STANLEY A. BASTIAN, District Judge.
Before the Court is Plaintiff's Motion for Summary Judgment, ECF No. 13. Defendants do not oppose the motion, which was heard without oral argument. For the reasons stated herein, the Court grants Plaintiff's motion and enters judgment in its favor.
On June 27, 2018, Plaintiff filed a Complaint for Declaratory Relief seeking a declaratory judgment that it has no obligation to defend or otherwise indemnify Defendants in an underlying action.
The underlying action at issue in this case arises from the business operations of Defendants' Steps Re-entry, Terri Mayer, and Brent Mayer (collectively "Steps"), for which Plaintiff provided a policy of insurance. In the state court complaint, Defendants Kenneth Wenham and Lincoln Capital, LLC (collectively "Lincoln Capital") allege Steps was a vendor for the Washington Department of Corrections ("DOC") providing housing for clients participating in the Voucher Program. ECF No. 14-1. Steps allegedly requested Lincoln provide housing for approximately thirty clients in exchange for payment. Lincoln provided that housing. However, for four months, Steps received payment from the DOC and failed to forward that payment to Lincoln after repeatedly promising to do so. Lincoln states claims for breach of oral contract, fraud, unjust enrichment, conversion, negligent misrepresentation, and violations of the Washington Consumer Protection Act, Wash. Rev. Code. §§ 19.86.010.
Plaintiff is defending Steps in the underlying action subject to a reservation of rights. It now seeks a declaration that it owes no duty to defend or indemnify pursuant to the terms of the applicable insurance policy. The relevant terms of the insurance policy are as follows:
ECF No. 15-1 at 12-27.
ECF No. 15-1 at 34-35.
ECF No. 15-1 at 42.
Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing Fed. R. Civ. P. 56(c)). There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The moving party has the burden of showing the absence of a genuine issue of fact for trial. Celotex, 477 U.S. at 325.
In addition to showing that there are no questions of material fact, the moving party must show that it is entitled to judgment as a matter of law. Smith v. Univ. of Wash. Law Sch., 233 F.3d 1188, 1193 (9th Cir. 2000). The moving party is entitled to judgment as a matter of law if the non-moving party has failed to make a sufficient showing on an essential element of a claim on which the non-moving party has the burden of proof. Celotex, 477 U.S. at 323.
A motion for summary judgment cannot be granted simply because there is no opposition, even if the failure to oppose violated a local rule. Henry v. Gill Indus., 983 F.2d 943, 950 (9th Cir. 1993). The moving party must demonstrate the absence of genuine issues of material fact, regardless of whether the party against whom the motion for summary judgment is direct has filed any opposition. Cristobal v. Siegel, 26 F.3d 1488, 1491 (9th Cir. 1994).
Under Washington law, a "duty to defend `arises at the time an action is first brought, and is based on the potential for liability.'" Woo v. Fireman's Fund Ins. Co., 161 Wn.2d 43, 52 (2007) (quoting Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 760 (2002)) (emphasis added in Woo). An insurer has a duty to defend "when a complaint against the insured, construed liberally, alleges facts which could, if proven, impose liability within the policy's coverage." Id. at 52-53 (citing Truck Ins. Exch., 147 Wash.2d at 760) (internal quotation marks omitted). "An insurer is not relieved of its duty to defend unless the claim alleged in the complaint is `clearly not covered by the policy.'" Id. at 53 (quoting Truck Ins. Exch., 147 Wash.2d at 760)). Thus, the duty to defend must be determined from the complaint.
Each of Lincoln's causes of action outlined in the Complaint arise from a common set of facts: Steps requested Lincoln provide housing for DOC Voucher clients; Lincoln provided housing; Steps failed to pay after promising to do so; Steps benefited financially at Lincoln's expense. ECF No. 14-1. The Court finds that there is no conceivable coverage under the insurance policy based on these allegations.
First, there is no coverage under the bodily injury or property damage provisions of the policy, nor under the personal and advertising injury. This case indisputably does not involve damage to a person, property, or reputation. Second, while the errors and omissions endorsement provides Plaintiff will pay for "those sums that the insured becomes legally obligated to pay as `damages' as a result of an error or omission' to which this insurance applies," ECF No. 15-1 at 34, this endorsement does not cover the alleged acts. An error or omission is a negligent act occurring in the course of business. Id. at 42. Each of the allegations in the Complaint relate to an intentional, fraudulent act; no negligence is alleged here. Third, the errors and omissions endorsement excludes from coverage injuries arising from breach of contract and fraudulent conduct. Lincoln alleges Steps breached its oral contract to pay for housing services and failed to do so after repeatedly assuring Lincoln payment was forthcoming. These allegations squarely fall within the errors and omissions exclusions, and therefore, no coverage exists.
Because the allegations in the underlying action are clearly not covered by the policy, Plaintiff has no duty to defend or indemnify Steps in the state court proceedings. See Woo, 161 Wash.2d at 53. Accordingly, Plaintiff's Motion for Summary Judgment, ECF No. 13, is granted.
Accordingly,
1. Plaintiff's Motion for Summary Judgment, ECF No. 13, is
2. The District Court Executive is hereby directed to