ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Before the court is Plaintiffs Absher Construction Company and Pacific Components, Inc. d/b/a Absher Pacific Joint Venture’s (collectively “Absher Pacific”) motion for summary judgment. (Mot. (Dkt. # 24).) This is an insurance coverage action, and Absher Pacific has moved for summary judgment with respect to whether the defendant insurance companies breached their duty to defend in bad faith, whether they are thereby estopped from denying coverage and so are liable for the settlement amount that Absher Pacific agreed to pay in the underlying litigation, and whether they are liable for bad faith claims handling irrespective of their obligations to provide a defense to Absher Pacific. (See Mot. at 1-2, 6, 18-21.) Having considered the motion, all submissions of the parties both in support and in oppo
II. BACKGROUND
A. The New Holly Development
In 1997 the Seattle Housing Authority (“SHA”) entered into construction contracts with Absher Pacific for the construction of a housing development, known as the New Holly Redevelopment Project (“New Holly”). (Holt Decl. Ex. 3 (SHA Compl.) at 26 ¶ 1.2 and at 27 ¶¶ 3.2-3.3.) New Holly was envisioned to comprise both rental housing and houses that would be for sale. (See id. Ex. 1 (New Holly Homeowners Association (“HOA”) Compl.) at 5, ¶ 4.) Work began on the for-rent housing on March 5, 1998 and ended on November 30, 1999. (Bedell Decl. (Dkt. # 52) Ex. 1 (Clement Decl.) at 9 (Notice of Completion); Ex. 7 at 50 (Notice of Completion).) Work began on the for-sale units on August 12, 1999 and ended on December 15, 2002. (Id. Ex. 1 (Clement Decl.) at 10 (Notice of Completion); Ex. 7 at 49 (Notice of Completion).)
B. The PTI Subcontract
In performing its contract with SHA, Absher Pacific subcontracted with Plumbing Today, Inc. (“PTI”) for installation of a hydronic heating system at New Holly. (Bedell Decl. Ex. 2 (Tonningas Decl.) ¶¶ 4-5, 9-10; Compl. (Dkt. #1) ¶3.2.) PTI provided and installed plumbing fixtures as part of the hydronic heating system. (See Holt Decl. Ex. 3 at 33 (PTI Subcontract).) PTI’s subcontract with Absher Pacific required PTI to obtain liability insurance naming Absher Pacific as an additional insured without reservation or limitation.
C. The New Holly HOA Complaint and the SHA Complaint
In 2008, the New Holly HOA brought an action against SHA alleging defects in the hydronic heating system. (Holt Decl. Ex. 1 (New Holly HOA Compl.).) The New Holly HOA Complaint alleged that the hydronic heating systems had been failing since “at least 2003.” (Id. Ex. 1 at 7 ¶ 9.).
In 2009, SHA filed a separate suit against Absher Pacific as SHA’s general contractor , with respect to New Holly.
D. Absher Pacific’s Tender of Defense
In April 2009, Absher Pacific tendered its defense of the SHA Complaint to PTI’s insurers. (Holt Decl. "Ex. 3 at 22-47 (4/22/09 Absher Pacific tender letter).) The addressees of Absher Pacific’s tender letter included Defendants North Pacific Insurance Company (“North Pacific”) and Assurance Company of America (“Assurance”). (See id. Ex. 3 at 22.) The tender letter included a copy of the SHA Complaint, but not the New Holly HOA Complaint. (See id.) The tender letter also included incomplete copies of the contracts between Absher Pacific and PTI. (See id.) Subsequently, Defendant OneBeacon American Insurance Company (“OneBeacon”), which responded to Absher Pacific’s tender letter, obtained complete copies of both of these contracts. (See Blackburn Decl. ¶¶ 3-4, Exs. C, D.)
