Lead Opinion
¶1 The supports for the deck system at Max and Krista Sprague’s house rotted out due to improper construction techniques exposing the supports to the elements. Their claim for homeowners’ insurance coverage was denied due to exclusions for rot and defective construction. The trial court
FACTS
¶2 The Spragues purchased their home in 1987. Safeco has insured the property continuously since the Spragues purchased the home. In 1995-96, the Spragues extensively remodeled the property and installed the deck system at issue here. The system consists of two large decks on the bottom and middle levels, and a smaller third deck on the top level. Six supports, known as “fin walls,” run from a concrete pad up through the decks. The supports are not connected to the house.
¶3 The fin walls were encased in a foam and stucco coating. In 2007, contractors repairing rot in an exterior wall near a bay window suggested that the Spragues install vents in the fin walls to permit the supports to air out if they ever got wet.
¶4 Safeco hired engineers to study the problem. They warned the Spragues not to use the decks and also directed a contractor to install shoring to uphold the decks. The engineers eventually concluded that the fin walls had inadequate flashing and other construction defects that caused the supports to rot. The decks were in a state of imminent collapse due to impairment of the structural integrity of the system. The condition had existed prior to September 2003.
¶5 The Spragues sought coverage from Safeco due to the decks being in a state of “collapse.” A claims representative tentatively believed there would be coverage under the initial policies issued to the Spragues. The company, however, ultimately denied coverage due to the exclusions for construction defects and rot damage.
f 6 The Safeco homeowners’ policy provided coverage for all losses that were not excluded. Prior to September 2003, the policies issued by Safeco did not define the term “collapse” nor explicitly address “collapse” as a covered or excluded loss. The policies did exclude coverage for losses caused by “smog, rust, mold, wet or dry rot.” The policies also provided that despite those exclusions, “any ensuing loss not excluded is covered.” Another set of exclusions covered building defects, including defective design, construction, or materials. That section of the policies also recognized that “any ensuing loss not excluded is covered.”
¶7 Safeco issued new policies to the Spragues in September 2003. The new policies expressly included “collapse” in the exclusion from coverage. “Collapse” was defined to mean fallen to the ground.
¶8 The Spragues paid $282,000 to repair the fin walls. The day after Safeco denied coverage, the Spragues filed suit. The trial court granted summary judgment to Safeco. The Spragues then appealed to the Court of Appeals. Division One of that court reversed, concluding that the decks had collapsed and that collapse was not an excluded loss due to the ensuing loss provisions of the policy. Sprague v. Safeco Ins. Co. of Am.,
¶9 This court then granted discretionary review of that decision. Sprague v. Safeco Ins. Co. of Am.,
ANALYSIS
¶10 The question presented here is whether the advanced decay of the fin walls was a
¶11 Interpretation of the language of an insurance policy presents an issue of law that is reviewed de novo. Woo v. Fireman’s Fund Ins. Co.,
¶12 The law governing all risk policies and ensuing loss provisions was authoritatively set forth in the companion decision in Vision One; that analysis will not be repeated here. Instead, this case presents a straightforward issue of applying that analysis to these facts. As recognized in Vision One, the policy at issue here is an “all risk” policy that provides coverage for all losses except those that had been excluded. Vision One,
¶13 We need not decide whether the deck had collapsed due to the loss of structural integrity even though it had not fallen to the ground. Whether or not the deck had reached a state of collapse, its condition was the result of the excluded perils of defective workmanship and rot and did not constitute a separate loss apart from those perils.
114 As explained in Vision One, the purpose of an ensuing loss provision is to limit the scope of an exclusion from coverage; losses caused by the excluded peril will be covered unless they are subject to their own specific exclusions. The classic example described there — a (covered) fire loss resulting from (excluded) defective wiring — explains the essence of the clause. Id. at 514-15. In effect, the clause breaks the causal chain between the excluded risk and losses caused by the excluded peril in order to provide coverage for the subsequent losses. TMW Enters., Inc. v. Fed. Ins. Co.,
¶15 “Many events can be characterized as both a loss and a peril,” and distinguishing between them will at times constitute “a semantic distinction without a difference.” Vision One,
¶16 “Rot” is typically not defined in insurance policies, and courts must rely on dictionary definitions of the term. E.g., Phillips v. United Servs. Auto. Ass’n,
1 a: to undergo natural decomposition: decay as a result of the action of bacteria or fungi ... b : to become unsound or weak...
2 a : to go to ruin : deteriorate.
