Zurich American Ins., Resp/cross-apps v. Ledcor Industries, Inc., App/cross-resp

|N THE COURT OF APPEALS OF THE STATE OF WASH|NGTON ZUR|CH AMER|CAN iNSURANCE COMPANY, a foreign insurance company1 Respondent/Cross-Appei|ant, V. !_EDCOR !NDUSTR|ES (USA) |NC., a Washington corporation, ADIV||RAL WAY, LLC, a Washington iimited iiabi|ity company, and SQ[, iNC., a Washington corporation Appei|ants/Cross-Respondents. LEDCOR |NDUSTREES (USA) INC., a Wash§ngton corporation, Appe||ants, v. AMER!CAN iNTERNATiONAL SPEC|ALTY L|NES iNSURANCE COJVIPANY, INC., a foreign insurance company; CAIV|BREDGE |NTEGRATED SERVICES GROUP, |NC., a foreign corporation; LIBERT¥ !NSURANCE UNDERVVR|TERS, |NC., a foreign insurance company; AEU NO` 76490-0~¥ D|V|SEON ONE UNPUBL|SHED OP|N!ON FELED: December 10, 20?8 NO. 76490-0~|/2 COMMERC|AL li\ESUFiANCE CO|V|PANY OF CANADA, a foreign insurance company; LEX|NGTON |NSURANCE COMPANY, a foreign insurance company; i_lBERTY SUFlPLUS INSURANCE CORPOF{AT|ON, a foreign insurance company; HARTFORD PROPERTY ANE) CASUALTY COMPANY, a foreign insurance company; and CONT|NENTAL WESTERN iNSUFiANCE COMPAN¥, a foreign insurance company, Third-Party Defendants, VlFiG|NlA SURETY CO|V!PANY, ENC., a foreign insurance company; TRANSPORTATJON lNSUFiANCE COMPANY, a foreign insurance company; TRANSCONT|NENTAL lNSUFiANCE COMPANY, a foreign insurance company; NORTH PAC£F|C lNSUFiANCl-E CO|V|PANY, a foreign insurance company; and FlFiST MEF{CUFtY lNSUFiANCE COMPANY, a foreign insurance company, Respcndents. i\/|ANN, A.C.J. _ This is one of two closely connected insurance coverage appeals arising out of the construction of “The Adrnirai,” a mixed use condominium building in West Seattie.1 The appeilant in this case was the general contractoi, Ledcor industries (USA), Enc. (i_edcor). The building owner and deveioper, Adrniral Way LLC (Adrnira| Way), contracted with Ledcor for construction of the buiiding. Ledcor in turn contracted with several subcontractors including The Painters, |nc. (The Painters) and SO|, lnc. (soi). 1 See Admiral Wav. LLC v. Zurich American |ns. Co.. No. 76405-5-i (Wash. Ct. App. Dec. 10, 2018) (unpub|ished). _2_ No. 76490~0-|/3 After the Adrnirai Way Condominiurn Owners’ Association (COA) sued Adrniral Way and Ledcor in 2007 for construction defects, Ledcor tendered the claim to its insurers and its subcontractors insurers. After responding and defending against tne COA’s claims under a reservation of rights, Zuricn Arnerican |nsurance Company (Zurich) filed a declaratory judgment action against Ledcor ciaiming it did not owe coverage under its poiicies. Ledcor responded by fiiing counterclaims and third-party causes against multipte insurers claiming bad faith and vioiations of the Consumer Protection Act (CPA)?, and the insurance Fair Conduct Act (iFCA)3. Ledcor appeals the trial court’s decision granting summary judgment and dismissing Zurich, Virginia Surety Cornpany (VSC), First Nlercury insurance Cornpany (i`-`NilC), North Pacific insurance Company (i\iorth Pacific), and Transportation insurance Company (Transportation). We reverse dismissal of Ledcor’s claims against VSC and Transportation. We affirm dismissal of Zurich, FiVi|C, and North Pacific. _E_é\£§ Admirai Way is the owner and deveioper of “The Adrniral” a mixed use, four~story building in West Seattie with street level retaii, 60 condominiums and an underground parking garage. On Apri| 3, 2001 , Admiral Way and Ledcor entered into a construction contract for construction of the building. Ledcor Was the general contractor. Ledcor in turn contracted with various specialty subcontractors Fie|evant to this appeal, Ledcor subcontracted with SQl to instaii the originai roof, and in 2005, Ledcor again subcontracted with SO| to conduct substantial roofing repair. Ledcor subcontracted with 2 Ch. 19.86 RCW 3 FiCW 48.30.010~.015 NO. 76490-0-|/4 The Painters to provide labor, materiais, and equipment for a “Gacoflex” waterproofing system on the baiconies and courtyards of The Adrniral. The contract between Ledcor and Adrnira| Way required Ledcor to obtain commercial general iiability (CGL) insurance naming Adrnirai Way as an additional insured The contract between Ledcor and its subcontractors required that the subcontractors each obtain CGi_ insurance naming Ledcor as an additional insured Ledcor purchased a CGL insurance poiicy from VSC for the policy period of December 1, 2003 through December i, 2004. Ledcor also purchased two consecutive annuai CGL policies from Zurich, for the policy periods from December 1, 2005 through December 1, 2007. 801 purchased three consecutive annual CGi_ policies frorn Transportation covering the period from Nlay 1, 2000 through |Vtay 1, 2003. SQi also purchased CGL policies from FiV|iC for the policy period of May 1, 2006 to lViay 'i, 2008. `i'he Painters purchased CGL poiicies from North Pacific for the period cf December 26, 2001 to December 26, 2002. Construction of The Admiral began in 2001. The City of Seatt|e issued a certificate of occupancy in March 2003. `i“he sate of condominiums began in Aprii 2013. After a contract dispute, on February 10, 2004, Ledcor and Admira| Way executed a contract addendum that resoived their remaining disputes about payment and performance of Ledcor's work. The parties agreed in the addendum that the project was complete other than specific items in an attached punch list that Were to be completed by February 20, 2004. in 2001, Admiral Way retained i\/lorrison i-Iershfie|d (l\/iorrison) as a building envelope consuitant to provide recommendations to the project architect on baicony and NO. 76490-0-|/ 5 wall interface detaiis. Ledcor also retained Morrison and received a report from the firm in December 2002. l\/lorrison concluded there were significant areas where there was “inappropriate design, and to a lesser degree inappropriate construction that in our opinion makes the building high risk for premature building envelope faiiure." in i\/iarch 2003, Morrison recommended substantial repairs to the building’s brick veneer and precast column caps. i\/lorrison believed that if the recommended work was not done, the walls would “remain susceptible to water entry” that “wouid lead to deterioration ot the sheathing and corrosion of the framing,” and “result in a compromise of the structural integrity." i\/iorrison further reported, “[wje are of the opinion that if not addressjedj at this time, these as-bui|t detaits wii| require remediation within the next five years.” i\/lorrison expressed similar concerns with other recommended work. On February 28, 2007, the COA sent Admira| Way a notice of construction defect claim alleging that the buiiding, or components of the buiiding, Were defectively designed and/or constructed, resulting in water intrusion that affected residential units, commercial spaces, and common areas throughout the project. `i'his notice was followed by the fiiing of a complaint in the King County Superior Court. in its complaint, the COA alleged that damage to the building began after the compietion ot construction: As a result of Deciarant’s acts and omissions, property damage to the Condominium has occurred to that pari of real property on which contractors or subcontractors working on Declarant’s behalf have completed their operations Such property damage has also occurred to that part of real property that rnust be restored, repaired or replaced because of the work of others performed on Declarant’s behaif. The property damage is continuous and ongoing throughout the Condominium. Damage rnay have commenced at or shortly after the completion of each building or element of infrastructure, and may be continuing to the present No. 76490-G-i/ 6 in response to the COA compiaint Admirai Way fiied a third-party complaint against Ledcor alieging Ledcor and its subcontractors were responsibie for the defective work. Ledcor initiaiiy tendered defense of the action to its own insurers Zu rich and VSC. Zurich accepted Ledcor's tender and assigned counsel. Zurich defended Ledcor in the underlying case, from 2007 through settlement in duly 2009, while expressiy reserving its right to contest coverage under a reservation of rights. Ledcor also tendered the action to