E. OneBeacon’s Denial of Absher Pacific’s Tender
On May 13, 2009, OneBeacon responded to Absher Pacific’s tender letter on behalf of its insured, PTI, listing policy number OOR 808958 by Defendant Pennsylvania General Insurance Company (“Pennsylvania General”), policy numbers C01-14974 and C02-14974 by North Pacific, and policy number COR808958 by OneBeacon. (Holt Decl. Ex. 4 at 48-51 (5/13/09 One-Beacon denial letter).) In its letter, One-Beacon denied Absher Pacific’s tender of defense of the SHA Complaint with respect to all of the foregoing policies. (See id. at 48.) OneBeacon denied coverage with respect to the North Pacific policies stating that the policies provided “only ongoing operations coverage,” and “[t]he insured had completed their [sic] work and left the site prior to any claim being made.” (Id. at 49.) OneBeacon denied coverage with respect to Pennsylvania General and OneBeacon policies based on the Additional Insured Endorsements found in those policies. (Id. at 50-51.) OneBeacon stated that “[a]n organization’s status as an additional insured under this endorsement ends when the named insured’s work is completed.” (Id. at 50.) OneBeacon further stated that “all of PTI’s work was completed before the policies with these endorsements incepted.” (Id. at 51.)
F. Assurance’s Initial Failure to Respond to Absher Pacific’s Tender
Assurance did not initially respond to Absher Pacific’s April 2009 tender letter. (Holt Decl. ¶ 6.) On June 10, 2009, having received no response from Assurance, Absher Pacific re-tendered the claims to Assurance and the other carriers, and invited the carriers to attend an upcoming mediation. (Id. Ex. 5 (6/10/09 Absher Pacific re-tender letter); Bedell Decl. (Dkt. # 52) ¶ 6, Ex. 5.) Assurance likewise failed to respond to this letter. (See Holt Decl. ¶¶ 6, 8.) Assurance has provided testimony from its claims handler that although the April 2009 letter is in Assurance’s file, the claims handler does not recall ever seeing
G. The New Holly Settlement
In September 2009, Absher Pacific, SHA, New Holly HOA, and others entered into a settlement agreement with respect to both the New Holly HOA Complaint and the SHA Complaint. (Love Decl. (Dkt. # 26) Ex. 4 (Settlement Agreement).) On behalf of Absher Pacific, Arrowood Indemnity Company (“Arrowood”), Absher Pacific’s carrier, paid $2.5 million to New Holly HOA. {Id. Ex. 4 at 1363 ¶ 2.1.) On behalf of SHA, the Housing Authority Risk Retention Group, Inc. (“HARRG”), SHA’s risk retention group, paid $1' million to New Holly HOA. {Id.) As part of the settlement, Absher Pacific assigned it claims against PTI and PTI’s carriers (who are the defendants in this action) to Arrowood and HARRG.
H. Assurance’s Eventual Denial of Absher Pacific’s Tender
In May 2009, Absher Pacific filed a third-party complaint against PTI with respect to the SHA Complaint. {See Thatcher Decl. (Dkt. # 53) ¶ 2.) PTI tendered its defense to Assurance, and Assurance accepted the tender under a reservation of rights in or about June 2009. {Id. ¶¶ 2-3.)
In early July 2010, Assurance’s claims handler for PTI’s claim contacted Absher Pacific’s counsel to discuss issues germane to the handling of Absher Pacific’s claim against PTI. {Id. ¶ 4.) During the conversation, counsel for Absher Pacific mentioned that Assurance had never responded to Absher Pacific’s additional insured tender. {Id.) Assurance’s claims handler explained that she was unaware of Absher Pacific’s tender. {Id.) Following this conversation, Assurance’s claims handlers immediately opened a separate additional insured claims file for Absher Pacific, and sent follow up emails to Absher Pacific’s counsel acknowledging the claim, explaining that the insurer could not find any additional insured endorsements for Absher Pacific, and requesting copies of the insurance certificates and/or additional insured endorsements from Absher Pacific. (Thatcher Decl. ¶ 5; Kazarian Decl. (Dkt. # 49) ¶¶ 3-6, Exs. 2-3; see also Bedell Decl. Ex. 6 at 46.) Assurance’s claims handler also requested copies of the project completion dates on multiple occasions. (Kazarian Decl. ¶¶ 5-6, Exs. 2, 3.) Although Absher Pacific’s counsel eventually sent the notices of completion to Assurance, he did not forward any certificates of insurance or additional insured endorsements during this time period. {See id. ¶ 6, Ex. 3.)
