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WESTCHESTER SURPLUS LINES INSURANCE COMPANY v. YAKIMA AIR TERMINAL MCALLISTER FIELD

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:15-cv-03021 Search Pacer
Court Type: 
Federal
US District Court: 
Eastern District of Washington
Date Filed: 
Feb 5 2015

Plaintiff Westchester Surplus Lines Insurance Company (“Westchester”),
by and through its undersigned attorneys, for its Complaint for Declaratory
2
Judgment against the above-captioned Defendants, alleges as follows:
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1.
NATURE OF ACTION
This is an insurance coverage action seeking declaratory relief
pursuant to 28 U.S.C. §§ 2201 and 2202.  Westchester seeks a determination of
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the parties’ rights and obligations under a municipal liability policy it issued to
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Yakima Air Terminal – McAllister Field, as more particularly described below,
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with respect to claims asserted by M.A. West Rockies Corporation/Langdon
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Family Revocable Trust and the Byron and Alice Lockwood Foundation in the
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actions captioned and numbered, Yakima Air Terminal – McAllister Field v.
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M.A. West Rockies Corporation, 10-2-00989-1, and Byron and Alice Lockwood
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Foundation v. M.A. West Rockies Corporation, et al., 14-2-00976-3, both of
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which are pending in the Superior Court for the State of Washington, County of
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Yakima.
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2.
PARTIES
Westchester Surplus Lines Insurance Company is an insurance
company incorporated in Georgia and having its principal place of business in
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Georgia.  Westchester is, therefore, a citizen of the State of Georgia.  
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Westchester is a wholly owned subsidiary of ACE US Holdings, Inc., a

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Delaware corporation, which is a wholly owned subsidiary of ACE Group
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Holdings, Inc., a Delaware corporation, which is a wholly owned subsidiary of
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ACE Limited, a foreign corporation (Switzerland).
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3. Yakima Air Terminal – McAllister Field, is an agency of the City
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and County of Yakima, Washington.  YAT is therefore a citizen of the State of
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Washington. The Yakima Air Terminal, the City of Yakima, and the County of
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Yakima are collectively referred to as “YAT.”
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4. The City of Yakima is a Washington municipal corporation and is
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therefore a citizen of the State of Washington.
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5. The County of Yakima is a Washington municipal corporation and
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is therefore a citizen of the State of Washington.
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JURISDICTION
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6. This Court has jurisdiction by virtue of 28 U.S.C. § 1332, as there
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is complete diversity of citizenship and the amount in controversy exceeds
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$75,000.
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7.
Venue is proper in this judicial district pursuant to 28 U.S.C.
§ 1391, as Defendants are residents of this judicial district and a substantial part
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of the events giving rise to this action occurred in this district.

Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C.
2
§2201(a), this Court has the power to declare all rights, duties, and obligations
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under the relevant insurance policy, whether or not further relief is or could be
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sought.
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The Unlawful Detainer Action.
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FACTS
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9. On or about March 30, 2010, YAT commenced an unlawful
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detainer action against its tenant M.A. West Rockies in the Superior Court for
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Yakima County.  (A true and correct copy of the Summons and Complaint dated
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March 30, 2010, Yakima Air Terminal v. M.A. West Rockies, Yakima County
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Superior Court Case No. 10-2-00989-1, is attached hereto as Exhibit A.)
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10.
YAT contended that M.A. West had breached its lease and failed to
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timely pay its monthly rent under its lease for a ramp which provided access
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from M.A. West’s property to the Yakima Airport runway.   
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11. M.A. West opposed the unlawful detainer proceeding and
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contended in its Answer and other pleadings that it had timely paid its rent.  
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M.A. West also alleged in its Answer that YAT:
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a. Had breached the lease agreement
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b. Had wrongfully withdrawn excessive sums from the lease