FlViiC, `t'ransportation, and i\iorth Pacific, for defense and indemnity for damages arising from SQi's and The Painters' work. Fivi|C accepted SOl’s tender under a reservation of rights and contributed to SQl's defense FM|C did not defend nor indemnify Ledcor. Transportation and North Pacific denied coverage VSC originally denied coverage, then agreed to defend Ledcor under a reservation of rights just as the final settlement was being reached VSC did not pay any defense costs and did not indemnify. Zurich fiied the underlying action in iViarch 2009 seeking declaratory judgment of its obligations to defend and indemnify its named insured, Ledcor, and the additional insured Admirai Way. Ledcor filed counterclaims for declaratory relief, insurance bad taith, and vioiations of the CPA and the lFCA. i_edcor’s counterclaims inciuded third parties FMIC, 'i`ransportation, North Paciiic, and VSC, as well as muitiple other insurers l\/leanwhiie, the COA, Admiral Way, and l_edcor settied their dispute over the condominium damage on duty 28, 2009. The COA’s claims against Admiral Way and i_edcor settled for $4,700,000. The settiement was contingent upon AiG, another of NO. 76490-0-|/7 Ledcor’s insurers funding $2,550,000. Ledcor agreed to pay $150,000, and iviarc Gartin on behaif of Admiral Way agreed to pay $2,000,000. The underlying declaratory judgment action proceeded with discovery and motions in June 2010, the trial court granted Zurich’s motions for partial summary judgment on (i) coverage under the poiicy in effect between December t, 2006 and December 1, 2007 and (2) dismissing Ledcor’s counterclaims for insurance bad faith, CF’A, and lFCA violations The trial court also denied Ledcor’s motion for partial summary judgment against Zurich for insurance bad faith and CPA violations At the same time, the triat court granted VSC’s motion for summary judgment and dismissed Ledcor’s ciaims against VSC. in l\/iarch 2011, the triai court dismissed Ledcor’s remaining counterclaims against Zurich, concluding that Zurich had no duty to defend or indemnify t.edcor with respect to the COA’s construction defect claims in Apri| 201 t, the trial court granted Fi\/iiC’s motion for summary judgment conciuding i_edcor Was not entitled to coverage under the poiicy issued by FivliC to SQ! as a matter of law. in duty 201i, the trial court granted North Pacific’s motion for summary judgment and dismissed Ledcor’s third party claims related to its poiicy issued to The Painters in February 2014, the trial court granted Transportation’s motion for partial summary judgment and dismissed Ledcor’s breach of contract claims for policies issued to SQI. in a separate action, Ledcor sued its subcontractors Through a settiement between Ledcor and SQi, Ledcor took assignment of SOl’s direct claims against Fl\/iiC. NO. 76490-0-|/ 8 On October 31, 2016, the trial court granted FM|C’s motion for summary judgment agreeing that FlVllC did not have an obligation to cover SOi‘s defense against Ledcor’s claim and that the policy FivltC issued to SQi was not applicabie, and even if it were, the continuous or progressive injury or damage exclusion barred recovery. Ledcor appeals ANALYSlS We review summary iudgrnent orders de novo, engaging in the same inquiry as the trial court. l<eck v. Coliins, 184 Wn.2d 358, 370 , 357 P.3d 1080 (20i5). Surnrnary judgment is proper if, after viewing ali facts and reasonable inferences in the light most favorable to the nonmoving party, there are no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law. CR 56(0); Eicon Const. lnc. v. E. Wash. Univ., 174 Wn.2d 157, 164 , 273 P.3d 965 (2012). “The moving party on summary judgment must produce factual evidence showing that it is entitled to judgment as a matter of iaw. The burden then shifts to the nonmoving party to set forth facts showing that there is a genuine issue of material fact in dispute.” i-iartford ins Co, v. Ohio Cas. lns. Co., 145 Wn. App. 765, 779 , 189 P.3d 195 (2008). A party opposing a motion for summary judgment may not rely on speculation, argumentative assertions that unresolved factual issues remain, or its affidavits considered at face value Fiather, “the nonmoving party must set forth specific facts that sufficientty rebut the moving party's contentions and reveal that a genuine issue as to a material fact exists.” |-ierman v. Safeco lns. Co. of Am., 104 Wn. App. 783, 787-88 , 17 P.3d 63t (2001). “‘Uitimate facts conclusions of fact, conciusory statements of fact or iegat conclusions are insufficient to raise a question of fact.”' Ainsworth v. Prooressive l\|O. 76490-0-|/9 Cas. lns. Co., 180 Wn. App. 52 , 61 , 322 P.3d 6 (2014) (quoting Snohomish County v. _F_iggg, 115 Wn. App. 218, 224 , 61 P.3d 1184 (2002)). “On summary judgment review, We may affirm the triai court’s decision on any basis Within the record.” Davidson Ser|es & Assocs. v. Citv of Kirkland, 159 Wn. App. 616, 624 , 246 P.3d 822 (2011). The outcome of this case depends on a proper interpretation of the various insurance policies issued to Ledcor and its subcontractors interpretation of insurance policies is a question of law we review de novo. Overton v. Consol. lns. Co., 145 Wn.2d 417, 424 , 38 P.3d 322 (2002). We construe insurance policies as contracts Weverhaeuser Co. v. Cornmercial Union lns. Co., 142 Wn.2d 654, 665 , 15 P.3d 115 (2000). “Every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the poiicy, and as amplified, extended, or modified by any rider, endorsement, or application attached to and made a part of the policy.” l=iCW 48.18.520. We consider the policy as a whoie, giving it a “tair, reasonable and sensible construction as would be given to the contract by the average person purchasing insurance." Am. Nat'i Fire ins. Co. v. B & L Truckino & Constr. Co., 134 Wn.2d 413 , 427»28, 951 P.2d 250 (1998). Where possibie, we harmonize ciauses that seem to conflict in order to give effect to all of the contract's provisions iiiealrnl lnc. v. City of Olymgia, 168 Wn. App. 1, 5 , 277 P.3d 679 (2012). “if the poiicy language is ciear and unambiguous We must enforce it as written; we may not modify it or create ambiguity where none exists.” Quadrant Corp. v. Am. States lns. Co.l 154 Wn.2d 165, 171 , 110 P.3d 733 (2005). if a term is defined in a poiicy, “the term shouid be interpreted in accordance with that policy definition.” _i$jt_§‘,_a_g County v. Alistate ins Co., 136 Wn.2d 567, 576 , 964 P.2d 1173 (1998). A clause is NO. 76490-0-|/10 ambiguous only “when, on its face, it is fairly susceptibie to two different interpretations both of Which are reasonable.” Quadrant, 154 Wn.2d at 171 . if a clause is ambiguous we may rely on extrinsic evidence of the intent of the parties to resolve the ambiguity Weyerhaeuser, 142 Wn.2d at 666 (citing B & i. `i`rucking, 134 Wn.2d at 427-28 ). Any ambiguity remaining after examination of the applicable extrinsic evidence is resolved against the insurer and in favor of the insured Weyerhaeuser, 142 Wn.2d at 666 . However, while exciusions should be strictly construed against the drafter, a strict application should not trump the piain, clear ianguage of an exclusion such that a strained or forced construction results Weyerhaeuser Co., 142 Wn.2d at 666 . Zurich l_edcor contends that the trial court erred in concluding that Zurich did not have a duty to defend under the CGL policies and in dismissing Ledcor’s claims for insurance bad faith, and for violations of the CPA and the |FCA. We disagree A. Duty to Defend The duty to defend is different from and broader than the duty to indemnify M Best Food, inc. v. Aiea l.ondon, 168 Wn.2d 398, 404 , 229 P.3d 693 (2010); Expediax lnc. v. Steadfast ins. Co., 180 Wn.2d 793, 802 , 329 P.3d 59 (2014). The duty to defend is one of the main benefits of an insurance contract Safeco ins. Co. of Am. v. Butier, 118 Wn.2d 383, 392 , 823 P.2d 499 (1992). “While the duty to indemnify exists oniy if the policy covers the insured’s liability, the duty to defend is triggered if the insurance policy conceivably covers ailegations in the complaint." §_)_<p_e_c_i_i_a_, 180 Wn.2d at 802 . “‘The duty to defend arises when a complaint against the insured construed iiberaily, alleges facts that could, if proven, impose liability upon the insured Within the poiicy’s _10_ NO. 76490-0-|/11 coverage”’ Expedia, 180 Wn.2d at 803 (quoting Am Best Food, 168 Wn.2d at 404-05 ). Exclusionary clauses in the policy are “strictly construed against the insurer.” Exgedia, 180 Wn,2d at 803. “if the complaint is ambiguous it will be liberally construed in favor of triggering the insurer's duty to defend.” Truck ins Exch. v. Vanport Homes, 147 Wn.2d 751, 760 , 5 P.3d 276 (2002). 