In September 2010, after Absher Pacific had failed to provide the requested information, Assurance sent a letter denying Absher Pacific’s claim because Assurance had not located any evidence at that time that Absher Pacific was an additional insured. {Id. ¶ 7, Ex. 4.) Notably, counsel for Absher Pacific with respect to the SHA complaint later produced the certificates of insurance and additional insured endorsements in response to a subpoena issued in the present litigation. (Bedell Decl. ¶ 9, Ex. 8.) In addition, .Assurance produced several additional insured endorsements that list “Absher-Pacific Joint Venture” as a scheduled additional insured. (Love Decl. Ex. 2 at 388, 390, 392.)
A. Standards
Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett,
B. Bad Faith and the Duty to Defend
In Washington, the duty to defend is different from and broader than the duty to indemnify. Am. Best. Food, Inc. v. Alea London, Ltd.,
An insurance company must look beyond the allegations in the complaint if “coverage is not clear from the face of the complaint but may exist.” Vanport Homes,
An insurer acts in bad faith if its breach of the duty to defend is “unreasonable, frivolous, or unfounded.” Alea London, Ltd.,
Absher Pacific asserts both types of bad faith claims against Defendants. Absher Pacific asserts that Defendants’ denial of a duty to defend was unreasonable, frivolous or unfounded based on the policy language. (See Mot. at 8-16.) Absher Pacific also asserts that Defendants’ handling of its claims was in bad faith because Defendants variously did not conduct a proper investigation, improperly relied upon extrinsic evidence in evaluating their duty to defend, or unreasonably delayed in responding to Absher Pacific’s tender. (See Mot. at 18-21.) Because the two types of bad faith claims referenced above result in different consequences with respect to the presumption of harm and coverage by estoppel, the court will consider the claims separately. The court will begin its analysis with Absher Pacific’s claims for bad faith based on Defendants’ denial of the duty to defend, and then turn to Absher Pacific’s claims for bad faith based on Defendants’ various alleged claims handling practices.
C. Defendants’ Denial of a Duty to Defend Absher Pacific
1. North Pacific Policies
Both North Pacific policies contain the following additional insured endorsement amending Section II of the policy, entitled “Who Is An Insured.” (Love Decl. Ex. 3a at 493, Ex. 3b at 714.) The endorsement states:
1. WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization (called “additional insured”) shown in the Schedule,5 but only with respect to:
(a) Vicarious liability arising out of your ongoing operations performed for the additional insured; or
(b) Liability arising out of any act or omission of the additional insured for which you have entered into an enforceable “insured contract” which obligates you to indemnify the additional insured, or to furnish insurance coverage for the additional insured, arising out of your ongoing operations for that additional insured.
(Id. (footnote added).)
An “insured contract” is defined in the policies (in relevant part) as “[t]hat part of any other contract or agreement pertaining to your business ... under which you assume the tort liability of another party to pay for “bodily injury” or “property damage” to a third person or organization.” (Id. Ex. 3a at 458, Ex. 3b at 693.) The parties do not appear to dispute that the contractual agreements between Absher Pacific and PTI requiring PTI to
Defendants assert that paragraph one of the endorsement constitutes a grant of coverage to Absher Pacific as an additional insured, but limits that grant to “ongoing operations” even when addressing an insured contract. (OneBeacon Resp. at 9.) Accordingly, Defendants assert that because the SHA Complaint specifically alleges that the hydronic heating systems began to prematurely fail “[a]fter NewHolly’s completion” (Holt Decl. Ex. 2 at 18 ¶ 3.8), the claim was clearly outside of the scope of policy’s coverage for “ongoing operations” based on the unambiguous language of the SHA Complaint. (See One-Beacon Resp. at 11-12.)
