Court Opinion

ID: 4382988
Source: CourtListenerOpinion
Date Created: 2019-04-01 19:49:17.993781+00
Date Added: 2024-06-11T14:50:05.652801
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 MT. HAWLEY INSURANCE
 COMPANY, a foreign insurance                       DIVISION ONE
 company,
                                                    No. 77379-8-I
        Appellant/Cross-Respondent,
                                                    UNPUBLISHED OPINION
                   V.

 ZURICH AMERICAN INSURANCE                          FILED: April 1,2019
 COMPANY, a foreign insurance
 company,

        Respondent/Cross-Appellant.

       DWYER, J.   —    This appeal arises from a dispute over the equitable

reapportionment of financial obligations between Mt. Hawley Insurance Company

(Mt. Hawley) and Zurich American Insurance Company (Zurich) arising from a

personal injury lawsuit against Mt. Hawley’s named insureds, Granite Market

Place, LLC (Granite) and JSH Properties, Inc. (JSH). Mt. Hawley seeks to

recover the costs of defending and settling the lawsuit against its named

insureds, asserting that Zurich breached its contractual obligations to defend and

indemnify Granite and JSH as additional insureds. The trial court initially granted

summary judgment in favor of Mt. Hawley, requiring Zurich to pay both the

defense and settlement costs incurred by Mt. Hawley in the underlying personal

injury action. However, following a motion for reconsideration, the trial court

partially reversed its decision, ordering that Zurich need only reimburse Mt.

Hawley’s defense costs.
No. 77379-8-1/2

       On appeal, Mt. Hawley seeks reversal of the trial court’s order on

reconsideration denying it reimbursement of settlement costs. For its part, Zurich

seeks reversal of the order requiring it to reimburse Mt. Hawley’s defense costs.

Mt. Hawley asserts that it is entitled to recover its defense and settlement costs

because it is equitably subrogated to its named insureds’ claims against Zurich

for Zurich’s breach of its duty to defend Granite and JSH as additional insureds.

Zurich asserts that Mt. Hawley’s claims for reimbursement of defense costs

became moot when it made a settlement offer to pay those costs. Because we

conclude that Mt. Hawley’s subrogation rights herein entitle it to reimbursement

of its defense costs, but to only that remedy, and because Zurich’s settlement

offer did not render Mt. Hawley’s claim moot, we affirm in all respects.

       In August of 2012, Granite and JSH entered into a standard service

agreement with Fisher & Sons, Inc., d/b/a JTM Construction (JTM), to perform

repair work that included repairing a sidewalk defect outside of Granite’s and

JSH’s building, Market Place, on Western Avenue in Seattle. The terms of the

agreement required JTM to provide Granite and JSH with primary insurance

coverage as additional insureds on its commercial liability insurance policy.

      JTM was insured through a policy issuedNby Zurich. The policy included

the following pertinent insuring language:

      SECTION I    -   COVERAGES

      COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
      LIABILITY

       1. Insuring Agreement

                                             2
No. 77379-8-1/3

       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.

       The Zurich policy also set forth the following endorsement on coverage for

additional insureds:

      This endorsement modifies ihsurance provided under the:

      Commercial General Liability Coverage Part

      A. Section Il Who Is An Insured is amended to include as an
                       —

         insured any person or organization who you are required to add
         as an additional insured on this policy under a written contract
         or written agreement.

      B. The insur~nce provided to the additional insured person or
         organization applies only to “bodily injury”, “property damage” or
         “personal and advertising injury” covered under Section I  —

         Coverage A Bodily Injury And Property Damage Liability
                           —

         and Section I Coverage B Personal And Advertising
                           —           —

         Injury Liability, but only with respect to liability for “bodily
         injury”, “property damage” or “personal 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 behalf,

      and resulting directly from your ongoing operations or “your work”
      as included in the “products-completed operations hazard”, which is
      the subject of the written contract or written agreement, performed
      for the additional insured person or organization.

      F. For the coverage provided by this endorsement:

      1. The following paragraph is added to Paragraph 4.a. of the Other
         Insurance Condition of Section IV Commercial General
                                            —

         Liability Conditions:

      This insurance is primary insurance as respects our coverage to
      the additional insured person or organization, where the written

                                           3
No. 77379-8-1/4

        contract or written agreement requires that this insurance be
        primary and non-contributory with respect to any other policy upon
        which the additional insured is a Named Insured. In that event, we
        will not seek contribution from any other such insurance policy
        available to the additional insured on which the additional insured
        person or organization is a Named Insured.

