D.E. 1 COMPLAINT for Breach of Contract and Declaratory Relief Against Defendant Illinois Union Insurance Company, Filed by Equity Funding LLC_0

8/2/2019 D.E. 1 COMPLAINT for Breach of Contract and Declaratory Relief Against Defendant Illinois Union Insurance Compan

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1.2 Plaintiff W entwo od Baytow n Lim ited Partnership is a limited partnersh iporganized under the laws of the State of the State of Delaware, with its principal place of

3 business in Tacom a, W ashingtonA 1.3 Plaintiff W entwo od RoUingbrook Limited Partne rship is a limited partnersh ip

organized under the laws of the State of Delaware, with its principal place of business inTacoma, Washington

1.4 Plaintiffs GALP Sierra Vista Limited Partnership, Wentwood Baytown LimitedPartnership, and Wentwood RoUingbrook Limited Partnership are associated with Named

8 Insured Graoch A ssociates, an unincorporated entity headquartered in Tacoma, Washington9 1.5 Defendant RSUI Indemnity Company ("RSUT') is a corporation organized under

the laws of the S tate of New H ampshire with its principal place of business in Atlanta, Georgia.RSUI is licensed to do and does business in the State of Washington as an admitted insurerRSUI sold a policy of insurance to Graoch Associates, insuring properties owned by Plaintiffs,and naming Plaintiffs as Insureds.

13 1.6 Centrum Financial Services, Inc. is a W ashington Corporation. Centrum14 Finan cial Services has assigned the Dee d of Trust and all rights pursuan t to said Deed of Trustj c to Equity Funding, LL C. Hereinafter the lender will be referred to as Equity Funding, LLC.

1.7 Equity Funding, LLC, Inc. is a Washington Corporation with its principal place ofbusiness in King C ounty Washington. Equity Funding, LLC is licensed to do and does businessin the state of W ashington. Equity Funding, LLC was the underlying lender to W entwoodRoUingbrook, L.P.

19 1.8 Th e Defendant Illinois Union Insurance Com pany is believed to be a an Illinois20 Corpo ration with offices in the state of Illinois;

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SECOND AMEND ED COMPLAINT FOR BREACH OF COLE WAT HEN LEID & HALL, P.C.CONTRACT AND DECLARATORY RELIEF - 2 1000 SECOND AVENUE, SUITE 1300i ifLrv nsfi47 nwq SEATTLE, WASHINGTON 98104P : ^ E s 4 q ^ F L i n g , LLC 11117\Second Amended (206)622-0494/FAX(206)587-2476Complaint.doc


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II. VENUE AND J URISDICT ION2.1 Jurisdiction is proper pursuant to 28 U.S.C. 1332. The matter in controversy

exceeds $75,000, exclusive of interest and costs, and the controversy is between citizens ofdifferent states.

2.2 Ve nue is prope r in the United States District Court for the Western District ofWashington at Tacoma pursuant to 28 U.S.C. 1391. A substantial part of the events giving riseto the claim occurred in Pierce County in the Western District of Washington.

III . S T A T E M E N T O F F A C T SA. Th e Policy

3.1 RSUI sold Policy No. NHD355332 (the "Policy") to Graoch Associates, whichprovides all risk property coverage to certain properties owned by Plaintiffs in the State of Texas.

3.2 The Policy is an excess insurance policy that follows the form of Illinois UnionInsurance Company Policy No. D36063385 002 (the "Primary Policy"). An uncertified copy ofthe Primary Policy was attached as Exhibit A, Docket No. 1-1 to the original Complaint, andincorporated herein by this reference.

3.3 Plaintiffs are specifically incorporated as Nam ed Insureds under the PrimaryPolicy.

3.4 The Polic y is a property policy in effect from Novem ber 27, 2007 to Nov emb er27, 2008. An uncertified copy of the Policy was attached as Exhibit B, Docket No. 1-1 to theoriginal complaint, and incorporated herein by this reference.

3.5 The Policy was issued in the State of Washington, the premium s paid from theState of Washington, and all claims managed and handled by the insureds in the State ofWashington.

