VISION ONE v. Philadelphia Indem. Ins. Co.
174 Wash. 2d 501
| Wash. | 2012Background
- Vision One and Vision Tacoma contracted to develop a condo project; D & D Construction poured concrete and subcontracted Berg Equipment and Scaffolding for shoring.
- Shoring collapsed under the first-floor pour, causing debris and damage to the lower level, with weeks of cleanup and reconstruction.
- Vision held a builders' risk all-risk policy with Philadelphia Indemnity Insurance; BT & Associates investigated the collapse and attributed it to marginal shoring design and several installation problems.
- The policy excluded losses caused by defective design or faulty workmanship, but included a resulting/ensuing loss clause for losses caused by a covered peril that ensues from the excluded peril.
- Philadelphia denied Vision's claim, asserting the loss was solely due to excluded design and faulty workmanship, and that no independent ensuing loss existed; Vision sued for coverage, bad faith, and CA violations; the trial court found coverage, and the Court of Appeals reversed, remanding for causation determinations under the efficient proximate cause rule.
- The Supreme Court held that the loss from the collapse is a covered ensuing loss under the all-risk policy, that causation is governed by the policy language and not the efficient proximate cause rule, and that the extraexpense endorsement limits coverage to $1 million for delay-related costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the collapse damages are covered as an ensuing loss. | Vision contends the ensuing loss clause covers collapse damages. | Philadelphia contends collapse is not an ensuing loss because the only cause was excluded design/workmanship. | Yes; collapse damages are a covered ensuing loss under the all-risk policy. |
| Whether the efficient proximate cause rule governs causation in this context. | Vision argues the efficient proximate cause rule should determine coverage when a covered peril contributes. | Philadelphia argues the rule applies only when a covered peril is the efficient cause in a sequence with excluded perils. | No; the rule does not require remand here; causation is resolved under the policy language already invoked. |
| Whether Philadelphia is precluded from raising the second prong of causation (sequence of events) given its denial letter. | Vision contends there is no bar to considering sequence causation under Findlay; denial allowed broader arguments. | Philadelphia asserts it did not rely on the sequence prong in denying coverage and is constrained by the denial. | Precluded from using the second prong; causation analyzed under the denial language actually invoked. |
| How the extraexpense endorsement affects coverage for delay-related soft costs. | Vision argues soft costs are covered under the endorsement beyond the general policy limits. | Philadelphia argues soft costs are not covered because the policy covers only physical losses to property, and the endorsement is limited to $1 million. | Endorsement coverage is limited to $1 million and does not extend to non-physical losses. |
Key Cases Cited
- McDonald v. State Farm Fire & Cas. Co., 119 Wash.2d 724 (1992) (all-risk coverage and ensuing loss principles)
- Capelouto v. Valley Forge Ins. Co., 98 Wash. App. 7 (1999) (ensuing loss/causation framework in exclusions)
- Findlay v. United Pac. Ins. Co., 129 Wash.2d 368 (1996) (interpretation of all-risk coverage and exclusions)
- Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wash.2d 618 (1994) (efficient proximate cause and coverage interpretation)
- Wright v. Safeco Ins. Co. of Am., 124 Wash. App. 263 (2004) (ensuing loss limitations in exclusions)
- Allstate Ins. Co. v. Peasley, 131 Wash.2d 420 (1997) (cautionary considerations in policy construction)