c. Had failed to provide proper notice of insufficient lease
payments
d. Had commenced the unlawful detainer action in bad faith to
eject M.A. West from the lease premises
e. Had forced M.A. West into default
(A true and correct copy of the M.A. West’s Answer dated April 16, 2010 is
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attached hereto as Exhibit B.)
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12. On or about May 20, 2010, the Yakima Superior Court ruled in
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favor of YAT, and on June 10, 2010, the court issued a Writ of Restitution,
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which restored possession of the ramp to YAT and directed the Sheriff to
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remove M.A. West Rockies and its property from the ramp.
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13. On August 16, 2010, M.A.West Rockies appealed the eviction to
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the Washington Court of Appeals, Division III.  
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14.
On December 10, 2013, the Court of Appeals reversed the lower
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court’s ruling and held that M.A.West Rockies had been unlawfully evicted.  
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(A true and correct copy of the Court of Appeals’ decision is attached hereto as
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Exhibit C.)  Among other holdings, the Court of Appeals held that
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 M.A. West’s
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attempts to cure alleged defaults had been improperly rejected, that YAT had
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failed to properly apply a security deposit to unpaid rent, and that YAT had
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failed to provide notice of other alleged defaults prior to commencing the
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unlawful detainer proceeding.

The Court of Appeals directed the remand of the case to the trial
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court for entry of judgment that M.A.West was “not guilty of unlawful detainer
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of the premises, that it was unlawfully evicted therefrom, that its lease was not
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forfeited, that the airport was not entitled to a writ of restitution and immediate
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possession.”  The Court of Appeals remanded for further proceedings, including
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an award of attorneys’ fees, appropriate orders to restore the leased premises,
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and restitution if appropriate.
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The Lockwood Claims.
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16. On January 10, 2014, the Byron and Alice Lockwood Foundation
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gave notice of its intent to pursue a tort claim to YAT as an agency of the City
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of Yakima.
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17.
The tort claim alleged that from March 30, 2010 and continuing,
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the Lockwood Foundation was a mortgage holder for the M.A. West property
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and lease, that YAT was aware of Lockwood’s security interest, and that YAT
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failed to properly notify Lockwood that the lease was in default.  
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18. On March 14, 2014, the Lockwood Foundation commenced a
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lawsuit against YAT, the County of Yakima, M.A. West Rockies Corporation,
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the Langdon Family Revocable Trust, and several other entities.  (A true and
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correct copy of the Lockwood Summons and Complaint is attached hereto as

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Exhibit D.)
  The Lockwood Complaint alleges that the Lockwood Foundation
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made several loans to M.A. West Rockies that were secured by the airport
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property and lease.  The Lockwood Foundation alleges that YAT was notified of
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its interest and failed to provide notice to the Lockwood Foundation when the
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alleged lease defaults occurred.  The Lockwood Complaint alleges that the total
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amount of the loans and interest that were secured by the M.A. West property
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and lease are $4,222,337.
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19. The Lockwood Complaint asserts claims against YAT for
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negligence, damages to collateral, negligent misrepresentation and omission,
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breach of contract, trespass, statutory trespass, condemnation, tortious
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interference with contract, and tortious interference with business expectancy.  
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The Lockwood Complaint seeks monetary amounts from YAT for the value of
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the land and/or collateral taken, lost rental income, costs and amounts to repair
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the damages caused by the wrongful taking/intrusion to the property,
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prejudgment interest, costs, attorneys’ fees, expert expenses, and treble damages
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allowed by statute.
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The M.A. West/Langdon Counterclaims.
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20.  On March 13, 2014, the Langdon Family Revocable Trust filed
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statutory tort claims with both the County of Yakima and the City of Yakima.

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The Langdon Trust alleges that M.A. West assigned its claims to the Trust.  The
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tort claim alleges that YAT unlawfully evicted M.A. West and committed
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statutory trespass, intentional and negligent interference with economic
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expectancies and contractual relationships and malicious prosecution.  The
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Langdon Trust estimates its compensatory damages at $7,000,000 plus
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prejudgment interest, reasonable attorneys’ fees, expert witness fees, and treble
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damages for statutory trespass.
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21. On June 25, 2014, the Langdon Trust filed its Second Amended
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Answer and Counterclaims in the Unlawful Detainer Proceeding.  (A true and
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correct copy of the Second Amended Answer and Counterclaims is attached
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hereto as Exhibit E.)  The Langdon Trust asserts claims against YAT for
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wrongful eviction, breach of contract, tortious interference with business
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expectancy and economic relations, trespass and inverse condemnation.
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The Policy and Extended Reporting Period Endorsement.
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22. Westchester issued three successive policies to Yakima Air
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Terminal followed by an Extended Reporting Period Endorsement:  
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Policy No. G24150707 (July 27, 2010 to July 27, 2011);
Policy No. G24150707 (July 27, 2011 to July 27, 2012);
Policy No. EONG24304127001 (July 27, 2012 to July 27, 2013);
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Extended Reporting Period Endorsement (July 27, 2013 to July 27,