The policy does not define “ongoing operations,” but Washington courts have interpreted similar “ongoing operations” clauses in a manner consistent with Defendants’ interpretation. In Hartford Insurance Co. v. Ohio Casualty Insurance Co.,
Despite the forgoing authority, Absher Pacific nevertheless asserts that it
Second, Absher Pacific asserts that, even if the court were to interpret the “ongoing operations” clause in the manner suggested by the Hartford decision, North Pacific would still owe Absher Pacific a duty to defend because the New Holly HOA complaint and the SHA complaint contain allegations against Absher Pacific “that were potentially covered.” (See Mot. at 17.) Indeed, Absher Pacific asserts that the New Holly HOA complaint alleges property damage “which may have begun as soon as its installation.” (Id.) Although Absher Pacific did not provide a copy of the New Holly HOA Complaint with its tender, Absher Pacific asserts that had OneBeacon “done a good-faith investigation prior to declining the tender, OneBeacon would have obtained that complaint .... ” (Reply (Dkt. # 56) at 3.) To review the specific allegations at issue, the SHA Complaint alleged that the hydronic heating systems did not begin to fail until “[a]fter New Holly’s completion” (Holt Deck Ex. 2 at 18 ¶ 3.8), whereas the New Holly HOA complaint alleged that the hydronic heating systems had been failing since “at least 2003” (id. Ex. 1 at 7). As the court understands the argument, Absher Pacific is asserting either that (1) due to the indefinite allegation in the New Holly HOA Complaint with respect to the timing of the heating systems’ failure, Defendants were required to ignore the definite allegation in the SHA Complaint when rendering a decision on their duty to defend, or (2) despite the definite allegation in the SHA Complaint, the less definite allegation in the New Holly HOA Complaint created an ambiguity regarding the timing of the property damage that under Washington law Defendants were required to construe in Absher Pacific’s favor.
The court is not persuaded by either argument. The only complaint that names Absher Pacific as a defendant is the SHA Complaint, and it plainly alleges that the hydronic heating systems began to fail “[a]fter NewHolly’s completion.” (Holt Deck Ex. 2 at 18 ¶ 3.8.) This unambiguous language rendered the allegations in the SHA Complaint clearly outside the scope of the policy’s coverage in light of the “ongoing operations” clause. See Truck Ins. Exch.,
Further, in light of these unambiguous allegations, the insurer was under no obligation to look beyond the complaint to determine its duty to defend. Washington courts have carved out limited exceptions to the general rule that the duty to defend must be determined from the face of the
Even if one were to conclude that the insurer should have obtained a copy of the New Holly HOA Complaint because it was “readily ascertainable,” the outcome would be no different. The allegation in the New Holly HOA Complaint that the hydronic heating systems had been failing since “at least 2003” (Holt Decl. Ex. 1 at 7), is not in conflict with the allegation in the SHA Complaint that the hydronic heating systems began to fail “[a]fter NewHolly’s completion” (Holt Decl. Ex. 2 at 18 ¶ 3.8). The two allegations are readily harmonized as describing property damage that has occurred since at least 2003, but after New Holly’s completion. There is no inconsistency, and thus no reason to conclude that the allegations in the two complaints create any ambiguity that might require the insurer to assume a duty to defend. It is true that if all the court were considering were the allegations in the New Holly HOA Complaint, it would impossible to determine if the property damage occurred during the insured’s “ongoing operations” or not. This fact, however, does not mean that the insurer or the court must ignore the specific allegation in the SHA Complaint, which is the only complaint to which Absher Pacific is a defendant, that the hydronic heating systems began to fail “[a]fter NewHolly’s completion” (Holt Decl. Ex. 2 at 18 ¶ 3.8).
Next, Absher Pacific asserts that even if the SHA Complaint alleged property damage outside of PTI’s “ongoing operations,” the North Pacific polices contain an exception to the “ongoing operations” clause “that permits coverage for liabilities assumed under an insured contract.” (Mot. at 13.) The exclusion relied upon by Absher Pacific occurs immediately following the language quoted in paragraph one of the endorsement above, and reads, in pertinent part:
2. Additional Exclusion. This insurance does not apply to ... “property damage” occurring after:
(a) All work, including materials, parts or equipment furnished in connection with such work, on the project ... to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or
(b) That portion of “your work” out of which the injury or damages arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
This exclusion does not apply to the extent that an “insured contract” requires that you assume the tort liability of the additional insured arising out of a risk that would otherwise be excluded by this exclusion.
