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Truck Insurance Exchange v. Vanport Homes3/3/2000
ORDER ON REMAND
Pursuant to the Supreme Court's order of remand, we have reconsidered our opinion filed March 3, 2000, in light of Hayden v. Mutual of Enumclaw Ins. Co., 141 Wn.2d 55, 1 P.3d 1167 (2000). We adhere to our original opinion, which is consistent with Hayden.
Both Hayden and our case involve general commercial liability insurance policy exclusions for damage to property allegedly caused by the insured's negligence or actions. The cases differ, however, in that Hayden involved the work of the insured, a tree-grafter whose defective work allegedly caused the loss of use of fruit trees, without physical damage to the claimants' property. Hayden, 141 Wn.2d at 58, 60. The claimed loss of use in Hayden was the delay and loss in fruit production when the grafts did not take. Hayden, 141 Wn.2d at 58. But the delayed and failed grafting by the insured did not damage the customers' rootstock. Hayden, 141 Wn.2d at 58. Thus, the insurance policy's exclusion, for loss of use of property that was not physically damaged, relieved the insurer from the duty to defend. Hayden, 141 Wn.2d at 66-67.
In our case, however, material factual differences precluded activation of the exclusions. Unlike in Hayden, there was physical damage to the customers' homes. Truck Ins. Exch. v. VanPort Homes, Inc., No. 23888-8-II, slip op. at 9 (Wash. Ct. App. Mar. 3, 2000). But the insured, Vanport, was not the party who caused it. And in its brief on appeal, TIE 'concedes that the complaints against VanPort Homes alleged 'property damage,'' which the policy defines as '{p}hysical injury to tangible property.'
As the Supreme Court noted in Hayden,
The duty to defend . . . exists merely if the complaint contains any factual allegations which could render the insurer liable to the insured under the policy. . . . {T}o determine whether the duty to defend exists, this court examines the policy's insuring provisions to see if the complaint's allegations are conceivably covered. If covered, this court must then determine whether an exclusion clearly and unambiguously applies to bar coverage. Hayden, 141 Wn.2d at 64 (emphasis added; citation omitted).
Applying these tests to the facts in our case, we adhere to our original holding that the homeowners' complaints of physical damage to their homes were 'conceivably covered' under Vanport's comprehensive general liability insurance policy with TIE, and for which no exclusion 'clearly and unambiguously applie{d} to bar coverage.' Hayden, 141 Wn.2d at 64. TIE had a duty under the policy to defend Vanport against the customers' claims that damages to their homes resulted from Vanport's negligent supervision of the subcontractors' work and its failure to discover defects in workmanship. The pertinent policy exclusions do not apply because: (1) the subcontractors, who caused the property damage to the homes, were not working on Vanport's behalf (exclusion 'j(5)'); and (2) there was physical damage to the homes, arising from defects and deficiencies in the subcontractors' work, not from any defect, deficiency, delay, or failure in the work of consultant Vanport, who at most failed to oversee and was not present when the subcontractors performed their defective work (exclusion 'm'). Our holding does not transform TIE's general commercial liability policy into a 'performance bond, product liability insurance, or malpractice insurance.' Hayden, 141 Wn.2d at 64 (quotation omitted).
Hayden does not warrant modification of our original holding in this case: 'We affirm the summary judgment but remand for determination of the reasonableness of the settlements.' VanPort Homes, slip op. at 1.
We concur:
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