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Servco Pacific Insurance v. Axis Insurance
Citations: 129 F. Supp. 3d 1143; 2015 U.S. Dist. LEXIS 118789; 2015 WL 5178031Docket: Case No. C15-0563-JCC
Court: District Court, W.D. Washington; September 4, 2015; Federal District Court
The Court granted Plaintiff Servco Pacific Insurance's motion for summary judgment and denied Defendant Axis Insurance's motion. The central issue is whether Servco is entitled to coverage under a hole-in-one insurance policy for a prize won by Gigi Jacobsen during the Lynwood Rotary Golf Tournament. Servco had purchased a policy covering four hole-in-one prizes, including a $30,000 Acura car for a hole-in-one at the designated Target Hole, Hole 15. The policy stipulated that for prizes exceeding $25,000, two witnesses were required, and the Target Hole had to be set at a minimum yardage of 150 yards for men and 140 yards for women. On the tournament day, Jacobsen achieved a hole-in-one, but the women’s tee was mistakenly set at 112 yards, and only one witness was present, leading Axis to deny Servco's claim. Servco subsequently filed a lawsuit against Axis for coverage, procedural failures, and unreasonable claim denial. The Court determined that there were no genuine disputes over material facts, applying the summary judgment standard under Rule 56 of the Federal Rules of Civil Procedure, and found in favor of Servco. A motion for summary judgment necessitates the opposing party to present specific facts demonstrating a genuine issue for trial, as outlined in Matsushita Elec. Indus. Co. v. Zenith Radio Corp. Material facts can influence the case outcome, and a dispute is considered genuine if a reasonable jury could rule for the non-moving party. Conclusory statements in affidavits are inadequate, and missing facts cannot be presumed, as established in Lujan v. National Wildlife Federation. Summary judgment is appropriate when a party fails to show an essential element of their case that they bear the burden of proving at trial, per Celotex Corp. v. Catrett. In diversity actions, federal courts apply state substantive law and federal procedural law. In Washington, insurance policies are treated as contracts and are interpreted liberally to provide coverage when possible. Policies are construed as a whole, considering their plain meaning to ascertain coverage. Axis denied coverage to Servco based on two issues: the hole-in-one was achieved from 112 yards instead of the required 140 yards, and only one witness was present instead of the stipulated two. An insurance contract allocates risk, where the insured pays a premium corresponding to the risk the insurer assumes. Hole-in-one insurance exemplifies this, as higher value prizes and easier shots increase risk. The policy specified no yardage under 130 yards for men and 110 yards for women and required an additional witness for prizes over $25,000. Servco deviated from these terms by placing the tee closer and providing only one witness, impacting Axis's risk but not contradicting the parties' original intent. Axis indicated that Servco would have faced a higher premium for insuring a hole at 112 yards instead of 140 yards, highlighting the risk allocation inherent in their agreement. 112 yards falls within the insured yardage limits specified by Axis. Axis is willing to insure a prize valued at $25,000, contingent on the presence of one witness. The Court deems reformation of the Policy necessary to align with the parties' intent to provide coverage to Servco, considering the risk assumed by Axis. Reformation is defined as an equitable remedy to correct discrepancies in written agreements. Given that only one witness was present at the Target Hole, Axis's liability under the Policy is capped at $25,000, which will be adjusted by the premium value for insuring the 112-yard Target Hole, minus the premium already paid by Servco. Servco is granted relief, with the Court approving the Plaintiffs' Cross-Motion for Summary Judgment and denying the Defendant's Motion for Summary Judgment. The parties must determine the offset amount within sixty days; if they fail to reach an agreement, the Court will set the amount. The case is to be statistically closed, and Axis's insurance policy was issued by its agent, ACECO Hole-In-One Insurance. For clarity, Axis and ACECO are referred to collectively as 'Axis.'