Opinion Information Sheet

			

    IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

LAKE CHELAN SHORES HOMEOWNERS                       )      No. 66636-3-I
ASSOCIATION, a Washington non-profit                )
entity,                                             )
                                            ) 
                      Appellant,                    ) 
                                                    )      ORDER GRANTING MOTION
       v.                                           )      MOTION TO PUBLISH
                                                    )
ST. PAUL FIRE & MARINE INSURANCE                    )
COMPANY, a foreign corporation,                     )
                                                    ) 
                      Respondent,                   )
                                                    )
       and                                          )
                                                    )
NORTHERN INSURANCE COMPANY OF                       )
NEW YORK, a foreign corporation,                    )
                                                    ) 
                      Defendant.                    ) 

       St. Paul Fire & Insurance Company and other interested parties filed a motion to 

publish the unpublished opinion filed on November 28, 2011 in the above matter.  

Appellant Lake Chelan Shores Homeowners responded to the motion.  

       Upon review of the motion for publication and the opposition to the motion, a

majority of the panel has determined this motion should be granted.  

       Now, therefore, it is hereby

       ORDERED that respondent's motion to publish is granted.

       DATED this ____ day of ________________ 2012.

                             FOR THE COURT: 

No. 66636-3-I/2

                             Presiding Judge

    IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

LAKE CHELAN SHORES HOMEOWNERS                       )      No. 66636-3-I
ASSOCIATION, a Washington non-profit                )
entity,                                             )      DIVISION ONE
                                                    ) 
                      Appellant,                    )
                                                    ) 
       v.                                           )
                                                    )
ST. PAUL FIRE & MARINE INSURANCE                    )
COMPANY, a foreign corporation,                     )
                                                    )      UNPUBLISHED OPINION
                      Respondent,                   )
                                                    )
       and                                          )
                                                    )
NORTHERN INSURANCE COMPANY OF                       )
NEW YORK, a foreign corporation,                    )
                                                    ) 
                      Defendant.                    )      FILED:  November 28, 2011
       spearman, j.  --  The main issue in this insurance coverage case is whether the 

method by which expert witnesses for Lake Chelan Shores condominiums homeowners 

association ("LCS") established that "collapse" conditions occurred years earlier was 

generally accepted within the scientific community.  In its summary judgment motion, 

St. Paul Fire & Marine Insurance Company ("St. Paul") set forth evidence indicating the 

methodology of LCS's experts was not generally accepted.  The burden then shifted to 

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No. 66636-3-I/3

LCS to come forward with evidence the methodology was generally accepted.  Because 

LCS provided no such evidence, the trial court properly concluded there was no 

admissible evidence of "collapse," a prerequisite for coverage under the policy.  We 

affirm.

                                            FACTS

       St. Paul insured the premises of LCS under three annual policies, effective from 

August 3, 1996 to August 3, 1999.  Each of those policies provided coverage for 

"collapse" that occurred during the policy period:

       Collapse coverage.  We'll insure covered property against the risk 
       of direct physical loss or damage involving collapse of a building or 
       any part of a building.

       The collapse must be due to any of the following causes of loss:
       . . .
       ?   hidden decay;

The policies contained the following relevant exclusions from coverage:

       Exclusions  --  Losses We Won't Cover

       . . .
       Collapse.  We won't cover loss resulting from collapse other than that 
       described in the collapse coverage under the Covered Causes Of Loss 
       section.

       . . .

       Wear  --  tear  --  deterioration  --  animals.  We won't cover loss caused or 
       made worse by:

      ?    wear and tear;
      ?    deterioration, mold, wet or dry rot, rust or corrosion including fungal or 
           bacterial contamination; . . .

       The LCS condominiums were built between 1980 and 1994.  LCS first 

discovered a problem with rot in mid-2006.  LCS hired Olympic Associates, an 

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No. 66636-3-I/4

architectural and engineering firm, to inspect and report on the problem.  By April 2007, 

LCS had decided to contract for a repair project that would include removal and 

replacement of all siding.  On July 11, 2007, LCS adopted a resolution for financing the 

project, and on July 27, 2007, it submitted design documents to the City of Chelan 

Building Department.  