The Policies provide public officials liability and public entity liability coverage
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and contain identical provisions unless otherwise indicated.  The Policies
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provide limits of liability of $1,000,000 each claim/aggregate.  Claims expenses
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are subject to a separate $1,000,000 limit and thereafter erode the $1,000,000
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per claim/aggregate limit of liability.
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  The Policies generally provide coverage
for damages and claims expenses for which the public entity becomes legally
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obligated to pay by reason of a claim first made against the public entity and
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reported during the policy period, or, if elected, during the extended reporting
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period.   
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23.
YAT notified Westchester of the adverse Court of Appeals’
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decision on or about December 11, 2013, during the Extended Reporting Period
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Endorsement (the “ERP.”)   
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24. On December 27, 2013, Westchester acknowledged receipt of
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YAT’s notice and issued a general reservation of rights.   On January 15, 2014,
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YAT notified Westchester of the Lockwood tort claim, and on January 30, 2014,
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Westchester acknowledged receipt of the tort claim and issued a reservation of
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rights.
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25.
On March 21, 2014, YAT notified Westchester of the Lockwood
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Complaint dated March 14, 2014.  On March 27, 2014, Westchester

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acknowledged receipt of the Complaint subject to a continuing reservation of
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rights.
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26.
Based upon the date of the reporting of the adverse Court of
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Appeals’ decision and the date of the tort claims, the applicable policy is the
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Extended Reporting Period (ERP), which is subject to the terms and conditions
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of the 2012-13 Policy.  (A true and correct copy of the 2012-13 Policy and ERP
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Endorsement is attached hereto as Exhibit F.)
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Westchester’s Investigation and Coverage Determination.
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27. After receiving notice of the Lockwood and Langdon claims,
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Westchester issued a reservation of rights letter advising YAT that it was
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investigating coverage for these claims.
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28. After completing its investigation, Westchester agreed to defend the
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claims against YAT, the City, and the County, based upon a reservation of its
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right to deny or limit coverage on several grounds and to seek declaratory relief
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establishing its rights and duties.
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CLAIM FOR DECLARATORY RELIEF
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29. An actual and justiciable controversy exists between Westchester
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and YAT, the City, and the County regarding the scope of coverage under the
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Policy’s terms and applicable law.

The 2012-13 Policy contains the following relevant provisions in
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the Insuring Agreement:
 
