26 February 22, 2024 No. 109

IN THE COURT OF APPEALS OF THE 

STATE OF OREGON

CONTINENTAL CASUALTY COMPANY 

and Transportation Insurance Company,

Plaintiffs-Counterclaim Defendants,

Respondents,

v.

ARGONAUT INSURANCE COMPANY,

Defendant,

and

INSURANCE COMPANY OF NORTH AMERICA, 

now known as Century Indemnity Company, 

successor to CCI Insurance Company,

Defendant-Counterclaimant-Cross Claimant,

Respondent,

and

EMPLOYERS INSURANCE COMPANY OF WAUSAU,

Defendant-Counterclaimant-Cross Claimant,

Respondent Cross-Appellant,

and

INSURANCE COMPANY OF THE

STATE OF PENNSYLVANIA,

Defendant-Cross Claim Defendant,

Appellant Cross-Respondent.

Multnomah County Circuit Court

16CV14319; A176743

David F. Rees, Judge.

Argued and submitted October 10, 2023.

William C. Perdue, Washington D. C., argued the cause 

for appellant-cross-respondent. Also on the briefs were 

Robert Reeves Anderson, Colorado, Samuel I. Ferenc, and 

Arnold & Porter Kaye Scholer LLP, Washington, D. C. and 

Thomas W. Brown, Julie A. Smith, and Cosgrave Vergeer 

Kestler LLP and Stephen R. Wong, Kenneth H. Sumner, 

and Sinnott, Puebla, Campagne & Curet APLC, California.
Cite as 331 Or App 26 (2024) 27

Laurie J. Hepler, California, argued the cause for respondents Continental Casualty Company and Transportation 

Insurance Company. Also on the brief were Rachel A. Beyda 

and Greines Martin Stein & Richland LLP, California, and 

Lawrence Gottlieb, Jeremy Schultze, H. Matthew Munson, 

and Betts, Patterson & Mines, P.S., Washington.

David C. Linder, Minnesota, argued the cause for 

respondent-cross-appellant Employers Insurance Company 

of Wausau. Also on the brief were Larson King LLP, 

Minnesota, and Thomas W. Sondag, Carter M. Mann, and 

Lane Powell, PC.

Thomas M. Christ and Sussman Shank LLP filed the 

brief for respondent Insurance Company of North America.

Before Egan, Presiding Judge, and Kamins, Judge, and 

DeVore, Senior Judge.

EGAN, P. J.

Reversed and remanded.
28 Continental Casualty Co. v. Argonaut Ins. Co. (A176743)

EGAN, P. J.

In Continental Casualty Company v. Argonaut 

Insurance Company (A176763) (Wausau), 331 Or App 38, ___ 

P3d ___ (2024), we set out the background facts and legal 

context for this claim by plaintiff Continental Casualty 

Company and Transportation Insurance Company (collectively, Continental) for contribution from defendant/appellant Insurance Company of the State of Pennsylvania 

(ICSOP) and other insurers, for costs that Continental has 

incurred and is obligated to pay to Schnitzer Steel Industries, 

Inc. (SSI), and MMGL Corp (formerly Schnitzer Investment 

Corp) (SIC) (collectively “Insureds”), relating to the defense 

of claims by the United States Environmental Protection 

Agency (EPA) for environmental cleanup of the Portland 

Harbor Superfund Site. In that opinion, we reversed that 

portion of the trial court’s judgment holding that defendant 

Employers Insurance Company of Wausau (Wausau), which 

had issued comprehensive general liability insurance to the 

Insureds, was subject to Continental’s contribution claim. 

ICSOP issued three “umbrella” policies to the Insureds 

during the relevant period.1 In this separate appeal by 

ICSOP from that same judgment, ICSOP challenges the 

trial court’s determination on ICSOP’s and Continental’s 

cross-motions for summary judgment that, based on its 

umbrella policies, ICSOP is subject to Continental’s claim 

for contribution to defense costs. Continental contends in a 

cross-assignment of error that, in the event that we determine that ICSOP is not subject to contribution, the judgment should be remanded for reallocation of contribution.2

On ICSOP’s appeal, we conclude that the trial court 

erred. We therefore reverse that portion of the judgment 

holding that ICSOP is subject to Continental’s contribution claim and remand the judgment for a reallocation of 

contribution.

We set forth additional facts as necessary to address 

the legal issues raised on appeal. After the EPA designated 

the Insureds as parties potentially responsible for cleanup 

1 The policy form is entitled an “umbrella policy” but the policy itself appears 

to provide only excess coverage over underlying policies.

