No. 27966-9-III.The Court of Appeals of Washington, Division Three.
January 7, 2010.
Appeal from a judgment of the Superior Court for Franklin County, No. 08-2-50667-6, Craig J. Matheson, J., entered March 9, 2009.
Reversed and remanded by unpublished opinion per Korsmo, J., concurred in by Kulik, C.J., and Brown, J.
KORSMO, J.
The trial court granted summary judgment dismissing American States Insurance’s (ASIC) claim against S.S. Eq., Inc. (SSEQ). Because the record does not show that SSEQ had a beneficial interest in the insurance policy, we reverse and remand.
FACTS
SSEQ leased a combine to Andrewjeski Livestock (Andrewjeski) for $249,560.95, to be paid in five annual payments of $49,912.19. The lease ran from June 1, 2004, through June 1, 2009. At the end of the lease, the combine was to be returned to SSEQ. SSEQ then transferred all of its interest and title to the lease to Agricredit.
The lease required Andrewjeski to assume all risk from possession and operation of the combine, and SSEQ was to be held harmless. In the event the combine was destroyed, Andrewjeski was to pay SSEQ the greater of the remaining lease payments or the fair market value of the combine at the time of loss. Andrewjeski was responsible for all necessary maintenance and repairs. The lease also required Andrewjeski to insure the combine with ASIC.[1] The lease concluded by providing that no title or ownership interest would vest in Andrewjeski.
In 2006 the combine’s Positive Straw Discharge (PSD) belt caught fire. Andrewjeski replaced the belt and told SSEQ’s shop foreman about the fire. In the spring of 2007, the manufacturer sent campaign letters to Andrewjeski urging it to contact SSEQ to have work done on the self-leveling shoe frame. Andrewjeski brought the machine in to SSEQ in August 2007 for work. Andrewjeski allegedly told the service manager, Ron Belt, to fix whatever needed fixing. Mr. Belt later recalled that he was told only to look the machine over. The only work done was the factory recommended modifications to the self-leveling shoe. In order to do that work, the rear bearing and discharge belt portions of the PSD were removed. No work was done on them. If the machine had been brought in for maintenance, the bearings would have been inspected and probably replaced due to the number of hours the machine had been operated.
Andrewjeski picked up the combine on October 5, 2007. On October 24, 2007, the combine was destroyed by a fire that started in a bearing on the PSD roller. ASIC paid out $250,000 under the insurance policy. $47,062.31 went to Andrewjeski and $212,937.69 went to Agricredit.
Andrewjeski filed a complaint against SSEQ for negligent repair to the combine, resulting in property damage and lost income. SSEQ moved for summary judgment on the property damage claim[2] on January 20, 2009. ASIC substituted in as plaintiff, asserting its subrogation rights on behalf of both Andrewjeski and Agricredit. ASIC filed a motion for summary judgment regarding SSEQ’s liability.[3]
The trial court granted SSEQ’s motion for summary judgment on March 9, 2009, and dismissed the action. The court orally noted that Andrewjeski had no property interest under the lease contract. SSEQ was the owner of the combine and, arguably, the tortfeasor as well.
This appeal timely followed.
ANALYSIS
An appellate court reviews a summary judgment order de novo, performing the same analysis as the trial court Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124
(2000). The facts, and all reasonable inferences to be drawn from them, are viewed in the light most favorable to the nonmoving party. Id. If there is no genuine issue of material fact, summary judgment will be granted if the moving party is entitled to judgment as a matter of law. Id.
The moving party bears the initial burden of establishing that it is entitled to judgment because there are no disputed issues of material fact. Young v. Key Pharm., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989). If a defendant makes that initial showing, then the burden shifts to the plaintiff to establish there is a genuine issue for the trier of fact Id. at 225-226. The plaintiff may not rely on speculation or having its own affidavits accepted at face value. Seven Gables Corp. v. MGM/UA Entm’t Co., 106 Wn.2d 1, 13, 721 P.2d 1 (1986). Instead, it must put forth evidence showing the existence of a triable issue. Id.