 
31.
I. INSURING AGREEMENTS
* * * *
 B. Public Entity Liability
 The Insurer will pay on behalf of the Public
Entity all Damages and Claims Expenses for
which the Public Entity becomes legally
obligated to pay by reason of a Claim first
made against the Public Entity and reported
to the Insurer during the Policy Period or, if
elected, the Extended Reporting Period, for
any Wrongful Act taking place prior to the
end of the Policy Period.
The 2012-13 Policy contains the following relevant Definitions:
III. DEFINITIONS
* * * *
D. Claim means:
1. a written demand against any Insured
for monetary Damages or non-
monetary or injunctive relief;
2. a civil proceeding against any Insured
seeking monetary Damages or non-
monetary or injunctive relief,
commenced by the service of a
complaint or similar pleading;
* * * *
K. Damages means compensatory damages,
judgments, any award of prejudgment and
post-judgment interest, and settlements which
the Insured becomes legally obligated to pay
on account of any Claim first made against
any Insured during the Policy Period or, if
elected, the Extended Reporting Period, for
Wrongful Acts to which this Policy applies.  
Such damages include punitive and exemplary
damages and the multiple portion of any
multiplied damage award, if and to the extent
such damages are insurable under the law of
the applicable jurisdiction most favorable to
the insurability of such damages.
* * * *
R.
Interrelated Wrongful Acts means all
Wrongful Acts that have as a common nexus
any fact, circumstance, situation, event,
transaction, cause or series of related facts,
circumstances, situations, events, transactions
or causes.
S. Personal Injury means injury arising out of
one or more of the following offenses:
* * *
2. malicious prosecution;
* * * *
5. wrongful entry or eviction, or other
invasion of the right to private
occupancy.
* * * *
BB. Wrongful Act means:
* * *
2. with regard to Insuring Agreements
I.B., any actual or alleged act, error,
omission, misstatement, misleading
statement, neglect or breach of duty by
the Public Entity; or
* * * *
The 2012-13 Policy contains the following relevant Exclusions:
IV. EXCLUSIONS
* * * *
D. alleging, based upon, arising out of or attributable to
any:
3. Personal Injury . . .
E. alleging, based upon, arising out of or attributable to
the operation of the laws, and principles of eminent
domain, condemnation, inverse condemnation,
temporary or permanent taking, adverse possession
or dedication by adverse use.
* * * *
K. alleging, based upon, arising out of or attributable
to:
1.
breach of any express, implied, actual or
constructive contract, warranty, guarantee or
promise…
* * * *
Q. alleging, based upon, arising out of or attributable
to:
1. any prior or pending litigation or
administrative or regulatory proceeding…
filed on or before the effective date of the first
policy issued and continuously renewed by
the Insurer, or the same or substantially the
same Wrongful Act, fact, circumstance or
situation underlying or alleged therein; or
2.
any other Wrongful Act whenever occurring
which, together with a Wrongful Act
underlying or alleged in such prior or pending
proceeding, would constitute Interrelated
Wrongful Acts.
* * * *
The 2012-13 Policy contains the following relevant provisions
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concerning the Optional Extended Reporting Period:
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34.
VII. EXTENDED REPORTING PERIODS
* * * *
B. Optional Extended Reporting Period
The Public Entity shall have the right, upon
payment of the additional premium set forth in
Item 7A of the Declarations, to any Optional
Extended Reporting Period, for the period set
forth in Item 7B of the Declarations following the
effective date of such cancellation or nonrenewal,
but only for Claims first made during such Optional
Extended Reporting Period and arising from
Wrongful Acts taking place prior to the effective
date of such termination or nonrenewal.
As set forth more particularly below, Westchester is entitled to
declaratory relief establishing that it owes no duty to defend or indemnify the

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defendants from the Lockwood and Langdon claims for the reasons set forth
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below:
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Claim Langdon Lockwood Basis for Non-Coverage
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Wrongful Eviction X  Barred by Exclusion D, Q
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Breach of Contract X X Barred by Exclusion K, Q
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Condemnation/Inverse X X Barred by Exclusion E, Q
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Condemnation
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Tortious Interference
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With Business
Expectancy
X
X
Barred by Exclusion Q
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Trespass X X Barred by Exclusion D, Q
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Negligence  X Barred by Exclusion Q
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Negligent
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Misrepresentation
X
Barred by Exclusion Q
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Damage to Collateral  X Barred by Exclusion Q
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Tortious Interference  X Barred by Exclusion Q
With Contract
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COUNT ONE – EXCLUSION D – PERSONAL INJURY/WRONGFUL
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35.
36.
EVICTION/TRESPASS
Westchester re-alleges the preceding paragraphs.
Exclusion D bars coverage for claims “alleging, based upon, arising
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out of or attributable to any . . . Personal Injury. . . .”

