Absher Construction Co. v. North Pacific Insurance
861 F. Supp. 2d 1236
W.D. Wash.2012Background
- Absher Pacific seeks summary judgment in an insurance-coverage action over defense duties, bad-faith breaches, estoppel, and bad-faith handling after a New Holly settlement.
- SHA contracted Absher Pacific for New Holly development; PTI acted as PTI’s subcontractor and was required to name Absher Pacific as additional insured.
- New Holly HOA and SHA filed complaints alleging hydronic heating system defects; SHA also alleged Absher Pacific breached defense/indemnity duties and insurance obligations.
- Absher Pacific tendered defense to PTI’s insurers in 2009; OneBeacon denied coverage, citing ongoing-operations limits and insured-contract exceptions; North Pacific and Assurance initially failed to respond or investigate adequately.
- In 2009–2010, Assurance eventually denied Absher Pacific’s claim, later producing endorsements; 2009 settlement of the underlying actions allocated claims and included Absher Pacific-related rights assigned to Arrowood/HARRG.
- Court denies Absher Pacific’s motion for summary judgment, finding genuine issues of material fact on bad-faith denial of defense and bad-faith claims handling, and declines to grant estoppel relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether denials of defense were made in bad faith | Absher Pacific argues denials were unfounded under policy terms | Defendants contend denials were grounded in policy language | No summary judgment; genuine issues of material fact remain |
| Whether coverage by estoppel applies | Bad-faith denial warrants estoppel coverage | Estoppel not available where no coverage or defense exists | Denied; estoppel not available given unresolved bad-faith defenses |
| Whether there was bad-faith claims handling by OneBeacon | OneBeacon failed to properly investigate and relied on extrinsic materials | Investigation and language interpretation were reasonable; damages not shown | Denied for summary judgment; jury to evaluate bad-faith handling and harm |
| Whether Assurance’s handling constituted bad faith | 17-month delay and investigation flaws show bad faith | Delay explained as miscommunication; later conduct raised triable issues | Denied for summary judgment; issues of fact as to reasonableness and damages |
Key Cases Cited
- Am. Best Food, Inc. v. Alea London, Ltd., 168 Wash.2d 398, 229 P.3d 693 (Wash. 2010) (duty to defend; good-faith standard; broad duties of insurer)
- Truck Ins. Exch. v. Vanport Homes, Inc., 58 P.3d 276, 147 Wash.2d 751 (Wash. 2002) (duty to defend determined from complaint; exceptions for extrinsic evidence)
- Hartford Ins. Co. v. Ohio Casualty Ins. Co., 145 Wash.App. 765, 189 P.3d 195 (Wash. Ct. App. 2008) (ongoing-operations interpretation of endorsements)
- Kirk v. Mt. Airy Ins. Co., 134 Wash.2d 558, 951 P.2d 1124 (Wash. 1998) (broad and limited duties to defend; policy exclusions)
- Alea London, Ltd. v. American Home Assurance Co., 158 P.3d 119, 229 P.3d 693 (Wash. Ct. App. 2007 & 2010) (limits of exceptions to exclusions; duty to investigate)
- Onvia, Inc., 196 P.3d 664 (Wash. 2008) (bad-faith claims handling framework; harm element)