Zurich American Ins., Resp/cross-apps v. Ledcor Industries, Inc., App/cross-resp ( 2018 )


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  • |N THE COURT OF APPEALS OF THE STATE OF WASH|NGTON
    ZUR|CH AMER|CAN iNSURANCE
    COMPANY, a foreign insurance
    company1
    Respondent/Cross-Appei|ant,
    V.
    !_EDCOR !NDUSTR|ES (USA) |NC., a
    Washington corporation,
    ADIV||RAL WAY, LLC, a Washington
    iimited iiabi|ity company, and SQ[, iNC.,
    a Washington corporation
    Appei|ants/Cross-Respondents.
    LEDCOR |NDUSTREES (USA) INC., a
    Wash§ngton corporation,
    Appe||ants,
    v.
    AMER!CAN iNTERNATiONAL
    SPEC|ALTY L|NES iNSURANCE
    COJVIPANY, INC., a foreign insurance
    company; CAIV|BREDGE |NTEGRATED
    SERVICES GROUP, |NC., a foreign
    corporation; LIBERT¥ !NSURANCE
    UNDERVVR|TERS, |NC., a foreign
    insurance company; AEU
    NO`` 76490-0~¥
    D|V|SEON ONE
    UNPUBL|SHED OP|N!ON
    FELED: December 10, 20?8
    NO. 76490-0~|/2
    COMMERC|AL li\ESUFiANCE
    CO|V|PANY OF CANADA, a foreign
    insurance company; LEX|NGTON
    |NSURANCE COMPANY, a foreign
    insurance company; i_lBERTY
    SUFlPLUS INSURANCE
    CORPOF{AT|ON, a foreign insurance
    company; HARTFORD PROPERTY
    ANE) CASUALTY COMPANY, a foreign
    insurance company; and
    CONT|NENTAL WESTERN
    iNSUFiANCE COMPAN¥, a foreign
    insurance company,
    Third-Party Defendants,
    VlFiG|NlA SURETY CO|V!PANY, ENC., a
    foreign insurance company;
    TRANSPORTATJON lNSUFiANCE
    COMPANY, a foreign insurance
    company; TRANSCONT|NENTAL
    lNSUFiANCE COMPANY, a foreign
    insurance company; NORTH PAC£F|C
    lNSUFiANCl-E CO|V|PANY, a foreign
    insurance company; and FlFiST
    MEF{CUFtY lNSUFiANCE COMPANY, a
    foreign insurance company,
    Respcndents.
    i\/|ANN, A.C.J. _ This is one of two closely connected insurance coverage appeals
    arising out of the construction of “The Adrnirai,” a mixed use condominium building in
    West Seattie.1 The appeilant in this case was the general contractoi, Ledcor industries
    (USA), Enc. (i_edcor). The building owner and deveioper, Adrniral Way LLC (Adrnira|
    Way), contracted with Ledcor for construction of the buiiding. Ledcor in turn contracted
    with several subcontractors including The Painters, |nc. (The Painters) and SO|, lnc.
    (soi).
    1 See Admiral Wav. LLC v. Zurich American |ns. Co.. No. 76405-5-i (Wash. Ct. App. Dec. 10,
    2018) (unpub|ished).
    _2_
    No. 76490~0-|/3
    After the Adrnirai Way Condominiurn Owners’ Association (COA) sued Adrniral
    Way and Ledcor in 2007 for construction defects, Ledcor tendered the claim to its
    insurers and its subcontractors insurers. After responding and defending against tne
    COA’s claims under a reservation of rights, Zuricn Arnerican |nsurance Company
    (Zurich) filed a declaratory judgment action against Ledcor ciaiming it did not owe
    coverage under its poiicies. Ledcor responded by fiiing counterclaims and third-party
    causes against multipte insurers claiming bad faith and vioiations of the Consumer
    Protection Act (CPA)?, and the insurance Fair Conduct Act (iFCA)3.
    Ledcor appeals the trial court’s decision granting summary judgment and
    dismissing Zurich, Virginia Surety Cornpany (VSC), First Nlercury insurance Cornpany
    (i``-``NilC), North Pacific insurance Company (i\iorth Pacific), and Transportation insurance
    Company (Transportation). We reverse dismissal of Ledcor’s claims against VSC and
    Transportation. We affirm dismissal of Zurich, FiVi|C, and North Pacific.
    _E_é\£§
    Admirai Way is the owner and deveioper of “The Adrniral” a mixed use, four~story
    building in West Seattie with street level retaii, 60 condominiums and an underground
    parking garage. On Apri| 3, 2001 , Admiral Way and Ledcor entered into a construction
    contract for construction of the building. Ledcor Was the general contractor. Ledcor in
    turn contracted with various specialty subcontractors Fie|evant to this appeal, Ledcor
    subcontracted with SQl to instaii the originai roof, and in 2005, Ledcor again
    subcontracted with SO| to conduct substantial roofing repair. Ledcor subcontracted with
    2 Ch. 19.86 RCW
    3 FiCW 48.30.010~.015
    NO. 76490-0-|/4
    The Painters to provide labor, materiais, and equipment for a “Gacoflex” waterproofing
    system on the baiconies and courtyards of The Adrniral.
    The contract between Ledcor and Adrnira| Way required Ledcor to obtain
    commercial general iiability (CGL) insurance naming Adrnirai Way as an additional
    insured The contract between Ledcor and its subcontractors required that the
    subcontractors each obtain CGi_ insurance naming Ledcor as an additional insured
    Ledcor purchased a CGL insurance poiicy from VSC for the policy period of
    December 1, 2003 through December i, 2004. Ledcor also purchased two consecutive
    annuai CGL policies from Zurich, for the policy periods from December 1, 2005 through
    December 1, 2007. 801 purchased three consecutive annual CGi_ policies frorn
    Transportation covering the period from Nlay 1, 2000 through |Vtay 1, 2003. SQi also
    purchased CGL policies from FiV|iC for the policy period of May 1, 2006 to lViay 'i, 2008.
    ``i'he Painters purchased CGL poiicies from North Pacific for the period cf December 26,
    2001 to December 26, 2002.
    Construction of The Admiral began in 2001. The City of Seatt|e issued a
    certificate of occupancy in March 2003. ``i“he sate of condominiums began in Aprii 2013.
    After a contract dispute, on February 10, 2004, Ledcor and Admira| Way executed a
    contract addendum that resoived their remaining disputes about payment and
    performance of Ledcor's work. The parties agreed in the addendum that the project
    was complete other than specific items in an attached punch list that Were to be
    completed by February 20, 2004.
    in 2001, Admiral Way retained i\/lorrison i-Iershfie|d (l\/iorrison) as a building
    envelope consuitant to provide recommendations to the project architect on baicony and
    NO. 76490-0-|/ 5
    wall interface detaiis. Ledcor also retained Morrison and received a report from the firm
    in December 2002. l\/lorrison concluded there were significant areas where there was
    “inappropriate design, and to a lesser degree inappropriate construction that in our
    opinion makes the building high risk for premature building envelope faiiure." in i\/iarch
    2003, Morrison recommended substantial repairs to the building’s brick veneer and pre-
    cast column caps. i\/lorrison believed that if the recommended work was not done, the
    walls would “remain susceptible to water entry” that “wouid lead to deterioration ot the
    sheathing and corrosion of the framing,” and “result in a compromise of the structural
    integrity." i\/iorrison further reported, “[wje are of the opinion that if not addressjedj at
    this time, these as-bui|t detaits wii| require remediation within the next five years.”
    i\/lorrison expressed similar concerns with other recommended work.