         In addition to requiring that they be added as additional insureds on JTM’s

policy, Granite and JSH obtained additional insurance through a policy issued by

Mt. Hawley. The Mt. Hawley policy specifically provided that it is excess over

“other primary insurance available to [Granite and JSH] covering liability for

damages arising out of the premises or operations, or the products and

completed operations, for which [Granite and JSH] have been added as an

additional insured by attachment of an endorsement.” The policy also contained

a subrogation clause, stating:

        Transfer Of Rights Of Recovery Against Others To Us

        If the insured has rights to recover all or part of any payment we
        have made under this Coverage Part, those rights are transferred
        to us. The insured must do nothing after loss to impair them. At
        our request, the insured will bring “suit” or transfer those rights to us
        and help us enforce them.

        The agreement between JTM and Granite and JSH also specified that the

work would be completed based on ‘[a] mutually agreeable project schedule

between JSH & JTM.”1 JTM obtained the necessary permit to perform sidewalk

repairs on November 6, 2012, but did not begin performing the work until

November 10, 2012. This schedule was approved by JSH.

        Meanwhile, on November 7, 2012, Kim Jennett was walking on the

         The term of the contract was set at one year, but with the possibility of additional month
to month extensions.

                                                     4
No. 77379-8-1/5

sidewalk on Western Avenue when her foot became stuck in a hole in front of

Market Place. Jennett filed suit against Granite, which owned Market Place,

against JSH, as Granite’s property manager, and against JTM. Jennett alleged

that her bodily injuries, resulting from her foot getting stuck in the hole, were

caused by the negligence of JTM, Granite, and JSH.

            Believing that Zurich’s policy covered the Jennett lawsuit, Granite and JSH

tendered their defense to JTM and, thus, to Zurich. Zurich declined to accept the

tender, claiming that JTM had not yet started work at the time of the incident, that

JTM was not responsible for the injury and, accordingly, Zurich was not required

to defend Granite and JSH as additional insureds. Instead, Zurich defended only

JTM, while Mt. Hawley defended Granite and JSH.

        In the Jennett lawsuit, JTM successfully moved for summary judgment

dismissal of all claims against it, asserting that it could not be liable because it

did not begin work on the sidewalk until after Jennett was injured.2 The

remaining parties settled shortly thereafter. Mt. Hawley paid for Granite’s and

JSH’s defense and settlement costs.

        Subsequently, Mt. Hawley filed this lawsuit against Zurich, alleging that

Zurich breached its duty to defend and indemnify Granite and JSH in the Jennett

lawsuit. Mt. Hawley claimed that it was entitled to subrogation from Zurich,

whether based on statute, equity, or contractual grounds, in amounts equaling

Zurich’s obligation for defense costs, indemnity, or other damages related to the

        2   Specifically, JTM contended that it was not a possessor of the sidewalk at the time of
injury and therefore could not be liable under a possessor of land theory of liability.

                                                       5
No. 77379-8-1/6

Jennett lawsuit. Zurich denied the allegations.

        Mt. Hawley moved for partial summary judgment, seeking a ruling that

Zurich had breached its duty to defend Granite and JSH as a matter of law, and

for recovery of Mt. Hawley’s defense costs from Zurich. In turn, Zurich moved for

summary judgment dismissal of all of Mt. Hawley’s claims, asserting, in part, that

the dismissal of all claims against JTM in the Jennett lawsuit meant that Zurich’s

policy did not offer coverage to Granite and JSH. The trial court initially granted

Mt. Hawley’s motion, ordering that Zurich had a duty to defend and a duty to

indemnify Granite and JSH and had breached those duties.

        Thereafter, Zurich successfully moved for reconsideration. On

reconsideration, the trial court partially vacated its earlier ruling, concluding that

Zurich had no duty to indemnify Granite and JSH, and therefore no duty to

indemnify Mt. Hawley for the settlement costs it paid in the Jennett lawsuit.

However, the trial court left undisturbed its judgment that Zurich had breached its

duty to defend.

        Mt. Hawley subsequently filed a notice of appeal from the trial court’s

order granting reconsideration and modifying its order of partial summary

judgment. Zurich then filed a notice of cross appeal.3

        Mt. Hawley’s primary contention on appeal is that the trial court erred by

granting reconsideration and ruling that Zurich was not required to reimburse Mt.

        ~ The trial court also entered judgment for the amount of Mt. Hawley’s defense costs.
Although Zurich disputed the amount of interest, it paid the judgment amount.

