Simmonds v. Privilege Underwriters Reciprocal Exch.

• Docket Number: 84081-9-I
• Decision Date: 07 August 2023
• Parties: DAVID M. SIMMONDS and DEBRA K. SIMMONDS, husband and wife, Appellants, v. PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGE, dba PURE INSURANCE, Respondent.
• Court: Washington Court of Appeals

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DAVID M. SIMMONDS and DEBRA K. SIMMONDS, husband and wife, Appellants, v. PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGE, dba PURE INSURANCE, Respondent.

No. 84081-9-I

Court of Appeals of Washington, Division 1

August 7, 2023

UNPUBLISHED OPINION

Coburn, J.

Homeowners challenge the denial of insurance coverage for rot damage from a leak surrounding their bedroom shower. After learning about the leak, the insurer engaged multiple experts to investigate and determined that the claim was not covered by the policy because the cause of the leak was an excluded construction defect. The homeowners sued their insurer alleging breach of contract and extra-contractual claims of violations of the Insurance Fair Conduct Act (IFCA) and Consumer Protection Act (CPA). Only the breach of contract claim survived a summary judgment hearing. Following a bench trial, the trial court found in favor of the insurer. We affirm.

FACTS

David and Debra Simmonds built their home in Redmond, Washington in 1998. At issue is the 2020 discovery of rot in the subfloor and joists underneath a leaky shower that has a glass block shower surround adjacent to their primary bedroom.

In July 2018, Simmonds^[1] used a hair dryer to remove what he thought was condensation on some of the glass blocks of the shower. After 45 minutes of heating the bottom glass block he heard a loud "pop" and saw that he cracked the glass block. Neither he or his wife ever had anyone come out to address the glass block after it cracked.

In August 2020, Simmonds discovered water leaking from a shower handle. When he looked in the crawl space, he discovered significant puddles of water on the visqueen, damp insulation, and rot in the plywood subfloor and flooring joists. The rot was "pretty significant."

Simmonds called his insurer, Privilege Underwriters Reciprocal Exchange d/b/a PURE Insurance (PURE), which has insured the home since 2013. Shawn Roessler was the assigned claim adjuster out of California. Roessler engaged Crawford and Company (Crawford), an independent local adjuster, to review the claim and visit the home. Crawford told Roessler of the possible rot exclusion. Roessler informed Simmonds that she thought the rot exclusion was going to "come into play." Simmonds then described Washington's efficient proximate cause rule^[2] to her, disagreeing with Roessler's assessment of the policy. According to Roessler, at that time both of them thought the rot may be related to the leak from the shower valve. Simmonds therefore believed because that leak was covered the rot should be as well. Roessler told Simmonds that PURE would do an additional review. As a result, PURE retained Washington coverage counsel. PURE also asked American Leak Detection (ALD) to conduct a full inspection.

ALD technician Zachary Schneider conducted the inspection. Schneider confirmed a leak from the right-hand shower valve. The affected area of the closet and wall cavity containing the shower valve did not appear to have any long-term damage.^[3]Schneider also did not see rot below that leak area. Testing on the shower pan revealed water manifesting from below the glass block and thermal imaging revealing that the leak was lower than the glass blocks. Based on his observations, including absence of damage to the shower and testing, Schneider concluded that there appeared to be an issue with the shower pan membrane. He testified that when a shower is installed, the membrane is integrated with the shower drain. Then, mortar is placed over everything before laying down the tile; it is the membrane that keeps the water contained. Schneider hypothesized that the membrane may not have been adequately lapped over the threshold dam to provide a proper waterproof seal.

Schneider had seen leaks develop because membranes were not high enough. He noted that he was not aware of the exact age of the shower, but if someone had built it correctly, it should probably last at least 30 years. Because he did not see anything that appeared to have happened to the shower to have otherwise caused this leak, he believed the membrane issue was "likely either a result of wear and tear or construction defect."

Simmonds had not mentioned the cracked glass block to Schneider during his inspection. Schneider later testified at trial that he did not see any cracked glass during his inspection and a review of the photos he took did not show any cracked glass blocks, but clarified that he did not consider any cracked glass because he knew that "the surround composed of glass blocks is not where the leak was located."