    On February 28, 2007, the COA sent Admira| Way a notice of construction defect
    claim alleging that the buiiding, or components of the buiiding, Were defectively
    designed and/or constructed, resulting in water intrusion that affected residential units,
    commercial spaces, and common areas throughout the project. ``i'his notice was
    followed by the fiiing of a complaint in the King County Superior Court. in its complaint,
    the COA alleged that damage to the building began after the compietion ot construction:
    As a result of Deciarant’s acts and omissions, property damage to
    the Condominium has occurred to that pari of real property on which
    contractors or subcontractors working on Declarant’s behalf have
    completed their operations Such property damage has also occurred to
    that part of real property that rnust be restored, repaired or replaced
    because of the work of others performed on Declarant’s behaif. The
    property damage is continuous and ongoing throughout the Condominium.
    Damage rnay have commenced at or shortly after the completion of each
    building or element of infrastructure, and may be continuing to the present
    No. 76490-G-i/ 6
    in response to the COA compiaint Admirai Way fiied a third-party complaint
    against Ledcor alieging Ledcor and its subcontractors were responsibie for the defective
    work.
    Ledcor initiaiiy tendered defense of the action to its own insurers Zu rich and
    VSC. Zurich accepted Ledcor's tender and assigned counsel. Zurich defended Ledcor
    in the underlying case, from 2007 through settlement in duly 2009, while expressiy
    reserving its right to contest coverage under a reservation of rights.
    Ledcor also tendered the action to FlViiC, ``t'ransportation, and i\iorth Pacific, for
    defense and indemnity for damages arising from SQi's and The Painters' work. Fivi|C
    accepted SOl’s tender under a reservation of rights and contributed to SQl's defense
    FM|C did not defend nor indemnify Ledcor. Transportation and North Pacific denied
    coverage VSC originally denied coverage, then agreed to defend Ledcor under a
    reservation of rights just as the final settlement was being reached VSC did not pay
    any defense costs and did not indemnify.
    Zurich fiied the underlying action in iViarch 2009 seeking declaratory judgment of
    its obligations to defend and indemnify its named insured, Ledcor, and the additional
    insured Admirai Way. Ledcor filed counterclaims for declaratory relief, insurance bad
    taith, and vioiations of the CPA and the lFCA. i_edcor’s counterclaims inciuded third
    parties FMIC, 'i``ransportation, North Paciiic, and VSC, as well as muitiple other insurers
    l\/leanwhiie, the COA, Admiral Way, and l_edcor settied their dispute over the
    condominium damage on duty 28, 2009. The COA’s claims against Admiral Way and
    i_edcor settled for $4,700,000. The settiement was contingent upon AiG, another of
    NO. 76490-0-|/7
    Ledcor’s insurers funding $2,550,000. Ledcor agreed to pay $150,000, and iviarc Gartin
    on behaif of Admiral Way agreed to pay $2,000,000.
    The underlying declaratory judgment action proceeded with discovery and
    motions in June 2010, the trial court granted Zurich’s motions for partial summary
    judgment on (i) coverage under the poiicy in effect between December t, 2006 and
    December 1, 2007 and (2) dismissing Ledcor’s counterclaims for insurance bad faith,
    CF’A, and lFCA violations The trial court also denied Ledcor’s motion for partial
    summary judgment against Zurich for insurance bad faith and CPA violations At the
    same time, the triat court granted VSC’s motion for summary judgment and dismissed
    Ledcor’s ciaims against VSC.
    in l\/iarch 2011, the triai court dismissed Ledcor’s remaining counterclaims
    against Zurich, concluding that Zurich had no duty to defend or indemnify t.edcor with
    respect to the COA’s construction defect claims
    in Apri| 201 t, the trial court granted Fi\/iiC’s motion for summary judgment
    conciuding i_edcor Was not entitled to coverage under the poiicy issued by FivliC to SQ!
    as a matter of law.
    in duty 201i, the trial court granted North Pacific’s motion for summary judgment
    and dismissed Ledcor’s third party claims related to its poiicy issued to The Painters
    in February 2014, the trial court granted Transportation’s motion for partial
    summary judgment and dismissed Ledcor’s breach of contract claims for policies issued
    to SQI.
    in a separate action, Ledcor sued its subcontractors Through a settiement
    between Ledcor and SQi, Ledcor took assignment of SOl’s direct claims against Fl\/iiC.
    NO. 76490-0-|/ 8
    On October 31, 2016, the trial court granted FM|C’s motion for summary judgment
    agreeing that FlVllC did not have an obligation to cover SOi‘s defense against Ledcor’s
    claim and that the policy FivltC issued to SQi was not applicabie, and even if it were, the
    continuous or progressive injury or damage exclusion barred recovery.
    Ledcor appeals
    ANALYSlS
    We review summary iudgrnent orders de novo, engaging in the same inquiry as
    the trial court. l184 Wash. 2d 358
    , 370, 
    357 P.3d 1080
     (20i5). Surnrnary
    judgment is proper if, after viewing ali facts and reasonable inferences in the light most
    favorable to the nonmoving party, there are no genuine issues as to any material fact
    and the moving party is entitled to judgment as a matter of law. CR 56(0); Eicon Const.
    lnc. v. E. Wash. Univ., 
    174 Wash. 2d 157
    , 164, 
    273 P.3d 965
     (2012). “The moving party
    on summary judgment must produce factual evidence showing that it is entitled to
    judgment as a matter of iaw. The burden then shifts to the nonmoving party to set forth
    facts showing that there is a genuine issue of material fact in dispute.” i-iartford ins Co,
    v. Ohio Cas. lns. Co., 
    145 Wash. App. 765
    , 779, 
    189 P.3d 195
     (2008).
    A party opposing a motion for summary judgment may not rely on speculation,
    argumentative assertions that unresolved factual issues remain, or its affidavits
    considered at face value Fiather, “the nonmoving party must set forth specific facts that
    sufficientty rebut the moving party's contentions and reveal that a genuine issue as to a
    material fact exists.” |-ierman v. Safeco lns. Co. of Am., 
    104 Wash. App. 783
    , 787-88, 
    17 P.3d 63t
     (2001). “‘Uitimate facts conclusions of fact, conciusory statements of fact or
    iegat conclusions are insufficient to raise a question of fact.”' Ainsworth v. Prooressive
    l\|O. 76490-0-|/9
    Cas. lns. Co., 
    180 Wash. App. 52
    , 61 , 
    322 P.3d 6
     (2014) (quoting Snohomish County v.
    _F_iggg, 
    115 Wash. App. 218
    , 224, 
    61 P.3d 1184
     (2002)). “On summary judgment review,
    We may affirm the triai court’s decision on any basis Within the record.” Davidson Ser|es
    & Assocs. v. Citv of Kirkland, 
    159 Wash. App. 616
    , 624, 
    246 P.3d 822
     (2011).
    The outcome of this case depends on a proper interpretation of the various
    insurance policies issued to Ledcor and its subcontractors interpretation of insurance
    policies is a question of law we review de novo. Overton v. Consol. lns. Co., 
    145 Wash. 2d 417
    , 424, 
    38 P.3d 322
     (2002). We construe insurance policies as contracts
    Weverhaeuser Co. v. Cornmercial Union lns. Co., 
    142 Wash. 2d 654
    , 665, 
    15 P.3d 115
    (2000). “Every insurance contract shall be construed according to the entirety of its
    terms and conditions as set forth in the poiicy, and as amplified, extended, or modified
    by any rider, endorsement, or application attached to and made a part of the policy.”
    l=iCW 48.18.520. We consider the policy as a whoie, giving it a “tair, reasonable and
    sensible construction as would be given to the contract by the average person
    purchasing insurance." Am. Nat'i Fire ins. Co. v. B & L Truckino & Constr. Co., 
    134 Wash. 2d 413
    , 427»28, 
    951 P.2d 250
     (1998). Where possibie, we harmonize ciauses that
    seem to conflict in order to give effect to all of the contract's provisions iiiealrnl lnc. v.