                                                    6
No. 77379-8-117

Hawley for the settlement payment made by Mt. Hawley on behalf of Granite and

JSH. Specifically, Mt. Hawley contends that Zurich must reimburse Mt. Hawley

because (1) as a matter of law, Zurich’s insurance policy provided coverage for

Granite and JSH in the Jennett lawsuit, and (2) even if it did not cover the Jennett

lawsuit, recovery of the settlement payment is appropriate as damages for

Zurich’s breach of its duty to defend Granite and JSH. In response, Zurich

contends that (1) Mt. Hawley never received an assignment of rights from

Granite and JSH and therefore does not have standing to sue Zurich for breach

of its duty to defend and indemnify Granite and JSH, and (2) even if it could do

so, the policy did not provide coverage for Granite and JSH in the Jennett lawsuit

and, therefore, Mt. Hawley cannot recover the cost of its settlement payment in

that lawsuit. We conclude that Mt. Hawley has standing to bring a claim against

Zurich to recover its defense and settlement costs from the Jennett lawsuit, but

that Mt. Hawley may recover only its defense costs because the Zurich policy did

not provide coverage to Granite and JSH in that suit.

                                        A

       “[A]n appellate court will review a summary judgment ruling de novo and

consider the same evidence heard by the trial court, viewing that evidence in a

light most favorable to the party responding to the summary judgment [motion].”

Slack v. Luke, 192 Wash. App. 909, 915, 370 P.3d 49 (2016) (citing Lybbert v.

Grant County, 141 Wash. 2d 29, 34, 1 P.3d 1124 (2000)). “Summary judgment is

appropriate if there are no genuine issues of material fact and the moving party is

                                            7
No. 77379-8-1/8

entitled to judgment as a matter of law.” Quadrant Corp. v. Am. States Ins. Co.,

154 Wash. 2d 165, 171, 110 P.3d 733 (2005).

                                                 B

        As a preliminary matter, Zurich contends that Mt. Hawley lacks standing to

pursue the claims that Zurich breached its contractual duty to defend and

indemnify Granite and JSH in the absence of an explicit assignment of those

claims to Mt. Hawley.4 In response, Mt. Hawley asserts that it has obtained the

right to pursue its claims through equitable and conventional subrogation. Mt.

Hawley has the better argument.

        “Subrogation is an equitable doctrine the essential purpose of which is to

provide for a proper allocation of payment responsibility.” Trinity Universal Ins.

Co. of Kansas v. Ohio Cas. Ins. Co., 176 Wash. App. 185, 200, 312 P.3d 976

(2013) (citing Mahlerv. Szucs, 135 Wash. 2d 398, 411, 957 P.2d 632 (1998)).

“Subrogation has two distinct types: conventional subrogation, which arises by

contract, and equitable subrogation, which arises by operation of law.” Mut. of

Enumclaw Ins. Co. v. USE Ins. Co., 164 Wash. 2d 411, 423, 191 P.3d 866 (2008)

(citing Mahler, 135 Wn.2d at 412).

        There are two features to subrogation. The first is the right to
        reimbursement. The second is the mechanism for the enforcement
        of the right. The right to reimbursement may arise by operation of
        law, termed legal or equitable subrogation, or by contract, called
        conventional subrogation. By virtue of payments made to or on
        behalf of an insured, an insurer has a right of reimbursement under
        general subrogation principles. That reimbursement may be
        enforced as a type of lien against any recovery the insured secures

         ~ Zurich also asserts that such claims are moot because Zurich made a settlement offer
to pay all of Mt. Hawley’s defense costs from the Jennett lawsuit. Zurich does not cite to any
authority to support its assertion that making an offer to settle a claim transforms a justiciable
case into a non-justiciable case. We decline Zurich’s invitation to adopt such a rule.

                                                     8
No. 77379-8-1/9

       from a third party. Alternatively, the insurer, standing in the shoes
       of its insured, may pursue an action in the insured’s name against
       the third party to enforce the reimbursement right.

Trinity, 176 Wn. App. at 200 (citations omitted) (citing Mahler, 135 Wn.2d at 411-

13).

       We considered an insurer’s right to subrogation based on a breach of

contract claim, specifically for breach of the duty to defend, in Trinity. Therein,

insurer Trinity defended a general contractor, Millenium, in a personal injury

action. Trinity, 176 Wn. App. at 190-91. Trinity was the primary insurer for a

subcontractor of Millenium. Even though the complaint alleged only that

Millenium was liable, Trinity represented Millenium as an additional insured

because it was conceivable that some act or omission of the subcontractor was

responsible for the plaintiff’s injuries. Trinity, 176 Wn. App. at 191. As the case

proceeded, Trinity came to believe that the subcontractor’s acts or omissions

were not responsible for the injuries alleged and tendered defense to Millenium’s

insurer, Ohio. Trinity, 176 Wn. App. at 191. Ohio refused to accept the tender.