The Policy defines “Personal Injury” as “injury arising out of one
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or more of the following offenses: wrongful entry or eviction, or other invasion
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of the right to private occupancy.”  
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38. The Langdon claim for unlawful eviction (First Cause of Action,
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Langdon’s Second Amended Counterclaims) constitutes a claim for “Personal
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Injury” within the meaning of Exclusion D of the Policy, and is therefore
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excluded from coverage under the Policy.
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39. The Langdon and Lockwood claims for Trespass (Fourth and Fifth
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Causes of Action of Langdon’s Second Amended Counterclaims, and the Fifth
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Cause of Action of the Lockwood Complaint) constitute claims for “Personal
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Injury” within the meaning of the Policy, and therefore fall within Exclusion D
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and are excluded from coverage under the Policy.  
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COUNT TWO – EXCLUSION E – CONDEMNATION/INVERSE
CONDEMNATION
40. Westchester realleges the preceding paragraphs.
41. Exclusion E bars coverage for claims “alleging, based upon, arising
out of or attributable to the operation of the laws, and principles of eminent
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domain, condemnation, inverse condemnation, temporary or permanent taking,
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adverse possession or dedication by adverse use.”

The Langdon claim for inverse condemnation (Sixth Cause of
2
Action, Second Amended Counterclaims) and the Lockwood claim for
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condemnation (Seventh Cause of Action, Complaint) fall within Exclusion E
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and are therefore excluded from coverage under the Policy.  
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COUNT THREE – EXCLUSION K – BREACH OF CONTRACT
43. Exclusion K bars coverage for claims “alleging, based upon, arising
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out of or attributable to . . . breach of any express, implied, actual or constructive
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contract.”
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44.
The Langdon claim for breach of contract (Second Cause of Action,
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Second Amended Counterclaims) and the Lockwood claim for breach of
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contract (the Fourth Cause of Action, Complaint) fall within Exclusion K and
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are therefore excluded from coverage under the Policy.
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COUNT FOUR – EXCLUSION Q – PRIOR AND PENDING
LITIGATION  
45. Exclusion Q.1 bars coverage for claims “alleging, based upon,
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arising out of or attributable to…any prior or pending litigation…filed on or
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before the effective date of the first policy issued and continuously renewed by
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Insurer, or the same or substantially the same Wrongful Act, fact, circumstance
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or situation underlying or alleged therein. . . .”

YAT’s unlawful detainer proceeding was filed on or about
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March 30, 2010.
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47. The first Westchester Policy incepted approximately four months
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later on July 27, 2010.
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48. YAT’s unlawful detainer proceeding was filed before the effective
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date of the first policy issued and continuously renewed by Westchester and
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constitutes a “prior or pending” proceeding within the meaning of the Policy.
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49.
Exclusion Q.2 bars coverage for claims “alleging, based upon,
arising out of, or attributable to … any other Wrongful Act whenever occurring
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which, together with a Wrongful Act underlying or alleged in such prior or
14
pending proceeding, would constitute “Interrelated Wrongful Acts.”
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50.
The Policy defines “Wrongful Acts” as “any actual or alleged act,
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error, omission, misstatement, misleading statement, neglect or breach of duty
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by the Public Entity.”
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51. The Policy defines “Interrelated Wrongful Acts” as “all Wrongful
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Acts that have as a common nexus any fact, circumstance, situation, event,
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transaction, cause or series of related facts, circumstances, situations, events,
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transactions or causes.”

All of the Langdon Counterclaims (Wrongful Eviction, Breach of
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Contract, Tortious Interference, Trespass – RCW 4.24.630, Trespass, and
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Inverse Condemnation) allege “Wrongful Acts” that are “based upon, arise out
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5
of, or are attributable to” . . . the unlawful detainer proceeding, or “the same or
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substantially the same Wrongful Act, fact, circumstance, or situation underlying
7
or alleged” in the unlawful detainer proceeding, or “any other Wrongful Act
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whenever occurring which together with the Wrongful Act underlying or alleged
10
in such prior or pending proceeding, would constitute Interrelated Wrongful
11
Acts.”
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 Therefore, Exclusion Q bars coverage for all of the Langdon
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Counterclaims and Westchester has no obligation to provide a defense or
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indemnity for any portion of these claims.
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53. All of the Lockwood claims against YAT (Negligence and Damage
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to Collateral, Negligent Misrepresentation, Breach of Contract, Trespass,
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Statutory Trespass, Condemnation, Tortious Interference with Contract, and
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Tortious Interference with Business Expectancy) allege “Wrongful Acts” that
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are “based upon, arising out of or attributable to” the unlawful detainer
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proceeding, or “substantially the same Wrongful Act, fact or circumstance or
23
situation underlying“ the unlawful detainer proceeding, or “any other Wrongful
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Act whenever occurring which together with the Wrongful Act underlying or

