F.3d at 1129. For instance, WSHH wishes to depose Ms. Bradix 10 regarding, among other topics, the defense Plaintiffs provided to Vandervert and to ask 11 Ms. Bradix why Lee Smart appeared at a “mediation wholly unprepared and without 12 having retained any experts to address the damages being claimed.” (Reply at 2-3; see 13 also 6/23/22 Clapham Decl. ¶ 8.) If given additional time, WSHH would further depose
14 a representative of Lee Smart regarding whether any “instructions and limitations were 15 placed on” them by Plaintiffs when they were retained to represent Vandervert. (6/23/22 16 Clapham Decl. ¶ 8.) Finally, WSHH would like more time in order to depose Mr. 17 Wetmore “about the nature and extent of a defense provided by” Plaintiffs “and about his 18 attempts to obtain a coverage determination” from Plaintiffs on Vandervert’s behalf.
19 (See id.). Whether Plaintiffs unreasonably denied Vandervert a defense, in breach of 20 their duties as insurers, is central to the counterclaims on which Plaintiffs seek summary 21 judgment. (See Answer ¶¶ 20-40.) As such, WSHH’s ability to defend those 22 // 1 counterclaims will be significantly enhanced if it is able to collect documents from and 2 then depose those most directly involved with Plaintiffs’ defense of Vandervert.
3 In addition, the court does not find that WSHH has been dilatory in its discovery 4 efforts. Although discovery has “been open for more than eight months,” during which 5 time WSHH has apparently not taken any depositions or served any interrogatories 6 (Resp. at 8), discovery does not close in this matter until June 12, 2023 (see Sched. Order 7 (Dkt. # 13)). Moreover, WSHH asserts that it cannot conduct depositions of Ms. Bradix, 8 Lee Smart, or Mr. Wetmore until document discovery is complete. (See 6/23/22
9 Clapham Decl. ¶ 8.) The benefits of sequencing discovery in that manner are obvious 10 and the court concludes that WSHH’s approach is reasonable here, where substantial time 11 remains before discovery closes. There has hardly been time for WSHH to carry out that 12 approach, however, because Plaintiffs finished producing documents on June 15, 2022 13 (Rainwater Decl. (Dkt. # 38) ¶ 4) and then filed their second summary judgment motion
14 the following day (see also MSJ). Likewise, Lee Smart’s first document production was 15 not due until July 5, 2022, a deadline that was set before Plaintiffs moved for summary 16 judgment. (See 6/23/22 Clapham Decl. ¶ 8 (asserting that WSHH cannot schedule a 17 deposition “until after Lee Smart responds to the outstanding subpoena duces tecum”).) 18 Because WSHH has made a timely motion for relief under Rule 56(d) that
19 identifies with sufficient specificity relevant information it seeks additional time to 20 pursue and because WSHH has not been unduly dilatory in its efforts to obtain discovery 21 in this matter, the court concludes that relief under Rule 56(d) is warranted. See Emps. 22 Teamsters, 353 F.3d at 1129. Moreover, because the court has authorized WSHH to add 1 a closely related counterclaim under IFCA (see 7/6/22 Order), denial—as opposed to 2 deferral—of Plaintiffs’ motion is the appropriate and most efficient remedy. See Fed. R.
3 Civ. P. 56(d). Once WSHH has had a reasonable opportunity to complete document 4 discovery and then depose Ms. Bradix, Mr. Wetmore, and a representative of Lee Smart, 5 Plaintiffs will be able to move for summary judgment against WSHH’s counterclaims in 6 a comprehensive fashion.2 8 Accordingly, to permit WSHH a reasonable period of time within which to
9 complete document discovery and then depose Ms. Bradix, Mr. Wetmore, and a 10 representative of Lee Smart, the court ORDERS as follows: WSHH’s motion for relief 11 under Rule 56(d) (Dkt. # 35) is GRANTED; Plaintiffs’ motion for summary judgment 12 (Dkt. # 30) is DENIED without prejudice; and WSHH’s motion to seal an exhibit 13 attached to its summary judgment response (Dkt. # 43) is DENIED as moot.
14 Dated this 7th day of July, 2022. 15 A
16 JAMES L. ROBART 17 United States District Judge 18 19
20 2 WSHH indicates that, once it has conducted its desired discovery, it will also move for summary judgment on its counterclaims. (See Mot. at 22-23.) The parties are encouraged to maintain open lines of communication regarding the potential for cross-motions practice and, if 21 such cross-motions seem likely, to consider proceeding in the manner outlined in the court’s local rules by stipulating to a cross-motions briefing schedule. See Local Rules W.D. Wash. 22 LCR 7(k).