Terrie Lewark v. American States Insurance Company ( 2013 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
TERRIE LEWARK, assignee of PUBLIC
STORAGE, INC. No. 68634-8-1
Appellant, DIVISION ONE
v. UNPUBLISHED OPINION
DAVIS DOOR SERVICES, INC., a
Washington corporation,
Defendant,
AMERICAN STATES INSURANCE
COMPANY, a foreigner insurer,
Respondent. FILED: August 5, 2013
Appelwick, J. — Lewark, as assignee of Public Storage, sued American Stated
claiming coverage as an additional insured under an umbrella liability policy it issded toT
Davis Door. She claimed breach of contract for failure to defend and indemnify and
asserted a variety of extra-contractual claims based on American States' alleged failure
to notify Public Storage of coverage. The trial court dismissed her claims on summary
judgment. The insurance policy did not provide coverage for the underlying claim. We
affirm.
FACTS
Public Storage Inc. contracted with Davis Door Service Inc. to perform work at its
facilities. They signed a master agreement in 2003, and again in 2006. The 2006
master agreement included a provision that required Davis Door to maintain a
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commercial general liability policy that insured Public Storage while it was performing
work:
Contractor shall procure and maintain at its own expense during the entire
progress of the Work, the following insurance coverage from an insurance
company satisfactory to Owner:
a. Employer's liability insurance of not less than $1,000,000, and
commercial general liability insurance insuring against claims
for personal injury, death or property damage occurring upon,
in or about the Property in limits not less than $1,000,000 per
occurrence. Prior to the start of any work a certificate must be
received by owner naming Public Storage, Inc. and each of its
affiliates, subsidiaries, partners, owners, officers, directors and
employees as additional insureds.
As required by the agreement, Davis Door took out a commercial general liability
policy and an employer's liability policy with American Economy. It also took out an
umbrella liability policy with American States. The umbrella liability policy provided that
insured persons or entities include:
Any person or organization for which an insured is required by virtue of a
written contract entered into prior to an "occurrence" to provide the kind of
insurance that is afforded by this policy, but only with respect to operations
by or on an insured's behalf, or to facilities an insured owns or uses, and
only to the extent of the limits of insurance required by such contract, but
not to exceed the applicable limits of insurance set forth in this policy.
In October 2006, Davis Door performed repair work on a door at a Public Storage
facility in Renton. Then, in December 2006, Terrie Lewark attempted to open the door
and injured her back. She sued Public Storage and Davis Door. Public Storage settled
with Lewark for $299,000. It also paid $150,028 in defense costs, and assigned to
Lewark its rights under the 2006 master agreement. Lewark settled with Davis Door in
September 2010 for $225,000. Then, Lewark sued Davis Door and American States as
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assignee of Public Storage. Because she acted as assignee of Public Storage, we refer
to her as simply Public Storage.
Public Storage alleged breach of contract for failing to defend and indemnify. It
also pursued extra-contractual claims for negligence, bad faith, and violation of the
Consumer Protection Act, ch. 19.86 RCW and the Insurance Fair Conduct Act, ch.
48.30 RCW. Those claims arose with respect to the umbrella liability policy. Public
Storage alleged that it was an additional insured under the umbrella liability policy, that
American States failed to defend or indemnify, and that American States acted in bad
faith by failing to inform Public Storage of available coverage and benefits. The parties
filed competing motions for summary judgment. The trial court dismissed all claims. It
found that "Public Storage is not an additional insured under the American States
Insurance Company umbrella policy issued to Davis Door."
DISCUSSION
Public Storage argues that it is an additional insured, that the umbrella insurance
policy covered the loss in this case, and that American States violated its duty of good
faith by failing to notify Public Storage of its policy benefits. It also claims that the trial
court abused its discretion by denying Public Storage's motion to compel discovery of
documents that American States alleges are protected by the work product doctrine and
attorney-client privilege. American States argues that Public Storage is not an
additional insured, that the policy was not triggered in this case, that it had no duty to
notify Public Storage of potential benefits, and that the trial court correctly denied the
motion to compel.
No. 68634-8-1/4
We review an order granting summary judgment de novo. Weden v. San Juan
County. 135 Wn.2d 678, 689, 958 P.2d 273 (1998). We may affirm the order on any
grounds supported by the record. Allstot v. Edwards. 116 Wn. App. 424, 430, 65 P.3d
696 (2003).
Even if Public Storage is an additional insured, the umbrella insurance policy
does not cover the loss in this case. In an "other insurance" provision, the umbrella
policy explicitly stated that it only applies as excess over other insurance:
1. This insurance is excess over, and shall not contribute with any other
insurance, whether primary, excess, contingent or on any other basis.
This condition will not apply to insurance written specifically as excess
over this policy.
2. When this insurance is excess, we will have no duty to defend the
insured against any "suit" if 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 your rights against all
other insurers, and you shall execute and deliver instruments and
papers, including assignments of rights, and do whatever else is
necessary to secure such rights.
3. When this insurance is excess over other insurance, we will pay our
share of the "ultimate net loss" that exceeds the sum of:
a. The total amount that all such other insurance would pay for the
loss in the absence of this insurance; and
b. The total of all deductible and self-insured amounts under all such
other insurance.
Public Storage in fact carried its own insurance policy with a $1,500,000 per
occurrence limit. That policy contained a $500,000 self-insured retention, such that the
insurer would only make payments for damages that exceeded $500,000. There is no
suggestion that the underlying claim in this case reached that threshold.
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Public Storage argues that, despite the fact that its insurance was not exhausted,
the umbrella coverage applies, because the self-insured retention is not "insurance." It
claims that section 1 of the "other insurance" provision determines whether the umbrella
policy applies. Only then, it argues, does subsection 3 and its explicit reference to self-
insured retentions kick in. That interpretation is untenable.
Public Storage's argument is based on the premise that self-insurance provisions
are not insurance, because "traditional insurance involves risk shifting, while self-
insurance involves risk retention." Bordeaux. Inc. v. Am. Safety Ins. Co.. 145 Wn. App.
687, 696, 186 P.3d 1188 (2008). It thus claims that its self-insured retention is not
insurance and does not need to be exhausted before the umbrella policy kicks in. But,
Bordeaux is a subrogation case that examined whether an insured is entitled to
reimbursement for paying out its self-insured retention before its insurer is entitled to
reimbursement. ]d. at 694. We rejected the insurer's argument that the self-insurance
was primary insurance and that the insurer only paid an excess amount over that
primary insurance. ]d It was within that equitable context of subrogation that we
explained that self-insured retentions are not really "insurance." ]d. at 695-96.
This case presents an entirely different issue. It is immaterial whether the self-
insured retention itself is "insurance," because it is undisputed that Public Storage owns
a primary insurance policy that mandates the self-insured retention. The "other
insurance" provision is triggered. It explicitly states that American States is only
responsible for losses above both the amount paid by another insurer and the amount
of any deductibles or self-insured retentions. It is unreasonable to interpret that
provision as requiring coverage in this case. Coverage was not triggered, because
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Public Storage's losses were not in excess of its primary insurance and self-insured
retention.
Public Storage's extra-contractual claims stem from the alleged failure to disclose
coverage and benefits available to Public Storage. Because there were no available
benefits, we affirm summary dismissal of those claims. Likewise, we need not consider
whether the trial court abused its discretion by denying Public Storage's motion to
compel, because Public Storage only sought documents related to the extra-contractual
claims. Specifically, American States' interpretation and investigation of coverage.
There was no coverage and the extra-contractual claims were properly dismissed.
We affirm.
WE CONCUR:
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