    City of Olymgia, 
    168 Wash. App. 1
    , 5, 
    277 P.3d 679
     (2012).
    “if the poiicy language is ciear and unambiguous We must enforce it as written;
    we may not modify it or create ambiguity where none exists.” Quadrant Corp. v. Am.
    States lns. Co.l 
    154 Wash. 2d 165
    , 171, 
    110 P.3d 733
     (2005). if a term is defined in a
    poiicy, “the term shouid be interpreted in accordance with that policy definition.” _i$jt_§‘,_a_g
    County v. Alistate ins Co., 
    136 Wash. 2d 567
    , 576, 
    964 P.2d 1173
     (1998). A clause is
    NO. 76490-0-|/10
    ambiguous only “when, on its face, it is fairly susceptibie to two different interpretations
    both of Which are reasonable.” Quadrant, 154 Wn.2d at 171. if a clause is ambiguous
    we may rely on extrinsic evidence of the intent of the parties to resolve the ambiguity
    Weyerhaeuser, 142 Wn.2d at 666 (citing B & i. ``i``rucking, 134 Wn.2d at 427-28). Any
    ambiguity remaining after examination of the applicable extrinsic evidence is resolved
    against the insurer and in favor of the insured Weyerhaeuser, 142 Wn.2d at 666.
    However, while exciusions should be strictly construed against the drafter, a strict
    application should not trump the piain, clear ianguage of an exclusion such that a
    strained or forced construction results Weyerhaeuser Co., 142 Wn.2d at 666.
    Zurich
    l_edcor contends that the trial court erred in concluding that Zurich did not have a
    duty to defend under the CGL policies and in dismissing Ledcor’s claims for insurance
    bad faith, and for violations of the CPA and the |FCA. We disagree
    A. Duty to Defend
    The duty to defend is different from and broader than the duty to indemnify M
    Best Food, inc. v. Aiea l.ondon, 
    168 Wash. 2d 398
    , 404, 
    229 P.3d 693
     (2010); Expediax
    lnc. v. Steadfast ins. Co., 
    180 Wash. 2d 793
    , 802, 
    329 P.3d 59
     (2014). The duty to defend
    is one of the main benefits of an insurance contract Safeco ins. Co. of Am. v. Butier,
    
    118 Wash. 2d 383
    , 392, 
    823 P.2d 499
     (1992). “While the duty to indemnify exists oniy if
    the policy covers the insured’s liability, the duty to defend is triggered if the insurance
    policy conceivably covers ailegations in the complaint." §_)_147
    Wash. 2d 751
    , 760, 
    5 P.3d 276
     (2002).
    'fhe duty to defend is generally determined by looking at the “eight corners” of
    the insurance contract and the underlying complaint The insurer is permitted to utilize
    the “‘eight corners”’ rule to determine Whether, on the face of the complaint and the
    insurance poiicy, there is an issue of fact or law that could conceivably result in
    coverage under the policy. §xgegja, 180 Wn.2d a1803. “There are two exceptions to
    this ruie, and both favor the insured.” _E_)_161 Wash. 2d 43
    , 53, 
    164 P.3d 454
     (2007). Second, “if the allegations in the complaint conflict with facts known to
    the insurer or if the allegations are ambiguous facts outside the complaint may be
    considered.” _i;E_)_<_pe_g_i_a_, 180 Wn.2d at 803~04 (citing _W_gc_), 161 Wn.2d at 54).
    Ledcor was directly insured by Zurich under two general liability insurance
    policies The first was effective from December 1, 2005 to December 1, 2006. 'i'he
    second was effective from December 1, 2006 to November 30, 2007. Each Zurich
    policy contained two endorsements that Zurich argues barred coverage for the COA’s
    ciaims: a residential building exclusion and an exclusion for continuing damage that
    began before the policy was issued The burden is on the insurer to show that the loss
    _11_
    No. 76490-0-|/12
    is excluded under the policy. Diamaco, inc. v. Aetna Cas. 81 Sur. Co., 
    97 Wash. App. 335
    ,
    337, 
    983 P.2d 707
     (1999).
    The policies issued by Zurich to Ledcor contain an exclusion for designated work
    on residential buildings The first policy (December 1, 2005 through December 1, 2006)
    excluded coverage for property damage caused by “your Work” and defined “your work”
    351
    This exclusion only applies to “your Work” in connection with the
    construction, reconstruction, remodeling, or repair of any “residentiai
    building”. For the purpose of this endorsement, "residential building"
    means: 1. Any single-family dwelling, including town homes or
    townhouses other than military base housingl and 2. Any multi-family
    dwelling, including condominiums or cooperatives duplexes, triplexes or
    four-piexes; and 3. Any apartments assisted living facilities or resort
    timeshares, if made of wood frame or partially made of wood frame
    construction; and 4. Any other structure which is attached to any such
    "residential buildin .” “l'he determination as to the type of structure will be
    made at the time a claim is made or suit is brought.W
    The endorsement in Zurich’s second policy (December 1, 2006 through
    December 1, 2007) defined “your work” as follows:
    This exclusion only applies to “your wori<" in connection with the
    construction, reconstruction, remodeling, or repair of any “residential
    building”. For the purpose of this endorsement, “residential building"
    means: . . .
    1. Any single-family dwelling, including but not limited to houses town
    homes or townhouses or
    2. Any multi-famlly dwelling, including but not limited to condominiums
    cooperatives duplexes, triplexes or fourp|exes; or
    3. Any structure that combines any other use with residential dwellings
    including but not limited to, those listed in 1. or 2. above, or
    4. Any other structure or improvement which is attached to or ancillary to
    any structure identified in t., 2., or 3. Above, constructed
    reconstructed remodeled or repaired with the intent that title to each
    individual dwelling or dwelling unit will be transferred separately to
    each owner.
    4 (Emphasis added.)
    _12-
    NO. 76490-0-|/13
    Notwithstanding the above, “residentiai building" does not include any
    structure that functions as apartments time shares a hotei, a motel, a
    nursing home, an assisted living senior housing care facility, a college
    campus dormitory, or government housing on military bases.l5l
    Ledcor argues that The Admira| Was not a residential building, but was instead a
    “mixed use” building that included street level retail and thus did not fall under the
    designated work exclusion However, the plain language of the residential building
    exclusion includes “condominiums” and “[a]ny other structure which is attached to any
    l"
    such ‘residentiai building The Zurich policy language was broad enough to include
    residential buildings that incorporate other “structures.” The Admiral, even With the
    attached commercial units at the base, qualifies as a residential building.
    Ledcor also argues that because The Admiral includes apartment units the
    residential building exclusion does not app|y. While ``l``he Admiral does allow 25 percent
    of the owners to rent their units out as “apartments,” the units are still within the legal
    definition of a condominium. The “intent that title to each individual dwelling or dwelling
    unit will be transferred separately to each owner" is still in place, even if some
    condominiums are later sublet out as apartments Ledcor’s argument fails Because
    The Admirai is a defined residential building under both policies Zurich did not have a
    duty to defend or indemnify
    B. Bad Faith
    An insurer acts in bad faith if its breach of the duty to defend Was unreasonable,
    frivolous or unfounded See St. Paul Fire & Marine lns. Co. v. Onvia, |nc., 
    165 Wash. 2d 122
    , 130, 
    196 P.3d 664
     (2008). Whether an insurer acted in bad faith is generally a
    question of fact. Van i\lov v. State Farm lVlut. Auto. lns. Co., 
    142 Wash. 2d 784
    , 796, 16
    5 (Emphasis added.)