After Schneider's inspection, Simmonds remembered the hairdryer incident and emailed Roessler the next morning asking for a convenient time to talk, explaining, "I think I figured out what happened." After PURE received ALD's report, PURE discussed the claim internally and discussed it with coverage counsel. They determined that the rot-related claim appeared to involve a non-covered loss, which was a construction defect. The policy provides a list of excluded coverage areas including property loss caused by faulty inadequate, or defective planning; loss caused by presence growth, proliferation, spread of wet or dry rot; and loss from wear and tear, deterioration or mechanical breakdown. These excluded coverage areas formed the basis of why PURE denied coverage related to the rot. PURE sent Simmonds the ALD report and Simmonds and Roessler spoke by phone. Roessler followed up by emailing Roessler two photos of the cracked glass block that shows a crack that extends to the bottom of the block to the grout line. Simmonds contested the ALD report.

To address Simmonds' concerns, PURE hired ARCCA structural engineer Kurt Ahlich to conduct a failure analysis. Ahlich reviewed Schneider's report, met with Simmonds for background, examined the shower and the shower surround, conducted a limited water test of the shower and bathroom floor, and inspected the crawl space and the condition of the wood framing below the shower area. Ahlich documented the scene, including taking photographs of the cracked glass block. Water testing revealed heat signatures along the curb of the shower and moisture readings also were elevated along the shower curb, especially the northern part. Ahlich had considered the hairdryer incident, but stated that the moisture level readings and the heat signature showed that water was leaking along the length of that curb, so it was a wider spread phenomenon than just a point source that one would expect with a glass block. Ahlich also confirmed some measurements with the layout of the shower with what he saw in the crawl space area. Ahlich observed that there did not appear to be any wood damage around the drain and Ahlich concluded the grout was working properly. He did not see anything that would have led him to believe there had been some type of catastrophic event that had damaged it.

Ahlich also consulted with ARCCA materials scientist James Mason. Mason obtained information from Ahlich and reviewed Ahlich's photographs. The photographs showed a crack near the top of the glass block. Mason observed that the cracks did not propagate all the way through the glass, and the cracks in the glass blocks were too small for water to be able to flow through them. Mason opined that there was not enough energy and force for the cracks to cause any damage to the surrounding area.

After conducting his investigation, Ahlich drafted a report that included observations and conclusions from him and Mason. The report concluded the following:

1. The wood decay in the structural framing underlying the shower stall was the [sic] caused by long-term, ongoing water intrusion at and along the shower curb. The source of this water was normal use of the shower itself.

2. The moisture intrusion along the shower curb was the result of a failure of the shower pan/curb's waterproofing system. The specific mechanism of leakage through the shower's waterproofing system was indeterminate; however, it was most likely due to penetrations or incomplete coverage of a waterproofing membrane overlaying the curb framing. Such conditions would be considered construction defects.

3. The leakage was a long-term phenomenon, and had been ongoing for a minimum of four to six years. However, it was most probable that moisture intrusion began to occur around the time the dwelling was constructed.

4. The leakage was not caused by the glass block cracking.

The report from ARCCA solidified PURE's decision to deny coverage. Simmonds continued to dispute PURE's conclusion. After receiving PURE's coverage opinion Simmonds emailed PURE a detailed response taking issue with the ARCCA report. In his response, Simmonds quoted a non-technical online article from aceweekly.com that, in turn, reported that Leslie A. Ferge, a biological technician from the U.S. Department of Agriculture's Forest Products Laboratory, told the author that "[t]here is no way even to crudely estimate the rate of wood decay or its age." Simmonds again included his photos of the cracks in the glass block that reached the bottom of the block. PURE asked Ahlich to review Simmonds' response and to address Simmonds' concern about wood decay and its duration. Ahlich responded in August 2021 by explaining that his estimate of the duration of wood decay was an engineering opinion based on his general understanding of wood decay and experience as an engineer and contractor. He explained that "the decay had caused complete cross sectional loss of joists and extensive degradation of subflooring; this decay had occurred in an unconditioned space in a relatively cool climate" leading him to conclude that "the decay was a long-term, cumulative condition, the duration of which would...