2 Wausau filed but has abandoned a cross-appeal.
Cite as 331 Or App 26 (2024) 29

of the Portland Harbor Superfund Site, the Insureds filed 

claims for defense and indemnity with their comprehensive 

general liability insurers, including Continental. They also 

filed a claim with ICSOP, which had provided what was entitled “umbrella” insurance to the Insureds during the relevant 

period, with limits of $5,000,000. The ICSOP policies provided 

excess coverage for losses within the scope of coverage of the 

underlying insurance named in the policy.3 ICSOP denied 

coverage or a duty to defend, contending that, based on the 

provisions of its policies with the Insureds, the Insureds’ environmental claims were subject to the excess liability portions 

of the policies and those provisions had not been triggered.

A federal judgment determined that Continental 

had a duty to defend the Insureds in the Portland Harbor 

Superfund Site claims by the EPA. Continental brought 

this action for contribution against all other insurers that 

had provided insurance to the Insureds during the relevant period, including ICSOP, as permitted by the Oregon 

Environmental Cleanup Assistance Act (OECAA), ORS 

465.475 to 465.485.

ICSOP argued that it should not be allocated any 

portion of contribution toward defense costs, because its 

3 In Hoffman Construction Co. v. Fred S. James & Co., 313 Or 464, 466 n 6, 

836 P2d 703 (1992), the Supreme Court described three “tiers” of insurance—

primary, excess, and umbrella:

“Liability insurance policies frequently are arranged in tiers, with each 

level of policy designed to ‘kick in’ when the coverage provided by the lower 

level of insurance is exhausted. The general nomenclature surrounding this 

phenomenon labels an insured’s basic insurance as the ‘primary’ insurance, 

the insured’s next level of insurance (that covers risks involving amounts in 

excess of the primary insurance) as ‘excess’ insurance, and the insured’s final 

level of insurance (that covers risks only after and to the extent that lower 

levels do not) as ‘umbrella’ insurance.’”

Although Hoffman described three “tiers” of insurance and described the disputed policy in that case as “umbrella insurance,” in fact, the policy would, in 

the event of a loss covered by the policy, pay the excess of the amount of the loss 

over the “amount recoverable” under certain underlying insurance policies, 313 

Or at 466. Thus, “umbrella insurance” as used in Hoffman, was synonymous with 

excess coverage, rather than true umbrella coverage (i.e., coverage of losses not 

covered by underlying policy’s insuring clauses). Here, although it is not the dispositive issue, it appears that, as in Hoffman, the “umbrella” coverage of ICSOP’s 

policies is really just excess coverage. If the policies were true umbrella policies, 

we would expect an insuring clause or clause describing covered risks different 

from the risks of liability for personal injury or property damage included within 

the main policy form’s insuring clause. 
30 Continental Casualty Co. v. Argonaut Ins. Co. (A176743)

policies with respect to the Insureds’ environmental claim 

had two features: (1) The policies provided excess, not primary, coverage of any liability that the Insureds might have 

for cleanup of the Portland Harbor Superfund Site, meaning that the policies were excess to the loss covered by the 

underlying insurance listed in the policies—in this case, El 

Dorado Insurance Company, which is defunct. (2) ICSOP 

contended that its policies required “horizontal exhaustion,” 

meaning that, before ICSOP’s coverage was triggered, there 

must be an exhaustion of all comprehensive general liability 

policies the Insureds held for the covered loss, not just the 

El Dorado policies. Because there had not been exhaustion 

of the Insureds’ comprehensive general liability policies, 

ICSOP asserted that ICSOP’s policies were not triggered, 

and that it had no liability and no duty to defend.

ICSOP cited provisions of its policies that it contends support its construction. The policies’ coverage provision stated:

“The Company hereby agrees, subject to the limitations, 

terms and conditions hereinafter mentioned, to indemnify 

the Assured for all sums which the Assured shall be obligated to pay by reason of the liability

“(a) Imposed upon the Assured by law, or

“(b) Assumed under contract or agreement by the 

Named Assured and/or any officer, director, stockholder, 

partner or employee of the Named Assured, while acting in 

his capacity as such,

“for damages, direct or consequential and expenses, all as 

more fully defined by the term ‘ultimate net loss’ on account 

of:—

“(i) Personal injuries, including death at any time 

resulting therefrom,

“(ii) Property Damage,

“(iii) Advertising liability,

“caused by or arising out of each occurrence happening 

anywhere in the world.”

