Kut Suen Lui v. Essex Insurance Co., 185 Wash. 2d 703

Owners Kut Suen Lui and May Far Lui owned a commercial building that became vacant after the last tenant left in early December 2010.
A frozen sprinkler pipe burst on or about January 1, 2011 (before 60 days of vacancy), causing substantial water damage.
The Luis submitted a claim to Essex Insurance; Essex initially paid $293,598.05 during investigation, then denied remaining coverage after discovering the building was vacant.
The policy included a "Change in Conditions Endorsement" stating (1) coverage is suspended if the building is vacant beyond sixty consecutive days, and (2) "effective at the inception of any vacancy" coverage is limited to enumerated perils (fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion) unless Essex approved otherwise.
The trial court found the endorsement internally ambiguous and granted partial summary judgment to the Luis; the Court of Appeals reversed. The Washington Supreme Court granted review and affirmed the Court of Appeals.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the endorsement is ambiguous about when vacancy exclusions apply	Luis: endorsement is ambiguous; limitation should start only after 60 days of vacancy	Essex: endorsement unambiguously limits causes of loss immediately at inception of vacancy and suspends coverage after 60 days	Held: Unambiguous — limited perils apply at inception of vacancy; after 60 days coverage is suspended (favoring Essex)
Whether the endorsement or underlying vacancy provision controls	Luis: endorsement merely modifies and should harmonize with underlying vacancy provision (which excludes water damage only after 60 days)	Essex: endorsement explicitly changes and supersedes the underlying policy; endorsements control inconsistent policy terms	Held: Endorsement controls and changes underlying policy; it limits perils at inception and suspends coverage after 60 days
Whether the policy term "vacant" is ambiguous	Luis: term ambiguous; urged alternative definition based on owner presence	Essex: policy expressly defines vacancy (less than 31% rented/used)	Held: Term is defined in the policy and is unambiguous (31% test applies)
Whether court should decide issues raised first on appeal (renovation/unoccupied)	Luis: alternatively argued building was under renovation and thus not vacant	Essex: raised distinction between vacant and unoccupied	Held: Court declines to address issues not certified by trial court or inadequately developed on appeal

Durland v. San Juan County, 182 Wn.2d 55 (summary judgment standard and de novo review of summary judgment)
Expedia, Inc. v. Steadfast Ins. Co., 180 Wn.2d 793 (policy interpretation reviewed de novo)
Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654 (insurance policies construed as contracts)
Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wn.2d 618 (give policy a fair, reasonable construction as an average purchaser would)
Queen City Farms, Inc. v. Cent. Nat’l Ins. Co. of Omaha, 126 Wn.2d 50 (ambiguity and harmonizing contract provisions)
Transcon. Ins. Co. v. Wash. Pub. Utils. Dists.’ Util. Sys., 111 Wn.2d 452 (later endorsements control inconsistent policy terms)
Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165 (cannot create ambiguity where none exists; strict construction limits)
State Farm Mut. Auto. Ins. Co. v. Ruiz, 134 Wn.2d 713 (definition of ambiguity; extrinsic evidence rules)
Panorama Vill. Condo. Owners Ass’n Bd. of Dirs. v. Allstate Ins. Co., 144 Wn.2d 130 (meaning of "inception" as beginning)
Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567 (defined policy terms apply throughout the policy)