United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
J. Lodge United States District Judge
before the Court in the above-entitled matter are the
Defendants' Motion for Partial Judgment on the Pleadings
(Dkt. 19) and Plaintiff's Motion for Summary Judgment.
(Dkt. 20.) The parties have filed their responsive briefing
and the matters are now ripe for the Court's
fully reviewed the record, the Court finds that the facts and
legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding further
delay, and because the Court conclusively finds that the
decisional process would not be significantly aided by oral
argument, the Motions shall be decided on the record before
this Court without oral argument.
6, 2014, Evanston Insurance Company (“Evanston”)
initiated these proceedings by filing a Complaint and Demand
for Jury Trial asserting two claims against the
Defendants/Counterclaimants, Bosski, Inc. and Columbia River
Moto-Sports, Inc. (Dkt. 1.) Evanston's claims against
Bosski included requests for a declaratory judgment and
recoupment. As alleged in Evanston's Complaint, Evanston
seeks a declaration of the parties' rights and
responsibilities with respect to an insurance policy Evanston
issued to Defendant/Counterclaimant Bosski, Inc. in relation
to a lawsuit filed against Bosski, Inc. in Oregon state court
(the “Underlying Action”). Attached to the
Complaint are four exhibits: (1) the Summons and Complaint in
the Underlying Action (Dkt. 1-1), (2) the insurance policies
at issue (Dkt. 1-2), (3) a series of email messages (Dkt.
1-3); and (4) a November 11, 2013 demand letter from an
Oregon law firm representing the plaintiff in the Underlying
Action, Paul Macy, directed to the Defendants (Dkt. 1-4).
seeks a declaration that it has no duty to defend or
indemnify Defendant Bosski in the Underlying Action because
Bosski failed to comply with the insurance policy's
Claims Reporting Provision. (Complaint, ¶¶
29-30, Dkt. 1.) The recoupment claim is for the costs
Evanston has covered by providing Bosski with a defense in
the Underlying Action. (Complaint at ¶¶
30, 2014, Bosski, Inc. filed an Answer, Counterclaim, and
Demand for Jury Trial. (Dkt. 6.) Bosski's counterclaim
includes two requests for declaratory judgment, an estoppel
claim, and a request for attorneys fees pursuant to Idaho
Code Sections 41-1839, 12-120, 12-121, and Rule 54 of the
Federal Rules of Civil Procedure. (Answer, Dkt. 6.)
In the first claim for declaratory relief, Bosski seeks a
judgment stating that it is entitled to coverage in the
Underlying Action including both defense and indemnity costs.
(Answer at ¶¶ 22-23.) In the second claim
for declaratory relief, Bosski seeks a judgment that
Evanston's conduct in denying the claims, asserting late
notice, asserting a right to recoupment, and proceeding with
litigation constitutes insurance bad faith. (Answer
at ¶¶ 33-36.) Bosski's estoppel claim states
that Evanston should be precluded from denying coverage
because it took Evanston four months to notify Bosski that
Evanston was denying coverage. (Answer at
instant motions, Bosski seeks partial judgment on the
pleadings solely with regard to Evanston's claim for
recoupment. (Dkt. 19.) Evanston seeks summary judgment on:
(1) its declaratory judgment claim on the basis that there is
no insurance coverage because Bosski failed to comply with a
timely notice provision in the insurance policy and (2)
Bosski's claim for insurance bad faith on the basis that
Evanston provided Bosski with a defense in the Underlying
Action even though there is no coverage under the policy.
reasons set forth below, the Court will grant Bosski's
motion and deny Evanston's. The Court can determine, as a
matter of law, that the recoupment claim is not permitted
under Idaho law. However, the coverage issues require
interpretation of an ambiguous insurance policy provision,
the Claims Reporting Provision, and disputes of fact
concerning substantial compliance with that provision that
must be reserved for the trier of fact.
is owned by Ryan Zelinsky and John Boguslawski, exclusively.
(John Boguslawski Declaration ¶ 2, Dkt. 26-2.)
