Court Opinion

ID: 3050601
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:31:57.611616+00
Date Added: 2024-06-11T07:37:55.213375
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ROBERT I. GOODSTEIN, as court-          
appointed receiver for Sternco
Industrial Properties Partnership
and Sterno Renton Center
Partnership,
                 Plaintiff-Appellant,
                 v.
CONTINENTAL CASUALTY COMPANY,                 No. 05-35805
                          Defendant,
                                               D.C. No.
                                            CV-02-01669-MJP
                and
INDUSTRIAL INDEMNITY COMPANY;                  OPINION
INDUSTRIAL INDEMNITY CO. OF THE
NORTHWEST, also known as
Fremont Industrial Indemnity;
UNITED STATES FIRE INSURANCE
COMPANY; JOHN DOE, 1-20; ZELMAN
RENTON LLC,
             Defendants-Appellees.
                                        
        Appeal from the United States District Court
          for the Western District of Washington
        Marsha J. Pechman, District Judge, Presiding

                  Argued and Submitted
            March 6, 2007—Seattle, Washington

                   Filed December 3, 2007

Before: Diarmuid F. O’Scannlain, A. Wallace Tashima, and
            Marsha S. Berzon, Circuit Judges.

                  Opinion by Judge Berzon

                            15567
                  GOODSTEIN v. INDUSTRIAL INDEMNITY                    15571

                               COUNSEL

William F. Cronin, Corr Cronin Michelson Baumgardner &
Preece LLP, and Colleen A. Christensen, The Christensen
Firm, Seattle, Washington, for the appellant.

David M. Schoeggl, Mills Meyers Swartling, Seattle, Wash-
ington, for the appellees.

                                OPINION

BERZON, Circuit Judge:

   At the heart of this insurance coverage dispute lie two prop-
erties, identified as contaminated by the State of Washington,
that were sold in their polluted state rather than remediated.
After the sale, Appellant Robert I. Goodstein, as receiver, ten-
dered a $5.3 million claim to Appellee Industrial Indemnity
Co. (“Industrial”) under a comprehensive general liability
(“CGL”) policy, reflecting the difference between “the
appraised value of the sites if uncontaminated less the sales
price of the sites in their contaminated states.” Industrial
refused to pay, and Goodstein consequently brought this law-
suit,1 seeking a declaration that Industrial owed a duty to

  1
    Appellee United States Fire Insurance Co. is also a defendant in this
suit, as it agreed to satisfy the obligations of Industrial under the insurance
policies at issue here.
15572            GOODSTEIN v. INDUSTRIAL INDEMNITY
indemnify and defend Goodstein under the policy and dam-
ages for breach of both duties. The district court granted sum-
mary judgment for Industrial on all claims, and Goodstein
timely appealed.

   We affirm the district court’s holding that Goodstein’s
claim for the diminution in the sale value of the properties due
to pollution was not covered under Industrial’s policy, but
reverse the district court’s conclusion that Industrial is as a
matter of law not liable for breaching its duty to defend Good-
stein.

                                     I.

  A.    The Properties

   Members of the Sternoff family jointly owned, through
partnerships, two industrial properties in Washington (collec-
tively, “the properties”) — one on Marginal Way in Seattle
(“the Marginal property”) and the other in Renton (“the Ren-
ton property”). At the Marginal property, the Sternoffs oper-
ated for 45 years a scrap metal salvage yard that caused
ground pollution. At the Renton site, the Sternoffs recycled
scrap metal and electrical equipment for approximately 20
years, resulting in hazardous waste byproducts containing
high concentrations of soluble lead. The properties were iden-
tified by the Washington State Department of Ecology
(“DOE”) as environmentally contaminated in the late 1980s
and early 1990s and were listed as hazardous sites under the
Model Toxics Control Act of Washington.2
   2
     The Model Toxics Control Act of Washington, Wash. Rev. Code
§ 70.105D.040, “is designed to deal both with the remediation of former
environmental hazards and to prevent environmental hazards in the future,
[and] a past or present property owner is strictly liable for the remediation
of environmental hazards caused by hazardous substances it released . . .
on its property.” Olds-Olympic, Inc. v. Commercial Union Ins. Co., 918
P.2d 923, 927 (Wash. 1996).
                   GOODSTEIN v. INDUSTRIAL INDEMNITY                  15573
   Starting in the mid-1980s, the Sternoff partners had a series
of disagreements among themselves that resulted in litigation.
On March 29, 1990, the King County Superior Court dis-
solved the partnerships and appointed Robert Goodstein as
receiver to wind them up. The court indicated that Goodstein
“may proceed with remediation of contaminated properties as
necessary but may also consider sale without remediation.”

