64 September 13, 2023 No. 458

IN THE COURT OF APPEALS OF THE 

STATE OF OREGON

STATE OF OREGON, 

acting by and through 

the Oregon Department of State Lands and 

the Oregon Department of Transportation,

Plaintiff-Respondent,

v.

PACIFIC INDEMNITY COMPANY,

as successor to all of the liabilities of

Northwestern Pacific Indemnity Company et al.,

Defendants,

and

ARROWOOD INDEMNITY COMPANY, 

as successor to all of the liabilities of

Royal Globe Insurance Company,

Defendant-Appellant.

Multnomah County Circuit Court

15CV29585; A175985

Leslie M. Roberts, Judge.

Argued and submitted August 16, 2023.

Thomas M. Christ argued the cause for appellant. Also 

on the briefs were Sussman Shank LLP; Nicholas L. Dazer 

and Nicholas Dazer P.C.; and Alex E. Potente and Clyde & 

Co.

Michael E. Farnell argued the cause for respondent. Also 

on the brief was Denise G. Fjordbeck, Assistant Attorney 

General.

Elizabeth Riegel and Crowell & Moring LLP filed the brief 

amicus curiae for American Property Casualty Insurance 

Association.

Before Tookey, Presiding Judge, and Egan, Judge, and 

Kamins, Judge.
Cite as 328 Or App 64 (2023) 65

KAMINS, J.

Affirmed.
66 ODOT v. Pacific Indemnity Co.

KAMINS, J.

The Oregon Department of Transportation (ODOT) 

brought this action against Arrowood Indemnity Company 

(Arrowood), an insurance company, seeking to establish 

Arrowood’s duty to pay ODOT’s defense costs in litigation 

by the Environmental Protection Agency (EPA) relating to 

the cleanup of environmental contamination at the Portland 

Harbor Superfund site. The asserted duty to defend is 

based on an automobile liability insurance policy that 

Arrowood’s predecessor, Royal Globe Insurance Company, 

issued to ODOT’s predecessor, the Oregon Transportation 

Commission, for a coverage period from 1978 to 1981. 

Arrowood responded that it was not required to defend 

ODOT or that its required contribution to defense costs 

under the policy are negligible.

On the parties’ cross-motions for summary judgment, the trial court entered a limited judgment for ODOT 

under ORCP 67 B on ODOT’s fifth claim for relief, which 

sought a declaratory ruling. The court determined that 

Arrowood has a duty to defend ODOT and to pay ODOT’s 

defense costs against all Portland Harbor Superfund site 

“claims,” and that Arrowood may not allocate its obligation 

to pay defense costs to those claims deemed to be covered 

by the policy. The limited judgment states that it does not 

address, and the parties have reserved, “all of their respective rights and defenses as to the reasonableness and necessity of ODOT’s claimed defense costs.”

Arrowood appeals, asserting in its first assignment 

of error that the trial court erred in granting ODOT’s motion 

for summary judgment and in denying Arrowood’s motion, 

determining that Arrowood has a duty to defend ODOT. In 

its second assignment, Arrowood asserts that the trial court 

erred in rejecting its contention that it is entitled to apportion its duty to defend to potentially covered claims under 

the policy.1

 We conclude that the trial court did not err and 

therefore affirm the limited judgment.

The former Oregon Transportation Commission 

(Commission), now ODOT, owned approximately 242 acres 

1 ODOT filed but has withdrawn a cross-appeal.
Cite as 328 Or App 64 (2023) 67

along the Willamette River, including Block 78, which was 

a half-acre parcel that the Commission leased to Northwest 

Copper Works, Inc., for use as a parking lot. Arrowood’s predecessor had issued an insurance policy to Northwest Copper 

Works, Inc., that provided coverage for damages caused by 

contamination from automobiles on Block 78, during the 

coverage period March 17, 1978 to March 17, 1981. The policy provided, in relevant part:

“The company will pay on behalf of the Insured all sums 

which the insured shall become legally obligated to pay as 

damages because of

“C. bodily injury or

“D. property damage

“to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or 

use, including loading and unloading, of any automobile, 

and the company shall have the right and duty to defend any 

suit against the insured seeking damages on account of such 

bodily injury or property damage, even if any of the allegations of the suit are groundless, false, or fraudulent[.]”