    _13-
    NO. 76490-0-|/14
    P.3d 574 (2001). Accordingiy, an insurer is only entitled to dismissal on summary
    judgment of a policyholders bad faith claim if there are no disputed material facts
    pertaining to the reasonableness of the insurer's conduct under the circumstances or
    the insurance company is entitled to prevail as a matter of law on the facts construed
    most favorably to the nonmoving party. Smith v. Safeco ins Co., 
    150 Wash. 2d 478
    , 484,
    78 P.Sd 1274 (2003).
    “An action for bad faith handling of an insurance claim sounds in toit.” _Mgt_._o_f
    Enurnclaw lns. Co. v. Dan Paulson Constr., inc., 
    161 Wash. 2d 903
    , 915, 169 P,3d 1,
    (2007). Claims of insurer bad faith “are analyzed applying the same principles as any
    other tort: duty, breach of that duty, and damages proximately caused by any breach of
    duty.” §rr_ii_th, 150 Wn.2d at 485. “in order to establish bad faith, an insured is required
    to show the breach was unreasonable frivolous or unfounded.” Kirk v. iVit. Airy lns.
    Qd, 
    134 Wash. 2d 558
    , 560-61, 
    951 P.2d 1124
     (1998).
    Ledcor first contends Zurich committed bad faith by denying coverage and
    defending under a reservation of rights Washington law has long favored defending
    under a reservation of rights “When the facts or the law affecting coverage is disputed,"
    until coverage is settled in a declaratory action. Arn. Best Food 168 Wn.2d at 405.
    When defending under a reservation of rights “the insured receives the defense
    promised and, if coverage is found not to exist, the insurer will not be obligated to pay."
    lvlut. of Enumciaw, 161 Wn.2d at 914. However, an insurer defending its insured under
    a reservation of rights has “an enhanced obligation of fairness toward its insured” lang
    v. State Farm Fire & Cas. Co., 
    105 Wash. 2d 381
    , 388, 
    715 P.2d 1133
     (1986). This
    enhanced obligation requires that the insurer must: (1) “thoroughly investigate” the claim
    _14-
    No. 76490~0~|/15
    against the insured (2) “retain competent defense counsel for the insured,” (3) fully
    inform the insured of “ali developments relevant to his policy coverage and the progress
    of his lawsuit,” and (4) “refrain from engaging in any action which Wouid demonstrate a
    greater concern for the insurer's monetary interest than for the insured‘s financial risk."
    lsg§, 105 Wn.2d at 388.
    After t_edcor tendered the claim to Zurich, Zurich agreed to defend l_edcor in the
    underlying case under a reservation of rights. Zurich defended l_edcor from 2007
    through the settlement in duly of 2009. Zurich provided the attorney of Ledcor’s own
    choosing for their defense There is no evidence that Ledcor was unsatisfied with its
    defense during this period The record further demonstrates that Zurich fully
    investigated the incident, retained separate counsel to represent both Ledcor and
    Admirai Way, and fully informed and participated in settlement activity.6 The only
    criteria in dispute in this case is whether Zurich engaged “in any action which would
    demonstrate a greater concern for the insurer’s monetary interest than for the insured's
    financial risk” during the course of its defense of l_edcor, and in making its later
    coverage decision. On this record We hold they did not.
    i_edcor argues next that Zurich acted in bad faith by filing its declaratory
    judgment action before the underlying case brought by the COA was fully resolved Our
    Supreme Court has said “‘jt]he insurer ‘may defend under a reservation of rights while
    seeking a declaratory judgment that it has no duty to defend,’ . . . but it must avoid
    seeking adjudication of factual matters disputed in the underlying litigation because
    advocating a position adverse to its insureds interests would ‘constitute bad faith on its
    6 Ledcor at one point argues that Zurich did not do an adequate investigation, however that was
    related to coverage and not related to its defense of Ledcor. i\/ioreover, Ledcor’s arguments only
    demonstrate it disagrees with Zurich's interpretation of its “residential" clause
    _-;5_
    l\lo. 76490-0-|/16
    part. lVlut. of Enumc|aw, 161 Wn.2d at 914-15 (quoting 1 ALLAN D. WlNDT, lNSUnANCE
    CLAir\/is & DisPuTas: FiEPnEsENTATioN oi= iNsur-‘iANcr-_‘ CoMPAr\iras AND iusunsos § 8:3, at 8~
    11 to ~12 (5th ed. 2007)). The court did not go so far as to bar filing a motion for
    summary judgment during the course of representation
    in this case, Zurich did not file its summary judgment motion until discovery in the
    underlying litigation with the COA was complete and the parties had mediated. The
    summary judgment motion was not argued nor decided until long after the final
    settlement had been entered There is no evidence that Zurich’s action filing its motion
    for summary judgment interfered with, or sought to adjudicate a factual matter in dispute
    in the underlying action to the detriment of l_edcor, l_edcor remained independently
    represented by counsel of its choice, funded by Zurich, and Ledcor does not contend its
    defense counsel Was ineffective
    Ledcor also argues that Zurich committed bad faith in reaching its coverage
    decision Speoificaiiy, Ledcor contends that Zurich’s insurance adjuster transferred
    information obtained in the underlying claim to coverage counse|, and utilized it to
    Ledcor's detriment Ledcor has failed however, to identify any case law that prohibits
    using the same adjuster for both claims Ledcor has also failed to demonstrate any
    confidential or privileged evidence that was provided to Zurich. Zurich provided a
    detailed list showing that it was entitled to all of the evidence it received most of which
    was obtainable through the public record Even on appeai, Ledcor does not identify any
    confidential documents that Were relied on by Zurich in reaching its coverage decision,
    citing the “lviorrison Fieport” and depositions which were ali publicaliy available and
    discoverable by Zurich,
    _15_
    NO. 76490-0-1/17
    i'-``inally, Ledcor raises Zurich’s pretrial failure to provide the complete defense file.
    Zurich argues that some of the evidence Was privileged however, the trial court
    eventually fined Zurich for failing to provide this evidence, and Zurich paid that fine.
    Failure to provide this evidence was a discovery violation, however Zurich provided
    good faith reasons for its failure to provide the documents in question, and the issue
    was resolved by the trial court. A single discovery violation does not rise to the level of
    bad faith.7 ``l'he insured may not base a bad faith or CPA claim on an insurer‘s good
    faith mistake Werlinqerv. Clarendon Nat. lns. Co., 
    129 Wash. App. 804
    , 808, 
    120 P.3d 593
     (2005).
    C. CPA and lFCA
    Ledcor also asserts that Zurich violated the CPA and the iFCA. To successfully
    bring an action under the CPA, a private plaintiff must prove five eiements: “(1) unfair or
    deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact;
    (4) injury to plaintiff in his or her business or property; and (5) causation.” Ledcor indus
    (USA), lnc. v. l\/lut. of Enumciaw lns. Co., 
    150 Wash. App. 1
    , 12, 
    206 P.3d 1255
     (2009). A
    denial of coverage does not constitute an unfair or deceptive act or practice and does
    not violate the CPA as long as it is based on reasonable conduct of the insurer, even if
    the denial ultimately is proved incorrect Overton, 145 Wn.2d at 417.