   Recognizing the Sternoffs’ liability for remediating the pol-
luted properties under state and federal law,3 Goodstein pre-
  3
   Washington DOE regulations both allow voluntary remedial action by
the property owner and authorize DOE-initiated remedial action. Wash.
Admin. Code 173-340-510; see also Olds-Olympic, 918 P.2d at 926 n.4.
This approach reflects the DOE’s stated regulatory policy:
      It is the responsibility of each and every liable person to conduct
      remedial action so that sites are cleaned up well and expedi-
      tiously where a release or threatened release of a hazardous sub-
      stance requires remedial action. Potentially liable persons are
      encouraged to initiate discussions and negotiations with the
      department and the office of the attorney general that may lead
      to an agreement on the remedial action to be conducted with the
      state of Washington. The department may provide informal
      advice and assistance on the development of proposals for reme-
      dial action, as provided by WAC 173-340-515. Any approval by
      the department or the state of remedial action shall occur by one
      of the means described in subsections (2) and (3) of this section.
Wash. Admin. Code 173-340-510(1).
   Subsection (2) of the DOE regulation identifies the two methods by
which potentially liable persons may initiate remedial action: by consent
decree under Wash. Admin. Code 173-340-520(1), or by requesting an
agreed order under Wash. Admin. Code 173-340-530. An agreed order
means the potentially liable person agrees to take specific steps to remedi-
ate the polluted site and the DOE agrees not to take enforcement action
so long as the potentially liable person performs the necessary cleanup.
Wash. Admin. Code 173-340-530(1).
  Subsection (3) of the DOE regulation authorizes the DOE to initiate
remedial action by: (1) “[i]ssuing a letter inviting negotiations on a con-
sent decree under Wash. Admin. Code 173-340-520(2);” (2) “[r]equesting
an agreed order under Wash. Admin. Code 173-340-530;” or (3) “[i]ssuing
15574            GOODSTEIN v. INDUSTRIAL INDEMNITY
sented two options to the receivership court: (1) sell the prop-
erties “as is,” with a discounted sales price accounting for the
pollution, or (2) remediate the pollution and then sell the
properties. The court approved of a plan to sell the two prop-
erties “as is.”

   In 1996 and 1998, respectively, the Receiver sold the Ren-
ton and Marginal properties. The Marginal property sold for
$500,000 and the Renton property for $3,001,000. The sales
agreements for both properties disclosed that the lands were
polluted and required the purchasers to take over responsibil-
ity for any cleanup the government — or the practicalities of
the real estate market — might in the future demand. The
agreements did not, however, commit the purchasers to reme-
diate the properties on their own. Both agreements also pro-
vided that “[n]o amendment, change or modification of [the
agreements] shall be valid, unless in writing and signed by the
parties hereto.”

  B.    The Insurance Policies

   Industrial issued primary and excess insurance policies to
the Sternoffs between 1980 and 1986. In relevant part, the poli-
cies4 provide: “[Industrial] will pay on behalf of the insured
all sums which the insured shall become legally obligated to

an enforcement order under Wash. Admin. Code 173-340-540.” Wash.
Admin. Code 173-340-510(3).
   In addition to these cooperative approaches to cleaning up contaminated
sites, the DOE retains the option of taking “appropriate remedial action on
its own at any time.” Wash. Admin. Code 173-340-510(4). The regula-
tions also permit citizens to undertake, under certain circumstances, “inde-
pendent remedial action[s],” i.e., cleanup efforts that are “without
department oversight or approval and not under an order, agreed order or
consent decree.” Wash. Admin. Code 173-340-515(1).
   4
     The policies at issue contain identical language with respect to the
terms at issue in this litigation. The citations are to Industrial policy no.
MP 811-1439, the only policy actually included in the record.
               GOODSTEIN v. INDUSTRIAL INDEMNITY          15575
pay as damages because of [property damage] . . . .” Under
the policies, Industrial also assumed “the right and duty to
defend any suit against the insured seeking damages on
account of such . . . property damage, even if any of the alle-
gations of the suit are groundless, false or fraudulent, and may
make such investigation and settlement of any claim or suit as
it deems expedient . . . .” The policies do not define “dam-
ages,” “claim,” or “suit.” “Occurrence” is defined to mean “an
accident, including continuous or repeated exposure to condi-
tions, which results in . . . property damage neither expected
nor intended from the standpoint of the insured[.]”

