Opinion ID: 2585591
Heading Depth: 1
Heading Rank: 5

Heading: Extent of Coverage

Text: Of the six sites tried to a jury and found covered under the Phase I and II trials, two were landfills: Mid State, Wisconsin, and Pasco, Washington. The Pasco landfill began operating in 1956 as a dump, but it was converted to a sanitary landfill in 1971. CP at 7099. Mid State became an operational sanitary landfill in 1971. CP at 11942. The supplemental policy was effective March 1, 1970 to March 1, 1973. Pl.'s Trial Ex. 3 at WEYO 000544. Two supplemental endorsements resulted in coverage commencing on January 1, 1970 and ending on January 31, 1973. Pl.'s Trial Ex. 3 at WEYO 000546 and WEYO 000549. Although both the Mid State and Pasco landfills were operational during the supplemental policy period, Weyerhaeuser did not ship waste to these sites until after the expiration of the supplemental policy. CP at 7099; 11942. [11] In December 1993 CU moved for partial summary judgment dismissing the Mid State site on grounds that the supplemental policy did not provide coverage for contamination because Weyerhaeuser did not ship waste to the site until 1974. CP at XXXXX-XXX. Although the trial court deferred ruling on whether property damage in fact occurred at Mid State before the supplemental policy expired, it ruled the policy covered property damage that occurred during the policy periodeven though damage was not attributable to Weyerhaeuser's waste. CP at 14164-65. CU claims it is not obligated to provide coverage for Weyerhaeuser's legal liability that arose due to actions of entities other than Weyerhaeuser during the policy period and disputes the following awards (excluding interest): (1) $1,500,000 judgment for damages at the Mid State site (CP at 11088); and (2) $143,542 judgment for damages at the Pasco landfill (CP at 11093). CU argues that before its obligation to provide coverage is triggered, any property damage that occurred during the policy period must arise out of Weyerhaeuser's business operations as opposed to damage caused by a stranger to the policy. Revised Br. of Appellant at 48. The supplemental policy provided the following under Coverage: Underwriters hereby agree ... 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 ... for damages, direct or consequential and expenses on account of: . . . . (c) Property Damage, . . . . caused by or arising out of each occurrence happening anywhere in the world, and arising out of the hazards covered by and as defined in the Underlying Policies.... Pl.'s Trial Ex. 3 at WEYO 000551. The underlying Fireman's Fund policy agreed TO PAY on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of the liability imposed upon the insured by law, or assumed by the insured under contract or agreement, because of injury to or destruction of corporeal property, including all loss resulting therefrom, arising out of the business operations of the insured. Def.'s Trial Ex. 2592 at WEY4 418663 (Coverage B). The Fireman's Fund policy defined Occurrence as an event or continuous or repeated exposure to conditions, which unexpectedly causes injury during the policy period. Id. at WEY4 418690. It is uncontroverted that pursuant to current federal and state environmental statutes, Weyerhaeuser, as a responsible party, is jointly and severally liable for the cleanup of all contamination at these sites, including contamination caused by parties other than Weyerhaeuser at a time when Weyerhaeuser had no connection to or involvement with the property. See 42 U.S.C. § 9607(a); RCW 70.105D.040(1). Also Weyerhaeuser's liability arose out of its business operations, as it is undisputed Weyerhaeuser disposed waste at these sites. Further the actions that gave rise to Weyerhaeuser's legal liability occurred during the policy period. What did not occur was damage directly caused by Weyerhaeuser during the covered period. We must, therefore, address the issue of whether a comprehensive, general liability insurance policy covers property damage arising from the conduct of a third party at a time when the insured had no relation to or connection with the property. Two federal district courts applying Washington law have ordered coverage under nearly identical circumstances and policies. One court reasoned: Boeing's liability in the underlying litigation, relating to 1961-64, clearly arose out of its operations, i.e., its post 1964 depositing of toxic wastes at the site. The phrase all sums is limited by the policy definitions of occurrence or accident, but is not limited by any requirement that the insured's act be a proximate cause of the damages it is legally obligated to pay. In Washington, if there is any ambiguity, policy language should be interpreted to promote coverage. Boeing Co. v. Aetna Cas. & Sur. Co ., Order on Plaintiff's Motions for Partial Summary Judgment Regarding Extent of Duty to Defend and Coverage for Policy Years 1961-1964 at Western Processing, 1991 WL 575712 (W.D.Wash., Oct.16, 1991) (No. C86-352WD) (citation omitted) (not reported in F.Supp.) (CP at 641). Accord, Puget Sound Power & Light v. Aetna Cas. & Surety Co., Order (May 19, 1998) (No. C95-1376C) (not reported in F.Supp.). Although these decisions are unpublished, we find their reasoning compelling. Here the plain language of the policy requires coverage as the definition of occurrence is not limited to actions taken by Weyerhaeuser but includes any event which unexpectedly causes injury during the policy period. Def.'s Trial Ex. 2592 at WEY4 418690. And the nature of the liability imposed by the federal and state statutes compels coverage where the insurer has agreed to pay all sums which the insured shall become obligated to pay as damages by reason of the liability imposed upon the insured by law.... Id. at WEY4 418663. Because the property damage occurred during the policy period and Weyerhaeuser has become obligated by reason of law, the plain language of the contract requires coverage. CU argues that imposing liability