(Love Decl. Ex. 3a at 493, Ex. 3b at 714.) The final sentence provides an exception to the forgoing exclusion for property damage occurring after Absher Pacific’s work at the site “has been completed” or after PTI’s work “has been put to its intended use” for liability arising from an “insured contract.” (Id.) In other words, the exclu
Absher Pacific argues that the exception in the final sentence of the exclusion applies, not only to the exclusion found in paragraph two of the endorsement, but also to the original insuring language for “ongoing operations” found in paragraph one of the endorsement. {See Mot. at 12-13; Reply at 4-5.) Accordingly, under Absher Pacific’s interpretation, the policy would provide coverage with respect to liability arising out of an “insured contract” irrespective of whether the liability was also related to the insured’s “ongoing operations.” The plain language of the exception, however, states (twice) that it applies to “this exclusion.” Because paragraph two is entitled “Additional Exclusion,” the court cannot conclude that the exception contained within paragraph two applies to anything other than the exclusion found in paragraph two.
Further, Absher Pacific’s interpretation is contrary to Washington law concerning the interpretation of insurance policies. If there is no coverage under the terms of the insuring clause, coverage cannot be created based on the exceptions or qualifications contained in the policy’s exclusions. In Harrison Plumbing & Heating, Inc. v. New Hampshire Ins. Group,
Finally, Absher Pacific asserts that the “ongoing operations” clause in the North Pacific policies is distinguishable from the “ongoing operations” clause in the Hartford decision because the “ongoing operations” clause in the North Pacific policies contains the phrase “arising out of’ your “ongoing operations.” {See Reply at 7-8.) The “arising out of’ language did not appear in the clause considered by the court in Hartford. See Hartford,
The court sees at least two problems with Absher Pacific’s position. First, the Washington Supreme Court has recently indicated the Toll Bridge court’s broad interpretation of the phrase “arising out of’ may not be appropriately applied in some contexts. In Alea London, the insurer denied a duty to defend its insured based on an exclusion that stated that the insurance did not apply to any claim “arising out of’ certain types of assaults or acts related to an assault. Alea London, 229
Second, if the court were to accept the broad construction of the phrase advocated by Absher Pacific, it would effectively write the word “ongoing” out of the policy. The construction that Absher Pacific advocates is really equivalent to the phrase “arising out of your operations.” Yet, if this were the parties’ intent, there would be no need to include the word “ongoing” as a modifier of the word “operations.” Thus, like the Washington Supreme Court in Alea London, Absher Pacific’s interpretation of Washington law, including its advocacy for a broad definition of “arising out of’ based on the Toll Bridge decision, fails to persuade the court that its interpretation of the insurance contract is correct. See also Davis,
2. Pennsylvania General and OneBeacon Policies
The Pennsylvania General and OneBeacon policies both contain “ongoing operations” clauses similar, but not identical, to the clauses found in the North Pacific policies. (Love Deck Ex. 3c at 906, Ex.3d at 1235.) The additional insured endorsement amending Section II of these policies, entitled “Who Is An Insured,” states, in relevant part:
A. Section II — Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured. A person’s or organization’s status as an insured under this endorsement ends when your operations for that insured are complete.
(Id.)
The OneBeacon policy’s additional-insured endorsement uses the same language above, but adds the following exclusion:
B. With respect to the Insurance afforded to these additional insured, the following additional exclusions apply:
3. Exclusions
This insurance does not apply to:
******
b. “Bodily injury” or “property damage” occurring after:
*1250 (1) All work, including materials, parts or equipment furnished in connection with such work, on the project ... to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or
(2) That portion of “your work” out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
(Love Decl. Ex.3d at 1235.)
