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American States Insurance, Co. v. Delean's Tile and Marble, LLC

Court of Appeals of Washington, Division 1

December 9, 2013

AMERICAN STATES INSURANCE, COMPANY, an Indiana corporation, Respondent,
v.
DELEAN'S TILE AND MARBLE, LLC, a Washington limited liability company; DELEAN CONTRACTING & LANDSCAPING, LLC, a Washington limited liability company; TABITA DELEAN dba DELEAN'S TILE AND MARBLE, a Washington sole proprietorship; MIRCEA and TABITA DELEAN, individually and dba DELEAN'S TILE & MARBLE, a Washington sole proprietorship; and LAWLESS CONSTRUCTION CORPORATION, INC., a Washington corporation, Appellants.

Order File Date January 23, 2014

ORDER GRANTING RESPONDENT'S MOTION TO PUBLISH OPINION

The respondent, American States Insurance Company, having filed a motion to publish opinion, and the hearing panel having reconsidered its prior determination and finding that the opinion will be of precedential value; now, therefore, it is hereby:

ORDERED that the unpublished opinion filed December 9, 2013, shall be published and printed in the Washington Appellate Reports.

Dwyer, J.

Six townhouse unit owners entered into a construction contract with Lawless Construction Corporation, Inc. (Lawless). The owners hired Lawless to repair construction deficiencies at their property that had been caused by the original developer. Lawless then subcontracted with Delean's Tile & Marble, LLC (Delean) to assist in repairing some of the damage. Delean was insured by American States Insurance Company at the time and Lawless was made an additional insured under Delean's policy. Some of Delean's work was defective and when Delean refused to return and fix the defective work, Lawless paid another company to repair and complete the work. Subsequently, Lawless brought a lawsuit against Delean. Lawless and Delean eventually settled their dispute. In the meantime, Lawless had tendered a claim to American States, but American States denied coverage pursuant to its Multi-Unit and Tract Housing Residential Exclusion (hereinafter Exclusion). Thereafter, American States filed a declaratory judgment action against Lawless and Delean, seeking a ruling on coverage. The trial court denied Lawless's and Delean's motion for partial summary judgment, granted American States' motion for summary judgment, and ruled, among other things, that the Exclusion precluded coverage for the claim submitted by Lawless and Delean. Because the work Delean performed falls within the plain language of the Exclusion, we affirm.

I

The property at issue was designed, permitted, and built between 2001 and 2002 as "three duplex townhouses with underground parking." It is located in Seattle at 125-127-129 26th Avenue East. A soils report prepared for the developer in 2001 stated that "the multi unit residential construction will consist of three, three-story buildings joined by courtyards."

In the building permit, each duplex townhouse building was listed as a "two-family dwelling." Each duplex townhouse has continuous siding, a common roof, and a continuous guttering system. Pedestrian access to all six units is available using the public sidewalk on 26th Avenue East, and the stairway leads into the inner courtyard area. The inner courtyard area between the three buildings consists of connected walkways and stairways used by all owners. Each unit has one entrance, accessible by traversing the common courtyard walkways. When the property owners exit their front doors, they access the garage via a stairway from the courtyard area. The garage area is located underneath the building bearing the address 125 26th Avenue East and it has a continuous span of siding shared with the upper portions of the building above it.

On August 25, 2003, the City of Seattle approved a subdivision of the property into seven parcels, denominated Parcels A to G. The six townhouse units occupy Parcels A to F. The subdivision's stated purpose, pursuant to the short plat for the property, was "for the creation of separate lots of record for the construction and transfer of title of townhouse as authorized under SMC 23.45.006." A Declaration of Covenants, Conditions, Restrictions and Easements, and Party Wall Agreement (hereinafter CC&Rs) applicable to all six parcels was recorded in 2003. The CC&Rs refer to Parcels A through F collectively as the "Property." The CC&Rs establish easements for walkways, parking, shared storage space, utilities, ingress and egress, mailboxes, and state that all six parcels are equally responsible for sharing the costs of maintaining the easement areas. The CC&Rs prohibit owners from making improvements, alterations, repairs, paint changes, excavations, changes in grade, or other work which alters the exterior of "any Parcel or the Structures located thereon . . . without the prior written approval of three-fourths (3/4) of the Owners Additionally, the CC&Rs prohibit structural alteration of any party walls—the party walls are walls that were built as part of the original construction and placed on the dividing line between the parcels.

The original construction of the walkways was defective, and the owners of all six units sued the builder. The owners hired Lawless to repair the defective work. Although the contract identified "Homeowners Association" as the party contracting with Lawless, all of the owners signed the contract individually. The scope of repair under the contract included the main courtyard, the six east elevation unit decks, the garage, the storage rooms, and the staircase to the garage.

On August 8, 2006, Lawless subcontracted with Delean to assist in repairing the damage. Delean's work included the following: tile work in the deck areas, courtyard areas, easement areas, and the staircase to the common garage; lapping membranes against the siding of the building walls; and waterproofing the penetrations from the buildings' downspouts.

Delean's work on the exterior walkways was defective, allowing water to leak into the garage. This, in turn, resulted in rot to the joists, sheathing, and drywall in the garage. The owners demanded that Lawless return and repair the damage. Lawless, in turn, asked Delean to repair the shoddy work. Delean refused to do so.

Delean's contract with Lawless required Delean to buy insurance, to make Lawless an additional insured under his liability insurance policy, and to indemnify and hold Lawless harmless for claims arising from Delean's performance. Delean was insured by American States Insurance Company at the time and Lawless was listed as an additional insured under ...


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