BITCO General Insurance Corporation v. Union Ridge Ranch LLC, 3:22-cv-05624

URR owned property in Washington, hired Inland Company in 2018 to perform infrastructure work, including retaining walls.
Geotechnical reports revealed widespread defects in Inland's work; a retaining wall (Wall 4) ultimately failed in early 2019 before being fully completed.
These defects and the retaining wall failure led to canceled sales and URR ultimately selling the project at a substantial loss.
URR sued Inland for breach of contract and negligence, seeking damages for financial loss tied to the diminished value and unsellability of the property.
Inland sought coverage under its BITCO insurance policy; BITCO defended under reservation but sought declaratory judgment that its policy did not cover these losses due to an "impaired property" exclusion.
Both parties filed for partial summary judgment on the coverage issue.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does BITCO's policy cover URR’s damages?	URR's damages are "loss of use" covered by policy after Wall 4's failure.	Inland's losses are business losses from URR’s disappointed commercial expectations, not covered.	No, coverage barred by impaired property exclusion.
Does the impaired property exclusion apply?	Exception applies because the loss arose from a sudden and accidental physical injury to the work.	Exclusion applies only for business losses due to poor construction.	Exclusion applies; wall failure was not sudden/accidental but gradual, predicted, and inevitable.
Did Inland meet burden to show “sudden and accidental physical injury” exception?	Wall 4 had been in use and its failure was a triggering event for coverage exception.	Wall 4’s failure was foreseeable, gradual, and not the cause of the damages; business losses were tied to overall poor workmanship.	No, Inland failed to show exception; damages arose from general defectiveness and loss of buyer confidence, not a specific sudden event.
Must BITCO indemnify Inland for settlement with URR?	Yes, because failure and loss of use triggered exception to exclusion.	No, the policy does not cover damages resulting from defective work itself.	No indemnity required; summary judgment for BITCO.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)
Woo v. Fireman's Fund Ins. Co., 161 Wn.2d 43 (insurance contract interpretation and duty to defend)
Celotex Corp. v. Catrett, 477 U.S. 317 (burden shift on summary judgment)
McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724 (burdens under insurance exclusions)
Xia v. ProBuilders Specialty Ins. Co., 188 Wn.2d 171 (eight corners rule for duty to defend)
Mut. of Enumclaw Ins. Co. v. Cross, 103 Wn. App. 52 (duty to indemnify defined)