(Emphasis added.) The italicized text of the quoted policy 

refers to Arrowood’s duty to defend the insured—to which 

this appeal pertains, as distinct from its duty to indemnify the insured. By endorsement, the Commission was an 

insured under the policy with respect to Block 78, and it is 

undisputed that ODOT, as the Commission’s successor, is an 

insured under the policy. The policy defined “property damage” as physical injury to tangible property “which occurs 

during the policy period.”

In 1980, Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act, 42 

USC §§ 9601 - 9628 (CERCLA), which establishes the retroactive joint and several strict liability for environmental 

cleanup of past and current landowners or operators of properties or facilities from which hazardous substances have 

been released or disposed into the environment. CERCLA 

required the creation of a National Priorities List. See U.S. 

v. Asarco Inc., 214 F3d 1104, 1105-06 (9th Cir 2000) (The 

President is “to compile a list identifying top priorities 
68 ODOT v. Pacific Indemnity Co.

among the nation’s known hazardous waste sites. Sites on 

this list, the National Priorities List, are considered the 

leading candidates for Superfund-financed cleanup.” (Citing 

42 USC § 9605(a)(8)(B).)).

In December 2000, the EPA listed a section of the 

lower Willamette River on the National Priorities List as a 

federal Superfund site. The site includes an investigation 

area, which is an area designated by the EPA in conducting 

a search for parties potentially responsible for cleanup of the 

site under CERCLA.

In 2008, the EPA issued to ODOT, and ODOT 

responded to, a “104(e) demand,” pursuant to section 104(e) of 

CERCLA, for information regarding alleged releases of hazardous substances within the investigation area, between 

1937 and the present, by ODOT and its affiliated commissions and divisions. The 104(e) demand directed ODOT to:

“[i]dentify each and every Property that Respondent currently owns, leases, operates on, or otherwise is affiliated 

[with] or historically has owned, leased, operated on, or 

otherwise been affiliated with within the Investigation 

Area during the period of investigation (1937 - Present). 

Please note this question includes state roads, state rights 

of way or easements, and state bridges. Please note that 

this question includes any aquatic lands owned or leased 

by Respondent.”

In 2011, the EPA issued a General Notice Letter 

(GNL) to ODOT, stating that the EPA “believes that the State 

of Oregon, by and through the Department of Transportation 

may be a PRP [potentially responsible party] with respect 

to this Site.” The GNL stated that a release of hazardous 

substances had occurred at “the site,” and that the state 

may be liable for those releases as an owner or operator of 

property at the site. The GNL directed the state to, among 

other things, take action and to “give these matters your 

immediate attention.”

ODOT tendered the GNL to Arrowood, requesting defense of its potential liability for the environmental 

cleanup. Arrowood declined to defend ODOT in any litigation relating to the cleanup and also declined coverage.
Cite as 328 Or App 64 (2023) 69

ODOT brought this proceeding, seeking in its fifth 

claim a declaration that Arrowood has a duty to defend 

ODOT’s potential liability for cleanup of the Portland 

Harbor Superfund site. As noted, on the parties’ crossmotions for summary judgment, the trial court issued a 

limited judgment declaring that Arrowood does have a duty 

to defend, must defend ODOT with respect to the entire litigation, and may not apportion defense costs to those claims 

that Arrowood determines are subject to defense under the 

policy.

On appeal, Arrowood argues in its first assignment 

of error that the trial court erred in denying Arrowood’s 

motion for summary judgment and in granting ODOT’s 

motion for partial summary judgment as to the duty to 

defend. In reviewing the trial court’s ruling on cross-motions 

for summary judgment, “we examine whether there are any 

disputed issues of material fact and whether either party 

was entitled to judgment as a matter of law.” Providence 

Health Plan v. Allen, 299 Or App 128, 135, 449 P3d 504 

(2019), rev den, 366 Or 257 (2020). There is “[n]o genuine 

issue as to a material fact” when “no objectively reasonable 

juror could return a verdict for the adverse party on the 

matter that is the subject of the motion for summary judgment.” ORCP 47 C. The issues presented on appeal are all 

legal; thus, we review the trial court’s rulings for legal error.