upon the insurer of one company for the harms caused by another violates the basic rules of construction of an insurance contract. That is, imposing liability outside of the contract period is not 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 427-28, 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)). But the broad nature of the coverage Weyerhaeuser purchased defeats this argument. [12] If there is unfairness it is the statute which creates the liability, not the insured which attempts to insure against it. The policy required payment of all sums which the Assured shall be obligated to pay by reason of the liability (a) imposed upon the Assured by law.... Pl.'s Trial Ex. 3 at WEYO 000551 (improved resolution). The triggering event is an occurrence, which is not limited to an act by Weyerhaeuser. Def.'s Trial Ex. 2592 at WEY4 418690. Although the parties may not have predicted liability of this nature would be imposed, it is nevertheless a legal liability imposed upon Weyerhaeuser by an occurrence as defined in Weyerhaeuser's insurance policy. Weyerhaeuser contractedand paid higher premiumsfor comprehensive coverage encompassing just such a situation. CU also argues that liability did not arise out of property damage that occurred during the policy period, as Weyerhaeuser's liability for its shipments arose after the expiration of the supplemental policy. In support CU notes the California Court of Appeals, Sixth District, has held coverage exists only where the insured is liable for the damage at the time it occurred. FMC Corp. v. Plaisted & Cos., 61 Cal.App.4th 1132, 1154-55, 72 Cal. Rptr.2d 467, 480 (1998); A.C. Label Co. v. Transamerica Ins. Co., 48 Cal.App.4th 1188, 1192-93, 56 Cal.Rptr.2d 207, 209 (1996). However, the Court of Appeals, Fifth District, reached the opposite conclusion. Garriott Crop Dusting Co. v. Superior Court, 221 Cal.App.3d 783, 791-92, 270 Cal.Rptr. 678, 682-83 (1990). During the pendency of this litigation the United States Court of Appeals for the Ninth Circuit resolved the apparent conflict favorably to the position here advocated by Weyerhaeuser. That court characterized the question almost identically to the one presented here: Where the state seeks recovery for damage to state-owned groundwater contained within certain property, does the property owner's comprehensive general liability policy provide coverage if the damage occurred within the policy period, but the insured purchased the property after the policy period ...? In re K F Dairies, Inc. & Affiliates, 224 F.3d 922, 924 (9th Cir.2000) (quoting K F Dairies, Inc. v. Fireman's Fund Ins. Co., 179 F.3d 1226, 1227 (9th Cir.1999)). The Ninth Circuit answered affirmatively, holding: [W]e reject the analysis of A.C. Label and FMC Corp., and hold that coverage is provided under a [comprehensive general liability] policy if the damage occurred within the policy period, but the insured purchased the property after the policy period. In re K F Dairies, Inc. & Affiliates, 224 F.3d at 925. This holding of the Ninth Circuit is directly on point and persuasive. See King County v. Cent. Puget Sound Growth Mgmt. Hearings Bd., 138 Wash.2d 161, 178, 979 P.2d 374 (1999) (citing Inland Empire Distrib. Sys., Inc. v. Utils. & Transp. Comm'n, 112 Wash.2d 278, 283, 770 P.2d 624 (1989)). CU seeks further support for its position from Wellbrock v. Assurance Co. of Am., 90 Wash.App. 234, 951 P.2d 367, review denied, 136 Wash.2d 1005, 966 P.2d 902 (1998). There the court held that an occurrence for insurance coverage purposes is determined by reference to the time of injury, not the time of initial negligence or damage. Id. at 242, 951 P.2d 367. However here the property damage, for which Weyerhaeuser is jointly and severally liable, did occur during the policy period. See also Villella v. Pub. Employees Mut. Ins. Co., 106 Wash.2d 806, 811-12, 725 P.2d 957 (1986) (denying coverage because insured failed to show either that actual damage had occurred during the covered period or that a continuing process of damage had commenced during that period). Support for CU's coverage obligation may be found in our holding in Weyerhaeuser I. There we pointed out that the nature of liability imposed under environmental cleanup acts requires coveragenotwithstanding the extent of the insured's faultas such statutes impose liability, often without fault, on polluters in order to safeguard society in general. Weyerhaeuser I, 123 Wash.2d at 909, 874 P.2d 142. Recognizing CU's coverage obligation is consistent with the nature of the legal liability imposed by CERCLA and the MTCA: it is strict, joint and several, and retroactive. The legal responsibility to cleanup the property damage that occurred at the sites during the policy period is now Weyerhaeuser's. The following excerpt is particularly applicable here: We recognize and even sympathize with the dismay of insurers who issued occurrence (as opposed to claims made) policies many years ago without advance knowledge that in 1980 Congress would enact CERCLA and impose retroactive liability upon insureds who had disposed of hazardous waste in a completely legal, nonactionable manner. Boeing, 113 Wash.2d at 907, 784 P.2d 507 (Callow, C.J., dissenting). But our Supreme Court has rejected these same public policy arguments as we are now hearing, in Boeing. Our Supreme Court has declined to rewrite the principles of insurance contract analysis in Washington, and then to retroactively apply these rewritten principles to the policyholders that bought their policies decades ago. Boeing, 113 Wash.2d at 887, 784 P.2d 507. Queen City Farms, Inc. v. Cent. Nat'l Ins. Co., 64 Wash.App. 838, 888, 827 P.2d 1024 (1992), aff'd, 124 Wn.2d 536, 126 Wash.2d 50, 882 P.2d 703, 891 P.2d 718 (1994). We hold the plain language of the contract, the comprehensive nature of the policy, and the nature of the liability imposed by CERCLA and the MTCA mandates coverage. The trial court properly denied CU's motion for summary judgment on this issue.