       LCS tendered its claim to St. Paul on July 5, 2007.  On July 23, a St. Paul 

property adjuster contacted counsel for LCS, and on July 26, the adjuster sent a letter 

to counsel asking for documents relating to the loss.  Counsel for LCS did not respond 

to the request.  On August 27, counsel for LSC sent a letter to St. Paul requesting 

reimbursement for $303,424 in investigation costs.  Three days later, on August 30,

2007, LCS sued St. Paul for breach of contract, bad faith, and Consumer Protection Act 

(CPA) violations. 

       In July 2009, LCS disclosed its experts' opinions.  On the basis of these 

opinions, St. Paul denied the claim and moved for partial summary judgment as to 

coverage.  St. Paul argued there was no coverage, because LCS's experts had no 

generally accepted scientific basis on which to link the current building decay to a state 

of "collapse" during the St. Paul policy periods.  In the alternative, St. Paul asked for a 

Frye1 hearing on LCS's experts' methods.  The trial court agreed with St. Paul, and 

granted the motion.  

       LCS then moved to compel discovery as to its remaining extra-contractual 

claims.  St. Paul moved for summary judgment on the extra-contractual claims.  LCS 

       1 Frye v. United States, 293 F. 1013 (D.C. Cir. 1923).

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No. 66636-3-I/5

sought a CR 56(f) continuance.  The trial court denied LCS's motion, and granted St. 

Paul's motion for summary judgment, dismissing the rest of the claims.  LCS appeals.

                                        DISCUSSION

                         Summary Judgment on Coverage Claims

       The trial court granted St. Paul's motion for summary judgment on coverage.  

The court agreed that the opinions of LCS's experts that the condominiums were in 

"collapse" 10 years earlier was not based on any theory generally accepted in the 

scientific community.  The trial court thus found LCS had failed to present evidence of 

coverage, and it granted the motion.  For the reasons described herein, we agree with 

the trial court.

       LCS offers multiple arguments as to why this was error, but those arguments rest 

upon two main, interconnected premises: (1) conflicting opinion testimony offered by 

opposing experts cannot be resolved at summary judgment and (2) the trial court 

essentially weighed evidence as if it was presiding over a Frye hearing as opposed to a 

summary judgment hearing.  LCS is correct that disputed opinion testimony, offered by 

qualified experts, cannot be resolved at summary judgment.  See Postema v. Pollution 

Control Hearings Bd., 142 Wn.2d 68, 119-20, 11 P.3d 726 (2000).  In its brief, LCS 

provides a list comparing and contrasting the expert deposition and declaration 

testimony of its experts versus St. Paul's expert.  

       But LCS misunderstands the nature of St. Paul's motion and the trial court's 

ruling.  St. Paul's motion for partial summary judgment argued the undisputed evidence 

gathered during discovery showed that the scientific bases upon which the opinions of

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No. 66636-3-I/6

LCS's experts rested were not generally accepted within the scientific community.  The 

motion also requested a Frye hearing in the event the court determined there was 

disputed evidence on the issue.  

       For expert testimony to be admissible, it first must satisfy the Frye standard and 

then must meet the other criteria in ER 702.  See State v. Gregory, 158 Wn.2d 759, 

829-30, 147 P.2d 1201 (2006).  Under Frye, expert testimony is admissible where:

       (1) the scientific theory or principle upon which the evidence is based 
       has gained general acceptance in the relevant scientific community of 
       which it is a part; and (2) there are generally accepted methods of 
       applying the theory or principle in a manner capable of producing 
       reliable results.