Trinity, 176 Wn. App. at 192. Trinity continued to defend Millenium and paid for a

settlement of the lawsuit against Millenium. Trinity, 176 Wn. App. at 192. Trinity

then sued Ohio, alleging several claims, including that Ohio breached its

contractual duty to defend Millenium, that Ohio breached its duty of good faith in

violation of the IFCA,5 that Ohio’s conduct violated the CPA,6 and that Trinity was

entitled to equitable contribution for Ohio’s share of Millenium’s defense. Trinity,

       ~ Insurance Fair Conduct Act, RCW 48.30.010-015.
       6 Washington Consumer Protection Act, ch. 19.86 ROW.

                                               9
No. 77379-8-1/10

176 Wn. App. at 193.

         Ohio did not appear or file an answer in Trinity’s lawsuit and Trinity

obtained a default judgment. Trinity, 176 Wn. App. at 193. Trinity claimed that

Ohio was entirely responsible for the indemnification and defense costs of

Millenium because Millenium, and not Millenium’s subcontractor (Trinity’s

insured), was solely responsible for the underlying personal injury. Trinity, 176

Wn. App. at 207. When Trinity tried to collect on the judgment, Ohio filed a

motion to vacate the default order and set aside the judgment. Trinity, 176 Wn.

App. at 193.

        On appeal, we vacated the default order and judgment in part, concluding

that Trinity lacked standing to assert Millenium’s statutory claims against Ohio

through equitable or conventional subrogation.7 Trinity, 176 Wn. App. at 203.

However, we affirmed the judgment with respect to the defense and settlement

costs of the Millenium litigation because Trinity had paid those costs and was

therefore equitably subrogated to Millenium’s contractual claim to recover those

costs on the ground that Ohio had breached its duty to defend.8 See Trinity, 176

          ~ We held that conventional subrogation language practically identical to the language in
Mt. Hawley’s policy did not automatically assign claims from the insured to the insurer. Trinity,
176 Wn. App. at 203, 209 (the pertinent language stated “[i}f the insured has rights to recover all
or part of any payment we have made under this Coverage Form, those rights are transferred to
us”). We also concluded that equitable subrogation did not permit Trinity to assert Millenium’s
statutory claims because it had not paid any money under its coverage on any IFCA or CPA
claim. Trinity, 176 Wn. App. at 203.
          8 We did not expressly state that Trinity’s subrogation claim was based on Ohio’s breach

of its contractual duty to defend. However, because we vacated the judgment with regard to
Trinity’s statutory claims and affirmed the judgment as to all of Trinity’s expenses incurred
defending and settling Milleniumn’s case (as opposed to merely a portion of those expenses as
would be expected in an equitable contribution claim where both insurers had a duty to defend),
there is no other claim through which Millenium could have had a right of reimbursement against
Ohio for all of its defense and settlement expenses. See Trinity, 176 Wn. App. at 203, 208.
Thus, Trinity’s subrogation claim, as affirmed by us, must have been based on it asserting
Millenium’s contractual right to recover from Ohio for its breach of the duty to defend.

                                                     10
No. 77379-8-Ill I

Wn. App. at 203, 208.

         Herein, it is undisputed that Mt. Hawley paid the defense and settlement

costs of Granite and JSH in the Jennett lawsuit. Therefore, Mt. Hawley has a

right to assert the breach of the duty to defend claims of Granite and JSH “under

general subrogation principles.”9 Trinity, 176 Wn. App. at 200.

                                                 C

        Mt. Hawley’s central contention on appeal is that the trial court erred when

it reversed its initial order on summary judgment and concluded that Zurich is not

required to reimburse Mt. Hawley for the cost of its settlement payment in the

Jennett lawsuit. This is so, Mt. Hawley asserts, because Zurich breached its duty

to defend Granite and JSH in the Jennett lawsuit and is therefore required to pay

the costs of settlement as damages for breach of that duty, or, alternatively,

because Zurich had a duty to indemnify Granite and JSH in the Jennett lawsuit

because the lawsuit was within the scope of coverage provided by Zurich. In

response, Zurich contends that its policy did not provide coverage to Granite and

         As a matter of policy, this is sensible because Millenium itself would have been unable to
assert a breach of contract claim against Ohio because it had not suffered any damages. Trinity
had covered the expenses of litigating and settling the personal injury claims. However,
someone, specifically Trinity, was still worse off because of Ohio’s breach of its duty to defend
and indemnify its insured. Therefore, because Trinity paid to satisfy the obligation that should
have been satisfied by Ohio, equitable principles allowed Trinity to pursue the breach of contract
claim that Millenium could not pursue in order to recover the amount paid.
         ~ Mt. Hawley asserts that it also has a conventional subrogation right to the defense costs
and settlement costs it paid in the Jennett lawsuit because of language in its policy with Granite
and JSH stating that [ijf the insured has rights to recover all or part of any payment we have
made under this Coverage Part, those rights are transferred to us.” However, in Trinity, we
analyzed practically identical language in Trinity’s insurance policy and concluded that it was not
sufficient to establish a conventional subrogation right to Trinity’s insured’s claims. 176 Wn. App.
at 203, 209 (concluding that “Trinity’s claim arose from its own equitable subrogation rights as the
paying insurer” and not from conventionally subrogated rights of the insured).

