The Washington Supreme Court just handed a defeat to Washington State liability insurers, holding that ProBuilders Specialty Insurance Company had a duty to defend a carbon monoxide poisoning case, notwithstanding a broad pollution exclusion. Zhaoyun Xia v. ProBuilders Specialty Ins. Co., 2017 WL 1532219 (Wash., April 27, 2017). The analysis is interesting: the opinion treats at length the “efficient proximate cause” rule, and makes it clear that no policy language in derogation of that rule will be enforced. But what’s really remarkable is that the Court condemned ProBuilders’ position as not merely wrong, but bad faith as a matter of law – even though both the Trial Court, and the Court of Appeals, held that ProBuilders’ position was correct as a matter of law. And the Washington Supreme Court did so in an opinion that begins with the words “This case asks us to clarify” the law as applied to the particular facts presented – which “clarif[ication]” required over a dozen pages of careful legal reasoning.
Everyone understands the practical need for the kind of system that U.S. Supreme Court Justice Robert Jackson summarized dryly: “We are not final because we are infallible; we are infallible only because we are final.” Even so, Washington insurers may be wondering whether the opinions of four non-infallible lower-court judges ought to count for something.