The policies’ “Limit of Liability” provision stated:
Cite as 331 Or App 26 (2024) 31

“The Company shall only be liable for the ultimate net 

loss the excess of either

“(a) the limits of the underlying insurances as set out 

in the schedule in respect of each occurrence covered by 

said underlying insurances, or

“(b) the amount as set out in the declarations as the 

self-insured retention in respect of each occurrence not covered by said underlying insurances (hereinafter called the 

“Underlying Limits”)[.]

“* * * * *

“In the event of reduction or exhaustion of the aggregate 

limits of liability under said underlying insurances by reason of losses paid there-under, this policy shall

“(1) in the event of reduction pay the excess of the 

reduced underlying limit

“(2) in the event of exhaustion continue in force as 

underlying insurance. The inclusion or addition hereunder 

of more than one Assured shall not operate to increase the 

Company’s limit of liability.”

As noted, the policies’ coverage was for “ultimate 

net loss.” The policies defined “ultimate net loss”:

“The term ‘Ultimate Net Loss’ shall mean the total sum 

which the [Insured] or any company as his insurer or both 

become obligated to pay by reason of * ** property damage * **, and shall also include expenses for *** lawyers 

* * * and investigators and other persons and for litigation, 

adjustment and investigation of claims and suits which are 

covered hereunder[.]

“[ICSOP] shall not be liable for expenses as aforesaid 

when such expenses are included in other valid and collectible insurance.”

(Emphasis added.) Thus, ICSOP’s coverage and liability to 

indemnify for expenses constituting “ultimate net loss,”—

including the Insureds’ defense costs—as defined in the first 

paragraph above, arose only if, as stated in the second paragraph, such incurred expenses were not included in other 

“valid and collectible” insurance.
32 Continental Casualty Co. v. Argonaut Ins. Co. (A176743)

ICSOP’s policies also included a Loss Payable provision stating, in part:

“Liability under this policy with respect to any occurrence shall not attach unless and until the Assured, or the 

Assured’s underlying insurer, shall have paid the amount 

of the underlying limits on account of such occurrence.”

The policies also included an “Other Insurance” provision:

“If other valid and collectible insurance with any other 

insurer is available to [the Insureds] covering a loss also 

covered by this policy * ** the insurance afforded by this 

policy shall be excess of and shall not contribute with such 

other insurance.”

(Emphasis added.) Those paragraphs, ICSOP contended, 

established ICSOP’s excess coverage as requiring “horizontal exhaustion,” meaning that, before ICSOP’s excess 

coverage could be triggered, all insurance provided by all 

other insurers for the covered loss during the relevant time 

must have been exhausted. Because the Insureds had other 

insurance policies that were “valid and collectible” on their 

environmental claim during the relevant periods, ICSOP 

asserted that it had no liability for defense costs or any loss 

that had been incurred by the Insureds.

ICSOP’s policies included a provision for “Maintenance 

of Underlying Insurances,” requiring the Insureds to maintain underlying insurance during the policy terms. ICSOP’s 

policies provided excess coverage for losses covered by 

the underlying insurance. The policies provided that the 

Insureds’ failure to retain underlying insurance would not 

change ICSOP’s liability, meaning that ICSOP’s coverage 

remained excess of what the underlying policy should have 

provided:

“It is a condition of this policy that the policy or policies referred to in the attached ‘Schedule of Underlying 

Insurances’ shall be maintained in full effect during the 

currency of this policy except for a reduction of the aggregate limit or limits contained therein solely by payment of 

claims in respect of accidents and or occurrences occurring 

during the period of this policy. Failure of the [Insured] to 

comply with the foregoing shall not invalidate this policy but 

in the event of such failure, [ICSOP] shall only be liable to 
Cite as 331 Or App 26 (2024) 33

the same extent as they would have been had the [Insured] 

complied with the said condition.”

(Emphasis added.)

The policies included a provision entitled “Assistance 

and Cooperation,” stating that ICSOP would have no duty to 

defend the Insureds (as distinct from coverage for indemnification of defense costs included within “ultimate net loss”):

“[ICSOP] shall not be called upon to assume charge of the 

settlement or defense of any claim made or suit brought or 

proceeding instituted against [the Insureds]. But [ICSOP] 

shall have the right and shall be given the opportunity 

to associate with the [Insured] or the [Insured’s] underlying insurers, or both, in the defense and control of any 

claim, suit or proceeding relative to an occurrence where 

the claim or suit involves, or appears reasonably likely to 

involve [ICSOP], in which event the [Insured] and [ICSOP] 

shall co-operate in all things in the defense of such claim, 

suit or proceeding.”