Arrowood’s argument focuses exclusively on the 

GNL, contending that there is no duty to defend, because 

the GNL does not constitute a complaint. In support of its 

motion for summary judgment, Arrowood wrote:

“Under Oregon law, with no complaint, the EPA’s ‘General 

Notice’ and 104(e) letters are considered ‘suits’ within the 

meaning of a liability policy, and they and the policy govern the determination of whether an insurer has a duty to 

defend.”

To the extent that Arrowood now argues in its first assignment that the trial court erred because the GNL does not 

constitute a complaint or a “suit” within the meaning of the 

policy, Arrowood conceded that point below, and we hold 

Arrowood to its concession and conclude for that reason that 

Arrowood has failed to preserve error on that issue or has 
70 ODOT v. Pacific Indemnity Co.

invited any error in the trial court. We therefore decline to 

address the contention on appeal. See Anderson Bros., Inc. v. 

St. Paul Fire & Marine Ins. Co., 729 F3d 923 (9th Cir 2013) 

(holding that a GNL letter and letter under section 104(e) of 

CERCLA, issued by the EPA, requiring responses to questions that necessarily established CERCLA liability, identifying the recipient as a potentially responsible party, and 

stating that the EPA believed it was responsible for hazardous substances and intended to pursue compensation, were 

“suits” under Oregon law).

We turn to Arrowood’s further contention that the 

trial court erred in determining that there was a duty to 

defend. Arrowood acknowledges the familiar “four-corners” 

rule, under which a duty to defend depends on whether 

the complaint and the policy allege facts that would, if 

proved, impose liability covered by the policy. West Hills 

Development Co. v. Chartis Claims, 360 Or 650, 653, 385 

P3d 1053 (2016) (describing rule). Under the rule, the allegations of the complaint are compared with the insurance 

policy’s terms. Marleau v. Truck Insurance Exchange, 333 Or 

82, 89, 37 P3d 148 (2001). If the allegations assert a claim 

covered by the policy, then the insurer has a duty to defend. 

West Hills Development Co., 360 Or at 653. If the allegations 

do not assert a claim covered by the policy, then the insurer 

has no duty to defend. Id. By limiting the analysis to the 

complaint and the policy, the four-corners (or eight-corners) 

rule generally prevents consideration of extrinsic evidence. 

Id.

Arrowood thus acknowledges that there is a duty 

to defend if a “complaint” and the policy together create the 

potential for covered damages. Further, Arrowood acknowledges that there is a duty to defend if the complaint alleges 

facts that bring the conduct within the policy, even if the 

complaint also alleged facts that are not covered or that are 

excluded from coverage. See Ferguson v. Birmingham Fire 

Ins., 254 Or 496, 506, 460 P2d 342 (1969) (the insurer has a 

duty to defend if the complaint includes an allegation falling 

within policy coverage, even if it includes allegations outside of coverage). But Arrowood argues that the GNL and 

the 104(e) demand do not trigger that duty, because they 
Cite as 328 Or App 64 (2023) 71

do not specifically mention Block 78, the only insured location, and indeed reference a completely different location. 

Arrowood further asserts that the documents are vague, do 

not contain any facts about the nature of the possible contamination released from ODOT’s property, and, apart from 

speculation, do not include any coverage-triggering facts.2

ODOT responds that the standard is more nuanced 

than whether the EPA documents contain specific facts 

demonstrating covered liability. ODOT points out that an 

insured does not have to prove that there are covered damages to be entitled to a defense. Ledford v. Gutoski, 319 Or 

397, 403, 877 P2d 80 (1994) (“The duty to indemnify is independent of the duty to defend.”). Rather, the insurer owes a 

duty to defend if the claimant can recover against the insured 

under the allegations of the complaint “upon any basis for 

which the insurer affords coverage.” Nielsen v. St. Paul 

Companies, 283 Or 277, 280, 583 P2d 545 (1978). Further, 

ODOT points out that any ambiguity in the complaint with 

respect to whether the allegations could be within coverage 

is resolved in favor of the insured. Blohm et al v. Glens Falls 

Ins. Co., 231 Or 410, 416, 373 P2d 412 (1962). Thus, citing 

Minnis v. Oregon Mutual Ins. Co., 162 Or App 198, 207, 986 

P2d 77 (1999), rev’d in part on other grounds, 334 Or 191, 48 

P3d 137 (2002) (examining whether the allegations in the 

complaint would permit a jury to find that plaintiff met the 

claim in question), ODOT asserts that, even if a complaint is 

unclear or devoid of coverage-related facts, there is a duty to 

defend if the complaint’s allegations would permit the presentation of evidence that would establish the uncertain or 

missing coverage fact.

