Opinion ID: 2585591
Heading Depth: 1
Heading Rank: 3

Heading: Limits of CU's Liability for Property Damage

Text: In June 1993 the trial court granted Weyerhaeuser's motion for partial summary judgment, denying CU's cross-motion for partial summary judgment, on the question of whether the supplemental policy contains an aggregate limit for property damage liability. The court found no aggregate limit for property damage liability exists. CP at 579. Arguing the supplemental policy aggregate limit provision is virtually identical to the underlying Fireman's Fund aggregate limit provision, CU moved for partial summary judgment, asking the court to declare the Fireman's Fund policy likewise did not contain a property damage aggregate limit. CP at 1879. The trial court denied this motion on September 29, 1994. CP at 2844. CU assigns error to both of these rulings, which are reviewed de novo. Mid Century Ins. Co. v. Henault, 128 Wash.2d 207, 212, 905 P.2d 379 (1995). [4]
We first consider whether the supplemental policy contains a property damage aggregate of $1,500,000, limiting the insurer's total liability for property damage to this sum for the policy period. [5] The trial court held the policy language imposes no aggregate limit for property damage claims, only aggregate limits for products liability and personal injury claims. CP at 579-80. We agree. The criteria for interpreting an insurance contract are well settled: In Washington, insurance policies are construed as contracts. An insurance policy is construed as a whole, with the policy being given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance. If the language is clear and unambiguous, the court must enforce it as written and may not modify it or create ambiguity where none exists. If the clause is ambiguous, however, extrinsic evidence of the intent of the parties may be relied upon to resolve the ambiguity. Any ambiguities remaining after examining applicable extrinsic evidence are resolved against the drafter-insurer and in favor of the insured. A clause is ambiguous when, on its face, it is fairly susceptible to two different interpretations, both of which are reasonable. B & L Trucking & Constr. Co., 134 Wash.2d at 427-28, 951 P.2d 250 (quoting Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wash.2d 618, 627, 881 P.2d 201 (1994)) (citations omitted). The language particularly at issue in the supplemental policy follows in bold face: II. LIMIT OF LIABILITY UNDERLYING LIMITS 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 of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured. and the Underwriters shall then be liable to pay only the excess thereof 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. Pl.'s Trial Ex. 3 at WEY0-000551-52 (emphasis and italics added to language at issue.) [6] Although both CU and Weyerhaeuser argue this language contains no ambiguity, both attribute opposite meanings to the aggregate clause. The trial court also found no ambiguity, agreeing with Weyerhaeuser's interpretation that the clause set an aggregate limit for products liability and personal injury but not for property damage or anything else. I find in favor of the plaintiff because I find that there is no ambiguity in this policy. I cannot find a general aggregate limit, and I cannot find a specific property aggregate. In order to find those things, I have to rearrange the punctuation in the policy. RP at 33-34. A fair, reasonable, and sensible construction of the clause at issue supports the trial court's conclusion that the clause imposes an aggregate limit for products liability and personal injury claims but calls out no general aggregate limit for other types of claims, including property damage. The policy provides excess liability up to $1,500,000 for 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. Pl.'s Trial Ex. 3 at WEY0 XXXXXX-XX (emphasis added). CU strains to show that this sentence structure creates three aggregate limits: (1) a general aggregate limit for all claimsincluding property damageother than products liability and personal injury; (2) an aggregate limit for products liability claims; and (3) an aggregate limit for personal injury claims. It argues its total exposure is therefore limited to $4,500,000a dollar sum nowhere expressly reflected in the policy language. Weyerhaeuser Co. v. Commercial Union Ins. Co., No. 67694-1 (oral argument (cassette tape) June 8, 1999). Contrary to CU's assertion, we agree with the trial court that there is no ambiguity in this policy and that if CU had intended to place an aggregate limit on property damage it would have said so. Notwithstanding, CU's liability is still limited by applicable policy provisions to $1,500,000 net loss in all respects for each occurrence. If there are multiple occurrences within an annual period the plain language of this policy does not limit the insured's aggregate recovery for property damage or other types of loss aside from products liability and personal injury.
