Windcrest Owners Ass'n v. Allstate Ins. Co.

• Decision Date: 13 February 2023
• Docket Number: 82836-3-I
• Parties: WINDCREST OWNERS ASSOCIATION, a Washington nonprofit corporation, Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois company, Respondent, STATE FARM FIRE AND CASUALTY COMPANY, an Illinois company, Defendant.
• Court: Washington Court of Appeals

WINDCREST OWNERS ASSOCIATION, a Washington nonprofit corporation, Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois company, Respondent, STATE FARM FIRE AND CASUALTY COMPANY, an Illinois company, Defendant.

No. 82836-3-I

Court of Appeals of Washington, Division 1

February 13, 2023

ORDER GRANTING MOTION TO PUBLISH

Respondent Allstate Insurance Company and former Respondent^[1] State Farm Fire and Casualty Company moved for publication of the opinion filed on December 12, 2022. Appellant Windcrest Owners Association has filed an answer. Amicus curiae Richmond Sequoia Homeowners Association and Stein, Sudweeks & Stein, PLLC also filed an answer to the motion. A panel of the court has reconsidered its prior determination not to publish the opinion for the above- entitled matter and has found that it is of precedential value and should be published. Now, therefore, it is hereby

ORDERED that the written opinion filed on December 12, 2022, shall be published and printed in the Washington Appellate Reports.

Chung J.

Windcrest Owners Association filed a lawsuit against Allstate Insurance after the company declined a claim for property damage to a building in its condominium development. Allstate moved for summary judgment, alleging that the property damage was not covered as a "collapse" and was excluded from coverage because it resulted from faulty construction and maintenance. The trial court granted summary judgment dismissing Windcrest's claims. We affirm.

FACTS

Windcrest Condominiums, which consists of 15 units in two buildings was completed in 1995. Allstate provided a commercial property insurance policy from November 2002 through 2017.^[1]

In October 2018, Windcrest notified Allstate of a property damage claim based on a structural report prepared by Dibble Engineers. The report noted decay consistent with substantial impairment of structural integrity to one of the buildings. Specifically, it noted, "The capacity of the building's lateral- and gravity-force-resisting systems are compromised by decay that has been hidden by the exterior siding." Dibble discovered severely corroded nails and "degradation or deterioration of the OSB sheathing from a combination of bug or pest and/or water deterioration related damage to the sheathing." Dibble also described damage to wall studs based on wood rot, organic growth, and pest damage. According to Dibble, moisture from outside entered through the building cladding, penetrated the wood of the studs and sheathing, causing rot and decay which led to bug infestation.

Allstate retained construction consultants from Madsen, Kneppers &amp Associates, Inc. (MKA) to conduct an inspection and evaluation of causation of the damage at Windcrest. MKA concluded that there were sites of noted decay of structural components but no evidence of collapse "defined as an abrupt falling down or caving in," as required for coverage by Allstate's policy. Allstate denied Windcrest's claim on August 5, 2019.

Windcrest filed suit against Allstate, alleging breach of contract and bad faith under the Consumer Protection Act (CPA), Chapter 19.86 RCW.^[2] Allstate moved for summary judgment; the trial court granted the motion and dismissed the claims with prejudice.

Windcrest appeals.^[3]

ANALYSIS

The trial court dismissed Windcrest's claims against Allstate on summary judgment. We review orders on summary judgment de novo. Kim v. Lakeside Adult Family Home 185 Wn.2d 532, 547, 374 P.3d 121 (2016). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998) (citing CR 56(c)). We consider the evidence and reasonable inferences in the light most favorable to the nonmoving party. Kim, 185 Wn.2d at 547. To defeat summary judgment, the opposing party must set forth specific facts showing a genuine issue of material fact and may not rely on allegations or self-serving statements. Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Grp., Inc., 114 Wn.App. 151, 157, 52 P.3d 30 (2002).

