Opinion ID: 2585591
Heading Depth: 2
Heading Rank: 2

Heading: Weyerhaeuser's Insurance Program

Text: In the present case, for the time period from 1970 to 1973, [1] Weyerhaeuser purchased primary insurance coverage with Fireman's Fund. The trial court found the Fireman's Fund policy contained an aggregate annual property damage limit of liability of $500,000. Thereafter, Weyerhaeuser had layers of coverage with Employers Surplus Lines Insurance Company (the predecessor to Commercial Union) (referred to hereinafter as Commercial Union), Insurance Company of the State of Pennsylvania (ICOSP), New Hampshire Insurance Company, and the underwriters at Lloyd's. [2] The Commercial Union policy purported to provide liability coverage to Weyerhaeuser for the period for March 1970 to March 1973. [3] The Commercial Union policy was specifically an excess policy and provided coverage for personal injuries, property damage, workmen's compensation, occupational disease, employer's liability, and employees' benefits liability. The policy specifically indicated Commercial Union's excess coverage commenced only upon the exhaustion of the underlying insurer's (Fireman's Fund) limits of liability, stating: It is expressly agreed that liability shall attach to the Underwriters only after the Underlying Insurers have paid or have been held liable to pay the full amount of their respective ultimate net loss liability as follows: $500,000 ultimate net loss in respect of each occurrence, but $500,000 in the aggregate for each annual period during the currency of this Policy separately in respect to Products Liability and separately in respect to Personal Injury (fatal or not-fatal) by Occupational Disease sustained by any employees of the Assured and the Underwriter shall then be liable to pay on the excess thereof. Clerk's Papers at 2748. As the trial court properly determined, the parties clearly contemplated the underlying aggregate annual limits of liability for the Fireman's Fund coverage would be $500,000. Commercial Union's obligation to insure commenced upon the $500,000 being paid out or obligated to be paid out by Fireman's Fund. The Commercial Union policy then went on to state it would pay in excess to the Fireman's Fund insurance coverage up to a further $1,500,000 ultimate net loss in all in respect of each occurrencesubject to a limit of $1,500,000 in the aggregate for each annual period during the currency of this Policy, separately in respect of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured. Clerk's Papers at 2748. The language employed in the reference to the underlying limits and the limit of Commercial Union's own coverage is identical. Both parties agree this limitation language in the Commercial Union policy provides a per occurrence limit of $1,500,000 of coverage. The parties disagree, however, as to whether the further language providing for an aggregate annual $1,500,000 limit was designed to provide a general aggregate annual limit for property damage, or merely aggregate annual limits each for the specific product liability and personal injury by occupational disease coverages, respectively. Commercial Union argues the aggregate limitation clause means an aggregate limit of $1,500,000 for product liability coverage, an additional aggregate limit of $1,500,000 for occupational disease coverage, both of which are specified in the clause; and a third aggregate limitation category, not specified in the clause, of $1,500,000 for property damage. Weyerhaeuser argues this third aggregate limitation category does not exist, and the majority agrees. The majority opinion relies on a bare statement that the aggregate damage clause is not ambiguous, and quickly moves on without analysis. Majority op. at 123. It then applies this judicial fiat to the supplemental aggregate clause. Majority op. at 124. To paraphrase Gertrude Stein, but there is no there there. There is no underlying analytical or legal principle articulated by the majority leading to its bare announcement that the aggregate damages clause leads unambiguously to the conclusion the parties intended to contract for a $4.5 million aggregate annual limit. While the language in the Commercial Union policy is not a picture of clarity, the meaning of the policy and the resulting allocation of millions of dollars of liability between Weyerhaeuser and Commercial Union should not be dismissed without analysis. Rather, having rightly determined the policy language is ambiguous, we should seek its meaning by referring to the commercial context in which the policy was sought, written, and purchased. Where two commercial entities sign a commercial agreement, we will give such an agreement a commercially reasonable construction. Wilson Court Ltd. P'ship v. Tony Maroni's, Inc., 134 Wash.2d 692, 705, 952 P.2d 590 (1998) (footnote omitted). [4]