SSEQ argues here, as it successfully argued in the trial court, that it was the owner of the combine and the party for whom the insurance policy existed. It is well-settled that an insurance company cannot pursue a subrogation claim against its own insured. E.g., Rizzuto v. Morris, 22 Wn. App. 951, 955-956, 592 P.2d 688, review denied, 92 Wn.2d 1021
(1979).
SSEQ contends this case is governed by General Insurance Co. of America v. Stoddard Wendle Ford Motors, 67 Wn.2d 973, 410 P.2d 904 (1966). There the purchaser, Findley, bought a truck on a sales contract from Stoddard Wendle, which assigned the sales contract to Pacific Finance. Findley purchased insurance, as required by the sales contract, naming Pacific Finance as the loss payee. Pacific Finance later assigned the contract back to Stoddard Wendle. Id.
at 974. Stoddard Wendle modified the truck for Findley’s logging operations. Before any payments were made on the truck, the truck crashed after the modifications failed due to alleged negligent work by Stoddard Wendle. Stoddard Wendle repossessed the truck. Id. at 974-975.
General Insurance paid Pacific for the loss and then sued Stoddard Wendle as the subrogee of either Findley or Pacific. Pacific passed the payment on to the repair shop that worked on the truck, while Stoddard Wendle paid the policy deductible to the repair shop. Id. at 975-976. Stoddard Wendle had an agreement with Pacific that Pacific would suffer no loss out of the sales contract. Our Supreme Court determined that under these facts, Pacific was merely the agent for Stoddard Wendle, which had a beneficial interest in the insurance policy Id. at 978. Because Stoddard Wendle was not a “third party” to the insurance relationship, it could not be sued for its alleged tort. Id. at 979.
In contrast, ASIC argues that this case is controlled b Johnny’s Seafood Co. v. City of Tacoma, 73 Wn. App. 415, 869 P.2d 1097 (1994). There the City of Tacoma leased land to Johnny’s Seafood, which placed a building on the property. In the course of another development project, the City allegedly damaged the leased property. Id. at 417. In defense of a suit filed by Johnny’s insurer, the City asserted that as property owner it could not be sued for damages done to its own property. Id. at 418, 423. Division Two of this court disagreed, reasoning that the damages to the leased property did not result from the City’s actions as landlord, but from its alleged negligence in the course of the other project. There was no indication that the parties intended to preclude litigation for such actions. Id. at 423-425.
Likening this case to Stoddard Wendle, SSEQ argues that ASIC stepped into the shoes of Andrewjeski, which had no ownership interest in the combine. SSEQ claims that Agricredit stepped into its shoes due to the assignment and that, therefore, SSEQ is the beneficiary of the insurance policy paid on behalf of Agricredit. In essence, SSEQ claims that despite the assignment of all its interests in the contract and the combine to Agricredit, it still retains those interests. We do not agree. Unlike Stoddard Wendle, SSEQ was not reassigned the lease contract from Agricredit.[4] At the time of the alleged tort, and again at the time of the loss, SSEQ was essentially a third party to the lease agreement.[5] It held no interest in the contract or in the combine. Agricredit held those interests. The fact that Agricredit obtained those interests from SSEQ did not make SSEQ a party with a beneficial interest in the insurance policy. It was not a named insured, nor did it have any insurable interest in the combine or the contract.
At the time of its alleged tortious act in repairing the combine, SSEQ had no interest in the implement. It was as much a third party to that proceeding as if it had never originated the lease. Unlike the dealer in Stoddard Wendle, SSEQ did not have a beneficial interest in the combine or the contract.
Both ASIC and SSEQ claim to stand in Agricredit’s shoes. ASIC had such standing by reason of its insurance policy with Agricredit. SSEQ did not because it had assigned away its interests to Agricredit. Accordingly, Agricredit could sue SSEQ for the latter’s alleged negligence. As subrogee, ASIC can maintain that same action.
The judgment of the trial court is reversed and the case remanded for further proceedings.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
Kulik, A.C.J. and Brown, J., concur.
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