'fhe duty to defend is generally determined by looking at the “eight corners” of the insurance contract and the underlying complaint The insurer is permitted to utilize the “‘eight corners”’ rule to determine Whether, on the face of the complaint and the insurance poiicy, there is an issue of fact or law that could conceivably result in coverage under the policy. §xgegja, 180 Wn.2d a1803. “There are two exceptions to this ruie, and both favor the insured.” _E_)_<p_edj, 180 Wn.2d at 803 . First, “if it is not clear from the face of the complaint that the policy provides coverage but coverage could exist, the insurer must investigate and give the insured the benefit of the doubt that the insurer has a duty to defend.” Woo v. Fireman's Fund ins Co., 161 Wn.2d 43, 53 , 164 P.3d 454 (2007). Second, “if the allegations in the complaint conflict with facts known to the insurer or if the allegations are ambiguous facts outside the complaint may be considered.” _i;E_)_<_pe_g_i_a_, 180 Wn.2d at 803 ~04 (citing _W_gc_), 161 Wn.2d at 54 ). Ledcor was directly insured by Zurich under two general liability insurance policies The first was effective from December 1, 2005 to December 1, 2006. 'i'he second was effective from December 1, 2006 to November 30, 2007. Each Zurich policy contained two endorsements that Zurich argues barred coverage for the COA’s ciaims: a residential building exclusion and an exclusion for continuing damage that began before the policy was issued The burden is on the insurer to show that the loss _11_ No. 76490-0-|/12 is excluded under the policy. Diamaco, inc. v. Aetna Cas. 81 Sur. Co., 97 Wn. App. 335, 337 , 983 P.2d 707 (1999). The policies issued by Zurich to Ledcor contain an exclusion for designated work on residential buildings The first policy (December 1, 2005 through December 1, 2006) excluded coverage for property damage caused by “your Work” and defined “your work” [351] This exclusion only applies to “your Work” in connection with the construction, reconstruction, remodeling, or repair of any “residentiai building”. For the purpose of this endorsement, "residential building" means: 1. Any single-family dwelling, including town homes or townhouses other than military base housingl and 2. Any multi-family dwelling, including condominiums or cooperatives duplexes, triplexes or four-piexes; and 3. Any apartments assisted living facilities or resort timeshares, if made of wood frame or partially made of wood frame construction; and 4. Any other structure which is attached to any such "residential buildin .” “l'he determination as to the type of structure will be made at the time a claim is made or suit is brought.W The endorsement in Zurich’s second policy (December 1, 2006 through December 1, 2007) defined “your work” as follows: This exclusion only applies to “your wori<" in connection with the construction, reconstruction, remodeling, or repair of any “residential building”. For the purpose of this endorsement, “residential building" means: . . . 1. Any single-family dwelling, including but not limited to houses town homes or townhouses or 2. Any multi-famlly dwelling, including but not limited to condominiums cooperatives duplexes, triplexes or fourp|exes; or 3. Any structure that combines any other use with residential dwellings including but not limited to, those listed in 1. or 2. above, or 4. Any other structure or improvement which is attached to or ancillary to any structure identified in t., 2., or 3. Above, constructed reconstructed remodeled or repaired with the intent that title to each individual dwelling or dwelling unit will be transferred separately to each owner. 4 (Emphasis added.) _12- NO. 76490-0-|/13 Notwithstanding the above, “residentiai building" does not include any structure that functions as apartments time shares a hotei, a motel, a nursing home, an assisted living senior housing care facility, a college campus dormitory, or government housing on military bases.l5l Ledcor argues that The Admira| Was not a residential building, but was instead a “mixed use” building that included street level retail and thus did not fall under the designated work exclusion However, the plain language of the residential building exclusion includes “condominiums” and “[a]ny other structure which is attached to any l" such ‘residentiai building The Zurich policy language was broad enough to include residential buildings that incorporate other “structures.” The Admiral, even With the attached commercial units at the base, qualifies as a residential building. Ledcor also argues that because The Admiral includes apartment units the residential building exclusion does not app|y. While `l`he Admiral does allow 25 percent of the owners to rent their units out as “apartments,” the units are still within the legal definition of a condominium. The “intent that title to each individual dwelling or dwelling unit will be transferred separately to each owner" is still in place, even if some condominiums are later sublet out as apartments Ledcor’s argument fails Because The Admirai is a defined residential building under both policies Zurich did not have a duty to defend or indemnify B. Bad Faith An insurer acts in bad faith if its breach of the duty to defend Was unreasonable, frivolous or unfounded See St. Paul Fire & Marine lns. Co. v. Onvia, |nc., 165 Wn.2d 122, 130 , 196 P.3d 664 (2008). Whether an insurer acted in bad faith is generally a question of fact. Van i\lov v. State Farm lVlut. Auto. lns. Co., 142 Wn.2d 784, 796 , 16 5 (Emphasis added.) _13- NO. 76490-0-|/ 14 P.3d 574 (2001). Accordingiy, an insurer is only entitled to dismissal on summary judgment of a policyholders bad faith claim if there are no disputed material facts pertaining to the reasonableness of the insurer's conduct under the circumstances or the insurance company is entitled to prevail as a matter of law on the facts construed most favorably to the nonmoving party. Smith v. Safeco ins Co., 150 Wn.2d 478, 484 , 78 P.Sd 1274 (2003). “An action for bad faith handling of an insurance claim sounds in toit.” _Mgt_._o_f Enurnclaw lns. Co. v. Dan Paulson Constr., inc., 161 Wn.2d 903, 915 , 169 P,3d 1, (2007). Claims of insurer bad faith “are analyzed applying the same principles as any other tort: duty, breach of that duty, and damages proximately caused by any breach of duty.” §rr_ii_th, 150 Wn.2d at 485 . “in order to establish bad faith, an insured is required to show the breach was unreasonable frivolous or unfounded.” Kirk v. iVit. Airy lns. Qd, 134 Wn.2d 558, 560-61 , 951 P.2d 1124 (1998). Ledcor first contends Zurich committed bad faith by denying coverage and defending under a reservation of rights Washington law has long favored defending under a reservation of rights “When the facts or the law affecting coverage is disputed," until coverage is settled in a declaratory action. Arn. Best Food 168 Wn.2d at 405 . When defending under a reservation of rights “the insured receives the defense promised and, if coverage is found not to exist, the insurer will not be obligated to pay." lvlut. of Enumciaw, 161 Wn.2d at 914. However, an insurer defending its insured under a reservation of rights has “an enhanced obligation of fairness toward its insured” lang v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 388 , 715 P.2d 1133 (1986). This enhanced obligation requires that the insurer must: (1) “thoroughly investigate” the claim _14- No. 76490~0~|/15 against the insured (2) “retain competent defense counsel for the insured,” (3) fully inform the insured of “ali developments relevant to his policy coverage and the progress of his lawsuit,” and (4) “refrain from engaging in any action which Wouid demonstrate a greater concern for the insurer's monetary interest than for the insured‘s financial