We agree with ODOT’s formulation of the controlling analysis. Contrary to Arrowood’s argument, the 

GNL and the 104(e) demand did not need to specifically 

reference Block 78 in order to trigger Arrowood’s duty to 

defend. As the Supreme Court has recognized, in the “real 

world,” “a complaint may not definitively allege the facts 

that ultimately will determine whether a claim is covered 

by the policy.” West Hills Development Co., 360 Or at 660. In 

2 In its opening brief, Arrowood addressed its argument only to the GNL. In 

its reply brief, Arrowood also addressed its argument to the 104(e) demand.
72 ODOT v. Pacific Indemnity Co.

the face of ambiguity or lack of clarity, a complaint should 

be interpreted in favor of the insured and require a duty to 

defend if “the court can reasonably interpret the allegations 

to include an incident or injury that falls within the coverage of the policy.” Id. at 667 (quoting Bresee Homes, Inc. 

v. Farmers Ins. Exchange, 353 Or 112, 117, 293 P3d 1036 

(2012)). Here, as ODOT asserts, Arrowood’s duty to defend 

arises because the GNL and the 104(e) demand together 

would permit proof that contaminants running off of Block 

78, for which Arrowood provided coverage, caused damage.

Citing Fred Shearer & Sons, Inc. v. Gemini Ins. Co., 

237 Or App 468, 240 P3d 67 (2010), rev den, 349 Or 602 

(2011), Arrowood argues that, in the face of ambiguity or 

the absence of coverage-triggering facts in the GNL, it was 

incumbent on ODOT to present extrinsic evidence in support of the contention that the EPA has raised claims under 

the policy. In Fred Shearer & Sons, Inc., we concluded that 

extrinsic evidence could be admitted to show that a person 

defending against a claim was in fact an insured under a 

policy and entitled to a defense by the insurance company. 

In that case, the “additional insured” portion of the policy 

stated that it applied to “‘all vendors’” of a product “‘in the 

regular course of the vendor’s business.’” Id. at 472. The 

complaint against the defending party did not allege that 

the defendant was a vendor of the product in the regular 

course of business. We acknowledged application of the “four 

corners” rule generally:

“When the question is whether the insured is being held 

liable for conduct that falls within the scope of a policy, it makes sense to look exclusively to the underlying 

complaint.”

Id. at 476. However, there was no dispute that, as to the circumstances alleged in the complaint, the defending party 

was indeed a vendor in the regular course of business, thus 

an insured. Id. at 474, 478 n 9. As limited to that question, 

we held that it would be inappropriate to disallow the use of 

extrinsic evidence, outside of the “four corners” of the policy 

and the complaint, to establish the facts relevant to whether 

the defending person was an insured. Id. at 485.
Cite as 328 Or App 64 (2023) 73

Arrowood argues that, in view of Fred Shearer & 

Sons, Inc., in the face of an ambiguous complaint, the insured 

may, indeed must, produce coverage-triggering facts that 

would give rise to an obligation to defend. Arrowood notes 

that, in West Hills Development Co., the Supreme Court 

referred to Fred Shearer & Sons, Inc., and did not overrule 

it, allowing the case’s holding to stand.

We reject Arrowood’s suggestion that Fred Shearer 

& Sons, Inc. supports a general rule that there is an obligation on the part of the insured to present evidence of coverage, or that the Supreme Court has somehow let such a rule 

stand. As noted, Fred Shearer & Sons, Inc. limited its holding to the unique question whether the defending party was 

an insured, in which the evidence was undisputed that the 

defending party was an insured under the policy in the first 

place—it did not address whether the allegations fell within 

the scope of coverage. Therefore, we explicitly held that the 

four-corners rule “is justified” when the question is “whether 

the insured is being held liable for conduct that falls within 

the scope of a policy.” Id. at 476. Further, in Bresee Homes, 

353 Or at 123, the Supreme Court has explicitly rejected 

Arrowood’s contention, holding that an insured has “no burden to come forth with facts beyond those alleged” in the 

complaint. Id.

