National Steel Const. Co. v. National Union Fire Ins. Co. of Pittsburgh
| Decision Date | 16 December 1975 |
| Docket Number | No. 1886--II,1886--II |
| Court | Washington Court of Appeals |
| Parties | NATIONAL STEEL CONSTRUCTION COMPANY, a Washington Corporation, Respondent, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, Pennsylvania, a foreign corporation, Appellant. |
Robert J. Grenier, of McMullen, Brooke, Knapp & Grenier, Seattle, for appellant.
Robert V. Brown, of Clinton, Fleck, Glein & Brown, Seattle, for respondent.
In this action plaintiff, National Steel Construction Company, seeks recovery against defendant, National Union Fire Insurance Company, alleging the defendant, its insurer, wrongfully refused to defend it against a products liability suit brought by Fairview Development, Inc. The products liability action was successfully defended by plaintiff, who now seeks recovery of attorney's fees, suit costs, and interest arising out of its defense of that suit. The case was tried to the court on an agreed statement of facts which included the insurance policy in question and the products liability complaint which gave rise to the claim of coverage. The trial court found and concluded the defendant should have accepted the tender of defense and allowed plaintiff a judgment for $3,123 attorney's fees, $249.81 in costs, and 8 percent interest from December 5, 1972, the date of the trial court's oral decision fixing the amount of damages.
In light of the well-settled law which applies to this case and the facts which were agreed at the trial, the issue presented on appeal is a narrow one: Did the complaint filed by Fairview against plaintiff allege facts which, if true, would render defendant liable under the insuring agreements of its comprehensive liability policy? Defendant has challenged the findings and conclusions of the trial court that the complaint did allege facts bringing the claim within the policy coverage.
The law is clear. An insurer's duty to defend arises when a complaint against its insured is filed and is to be determined from the allegations of the complaint. Holland Amer. Ins. Co. v. National Indemnity Co., 75 Wash.2d 909, 454 P.2d 383 (1969). For the purposes of determining the duty of an insurer to defend, the allegations, if proved, must render the insurer liable under its policy. Seaboard Surety Co. v. Williams' Northwest Chrysler Plymouth, Inc., 81 Wash.2d 740, 504 P.2d 1139 (1973).
It is true the advent of notice pleadings has caused some jurisdictions to depart from the strict application of this rule and to expand the scope of determining an insured's duty to defend, to include facts known by an insurer or discoverable by it either before or after the complaint has been filed. See Gray v. Zurich Ins. Co., 65 Cal.2d 263, 419 P.2d 168, 54 Cal.Rptr. 104 (1966); Spruill Motors, Inc. v. Universal Underwriters Ins. Co., 212 Kan. 681, 512 P.2d 403 (1973). The courts in these cases point out that notice pleadings can lead to undertainties relating to coverage which make the stricter rule inequitable.
While the Washington Supreme Court has not seen fit to adopt what we consider to be the more modern approach to the issue, as discussed in Gray v. Zurich Ins. Co., supra and Spruill Motors, Inc. v. Universal Underwriters Ins. Co., supra, we need not reexamine the question in this case. For in our view, Fairview's complaint was specific enough on its face to warrant a determination that defendant owed plaintiff a defense under the terms of its policy.
The complaint alleged plaintiff had manufactured and sold Fairview four hot water tanks through a distributor, and the tanks were defective because of plaintiff's negligent design and construction. It also stated: 'As a consequence of the defendants' wrongful conduct, plaintiff has been damaged in the sum of $18,160.96.'
It is true another allegation of the complaint alleged the tanks were rendered valueless as a result of the defect, and that the cost of their installation had been $13,279.40. It is conceded defendant's policy excluded coverage for damage to the completed manufactured product, and the products liability coverage applied to consequential damages only. The complaint, however, does seek consequential damages above the cost or value of the installed tanks. Thus the trial court's finding and conclusion that consequential damages were sought is correct.
It follows, then, that the complaint asserted a potential liability which, at the least required the defendant to defend a portion of the claim, I.e., that part...
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