risk." lsg§, 105 Wn.2d at 388 . After t_edcor tendered the claim to Zurich, Zurich agreed to defend l_edcor in the underlying case under a reservation of rights. Zurich defended l_edcor from 2007 through the settlement in duly of 2009. Zurich provided the attorney of Ledcor’s own choosing for their defense There is no evidence that Ledcor was unsatisfied with its defense during this period The record further demonstrates that Zurich fully investigated the incident, retained separate counsel to represent both Ledcor and Admirai Way, and fully informed and participated in settlement activity.6 The only criteria in dispute in this case is whether Zurich engaged “in any action which would demonstrate a greater concern for the insurer’s monetary interest than for the insured's financial risk” during the course of its defense of l_edcor, and in making its later coverage decision. On this record We hold they did not. i_edcor argues next that Zurich acted in bad faith by filing its declaratory judgment action before the underlying case brought by the COA was fully resolved Our Supreme Court has said “‘jt]he insurer ‘may defend under a reservation of rights while seeking a declaratory judgment that it has no duty to defend,’ . . . but it must avoid seeking adjudication of factual matters disputed in the underlying litigation because advocating a position adverse to its insureds interests would ‘constitute bad faith on its 6 Ledcor at one point argues that Zurich did not do an adequate investigation, however that was related to coverage and not related to its defense of Ledcor. i\/ioreover, Ledcor’s arguments only demonstrate it disagrees with Zurich's interpretation of its “residential" clause _-;5_ l\lo. 76490-0-|/16 part. lVlut. of Enumc|aw, 161 Wn.2d at 914-15 (quoting 1 ALLAN D. WlNDT, lNSUnANCE CLAir\/is & DisPuTas: FiEPnEsENTATioN oi= iNsur-‘iANcr-_‘ CoMPAr\iras AND iusunsos § 8:3, at 8~ 11 to ~12 (5th ed. 2007)). The court did not go so far as to bar filing a motion for summary judgment during the course of representation in this case, Zurich did not file its summary judgment motion until discovery in the underlying litigation with the COA was complete and the parties had mediated. The summary judgment motion was not argued nor decided until long after the final settlement had been entered There is no evidence that Zurich’s action filing its motion for summary judgment interfered with, or sought to adjudicate a factual matter in dispute in the underlying action to the detriment of l_edcor, l_edcor remained independently represented by counsel of its choice, funded by Zurich, and Ledcor does not contend its defense counsel Was ineffective Ledcor also argues that Zurich committed bad faith in reaching its coverage decision Speoificaiiy, Ledcor contends that Zurich’s insurance adjuster transferred information obtained in the underlying claim to coverage counse|, and utilized it to Ledcor's detriment Ledcor has failed however, to identify any case law that prohibits using the same adjuster for both claims Ledcor has also failed to demonstrate any confidential or privileged evidence that was provided to Zurich. Zurich provided a detailed list showing that it was entitled to all of the evidence it received most of which was obtainable through the public record Even on appeai, Ledcor does not identify any confidential documents that Were relied on by Zurich in reaching its coverage decision, citing the “lviorrison Fieport” and depositions which were ali publicaliy available and discoverable by Zurich, _15_ NO. 76490-0-1/17 i'-`inally, Ledcor raises Zurich’s pretrial failure to provide the complete defense file. Zurich argues that some of the evidence Was privileged however, the trial court eventually fined Zurich for failing to provide this evidence, and Zurich paid that fine. Failure to provide this evidence was a discovery violation, however Zurich provided good faith reasons for its failure to provide the documents in question, and the issue was resolved by the trial court. A single discovery violation does not rise to the level of bad faith.7 `l'he insured may not base a bad faith or CPA claim on an insurer‘s good faith mistake Werlinqerv. Clarendon Nat. lns. Co., 129 Wn. App. 804, 808 , 120 P.3d 593 (2005). C. CPA and lFCA Ledcor also asserts that Zurich violated the CPA and the iFCA. To successfully bring an action under the CPA, a private plaintiff must prove five eiements: “(1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; and (5) causation.” Ledcor indus (USA), lnc. v. l\/lut. of Enumciaw lns. Co., 150 Wn. App. 1, 12 , 206 P.3d 1255 (2009). A denial of coverage does not constitute an unfair or deceptive act or practice and does not violate the CPA as long as it is based on reasonable conduct of the insurer, even if the denial ultimately is proved incorrect Overton, 145 Wn.2d at 417 . 7 Admiral Way and l_edcor make much of Zurich’s attempt to recoup defense costs it paid in the COA iawsuit. in 2013, the Washington Supreme Court disallowed such reimbursement, holding “[d]isallowing reimbursement is most consistent with Washington cases regarding the duty to defend which have squarely placed the rlsl< of the defense decision on the insurer's shoulders." Nat'i Sur. Corp_ v. immunex Corg., 176 Wn.2d 872, 884 , 297 P.3d 688 (2013). While reimbursement has been found to be unavailable neither Admiral Way nor Ledcor make it clear how Zurich briefly requesting such reimbursement in 2009 contributes to a bad faith claim. There is no evidence that Zurich pursued these costs in an unreasonable or frivolous way, or that any damage arose out of this minor addition to Zurich’s claim. Zurich also argues that Ledcor's counsel at one point offered to allow Zurich to cover defense costs -17_ No. 76490'0~|/ 18 The lFCA also does not create an independent cause of action for alleged regulatory violations in the absence of an unreasonable denial of coverage or benefits Perez-Crisantos v. State Farm Fire & Cas. Co., 187 Wn.2d 669, 680 , 389 P.3d 476 (2017). Since Ledcor did not demonstrate Zurich’s actions Were unreasonable or in bad faith, its extra-contractual claims against Zurich were properly dismissed VSC Ledcor next contends that the trial court erred in granting summary judgment and dismissing its claims against VSC. We agree. Ledcor’s CGL policy from VSC was effective Decernber 1, 2003 to December 1, 2004. Ledcor tendered the COA’s notice of construction defect to VSC on i\/larch 23, 2007. Carnbridge integrated Services Group, lnc., a third-party administrator ot VSC, acknowledged receipt of the claim on April 13, 2007 and indicated it was investigating the matter. On lvlay t6, 2007, VSC responded denying coverage based on several policy exciusions. After the COA filed its complaint, Ledcor re-tendered the matter to VSC on Septernber 21, 2007. On July 20, 2009, VSC notified Ledcor that it would be sending a follow up ietter agreeing to participate in Ledcor's defense under a reservation of rights. The subsequent letter was never sent. The COA’s claim was resolved on Ju|y 28, 2009. VSC moved for summary judgment in i\/lay 2010 seeking a declaratory judgment that it had no duty to defend Ledcor. At the same time, i_edcor moved for summary judgment against VSC. The triai court granted VSC's motion for summary judgment as to Ledcor and denied Ledcor’s motion.8 8 Fieiying on RAP 9.12, VSC moved to strike references in Ledcor’s brief to materials not specifically listed in the trial court‘s order on summary judgment General|y, “evidence cailed to the -18- NO. 76490-0-|/19 A. Duty to Defend VSC maintains that it did not have a duty to defend nor indemnify under the “progressive, continuous or intermittent property damage exciusion” (progressive damage exclusion) and the “other insurance” clause of its policy. We disagree We address each in turn, strictly construing the exclusion against VSC. Expedia, 180 Wn.2d at 803 . The progressive damage exclusion has three requirements For the exclusion to app|y, VSC was required to demonstrate that (1) the property damage “existed or commenced prior to the inception date of th[e] poiicy,” or (2) “arose out of any damage, defect, deficiency, inadequacy or dangerous condition which existed