But the policies also included a “Defense Endorsement,” 

which established a duty to defend in certain circumstances:

“In consideration of the premium provided, it is understood and agreed that in the event there be no underlying insurance against loss or claim covered by [the ICSOP 

Policies] [ICSOP] agrees to defend in [the Insureds’] name 

and behalf any suit against [the Insureds] alleging ** * 

property damage and seeking damages on account thereof 

* * *.

“All other terms and conditions remain unchanged[.]”

As Continental reads the defense endorsement, 

it triggered a duty to defend if the underlying insurance 

named in the policy—El Dorado—was not available to pay a 

claim. Thus, Continental asserted that, because El Dorado 

had become insolvent and was no longer in existence, it 

was not available, and ICSOP’s defense endorsement was 

triggered.

ICSOP understands the defense endorsement differently—not, like Continental, as wholesale exception to the 

general policy provisions described above regarding excess 

coverage, but as a description of ICSOP’s duty to defend if 
34 Continental Casualty Co. v. Argonaut Ins. Co. (A176743)

the loss is one for which the ICSOP policy provides umbrella 

coverage, i.e., coverage for losses not within the scope of coverage provided by underlying insurance. That is, in the event 

that a loss is not within the scope of coverage provided by an 

underlying insurance (i.e., for which “there be no underlying 

insurance”), rendering ICSOP’s umbrella coverage primary 

after payment of the Insureds’ reserve, then ICSOP has an 

obligation to defend. However, ICSOP contended, as to the 

Insureds’ environmental claims, which are within the scope 

of coverage of the El Dorado policies as well as within the 

scope of coverage of other valid and collectible insurance, 

its coverage, as well as its duty to defend, remained both 

excess and subject to the requirement for horizontal exhaustion—i.e., would be triggered only in excess of the limits of 

the El Dorado policies and when all other insurance was 

exhausted, even if the underlying insurer, El Dorado, was 

no longer solvent or in existence.

As pertains to ICSOP, the trial court agreed with 

Continental’s construction of the defense endorsement and 

held that, as a result of the extinction of El Dorado, there 

was an absence of underlying insurance, and ICSOP had 

a duty to defend the Insureds. The court therefore ruled 

that ICSOP was required to share in the apportionment of 

defense costs paid by Continental.

ICSOP challenges that ruling on appeal. In its first 

assignment, ICSOP contends that the trial court erred in 

determining on summary judgment that ICSOP’s policies 

were triggered so as to give rise to a duty to share in apportionment of defense costs. In ICSOP’s view, provisions of 

the policies—the “ultimate net loss,” “other insurance,” and 

“limitation of liability” provisions—unambiguously show 

that ICSOP’s coverage for the claimed loss is excess to other 

valid and collectible insurance and also require that all other 

outstanding insurance be exhausted before ICSOP’s policies 

becomes available, either for defense or indemnity. Because 

the Insureds had other valid and collectible insurance, 

ICSOP contends, its policies, including the defense endorsement, were not triggered and there was no duty to defend. As 

for the defense endorsement, ICSOP contends that because 

there was underlying insurance through El Dorado, despite 
Cite as 331 Or App 26 (2024) 35

El Dorado’s dissolution, the defense endorsement is not triggered. Alternatively, ICSOP contends that the phrase “in 

the event there be no underlying insurance” means simply 

that ICSOP will assume, under ICSOP’s umbrella coverage, 

defense of a claim that is not within the scope of coverage of 

underlying insurance. But that umbrella coverage, ICSOP 

contends, is still subject to the policy’s requirement for horizontal exhaustion. Thus, the obligation to defend would not 

be triggered by the endorsement unless all other valid and 

collectible insurance is exhausted.

Continental agrees with ICSOP that the defense 

endorsement’s reference to “underlying insurance” is a reference to El Dorado. But in Continental’s view, the defense 

endorsement is triggered if the underlying insurance is not 

available to pay damages on this claim. Here, Continental 

argues, and the trial court held, in view of El Dorado’s 

dissolution, there is no underlying insurance to pay the 

Insureds’ claim. Thus, Continental argues, “there be no 

underlying insurance,” and the defense endorsement has 

been activated. Continental assert that, if and to the extent 

the defense endorsement conflicts with other provisions 

relating to excess coverage and horizonal exhaustion, the 

defense endorsement, as the provision relating specifically 

to the duty to defend, controls over those more general provisions and does not require exhaustion of other policies. See 

Waller v. Auto-Owners Ins. Co., 174 Or App 471, 476, 26 P3d 

845 (2001) (“To the extent that there is a conflict between 

the terms of an insurance policy and an endorsement, the 

endorsement controls.”).

