The Washington State Supreme Court decided unanimously to affirm a lower court’s ruling that insurers need not include all possible reasons for denying a claim when determining if they have a duty to defend a policyholder. The Washington case initially involved the business of grafting fruit buds to rootstock to produce different types of fruit trees. When there was damage to the rootstocks, Hayden Farms eventually sued Krause, who stored the rootstock, for breach of contract and negligence. Krause had a liability policy with Mutual of Enumclaw, which declined Krause’s request for defense saying no coverage existed due to the exclusions contained in the policy. Krause then settled with Hayden for $500,000 and as part of the settlement, assigned all of his rights against Mutual of Enumclaw to Hayden Farms, which then sued the mutual, claiming bad faith.
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