prior to the inception date of th[ej policy,” and (3) that the damage was included under the defined “Products--Comp|eted Operations l-lazard.” Worl< under the Products--Cornpleted Operations l-iazard would he deemed completed: “When ali of the work to be done at the job site has been completed” or “When that part of the work done at a iob site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.” Ledcor’s CGL policy with VSC was effective December 1, 2003 to December 1, 2004. Thus, the progressive damage exclusion would exclude damage that existed or commenced, or arose out of a condition that existed, prior to December ‘l, 2003. The attention of the trial court is properly before us, whether or not it was considered by the trial coun." Goodwin v. Wright, 100 Wn. App. 631, 648 , 6 P.3d 1 (2000). At the time the trial court considered VSC’s motion it was also reviewing motions and cross motions related to Ledcor’s claims against Zurich. Due to the complex nature of this case, we decline to apply RAP 9.12 in a manner that wouid assume that the trial court granted summaryiudgrnent for VSC in a vacuum without considering Ledcor’s own summary judgment motion or any other evidence. `l`he appellate “rules will be iiberaliy interpreted to promote justice and facilitate the decision of cases on the merits. Cases and issues will not be determined on the basis of compliance or noncompliance with these rules except in compelling circumstances where justice demands." FiAP 1.2. We deny VSC’s motion to strike. _19_ No. 76490-0-|/20 COA’s complaint is vague about when the damage began. The complaint lists multiple claims of water intrusion damages and defects, and states “the property damage is continuous and ongoing throughout the Condominiurn. Damaoe may have commenced at or shortly after the completion of each building or element of infrastructure, and mav be continuing to the present.”9 Thus, the relevant date is the “completion" of each bullding. lt is undisputed that the certificate of occupancy for The Admira| was issued by the City of Seattie on lVlarch l4, 2003, and sale of the condominiums began in April 2003. lt is also undisputed that Ledcor and Admirai Way contractually agreed that The Admiral was not substantially complete until February 2004. Strictly construing the exception against VSC, because the date of completion falls within the term of VSC’s policy, VSC had a duty to investigate and give Admiral Way the benefit of the doubt. W_g_g, 161 Wn.2d at 53. Because a reasonable interpretation of the facts could result in coverage, the progressive damage exclusion does not app|y. The other insured condition in Ledcor’s policy from VSC provides that the insurance is excess over “[ajny other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.” Ancl further, When this insurance is excess, we Will have no duty under COVERAGES A or B to defend the insured against any "suit" it 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 the insured‘s rights against all those other insurers l_edcor was listed as an additional insured under multiple insurance policies, and was being represented by two insurance companies that undertook its defense at no 9 (Emphasis added.) -20- No. 76490-0-|/21 cost to Ledcor. However, there is no evidence that VSC investigated whether other insurers were “available" for l_edcor at the time of its initial deniai, or that VSC even believed this provision applied when it denied Ledcor’s claim' VSC did not rely on this provision in its denia|, and VSC did not rely on this provision When it later suggested it would join the defense alongside the other carriers. lf it is not clear from the face of the complaint that the policy provides coverage, but if coverage could exist, the insurer must investigate and give the insured the benefit of the doubt that the insurer has a duty to defend. _V_ij'_o_o_, 161 Wn.2d at 53. A question of fact remains whether VSC did the requisite investigation into whether other insurance Was available for Ledcor before it denied coverage. Because there is at least a question of fact whether the progressive loss exclusion and other insurance provision apply, summary judgment and dismissal of Ledcor’s claims against VSC was not appropriate B. Extra Contractual C|aims Ledcor maintains that VSC acted in bad faith. At the outset, Washington courts have long held the “insured may maintain an action against its insurer for bad faith investigation of the insured's claim and violation of the CPA regardless of whether the insurer was ultimately correct in determining coverage did not exist.” Covent[y Associates v. Am. States lns. Co., 136 Wn.2d 269, 279 , 96t P.2d 933 (1998). Only if the alleged claim is clearly not covered by the policy is the insurer relieved of its duty to defend ”i$j;k, i34 Wn.2d at 561. The insured bears the burden of demonstrating the insurer acted in bad faith when it refused to defend its insured by demonstrating that refusal is “unreasonable, frivolous, or unfounded.” lggg__l;, 147 Wn.2d at 777 ; §g"l_it_h_, 150 Wn.2d at 486 . The insurer is entitled to summary judgment “if reasonable minds could -21_ l\lo. 76490~0~|/22 not differ that its denial of coverage was based upon reasonable grounds.” _S_i_*_n_ith_, 150 Wn.2d at 486 . Ledcor retained a policy with VSC for primary general liability effective from December l, 2003 to December l, 2004, The Admiral Was substantially completed on either April 2003, or l-“ebruary 2004. The original claim provided to VSC did not state a specific date as to when damages began, or when the defects developed lt can hardly be said that the alleged claim was “clear|y not covered” by policy. “if the insurer is unsure of its obligation to defend in a given instance, it may defend under a reservation of rights While seeking a declaratory judgment that it has no duty to defend.” M, 147 Wn.2d at 761 . VSC should have done so in this case As discussed above, it appears that i.edcor may have been covered under VSC’s CGl. policy, and there remains at least a question of fact as to Whether VSC reasonably investigated whether the two exclusions it relies upon actual excluded coverage Dismissal of Ledcor’s bad faith and CPA claim on summary judgment was erroneous. North Pacific Ledcor next contends that the trial court erred in dismissing its claims against North Pacific for coverage under its policy With The Painters. We disagree A. Additiona| Facts The subcontract between Ledcor and The Painters required Ledcor be named as an additional insured on The Painters’ insurance: 11.1 SUBCONTRACTOR' S lNSURAi\lCE. Prior to the start of the Subcontract Work, the Subcontractor shall procure for the Subcontract Work and maintain in force Workers' Compensation lnsurance, Employer's Liability insurance Comprehensive Automobiie Liabiiity insurance Comprehensive or Commercial General Liabi|ity insurance on an _22- l\lo. 76490~0-|/ 23 occurrence basis and any other insurance required of Subcontractor under the Subcontract, . . . lTjhe Contractor, Owner and other parties as required shall be named as additional insureds on each of these policies except for Workers' Compensation. The Subcontractor's insurance shall include contractual liability insurance covering the Subcontractor's obligations under this Subcontract. The Painters obtained a CGL policy from North Pacific for the policy period from December 26, 2001 , through December 26, 2002. The declarations did not name i_edcor as an additional insured under the policy. lite policy included an automatic additional insured endorsement that provided: AUTOlViATlC ADDlTlONAL lNSUFlEDS lNCLUDll\lG COMPLETED OPEFiAT|Ol\|S TO THE EXTENT FlEOUlFiED BY AN lNSURED CONTRACT This endorsement modifies insurance provided under the following: CONll\/lEFlClAL GEl\lEFlAL LlABiLiTY COVERAGE PART The following is added to Wl-lO lS lNSUFiED (Section ll): l. To the extent it is required by the terms of an "insured contract" which requires you to add by endorsement as an additional insured or organization, Wl-lO lS Al\l ll\lSURED (Section ll) is amended to include as an insured such person or organization ("additlona| insured") but only with respect to: (a) Vicarious liability arising out of your ongoing operations performed for the additional insured; or (b) Liabi|ity arising out of any actor omission of the additional insured for Which you have entered into an enforceable “insured contract" which obligates you to indemnify the additional lnsured, or to furnish insurance coverage for the additional lnsured, and arising out of your ongoing operations for that additional insured With respect to the insurance afforded these additional insureds the following additional exclusions app|y: _23_ l\lo. 76490-0~|/24 2. This insurance does not apply to "bodi|y injury," or "groperty damage“ occurring after: (a) All work, including materials parts or equipment furnished in connection with such work, on the project (other than service maintenance or repairs), to be performed by or on behalf of the additional insured at the site of the coverage operations has been completed; or (b) `l“hat portion of l‘your work’l out of which the lnlury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project This exclusion does not apply to the extent that an "insured contract" requires that you assume the tort liability of the additional insured arising out of a risk that would otherwise be excluded by this exclusion.