State v. Sipin, 130 Wn. App. 403, 414, 123 P.3d 862 (2005).  Both the theory 

underlying the evidence and the methodology used to implement the theory must be 

generally accepted in the scientific community for evidence to be admissible under 

Frye.  Gregory, 158 Wn.2d at 829.  When applying the Frye test, courts do not 

determine if the scientific theory underlying the proposed testimony is correct; rather, 

courts "must look to see whether the theory has achieved general acceptance in the 

appropriate scientific community."  Grant v. Boccia, 133 Wn. App. 176, 179, 137 P.3d 

(2006) (quoting State v. Riker, 123 Wn.2d 351, 359-60, 869 P.2d 43 (1994)).  To 

perform a Frye analysis, courts consider three sources of information:

       To determine whether a consensus of scientific opinion has been 
       achieved, the reviewing court examines expert testimony, scientific 
       writings that have been subject to peer review and publication, 
       secondary legal sources, and legal authority from other jurisdictions.  
       However, "the relevant inquiry is general acceptance by the scientists, 
       not the courts."

Eakins v. Huber, 154 Wn. App. 592, 599-600, 225 P.3d 1041 (2010) (citations omitted).

                                               6 

No. 66636-3-I/7

       In its motion, St. Paul set forth what it believed showed a lack of general 

acceptance.  The only evidence purporting to show a state of collapse from hidden 

decay during the St. Paul policy periods came in the form of two opinions from LCS's

experts.  One of the experts, Justin Franklin, was a civil engineer at Olympic 

Associates.  Regarding whether it was possible to backdate from the present rot

condition to the initial onset of a state of collapse, Franklin sent an email in 2006 

saying it could not be determined:

       We did an investigation on a building in Chelan which has lots of rotten 
       framing.  The attorney for the HOA would like to know if we can estimate 
       when the rot occurred.  Apparently their insurance coverage ended in 
       2002 and of course he would like us to state the rot was present in 2002.  
       I told him that all we can say is that the rot presently exists but that we 
       can not [sic] state when the rot and subsequent SSI occurred.

At his 2009 deposition, however, he claimed to be able to trace the progression of 

decay at the LCS properties with only two pieces of information: (1) the date each 

building was built and (2) the depth of the rot when it was uncovered during 

remediation in 2007-2009.  He applied a formula, y = ax2 + c, to trace the progression 

of rot between these two times.  The formula means that the percentage of decay "y,"

progresses according to the square of the number of years "x," times a decay rate "a,"

plus a constant "c." The constant "c" allows for a time lag between completion of 

construction and the start of decay, which Franklin assumed to be one year.

       Franklin then applied the formula y = ax2 + 1 to every area in which Olympic 

Associates had identified a collapse condition during its 2007-2009 inspection. This 

application resulted in a series of curves purporting to plot the progression of rot at 

each location from the time of construction to the time the rot was discovered by 

                                               7 

No. 66636-3-I/8

Olympic Associates.  Franklin assigned a "collapse" point at the first point the rot 

reached a collapse condition, and then compared that date to policy periods.  

       Franklin's equation did not come from any scientific literature.  Instead, he got it 

from another Olympic Associates engineer, Lee Dunham.  When asked, "[w]hat work 

has Mr. Dunham done to verify the accuracy of that equation that you know of?",

Franklin testified, "I don't know."  Franklin also testified that the engineers at Olympic 

Associates simply assumed decay began one year after construction was complete.  

He did not testify that the assumption was generally accepted in the scientific 

community.MSS Franklin described his calculations as "educated guesses" and was 

unable to identify any other person or literature stating his formula is a proper equation 

for estimating rot progression.   

       LCS's second expert was Kevin Flynn, a wood scientist from California.  Flynn

could not identify any support in the scientific community for the proposition that decay 

advances according to the square of the number of years as is set forth in Franklin's 

equation.  LCS hired Flynn because it claimed Flynn's use of a software package called 

"TimberLife" validated Franklin's equation.  But neither Flynn nor any other witness 

testified that it was generally accepted in the scientific community to use TimberLife to 

determine or confirm when a state of collapse began by working backward from present 

rot conditions.  Instead, Flynn testified that TimberLife is a design tool intended to 

guide building designers in selecting appropriate building materials.  It is not forensic 

software that predicts timber life values with precision.  