   In a provision entitled “Insured’s Duties in the Event of
Occurrence, Claim or Suit,” the policies required the Sternoffs
to provide written notice of an “occurrence” to Industrial “as
soon as practicable,” and, in the event a claim or suit is
asserted against the Sternoffs, to “immediately forward” to
Industrial all “demand, notice, summons or other process”
received by the Sternoffs. In the same provision, the Sternoffs
agreed not to “voluntarily make any payment, assume any
obligation or incur any expense” related to any such claim.

  C.     Communication Between the Receiver and Industrial

    1.    Pre-Sale Communication

   On September 28, 1990, Goodstein wrote to Industrial,
indicating that the Washington DOE had identified the Mar-
ginal and Renton sites as contaminated and stating that Good-
stein had initiated a study to assess the damage and cost of
cleaning up the land. The letter also stated: “We write to
notify you that Sternoff may make a claim for cleanup and
related costs under the insurance policies you issued in favor
of Sternoff.” (Emphasis added). Copies of the relevant poli-
cies were requested, and in closing, the letter stated, “After
we have had an opportunity to review the policies, we may
make a more formal claim for coverage of the cleanup costs.”
(Emphasis added).
15576         GOODSTEIN v. INDUSTRIAL INDEMNITY
   Internal documents indicate that Industrial understood the
September 28, 1990 letter to be asserting a claim for the
cleanup and other related costs. Industrial wrote a letter to
Goodstein on October 19, 1990 “acknowled[ing] receipt of
the captioned claim,” and indicating that it was attempting to
find the Sternoffs’ policies, as requested.

   In a reply letter dated October 22, 1990, Goodstein
acknowledged receipt of Industrial’s October 19, 1990 letter,
but stated: “Please note, however, in case there is any confu-
sion, we are not presently making any claims under th[e]se
policies. At present, we are simply asking to obtain copies of
any policies, applications, etc. relating to insurance provided
by Industrial Indemnity to Sternoff.” (Emphasis added).

   Industrial heard nothing more about the Sternoff policies
thereafter, and in December 1992 closed the file for lack of
activity. Before the file was closed, a summary of what was
known regarding a possible claim, and a list of possible
defenses, was prepared. The summary document indicated
that no coverage position letter had been issued because no
claim had been filed.

    2.   Post-Sale Communication

   On September 25, 1998, eight years after Goodstein told
Industrial that he was “not presently making any claims”
under the Sternoff policies, Goodstein sent a letter to Indus-
trial indicating that the Renton and Marginal properties had
been sold. Goodstein stated:

    Previous correspondence on my behalf had notified
    . . . Industrial Indemnity, as an insurer of Sternoff,
    of potential claims arising out of the environmental
    contamination of properties owned and/or operated
    by Sternoff. The extent of the contamination has
    now been more fully investigated, and the properties
    have now been sold. I am, therefore, now in a posi-
                 GOODSTEIN v. INDUSTRIAL INDEMNITY                 15577
      tion to fully present and settle the environmental
      claims related to those properties.

In that letter, Goodstein also stated:

      I hereby demand payment of $473,000 for the loss
      on the Marginal Way property, and $4.839 million
      for the loss on the Renton properties. These amounts
      are calculated based on the appraised value of the
      sites if uncontaminated less the sales price of the
      sites in their contaminated condition.

Industrial responded a month later with a letter disclaiming
any coverage for the losses claimed by Goodstein on behalf
of the Sternoffs.

  D.    Procedural History

   Four years later, in 2002, Goodstein filed this lawsuit. The
second amended complaint — the operative pleading for the
purposes of this appeal — sought, in relevant part, a declara-
tory judgment that Industrial owed a duty to defend and to
indemnify Goodstein under the CGL policies and asserted a
claim for breach of contract based on Industrial’s failure to
fulfill those duties.

   Industrial thereafter moved for summary judgment on the
grounds that Goodstein’s claimed losses due to the allegedly
reduced proceeds5 from the property sales were not covered
by the policies and that Goodstein had never invoked the duty
to defend.