The primary differences between these policies and the North Pacific policies are that the Pennsylvania General policy does not contain any relevant exclusions to the endorsement at issue, and although the One Beacon America policy contains an exclusion that is similar to the one in the North Pacific policies, the exclusion does not contain the exception for “insured contracts” that produced so much argument by the parties with respect to the North Pacific policies. (Compare Love Decl. Exs. 3a at 493 and 3b at 714 with Exs. 3c at 906 and 3d at 1235.) Without this exception, based on the allegation in the complaint that the hydronic heating systems did not begin to fail until “[ajfter NewHolly’s completion” (Holt Decl. Ex. 2 at 18 ¶ 3.8), the grounds for denial of coverage under the OneBeaeon policy would include not only the “ongoing operations” clause, but also the exclusions for “operations” that had been “completed” and for work that “has been put to its intended use.” (Love Decl. Ex.3d at 1235.) The court’s analysis above concerning the “ongoing operations” clause in the North Pacific policies applies equally here with respect to the Pennsylvania General and OneBeaeon policies. Accordingly, the court also denies summary judgment with respect to Absher Pacific’s claim that Defendants denial of a duty to defend based on the language of these policies and the allegations contained in the SHA Complaint was “unreasonable, frivolous, or unfounded,” Alea London, Ltd.,
3. Assurance Policy
Assurance issued a policy to PTI encompassing policy periods from June 14, 1998 to June 14, 1999 and from June 14, 1999 to July 29,1999. (Love Decl. Ex. 1 at 10, 182, 385-86.) The grant of coverage states, in relevant part, that “[t]his insurance applies to ... property damage only if ... [t]he property damage occurs during the policy period.” (Love Decl. Ex. 1 at 73.) The Assurance policy also contains additional insured coverage where a “work contract” so requires. Specifically, the policy provides:
SECTION II — WHO IS AN INSURED
}Jj ‡ í|í ifc
f. Any person or organization ... which requires in a “work contract” that such person or organization be made an insured under this policy. However, such person or organization shall be insured only with respect to covered ... “property damage” ... which results from “your work” under that “work contract.”
The coverage afforded to such person or organization does not apply to ... “property damage” occurring after the earliest of the following times:
(1) When “your work” under the “work contract” ... has been completed.
(2) When that portion of “your work” under the “work contract” out of which any injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing oper*1251 ations for a principal as part of the same project.
(3) When our coverage for you under this policy or a renewal of this policy terminates and is not continued by other insurance provided by us.
(Love Decl. Ex. 1 at 80.)
Based on the allegation in the SHA Complaint that the hydronic systems began to prematurely fail “[ajfter NewHolly’s completion” (Holt Decl. Ex. 2 at 18 ¶ 3.8), Assurance could have denied coverage under the “completed” work exclusion or the exclusion for work that “has been put to its intended use.” (See Love Decl. Ex. 1 at 80.) In its denial letter, Assurance mentions that it can find no additional insured endorsement for “completed operations” coverage, but does not reference any specific policy language. (Holt Decl. Ex. 7 at 55.) Instead, Assurance states that it is denying coverage because it was unable, as of that time, to find an additional insured endorsement that named Absher Pacific. (Id.) Endorsements and/or certificates of insurance naming Absher Pacific were eventually located in the course of this litigation (see Bedell Decl. Ex. 8 at 52-61; Love Decl. Ex. 2 at 388, 390, 392), but Assurance has not altered its position that, based on the allegations in the SHA Complaint and the language of its policy, it did not owe a duty to defend to Absher Pacific for completed operations (see Assurance Resp. (Dkt. # 49) at 14-15). The court agrees, and accordingly also denies Absher Pacific’s motion for summary judgment that Assurance’s declination of a duty to defend was “unreasonable, frivolous, or unfounded,” Alea London, Ltd.,
D. Coverage by Estoppel
The court has denied Absher Pacific’s motion for summary judgment that Defendants’ denials of a duty to defend under the various provisions of the policies at issue were in bad faith. (See supra § III.C.) As a result, the court must also deny summary judgment with respect to Absher Pacific’s claims for coverage by estoppel. As noted above, where coverage or a duty to defend are not available under the policy terms, a rebuttable presumption of harm and coverage by estoppel are likewise unavailable with respect to claims for bad faith claims handling. Onvia,
E. Bad Faith Claims Handling
In addition to its claims that Defendants denied their duties to defend in bad faith, Absher Pacific also moves for summary judgment with respect to its allegations that Defendants engaged in acts of bad faith claims handling. As noted above, even where there is no coverage under a policy and an insurer is not obligated to defend its insured, a cause of action based on bad faith claims handling remains available to the insured. Onvia,
1. OneBeacon’s Claims Handling
Absher Pacific’s alleges that OneBeacon mishandled its claim by improperly considering materials extrinsic to the complaint and by failing to conduct a reasonable investigation, including correctly determining applicable policy language, before declining to defend. (See Mot. at 11-12, 18-19.) The court has already considered Absher Pacific’s assertion that OneBeacon improperly relied upon extrinsic materials and concluded that Absher Pacific failed to submit evidence upon which the court could conclude on summary judgment that Absher Pacific had indeed considered any such materials. (See supra § III.C.l.) Accordingly, the court also denies Absher Pacific’s motion for summary judgment that OneBeacon’s alleged consideration of extrinsic materials constituted bad faith claims handling.
