276 P.3d 1270
Wash.2012Background
- Spragues' home has Safeco homeowners' coverage; a rot-susceptible fin-wall deck system deteriorated due to construction defects.
- Deck supports (fin walls) are not attached to the house and were encased in foam and stucco; rot was discovered in 2007-2008 after vents were installed.
- Safeco denied coverage based on rot and defective construction exclusions; plaintiffs sought coverage under all-risk policy and ensuing-loss provisions.
- Policy history: pre-2003 policies were all-risk with no collapse exclusion; 2003 policies added a collapse exclusion but preserved an ensuing-loss mechanism for non-excluded losses.
- Lower court granted Safeco summary judgment; Court of Appeals reversed, concluding the deck’s rot/defects could be covered as an ensuing loss; Washington Supreme Court reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the ensuing loss clause cover deck damage caused by rot/defective construction? | Sprague argues ensuing loss covers losses not excluded, so collapse-related damage is covered. | Safeco argues rot/defective construction exclusions bar coverage, despite an ensuing-loss clause. | No coverage; rot/defective construction exclusions bar the ensuing-loss recovery. |
| Is 'collapse' a covered peril given pre- and post-2003 policy language, and did the deck actually collapse? | Collapse was a covered peril under pre-2003 policies; ensuing loss should apply to cover collapse-related damage. | Even if collapse is covered, the loss here resulted from rot/defective construction and falls within exclusions. | Ensuing loss does not create coverage because the loss stems from rot and defective construction, which are excluded. |
| Does rot constitute a separate loss distinct from excluded perils, warranting coverage? | Rot-caused deterioration leads to an ensuing loss separate from excluded rot/defect perils. | Rot is the result of excluded perils; no separate covered loss exists. | Rot deterioration is not a separate covered loss; the loss remains within exclusions. |
Key Cases Cited
- Vision One LLC v. Philadelphia Indemnity Insurance Co., 276 P.3d 300 (Wash. 2012) (all-risk policy with ensuing-loss framework; limits coverage to not-excluded ensuing losses)
- McDonald v. State Farm Fire & Cas. Co., 837 P.2d 1000 (Wash. 1992) (interpretation of all-risk policies and ensuing-loss language; ambiguity resolved against drafter)
- TMW Enters., Inc. v. Fed. Ins. Co., 619 F.3d 574 (6th Cir. 2010) (explains causal chain limitation via ensuing-loss provisions)
- Panorama Village Condominium Owners Ass'n Board of Directors v. Allstate Ins. Co., 26 P.3d 910 (Wash. 2001) (collapses under liberal definition; utilized in applying collapse/ensuing-loss concepts)
- Capelouto v. Valley Forge Ins. Co., 99 Wash. App. 7, 990 P.2d 414 (Wash. App. 1999) (discusses the structure of coverage within an ensuing-loss framework)