  In opposing the summary judgment motion, Goodstein
  5
    For the purposes of the summary judgment motion, Industrial assumed
that the Sternoffs received less money for the properties in their “as is”
contaminated state than they would have had they first remediated the pol-
lution.
15578            GOODSTEIN v. INDUSTRIAL INDEMNITY
offered evidence that he and the purchaser of the Renton
property, Zelman Renton LLC (“Zelman”), had entered into
an oral agreement “to ensure that all rights to insurance cover-
age for environmental damage at the Renton site are consoli-
dated and assigned to the Receiver.” Specifically, the
declaration stated that “the Receiver and Zelman have agreed
that: 1) all rights the Receiver had to insurance coverage for
environmental contamination will be transferred to Zelman;
and 2) Zelman will transfer all rights it has to insurance cov-
erage back to the Receiver.” The declaration attesting to the
cross-assignment indicated that “[t]he agreement has not yet
been finalized.” No such agreement evidencing the transfer
and cross-transfer was submitted in support of Goodstein’s
opposition to summary judgment.

   The district court granted Industrial’s summary judgment
motion on July 11, 2005, finding that Industrial had neither a
duty to defend nor a duty to indemnify Goodstein under the
policies. In rendering its decision, the court did not consider
the evidence purporting to establish a cross-assignment.

   Goodstein thereafter filed a motion for reconsideration, this
time supported by a new declaration that stated that “all the
material terms [of the cross-assignment agreement] had been
negotiated by, agreed to, and known to the parties as of Janu-
ary 27, 2005.” A written cross-assignment agreement was also
submitted as evidence. The district court denied the motion
for reconsideration on August 5, 2005, holding that Goodstein
failed to comply with the local rules governing such motions.

   Goodstein timely filed the instant appeal. On appeal, Good-
stein challenges the district court’s failure to consider the
cross-assignment evidence at the summary judgment and
reconsideration stages, as well as the district court’s grant of
summary judgment for Industrial on Goodstein’s duty to
indemnify and duty to defend claims.6
  6
   On appeal, we “review de novo a grant of summary judgment and must
determine whether, viewing the evidence in the light most favorable to the
                 GOODSTEIN v. INDUSTRIAL INDEMNITY                   15579
                                    II.

   Before proceeding to evaluate the merits of the district
court’s summary judgment order, we first address whether the
court erred in (1) refusing to consider Goodstein’s cross-
assignment evidence submitted in opposition to the summary
judgment motion, and (2) denying Goodstein’s motion for
reconsideration predicated on additional evidence of the
cross-assignment.

   Goodstein asserts that it offered evidence that Zelman, who
purchased the Renton property, entered into an agreement
with Goodstein “in principle to cross-assign rights to insur-
ance coverage, such that all of the rights [Goodstein] had
were transferred to Zelman and all of the rights that Zelman
had were then transferred back to [Goodstein].” In so doing,
Goodstein argues, the agreement “created an indisputable
damages claim, since Zelman paid the costs to remediate the
Renton property.” Because we hold that the district court
properly declined to consider the cross-assignment evidence
at summary judgment and properly refused to reconsider that
decision, we do not address the possible impact of the alleged
cross-assignment on Goodstein’s substantive claims.

  A.    Cross-Assignment Evidence at Summary Judgment
        Stage

  The district court did not abuse its discretion by declining
to consider the cross-assignment evidence submitted at the
summary judgment stage.7 See Orr v. Bank of Am., NT & SA,

nonmoving party, there are any genuine issues of material fact and
whether the district court correctly applied the relevant substantive law.”
Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en banc).
   7
     Although the Sternoffs argue that the district court simply ignored the
cross-assignment evidence, the summary judgment order indicates other-
wise. The district court noted the evidence but explained that “this agree-
ment was only mentioned briefly by Plaintiff and not in a way that put the
substance or validity of this agreement properly before the Court for con-
sideration.”
15580           GOODSTEIN v. INDUSTRIAL INDEMNITY
285 F.3d 764, 773 (9th Cir. 2002) (reviewing trial court’s
refusal to consider inadmissable evidence at summary judg-
ment under abuse of discretion standard). Goodstein argues
that he had reached an oral agreement concerning the assign-
ments, and that the declaration properly served as evidence of
its existence. He asserts that “testimony of an agreement is
adequate to prove its existence,” and that oral agreements are
enforceable if they set forth all material terms of the agree-
ment and provide that the parties will later memorialize the
agreement.