Absher Pacific also asserts that OneBeacon mishandled its claim in bad faith by conducting an inadequate investigation. An insured may sue an insurer for a bad faith investigation even where the insurer ultimately correctly determines there is no coverage. Onvia,
First, as the court explained above (see supra § III.C.l), OneBeacon was not obligated to obtain a copy of the New Holly HOA Complaint because the allegations in the SHA complaint “were neither ambiguous nor inadequate” with respect to OneBeacon’s duty to defend. See Am. Best Food, Inc. v. Alea London, Ltd., 138 WashApp. 674,
The court also is unpersuaded by Absher Pacific’s argument with respect to the variation in policy language that OneBeacon cited in its denial letter. In its denial letter, OneBeacon implicitly acknowledged that it was not quoting directly from the actual policy language of the Pennsylvania General and OneBeacon policies when it stated that “[t]here are slight differences in the form on each policy,” but “[t]hey generally read as follows .... ” (Holt Decl.
Further, an essential element of the tort of bad faith claims handling is harm to the insured or damages. See Dan Paulson Constr. Co.,
In addition to the foregoing, OneBeacon has asserted that it did conduct an investigation of Absher Pacific’s claims. For example, OneBeacon has submitted evidence that although Absher Pacific failed to produce complete copies of its contracts with PTI in its tender letter (see Holt Decl. Ex. 3), Absher Pacific nevertheless obtained complete copies (see, e.g., Blackburn Decl. Exs. C, D). Accordingly, the court finds that a jury is entitled to consider evidence with respect to OneBeacon’s actual investigation of Absher Pacific’s claim, and denies Absher Pacific’s motion for summary judgment on this issue.
2. Assurance’s Claims Handling
Absher Pacific seeks summary judgment with respect to Assurance’s initial 15-month delay in responding to Absher Pacific’s tender. The court acknowledges that this is an extraordinarily long period of time for an insurer to fail to respond to its insured’s tender. Absher Pacific relies primarily on Truck Insurance Exchange v. Vanport Homes, Inc.,
Unlike the insurer in Vanport Homes, Assurance has offered explanations for its
The question of bad faith is ordinarily a question of fact. See Smith,
Absher Pacific also alleges that Assurance failed to conduct an adequate investigation when it denied coverage based on its inability to find an additional insured endorsement that specifically named Absher Pacific. (Mot. at 19-20.) Assurance describes the electronic search it conducted for the additional insured endorsements (Kazarian Decl. ¶¶ 3-4), but does not otherwise provide an explanation as to why it was unable to uncover the endorsements with respect to its own policy (see id.). Nevertheless, Assurance did ask Absher Pacific twice if it had any information concerning the applicable additional insured endorsements. (Kazarian Decl. ¶¶ 5-6, Exs. 2-3.) Absher Pacific did not respond to these requests. (See id. ¶¶ 5-6.) Because it could find no evidence of the additional insured endorsements at the time, Assurance ultimately denied coverage on this basis on September 20, 2010. (Kazarian Decl. ¶ 7, Ex. 4.) Subsequently, however, during the course of the present litigation, both Absher Pacific and Assurance ultimately discovered and produced evidence of Absher Pacific’s status as an additional insured under the Assurance policies.
