Opinion
No. 56396-3-I.
June 26, 2006.
Appeal from a judgment of the Superior Court for King County, No. 04-2-02217-7, Mary Yu, J., entered April 2 and June 1, 2005.
Counsel for Appellant(s), Jami K Elison, Marston Heffernan PLLC, 16880 NE 79th St, Redmond, WA 98052-4424.
Linda L. Foreman, Marston Heffernan PLLC, 16880 NE 79th St, Redmond, WA 98052-4424.
Counsel for Respondent(s), Craig Hinton Bennion, Attorney at Law, 1201 3rd Ave Ste 5200, Seattle, WA 98101-3041.
Ramona Noel Hunter, Attorney at Law, 1201 3rd Ave Ste 5200, Seattle, WA 98101-3041.
Affirmed by unpublished opinion per Appelwick, C.J., concurred in by Baker and Dwyer, JJ.
This is an insurance coverage case. An engineering firm warned Washington Mutual Bank (WaMu) that one of the bank's buildings was at risk of collapse. WaMu incurred substantial costs resulting from the subsequent evacuation. A second engineering investigation reported that the building was not, and had not been, in any actual danger of collapse. WaMu sought coverage from its insurers for losses sustained and filed suit when its claims were denied. The trial court dismissed WaMu's claims on summary judgment. We affirm.
FACTS
WaMu owns the Western Branch Data Center (the property). The property housed WaMu employees as well as other commercial tenants. WaMu held $12.5 million dollars worth of property insurance coverage on the property provided by three insurance firms (Insurers). Each of the Insurers provided a separate policy for its share of coverage (Policies). The language of these Policies was substantially identical.
In early 2000, WaMu hired North West Post Tensioning, Inc. (NWPT) to evaluate the property in anticipation of renovation. In a report WaMu received on or about August 15, 2000, NWPT concluded that the property was unsafe and should be evacuated. WaMu hired another engineering company, Wiss, Janney, Elstner Associates, Inc., (WJE) for a second opinion. However, WJE could not complete a thorough inspection until August 21. Therefore, in light of the severity of problems identified by NWPT, WaMu evacuated the property on August 17.
NWPT hired Lucia Engineering to perform services necessary to fulfill the terms of this contract. In this opinion, NWPT refers to both NWPT and Lucia Engineering.
WJE investigated the property on August 21 with NWPT engineers present and concluded that the building was structurally sound. WJE issued a preliminary report on August 28 concluding that NWPT's report was wrong and that there was no threat to the structural integrity of the building. On August 29, the tenants were advised that they could return to the property. Three additional comprehensive inspections by WJE confirmed the assessment that the property was structurally sound.
WaMu brought an action for malpractice and breach of contract against NWPT. Those claims were settled out of court. WaMu also filed a declaratory judgment action against the Insurers to obtain coverage for economic losses associated with the evacuation. Both WaMu and the Insurers moved for summary judgment on the issue of coverage. The trial court granted summary judgment in favor of the Insurers, and WaMu appeals.
ANALYSIS
On review of summary judgment, this court engages in the same inquiry as the trial court. Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165, 171, 110 P.3d 733 (2005). `Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.' Quadrant Corp., 154 Wn. 2d at 171. The court must consider the facts submitted and all reasonable inferences from those facts in the light most favorable to the nonmoving party. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Insurance coverage can be resolved by summary judgment when the relevant facts are undisputed and the only issue is whether the policy provides coverage for the loss. Tyrrell v. Farmers Ins. Co., 140 Wn.2d 129, 133, 994 P.2d 833 (2000). Interpretation of an insurance contract is a question of law reviewed de novo. Quadrant Corp., 154 Wn.2d at 171 (citing Overton v. Consol. Ins. Co., 145 Wn.2d 417, 424, 38 P.3d 322 (2002)).
Insurance contracts in Washington are construed as contracts. Quadrant Corp., 154 Wn.2d at 171. Washington courts consider the insurance policy as a whole and give it a `fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.' Quadrant Corp., 154 Wn.2d at 171 (internal quotations omitted). Insurance policies are liberally construed to provide coverage for the insured whenever possible. Mercer Place Condo. v. State Farm, 104 Wn. App. 597, 602-03, 17 P.3d 626 (2000). Undefined terms are given their plain, ordinary, and popular meanings. Panorama Village v. Allstate Ins. Co., 144 Wn.2d 130, 131, 26 P.3d 910 (2001). If the plain meaning is not clear, a dictionary definition can be used for clarification. State Farm v. English Cove Ass'n, 121 Wn. App. 358, 363, 88 P.3d 986 (2004).