    7 Admiral Way and l_edcor make much of Zurich’s attempt to recoup defense costs it paid in the
    COA iawsuit. in 2013, the Washington Supreme Court disallowed such reimbursement, holding
    “[d]isallowing reimbursement is most consistent with Washington cases regarding the duty to defend
    which have squarely placed the rlsl< of the defense decision on the insurer's shoulders." Nat'i Sur. Corp_
    v. immunex Corg., 
    176 Wash. 2d 872
    , 884, 
    297 P.3d 688
     (2013). While reimbursement has been found to
    be unavailable neither Admiral Way nor Ledcor make it clear how Zurich briefly requesting such
    reimbursement in 2009 contributes to a bad faith claim. There is no evidence that Zurich pursued these
    costs in an unreasonable or frivolous way, or that any damage arose out of this minor addition to Zurich’s
    claim. Zurich also argues that Ledcor's counsel at one point offered to allow Zurich to cover defense
    costs
    -17_
    No. 76490'0~|/ 18
    The lFCA also does not create an independent cause of action for alleged
    regulatory violations in the absence of an unreasonable denial of coverage or benefits
    Perez-Crisantos v. State Farm Fire & Cas. Co., 
    187 Wash. 2d 669
    , 680, 
    389 P.3d 476
    (2017). Since Ledcor did not demonstrate Zurich’s actions Were unreasonable or in bad
    faith, its extra-contractual claims against Zurich were properly dismissed
    VSC
    Ledcor next contends that the trial court erred in granting summary judgment and
    dismissing its claims against VSC. We agree.
    Ledcor’s CGL policy from VSC was effective Decernber 1, 2003 to December 1,
    2004. Ledcor tendered the COA’s notice of construction defect to VSC on i\/larch 23,
    2007. Carnbridge integrated Services Group, lnc., a third-party administrator ot VSC,
    acknowledged receipt of the claim on April 13, 2007 and indicated it was investigating
    the matter. On lvlay t6, 2007, VSC responded denying coverage based on several
    policy exciusions. After the COA filed its complaint, Ledcor re-tendered the matter to
    VSC on Septernber 21, 2007. On July 20, 2009, VSC notified Ledcor that it would be
    sending a follow up ietter agreeing to participate in Ledcor's defense under a
    reservation of rights. The subsequent letter was never sent. The COA’s claim was
    resolved on Ju|y 28, 2009.
    VSC moved for summary judgment in i\/lay 2010 seeking a declaratory judgment
    that it had no duty to defend Ledcor. At the same time, i_edcor moved for summary
    judgment against VSC. The triai court granted VSC's motion for summary judgment as
    to Ledcor and denied Ledcor’s motion.8
    8 Fieiying on RAP 9.12, VSC moved to strike references in Ledcor’s brief to materials not
    specifically listed in the trial court‘s order on summary judgment General|y, “evidence cailed to the
    -18-
    NO. 76490-0-|/19
    A. Duty to Defend
    VSC maintains that it did not have a duty to defend nor indemnify under the
    “progressive, continuous or intermittent property damage exciusion” (progressive
    damage exclusion) and the “other insurance” clause of its policy. We disagree We
    address each in turn, strictly construing the exclusion against VSC. Expedia, 180
    Wn.2d at 803.
    The progressive damage exclusion has three requirements For the exclusion to
    app|y, VSC was required to demonstrate that (1) the property damage “existed or
    commenced prior to the inception date of th[e] poiicy,” or (2) “arose out of any damage,
    defect, deficiency, inadequacy or dangerous condition which existed prior to the
    inception date of th[ej policy,” and (3) that the damage was included under the defined
    “Products--Comp|eted Operations l-lazard.” Worl< under the Products--Cornpleted
    Operations l-iazard would he deemed completed: “When ali of the work to be done at
    the job site has been completed” or “When that part of the work done at a iob site has
    been put to its intended use by any person or organization other than another contractor
    or subcontractor working on the same project.”
    Ledcor’s CGL policy with VSC was effective December 1, 2003 to December 1,
    2004. Thus, the progressive damage exclusion would exclude damage that existed or
    commenced, or arose out of a condition that existed, prior to December ‘l, 2003. The
    attention of the trial court is properly before us, whether or not it was considered by the trial coun."
    Goodwin v. Wright, 
    100 Wash. App. 631
    , 648, 
    6 P.3d 1
     (2000). At the time the trial court considered VSC’s
    motion it was also reviewing motions and cross motions related to Ledcor’s claims against Zurich. Due to
    the complex nature of this case, we decline to apply RAP 9.12 in a manner that wouid assume that the
    trial court granted summaryiudgrnent for VSC in a vacuum without considering Ledcor’s own summary
    judgment motion or any other evidence. ``l``he appellate “rules will be iiberaliy interpreted to promote
    justice and facilitate the decision of cases on the merits. Cases and issues will not be determined on the
    basis of compliance or noncompliance with these rules except in compelling circumstances where justice
    demands." FiAP 1.2. We deny VSC’s motion to strike.
    _19_
    No. 76490-0-|/20
    COA’s complaint is vague about when the damage began. The complaint lists multiple
    claims of water intrusion damages and defects, and states “the property damage is
    continuous and ongoing throughout the Condominiurn. Damaoe may have commenced
    at or shortly after the completion of each building or element of infrastructure, and mav
    be continuing to the present.”9 Thus, the relevant date is the “completion" of each
    bullding. lt is undisputed that the certificate of occupancy for The Admira| was issued
    by the City of Seattie on lVlarch l4, 2003, and sale of the condominiums began in April
    2003. lt is also undisputed that Ledcor and Admirai Way contractually agreed that The
    Admiral was not substantially complete until February 2004.
    Strictly construing the exception against VSC, because the date of completion
    falls within the term of VSC’s policy, VSC had a duty to investigate and give Admiral
    Way the benefit of the doubt. W_g_g, 161 Wn.2d at 53. Because a reasonable
    interpretation of the facts could result in coverage, the progressive damage exclusion
    does not app|y.
    The other insured condition in Ledcor’s policy from VSC provides that the
    insurance is excess over “[ajny other primary insurance available to you covering
    liability for damages arising out of the premises or operations for which you have been
    added as an additional insured by attachment of an endorsement.” Ancl further,
    When this insurance is excess, we Will have no duty under COVERAGES
    A or B to defend the insured against any "suit" it any other insurer has a
    duty to defend the insured against that "suit." if no other insurer defends,
    we will undertake to do so, but we will be entitled to the insured‘s rights
    against all those other insurers
    l_edcor was listed as an additional insured under multiple insurance policies, and
    was being represented by two insurance companies that undertook its defense at no
    9 (Emphasis added.)
    -20-
    No. 76490-0-|/21
    cost to Ledcor. However, there is no evidence that VSC investigated whether other
    insurers were “available" for l_edcor at the time of its initial deniai, or that VSC even
    believed this provision applied when it denied Ledcor’s claim' VSC did not rely on this
    provision in its denia|, and VSC did not rely on this provision When it later suggested it
    would join the defense alongside the other carriers. lf it is not clear from the face of the
    complaint that the policy provides coverage, but if coverage could exist, the insurer
    must investigate and give the insured the benefit of the doubt that the insurer has a duty
    to defend. _V_ij'_o_o_, 161 Wn.2d at 53. A question of fact remains whether VSC did the
    requisite investigation into whether other insurance Was available for Ledcor before it
    denied coverage. Because there is at least a question of fact whether the progressive
    loss exclusion and other insurance provision apply, summary judgment and dismissal of
    Ledcor’s claims against VSC was not appropriate
    B. Extra Contractual C|aims
    Ledcor maintains that VSC acted in bad faith. At the outset, Washington courts
    have long held the “insured may maintain an action against its insurer for bad faith
    investigation of the insured's claim and violation of the CPA regardless of whether the
    insurer was ultimately correct in determining coverage did not exist.” Covent[y
    Associates v. Am. States lns. Co., 
    136 Wash. 2d 269
    , 279, 96t P.2d 933 (1998). Only if
    the alleged claim is clearly not covered by the policy is the insurer relieved of its duty to
    defend ”i$j;k, i34 Wn.2d at 561. The insured bears the burden of demonstrating the
    insurer acted in bad faith when it refused to defend its insured by demonstrating that
    refusal is “unreasonable, frivolous, or unfounded.” lggg__l;, 147 Wn.2d at 777; §g"l_it_h_, 150
    Wn.2d at 486. The insurer is entitled to summary judgment “if reasonable minds could
    -21_
    l\lo. 76490~0~|/22
    not differ that its denial of coverage was based upon reasonable grounds.” _S_i_*_n_ith_, 150
    Wn.2d at 486.