Finally, Absher Pacific argues that it is entitled to summary judgment with respect to its claim that Assurance acted in bad faith when it considered materials outside the complaint with respect to its coverage decision. (Mot. at 15.) Once it realized that Absher Pacific had tendered a claim with respect to the SHA Complaint, Assurance asked Absher Pacific to provide copies of the notices of completion with respect to PTI’s work at New Holly, and Absher Pacific complied with this request. (Kazarian Deck ¶¶ 5-6, Ex. 2.) Based on the dates of completion in the notices, along with the allegation in the SHA Complaint that the hydronic heating systems began to fail “[a]fter NewHolly’s completion” (Holt Deck Ex. 2 at 18 ¶ 3.8), Assurance determined that the alleged property damage did not occur with its policy periods. (Assurance Resp. at 6-7.) Absher Pacific argues that Assurance’s reliance on the information contained in the notices of completion violated the rule in Washington that ordinarily an insurer’s duty to defend is to be determined from the face of the complaint. (Mot. at 15.)
Once again, however, Absher Pacific fails to show how the absence of this information would have led “to a different understanding of the facts, or a different result,” Alea London,
IV. CONCLUSION
Based on the foregoing analysis and because the court has found that there are genuine issues of material fact for trial, the court DENIES Absher Pacific’s motion for summary judgment (Dkt. # 24).
Notes
. No party has requested oral argument. Federal Rule of Civil Procedure 56 does not require a hearing where the opposing party does not request it. See, e.g., Demarest v. United States,
. The PTI Subcontract states, in pertinent part;
Subcontractor [PTI] shall submit to Absher Pacific a Certificate of Insurance (i) naming Absher Pacific and the Owner [SHA] as additional Insureds without limitation, qualification or reservation, (ii) endorsed to be primary and noncontributory with any insurance maintained by Absher Pacific; (iii) containing a waiver of rights of subrogation against Absher Pacific and the Owner, and (iv) containing a Severability of Interest in favor of Absher Pacific and the Owner.
(Holt Decl. Ex. 3 (PTI Subcontract) at 37 ¶ 10(a).)
. SHA also sued the two entities that comprised the joint venture Defendant Absher Construction Company and Defendant Pacific Components, Inc. (Holt Decl. Ex. 2 (SHA Compl.).)
. The court has previously ruled that HARRG and Arrowood are the real parties in interest with respect to this lawsuit. (Order (Dkt. # 65) at 11-12.) Pursuant to Federal Rule of Civil Procedure 17(a)(3), HARRG and Arrowood have properly ratified PTI’s action herein. (HARRG Decl. (Dkt. # 74); Arrowood Decl. (Dkt. # 73).)
. Defendants note in their briefing that the organization named in the schedule is Defendant Absher Construction Company and not the joint venture Absher Pacific. (OneBeacon Resp. (Dkt. # 47) at 3.) However, OneBeacon did not deny coverage on this basis and did not assert in the course of their response to this motion that this discrepancy justified its denial.
. The court notes that, although the decision in Valley Ins. Co. v. Wellington Cheswick, LLC, No. C05-1886RSM,
. The policy defines a "work contract” as "a written agreement into which you enter for work performed by you or on your behalf.” (Love Decl. Ex. 1 at 265.) The parties do not raise any dispute concerning whether the contract between PTI and Absher Pacific constituted a “work contract.”
. Although the Washington Supreme Court reversed portions of Court of Appeals’ decision in Alea London,
. The documents were produced by Absher Pacific's attorneys in the underlying lawsuit with respect to the SHA complaint in response to a subpoena. (See Bedell Decl. 119, Ex. 8.)
. Because the court has denied Absher Pacific's motion for summary judgment with respect to its claim against Defendants for bad faith denial of its tender of defense and bad faith claims handling, the court does not reach issues concerning the proper measure of damages. Any such rulings, at this point in the litigation, would be premature.