good morning your honour's and hauser on behalf of the sienna del lago condominium association the sienna del lago condominium building is twelve units located in the east lake neighborhood of seattle the original cladding system was an exterior insulation finishing system it looks like stucco but it's not stucco it commonly goes by the acronym of effects and in two thousand and one the association discovered water intrusion and hidden damage behind the effects so they made a claim to all of their insurers and insurers came out and investigated including mount holly and  found additional hidden damage and that portions of the building were at risk of imminent collapse as of two thousand was there any coverage on the i got from the underlying  policies i believe that all the underlying policies denied coverage however the question well it wasn't ever determined we allege that there was coverage they allege that there was not in the district court specifically find that there was a huge under the underlying or respond and therefore couldn't be covered by the differences conditions the i c coverage yes i would agree with that that's wrong what's wrong with what judge well the most obvious thing that's wrong with what joe julie did is that he didn't understand that the difference in conditions policy had an ensuing loss exception to the exclusion for inadequate construction which preserved coverage for water damage resulting from inadequate construction one of the underlying policies did not have that exception and in fact deleted that exception and replaced it with language that says if the united quote construction initiates the sequence of events then any resulting loss is covered i'm sorry is excluded and so that underlying policy very clearly the sequence of events that judge zilly found is the sequence of events at issue here what was the claim that was for that underlying policy the claim was made a tender letter was sent and that was that what was as it was characterized in their denial letter one for damage to exterior wall sheath in and framing caused by rain water intrusion and two for repair of areas in a state of substantial impairment of structural integrity caused in part by hidden decay and faulty workmanship or cause or construction that's what you tender to the insurance company they denied it and then later you come up with scum pints their peril stary and you're asking us to address that now what happened here are that washington law has been undergoing some changes regarding coverage for a combined apparels under first party policies this case the complaint was initially filed in january two thousand and twelve before mount holly made a coverage decision before we got mount holly's expert report then in may two thousand and twelve we get the vision one decision which affected a fundamental change in coverage for a kind by which you can see that you didn't offer a combined perils theory when you tendered when you put the letter to the insurance company that is true yes and it also is not the combined peril theory is not expressed in the original complaint right it was first brought up after we read vision one and after we read mt holly's denial letter and their expert's opinion it was first brought up in and if the letter that we sent to mount holly in june two thousand and twelve one month after the vision one decision which again is the decision which says if you haven't excluded peril that's initiating the loss the loss can still be covered if there are and then you know now i'm asking you what are you so it seems that this is just something that is being evolving and making up as we go along and then we're being asked to you know address something that was never in the initial you know that in your initial claim that was presented was never in the complaint and now you're not clearly articulating that here i can clearly articulate how the combined peril theory applies to the water intrusion porche portion of the claim you know adequate construction is excluded but there is a resulting loss exception in mt holly's policy that's your three seventy six that preserves coverage for any covered resulting loss such as water damage from rain water intrusion that is the theory that we explained in our if to let are now holly's thirty b six deposition testimony is that they looked at that if to letter and looked at vision one and reevaluated coverage and decided that their policy still would not provide coverage for this compound peril theory subcouncil just and china understand what your argument is so bar you are climbing under the american national policy there is no the inadequate construction exclusion is going to bar anything that happens after inadequate construction even the very typical example that we think of where you there's miswiring and then it causes a fire we normally think of that is being covered because usually there is a resulting loss exception in the inadequate construction exclusion it's not of events is excluded that is the specific language that was added to the american national policy and that language is going to be affective under the vision one decision to exclude every sequence of coverage events that's initiated by inadequate construction now in the absence of that kind of language we have the vision one case and we also have a very recent green light condominium of association which is all state case which i gave you in my supplemental letter about a week ago which says water damage resulting from rainwater intrusion is covered even if it results from inadequate construction that's because the policy doesn't contain that specific language that says if initiated by inadequate construction anything is excluded from the date of that december twenty fifth teen and that's a u s district court decision that just interprets the vision one case one of the underlying policies clearly excludes coverage and therefore amount hollies d i see policy fills that gap in coverage so so could you show point me in the record to the underlying policy that you're referring to that clearly excluded coverage and i you thing in the excluded coverage for the combined peril or for the subsequent peril that you're on or the underlying policy i'm discussing is the american national policy in the record at your fifty two and what specific policy provision are you referring to i'm referring specifically to the original version of the policy at fifty six has a resulting loss exception to this