We further reject Arrowood’s suggestion that the 

use of extrinsic evidence as to facts of coverage might be 

an open question, because the Supreme Court did not overturn Fred Shearer & Sons, Inc. in its opinion in West Hills 

Development Co. In that case, the trial court had referred 

to extrinsic evidence to determine that the alleged damages had been caused by an insured. Because the defending 

party was also an insured under the policy, the trial court 

concluded that the insurer was required to defend. 306 Or at 

659. We affirmed the trial court’s ruling, citing our opinion 

in West Hills Development Co. v. Chartis Claims, 273 Or App 

155, 359 P3d 339 (2015).

On review, the Supreme Court affirmed our opinion but on different reasoning. The court explained that it 

did not need to address the correctness of the holding in

Fred Shearer & Sons, Inc. that extrinsic evidence could be 
74 ODOT v. Pacific Indemnity Co.

considered for purposes of determining who was an insured, 

because the case before it did not involve the question whether 

the plaintiff was an insured—it was undisputed that the 

plaintiff was a named insured. West Hills Development Co., 

360 Or at 666. The court further concluded that, because 

the complaint’s allegations, reasonably interpreted, could 

result in the insured being held liable for damages covered 

by the policy, the insurer had a duty to defend. Id.

As in West Hills Development Co., the issue addressed 

in Fred Shearer & Sons, Inc.—whether the defending party 

was an insured under the policy—is not presented here. 

ODOT is named as an insured. For the purpose of determining the duty to defend, the question is whether, despite any 

ambiguity, the EPA 104(e) demand and GNL can reasonably 

be interpreted to allow proof at trial of liability covered by 

the policy. See West Hills Development Co., 360 Or at 666. We 

conclude that the EPA’s allegations of releases from stateowned land at the site, which implicitly includes Block 78, 

fall squarely within that standard and give rise to a duty to 

defend.3

 We therefore reject Arrowood’s first assignment of 

error.

Arrowood’s second assignment of error relates to 

the scope of Arrowood’s duty to defend, and whether the trial 

court erred in limiting discovery on that question.4

 Below, 

Arrowood sought to limit its duty to defend to those aspects 

of the EPA’s “claim” that were determined to be within the 

scope of the policy’s coverage. Relying on Timberline Equip. 

Co. v. St. Paul Fire and Mar. Ins., 281 Or 639, 645, 576 

P2d 1244 (1978), ODOT responded that under the “complete defense” rule, if there is an obligation under a policy 

to defend against one allegation of a complaint, the insurer 

has a duty to defend against the entire action. The trial 

court agreed with ODOT and determined that Arrowood is 

responsible for all of ODOT’s defense costs in the Portland 

3 The 104(e) demand alleged property damage in the form of contamination 

at the site and that the state, through ODOT, is among those potentially liable 

for the contamination. The GNL stated that a release of hazardous substances, 

pollutants, or contaminants occurred at the site and that the state may be liable 

for those releases as an owner or operator of property at the site.

4 Although Arrowood challenges to the trial court’s ruling allowing ODOT’s 

motion to stay discovery, it does not raise a separate argument addressing that 

contention.
Cite as 328 Or App 64 (2023) 75

Harbor Superfund litigation. Thus, the trial court rejected 

Arrowood’s contention that it is entitled to apportion its duty 

to defend to those “claims” that are determined to be covered by the policy.

Citing federal and California case law as persuasive authority, see, e.g., Ins. Co. of N. Am. v. Forty-Eight 

Insulations, Inc., 633 F2d 1212 (6th Cir 1980), aff’d on reh’g, 

657 F2d 814 (6th Cir 1981); Buss v. Superior Court, 16 Cal 

4th 35, 65 Cal Rptr 2d 366, 939 P2d 766 (1997), Arrowood 

asserts in its second assignment that its obligation, if any, 

is limited to the cost of defending ODOT against potential 

insured liability for pollution from Block 78 during the coverage period, the only risk insured:

“To require the insurer to defend the uncovered claim when 

joined gratuitously to the covered claim would give the 

insured a windfall at the insurer’s expense. The insured 

would be unjustly enriched, and the insurer unjustly burdened. The better holding is to require the insurer to defend 

the [covered] claim only[.]”