alleged in such prior or pending proceeding, would constitute Interrelated
2
Wrongful Acts.”  Therefore, Exclusion Q bars coverage for all of the Lockwood
3
Claims and Westchester has no obligation to provide a defense or indemnity for
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5
any portion of these claims.
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PRAYER FOR RELIEF
WHEREFORE, Plaintiff Westchester Surplus Lines
Insurance Company
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respectfully requests that this Court adjudicate and declare the rights of the
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parties, and that the Court declare as follows:
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1. That the Extended Reporting Period Endorsement applies to
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Langdon’s Second Amended Counterclaims and Lockwood’s Complaint;
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2. That Coverage I.B. Public Entity Liability applies to Langdon’s
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Second Amended Counterclaims and Lockwood’s Complaint;
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3. That Langdon’s claim for unlawful eviction (First Cause of Action
18
of the Second Amended Counterclaims) constitutes a claim for “Personal
19
Injury” within the meaning of Exclusion D of the Policy, and is therefore
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excluded from coverage under the Policy.
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4. That the Langdon and Lockwood claims for Trespass (Fourth and
23
Fifth Causes of Action of the Second Amended Answer, and the Fifth Cause of
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25
Action of the Lockwood Complaint) constitute claims for “Personal Injury”

within the meaning of Exclusion D of the Policy, and are therefore excluded
2
from coverage under the Policy;
3
5. That the Langdon claim for inverse condemnation (Sixth Cause of
4
5
Action, Second Amended Counterclaims) and the Lockwood claim for
6
condemnation (Seventh Cause of Action, Complaint) fall within Exclusion E
7
and are therefore excluded from coverage under the Policy.
8
9
6. That the Langdon claim for breach of contract (Second Cause of
10
Action, Second Amended Counterclaims) and the Lockwood claim for breach of
11
contract (the Fourth Cause of Action, Complaint) fall within Exclusion K and
12
13
are therefore excluded from coverage under the Policy.
14
15
7. That all of the Langdon Counterclaims (Wrongful Eviction, Breach
16
of Contract, Tortious Interference, Trespass – RCW 4.24.630, Trespass, and
17
Inverse Condemnation) allege “Wrongful Acts” that are “based upon, arise out
18
19
of, or are attributable to” … the unlawful detainer proceeding, or “the same or
20
substantially the same Wrongful Act, fact, circumstance, or situation underlying
21
or alleged” in the unlawful detainer proceeding. Therefore, Exclusion Q bars
22
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coverage for all of the Langdon Counterclaims and Westchester has no
24
obligation to provide a defense or indemnity for any portion of these claims.
25
8. That all of the Lockwood claims against YAT (Negligence and
2
Damage to Collateral, Negligent Misrepresentation, Breach of Contract,
3
Trespass, Statutory Trespass, Condemnation, Tortious Interference with
4
Contract, and Tortious Interference with Business Expectancy) allege
5
6
“Wrongful Acts” that are “based upon, arising out of or attributable to” the
7
unlawful detainer proceeding, or “substantially the same Wrongful Act, fact or
8
circumstance or situation underlying“ the unlawful detainer proceeding, or “any
9
10
other Wrongful Act whenever occurring which together with the Wrongful Act
11
underlying or alleged in such prior or pending proceeding, would constitute
12
Interrelated Wrongful Acts.”  Therefore, Exclusion Q bars coverage for all of
13
14
the Lockwood Claims and Westchester has no obligation to provide a defense or
15
indemnity for any portion of these claims.
16
9. That Westchester is entitled to withdraw the defense being provided
17
18
to YAT, the City of Yakima and the County of Yakima under the Policy.

10. Grant such other relief as the Court may deem just and proper.
th
DATED this 5
 day of February, 2015

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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