Clear Creek Retirement Plan Ii Llc, a Washington limited liability company v. Foremost Insurance Company Grand Rapids Michigan, a Michigan corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CLEAR CREEK RETIREMENT PLAN II
LLC, a Washington limited liability
company,
Plaintiff-Appellant,
v.
FOREMOST INSURANCE COMPANY
GRAND RAPIDS MICHIGAN, a Michigan
corporation,
Defendant-Appellee.
No. 18-35725
D.C. No. 3:17-cv-05564-RBL
MEMORANDUM*
Appeal from the United States District Court
for the Western District of Washington
Ronald B. Leighton, District Judge, Presiding
Submitted August 28, 2019**
Seattle, Washington
Before: HAWKINS, McKEOWN, and BYBEE, Circuit Judges.
Clear Creek Retirement Plan II LLC (“Clear Creek”) brought claims under
Washington’s Insurance Fair Conduct Act (“IFCA”) against its insurance provider,
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
FILED
AUG 30 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Foremost Insurance Company Grand Rapids Michigan (“Foremost”), relating to
coverage of five modular homes. In 2011, David Cecie and Rusty Fields formed
Clear Creek. The parties are familiar with the facts so we do not repeat them here.
IFCA provides relief against insurers for unreasonable denials of coverage.
RCW § 48.30.015. “An insurer does not have a reasonable basis for denying
coverage and, therefore, acts without reasonable justification when it denies
coverage based upon suspicion and conjecture.” Indus. Indem. Co. of the Nw., Inc.
v. Kallevig, 792 P.2d 520, 526 (Wash. 1990). “[A]n insurer must make a good
faith investigation of the facts before denying coverage and may not deny coverage
based on a supposed defense which a reasonable investigation would have proved
to be without merit.” Id. On the other hand, an “insurer is entitled to summary
judgment if reasonable minds could not differ that its denial of coverage was based
upon reasonable grounds.” Smith v. Safeco, Ins. Co., 78 P.3d 1274, 1277 (Wash.
2003).
We conclude that Foremost did not act unreasonably when denying Clear
Creek’s claim. Foremost relied on several sources of evidence to determine the
loss of the modular homes was due to a business dispute rather than theft.
Foremost’s logs, proof of loss reports, and interview with Fields and his counsel
show that Fields had updated Foremost that he had located the modular homes and
knew who took them, in part because the homes were subject to a pending civil

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action. Given this record, it was not unreasonable for Foremost to deny coverage
because no qualifying theft had occurred.
Although the district court states that Foremost relied on the police report,
Foremost’s denial letter states that it did not locate this report. However, the lack
of the police report does not affect the reasonableness of Foremost’s determination.
The final police report concluded that the matter was “strictly a civil matter.”
Further investigation regarding this report would not have made Foremost’s
determination unreasonable, and in fact, the report supports the reasonableness of
Foremost’s defense. See Indus. Indem. Co., 792 P.2d at 526. We reject Clear
Creek’s contention that Foremost should have located and relied on only the initial
police report describing Fields’s self-reported theft while ignoring the final report.
Drawing all reasonable inferences in favor of Clear Creek, Clear Creek has
not presented sufficient evidence that Foremost acted unreasonably. We affirm the
district court’s grant of summary judgment to Foremost.
AFFIRMED.

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