American Economy Insurance Com v. Totem Bowl and Investment, Inc

MEMORANDUM

1. The district court erroneously construed coverage under the Zurich American Insurance Company policy to exclude Totem Bowl and Investments, Inc. Thus, we reverse and remand with instructions to enter judgment in favor of American Economy Insurance Company.

Under Washington law, an insurer’s duty to defend “arises when a complaint against the insured, construed liberally, alleges facts which could, if proven, impose liability upon the insured within the policy’s coverage.” Unigard Ins. Co. v. Leven, 97 Wash.App. 417 , 983 P.2d 1155, 1160 (1999). “An insurer’s duty to defend is broader than its duty to indemnify.... The duty to defend ... is based on the potential for liability.” Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wash.2d 751 , 58 P.3d 276, 281 (2002) (emphasis added and citations omitted). Here, Zurich insured Cut’N Up, who leased salon space from Totem Bowl. The allegations of the underlying slip-and-fall complaint seek to hold Totem Bowl liable as owner of the strip mall based-on breach of its duty to keep the premises safe for its invitees, including Cut’N Up and the employees and customers of Cut’N Up. See Ford v. Red Lion Inns, 67 Wash.App. 766 , 840…