Chase Construction North West Inc. v. AIX Specialty Insurance Co.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 13 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHASE CONSTRUCTION NORTH WEST No. 15-35591
INC., a Washington Company,
D.C. No. 2:15-cv-00019-RAJ
Plaintiff-Appellant,
v. MEMORANDUM*
AIX SPECIALTY INSURANCE
COMPANY, a foreign insurer,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
Richard A. Jones, District Judge, Presiding
Submitted February 8, 2018**
Seattle, Washington
Before: M. SMITH and MURGUIA, Circuit Judges, and ROBRENO,*** District
Judge.
This case arises out of a general commercial liability insurance policy (“the
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Eduardo C. Robreno, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
Policy”) that Plaintiff-Appellant Chase Construction North West, Inc. (“Chase”)
purchased from Defendant-Appellee AIX Specialty Insurance Company (“AIX”).
The Policy covered property damage arising from Chase’s commercial operations
as a construction and remodeling company. When the Oakbrook Country Club
Condominium Association (“Oakbrook”) sued Chase over an allegedly defective
roofing project, AIX refused coverage on the grounds that the Condo Exclusion
applied to exclude coverage. Relevant here, the Policy excluded work performed in
connection with condominiums (the “Condo Exclusion”), except where “such
work is being done under contract with the owner(s) of the single unit being
worked on” (the “Exception”). Chase filed suit in the United States District Court
for the Western District of Washington, seeking a declaration that, under the
Policy, AIX had a duty to defend and indemnify Chase against the Oakbrook
lawsuit. Chase now appeals from the district court’s decision granting summary
judgment for AIX and concluding that AIX had no duty to defend or indemnify
Chase against the Oakbrook lawsuit. We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and we affirm.
Reviewing de novo, we conclude that the district court correctly concluded
that the Condo Exclusion applies to exclude from coverage damage arising out of
the roofing work performed by Chase on Buildings I and D, on the grounds that it
constitutes property damage arising from work performed “in connection with any
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condominium.” We reject Chase’s argument that the term “unit” can be read to
mean a “single entity” or “any group of things . . . regarded as an entity,” such that
Buildings I and D, each containing multiple condominiums, can be regarded as a
“single unit” for the purposes of the Exception to the Condo Exclusion. Chase has
not shown how this interpretation reflects the ordinary meaning of the term. Kish v.
Ins. Co. of N. Am., 883 P.2d 308, 311–12 (Wash. 1994) (Courts give undefined
policy terms their “plain, ordinary, and popular meaning.”). Under Washington law
“units” is used to describe portions of a condominium designated for separate
ownership. See, e.g., Wash. Rev. Code §§ 64.34.020(41), 64.34.204(1),
64.34.216(d); see also, e.g., Rouse v. Glascam Builders, Inc., 677 P.2d 125, 129
(Wash. 1984) (discussing the rights of “individual unit owners” in common areas);
Fairway Estates Ass’n of Apartment Owners v. Unknown Heirs & Devisees of
Young, 289 P.3d 675, 680 (Wash. Ct. App. 2012) (defining “unit” to be an area
designated for separate ownership). Chase cites no authority in which buildings
containing multiple condominiums are discussed or defined as “units,” and Chase
concedes that Oakbrook had no ownership interest in either the individual units,
the buildings, or the roofs. Chase’s interpretation is also inconsistent with the way
the term “unit” is used in the Policy, which elsewhere refers to “single family
units” to denote a residential unit that cannot be subdivided. See Allstate Ins. Co. v.
Bauer, 977 P.2d 617, 620 (Wash. Ct. App. 1999) (“Courts view insurance
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contracts in their entirety and do not interpret phrases in isolation.”).
Moreover, we agree with the district court that the extremely broad
interpretation offered by Chase would render the Condo Exclusion either nugatory
or absurd because any condominium work contracted through the owner of an
individual residential unit, the owners of multiple units, and/or the agent for
multiple owners would be covered under the Policy, effectively reading out of the
Exception the portion that limits coverage to work being done “under contract with
the owner(s) of the single unit being worked on.” See Pub. Util. Dist. No. 1 of
Klickitat Cty. v. Int’l Ins. Co., 881 P.2d 1020, 1026 (Wash. 1994) (“Overall, a
policy should be given a practical and reasonable interpretation rather than a
strained or forced construction that leads to an absurd conclusion, or that renders
the policy nonsensical or ineffective.”); Bauer, 977 P.2d at 620 (“Insurance policy
language is interpreted . . . in a way that gives effect to each provision.”).
In sum, it is not enough that Chase has presented one possible definition of
“unit,” where that interpretation has not been shown to be reasonable. See Kaplan
v. Nw. Mut. Life Ins. Co., 65 P.3d 16, 25 (Wash. Ct. App. 2003). Because Chase
has not presented a reasonable alternative interpretation of the Condo Exclusion,
we conclude that the Exclusion is unambiguous and applies to exclude coverage on
the claims raised in the Oakbrook litigation. See Allstate Ins. Co. v. Hammonds,
865 P.2d 560, 562 (Wash. Ct. App. 1994) (“A clause in [an insurance] policy is
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ambiguous when, on its face, it is fairly susceptible to two different interpretations,
both of which are reasonable.” (citation omitted)).
AFFIRMED.
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