Clear and unambiguous policy language is enforced as written. Quadrant Corp., 154 Wn.2d at 171. The court does not `modify it or create ambiguity where none exists.' Quadrant Corp., 154 Wn.2d at 171. A clause is ambiguous only when `on its face, it is fairly susceptible to two different interpretations, both of which are reasonable.' Quadrant Corp., 154 Wn.2d at 171 (quoting Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 665, 15 P.3d 115 (2000)) (internal quotations omitted). The expectations of the insured cannot override the plain language of the contract. Quadrant Corp., 154 Wn.2d at 172 (citing Findlay v. United Pac. Ins. Co., 129 Wn.2d 368, 378, 917 P.2d 116 (1996)).
Here, no material facts are in dispute. The Insurers concede that the property is covered under the Policies, and do not dispute that WaMu acted reasonably in following NWPT's evacuation recommendation. Therefore, the question of coverage is a matter of law.
The Policies contain the following provisions:
PERILS INSURED AGAINST
This policy insures against all risk of direct physical loss of or damage to property described herein . . ., except as hereinafter excluded.
. . .
Ingress/Egress: This policy is extended to cover the loss sustained during the period of time when, in connection with or following a peril insured against, access to or egress from real or personal property is impaired. This extension is limited to a maximum period of 30 days.
. . .
Sue and Labor
In case of actual or imminent loss or damage covered by this policy, it shall, without prejudice to this insurance, be lawful and necessary for the Insured, their factors, servants, or assigns to sue, labor and travel for, in and about the defense, the safeguard, and the recovery of property or any part of the property insured hereunder; nor, in the event of loss or damage, shall the acts of the Insured or of this Company in recovering, saving andpreserving the insured property be consider a waiver or an acceptance of abandonment. This company shall contribute to the expenses so incurred according to the rate and quantity of the sum herein insured.
WaMu argues that in the perils insured against clause, `direct physical loss of' and `damage to' have two separate meanings and are separated by a disjunctive `or,' and therefore that the trial court erred in concluding that that actual physical damage was required. WaMu argues that `loss' has a broader meaning than physical damage. WaMu further argues that the ingress/egress clause in the Policies contains broad inclusionary language that extends coverage here.
The plain language of the `perils insured against' clause requires a direct physical loss of or damage to insured property. The language of this clause specifies that the loss must be `direct physical loss.' The clause does not use the word `loss' in the abstract. The `time of an occurrence for insurance coverage purposes is determined by when damages or injuries took place.' Transcon. Ins. v. Utility Sys., 111 Wn.2d 452, 465,
760 P.2d 337 (1988); see Schwindt v. Commonwealth Ins. Co., 94 Wn. App. 504, 507-08, 972 P.2d 570 (1999), reversed on other grounds,
140 Wn.2d 348 (2000). When NWPT recommended evacuation, there was no actual physical loss to the property and no actual damage to the property. See Wolstein v. Yorkshire Ins. Co., 97 Wn. App. 201, 211-12, 985 P.2d 400 (1999) (noting that language in a similar `all risks' policy required the insured property to sustain actual damage or physical loss to invoke coverage). While WaMu acted on a reasonable belief that the property was at risk of collapse, there was no actual risk or actual peril. The engineering report that created WaMu's reasonable belief was later determined to be in error. Because no actual `peril insured against' arose, coverage under the Policies was not triggered by that clause.
The ingress/egress provision refers back to the `perils insured against' clause and thus extends coverage only if the claimed expense results from a direct physical loss of or damage to insured property. Thus, although the `in connection with or following' causation language in the ingress/egress provision may be broad, coverage under that provision was not triggered absent a peril insured against.
Sue and labor clauses require an insured to take action to prevent or mitigate damage to covered property. See Wolstein, 97 Wn. App. at 215. A covered loss does not have to actually occur in order to invoke coverage under a sue and labor provision. Wolstein, 97 Wn. App. at 216. `Rather, actions taken to prevent a covered loss will suffice to invoke coverage.' Wolstein, 97 Wn. App. at 216. `The purpose of the sue and labor clause is to reimburse the insured for those expenditures which are made primarily for the benefit of the insurer to reduce or eliminate a covered loss.' Wolstein, 97 Wn. App. at 217 (quoting Blasser Bros. v. N. Pan-Am. Line, 628 F.2d 376, 386 (5th Cir. 1980)).