                                                     11
No. 77379-8-1112

JSH in the Jennett lawsuit and that it thus had no duty to indemnify Granite and

JSH in that lawsuit.1°

         “The rule regarding the duty to defend is well settled in Washington and is

broader than the duty to indemnify.” Woo v. Fireman’s Fund Ins. Co., 161 Wash. 2d
43, 164 P.3d 454 (2007) (citing Hayden v. Mut. of Enumclaw Ins. Co., 141 Wash. 2d
55, 64, 1 P.3d 1167 (2000)). An insurer’s duty to defend “arises at the time an

action is first brought, and is based on the potential for liability.” Truck Ins. Exch.

v. VanPort Homes, Inc., 147 Wash. 2d 751, 760, 58 P.3d 276 (2002). “[T]he duty to

defend is triggered if the insurance policy conceivably covers the allegations in

the complaint.” Woo, 161 Wn.2d at 53.

        “The general rule regarding damages for an insurer’s breach of contract is

that the insured must be put in as good a position as he or she would have been

had the contract not been breached.” Woo v. Fireman’s Fund Ins. Co., 150 Wn.

App. 158, 170-71, 208 P.3d 557 (2009) (quoting Kirk v. Mt. Airy Ins. Co., 134
Wash. 2d 558, 561, 951 P.2d 1124 (1998)). “In the failure-to-defend context,

recoverable damages include: (1) the amount of expenses, including reasonable

attorney fees the insured incurred defending the underlying action, and (2) the

amount of the judgment entered against the insured.” Kirk, 134 Wn.2d at 561

(citing Greerv. Nw. Nat’l Ins. Co., 109 Wash. 2d 191, 202, 743 P.2d 1244 (1987)).

However, the insurer can only be held liable for the amount of the judgment if

          10 Although Zurich seeks reversal of the trial court’s order requiring it to reimburse Mt.

Hawley for the defense costs it incurred in the Jennett lawsuit, Zurich does not actually dispute
that it breached its duty to defend Granite and JSH. Instead, it bases its argument that we should
reverse the trial court solely on its contentions that Mt. Hawley lacks standing and that Zurich’s
offer to settle with Mt. Hawley rendered Mt. Hawley’s claims moot. We have rejected these
arguments.

                                                     12
No. 77379-8-1/13

“the act creating liability is a covered event” and ‘the amount of the judgment is

within the limits of the policy.”11 Kirk, 134 Wn.2d at 561 (citing Greer, 109 Wn.2d

at 202-03). Thus, if Zurich’s policy covered the claims against Granite and JSH

in the Jennett lawsuit, then Mt. Hawley could recover the cost of its settlement

payment.12’13

                                                   D

         Mt. Hawley contends that Zurich’s policy provided coverage to Granite and

JSH in the Jennett lawsuit because the policy covered claims for injuries if

Granite’s and JSH’s liability for the injuries is caused by the acts or omissions of

JTM and that JTM’s omissions caused Granite’s and JSH’s liability for Jennett’s

injuries. In response, Zurich asserts that its policy covered only claims for

injuries caused by the acts or omissions of JTM and did not provide any

coverage for the claims against Granite and JSH in Jennett’s lawsuit because

Jennett’s personal injury was not caused by an act or omission of JTM.14

           11 However, if an insurer breaches its duty to defend in bad faith, the insurer is estopped

from denying coverage and must reimburse its insured’s judgment or settlement costs. See Kirk,
134 Wn.2d at 562. “When the insurer breaches the duty to defend in bad faith, the insurer [is]
held liable not only in contract for the cost of the defense, but also [is] estopped from asserting
the claim is outside the scope of the contract and, accordingly, that there is no coverage. The
coverage by estoppel remedy creates a strong incentive for the insurer to act in good faith, and
protects the insured against the insurer’s bad faith conduct.” Kirk, 134 Wn.2d at 564 (citing
Safeco Ins. co. of Am. v. Butler, 118 Wash. 2d 383, 394, 823 P.2d 499 (1992)). Herein, Mt. Hawley
does not assert that Zurich breached its duty of good faith.
           12 Zurich does not contend that the settlement amount exceeds its policy limit.
           13 Mt. Hawley also contends that Zurich breached its contractual duty to indemnify