Webster’s Third New International Dictionary 1976 (1993). Stated simply, “rot” describes the process of deterioration.
¶17 These definitions confirm that rot typically results in the complete deterioration of the rotting material. In the case of a wooden structure, the natural process of deterioration will result in collapse and eventual
¶18 The facts of Vision One demonstrate proper application of the ensuing loss provision. The policy at issue there excluded from coverage losses caused by faulty workmanship or deficient design but covered resulting losses including collapse. Vision One,
f 19 As in Vision One, there is no coverage here for the fin walls because of the policy exclusions for rot and defective workmanship. If there had been losses other than to the fin walls — an injury to a person hurt by the collapse or property damaged by the deck failure — coverage would have existed under the ensuing loss provisions of the policy. Unlike Vision One, that was not the case here. The only loss was to the deck system itself. That loss resulted from rot caused by construction defects.
¶20 The trial court correctly concluded that there was no coverage for the rotting deck supports. It properly granted summary judgment.
CONCLUSION
¶21 Rotting wood deteriorates to the point that it loses its structure. That natural process of decay does not amount to a new or different condition. Because the homeowners’ policies here excluded coverage for both rot and defective construction, the deterioration of the fin walls was not a covered condition. We reverse the Court of Appeals and reinstate the judgment of the trial court.
Notes
Judge Kevin M. Korsmo is serving as a justice pro tempore of the Supreme Court pursuant to Washington Constitution article IV, section 2(a).
The Spragues submitted a claim to Safeco for the window repairs. The claim was denied; it is not at issue in this action.
The terms “ensuing loss” and “resulting loss” have the same meaning. See Vision One,
Concurrence Opinion
¶22 (concurring) — I agree with the majority that Safeco Insurance Company of America properly denied coverage because the homeowners’ policy before us excluded coverage for both rot and defective construction. I write separately, however, in order to set forth my opinion that even if Safeco’s policy covered losses associated with “collapse,” it is apparent that Max and Krista Sprague’s deck did not collapse. In reaching that conclusion, I am mindful of the principle that we are to construe terms in an insurance policy from the standpoint of a typical purchaser of insurance. In my view, a typical purchaser of insurance would be inclined to agree with the following definition of “collapse” that is contained in Webster’s Third New International Dictionary 443 (2002): “to break down completely : fall apart in confused disorganization : crumble into insignificance or nothingness ... fall into a jumbled or flattened mass.” The record here shows that the Spragues’ deck did not break down. Neither did it fall apart or crumble. Thus, it cannot be said that it collapsed.
¶23 The dissent disagrees, highlighting a portion of Webster’s definition of “collapse,” which is as follows: “ ‘a breakdown of vital energy, strength, or stamina.’ ” Dissent at 534 (quoting Webster’s, supra, at 443). It is apparent that this portion of Webster’s definition of “collapse” has no application to the collapse of structures but, rather, relates to the kind of emotional or mental collapse that may be experienced by an individual. Here, of course, we are confronted with an alleged collapse of a structure, a deck, not the asserted loss of physical abilities or physical depression. Construing the term “collapse” in a commonsense way, as would a typical purchaser of insurance, and in the context of what occurred here, we should hold that the Spragues’ deck did not collapse. For that reason, as well as that set forth in the majority opinion, there is no coverage under the Safeco policy.
Justice Gerry L. Alexander is serving as a justice pro tempore of the Supreme Court pursuant to Washington Constitution article IV, section 2(a).
Dissenting Opinion
¶24 (dissenting) — Despite acknowledging the proper interpretation of “ensuing loss” set forth in our opinion in the companion case of Vision One, LLC v. Philadelphia Indemnity Insurance Co.,
¶25 First, it must be remembered the Spragues had an all-risks policy with Safeco Insurance Company. As we explained in Vision One, such policies “ ‘provide coverage for all risks unless the specific risk is excluded.’ ” Vision One,
¶26 The policy listed several excluded perils under a section entitled “Building Losses We Do Not Cover.” Clerk’s Papers (CP) at
¶27 The Court of Appeals concluded that the ensuing loss clause covers the damage to the Spragues’ deck. The court explained that “the losses that are faulty construction and rot are not covered, but the ‘ensuing losses,’ those that result from such faulty construction or rot, are covered because such an ensuing loss is not excluded elsewhere in the policy.” Sprague v. Safeco Ins. Co. of Am.,
¶28 Safeco insists that even if its policy covers collapse, coverage should apply only when a structure actually falls down. The majority does not endorse this argument, and for good reason. Absent a policy definition, courts have generally rejected the fall-down notion of collapse in favor of the more liberal standard, “ ‘substantial impairment of structural integrity.’ ” Mercer Place Condo. Ass’n v. State Farm Fire & Cas. Co.,
¶29 While the majority does not endorse Safeco’s definition of collapse, it insists we need not decide if the deck collapsed because
¶30 We explained in Vision One that the ensuing loss clause limits the scope of what is otherwise excluded under the policy.
