More bad news for insurers on consent judgments
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The trial court then decided on cross-motions for summary judgment that Truck did have a duty to defend, which it breached in bad faith. The Court of Appeals affirmed most of the trial court’s rulings, and the Supreme Court then accepted review.

Truck contended that because a CGL policy is not a performance bond, its denial of coverage was correct; the claimants alleged only that VanPort had failed in its contract obligations, not that it caused any resultant property damage. Truck also asserted a policy exclusion for damage to realty on which the insured or contractors working on its behalf are performing operations.

The Supreme Court disagreed. The claimants sued in tort, not just in contract, so that the claims were within the terms of the insuring agreement. The Court also found that the exclusion might or might not apply depending on unresolved facts, so that Truck owed at least a duty to defend. The VanPort Court also concluded that Truck committed bad faith based on its tardy and inadequate response to the insured’s tender of the claims and its failure to investigate before rejecting that tender.

The Court therefore held that this settlement was fully enforceable against Truck if it was reasonable, based on its recent decision in a similar case, Besel v. Viking Ins. Co., 146 Wn.2d 730 (2002). If the trial court finds the settlement to be reasonable, it is presumptively reasonable, and the burden then shifts to the insurer to show that the settlement resulted from fraud or collusion. Overcoming this presumption could prove difficult for insurers.