An insurer’s duty to defend is determined by comparing the complaint to the insurance policy. West Hills 

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

P3d 1053 (2016) (describing rule). Here, it is undisputed 

that the issue on appeal turns on a construction of the 

defense endorsement of the ICSOP policies, in the context 

of the policy as a whole, and whether it provides coverage 

for the Insureds’ defense. Construction of an insurance policy requires ascertaining the parties’ intent, which is determined from the terms and conditions of the policy. Groshong 

v. Mutual of Enumclaw Ins. Co., 329 Or 303, 307, 985 P2d 
36 Continental Casualty Co. v. Argonaut Ins. Co. (A176743)

1284 (1999). The interpretation of plain and unambiguous 

policy provisions is a question of law for the court. Hoffman 

Construction Co. v. Fred S. James & Co., 313 Or 464, 469, 

836 P2d 703 (1992).

We conclude that ICSOP’s construction of the 

defense endorsement as triggered only when underlying 

insurance and other policy limits are exhausted is the correct construction, when viewed in the context of the policy 

as a whole, because it gives the endorsement a meaning 

that is consistent and not in conflict with the policies’ other 

provisions. The defense endorsement must be considered 

in the context of the Assistance and Cooperation provision 

of the main policy, which explicitly denied a duty to defend 

and provided only a discretionary right to an opportunity 

to assist in the defense; the defense endorsement added a 

true duty to defend when the policy covered a risk, albeit “in 

the event there be no underlying insurance against loss or 

claim covered by [the ICSOP Policies].” As we understand 

the phrase “in the event there be no underlying insurance 

against loss or claim covered by [the ICSOP Policies],” it is 

a reference to coverage that ICSOP’s policies provided when 

the limits of the underlying insurance had been exhausted. 

Thus, despite El Dorado’s current insolvency, it was nonetheless underlying insurance, and its policy limits must be 

exhausted before ICSOP’s duty to defend is triggered.

Additionally, as ICSOP argues, the defense endorsement states explicitly that “[a]ll other terms and conditions 

remain unchanged.” Under the policies’ Limits of Liability, 

Loss Payable, “Other Insurance,” and “Ultimate Net Loss” 

provisions, ICSOP’s indemnity coverage is not triggered if 

there are other policies that covered the loss and the limits 

of those polices have not been exhausted. The provisions of 

ICSOP’s policies mean that ICSOP’s liability and coverage 

are both excess to El Dorado’s limits as stated in El Dorado’s 

policies and excess to all other valid and collectible insurance covering the risk. The defense endorsement would be 

subject to both of those policy features.

Thus, we conclude that the defense endorsement, 

read in the context of the policy as a whole, means that, 

when the underlying insurance does not cover a claimed loss 
Cite as 331 Or App 26 (2024) 37

because limits have been met, ICSOP will have a duty to 

defend, subject to exhaustion of the limits of other valid and 

collectible insurance. It is undisputed that El Dorado’s scope 

of coverage included the Insureds’ environmental claims; 

thus, although El Dorado is defunct, ICSOP’s coverage of 

the Insureds’ loss based on El Dorado’s underlying coverage 

is still excess of El Dorado’s coverage limits and not primary, 

and ICSOP’s coverage will not be triggered until the limits 

of El Dorado’s policies have been exhausted. See Century 

Indemnity Co. v. Marine Group, LLC, 131 F Supp 3d 1018 

(D Or 2015) (reaching same conclusion under same defense 

endorsement in ICSOP policy). Additionally, even in that 

context, ICSOP’s duty to defend under the defense endorsement is subject to the policies’ requirement that, as long 

as there is valid and collectible insurance on the Insureds’ 

environmental claim, ICSOP has no duty to defend.

We decline to read the defense endorsement in 

isolation from the rest of the policy so as to create coverage beyond what is consistent with the policy provisions 

as a whole. We conclude, therefore, that Continental was 

not entitled to seek contribution from ICSOP and that the 

trial court erred in so concluding. We therefore reverse and 

remand the judgment for a redetermination of the allocation 

on Continental’s claim for contribution to defense costs.

Reversed and remanded.