       In its response to the summary judgment motion, LCS did not dispute any of this 

                                               8 

No. 66636-3-I/9

information about the scientific bases for the expert opinions.  Instead, the response 

simply repeated the opinions and noted that LCS's experts "rely upon long accepted 

scientific knowledge and their own education, training and experience" in providing the 

opinions.  LCS had Franklin submit a declaration (with numerous exhibits), the bulk of 

which was spent explaining how his formula works and providing examples of the back 

dating.  The only part of Franklin's declaration that came close to addressing whether 

his formula was generally accepted within the scientific community was the following 

paragraph:

       This is a formula defining an exponential curve which approximates my 
       observations, and those of other engineers in the field.  Thus, this 
       formula is merely an equation for graphing the wood rot's lag phase 
       and accelerated growth phase that is universally accepted in the 
       scientific community.  Equations such as this are commonly used by 
       engineers and others for various applications.

This paragraph states only that it is generally accepted in the scientific community that 

rot has a lag phase and an accelerated growth phase; it says nothing about whether 

the formula is generally accepted within the scientific community as a method of back 

dating when rot has progressed to the point of collapse.

       Likewise, the vast bulk of Flynn's declaration is spent discussing his 

background, the validity of Franklin's data, and the possible confirmation of that data by 

the TimberLife software.  Only one paragraph appears to discuss the merits of St. 

Paul's allegations regarding the general acceptance of Franklin's formula:

       Thus, while no single mathematical model has been accepted to the 
       exclusion of others, the concept of applying a mathematical model such 
       as Mr. Franklin's to approximate the exponential curve that describes the 
       progress of wood decay is generally accepted in the scientific 
       community.

                                               9 

No. 66636-3-I/10

At most, this paragraph simply states that models approximating exponential curves 

that describe wood decay are generally accepted, but it does not address the critical 

issue: whether the use of such formulas, and in particular, Franklin's formula, to back 

date to the time when the collapse condition began, is generally accepted in the 

scientific community.

       LCS is correct that in general, the moving party on summary judgment bears the 

initial burden of showing the absence of an issue of material fact.  Young v. Key 

Pharm., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989).  However, where a plaintiff 

"'fails to make a showing sufficient to establish the existence of an element essential to 

that party's case, and on which that party will bear the burden of proof at trial,'" the trial 

court should grant the motion.  Id. at 225 (quoting Celotex Corp. v. Catrett, 477 U.S. 

317, 322, 91 L.Ed.2d 265, 106 S.Ct. 2548 (1986)). A moving defendant may meet the 

initial burden by "'showing' -- that is, pointing out to the [trial] court -- that there is an 

absence of evidence to support the nonmoving party's case." Young, 112 Wn.2d at 

225 n.1, (quoting Celotex, 477 U.S. at 325).  That is exactly what happened here: St. 

Paul pointed to an absence of evidence that the bases of the opinions offered by LCS's

experts were generally accepted and LCS failed to respond.  In light of this unrebutted 

evidence, the trial court did not err in concluding that the opinions were inadmissible 

and that LCS could not prove a collapse condition existed during the coverage period.  

Accordingly, the trial court properly granted St. Paul's summary judgment motion.

                     Summary Judgment on Extra-Contractual Claims

       LCS next argues the trial court erroneously granted St. Paul's motion for 

                                              10 

No. 66636-3-I/11

summary judgment on its extra-contractual claims, namely the claims for bad faith and 

CPA violations arising from the alleged failure to adequately investigate, both under a 

common law duty to investigate and a Washington Administrative Code-imposed duty 

to investigate. We reject LCS's arguments.  