[mi l_edcor tendered the COA’s claim to i\lorth Pacific on lVlarch 10, 2009. North Pacific did not respond On l\/lay 24, 2010, Ledcor’s counsel sent a 20-day notice letter under the ll`-'CA, demanding that North Pacific defend and indemnify Ledcor for the underlying construction defect claims as an additional insured under The Painters' CGL policy. On l\/iay 28, 20t0, North Pacllic responded stating they had no record of the lVlarch 2009 tender, and that there Was no coverage under The Painters' CGl_ policy because Ledcor was not identified as an additional named insured and the automatic additional insured endorsement only applied to “ongoing operations.” in June 2010, Ledcor amended its third-party complaint to name North Pacific as a third-party defendant alleging claims for declaratory relief, breach of contract, breach of the obligation of good faith and fair dealing, bad faith refusal to defend, and lFCA and CPA violations 10 (Emphasis added.) -24_ NO. 76490-0»!/25 North Pacific subsequentiy moved for summary judgment and dismissal of Ledcor’s third-party claims On Juiy 8, 2011, the trial court granted l\lortl‘i Pacific's motion on each contractual and extra-contractuai claim and dismissed North Pacific from the lawsuit B. Duty to Defend North Pacific contends that their policy with The Painteis only provided automatic additional insured coverage for “ongoing operations” and not “coinpleted operations." Consequently, because Ledcor was not a named additional insured, North Pacitic had no duty to provide a defense to Ledcor as an additional insured because the operations performed by The Painters were completed operations We agree with North Pacific. North Paciiic relies on this court’s decision in i-iartford lns. Co. v. Ohio Cas. lns. Q)_., t45 Wn. App. 765, 778, 189 P.3d 195 (2008), Where we concluded that the term “ongoing operations” was an express coverage limitation in the policy and endorsement language that was intended to avoid “t)road coverage for an additionai insured.” Speciiically, we held “ongoing operations" language excludes “completed operations” coverage and limits coverage to the “subcontractors’ work in progress only.” Hartford, 145 Wn. App. at 778 . The plain language ot the North Pacific policy contains this same limitation Section one of the “additional insured” endorsement in The Painters’ policy limits additional insured coverage to when it “is required by the terms of an ‘insured contract'” and includes as an insured such person or organization “only with respect to: (a) Vicarious liability arising out of your ongoing operations performed for the additional insured; or (b) Liability arising out of any actor omission of the additional insured . . . -25_ NO. 76490-O-l/26 arising out of your oncioinu operations for that additional insured.”11 Thus, as in i-lartford, the plain language of the first section explicitly limits coverage to “ongoing operations.” See Absher Const. Co. v. N. Pac. lns. Co., 861 F. Supp. 2d 1236, 1244 (W.D. Wash. 2012) (considering a similar l\lorth Pacific policy). The COA’s complaint in the underiying action alieged damages occurring after compietion of the buildings, long after the Painters ceased their “ongoing operations.” Accordingiy, we agree With the trial court that the policy did not cover those claims and North Pacific’s denial of a defense and coverage based on this ianguage was not “unreasonab|e, frivolous, or unfounded." We affirm summary judgment Transportation Ledcor next contends that the trial court erred in dismissing its claims against Transportation12 based on the policy transportation provided subcontractor SQl. We agree. i_edcor contracted with subcontractor SOi to install a roofing system. Transportation issued policies to SOl for the period frorn lVlay i, 2000 to Nlay t, 2003. lt is undisputed that SCli was required to name Ledcor as an additional insured under those policies. Paragraph 11.1 of the subcontract between Ledcor and SQl is the same as the subcontract with The Painters, and describes the requirements that SOl name certain parties as additional insureds: it.i SUBCONTRACTOR’S iNSUi=lANCE. Priorto start of the Subcontract work, the Subcontractor shall procure for the Subcontract Work and maintain in force Wori<ers’ Compensation insurance, Employer‘s t.ialoility lnsurance, Comprehensive Automobile Liability lnsurance, Comprehensive or Commercial General Liability lnsurance on an occurrence basis, and any other insurance required of Sui:)contractor " (Emphasis added.) 12 Ledcor refers to the Transportation insurance Company as CNA. _26_ No. 76490-0-|/27 under the Subcontract. li required by the Subcontract Documents, mg Contractor, Owner and other parties as required shall be named as additional insureds on each of these policies except for Workers’ Comgensation. The Subcontractor’s insurance shall include contractual iiability insurance covering the Subcontractor’s obligations under this Subcontract.li3l Paragraph 11.2 ot the subcontract states the “Subcontractor’s Comprehensive or Commercial General Liability insurance and Comprehensive Autornobiie Liability lnsurance, as required by Paragraph ii.1, shall be written with limits of liability not less than the foliowing: . . . A. Comprehensive General Liability lnsurance including completed operations: 1. Combined Singie i_imit Bodily injury and Property Damage: $1,000,000 Each Occurrence $ 2,000,000 Aggregate or 2. Bodily lnjury: $ 1.000,000 Each Occurrence $ 2,000,000 Aggregate 3. Property Damage: $ 1,000,000 Each Occurrence $ 2,000,000 Aggregate B. Commerciai General Liability insurance 1. Each Occurrence l,imit: $ 1,000,000 2, Genera| Aggregate: $2,000,000 3. Products/Compieted Operations Aggregate: $2,000,000. . .”l“‘l Paragraph t1.4 states the requirements for What insurance policies the Subcontractors must obtain, and provisions for cancellation and renewal of those policies. This paragraph includes the requirement that “The Subcontractor shall maintain completed operations liability insurance for one year after acceptance of the Subcontract Work, substantial completion of the Project, orto the time required by the Subcontract Documents, Whichever is longer." The Subcontractor shall furnish the 13 (Emphasis added.) 