Granite and JSH in the Jennett lawsuit. “The duty to indemnify hinges on the insured’s actual
liability to the claimant and actual coverage under the policy.” Hayden, 141 Wn.2d at 64. Thus,
regardless of whether Zurich must reimburse Mt. Hawley for its settlement payment pursuant to
its breach of the duty to defend or because of its alleged breach of its duty to indemnify Granite
and JSH, both of Mt. Hawley’s arguments supporting reimbursement of its settlement costs
depend on whether Zurich’s policy actually covered the claims in the Jennett lawsuit. Therefore,
resolution of whether the policy actually covered the claims from the Jennett lawsuit resolves the
issue of whether Mt. Hawley is entitled to reimbursement from Zurich for its settlement payment.
           14 Zurich additionally contends that this issue was already resolved in the underlying

Jennett lawsuit and asserts that collateral estoppel bars relitigation of whether JTM’s acts or

                                                       13
 No. 77379-8-1/14

         “Interpretation of an insurance contract is a matter of law.” McDonald v.

State Farm Fire & Cas. Co., 119 Wash. 2d 724, 730, 837 P.2d 1000 (1992).

         In construing the language of an insurance policy, the entire
        contract must be construed together so as to give force and effect
        to each clause. If the language in an insurance contract is clear
        and unambiguous, the court must enforce it as written and may not
        modify the contract or create ambiguity where none exists.
        However, if a policy provision on its face is fairly susceptible to two
        different but reasonable interpretations, the policy is ambiguous
        and the court must attempt to discern and enforce the contract as
        the parties intended.

Transcontinental Ins. Co. v. Wash. Pub. Utils. Dists’. Util. Sys., 111 Wash. 2d 452,

456-57, 760 P.2d 337 (1988) (citations omitted). “An interpretation which gives

effect to all of the words in a contract provision is favored over one which renders

some of the language meaningless or ineffective.” Seattle-First Nat’l Bank v.

Westlake Park Assocs., 42 Wash. App. 269, 274, 711 P.2d 361 (1985) (citing

Wagnerv. Wagner, 95 Wash. 2d 94, 101, 621 P.2d 1279 (1980)). “If terms are

defined in a policy, then the term should be interpreted in accordance with that

policy definition. “If terms are not defined, then they are to be given their ‘plain,

ordinary, and popular’ meaning.” Polygon Nw. Co. v. Am. Nat’I Fire Ins. Co., 143
Wash. App. 753, 767, 189 P.3d 777 (2008) (internal quotation marks omitted)

(quoting Kitsap County v. Allstate Ins. Co., 136 Wash. 2d 567, 576, 964 P.2d 1173

(1998)).

omissions caused Jennett’s injury. This is so, Zurich asserts, because all the claims against JTM
were dismissed on summary judgment. However, assuming arguendo that Zurich is correct—that
the claims against JTM in the Jennett lawsuit were dismissed because it had no direct liability for
Jennett’s injuries—that does not necessarily foreclose the possibility that JTM’s acts or omissions
could have caused Granite and JSH to be liable for Jennett’s injuries. The issue of Granite’s and
JSH’s liability was never decided in the Jennett lawsuit because the parties settled. Thus, if Mt.
Hawley is correct that Zurich’s policy provided coverage for personal injuries where liability for the
injury is caused by an act or omission of JTM, whether JTM caused such liability was never
decided in the Jennett lawsuit.

                                                     14
 No. 77379-8-1/15

         Herein, the parties extensively dispute in their briefing the meaning of the

following contract language in Zurich’s policy:

         B. The insurance provided to the additional insured person or
            organization applies only to “bodily injury”, “property damage” or
            “personal and advertising injury” covered under Section I               —

            Coverage A Bodily Injury And Property Damage Liability
                             —

            and Section I Coverage B Personal And Advertising
                              —                  —

            Injury Liability, but only with respect to liability for “bodily
            injury”, “property damage” or “personal 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 behalf,

        and resulting directly from your ongoing operations or “your work”
        as included in the “products-completed operations hazard”, which is
        the subject of the written contract or written agreement, performed
        for the additional insured person or organization.