       Generally, "[a]n insurer must make a good faith investigation of the facts 

supporting a claim and may not deny coverage if a reasonable investigation would 

have proved the insurer's defense to be without merit."  Capelouto v. Valley Forge Ins. 

Co., 98 Wn. App. 7, 19-20, 990 P.2d 414 (1999) (citing Industrial Indem. Co. v. 

Kallevig, 114 Wn.2d 907, 917, 792 P.2d 520 (1990)).  LCS contends that because St. 

Paul did not undertake its own investigation of the rot, i.e., by removing the exterior 

cladding on the condominiums to try to determine when the "collapse" occurred, LCS 

was forced to "incur the full cost of stripping and recladding all 21 buildings at Lake 

Chelan Shores."  We disagree.

       As is described above, the method by which LCS claims St. Paul should have 

attempted to determine the date of "collapse" a decade earlier was not generally 

accepted in the scientific community.  It is difficult to say the trial court erred in 

concluding such an investigation would not have been "reasonable."  Capelouto, 98 

Wn. App. at 19.   Moreover, any costs LCS incurred in recladding the buildings was not 

proximately caused by any alleged failure to investigate by St. Paul.  Panag v. Farmers 

Ins. Co. of Washington, 166 Wn.2d 27, 64, 204 P.3d 885 (2009) ("If the investigative 

expense would have been incurred regardless of whether a violation existed, causation 

cannot be established") (citing Sambor v. Omnia Credit Servs., Inc., 183 F.Supp.2d 

                                              11 

No. 66636-3-I/12

1234 (D.Haw. 2002)). Indeed, it is undisputed that LCS had decided to contract for a 

repair project that would include removal and replacement of all siding by April 2007, 

about three months before LCS even tendered to St. Paul.  The trial court thus properly 

dismissed LCS's extra-contractual claims.

                         Denial of Motions to Compel and Continue

       LCS also contends the trial court abused its discretion by denying two motions: 

(1) a CR 56(f) continuance of St. Paul's summary judgment motion on the extra-

contractual claims and (2) a motion to compel discovery regarding St. Paul's 

investigation of LCS's claims.  We reject the arguments for the reasons described 

herein.

       A trial court's denial of a motion to compel or a CR 56(f) motion for a 

continuance are reviewed for an abuse of discretion.  See Clarke v. Office of Attorney 

General, 133 Wn. App. 767, 777, 138 P.3d 144 (2006); Mossman v. Rowley, 154 Wn. 

App. 735, 742, 229 P.3d 812 (2009).  "A court abuses its discretion when it bases its 

decision on unreasonable or untenable grounds."  Clarke, 133 Wn. App. at 777

(quoting Brand v. Dep't of Labor & Indus., 139 Wn.2d 659, 665, 989 P.2d 1111 (1999)).  

       Here, the CR 56(f) motion sought a continuance of St. Paul's summary judgment 

motion on extra-contractual claims "until a reasonable date following St. Paul Fire & 

Marine's compliance with any order issued by this Court following hearing on the 

Plaintiff's Motion to Compel Discovery[.]" The motion to compel discovery sought: St. 

Paul's "subrogation file;" documents "relating to the investigation of this claim in an 

unredacted condition;" and supplemental responses to interrogatories about St. Paul's 

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No. 66636-3-I/13

involvement in other claims regarding back timing of rot.  

       The motion to compel thus sought information relating to St. Paul's alleged 

deficient investigation.  But as is described above, the method by which LCS claims St. 

Paul should have attempted to investigate was not generally accepted in the scientific 

community, and any costs LCS incurred in recladding the buildings was not proximately 

caused by an alleged failure to investigate by St. Paul.  In short, the motion sought 

information not reasonably calculated to lead to admissible evidence, see CR 26(b)(1), 

and there was no need to continue the summary judgment hearing to obtain such 

information.  As such, the trial court did not abuse its discretion by denying the motion 

to compel and the CR 56(f) motion for a continuance.

       Affirmed.

WE CONCUR:

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