¶31 The majority wrongly requires that there be a “separate” cause of an ensuing loss, distinct from the excluded peril. Majority at 530. But, such a requirement would render the ensuing loss clause inoperative because the clause is implicated only when a covered loss results or ensues from an excluded peril. This presupposes causation. What the majority appears to be searching for is a physical line of demarcation. Thus, it seizes on the fact that in Vision One, the shoring installation was physically separate from the floor slab and related concrete work damaged in the collapse. Majority at 530.
¶32 I acknowledge that the nature of the ensuing loss is easier to see in Vision One, but the same principles are at play here. The engineers who examined the Spragues’ deck concluded that the “decayed wood framing in the deck piers” was caused by a combination of (1) “[inadequate flashing between the deck beams and the deck piers,” (2) “[p]ossible inadequate flashing between the deck guardrails and the deck piers,” and (3) “[inadequate ventilation of the deck piers.” CP at 109. They determined that the deck had been in a state of imminent collapse since before 2003. CP at 106. The engineering report described the likely process that undermined the structural integrity of the piers:
Water drained through the gaps between the spaced decking boards and onto the deck beams below. The water then seeped through the cracks along the sides of the deck beams and under the small metal flashings over the deck beams into the pier assembly. Once inside the pier assembly, the water came in contact with the wood framing. The absence of ventilation in the deck piers prevented the framing from drying. The moist conditions were conducive to the growth of fungi in the wood that causes decay and, over time, resulted in the gradual deterioration of the wood framing.
CP at 227.
¶33 While the majority reduces the circumstances here to the “natural process of decay,” majority at 531, in fact it is possible to identify the progression of events from faulty workmanship and wood rot to the imminent collapse. Just as in Vision One, the covered loss ensued from excluded perils. To the extent the ensuing loss is harder to visualize in this case, perhaps that is because it developed inside the deck fin walls rather than out in the open, as in Vision One.
¶34 Finally, the majority insists that the ensuing loss clause applies only to personal injury or property damage that results from a collapse, noting that here, “[t]he only loss was to the deck system itself.” Majority at 531. We rejected a similar, separate property argument in Vision One.
¶35 In sum, the Spragues’ all-risk policy contemplated losses caused by collapse — including substantial impairment of structural integrity. The ensuing loss clause provides coverage because the deck collapse ensued from the defective construction of the deck, and the policy did not exclude coverage for collapse. I would affirm the Court of Appeals conclusion that there is coverage. Because the Spragues have demonstrated coverage under the policy, I would also hold they are entitled to fees under Olympic Steamship Co. v. Centennial Insurance Co.,
Reconsideration denied July 9, 2012.
Beginning in 2003, Safeco added an endorsement to the Spragues’ homeowners policy excluding “collapse” as a peril. Clerk’s Papers (CP) at 98. Under the new endorsement, the policy did not cover any losses “caused directly or indirectly” by “collapse.” Id. The endorsement also contained a definition of the word “collapse,” stating that only “an abrupt falling down or caving in of a building or any part of a building” qualified as a collapse. CP at 99. Some limited coverage for collapse was provided under the policy’s section for “Additional Property Coverages.” CP at 98-99.
Safeco asserts that its pre-2003 policies did in fact define collapse as requiring the structure to fall down because the personal property section clarifies that “[collapse] does not include settling, cracking, shrinking, bulging or expansion.” CP at 54, 79. Safeco reads this provision to exclude any form of collapse short of the actual falling down of the structure. A majority of courts have rejected this argument, even where the policy defines collapse to not include settling and cracking. Am. Concept Ins. Co. v. Jones,
The amount of coverage presents a different question. The majority seems bothered that recognizing coverage for collapse would seem to provide coverage for the very peril Safeco’s policy excludes, namely wood rot and defective construction. But, there is a difference between recognizing coverage and calculating the loss. The extent to which damages from excluded perils may be subtracted from ensuing loss coverage is not before us.