   [1] The evidence Goodstein submitted in opposition to
summary judgment, however, indicates that no definitive
agreement had actually been reached: “The Receiver has
reached an agreement in principle with Zelman . . . . The
agreement has not yet been finalized.” (Emphasis added). So,
contrary to Goodstein’s assertion, the declaration did not state
that the parties had already agreed to the final terms but
would memorialize them later. Cf. Restatement (Second) of
Contracts § 26. Moreover, the sales agreement executed by
Zelman and Goodstein, which the cross-assignment purported
to modify, made clear that only written, signed agreements
could supersede or amend the original sales agreement.

   [2] Given these circumstances, the evidence submitted in
opposition to summary judgment is insufficient to prove the
existence of an enforceable contract under Washington law.8
For an agreement to be enforceable, “the terms assented to
must be sufficiently definite, [and] the contract must be sup-
ported by consideration.” Keystone Land & Dev. Co. v. Xerox
Corp., 94 P.3d 945, 949 (Wash. 2004) (citation omitted).
Moreover, testimony attesting to the existence of an oral con-
tract must describe the “essential terms” of the agreement. See
Hansen v. Transworld Wireless TV-Spokane, Inc., 44 P.3d
  8
   Washington substantive law governs this dispute, which is predicated
on diversity jurisdiction. See Intel Corp. v. Hartford Accident & Indem.
Co., 952 F.2d 1551, 1556 (9th Cir. 1991).
                  GOODSTEIN v. INDUSTRIAL INDEMNITY                   15581
929, 938 (Wash. Ct. App. 2002). The declaration submitted
by Goodstein discloses no pertinent details of the purported
cross-assignment, including what consideration supported the
parties’ agreement.9 Because the purported agreement was
admittedly not final, not in writing, despite the requirement in
the original contract, and the evidence failed to sufficiently
detail its terms, the district court did not abuse its discretion
in declining to consider the cross-assignment evidence.

  B.    Cross-Assignment Evidence at Reconsideration Stage

   The district court also properly declined to reverse its sum-
mary judgment ruling on the basis of evidence submitted in
support of Goodstein’s motion for reconsideration. “We
review a district court’s denial of a motion for reconsideration
for an abuse of discretion.” M2 Software, Inc. v. Madacy
Entmt., 421 F.3d 1073, 1086 (9th Cir. 2005).

   [3] The district court refused to reconsider the cross-
assignment issue because Goodstein failed to meet the stan-
dard for such motions laid out in the local rules. The Western
District of Washington Local Rules provide that motions for
reconsideration are disfavored, and will be granted only upon,
in pertinent part, “a showing of new facts . . . which could not
have been brought to [the court’s] attention earlier with rea-
sonable diligence.” W.D. Wash. Local R. 7(h).
  9
    In support of his argument, Goodstein cites Cable & Computer Tech-
nology Inc. v. Lockheed Sanders, Inc., 214 F.3d 1030 (9th Cir. 2000).
Cable & Computer is, as an initial matter, nonbinding authority, as it con-
cerned California rather than Washington law. Id. at 1033. Moreover,
instead of helping Goodstein, the case simply highlights the deficiencies
in the evidence submitted to the district court. Cable & Computer found
the oral contract at issue to be a valid final agreement, rather than an unen-
forceable “naked agreement to agree,” because the evidence submitted
described the terms of the agreement and noted the amount of consider-
ation paid. Id. at 1035. Here, by contrast, the declaration is cursory and
vague, and does not describe any consideration due under the agreement.
15582         GOODSTEIN v. INDUSTRIAL INDEMNITY
   [4] Goodstein’s new evidence indicated that, “[w]hile the
agreement was not memorialized to [sic] writing by the time”
the original declaration in opposition to summary judgment
was submitted, “all the material terms had been negotiated by,
agreed to, and known to the parties as of January 27, 2005.”
Yet, the declaration submitted in January in opposition to
summary judgment did not recite the terms contained in the
written document dated more than seven months later and
submitted in support of reconsideration. Because those terms
were, according to Goodstein, fully settled at the time the
opposition to summary judgment was filed in January, the
July submission on reconsideration fails of its own weight:
According to that submission, the precise terms of the cross-
assignment agreement could have been brought to the district
court’s attention in January, as they were “negotiated, agreed
to, and known to the parties” by then. Goodstein’s motion for
reconsideration therefore did not meet the burden imposed by
the Local Rules. W.D. Wash. Local R. 7(h); see also Shalit v.
Coppe, 182 F.3d 1124, 1132 (9th Cir. 1999)
(“[R]econsideration is appropriate only in very limited cir-
cumstances, and . . . the overwhelming weight of authority is
that the failure to file documents in an original motion or
opposition does not turn the late filed documents into newly
discovered evidence.” (alteration and internal quotation marks
omitted)).

