LANA R. STAHELI, Ph.D. and LYNN T. STAHELI, M.D. v. Chicago Insurance Company, a foreign corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LANA R. STAHELI, Ph.D. and LYNN T.
STAHELI, M.D.,
Plaintiffs-Appellants,
v.
CHICAGO INSURANCE COMPANY, a
foreign corporation,
Defendant-Appellee.
No. 16-35480
D.C. No. 2:16-cv-00096-JCC
MEMORANDUM*
Appeal from the United States District Court
for the Western District of Washington
John C. Coughenour, District Judge, Presiding
Submitted February 7, 2019**
Seattle, Washington
Before: IKUTA and CHRISTEN, Circuit Judges, and FREUDENTHAL,***
District Judge.
FILED
FEB 11 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* 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).
*** The Honorable Nancy D. Freudenthal, United States District Judge for
the District of Wyoming, sitting by designation.

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Plaintiffs-Appellants Lana and Lynn Staheli, together with their “marital
community,” appeal the district court’s order dismissing their diversity suit against
Chicago Insurance Company (“CIC”) and ACE American Insurance Company
(“ACE”) (collectively, “Defendants”). We have jurisdiction under 28 U.S.C.
§ 1291 and we affirm.1
1. Mr. Staheli’s and the Stahelis’ Marital Community’s Claims. “We review
de novo the district court’s decision to grant [a] motion to dismiss . . . . We accept
factual allegations in the complaint as true and construe the pleadings in the light
most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins.
Co., 519 F.3d 1025, 1031 (9th Cir. 2008) (internal citations and quotation marks
omitted).
To determine whether an insurer owes a duty to defend a claim, Washington
courts look to whether “a complaint against [an] insured alleges facts which, if
proved, would render the insurer liable under the policy.” Harrison Plumbing &
Heating, Inc. v. N.H. Ins. Grp., 681 P.2d 875, 877 (Wash. Ct. App. 1984)
(emphasis added). It is clear from the record that neither Mr. Staheli nor the
marital community are named insureds on either policy. By the plain terms of the
1 Because the parties are familiar with the facts and arguments on
appeal, we do not recite them here.
2

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policies, then, Defendants owed no duty to defend Mr. Staheli or the marital
community. See, e.g., Safeco Ins. Co. of Am. v. Davis, 721 P.2d 550, 552 (Wash.
Ct. App. 1986) (“Language in an insurance policy should be interpreted in the way
it would be understood by the average person.”). The Stahelis’ contention that a
judgment might require the expenditure of marital community assets does not
change this analysis because liability would still rest exclusively with Dr.
Staheli—the marital community is not a legal entity that can be liable, see, e.g.,
deElche v. Jacobsen, 622 P.2d 835, 839 (Wash. 1980) (en banc), and there were no
allegations against Mr. Staheli in the underlying state lawsuit. Likewise, Mr.
Staheli and the Staheli marital community are not third-party beneficiaries to the
CIC and ACE policies because the policies were not intended to benefit them. See
Postlewait Const., Inc. v. Great Am. Ins. Cos., 720 P.2d 805, 806 (Wash. 1986) (en
banc).
We conclude that Defendants did not owe a duty to Mr. Staheli or the
marital community to defend the underlying state lawsuit because neither qualified
as an “insured.” We also conclude that Defendants did not breach any contractual
agreements with Mr. Staheli or the marital community. See Greer v. Nw. Nat’l Ins.
Co., 743 P.2d 1244, 1247–48 (Wash. 1987) (en banc). Mr. Staheli’s and the
marital community’s claims for breach of the duty of good faith and violations of
3

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the Washington Consumer Protection Act and Insurance Fair Conduct Act falter on
the same shoals. See Tank v. State Farm Fire & Cas. Co., 715 P.2d 1133, 1139
(Wash. 1986) (en banc).
2. Dr. Staheli’s Claims. Defendants undisputedly hired a lawyer for Dr. Staheli
in the underlying state court litigation and paid the eventual settlement. They thus
performed their contractual duties to defend and indemnify. We conclude that any
claims Dr. Staheli brought based on a breach of contract, the duty to defend, the
duty of good faith, or the Consumer Protection Act were therefore properly
dismissed.
We further conclude that Dr. Staheli failed to state a claim for a violation of
the Insurance Fair Conduct Act because that statute requires as an element that an
insurer “unreasonably denied a claim for coverage[.]” Wash. Rev. Code §
48.30.015(1) (2018). The complaint does not allege that Defendants denied Dr.
Staheli’s claim for coverage.
AFFIRMED.
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