    Ledcor retained a policy with VSC for primary general liability effective from
    December l, 2003 to December l, 2004, The Admiral Was substantially completed on
    either April 2003, or l-“ebruary 2004. The original claim provided to VSC did not state a
    specific date as to when damages began, or when the defects developed lt can hardly
    be said that the alleged claim was “clear|y not covered” by policy. “if the insurer is
    unsure of its obligation to defend in a given instance, it may defend under a reservation
    of rights While seeking a declaratory judgment that it has no duty to defend.” M, 147
    Wn.2d at 761. VSC should have done so in this case
    As discussed above, it appears that i.edcor may have been covered under VSC’s
    CGl. policy, and there remains at least a question of fact as to Whether VSC reasonably
    investigated whether the two exclusions it relies upon actual excluded coverage
    Dismissal of Ledcor’s bad faith and CPA claim on summary judgment was erroneous.
    North Pacific
    Ledcor next contends that the trial court erred in dismissing its claims against
    North Pacific for coverage under its policy With The Painters. We disagree
    A. Additiona| Facts
    The subcontract between Ledcor and The Painters required Ledcor be named as
    an additional insured on The Painters’ insurance:
    11.1 SUBCONTRACTOR' S lNSURAi\lCE. Prior to the start of the
    Subcontract Work, the Subcontractor shall procure for the Subcontract
    Work and maintain in force Workers' Compensation lnsurance, Employer's
    Liability insurance Comprehensive Automobiie Liabiiity insurance
    Comprehensive or Commercial General Liabi|ity insurance on an
    _22-
    l\lo. 76490~0-|/ 23
    occurrence basis and any other insurance required of Subcontractor
    under the Subcontract,
    . . . lTjhe Contractor, Owner and other parties as required shall be named
    as additional insureds on each of these policies except for Workers'
    Compensation.
    The Subcontractor's insurance shall include contractual liability insurance
    covering the Subcontractor's obligations under this Subcontract.
    The Painters obtained a CGL policy from North Pacific for the policy period from
    December 26, 2001 , through December 26, 2002. The declarations did not name
    i_edcor as an additional insured under the policy. lite policy included an automatic
    additional insured endorsement that provided:
    AUTOlViATlC ADDlTlONAL lNSUFlEDS
    lNCLUDll\lG COMPLETED OPEFiAT|Ol\|S TO THE EXTENT
    FlEOUlFiED BY AN lNSURED CONTRACT
    This endorsement modifies insurance provided under the following:
    CONll\/lEFlClAL GEl\lEFlAL LlABiLiTY
    COVERAGE PART
    The following is added to Wl-lO lS lNSUFiED (Section ll):
    l. To the extent it is required by the terms of an "insured contract" which
    requires you to add by endorsement as an additional insured or
    organization, Wl-lO lS Al\l ll\lSURED (Section ll) is amended to include
    as an insured such person or organization ("additlona| insured") but
    only with respect to:
    (a) Vicarious liability arising out of your ongoing operations
    performed for the additional insured; or
    (b) Liabi|ity arising out of any actor omission of the additional
    insured for Which you have entered into an enforceable “insured
    contract" which obligates you to indemnify the additional lnsured, or
    to furnish insurance coverage for the additional lnsured, and arising
    out of your ongoing operations for that additional insured
    With respect to the insurance afforded these additional insureds the
    following additional exclusions app|y:
    _23_
    l\lo. 76490-0~|/24
    2. This insurance does not apply to "bodi|y injury," or "groperty damage“
    occurring after:
    (a) All work, including materials parts or equipment furnished in
    connection with such work, on the project (other than service
    maintenance or repairs), to be performed by or on behalf of the
    additional insured at the site of the coverage operations has been
    completed; or
    (b) ``l“hat portion of l‘your work’l out of which the lnlury 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
    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.[mi
    l_edcor tendered the COA’s claim to i\lorth Pacific on lVlarch 10, 2009. North
    Pacific did not respond On l\/lay 24, 2010, Ledcor’s counsel sent a 20-day notice letter
    under the ll``-'CA, demanding that North Pacific defend and indemnify Ledcor for the
    underlying construction defect claims as an additional insured under The Painters' CGL
    policy. On l\/iay 28, 20t0, North Pacllic responded stating they had no record of the
    lVlarch 2009 tender, and that there Was no coverage under The Painters' CGl_ policy
    because Ledcor was not identified as an additional named insured and the automatic
    additional insured endorsement only applied to “ongoing operations.”
    in June 2010, Ledcor amended its third-party complaint to name North Pacific as
    a third-party defendant alleging claims for declaratory relief, breach of contract, breach
    of the obligation of good faith and fair dealing, bad faith refusal to defend, and lFCA and
    CPA violations
    10 (Emphasis added.)
    -24_
    NO. 76490-0»!/25
    North Pacific subsequentiy moved for summary judgment and dismissal of
    Ledcor’s third-party claims On Juiy 8, 2011, the trial court granted l\lortl‘i Pacific's
    motion on each contractual and extra-contractuai claim and dismissed North Pacific
    from the lawsuit
    B. Duty to Defend
    North Pacific contends that their policy with The Painteis only provided automatic
    additional insured coverage for “ongoing operations” and not “coinpleted operations."
    Consequently, because Ledcor was not a named additional insured, North Pacitic had
    no duty to provide a defense to Ledcor as an additional insured because the operations
    performed by The Painters were completed operations We agree with North Pacific.
    North Paciiic relies on this court’s decision in i-iartford lns. Co. v. Ohio Cas. lns.
    Q)_., t45 Wn. App. 765, 778, 
    189 P.3d 195
     (2008), Where we concluded that the term
    “ongoing operations” was an express coverage limitation in the policy and endorsement
    language that was intended to avoid “t)road coverage for an additionai insured.”
    Speciiically, we held “ongoing operations" language excludes “completed operations”
    coverage and limits coverage to the “subcontractors’ work in progress only.” Hartford,
    145 Wn. App. at 778. The plain language ot the North Pacific policy contains this same
    limitation
    Section one of the “additional insured” endorsement in The Painters’ policy limits
    additional insured coverage to when it “is required by the terms of an ‘insured contract'”
    and includes as an insured such person or organization “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 actor omission of the additional insured . . .
    -25_
    NO. 76490-O-l/26
    arising out of your oncioinu operations for that additional insured.”11 Thus, as in
    i-lartford, the plain language of the first section explicitly limits coverage to “ongoing
    operations.” See Absher Const. Co. v. N. Pac. lns. Co., 
    861 F. Supp. 2d 1236
    , 1244
    (W.D. Wash. 2012) (considering a similar l\lorth Pacific policy).
    The COA’s complaint in the underiying action alieged damages occurring after
    compietion of the buildings, long after the Painters ceased their “ongoing operations.”
    Accordingiy, we agree With the trial court that the policy did not cover those claims and
    North Pacific’s denial of a defense and coverage based on this ianguage was not
    “unreasonab|e, frivolous, or unfounded." We affirm summary judgment
    Transportation
    Ledcor next contends that the trial court erred in dismissing its claims against
    Transportation12 based on the policy transportation provided subcontractor SQl. We
    agree.
    i_edcor contracted with subcontractor SOi to install a roofing system.