but is that you have to look further though because that resulting loss exception is crossed out and replaced by an endorsement the endorsement is that you are sixty six endorsement says i'm replacing the lead in causation language and i'm replacing the inadequate construction exclusion if you look at the combined effect of how the endorsement effects the original language in the policy what american national said in his denial letter as said it removes the resulting loss exception the denial letters in the record at two places you are seventy to seventy eight and you are one ninety nine through two zero seven so if we if we agree that mount holly exclusion seven eight three provides a sufficient basis for its coverage denial of cns are riginal when driven rain and collapse claims what's your best argument for reversal of the district court's grant of summary judgment for mount holly i think the best argument is what i just discussed but the in addition the problem with the district court's order is it took an extremely ambiguous and broad exclusion seventy three and defined it or interpreted it in a way that benefits the insurer even though we identified at least two different reasonable interpretations of that exclusion that should have been applied first of all the language of that exclusion says it applies to other perils as defined and limited in the underlying policies we said let's look at the dictionary definitions of those terms because they're not defined we look at the definition of as we look at the definition of defined we looked at the definition of limited and particularly if you look at the definition of defined a normal person thinks that when you define something you specifically explain what it means that's not how judge zillion turpitude this he said it doesn't matter whether the underlying policy even mentions it he cited theft as an example he said the honor ok but now when i'm reading to the extent that if a claim that is based on the timing or the timeliness of mt holly's coverage decision that you have a problem in that a violation of washington's administrative code can serve only as a basis for increasing an award of damages for it otherwise meritorious if klein i'm referring to washington code section forty eight point three zero point zero one place your saying that i'm american national excluded the you didn't answer my question about whether or not you are referring to the exclusion for a for a single incident or for the combined right in a number of ways a loss caused by excluded perils does not result in coverage the purpose i'm sorry for the purpose of summary judgment holly except it is true that the peril was wind driven rain and also faulty construction the efficient proximate cause rule only applies  perils combine in a sequence to cause a loss and a covered peril is the predominant cause of the loss in this particular case because both of the losses were excluded under the mount holly  policy we don't apply the fission proximate cause rule what we do need to look at is whether those two perils are in fact excluded so we start with wind driven rain wind driven rain is excluded under the d i c policy because it is a peril insured against under all three of the underlying policies all three of them cover all risks of loss unless they are excluded under section c of the policy or limited in section d limitations none of the underlying policies exclude wind driven rain or limit wind driven rain in any meaningful way for this loss because the perils because that peril is insured against under more specific insurance if falls within the language of the catch all exclusion seven a and in this case we're referring to three part three which is the catch all part that is trying to again exclude any peril that would have been insured against under the required underlying policies yet stock was seventy three the whole way through wouldn't this be a little easier well we would think it makes it easier but we also wanted to respond to the argument that faulty workmanship was a cos and faulty workmanship is specifically excluded under the d i see policy in sections seven p because it six bressler excluded we don't need to look at the underlying policies for how they resolve or in any way deal with faulty work at the outset of the claim because the claim was submitted as a wind driven rain claim the denial letter did emphasize seventy three again because wind driven rain is excluded and it's not covered and i think that makes the point that certainly faulty workmanship could also fall within seventy three believe that's part of the question that i'm hearing but seven different operable exclusion for faulty workmanship i do want to point out that all three of the underlying policies exclude loss or damage caused by the peril of faulty workmanship as does the d i policy the reference to the additional exclusion indorsement was dismissed by judge zilly and it should be by this court why because it expressly says and  honor that in our three seventy six it says right there on the bottom that these are additional exclusions it adds a number of ones that are new to the policy it does also add have one exclusion in the policy that my clients rely on that says we don't cover faulty workmanship unless a collapse ensues we're not relying on the less stringent exclusion in the in the additional indorsement because it doesn't change or modify so the one we're relying on is one more example that might say we don't cover losses to all books there might be an additional endorsement that says well we don't cover losses to blue bugs not much about endorsement doesn't suddenly now make yellow boats covered under the policy it's very clear in the law and i would refer the court to trans america to well first of all my response would be that three a p does not require that the underlying policies cover the loss it only requires that we identify that the risk is insured against for it to become an operable exclusion under the mount holly policy i think it's argument is that this means that there is insurance coverage for no i think he  meant that there is no coverage for the think with even his combined pair argument he's saying that the endorsement on pay sixty six exempts this allows coverage for the come combination of the parents and therefore the gap coverage would be initiated what's your response to that first of all your honor my clients not relying on the underlying policy to identify whether