14 {Emphasis added.) -27- NO. 76490~0-l/28 Contractor evidence of such insurance at the time of compietion of the Subcontract Work. The issue is whether Ledcor, as an additional insured under SQl’s policy with Transportation, had completed operations coverage. Of the three annual policies that Transportation issued to SOI, only the third (l\/lay 1, 2002 through Niay 1, 2003) contains an endorsement addressing completed operations. the policy includes an endorsement that modifies the “commerciai general liability coverage." The endorsement provides an additional-insured coverage for completed operations only it that coverage is required by written contract The coverage provided to the additional insured by this endorsement and paragraph t of the definition ot “insured contrac ” under DEFll\ilTlONS (section V) do not appiy to “bodily in§ury” or “property damage” arising out of the “products-completed operations hazard” unless reguired by the written contractor written aqreement.E15i Under the policies “products-completed operations hazard,” a. lnciudes all “bodily injury" and “property damage" occurring away from premises you own or rent and arising out of ‘your product" or “your work” except (1) Products that are still in your physical possession; or (2) Work that has not yet been completed or abandoned However, “your work” will be deemed completed at the earliest of the following times: (a) When ali of the work calied for in your contract has been completed (b) When all ot the work to be done at the job site has been completed if your contract calis for work at more than one job site. (c) When that part ot the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project ‘5 (Emphasis added). -28_ l\|O, 76490-0-1/29 Work that may need service, maintenance, correction, repair or replacement but which is othenivise complete, will be treated as completed.llel in construing a written contract, a court will not read an ambiguity into a contract that is othenrvise clear and unambiguous. Maver v. Pierce County i\ded. Bureau, inc., 80 Wn. App. 416, 420 , 909 P.2d 1323 (i995). When interpreting a contract the contract will be given a practical and reasonable interpretation that fulfills the object and purpose of the contract rather than a strained or forced construction that leads to an absurd conclusion, or that renders the contract nonsensical or ineffective. Washington Pub. Util. Districts‘ Utilities Sys. v. Pub. Util. Dist i\lo. 1 of Clallarn County, 112 Wn.2d 1 , 1t, 771 P.2d 701 (1989). Transportation’s interpretation of the contract asks us to do just that Paragraph il.1 of the subcontract required that SQ| obtain several forms of insurance, including “Comprehensive or Commercial General Liability insurance on an occurrence basis.” The subcontractor was also to name “the Contractor, Owner and other parties . . . as additional insureds on each of these policies." lt is undisputed this paragraph fulfills the requirement of requiring Ledcor to be named as an additional insured. Paragraph 11.2 provided the minimum limits of liability for “The Subcontractor's Comprehensive or Commercial General i_iability insurance and Comprehensive Automobile Liability lnsurance, as required by Paragraph 11.1.” This reference back to 1t.‘l is not a iimitation, but merely referencing that “Comprehensive or Commercial General Liabiiity lnsurance" had been required in l1.1. The minimums required under paragraph 11.2 for CGL insurance include a “product/comp|eted operations aggregate 16 (Emphasis added.) -29_ No. 76490-0-|/ 30 of $2 millionv Because paragraph 11.i required CGL insurance paragraph l1.2 required the insurance include completed operations coverage ln addition, paragraph 1i.4 of the subcontract provided the coverage time limits required under the contract 11.4 includes the requirement that the Subcontractor shall “rnaintain in effect all insurance coverage required under this Subcontract,” and that the “Subcontractor shall maintain completed operations liability insurance for one year after acceptance of the Subcontract Work, substantial completion of the Project, or to the time required by the Subcontract Documents, whichever is |onger.""' When read together, and giving effect to paragraphs i1.t, 1t.2, and t1.4, SQL’s subcontract required l_edcor to be named as an additional insured on the CGL policy, required the CGL policy to include completed project coverage, and required the coverage extend through the term of the CGl_ policies issued by Transportation. The trial court erred in granting summary judgment and dismissing Ledcor's claims against Transportation. FMIC i_edcor contends next that the trial court erred in dismissing its direct claims against third party FlVllC, another insurer for subcontractor SQ|. We disagree We first address whether l_edcor was covered under the policies issued by FiVllC to SQ|. Fi\/llC issued a CGL policy from lVlay 1, 2006 to May t, 2007. That policy was subsequently renewed from lVlay t, 2007 to May 1, 2008. Both policies contained separate endorsements for ongoing operations and compieted operations Both policies also contain nearly identical “additional insured ongoing operations” endorsements That endorsement provides as follows: 17 (Ernpi'iasis added.) -30_ NO. 76490-0-|/31 A. Section il - Who is An insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contractor agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only With respect to liability for “bodily inlury”, “property damage” or “personai 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 behaif; in the performance of your ongoing operations for the additional insured. A person's or organizations status as an additional insured under this endorsement ends when your operations for that additional insured are completed B. With respect to the insurance afforded to these additional insureds the following additional exclusions apply: 'l`his insurance does not apply to: 2. “Bodi|y injury" or “property damage” occurring after: a. Aii work, including materials parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or b. That portion of “your work” out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a pari of the same projectmill Thus the oniy question is whether SQ| was engaged in any “ongoing operations” for the additionally insured--Ledcor--at the time the original policy began on i\Aay 1, la (Emphasis added). ,31- No. 76490-0-|/32 2006. lt is undisputed that SQl’s final maintenance at The Adrniral concluded on lVlay 10, 2005. Ledcor does not argue any other “ongoing operations” were continuing at that time, nor provide any evidence that further operations took place during that period The contract unambiguously provides “A person’s or organizations status as an additional insured under this endorsement ends when your operations for that additional insured are compieted." Consequently, Ledcor has not demonstrated that it qualifies as an additional insured for ongoing operations under either policy, Turning to the completed operations endorsement, the 2006 to 2007 and 2007 to 2008 policies differ. The 2006 to 2007 policy specifically identifies each entity covered as an additional insured for completed operations Ledcor was not identified as an additionally insured for completed operations on the 2006 to 2007 policy. Ledcor offered no evidence to the contrary. The 2007 to 2008 policy, however, includes an additional listing for: “Any person or organization, . . .to whom or to which the Named lnsured is obligated by virtue of written contract to provide lnsurance, such as is afforded by this policy.”19 The same Ledcor and SOl subcontract is at issue here as in the claims brought against Transportation. As discussed above, when read together, paragraphs 11.1, 11.2, and ll.4 required SOl to maintain completed operations coverage and identify Ledcor as an additionally named SQl’s obligation, however, was limited in time Paragraph 1i.4 of the subcontract requires that: “The Subcontractor shall maintain completed operations liability insurance for one year after acceptance of the Subcontract Work, substantial completion of the Project, or to the time required by the Subcontract Documents whichever is longer." Under this provision, the latest 19 (Emphasis added.) -32- l\lo. 76490~0-|/33 reasonable interpretation of this provision is lVlay 2006, one year after SQl performed maintenance on The Admiral. We hold that Ledcor was not an additionally insured under the policy issued to SQi by FM|C. ln addition, because Ledcor was not covered as an additional insured under the policies l_edcor has failed to demonstrate that Fi\/i|C’s denial of coverage was “unreasonabie, frivolous or unfounded.” Q_y"g”r"t_g_g, 145 Wn.2d at 433 . Ledcor’s Assfgneo' Cl'aims Against FMIC SQi assigned its direct claim against Fl\/llC to Ledcor, i_edcor asserts finally that the trial court erred in dismissing its assigned claims against FlVllC. We disagree A. Additiona| Facts On August 29, 2008, while the COA’s construction defect action was