        Mt. Hawley contends that the language “with respect to liability for ‘bodily

injury’, ‘property damage’ or ‘personal and advertising injury’ caused, in whole or

in part, by” means that the policy required that JTM caused Granite and JSH to

have liability for Jennett’s injuries before it would provide coverage. Zurich

contends that the quoted policy language required that JTM caused Jennett’s

injuries before it would provide coverage. Neither Mt. Hawley nor Zurich cite to

any controlling Washington authority that supports their respective positions.15

        15 Instead, they cite to case law from New York. Mt. Hawley asserts that New York case
law supports its position by citing to Kel-Mar DesiQns, Inc. v. Harleysville Ins. Co. of N.Y., 127
A.D.3d 662, 8 N.Y.S.3d 304 (201 5). However, the policy language therein stated that the policy
provided coverage for “liability caused, in whole or in part, by the acts or omissions” of the
insured. Kel-Mar, 127 A.D.3d at 663. This is not the same as the disputed language in Zurich’s
policy and is therefore unhelpful when analyzing the Zurich policy. Zurich’s chosen New York
case, Burlington Ins. Co. v. NYC Transit Auth., 29 N.Y.3d 313,79 N.E.3d 477 (2017), is more
helpful because the policy language therein matches the Zurich policy more closely, but is far
from definitive. The language in Burlington stated that an entity is “an additional insured only with
respect to liability for ‘bodily injury’
                                    .   .caused, in whole or in part, by” the insured’s acts or
                                            .

omissions. 29 N.Y.3d at 321. While the court interpreted this to mean that the verb “caused”

                                                     15
 No. 77379-8-1/16

         Mt. Hawley asserts that Zurich’s interpretation would make the language

“with respect to liability for” pointless, and therefore that Zurich’s interpretation

must be inaccurate. Zurich disagrees. The parties also present additional

arguments about the meaning of other components of the policy language.

         However, we need not reach any of these, for the most part unsupported,

arguments, because even if Mt. Hawley were correct about the interpretation of

every aforementioned disputed clause in the pOlicy, it is apparent that Zurich’s

policy did not provide coverage. This is so because Mt. Hawley bases its

conclusion that the policy provides coverage on its assertion that JTM delayed

fixing the sidewalk and that its failure to fix the sidewalk earlier was responsible

for Granite and JSH having liability for Jennett’s injuries. This is an argument

that JTM’S omission—its failure to fix the sidewalk before the incident when it had

a duty to do so—caused Granite and JSH to have liability.16 This presupposes

that JTM had a duty to fix the sidewalk prior to the incident. However, the record

shows that JTM did not undertake any obligation to complete the sidewalk repair

before the day of the incident, and thus it could not possibly have omitted to

repair the sidewalk earlier. Thus, Mt. Hawley’s contention that Zurich’s policy

provided coverage to Granite and JSH fails.

        Because Zurich’s policy did not provide actual coverage to Granite and

JSH for the claims asserted in the Jennett lawsuit, the trial court’s order following

applied to “bodily injury” rather than to “liability for’ it did not provide much in the way of analysis
to explain why it chose such an interpretation. Burlington, 29 N.Y.3d at 322 (“the Burlington
policy endorsement states that the injury must be ‘caused, in whole or in part’ by [the insured]”).
         16 An “omission” is “apathy toward or neglect of duty.” WEBSTER’S THIRD NEW

INTERNATIONAL DICTIONARY, 1574 (2002). Itis “[a] failure to do something; esp., a neglect of duty.”
BLACK’S LAW DICTIONARY 1260 (10th ed. 2014).

                                                       16
No. 77379-8-1117

Zurich’s motion for reconsideration correctly concluded that Zurich had no duty to

indemnify Granite and JSH and thus was not required to reimburse Mt. Hawley

for settlement costs. Additionally, because Zurich breached its duty to defend

Granite and JSH, the trial court properly concluded that Zurich was required to

pay Mt. Hawley’s defense costs incurred defending Granite and JSH in the

Jennett lawsuit.

                                           Ill

        Both Mt. Hawley and Zurich seek an award of attorney fees on appeal.

Mt. Hawley asserts that it is entitled to fees on appeal pursuant to RAP 18.1 and

OfympicS.S. Co. v. Centennial Ins. Co., 117 Wash. 2d 37, 811 P.2d 673 (1991).

Zurich asserts that it is entitled to fees pursuant to RAP 18.1, but offers no

argument in support of its claim to fees. Neither party is entitled to an award of

fees.

