by Soha Lang | Mar 27, 2024 | Blog News, Publications
On March, 14 2024, the Washington Supreme Court held, in Gardens Condo. v. Farmers Ins. Exch., 2024 Wash. LEXIS 165 (2024), that a resulting loss exception to a faulty workmanship exclusion preserved coverage under the insured’s all-risk policy because the workmanship resulted in a covered loss.
In that case, the insured had discovered water damage to the roof of its 26-unit condominium building, caused by insufficient interior vents and design issues preventing needed ventilation. The insured had the roof assembly redesigned and repaired in attempts to increase ventilation and eliminate condensation. However, the improvements still did not provide sufficient ventilation causing the accumulation of water vapor and condensation in the space between the roof surface and ceiling. The insured sought coverage for this loss, and the insurer denied coverage under the policy’s faulty workmanship exclusion, which contained a resulting loss exception and which the Court interpreted to mean, “if faulty workmanship causes a covered peril to occur and that covered peril results in loss or damage, the loss or damage will be covered.”
Relying on the holdings in Vision One LLC v. Philadelphia Indemnity Insurance Co., 174 Wn.2d 501, 276 P.3d 300 (2012), and Sprague v. Safeco Insurance Co. of America, 174 Wn.2d 524, 276 P.3d 1270 (2012), both involving faulty workmanship exclusions and resulting loss exceptions, the court held that the resulting loss exception preserved coverage because, although faulty workmanship existed, the faulty workmanship resulted in a covered loss caused by water vapor and condensation. If the insurer had desired, it could have drafted the policy differently by omitting the resulting loss exception entirely or, if included, by limiting the exception to “ensure that the entire causal chain resulting from an excluded peril would [have been] excluded.”
The Court affirmed the ruling in favor of the insured.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Soha Lang | Mar 19, 2024 | Publications
In a recent opinion, Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC, the Supreme Court of the United States considered the validity of a choice-of-law provision in maritime insurance policies. Great Lakes Insurance insured Raiders Retreat Realty with a maritime insurance policy that included a choice-of-law provision which selected New York law to govern future disputes between the parties. A boat insured under the Great Lakes policy ran aground, and Great Lakes denied the claim. Great Lakes based the decision on the allegation that Raiders breached the insurance contract by failing to maintain the boat’s fire-suppression system. Under New York law, this would void the contract in its entirety.
Great Lakes filed a declaratory action to deny coverage in the Eastern District of Pennsylvania. Raiders responded making contract claims under Pennsylvania law, claiming that Pennsylvania law should be used because, as the location of the trial, it was the jurisdiction that had the most interest in the dispute. The court determined that the choice-of-law provision was enforceable under federal maritime law.
First, the court considered the initial question of whether there were already any federal maritime rules regarding whether choice-of-law provisions in maritime contracts were enforceable. The court noted that it and Courts of Appeals have enforced choice-of-law provisions in maritime contracts. The court compared the choice-of-law provisions in insurance policies to forum selection provisions, which it has upheld in maritime contracts. Ultimately, the court stated it will uphold choice-of-law provisions because they reduce legal uncertainty for the parties and discourages forum shopping.
Next, the court considered whether the choice-of-law provisions should be considered under state law. The court confirmed that there is no state law which will override a choice-of-law provision in a maritime contract. The court reiterated that there is a federal rule that governs whether choice-of-law clauses in maritime contracts are enforceable and refused to create a new rule. Further, the court noted that it will consider whether there is an equitable result when applying maritime rules. Here, the court held that its decision to uphold these clauses was equitable because it will prevent legal uncertainty to parties entering into similar agreements.
The court looked at whether there are any exceptions to this rule as it allowed some in the past. However, the court refused to create a new exception as requested by Raiders because there is no public policy interest in substituting one state’s law for another’s.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S., or its clients.
by Soha Lang | Feb 6, 2024 | Blog News
On January 26, 2024, the Alaska Supreme Court reviewed the superior court ruling regarding an insurance policy exclusion which excluded coverage for “bodily injury… [a]rising out of … the ownership, maintenance, use, loading or unloading of… an ‘aircraft.’” The injury at issue arose when the plaintiff was pushing a 1946 Piper PA-12 airplane in 2019. The Piper had been purchased by the plaintiff’s husband in 2011 and had not flown since it failed an inspection in 2014. The plaintiff’s husband had begun to repair a fabric covering which had led to the inspection failure and had removed the plane’s wings, tail rudder, and elevators from the fuselage. The rest of the fuselage was intact, as well as many other parts of the Piper. The Piper was insured under an aircraft owner-specific policy and was registered as an aircraft with the FAA.