pending, Ledcor filed a separate lawsuit against all subcontractors involved in 'l`he Admiral project (subcontractor action). SQl was named in the subcontractor action. The subcontractor action sought to recover against the subcontractors any amounts that Ledcor Was ultimately obligated to pay to the COA. SQl tendered that lawsuit to FlVllC seeking defense and indemnity as a Named insured under the Fi\/llC Policies. FlyllC agreed to defend SQi pursuant to a reservation of rights One of SQl’s other insurers Cornhusker insurance Company (Cornhusker), also agreed to participate in SQl's defense Cornhusker and Fi\/llC jointly provided SQ| with a fully funded and complete defense Ledcor sent a settlement demand letter in lVlarch 2014. Beginning in February 2014, FlVliC participated in mediations and offered to contribute to settlement demands on behalf of SQl. i\lo settlement was reached at -33- NO. 76490-0-|/34 this time After the mediations failed to reach a settlement Fl\/llC sent letters requesting updates on the settlement negotiations On April 8, 2014, FM|C was informed by the assigned defense counsel that SQl, through its personal counsel, had reached a settlement agreement with Ledcor. On April 11, 2014, Fl\/llC was provided with a copy of the consent judgment that was entered against SO! in the subcontractor action. The consent judgment indicated that it was filed in compliance with a lViarch 21, 2014 settlement agreement between Ledcor and SO|. FlVl|C sent a follow up letter requesting information about the |etter, and expressing concern that it had not been included in the settlements or been asked to contribute to the settlement After entering into the consent judgment settlement Ledcor pursued all contractual and extra-contractual causes of action against Fl\/llC as the assignee of SQl. in November 2013, FM|C filed a declaratory judgment action in federal court seeking a judicial determination that it was not obligated to cover SQl in the subcontractor action. After the case was remanded to the King County Superior Court Fl\/ilC was granted leave to file a third-party complaint in this action seeking declaratory judgment against SOl. SQl (through Ledcor) responded adding counter claims for breach of duty, bad faith, and violations of the CPA and the lFCA. On October 26, 2016, the trial court granted l:lVllC‘s motion for summary judgment dismissing SQl/Ledcor’s counter claims On October 31 , 2016, the court granted Fl\/liC’s motion for summary judgment agreeing that the policy FlVllC issued to SQi was not applicable and even if it were, the continuous or progressive injury or _34_ l\lO. 76490-0-|/35 damage exclusion barred recover. The trial court subsequently denied Ledcor’s motions for reconsideration B. Duty to Defend `l“he FlVllC policy issued to SQl provides coverage for “property damage” caused by an “occurrence” during the Fi\/llC policy period, so long as the insured does not know, in whole or in part about the “property damage” or any continuation, change, or resumption of such “property damage” prior to the inception of the FiVllC poiicy. Specitically, the policy states 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 However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury" or “property damage” to which this insurance does not apply. . . . b. This insurance only applies to “bodily injury” and “property damage” only if: 1) The “bodily injury" or “property damagell is caused by an “occurrence" that takes place in the "coverage territory"; and 2) The “bodily injury" or “property damage” occurs durinq the policy penod;and 3) Prior to the policy period, no insured listed under Paragraph 1 of Section ll - Who is An insured and no “employee” authorized by you to give or receive notice of an “occurrence” or ciaim, knew that the “bodily injury" or “property damaqe“ had occurred in whole or in part if such a listed insured or authorized "employee” knew, prior to the policy period, that the “bodily injury" or “property damage” occurred then Ly continuation, change or resumption of such “bodily iniury” or “property damage” durinq or after the policy period will be deemed to have been known prior to the policy period d "Bodily injury" or “property damage” will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 'l. of Section ll - Who is An insured or any "employee" authorized by you to give or receive notice of an "occurrence“ or claim: 1) Ftepons all, or any part, of the l‘bodily injury" or “property damage” to us or any other insurer; 2) Fieceives a written or verbal demand or claim for damages because of the “bodily injury‘l or “property damage"; or -35_ NO. 76490~0-1/36 3) Becomes aware by any other means that l‘i:)odily injury" or “property damage” has occurred or has begun to occur.[?°i As discussed above, in determining coverage, this court considers a two~step process First, the insured must establish that the loss falis within the “scope of the policy's insured losses.” Then, the burden shifts to the insurer to show that the loss is excluded by specific language in the policy. Diamaco, 97 Wn. App. at 337 . Atthough this policy uses exciusionary language, the burden is still on SO! to demonstrate the damage took place during the coverage period, and that SQi did now know ot the damage before the policy period. Fl\/liC provided substantial evidence that SQl knew, at least in part, that the damage to the roofing had occurred at The Admiral as of at least 2004. FlVllC further provided evidence that SQl failed to repair the damage that it was asked to repair in 2005, and that some of the claims arose of that damage. SOI only presented evidence that SQi rnay have believed that they had fixed all ot the damage when they returned to do further maintenance in .2005.21 Moreover, the evidence showed the damage occurring after 2005 would have been a “continuation, change or resumption" of the original damages22 Because there is no reasonable dispute that SQ| knew ot the damages before it purchased the FNl|C policies in 2006 and in 2007, summary judgment was appropriate concluding that SOl’s damages were not covered under the Fi\lliC policies 20 (Emphasis added.) 21 Ledcor cites several cases considering the common law “known loss" principai, however these cases do not support his argument See Pub. Util. Dist. No. t of Klict<itat County v. lnt'| ins Co., 124 Wn.2d 789, 806 , 881 P.2d 1020 (1994). 22 (Emphasis added.) -36- NO. 76490~0*|/37 C. Extra Contract Claims Again, to succeed on a bad faith claim, the policyholder must show the insurer's breach of the insurance contract was unreasonabie, frivolous or unfounded Ov_ertgn_, 145 Wn.2d at 433 . “The insured may not base a bad faith or CPA claim on an insurer's good faith mistake, which occurs when the insurer acts honestly, bases its decision on adequate inlormation, and does not overemphasize its own interest.” Werlinger, 129 Wn. App. at 808 . l-iere, based on the allegations in the subcontractor action, l`-`NllC accepted the defense of SQi under a reservation of rights. Fl\/l|C then assigned counsel, participated in settlement negotiations and finally brought a declaratory relief action. SOl did not pay any defense fees or incur damages FMiC did not act in bad faith in its defense of SQ|. §g_g lr_g_g_ig, 147 Wn.2d at 761 . SGi also raised various CPA violations including that FlVl|C failed to investigate its claims and again that FlvllC “commingled” the coverage and defense claims Even it these actions rise to the ievel ot “(1) unfair or deceptive act or practice,” under the CPA, there is no presumption of harm. SQi needed to prove it was harmed by FlVliC’s actions and SQ| did not present evidence of harm. SQl did not pay defense fees or incur any costs. Finally, in the absence of an unreasonabie denial of coverage or benefits the iFCA does not create an independent cause of action for alleged regulatory violations Perez-Crisantos, 187 Wn.2d at 680 . Summary judgment and dismissal of Ledcor’s assigned claims against Fi\lliC was appropriate _37_ No. 76490~0~1/38 We reverse the dismissal of Ledcor’s claims against VSC and Transportation. Mww-, /l._(_.»:r" WECONCUR: »-/' r""' l ii l\/`lC#L<Q`\{ 1 :T-` ‘) ° VJNMJ / l l We affirm in all other respects _33-