the peril of faulty workmanship is excluded so i'm talking about the combination the combination that may have some effect in the combination as to how the underlying property insure may or may not determine whether that policy in fact covers the loss what we have here though is policy was denied on the basis of faulty workmanship being the sole cause and sounds a lot like the vision one case and in fact we're here talking about combined perils so i believe that it's  relevant to the analysis for the i c policy at best it's irrelevant and otherwise nasa start humint that if people don't tender that to you in their initial letter that and they don't put it in their complaint that they can later you know require you to you know said your denial wasn't based on complying perils sure which it may help you make it from what you're saying you would have denied it if he w set it but it wasn't based on that so what's the best argument that if you don't put it in your letter and you don't put it in your complaint that you can't come up with it later what's the best case for that problem  judgment and it's really a point in terms of the argument as to how my client addressed the claim and what they were looking at in the sequence in which they address these arguments  quite frankly it appears to me that the evolving nature of these claims is always somewhat problematic and it complicates what should have been a very easy denial under a is what is the most problematic part of the judge's analysis from your perspective well i liked all of it i think that there was one point where he mentioned  faulty workmanship i think he said initiated a sequence that probably gave some fodder to the other side arguing about this inverse or converse efficient proximate cause or all the fact of the matter is that faulty workmanship doesn't make wind driven rain happen just like my failure to carry an umbrella doesn't make it rain very simple so i think the only thing i saw that was problematic is faulty workmanship was likely a predominant cause but that word aside i thought it was really a very wonderful analysis this is a case of first impression there isn't another case out there that deals with the the interplay between a di i c policy purchase to cover an earthquake a vent in a discreet period of time and all the other coverages and all the other cases that have been put into the record about first party property losses what did the experts say was the primary cause of the economic well interestingly enough mr in the i c policy that is a political two combined cause they both just as literally caused by our courts have instructed us that when we see the word caused by we're supposed to think official proximate cause but the efficient proximate cause rule only applies if we're trying to analyze covered and excluded losses so absolutely because the d c policy excludes faulty workmanship and then excludes wind driven rain there is no analysis of combined losses that's relevant to this court's determination that there's no coverage here under the earthquake policy so can you point us to washington state law authority for the proposition that if that and if that claim must fail when that coverage decision involved in debatable question of coverage there has not been to my recollection a washington case that has resolve that issue out of our state courts so  the cases that have been evolving in the bad faith arena have all been coming out of the district court and i don't think we have a binding case but clearly the statute itself was written and it was presented as a statute that would only be a political for an unreasonable denial of coverage the de lay the other types of regulatory  triggers have as consul conceded only been applied as an enhancement once there's been an unreasonable denial in this case there's no question this wasn't an unreasonable denial so the fact that and we can go to waiver right now your honor the fact that they're not even suggesting that a delay and i would say there was no unreasonable delay i mean delay itself is not actionable it would have to be unreasonable the fact that there is no unreasonable delay here should inform the court again that could not be the basis for an if a coin here and again they've waived that argument and certainly that's not the way the cases i'm sorry that there is no controlling law on that issue that would inform the court otherwise ok thank you i see that i'm out of time again i would ask the court respectfully to affirm judge julie's rulings thank if you look at your three sixty nine this is the text of natalee's policy we see the rain exclusion here and it's very clear this is exclusion seven are it only applies to personal property left in the open are not contained in buildings not holly admits that that its policy doesn't exclude rain its policy covers rain the only way it can avoid coverage for rain is under the seventy three exclusion so are you saying that the wind driven rain is not excluded under the difference in conditions policy it is not excluded it's covered and if you look at page three sixty nine you'll see that the rain exclusion only applies to personal property  how i can see it it's thirty six deposition that doesn't apply so the rain exclusion does not apply to this last please take a careful look at your three seventy six judge really completely missed t point here is the exclusion the right correct but it preserves coverage for and suing losses so you have to look at whether the ensuing loss is covered such as a fire water damage and you can't turn is covered let the insulin loft that is covered with water damage from rain water intrusion that is the last that is covered that's the green light case as applying vision one i want to point out this suing las exception i believe council is now arguing for the first time that you could look to the other perils exclusion of seventy three to exclude the ensuing loss but judge really was clear that's talking about perils not losses so if you're going to distinguish between perils and losses you've got to be consistent there's no excluded losses under seventy three it's only pales finally fifteen seconds to talk about collapse coverage collapse is a peril so the commencing condition in the underlying policies limits the peril of collapse i'm talking about the risk that something would fall down not the actual falling down when that happens is restricted under the underlying policies mount holly provides much