The issue the court reviewed was whether the plaintiff’s injury from pushing the Piper arose out of the ownership and maintenance of an “aircraft,” which would preclude coverage under the above exclusion. The court found “as USAA argues, a reasonable person would understand that the terms of the policy exclude bodily injury ‘that has a causal connection to the possession and control over (ownership [of]) an airplane.’” The court also determined that the plain language of the exclusion was clear and that it would be unreasonable to limit the exclusion to when an aircraft was fully assembled and operable. The court found that “to conclude otherwise would ignore the policy’s exclusion of coverage for bodily injury arising out of maintenance of an aircraft.” The court further held that it would be unreasonable of a lay insured to assume that the exclusion no longer applied solely because the aircraft had been partially disassembled and was no longer fully intact. The superior court’s rulings were affirmed.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S., or its clients.
by Soha Lang | Jan 24, 2024 | Blog News
The Washington Supreme Court, in Pacific Lutheran Univ., et. al., v. Certain Underwriters at Lloyd’s London, 2024 Wash. LEXIS 55*, Case No. 100752-3 (2024), reviewed the trial court’s rulings for abuse of discretion in (1) denying the Insurers’ motion to dismiss the Colleges’ action, based on forum non conveniens; and (2) granting the Colleges’ motion to enjoin the Insurers from taking further action in a parallel case subsequently initiated by the Insurers in Illinois State Court, based on equitable factors. On January 18, 2024, the Supreme Court affirmed those rulings.
This action arises from an insurance coverage dispute based on losses allegedly caused by the COVID-19 pandemic. The Insurers issued “all risk” insurance policies to the Colleges through the EIIA, a nonprofit organization that provides risk management and insurance services to member institutions. The Colleges brought this action against the Insurers in their selected forum, the Pierce County Superior Court, consistent with the policies’ “suit against the company” clause (the “Washington Action”). Several months later, two of the defendant Insurers to the Washington Action commenced a parallel action against the EIIA in Illinois State Court, and subsequently joined the Colleges as defendants (the “Illinois Action”).
The Colleges moved to enjoin the Insurers from taking further action in the Illinois Action, and the Insurers moved to dismiss the Washington Action on the basis of forum non conveniens. The trial court ruled in favor of the Colleges, and the Insurers sought review by the Washington Supreme Court.
The Supreme Court held that the trial court did not abuse its discretion in electing to enforce the policies’ forum selection clause, by denying the Insurers’ motion to dismiss based on forum non conveniens. The Court explained that the common law doctrine of forum non conveniens refers to “the discretionary power of a court to decline jurisdiction when the convenience of the parties and the ends of justice would be better served if the action were brought and tried in another forum” and “unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Here, the Colleges had the contractual right under the policies to select their desired forum, all sixty plaintiff Colleges elected for the dispute to be heard in Pierce County Superior Court, and the Insurers failed to establish that the relevant private- and public-interest factors justified denying the Colleges’ contractual right. Accordingly, the Supreme Court held that the trial court properly enforced the policies’ forum selection clause and affirmed the trial court’s ruling.
The Supreme Court further held that the trial court properly issued the injunction enjoining the Insurers from taking further action in the Illinois Action, by granting the Colleges’ motion based on equitable factors. The Court explained that an injunction is an equitable remedy, and that a Washington Court may enjoin parties before it from pursuing an out-of-state action where equity clearly demands. Here, the important factors relied on by the trial court were the timing in which the actions were filed, the parallelism of the actions, and the presence of a forum selection clause that established the Colleges’ contractual right to select forum. Accordingly, the Supreme Court held that the trial court properly enjoined the Insurers to protect those interests and affirmed the trial court’s ruling.
The trial court’s rulings on the motions were affirmed.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.
by Soha Lang | Nov 12, 2020 | Blog News
Soha & Lang, P.S. is honored to accept this year’s Presidents Award from the Pacific Northwest Chapter of the CPCU Society. The President’s Award recognizes a company’s strong support for insurance education and involvement in the CPCU Society. We also extend our congratulations to Soha & Lang, P.S. shareholders Paul Rosner, Jennifer Dinning, and Geoff Bedell, who earned the CPCU designation and are active in the CPCU Society.
Learn more about the Pacific Northwest Chapter of the CPCU Society at: https://pacificnorthwest.cpcusociety.org/about