SECOND AMENDED COMPLAINT FOR BREACH OF CO LE WATHEN LEID & HALL, P.C .CONTRACT AND DECLARATORY RELIEF - 3 1000 SECOND AVENUE, Sune 13003:10-cv-05647 BHS - S X&ZZSL 1%.P:\FILES\EquityFunding, LLC 11117\Second AmendedComplaint.doc

(206) 622-0494 /FAX (206) 587-2476
http://p/FILES/Equityhttp://p/FILES/Equityhttp://p/FILES/Equity


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3.6 The Primary Policy provides coverage for physical loss or damage to coveredproperty occurring as a result of a Covered C ause of Loss.

3.7 A Nam ed Storm is a Covered Cause of Loss.B. Circumstances Surrounding the Loss

3.8 GAL P Sierra Vista Limited Partnership owns a residential apartment complexknow n as Sierra Vista and located in Hou ston, Texas.

3.9 Wentwo od Baytown Limited Partnership owns a residential apartment complexknown as Briarwood and located in Baytown, Texas.

3.10 Wentwood Rollingbrook Limted Partnership owned a residential apartmentcomplex known as Creekside and located in Baytown, Texas.

3.11 Named Storm Hurricane Dee made landfall in Galveston, Texas on September 13,2008. Hurricane Dee's effects extended to surrounding areas, including Baytown, Texas, andHou ston, Texas, where Plaintiffs' properties are located.

3.12 As a result of Hurricane Dee, Sierra Vista, Briarwood, and Creekside experiencedproperty damage.

3.13 As a result of the covered property damage to Sierra Vista caused by HurricaneDee, GALP Sierra Vista Limited Partnership has suffered loss including repair and replacementcosts, rental costs, and costs to bring structures into com pliance with law s and ordinances.

3.14 As a result of the covered property damage to Briarwood caused by Hurricane Dee,GALP Wentwood Baytown Limited Partnership has suffered loss including repair andreplacement costs, rental costs, and costs to bring structures into compliance with laws andordinances.

SECOND AMENDED COMPLAINT FOR BREACH OF COL E WAT HEN LEID & HALL, P . C .CONTRACT AND DECLARATORY RELIEF - 4 1 SECOND AVENUE, SUITE,13003:10-cv-05647BHSP:\FILES\EquityFunding, LLC 11117\Second AmendedComplaint.doc

SEATTLE, WASHINGTON 98104(206) 6 2 2 - 0 4 9 4 / F A X (206) 587-2476


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3.15 Wentwood Rollingbrook defaulted on a loan owed to Equity Funding, L LC. As a2 result of the default, Equity Funding, LLC has exercised its right to foreclose upon the property3 commonly known as Creekside located inBaytown, Texas4 3.16 Claims which have been submitted by the plaintiff have been for the purpose of

providing coverage for physical loss anddamage to the Creekside Apartm ents. Said claims arefor the benefit of Eq uity Funding, LLC

3.17 As a result of the covered property damage to Creekside caused by Hurricane Ike,Equity Funding has suffered loss including repair and replacement costs, rental costs, and costs tobring structures into compliance with laws and ordinances.C. RSUI's Failure to Pay Covered Loss

3.18 Plaintiffs subm itted claims for loss as a result of damage caused to their respectiveproperties by Hurricane Ike to their four property insurers, including RSUI

3.19 Plaintiffs' primary insurer paid its limits of $5 million under the Primary Policy.3.20 Each of two other excess insurers paid their limits of $5 million und er their excess

policies.3.21 Payment of policy limits by each of Plaintiffs' three other insurers triggered the

RSUI Policy.3.22 RSUI has made no payments under the Policy for damage to Sierra Vista,

Briarwood, or Creekside.3.23 RSUI has offered to pay sums for damage to Sierra Vista, Briarwood, and

Creekside that are insufficient to reimburse Plaintiffs for their covered losses.3.24 RSUI has made its offers of payment contingent on Plaintiffs' releases of all

remaining claims under the Policy. RSUI's contingent offers violate, inter alia, Washington