CU next argues if the supplemental policy's aggregate clause does not impose an aggregate limit on property damage coverage, the same interpretation must be applied to the same language used to describe the aggregate limits of the underlying policy [Weyerhaeuser] promised to maintain. Revised Br. of Appellant at 34. We agree. Weyerhaeuser's underlying insurance policy with Fireman's Fund contains the following clause: (3) As respects Coverage B [property damage] subject to the above limit for any one occurrence or accident, the aggregate limit of the Company's liability for all damages shall be $500,000. as a result of all occurrences or accidents happening during the policy period.... Def.'s Trial Ex. 2592, at WEY4 418683. Although the parties do not dispute this clause clearly establishes a property damage aggregate limit, this clause appears in the underlying policy, not CU's supplemental policy. CU therefore asks this court to examine language from its insurance policy to determine its right to offset the threshold exclusion for which Weyerhaeuser agreed to provide underlying insurance coverage whether or not it successfully obtained that coverage. CU notes the language used in its supplemental policy's underlying aggregate exclusion clause is virtually identical to that used in the same policy's supplemental aggregate clause which we construed in the previous section not to impose an aggregate limit on property damage claims. CU contends if it has no aggregate limit for property damage, the insuredby virtue of the same languagemust be responsible for the first $500,000 of each property damage claim also without aggregate limit. The supplemental policy language here at issue provides: 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 of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured . . . . Pl.'s Trial Ex. 3 at WEY0 XXXXXX-XX (emphasis added to language at issue). CU argues the underlying aggregate exclusion clause should be given the same meaning as the supplemental aggregate limitation clause, thus entitling it to offset $500,000 against each property damage claim notwithstanding the fact Weyerhaeuser's underlying policy does in fact impose a $500,000 aggregate limit on coverage to benefit its insured. When interpreting a contract our primary goal is to discern the intent of the parties, and such intent must be discovered from viewing the contract as a whole. Tanner Elec. Coop. v. Puget Sound Power & Light Co., 128 Wash.2d 656, 674, 911 P.2d 1301 (1996). Our rules require interpreting the whole contract by giving it a `fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.' B & L Trucking & Constr. Co., 134 Wash.2d at 427, 951 P.2d 250 (quoting Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wash.2d 618, 627, 881 P.2d 201 (1994)). A fair, reasonable, and sensible construction compels us to agree that nearly identical language in these two clauses of the same policy must have the same meaning. See Holter v. Nat'l Union Fire Ins. Co., 1 Wash. App. 46, 50, 459 P.2d 61 (1969) (In the absence of anything in the context of a contract clearly indicating a contrary intent, when the same word is used in different parts of the contract, it will be presumed to be used in the same sense throughout the contract.). Because the CU aggregate limits clause cannot be read to provide an aggregate property damage limit on CU's liability, the exclusion clause similarly limits CU's liability to that in excess of $500,000 per incident, no matter how many incidents. Pl.'s Trial Ex. 3 at WEY0 XXXXXX-XX. See MacKenzie v. Empire Ins. Cos., 113 Wash.2d 754, 759, 782 P.2d 1063 (1989) (catastrophe policies provide coverage excess to that provided by the primary policy); Millers Cas. Ins. Co. v. Briggs, 100 Wash.2d 9,13, 665 P.2d 887 (1983) (liability of excess insurer does not arise until after the limits of the coverage under the primary policy have been exceeded); Mitchell L. Lathrop, Insurance Coverage for Environmental Claims § 8.03[3], at 8-39 (1992) (excess insurer's obligation to defend and indemnify the insured upon exhaustion of the primary insurance is commanded by the terms of the excess policy itself.); Thomas V. Harris, Washington Insurance Law § 31.3, at 31-2 (1995) (describing Umbrella and Excess [Insurance] Policies). Weyerhaeuser improperly focuses on CU's admission that the underlying Fireman's Fund policy contains a property damage aggregate by mistakenly overlooking the crucial fact that it is bound by its contract with CU and, by the terms of that contract, CU's liability arises only for sums in excess of $500,000 per incident without aggregate limit. [7] Accordingly, we reverse the trial court, holding CU is entitled to a $500,000 per incident setoff with no aggregate limit on the number of setoffs for property damage.