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Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 1 of 6

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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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BIG-D CONSTRUCTION NORTHWEST,


LLC, a Utah limited liability company;

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NO.
COMPLAINT FOR DECLARTORY
RELIEF

Plaintiff,
vs.

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ACE AMERICAN INSURANCE COMPANY,


a foreign corporation,
Defendants.

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COMES NOW Plaintiff Big-D Construction Northwest, LLC by and through its

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attorneys of record, Groff Murphy, PLLC, and hereby asserts the following Complaint for

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Declaratory Relief and for Damages:


I. PARTIES

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1.

Plaintiff Big-D Construction Northwest, LLC (Big-D) is a Utah limited

liability company conducting business in the State of Washington, Western District. Big-D is
a duly registered contractor in the State of Washington, in good standing, and has complied

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with all prerequisites to maintain this action.
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2.

Defendant Ace American Insurance Company (ACE) is a Pennsylvania

corporation transacting business as an insurer in the State of Washington, Western District.

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COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES -1

11069 06 sk20fp1446

GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506

Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 2 of 6

ACE issued a policy of excess liability insurance under which Big-D is an insured, which

policy follows form to the underlying policy.


II. JURISDICTION AND VENUE

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3.

Upon information and belief, subject matter jurisdiction exists under 28 U.S.C.

1332 in that this lawsuit involves citizens of different States and the amount in controversy
exceeds the sum of $75,000, exclusive of interest and costs.
4.

This Court has personal jurisdiction over Defendant ACE under the

Washington Long Arm Statute, RCW 4.28.185, in that ACE transacts business in the State of

Washington.

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5.

Venue is proper in this judicial district under 28 U.S.C. 1391(c) because ACE

is subject to personal jurisdiction in this judicial district at the time of commencement of this
action, and is therefore a resident of this judicial district.
III.

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FACTUAL BACKGROUND

Big-D was the general contractor for construction of the Washington Square

Towers One & Two Condominium project in Bellevue, Washington (the Project). The

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Project is generally comprised of two towers with 377 residential units, including 26 townhouse

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units and 17 residential flats. Big-D constructed the Project under contract to the project

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owner/developer, Washington Square One Towers, Inc. and Washington Square One Parking,

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Inc. (together, Developer). The Project is complete.


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The Project was insured pursuant to an Owner Controlled Insurance Program

(OCIP). The OCIP included a Products/Completed Operations Liability insurance policy,


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issued by Zurich American Insurance Company under policy number GLO 4277400-00 (the
Zurich Policy). The Zurich Policy contains $2,000,000/$4,000,000 limits, per occurrence
and aggregate. Big-D is an insured under the Zurich Policy.
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The OCIP also included an excess insurance policy issued by Ace American

Insurance Company, under policy number XSL G22910176 (the ACE Policy). The ACE
COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES -2

11069 06 sk20fp1446

GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506

Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 3 of 6

Policy contains a $25,000,000 limit per occurrence and aggregate. The ACE Policy is excess to

the Zurich Policy and follows form to the Zurich Policy. Big-D is an insured under the ACE

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Policy.
9.

In or about April 2010, the Developer placed Big-D on notice of alleged leaks

and other property damage resulting from alleged construction defects at the Project. Big-D
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tendered the Developers claims to Zurich and ACE. ACE failed to respond to Big-Ds tender
within a reasonable time as required by WAC 284-30-330.
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In July of 2013, the Washington Square Towers One & Two Condominium

Association (the HOA) filed suit in King County Superior Court (Cause No. Case No. 13-2-

27554-6 SEA) against the Developer, alleging a variety of construction defects and other

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deficiencies causing property damage at the Project (the Defect Claims). The amounts
alleged as damages by the HOA pursuant to its Defect Claims exceeds the policy limits of the
Zurich Policy. On information and belief, the Developer tendered defense of the claims to both

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Zurich and ACE, as primary and excess insurers, respectively.


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As a result of the HOAs Defect Claims against the Developer, the Developer

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filed third-party claims against Big-D seeking indemnity and damages from Big-D for the

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HOAs Defect Claims.

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Zurich defend and indemnify Big-D against the same. Zurich agreed to defend Big-D pursuant
to a reservation of rights.
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Big-D again tendered the Developers Defect Claims to Zurich demanding that

By letter dated March 6, 2015, Zurich again tendered the Defect Claims to ACE

on behalf of Big-D. By letter dated April 27, 2015, ACE took the position that it was inclined
to deny coverage to Big-D because the ACE contended that the OCIP enrollees waived

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claims against the other enrollees to the extent that the OCIP covers the claim. Stated

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differently, ACE contends that the ACE Policy does not provide Big-D with coverage for any

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claims by the Developer against Big-D.


COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES -3

11069 06 sk20fp1446

GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506

Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 4 of 6

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14.

The ACE Policy follows form to the Zurich Policy, which is Underlying

Insurance to the ACE Policy. The ACE Policy provides as follows:


The Definitions, Terms, Conditions, Limitations and Exclusions of the UNDERLYING
INSURANCE, in effect at the inception date of this policy, apply to this coverage unless
they are inconsistent with provisions of this policy, or relate to premium, subrogation,

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any obligation to defend, the payment of expenses, limits of insurance, cancellation or


any renewal agreement.

While Zurich has accepted the tender of the Developers Defect Claims against Big-D under a

reservation of rights (which reserved rights are different from the basis on which ACE has

asserted Big-D is not afforded coverage), ACE has denied coverage to Big-D for the same

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Defect Claims.
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Big-D has provided ACE with all pertinent documents, investigations and

reports related to the Defect Claims to allow ACE to evaluate the Defect Claims and provide a
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defense and indemnity. Big-D has also provided regular updates to ACE regarding the
litigation and Big-Ds estimate of potential exposure regarding the litigation.
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In addition, Big-D has requested that ACE assess the facts and expert reports

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produced by the parties regarding the Defect Claims, and to provide a detailed coverage

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position regarding the Defect Claims. ACE has failed to do so.

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Rather, ACE has refused to modify its coverage position (denying coverage

based upon a waiver of claims between insureds) and acknowledge its obligation to provide
coverage to Big-D for WSOTs claims.

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ACE has also refused to provide an evaluation of its

coverage position on the property damage alleged in the Defect Claims.


18.

There is no language or provision in the ACE Policy that excludes coverage for

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the Developers claims against Big-D. ACE has failed to provide a reasonable basis and

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explanation for its coverage denial

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COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES -4

11069 06 sk20fp1446

GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506

Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 5 of 6

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settlement of the Claims as required by WAC 284-30-330.


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ACE has failed to attempt in good faith to effectuate a prompt, fair and equitable

ACE has failed to participate in mediations of the underlying claims in good

faith. At each mediation, ACE has failed to have an adjuster present with knowledge of the
facts and issues underlying the Defect Claims.

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21.

Notwithstanding Big-Ds regular and detailed coverage letters discussing the

property damage claims and provision of detailed expert reports and summaries of those

reports, ACE has never engaged in any fashion in any dialogue regarding any reason why any

of the Defect Claims are not covered property damage under the ACE Policy.
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ACE has failed and refused to engage counsel on behalf of Big-D to participate

in the defense of the Defect Claims. While Zurich, as the primary carrier, has been funding the
defense, given the Defect Claims significantly exceed the Zurich Policy limits, ACE has
effectively refused to engage in litigation defense strategies and discussions.

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IV.

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CAUSE OF ACTION: DECLARATORY RELIEF

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Big-D incorporates and re-alleges the above paragraphs as if fully set forth

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Big-D has complied with all applicable requirements and conditions precedent

herein.

for coverage under the ACE Policy.


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An actual controversy exists between Big-D and ACE with respect to the rights

and obligations of the parties under the ACE Policy, and specifically with respect to ACEs
obligation to defend and indemnify Big-D against the Developers Defect Claims.

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Big-D against the Developers Defect Claims and (b) that the Defect Claims allege property
damage that is covered under the ACE Policy.

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Big-D seeks a declaration that (a) ACE is obligated to defend and indemnify

V.

PRAYER FOR RELIEF

WHEREFORE, Big-D prays for the following relief:


COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES -5

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GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506

Case 2:15-cv-01839-TSZ Document 1 Filed 11/20/15 Page 6 of 6

1. A declaration establishing the rights and obligations of the parties;

2. An award of attorneys fees, interest, and other costs as permitted by law;

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3. Such other and further relief as this Court deems just and proper.
DATED this 20th day of November, 2015.

Respectfully submitted,

GROFF MURPHY PLLC

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/s/ Michael P. Grace
Michael P. Grace, WSBA #26091
Meredith L. Thielbahr, WSBA #41746
300 East Pine Street
Seattle, WA 98122
Ph. 206-628-9500
Fx. 206-628-9506
E. mgrace@groffmurphy.com
E. mthielbahr@groffmurphy.com
Attorneys for Plaintiff Big-D Construction
Northwest, LLC

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COMPLAINT FOR DECLARATORY RELIEF


AND DAMAGES -6

11069 06 sk20fp1446

GROFF MURPHY PLLC


300 EAST PINE
SEATTLE, WASHINGTON 98122
(206) 628-9500
FACSIMILE: (206) 628-9506