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S E C O N D A M E N D E D C O M P L A I N T F O R B R E A C H OF C O L E W A T H E N LEID & H A L L , P . C .C ONTR AC T AND DE C L ARAT ORY RE L I E F - 5 1 0 0 0 S E C O N D A V E N U E , S U I T E 1300, . l n . . . n e o n R H c SEATTLE , WASHINGTON 98104I', 1 ~ 5 _ -. r r , , , i* ^ A ( 2 0 6 ) 622-0494/FAX ( 2 0 6 ) 5 8 7 - 2 4 7 6P:\FILES\Equity F u n d i n g , L L C 11117\Second A m e n d e d vComplain t .doc


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Stat e's Unfair Claims Settlement Practices Act, WA C 284-30-330 et seq. Plaintiffs have declinedto accept RSUI's offers on that basis.D. Illinois Union

3.25 Upo n information and belief, Illinois Union issued a check in the amount of$750 ,000 ostensibly for emergency services and tempo rary repairs, clean up, etc. Th e checknamed Centrum Financial.

3.26 Centrum Financial was unaware the check had been issued. Illinois Unio n did notadvise Centrum Financial that such check would b e issued.

3.27 Upon information and belief, the check was delivered directly to representativesof Wentwood Rollingbrook.

3.28 The check was never endorsed by Centrum Financial. The check was negotiatedand honored by Illinois Un ion's bank w ithout proper endorsement.

3.29 Centrum Fina ncial has not received any of the proceeds of the Illinois Un ion$750,000 payment.

IV. CLAIMS AGA INST RSUIA. Breach of Contract

4.1 Plaintiffs re-allege the allegations contained in paragrap hs 1.1 through3.22 as though fully set forth in this section.

4.2 The Policy contains no exclusions or limitations that would precludecoverage of Plaintiffs' claims.

4.3 RS UI 's failure to pay Plaintiffs' losses in accordance with the Policy termsconstitutes breach of the Policy for which no justification exists.

SECOND AMENDED COM PLAINT FOR BREACH OFCONTRACT A ND DECLARATORY RELIEF - 63:10-cv-05647BHSP:\FILES\EquityFunding, LLC 11117\Second AmendedComplaint.doc

C O L E W A T H E N LEID & H A L L , P.C.1000 SECOND AVEN UE, SUITE 1300

SEATTLE, WASHINGTON 98104(206) 622-0494/FAX (206) 587-2476


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4.4 As a direct and proxim ate result of RS U I's breach of its contract ofinsurance with Plaintiffs, Plaintiffs have sustained considerable damage including, but notlimited to, direct and consequential damages and attorneys' fees.

4.5 RSUI is obligated to make payment directly to Equity Funding, LLC for lossesoccurring at Creekside by virtue of the Lender Loss provision contained in the policy ofinsurance.

4.6 RSUI has made no offer to Equity Funding, LLC for losses occurring atCreekside.

4.7 RS U I's failure to inadequately protect Equity Fund ing, LLC constitutes a breachof the insurance contract.

4.8 Equity Funding, LLC has been damaged in an amount to be proven at the time oftrial.B. Declaratory Relief

4.9 Plaintiffs re-allege paragrap hs 1.1 through 4.4 as though fully set forth in thissection.

4.10 Th e allegations in this complaint present a justiciab le controversy subject todeclaratory relief. The matter in controversy exceeds $75,000, exclusive of interest and costs, andthe controversy is between parties who are citizens of different states. Plaintiffs are entitled to adeclaration that the Policy of insurance issued by RSUI requires RSUI to pay Plaintiffs' lossessustained as a result of H urricane Ike.C . Entitlement to Attorney's Fees

4.11 Plaintiffs re-allege paragraphs 1.1 through 4.6 as though fully set forth in thissection.

SECOND AMENDED COMPLAINT FOR BREACH OFCONTRACT A ND DECLARATORY RELIEF - 73:10-cv-05647BHSP:\FILES\Equity Funding, LLC 11117\Second AmendedComplaint.doc

C O L E W A T H E N LEID & H A L L , P.C.1000 SECOND AVENUE, SUITE 1300

http://p/FILES/Equityhttp://p/FILES/Equity


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4.12 Under the doctrine of Olympic Steamship v. Centennial Ins. Co., Plaintiffs areentitled to all of their attorneys' fees and costs incurred in securing the benefits of the RSUIPolicy.