        “Washington follows the American rule ‘that attorney fees are not

recoverable by the prevailing party as costs of litigation unless the recovery of

such fees is permitted by contract, statute, or some recognized ground in

equity.” Panorama Vill. Condo. Owners Ass’n Bd. of Dirs. v. Allstate Ins. Co.,

144 Wash. 2d 130, 143,26 P.3d 910 (2001) (quoting McGreevyv. Or. Mut. Ins. Co.,

128 Wash. 2d 26, 35 n.8, 904 P.2d 731 (1995)). This rule requires, initially, that a

party must prevail in order to remain eligible for an attorney fees award. ‘In

general, a prevailing party is one who receives an affirmative judgment in his or

her favor.” Riss v. Angel, 131 Wash. 2d 612, 633, 934 P.2d 669 (1997).

        Herein, Mt. Hawley seeks reversal of the trial court’s order stating that

                                                 17
No. 77379-8-1/18

Zurich had no duty to indemnify Granite and JSH, and thus no duty to pay Mt.

Hawley the costs of its settlement payment in the Jennett lawsuit. Because we

affirm the trial court’s order, Mt. Hawley is not the prevailing party and is thus not

entitled to an award of fees on appeal.

         For its part, Zurich fails to provide any argument as to why it should

receive an award of fees. By failing to assert any right to recover fees pursuant

to “‘contract, statute, or some recognized ground in equity,” Zurich does not

demonstrate an entitlement thereto. Panorama, 144 Wn.2d at 143 (quoting

McGreevy, 128 Wn.2d at 26). No fee award is ordered.

                                                    Iv
         On cross appeal, Zurich contends that the trial court improperly granted an

award of prejudgment interest on the defense costs Zurich paid to Mt. Hawley.

This is so, Zurich asserts, because Mt. Hawley unreasonably delayed litigation by

refusing to accept Zurich’s settlement offer to pay Mt. Hawley’s defense costs.17

In response, Mt. Hawley asserts that Zurich fails to show that it unreasonably

delayed the litigation or that the trial court abused its discretion in awarding

prejudgment interest.

        “We review a trial court’s order on prejudgment interest for abuse of

discretion.” Humphrey Indus., Ltd. v. Clay St. Assocs., LLC, 176 Wash. 2d 662,

        17   Zurich also asserts that the case became moot when it made a settlement offer and
that it was therefore improper for the trial court to award interest on a moot claim. However, as
already discussed herein, making an offer to settle does not render a case moot.
         Additionally, at oral argument, Zurich asserted for the first time that the trial court utilized
an improper rate to calculate Mt. Hawley’s award of prejudgment interest (as opposed to Zurich’s
assertion that any award of interest was improper). We do not consider arguments raised by a
party for the first time at oral argument. ~ ~ Swank v. Valley Christian Sch., 188 Wash. 2d
663, 675 n.6, 398 P.3d 1108 (2017) (Here, the parties did not brief this argument, which was
raised for the first time at oral argument. As a result we decline to address it.”).

                                                         18
No. 77379-8-1/19

672, 295 P.3d 231 (2013). We will reverse the trial court’s decision only if it “is

manifestly unreasonable, exercised on untenable grounds, or exercised for

untenable reasons.” Noble v. Safe Harbor Family Pres. Trust, 167 Wash. 2d 11, 17,

216 P.3d 1007 (2009). In most cases with a liquidated judgment, “prejudgment

interest is due as a matter of right.” Colonial Imports v. Carlton Nw., Inc., 83 Wn.

App. 229, 242, 921 P.2d 575 (1996). However, if an undue delay in completing

litigation is attributable to the claimant, a trial court may disallow prejudgment

interest. Colonial Imports, 83 Wn. App. at 245. Quoting from a Delaware

superior court decision, the Colonial Import coUrt explained that the type of

undue delay potentially justifying the suspension of prejudgment interest is “‘(1) a

failure by the plaintiff or his attorney to take some action in the prosecution of a

case at a time that would otherwise seem appropriate to a reasonable person or

attorney, or (2) the taking of some action by the plaintiff or his attorney that bears

absolutely no reasonable relation to the prosecution of the case or is otherwise

impermissible.” 83 Wn. App. at 246 (quoting Getty Oil Co. v. Catalytic, Inc., 509
A.2d 1123, 1126 (Del. Super. Ct. 1986)).

       Herein, Zurich fails to identify any delay by Mt. Hawley in completing

litigation, let alone an unreasonable one. Zurich bases its claim of undue delay

solely on Mt. Hawley’s choice not to accept its settlement offer, asserting that

such behavior falls into the category of undue delay justifying the denial of

prejudgment interest as set forth in Colonial. However, declining to accept a

settlement offer does not delay prosecution of the case. Zurich does not point to

any instance in the record where Mt. Hawley delayed the proceedings. Hence,

                                             19
No. 77379-8-1/20

Zurich fails to show that it was an abuse of discretion for the trial court to grant an

award of prejudgment interest.

       Affirmed.

We concur:

                                             20