    Transportation issued policies to SOl for the period frorn lVlay i, 2000 to Nlay t, 2003. lt
    is undisputed that SCli was required to name Ledcor as an additional insured under
    those policies. Paragraph 11.1 of the subcontract between Ledcor and SQl is the same
    as the subcontract with The Painters, and describes the requirements that SOl name
    certain parties as additional insureds:
    it.i SUBCONTRACTOR’S iNSUi=lANCE. Priorto start of the
    Subcontract work, the Subcontractor shall procure for the Subcontract
    Work and maintain in force Wori80
    Wash. App. 416
    , 420, 
    909 P.2d 1323
     (i995). When interpreting a contract the contract
    will be given a practical and reasonable interpretation that fulfills the object and purpose
    of the contract rather than a strained or forced construction that leads to an absurd
    conclusion, or that renders the contract nonsensical or ineffective. Washington Pub.
    Util. Districts‘ Utilities Sys. v. Pub. Util. Dist i\lo. 1 of Clallarn County, 
    112 Wash. 2d 1
    , 1t,
    
    771 P.2d 701
     (1989). Transportation’s interpretation of the contract asks us to do just
    that
    Paragraph il.1 of the subcontract required that SQ| obtain several forms of
    insurance, including “Comprehensive or Commercial General Liability insurance on an
    occurrence basis.” The subcontractor was also to name “the Contractor, Owner and
    other parties . . . as additional insureds on each of these policies." lt is undisputed this
    paragraph fulfills the requirement of requiring Ledcor to be named as an additional
    insured.
    Paragraph 11.2 provided the minimum limits of liability for “The Subcontractor's
    Comprehensive or Commercial General i_iability insurance and Comprehensive
    Automobile Liability lnsurance, as required by Paragraph 11.1.” This reference back to
    1t.‘l is not a iimitation, but merely referencing that “Comprehensive or Commercial
    General Liabiiity lnsurance" had been required in l1.1. The minimums required under
    paragraph 11.2 for CGL insurance include a “product/comp|eted operations aggregate
    16 (Emphasis added.)
    -29_
    No. 76490-0-|/ 30
    of $2 millionv Because paragraph 11.i required CGL insurance paragraph l1.2
    required the insurance include completed operations coverage
    ln addition, paragraph 1i.4 of the subcontract provided the coverage time limits
    required under the contract 11.4 includes the requirement that the Subcontractor shall
    “rnaintain in effect all insurance coverage required under this Subcontract,” and that the
    “Subcontractor shall maintain completed operations liability insurance for one year after
    acceptance of the Subcontract Work, substantial completion of the Project, or to the
    time required by the Subcontract Documents, whichever is |onger."'
    When read together, and giving effect to paragraphs i1.t, 1t.2, and t1.4, SQL’s
    subcontract required l_edcor to be named as an additional insured on the CGL policy,
    required the CGL policy to include completed project coverage, and required the
    coverage extend through the term of the CGl_ policies issued by Transportation. The
    trial court erred in granting summary judgment and dismissing Ledcor's claims against
    Transportation.
    FMIC
    i_edcor contends next that the trial court erred in dismissing its direct claims
    against third party FlVllC, another insurer for subcontractor SQ|. We disagree
    We first address whether l_edcor was covered under the policies issued by FiVllC
    to SQ|. Fi\/llC issued a CGL policy from lVlay 1, 2006 to May t, 2007. That policy was
    subsequently renewed from lVlay t, 2007 to May 1, 2008. Both policies contained
    separate endorsements for ongoing operations and compieted operations Both
    policies also contain nearly identical “additional insured ongoing operations”
    endorsements That endorsement provides as follows:
    17 (Ernpi'iasis added.)
    -30_
    NO. 76490-0-|/31
    A. Section il - Who is An insured is amended to include as an additional
    insured any person or organization for whom you are performing
    operations when you and such person or organization have agreed in
    writing in a contractor 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 for “bodily
    inlury”, “property damage” or “personai and advertising injury” caused, in
    Whole or in part, by:
    1. Your acts or omissions or
    2. The acts or omissions of those acting on your behaif;
    in the performance of your ongoing operations for the additional insured.
    A person's or organizations status as an additional insured under this
    endorsement ends when your operations for that additional insured are
    completed
    B. With respect to the insurance afforded to these additional insureds the
    following additional exclusions apply:
    'l``his insurance does not apply to:
    2. “Bodi|y injury" or “property damage” occurring after:
    a. Aii work, including materials parts or equipment furnished
    in connection with such work, on the project (other than
    service, maintenance or repairs) to be performed by or on
    behalf of the additional insured(s) at the location of the
    covered operations has been completed; or
    b. 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 pari of the same projectmill
    Thus the oniy question is whether SQ| was engaged in any “ongoing operations”
    for the additionally insured--Ledcor--at the time the original policy began on i\Aay 1,
    la (Emphasis added).
    ,31-
    No. 76490-0-|/32
    2006. lt is undisputed that SQl’s final maintenance at The Adrniral concluded on lVlay
    10, 2005. Ledcor does not argue any other “ongoing operations” were continuing at that
    time, nor provide any evidence that further operations took place during that period
    The contract unambiguously provides “A person’s or organizations status as an
    additional insured under this endorsement ends when your operations for that additional
    insured are compieted." Consequently, Ledcor has not demonstrated that it qualifies as
    an additional insured for ongoing operations under either policy,
    Turning to the completed operations endorsement, the 2006 to 2007 and 2007 to
    2008 policies differ. The 2006 to 2007 policy specifically identifies each entity covered
    as an additional insured for completed operations Ledcor was not identified as an
    additionally insured for completed operations on the 2006 to 2007 policy. Ledcor
    offered no evidence to the contrary.
    The 2007 to 2008 policy, however, includes an additional listing for: “Any person
    or organization, . . .to whom or to which the Named lnsured is obligated by virtue of
    written contract to provide lnsurance, such as is afforded by this policy.”19
    The same Ledcor and SOl subcontract is at issue here as in the claims brought
    against Transportation. As discussed above, when read together, paragraphs 11.1,
    11.2, and ll.4 required SOl to maintain completed operations coverage and identify
    Ledcor as an additionally named SQl’s obligation, however, was limited in time
    Paragraph 1i.4 of the subcontract requires that: “The Subcontractor shall maintain
    completed operations liability insurance for one year after acceptance of the
    Subcontract Work, substantial completion of the Project, or to the time required by the
    Subcontract Documents whichever is longer." Under this provision, the latest
    19 (Emphasis added.)
    -32-
    l\lo. 76490~0-|/33
    reasonable interpretation of this provision is lVlay 2006, one year after SQl performed
    maintenance on The Admiral.
    We hold that Ledcor was not an additionally insured under the policy issued to
    SQi by FM|C. ln addition, because Ledcor was not covered as an additional insured
    under the policies l_edcor has failed to demonstrate that Fi\/i|C’s denial of coverage was
    “unreasonabie, frivolous or unfounded.” Q_y"g”r"t_g_g, 145 Wn.2d at 433.
    Ledcor’s Assfgneo' Cl'aims Against FMIC
    SQi assigned its direct claim against Fl\/llC to Ledcor, i_edcor asserts finally that
    the trial court erred in dismissing its assigned claims against FlVllC. We disagree
    A. Additiona| Facts
    On August 29, 2008, while the COA’s construction defect action was pending,
    Ledcor filed a separate lawsuit against all subcontractors involved in 'l``he Admiral
    project (subcontractor action). SQl was named in the subcontractor action. The
    subcontractor action sought to recover against the subcontractors any amounts that
    Ledcor Was ultimately obligated to pay to the COA.