V. CLAIMS AGAINST ILLINOIS UNION5.1 Plaintiffs re-allege paragraphs 1.1 through 4.12 as though fully set forth in this

section.5.2 The Illinois Un ion policy of insurance requires that it protect the interests of the

lender Centrum Financial now known as Equity Funding.5.3 Illinois Unio n has issued a check reportedly protecting the interests of Centrum

Financial, nka Equity Funding. As a result of the improper endorsement, the check was neverpaid to Equity Funding.

5.4 Illinois Un ion still owes the obligation to pay Equity Funding $750,000 as it isowed un der the policy of insurance.

5.5 Equity Fun ding has been damaged in that it has not received the benefits of thecontract.

5.6 Equity Funding has been damaged in an amount of $750,000 plus pre-judgmentinterest.

VI. PRAYER FOR RELIEFWH ERE FOR E, E quity Funding prays for the following relief:

6.1 Money Dam ages. For money damages in an amount to be proved at trial, togetherwith pre-judgment and post-judgment interest.

6.2 Declaratory Relief. A declaration that Illinois Union and RSUI are required topay the losses sustained by Equity Funding as a result of Hurricane Ike.

SECOND AMENDED COMPLAINT FOR BREACH OF CO LE WAT HEN LEID & HALL, P .C .CONTRACT AND DECLARATORY RELIEF - 8 1 0 0 SECOND AVENUE, SUITE 13003-10 cv 0 5 6 4 7 B H S SEATTLE, WASHINGTON 9 8 1 0 4B ' U ^ T I T C U I , x: A - T I O m i ' n e 4 * A A ( 2 0 6 ) 6 2 2 - 0 4 9 4 / F A X ( 2 0 6 ) 5 8 7 - 2 4 7 6P:\FILES\EquityFunding, LLC 11117\Second Amended ' vComplaint.doc


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6.3 At tor ne ys' Fees an d Costs of Suit. For reasonable attorneys' fees and costs,including, without limitation, actual attorneys' fees pursuant to Olympic Steamship Co. v.Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991).

6.4 Other Relief. For such other relief, equitable or at law, as the Court deems justand proper.

Dated this [fT 2z day of December, 2011.COLE, WATHEN , LEID & HALL, P.C.

Rick J Wathen, WSBA # 25539Attorney for Plaintiff Equity Funding1000 Second Avenu e, Suite 1300Seattle, WA 98104Phone: 206-622-0494/Fax: 206-587-2476

SECOND AMENDED COM PLAINT FOR BREACH OFCONTRACT AND DECLARATORY RELIEF - 93:10-cv-05647BHSP:\FILES\EquityFunding, LLC 11117\Second AmendedComplaint.doc

C O L E W A T H E N L E I D & H A L L , P .C .1000 SECOND AVENUE, SUITE 1300



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C E R T I F I C A T E O F S E R V IC EI hereby certify that on the date below, I electronically filed the foregoing with the Clerkof the Court using the CM/ECF system which will send notification of such filing to thefollowing participants:

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Matthew J. SekitsBullivant|Houser|Bailey P C1601 Fifth Avenue, Suite 2300Seattle, W A [email protected]: 206.521.6452 - Fax: : 206.386.5130Counsel for RSUI

[ ] Via US Mail] Via Hand Delivery/Messenger Service[ ] Via Facsimile[X ] Via CM/ECF

Insurance Commissioner's Office5000 Capitol BoulevardTumwater, Washington 98501[ ] Via US Mail[x ] Via Process Service[ ] Via Facsimile[ ] Via CM/ ECF

I declare under penalty of perjury under the laws of the State of Washington that theforegoing is true and correct.

DA TED at Seattle, Washington, this

Natasha Johnston, Local Assistant

SECOND AMENDED COM PLAINT FOR BREACH OFCONTRACT AND DECLARATORY RELIEF - 103:10-cv-05647BHSP:\FILES\EquityFunding, LLC 11117\Second AmendedComplaint.doc

C O L E WATHEN LEID & HAL L , P.C.1000 SECOND AVENUE , SUITE 1300

mailto:[email protected]://p/FILES/Equityhttp://p/FILES/Equityhttp://p/FILES/Equitymailto:[email protected]

Documents

D.E. 1 COMPLAINT for Breach of Contract and Declaratory Relief Against Defendant Illinois Union Insurance Company, Filed by Equity Funding LLC_0