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City of Everett v. American Empire Surplus Lines Insurance Co.12/23/1991
rd party claims for misfeasance and malfeasance of public officers which result in financial loss. Nelson then described several instances where American has paid claims for misfeasance and malfeasance pursuant to E&O;policies identical to the Everett policy.
At the hearing on summary judgment, the trial court rejected American's prior knowledge argument. The court did, however, grant American's motion for summary judgment concluding that both exclusions 6 and 14 precluded coverage.
II
On appeal, the City contends that neither exclusion 6 nor 14 applies here to preclude coverage. American cross-appeals from the trial court's rejection of its contention that the City's prior knowledge of the potential claim is an additional basis to deny the City coverage.
On review of a summary judgment, the appellate court places itself in the position of the trial court and, considering the evidence in the light most favorable to the nonmoving party, must assess whether "the pleadings, depositions . . . and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Del Guzzi Constr. Co. v. Global Northwest Ltd., 105 Wash. 2d 878, 882, 719 P.2d 120 (1986) (quoting CR 56(c)).
An insurance policy should be given a fair, reasonable, and sensible construction consonant with the apparent object and intent of the parties. Sears v. Grange Ins. Ass'n, 111 Wash. 2d 636, 638, 762 P.2d 1141 (1988); Morgan v. Prudential Ins. Co. of Am., 86 Wash. 2d 432, 434, 545 P.2d 1193 (1976). If the policy language is clear and unambiguous, the court may not modify the contract or create an ambiguity where none exists. Morgan, 86 Wash. 2d at 434; see also Avemco Ins. Co. v. Mock, 44 Wash. App. 327, 329, 721 P.2d 34 (1986).
We address first the City's claim that exclusion 6 does not apply to the nondamage expenses listed in the coverage portion of the policy. The City makes a number of arguments. First, it points out that the E&O;policy provides coverage for "all loss", and loss includes not only damages, but also "judgments, settlements and costs, cost of investigation and defense of legal actions . . . and appeals therefrom". Thus, the City claims that exclusion 6's bar on "damages . . . arising from, or caused by . . . death" does not apply to these "nondamage" types of losses.
We reject this interpretation. The exclusion must be read in context with the introductory language which
precedes it. When this is done, it is clear that the policy excludes " any payment in connection with any claim made or suit brought" for "damages . . . arising from, or caused by, bodily injury , personal injury , sickness, disease or death". (Italics ours.) Because the underlying action specifically alleges damages arising from Gary Parks' death, the City is not entitled under the policy to any payment incurred in putting on a defense to this claim, including settlements, costs, or attorney's fees.
The City next argues that if exclusion 6 is held to apply, the policy provides no coverage at all. This argument is without merit. As the Nelson declaration plainly demonstrates, American has provided coverage under identical E&O;policies for a variety of wrongful acts by public officials. Thus, although the policy is not one of general liability, neither is its coverage nugatory. Fo
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