   [5] Accordingly, we conclude the district court did not
abuse its discretion in excluding the cross-assignment evi-
dence at summary judgment and in denying Goodstein’s
motion for reconsideration. We therefore need not consider
the possible impact of the alleged cross-assignment of rights
on Goodstein’s substantive claims for coverage under Indus-
trial’s CGL policy. We turn to those claims next.

                              III.

  Goodstein challenges the district court’s conclusion that
Industrial had no duty to indemnify the receiver for the differ-
              GOODSTEIN v. INDUSTRIAL INDEMNITY           15583
ence between the sale price received for the polluted proper-
ties and the fair market value of the land had it been cleaned
up prior to sale. We agree that the policy does not provide for
such indemnity. We cannot, however, adopt the rationale
asserted by the district court, as Industrial urges.

   In finding that Industrial had no indemnification duty under
the policy, the district court first emphasized that Washington
adheres to a strict distinction between third and first party
insurance. See Olds-Olympic, 918 P.2d at 930 (Wash. 1996).
Given the fact that Industrial’s policy was designed to protect
third party harm, the district court reasoned, the policy provi-
sion obligating Industrial to pay “ ‘on behalf of the insured,’
rather than to the insured” must be read literally, to provide
only for “indemnify[ing] the insured for someone else’s loss,
not for the insured’s own loss,” and thus to preclude coverage
for the decreased sale price.

   [6] The Washington Supreme Court, however, has demon-
strated a marked willingness to take a view of policy language
in the context of insurance coverage for environmental
cleanup claims sufficiently expansive to preclude such literal-
ism. For example, in Boeing Co. v. Aetna Casualty & Surety
Co., 784 P.2d 507 (Wash. 1990), which concerned a CGL
policy identical to the one at issue here, the Washington
Supreme Court interpreted the policy to provide coverage
beyond the literal scope of the policy’s language. The specific
question certified to the court in Boeing concerned whether
environmental cleanup costs incurred by an insured consti-
tuted “damages” under a CGL policy. Id. at 516. In conclud-
ing that such costs are within the scope of CGL coverage, the
court necessarily rejected the notion that the policy covers
only sums paid to the third party damaged by the insured’s
actions. In other words, Boeing held remediation costs cov-
ered under a third-party liability policy even though the
insurer was to pay the insured for costs incurred, rather than
paying the party to whom the insured was actually “liable” for
the property damage — i.e., the EPA and/or the Washington
15584           GOODSTEIN v. INDUSTRIAL INDEMNITY
DOE. Yet, the literal language of the policy, as interpreted by
the district court in this case, would appear to prohibit such
coverage. Thus, Goodstein’s claim cannot fail simply because
it is not a request for a payment made to a harmed third party.

   So recognizing, Goodstein argues that the claim for the
diminution in value of the land due to the pollution should be
covered because it is a functional approximation of the cost
to remediate the properties, which Industrial would be liable
to pay under Boeing and Weyerhaeuser Co. v. Aetna Casualty
& Surety Co., 874 P.2d 142 (Wash. 1994).10 In support of this
argument, Goodstein urges us not to confuse form and sub-
stance: “Washington courts have taken a more pragmatic
approach and have refused to allow a forfeiture of coverage
based on an insurer’s superficial objections to the form that a
claim takes, especially where the substance of the claim is
identical to what the insurance covers,” citing Boeing.

  But the instant land sale contracts do not amount to the
functional equivalent of the claims in Boeing and
Weyerhaeuser in one crucial respect: Neither contract
required the buyer actually to remediate the pollution as a
condition of sale. Because of that omission, this case is funda-
mentally different from the situation presented in both Boeing
and Weyerhaeuser.

