Asko Processing, Inc v. Kibble & Prentice Holding Company, 2:17-cv-01393

Background

Asko Processing operated three nearby properties (434, 456, 462 N. 35th St.) and identified one as its "warehouse" used for storage and shipping.
Citizens Insurance, via broker Kibble & Prentice, insured Asko beginning in 2011 and annually renewed BI (business income) coverage: $1,190,000 was placed on the 456 address and $200,000 on the 462 address.
Asko contends the parties mutually intended the $1,190,000 BI limit to apply to Asko’s warehouse (the store of customer merchandise), which Asko says was actually the 462 property; Citizens’ underwriting paperwork labels 456 as the warehouse.
On September 30, 2014 a fire at 462 shut down operations; Asko sought reformation so the $1,190,000 BI limit would apply to the damaged 462 property; Citizens refused and paid the $200,000 limit for 462.
Asko sued for reformation, breach of contract, insurer bad faith, IFCA, and CPA claims; both parties moved for summary judgment.
The court denied both summary judgment motions, finding genuine disputes of material fact about intent, reformation, and related issues.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether insurance policy should be reformed for mutual mistake so $1,190,000 BI applies to 462	Parties mutually intended the $1,190,000 BI limit to cover Asko's warehouse (462); written placement was a mistake	Written policy documents, SOVs, and renewals show $200,000 on 462 and $1,190,000 on 456; evidence of intent is mixed	Denied summary judgment for both; genuine factual dispute on intent and material mistake precludes reformation on summary judgment
Whether Citizens breached the insurance contract by paying only $200,000 to 462	If reformation is granted, Citizens breached by not paying $1,190,000	Citizens paid the policy limits as written ($200,000) and thus satisfied contractual obligations absent reformation	No summary judgment; breach claim remains because it depends on reformation outcome
Whether Citizens acted in bad faith by refusing reformation and other acts	Citizens’ refusal to reform and refusal to extend suit deadline constitute bad faith	Citizens had reasonable basis to deny reformation and acted consistently with policy terms; payment of $200,000 was reasonable	Denied summary judgment for both; reasonableness of insurer conduct is a factual question intertwined with reformation issue
Whether IFCA and CPA claims survive summary judgment	Denial of coverage/reformation and alleged regulatory violations support IFCA/CPA claims	No unreasonable denial of coverage; cited WACs not applicable; IFCA requires unreasonable denial	Denied summary judgment; IFCA/CPA claims depend on factual issues about reasonableness and are unresolved at summary judgment

Key Cases Cited

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
Crane v. Conoco, 41 F.3d 547 (9th Cir. 1994) (summary judgment evidence view)
O’Melveny & Meyers v. FDIC, 969 F.2d 744 (9th Cir. 1992) (weight given to evidence on summary judgment)
Rocky Mountain Fire & Casualty Co. v. Rose, 62 Wn.2d 896 (contract reformation for mutual mistake)
Wilhelm v. Beyersdorf, 100 Wn. App. 836 (reformation and mistake standards)
Simonson v. Fendell, 101 Wn.2d 88 (materiality test for reformation)
St. Paul Fire & Marine Ins. Co. v. Onvia, 165 Wn.2d 122 (bad faith elements for insurer)
Mutual of Enumclaw Ins. Co. v. Dan Paulson Const., 161 Wn.2d 903 (insurer bad faith principles)
Smith v. Safeco Ins. Co., 150 Wn.2d 478 (bad faith usually a jury question)
Pleasant v. Regence Blue Shield, 181 Wn. App. 252 (reasonable basis for denial is defense to bad faith/CPA claims)