ODOT responds that the cited cases are distinguishable factually and, further, that the “complete defense” 

rule of Timberline Equip. Co. is controlling in Oregon and 

requires that if Arrowood has an obligation to defend ODOT 

on any of the EPA allegations, it has a duty to defend ODOT 

in the entire litigation. That is indeed the rule that we have 

drawn from Timberline Equip. Co. See Klamath Pacific Corp. 

v. Reliance Ins. Co., 151 Or App 405, 413, 950 P2d 909 (1997), 

modified on recons, 152 Or App 738, 955 P2d 340 (1998) (“If 

some of the allegations pertain to conduct that could be covered by the insurance policy, and some that could not, the 

insurer must defend the entire action.”).

Arrowood asserts alternatively that the “complete 

defense” rule is properly limited to cases involving multiple claims arising from a single occurrence—seeking the 

same damages for the same injury from the same covered 

event—and should not apply to require defense of “permissively joined” claims not within policy coverage for separate 

damages for separate injuries from separate occurrences. 

Arrowood argues that Timberline Equip. Co. and the cases 

that have followed it have been single-occurrence cases, in 
76 ODOT v. Pacific Indemnity Co.

which the plaintiff asserted both covered and uncovered 

damages under alternative theories of liability but that did 

not involve claims like those relating to the Portland Harbor 

Superfund site cleanup, in which damages are claimed for 

separate injuries from separate occurrences, and where 

defense costs can be apportioned between insured and uninsured claims.

The flaw in Arrowood’s reasoning is that the EPA 

proceeding does not allege separate counts or permissively 

joined independent claims with apportionable defense costs. 

Under the EPA’s single theory of joint and several liability 

under 42 USC sections 9606(a) and 9607(a) (“the owner and 

operator of a vessel or a facility ** * shall be liable for ** * all 

costs of removal or remedial action incurred by the United 

States Government ***”), ODOT is potentially liable for 

all damages for the environmental cleanup from all causes 

during the entire exposure period. That interpretation is 

consistent with CERCLA, which “establishes a retroactive 

strict liability regime that imposes joint and several liability upon past and current landowners or operators of properties or facilities from which hazardous substances have 

been released or disposed into the environment.” Anderson 

Bros., 729 F3d at 926. Because CERCLA liability is joint and 

several, “a responsible party may be held liable for the entire 

cost of cleanup even where other parties contributed to the 

contamination.” Chubb Custom Ins. Co. v. Space Sys./Loral, 

Inc., 710 F3d 946, 957 (9th Cir 2013) (internal citations omitted). That exposes anyone identified as a PRP, such as the 

state, to liability for the entire cleanup. Thus, even assuming the correctness of Arrowood’s attempted narrowing of 

Timberline Equip. Co., the distinction is not apt.5

We further agree with ODOT that the policy itself 

supports the trial court’s ruling. It requires that Arrowood

5 We also note that, contrary to Arrowood’s suggestions, “apportionment” in 

Oregon is generally between and among insurers, not between an insurer and its 

insured. Cascade Corp. v. American Home Assurance Co., 206 Or App 1, 12, 135 

P3d 450 (2006) (“[Lamb-Weston et al v. Ore. Auto. Ins. Co., 219 Or 110, 341 P2d 110 

(1959)], provides a mechanism for insurers to determine among themselves how 

much each must contribute to the insured’s loss, but it does not affect their duty 

to make the insured whole up to the limits of their policies.”).
Cite as 328 Or App 64 (2023) 77

“defend any suit against the insured seeking damages 

on account of [property damage to which the insurance 

applies,] even if any of the allegations of the suit are 

groundless, false, or fraudulent[.]”

The policy requires a defense of “any suit” seeking damages 

and does not limit the duty to defend to claims for covered 

damages. Because the EPA alleges damages on account of 

property damage reasonably subject to coverage under the 

policy, the trial court correctly held that Arrowood has a 

duty to defend the entire action.

Affirmed.