In Wolstein, the insured ordered construction of a yacht. Wolstein, 97 Wn. App. at 203. The yacht was insured under a policy that included a sue and labor clause. That clause provided:
And in case of any Loss or Misfortune, it shall be lawful and necessary for the Assured, their factors, Servants and Assigns, to sue, labor and travel for, in and about the defense, safeguard and recovery of the Vessel, or any part thereof[.]
In the event of expenditure under the Sue and Labor clause, the Underwriters shall pay the proportion of such expenses.
Wolstein, 97 Wn. App. at 215-16. The builder declared bankruptcy and abandoned the project. The insured hired security to guard the yacht and paid utilities to prevent weather damage that would result from a potentially harsh Wisconsin winter. Wolstein, 97 Wn. App. at 204. The insurer argued that the insured had failed to show an imminent risk of damage to the vessel and therefore that his actions in protecting it were unnecessary. The court rejected this defense and refused to impose an imminence of risk requirement, holding that the insured's actions would be reviewed for reasonableness. Wolstein, 97 Wn. App. at 217-18. The court held that `[w]hile no one can say with certainty that the [vessel] would have incurred damage from these events, we find that Wolstein presented enough evidence to create a genuine issue of fact as to whether his actions were reasonable given the circumstances.' Wolstein, 97 Wn. App. at 218. WaMu argues that under Wolstein, preventative expenses are clearly permitted where the risk of loss or damage is uncertain but is reasonably perceived by the insured based on the circumstances. The Insurers argue that the sue and labor clause in Wolstein was significantly different from the sue and labor clause in the Policies. Specifically, the Policies' sue and labor provision is invoked only `[i]n case of actual or imminent loss or damage covered by this policy.' (emphasis added) The Insurers argue that there was neither an actual collapse nor an imminent collapse, and thus WaMu took no actions to prevent a `covered loss.' As such, the insurer's argue that WaMu's expenditures were not primarily for the benefit of the Insurers and were not compensable under the sue and labor clause. See Wolstein, 97 Wn. App. at 217.
The language of the sue and labor provision controls the outcome of this case. No one disputes that there was no actual direct physical loss of or damage to the property. Therefore, the question is whether any such loss was imminent. The Policies do not define `imminent.' The dictionary defines imminent as `ready to take place: near at hand:
impending . . . hanging threateningly over one's head: menacingly near.' Webster's Third New International Dictionary 1130 (1966). WaMu argues that absent a definition in the Policies, the insured's subjective determination of imminence is the touchstone to determine coverage. WaMu thus argues that because the parties agree that WaMu acted reasonably, its losses are covered under the sue and labor provision. The Insurers argue that the loss or damage must be imminent in fact, rather than merely reasonably perceived to be imminent.
We agree with the Insurers. Under the language of the Policies, a reasonable but incorrect perception of imminence of covered loss does not suffice as a basis for coverage under the sue and labor provision. To obtain coverage under the sue and labor provision in this case, the insured's actions must have been taken to protect insured property from a risk of covered loss that was imminent in fact. Because there was in fact no imminent risk of covered loss, WaMu's actions were not taken to prevent a `covered loss.' Thus, WaMu's expenditures were not primarily for the benefit of the Insurers and are not compensable under the sue and labor clause. See Wolstein, 97 Wn. App. at 217.
WaMu argues that this court should consider only those facts known at the time of the loss, and not facts uncovered after the loss occurred, to determine the insured's right to recover and the insurer's obligation. Therefore, WaMu argues, the court should not consider the post-loss determination that NWPT's report was wrong. It is correct that `the time of an occurrence for insurance coverage purposes is determined by when damages or injuries took place.' Transcon. Ins., 111 Wn.2d 452 at 465. But that does not mean that coverage is based solely on the facts as they were known, understood, or interpreted at the time of the loss. Rather, the insurer is obligated to make a good faith investigation of the facts and circumstances of each claimed loss. Indus. Indem. Co. v. Kallevig, 114 Wn.2d 907, 917, 792 P.2d 520, (1990). Coverage is determined objectively, not based on the subjective assessment of the insured, no matter how reasonable that assessment appeared at the time. Here the Insurers' investigation showed that at the time of the loss, despite WaMu's reasonably held belief to the contrary, there was no actual risk of collapse of the building. The actual facts and circumstances at the time of WaMu's loss did not support coverage.
WaMu seeks attorney fees on appeal under RAP 18.1 and Olympic Steamship v. Centennial Ins., 117 Wn.2d 37, 52-53, 811 P.2d 673 (1991). Because WaMu does not prevail on appeal, it is not entitled to fees.
We affirm.
DWYER and BAKER, JJ., concur.