    SQl tendered that lawsuit to FlVllC seeking defense and indemnity as a Named
    insured under the Fi\/llC Policies. FlyllC agreed to defend SQi pursuant to a reservation
    of rights One of SQl’s other insurers Cornhusker insurance Company (Cornhusker),
    also agreed to participate in SQl's defense Cornhusker and Fi\/llC jointly provided SQ|
    with a fully funded and complete defense Ledcor sent a settlement demand letter in
    lVlarch 2014. Beginning in February 2014, FlVliC participated in mediations and offered
    to contribute to settlement demands on behalf of SQl. i\lo settlement was reached at
    -33-
    NO. 76490-0-|/34
    this time After the mediations failed to reach a settlement Fl\/llC sent letters requesting
    updates on the settlement negotiations
    On April 8, 2014, FM|C was informed by the assigned defense counsel that SQl,
    through its personal counsel, had reached a settlement agreement with Ledcor. On
    April 11, 2014, Fl\/llC was provided with a copy of the consent judgment that was
    entered against SO! in the subcontractor action. The consent judgment indicated that it
    was filed in compliance with a lViarch 21, 2014 settlement agreement between Ledcor
    and SO|. FlVl|C sent a follow up letter requesting information about the |etter, and
    expressing concern that it had not been included in the settlements or been asked to
    contribute to the settlement After entering into the consent judgment settlement
    Ledcor pursued all contractual and extra-contractual causes of action against Fl\/llC as
    the assignee of SQl.
    in November 2013, FM|C filed a declaratory judgment action in federal court
    seeking a judicial determination that it was not obligated to cover SQl in the
    subcontractor action. After the case was remanded to the King County Superior Court
    Fl\/ilC was granted leave to file a third-party complaint in this action seeking declaratory
    judgment against SOl. SQl (through Ledcor) responded adding counter claims for
    breach of duty, bad faith, and violations of the CPA and the lFCA.
    On October 26, 2016, the trial court granted l:lVllC‘s motion for summary
    judgment dismissing SQl/Ledcor’s counter claims On October 31 , 2016, the court
    granted Fl\/liC’s motion for summary judgment agreeing that the policy FlVllC issued to
    SQi was not applicable and even if it were, the continuous or progressive injury or
    _34_
    l\lO. 76490-0-|/35
    damage exclusion barred recover. The trial court subsequently denied Ledcor’s
    motions for reconsideration
    B. Duty to Defend
    ``l“he FlVllC policy issued to SQl provides coverage for “property damage” caused
    by an “occurrence” during the Fi\/llC policy period, so long as the insured does not
    know, in whole or in part about the “property damage” or any continuation, change, or
    resumption of such “property damage” prior to the inception of the FiVllC poiicy.
    Specitically, the policy states
    a. We will pay those sums that the insured becomes legally obligated to pay as
    damages because of “bodily injury" or “property damage” to which this
    insurance applies We will have the right and duty to defend the insured
    against any “suit" seeking those damages However, we will have no duty to
    defend the insured against any “suit” seeking damages for “bodily injury" or
    “property damage” to which this insurance does not apply. . . .
    b. This insurance only applies to “bodily injury” and “property damage” only if:
    1) The “bodily injury" or “property damagell is caused by an “occurrence"
    that takes place in the "coverage territory"; and
    2) The “bodily injury" or “property damage” occurs durinq the policy
    penod;and
    3) Prior to the policy period, no insured listed under Paragraph 1 of
    Section ll - Who is An insured and no “employee” authorized by you to
    give or receive notice of an “occurrence” or ciaim, knew that the “bodily
    injury" or “property damaqe“ had occurred in whole or in part if such
    a listed insured or authorized "employee” knew, prior to the policy
    period, that the “bodily injury" or “property damage” occurred then Ly
    continuation, change or resumption of such “bodily iniury” or “property
    damage” durinq or after the policy period will be deemed to have been
    known prior to the policy period
    d "Bodily injury" or “property damage” will be deemed to have been known to
    have occurred at the earliest time when any insured listed under Paragraph 'l.
    of Section ll - Who is An insured or any "employee" authorized by you to give
    or receive notice of an "occurrence“ or claim:
    1) Ftepons all, or any part, of the l‘bodily injury" or “property damage” to
    us or any other insurer;
    2) Fieceives a written or verbal demand or claim for damages because of
    the “bodily injury‘l or “property damage"; or
    -35_
    NO. 76490~0-1/36
    3) Becomes aware by any other means that l‘i:)odily injury" or “property
    damage” has occurred or has begun to occur.[?°i
    As discussed above, in determining coverage, this court considers a two~step
    process First, the insured must establish that the loss falis within the “scope of the
    policy's insured losses.” Then, the burden shifts to the insurer to show that the loss is
    excluded by specific language in the policy. Diamaco, 97 Wn. App. at 337. Atthough
    this policy uses exciusionary language, the burden is still on SO! to demonstrate the
    damage took place during the coverage period, and that SQi did now know ot the
    damage before the policy period.
    Fl\/liC provided substantial evidence that SQl knew, at least in part, that the
    damage to the roofing had occurred at The Admiral as of at least 2004. FlVllC further
    provided evidence that SQl failed to repair the damage that it was asked to repair in
    2005, and that some of the claims arose of that damage. SOI only presented evidence
    that SQi rnay have believed that they had fixed all ot the damage when they returned to
    do further maintenance in .2005.21 Moreover, the evidence showed the damage
    occurring after 2005 would have been a “continuation, change or resumption" of the
    original damages22 Because there is no reasonable dispute that SQ| knew ot the
    damages before it purchased the FNl|C policies in 2006 and in 2007, summary
    judgment was appropriate concluding that SOl’s damages were not covered under the
    Fi\lliC policies
    20 (Emphasis added.)
    21 Ledcor cites several cases considering the common law “known loss" principai, however these
    cases do not support his argument See Pub. Util. Dist. No. t of Klict124
    Wash. 2d 789
    , 806, 
    881 P.2d 1020
     (1994).
    22 (Emphasis added.)
    -36-
    NO. 76490~0*|/37
    C. Extra Contract Claims
    Again, to succeed on a bad faith claim, the policyholder must show the insurer's
    breach of the insurance contract was unreasonabie, frivolous or unfounded Ov_ertgn_,
    145 Wn.2d at 433. “The insured may not base a bad faith or CPA claim on an insurer's
    good faith mistake, which occurs when the insurer acts honestly, bases its decision on
    adequate inlormation, and does not overemphasize its own interest.” Werlinger, 129
    Wn. App. at 808.
    l-iere, based on the allegations in the subcontractor action, l``-``NllC accepted the
    defense of SQi under a reservation of rights. Fl\/l|C then assigned counsel, participated
    in settlement negotiations and finally brought a declaratory relief action. SOl did not
    pay any defense fees or incur damages FMiC did not act in bad faith in its defense of
    SQ|. §g_g lr_g_g_ig, 147 Wn.2d at 761.
    SGi also raised various CPA violations including that FlVl|C failed to investigate
    its claims and again that FlvllC “commingled” the coverage and defense claims Even it
    these actions rise to the ievel ot “(1) unfair or deceptive act or practice,” under the CPA,
    there is no presumption of harm. SQi needed to prove it was harmed by FlVliC’s
    actions and SQ| did not present evidence of harm. SQl did not pay defense fees or
    incur any costs.
    Finally, in the absence of an unreasonabie denial of coverage or benefits the
    iFCA does not create an independent cause of action for alleged regulatory violations
    Perez-Crisantos, 187 Wn.2d at 680.
    Summary judgment and dismissal of Ledcor’s assigned claims against Fi\lliC was
    appropriate
    _37_
    No. 76490~0~1/38
    We reverse the dismissal of Ledcor’s claims against VSC and Transportation.
    Mww-, /l._(_.»:r"
    WECONCUR:
    »-/' r"' l ii
    l\/``lC#L