Property insurance policies generally are one of two kinds: "named-peril" policies, which provide coverage only for specific enumerated risks and exclude all other risks, or "all-risk" policies, which provide coverage for all risks unless the specific risk is excluded. Vision One, LLC v. Philadelphia Indem. Ins. Co., 174 Wn.2d 501, 513, 276 P.3d 300 (2012). "Determining whether coverage exists is a 2-step process. The insured must show the loss falls within the scope of the policy's insured losses. To avoid coverage, the insurer must then show the loss is excluded by specific policy language." McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 731, 837 P.2d 1000 (1992). An insured has the burden of proving that coverage is triggered, while the insurer has the burden of proving that an exclusion applies. Feenix Parkside LLC v. Berkley N. Pac., 8 Wn.App. 2d 381, 387, 438 P.3d 597 (2019).

Interpretation of an insurance policy is a question of law reviewed de novo. Vision One, 174 Wn.2d at 512. Courts construe insurance policies as the average person purchasing insurance would and give the language "a fair, reasonable, and sensible construction." Vision One, 174 Wn.2d at 512 (quoting Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wn.2d 618, 627, 881 P.2d 201 (1994)). When a term is undefined, we assign its ordinary meaning as provided in standard English language dictionaries. Overton v. Consolidated Ins. Co., 145 Wn.2d 417, 428, 38 P.3d 322 (2002). Ambiguities in the policy and exclusions from coverage are construed against the drafter-insurer. Vision One, 174 Wn.2d at 512.

I. Collapse Coverage

Windcrest made a claim under the Allstate insurance policy. The all-risk policy at issue insures "loss or damage resulting from direct physical loss" except for enumerated exclusions. As one of those exclusions, Allstate does not cover any loss or damages caused by collapse except as provided under additional collapse coverage. Windcrest's insurance policy included this collapse coverage:

D. Additional Coverage - Collapse

The coverage provided under this Additional Coverage Collapse applies only to an abrupt collapse as described and limited in D.1 through D.7.

1. For the purpose of this Additional Coverage - Collapse, abrupt collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.

2. We will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building that is insured under this Coverage Form or that contains Covered Property insured under this Coverage Form, if the collapse is caused by one or more of the following:

a. Building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse;

b. Insect or vermin damage that is hidden from view, unless the presence of such damage is known to an insured prior to collapse;

c. Use of defective material or method in construction, remodeling or renovation if the abrupt collapse occurs during the course of the construction, remodeling or renovation.

d. Use of defective material or methods in construction, remodeling or renovation if the abrupt collapse occurs after the construction, remodeling or renovation is complete, but only if the collapse is caused in part by:

(1) A cause of loss listed in 2.a or 2.b;

(2) One or more of the "specified causes of loss…"

The policy then limits the collapse coverage, stating as follows:

3. This Additional Coverage - Collapse does not apply to:

a. A building or any part of a building that is in danger of falling down or caving in;

b. A part of a building that is standing, even if it has separated from another part of a building;

c. A building that is standing or any part of a building that is standing, even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.

Finally, the Allstate policy defines "collapse" as follows:

With respect to buildings:

a. Collapse means an abrupt falling down or caving in of a building, or any part of a building, with the result that the building or part of a building cannot be occupied for its intended purpose;

b. A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.

Windcrest contends that the collapse provisions of the policies apply because "building components have collapsed and are no longer taking up or filling the space they were intended for," and "were no longer able to support their intended purpose." Allstate argues that the slow deterioration of parts of the building does not fit within the policy definition of "collapse."

To interpret the provisions on collapse coverage we may use the dictionary definition and "a fair, reasonable, and sensible construction" of the policy language. Vision One, 174 Wn.2d at 512. The dictionary defines "abrupt" as "broken off: suddenly terminating as if cut or broken off" or "characterized by or producing the effect of a sharp break or sudden ending." Webster's Third New International Dictionary 6 (2002). Here, the key word in the dictionary definition is "sudden." Therefore, the Allstate policy provides coverage when a building or part of a building suddenly falls down or caves in. Using this definition, the evidence does not create a question of material fact as to whether the damage meets the policy criteria for coverage.

Windcrest relies on evidence produced by its expert, Robb Dibble. Windcrest submitted Dibble's structural report...