Bosski's primary business is the development and sale of
a line of ATV wagons and aluminum ATV/UTV/snowmobile ramps.
(Boguslawski Dec. at ¶ 1.)
29, 2011, Boguslawski submitted an application for general
liability insurance to Bosski's local insurance agent,
the Leavitt Group of Boise (“Leavitt
Group”).(Boguslawski Dec. at ¶ 3.)
Boguslawski understood that the Leavitt Group approved the
application. (Boguslawski Dec. at ¶ 4.) On
September 20, 2011, Boguslawski, on behalf of Bosski, wrote a
check to the Leavitt Group in the amount of $4, 000 to cover
portions of the annual insurance premium for the general
liability insurance policy. (Boguslawski Dec. at
¶ 4, Ex. 2.)
result of these interactions with the Leavitt Group, Bosski
obtained General Liability Insurance Policy No. SP-853897
effective from September 2011 to September 20, 2012 (the
“2011/2012 Policy”). (Boguslawski Dec.
at ¶ 5, Ex. 2.) Before the 2011/2012 Policy expired,
Bosski renewed its insurance through the Leavitt Group and
obtained General Liability Insurance Policy No. 858306 for
claims made between September 11, 2012 and September 20, 2013
(the “2012/2013 Policy”). (Boguslawski
Dec. at ¶ 6, Ex. 4.) In addition, before the
2012/2013 policy had expired, Bosski purchased one-year tail
coverage through the Leavitt Group. (Boguslawski
Dec. at ¶ 7.)
undisputed that the 2011/2012 Policy, 2012/2013 Policy and
tail coverage were all issued by Plaintiff Evanston. (Dkt.
20-2, ¶ 1.) Nevertheless, all of Bosski's policy
premiums were sent to the Leavitt Group in Boise.
Id. at ¶ 4. In fact, the Leavitt Group of Boise
handled all applications, issued the primary policies, issued
tail coverage, collected premiums, and otherwise responded to
Bosski's coverage questions. (Boguslawski Dec.
at ¶ 15.) Boguslawski has submitted a sworn declaration
that, based on this contact, he believed the Leavitt Group
was Evanston's agent. (Boguslawski Dec. at
April 5, 2012, Zelinski received a call from Paul Macy.
(Ryan Zelinsky Declaration, ¶ 3, Dkt. 26-4.)
Macy informed Zelinski that he had broken his back while
using one of Bosski's ramps. (Zelinsky Dec. at
after speaking with Macy, Zelinsky drafted an email to
Boguslawski informing him of the interaction. (Zelinsky
Dec. at ¶ 4.) Also on April 5, 2012
Zelinsky received an email from Macy with pictures of the
ramp at issue. (Zelinsky Dec. at ¶ 5.)
next day, Macy called Zelinsky's cell phone 13 times in a
12-minute period. (Zelinsky Dec. at ¶
10.) Zelinsky then called Boguslawski and they
decided that Boguslawski would return Macy's call.
(Zelinsky Dec. at ¶ 7, Boguslawski
Dec. at ¶ 9.)
speaking with Macy, both Boguslawski and Zelinsky reached the
conclusion that Macy was acting strange and erratic, was not
credible, and was trying to perpetuate some kind of scam.
(Zelinsky Dec. at ¶¶ 3, 6-7;
Boguslawski Dec. at ¶¶ 9-10). Nonetheless,
Bosski, through Boguslawski, contacted the Leavitt Group that
same day and notified the Leavitt Group of the contact with
Macy. (Boguslawski Dec. at ¶ 11). An agent of
the Leavitt Group informed Bosski that there was nothing
further required unless and until Bosski received a demand
letter or something more formal. (Boguslawski Dec.
at ¶ 11).
September 2013, Bosski purchased tail coverage from the
Leavitt Group for the 2012/2013 policy. (Zelinsky
Dec. at ¶ 8.) When purchasing tail coverage, Bosski
again mentioned the Macy communications with the Leavitt
Group and made certain to purchase tail coverage in the event
Macy made a more formal claim. (Zelinsky Dec. at
November 11, 2013, Bosski received a demand letter from
Macy's counsel. (Boguslawski Dec. at ¶ 13.)
Bosski forwarded that letter via email to the Leavitt Group.
(Boguslawski Dec. at ¶ 15).
does not dispute that it received notice of the Macy claim on
November 14, 2013. “Bosski . . . provided notice of the
Macy matter to Evanston by email dated November 14, 2013,
when it forwarded the attorney's letter.” (Dkt.
20-2, ¶ 14.) Evanston received such notice
through the Leavitt Group. (Boguslawski Dec. at
¶ 17, Ex. 7.) The email message from the Leavitt Group
to Evanston states, “Please see the attached from our
insured, we need to open a claim... [sic].”
(Boguslawski Dec. at Ex. 7.)
November 26, 2013, a senior claims examiner from the Markel
Group, apparently acting on behalf of Evanston, contacted
Boguslawski. (Boguslawski Dec. at ¶
17.) This was the first direct contact Bosski had with either
the Markel Corp. or Evanston Insurance. (Boguslawski
Dec. at ¶¶ 16-17.)
February 28, 2014, Macy filed a lawsuit against Bosski in
Oregon state court, thus initiating the Underlying Action.
(Boguslawski Dec. at ¶ 26, Ex. 14.) Evanston
hired and paid for Bosski's defense counsel in the
Underlying Action. (Boguslawski Dec. at ¶¶
March 26, 2014, Evanston sent Bosski a letter stating that it
would provide Bosski with a defense in the Underlying Lawsuit
but was also taking the position that there was no coverage.
(Complaint, Ex. F, Dkt. 1-6.) Evanston advised
Bosski that it was denying coverage under the 2012/2013
Policy because the claim was not first made during the policy
period and under the 2011/2012 Policy based on late notice.
Id. at p. 5.
Motion for Judgment on the Pleadings
12(c) provides that “[a]fter the pleadings are
closed-but early enough not to delay trial-a party may move
for judgment on the pleadings.” Fed.R.Civ.P. 12(c). A
motion for judgment on the pleadings pursuant to Rule 12(c)
challenges the legal sufficiency of the opposing party's
pleadings. See, e.g., Westlands Water Dist. v. Bureau of
Rec., 805 F.Supp. 1503, 1506 (E.D. Cal. 1992).
motion for judgment on the pleadings should only be granted
if “the moving party clearly establishes on the face of
the pleadings that no material issue of fact remains to be
resolved and that it is entitled to judgment as a matter of
law.'” Hal Roach Studios, Inc. v. Richard
Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir.
1989). Judgment on the pleadings is also proper when there is
either a “lack of cognizable legal theory” or the
“absence of sufficient facts alleged under a cognizable
legal theory.” Balistreri v. Pacifica Police
Dept., 901 F.2d 696, 699 (9th Cir. 1988).
reviewing a Rule 12(c) motion, “all factual allegations
in the complaint [must be accepted] as true and construe[d]
... in the light most favorable to the non-moving
party.” Fleming v. Pickard, 581 F.3d 922, 925
(9th Cir. 2009). Judgment on the pleadings under Rule 12(c)
is warranted “only if it is clear that no relief could
be granted under any set of facts that could be proved
consistent with the allegations.” Deveraturda v.
Globe Aviation Sec. Servs., 454 F.3d 1043, 1046 (9th
Cir. 2006) (internal citations omitted).
Motion for Summary Judgment
for summary judgment are governed by Rule 56 of the Federal
Rules of Civil Procedure. Rule 56 provides, in relevant part,
that “[t]he court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a).
Supreme Court has made it clear that under Rule 56 summary
judgment is mandated if the non-moving party fails to make a
showing sufficient to establish the existence of an element
which is essential to the non-moving party's case and
upon which the non-moving party will bear the burden of proof
at trial. See Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). If the non-moving party fails to make such a
showing on any essential element, “there can be no
‘genuine issue of material fact, ' since a
completely failure ...