   [7] The rationale for finding coverage in those two cases is
that the third party injured by the insured’s bad act is made
whole through the insurer’s payments for cleanup costs. The
plaintiffs in Boeing and Weyerhaeuser actually cleaned up the
polluted land, thus remedying the harm to the public caused
by the contamination. The covered damages were incurred as
part of that effort. As the court in Boeing explained, the CGL
  10
    The Washington Supreme Court extended Boeing’s holding in
Weyerhaeuser, concluding that CGL policies cover environmental cleanup
costs incurred by the insured even where no administrative agency has
taken official adversarial action. Weyerhaeuser, 874 P.2d at 145.
              GOODSTEIN v. INDUSTRIAL INDEMNITY          15585
policies cover as “damages” an insured’s obligation to pay
environmental response costs because “the substance of the
claim for response costs in the present case concerns compen-
sation for restoration of contaminated water and real proper-
ty.” 784 P.2d at 515 (emphasis added).

   [8] In this case, however, Goodstein would have Industrial
compensate him when he has not taken any action to ensure
— either by procuring clean up services himself or by requir-
ing the buyer of the contaminated land to do so — that the
harm caused by the Sternoffs’ polluting activities has been or
will be remedied. Indeed, the record indicates that while one
of the properties was cleaned up by the purchaser, the other
remains polluted almost ten years after the sale and over fif-
teen years after the government first identified the land as
containing hazardous waste.

  This holding does not elevate form over substance, as
Goodstein suggests. Rather, it draws a line consistent with
Washington’s expressed preference for encouraging prompt,
voluntary remediation of pollution in the insurance coverage
context.

   The Washington Supreme Court articulated such a concern
in Weyerhaeuser. Weyerhaeuser acknowledged that special
considerations inform coverage disputes in the environmental
claims context, because environmental statutes impose strict
liability on polluters “in order to safeguard society in gener-
al.” 874 P.2d at 152. The court then cited the concerns
expressed by commentators and the DOE that precluding cov-
erage of voluntary clean up costs under CGL policies would
“create[ ] a disincentive to engage in independent cleanups,”
and that, as a result, “the environment will suffer severe harm
if owners have to postpone a cleanup until a clear third party
claim prompts a lawsuit.” Id. at 151-52. Weyerhaeuser’s dis-
cussion of these potential harms demonstrates a concern with
encouraging prompt remediation of the harm caused to the
15586         GOODSTEIN v. INDUSTRIAL INDEMNITY
public by pollution with a minimum of transaction costs to the
government.

  Echoing the Washington Supreme Court is the Insurance
Commissioner, who articulated the state’s basic position on
environmental claims by declaring:

    It is in the public interest to reduce the costs incurred
    in connection with environmental claims and to
    expedite the resolution of such claims. The state of
    Washington has a substantial public interest in the
    timely, efficient, and appropriate resolution of envi-
    ronmental claims involving the liability of insureds
    at polluted sites in this state. This interest is based on
    practices favoring good faith and fair dealing in
    insurance matters and on the state’s broader health
    and safety interest in a clean environment.

Wash. Admin. Code 284-30-900(1).

   [9] In this case, Goodstein presumably did receive a signifi-
cantly reduced price for the sale of the properties due to their
pollution. We believe, however, that Washington courts
would not find that loss covered under Industrial’s policy, as
Goodstein failed to ensure that the polluted properties would
be cleaned up promptly. Again, the purchase agreements con-
tained no cleanup condition. In economic terms, it is probable
that the reduced purchase price represented a calculation
premised on the probable cost of remediation as discounted
by a factor representing the probability that the costs would
actually be incurred and, if so, how far in the future. The
reduction in price for the cleanup costs was thus almost surely
not equivalent in amount to the present cost of prompt
cleanup. And the purchaser retained the right, and had an
incentive, to contest any specific government-imposed
cleanup requirements, as well as to delay incurring cleanup
costs as long as possible.
                 GOODSTEIN v. INDUSTRIAL INDEMNITY                  15587
   [10] Furthermore, the language of the policy supports our
conclusion that Goodstein’s claim for diminution in value
cannot be covered under Industrial’s policy. First, diminution
in value does not alone constitute “property damage” where
the policy language requires “physical injury to tangible proper-
ty.”11 In Guelich v. American Protection Ins. Co., 772 P.2d
536 (Wash. Ct. App. 1989), the issue was whether a home-
owner’s umbrella liability insurer had a duty to defend him in
a view obstruction suit. The court held that diminution in
property value resulting from an obstructed view does not
constitute a “physical injury to tangible property” that would
give rise to the duty to defend, because such diminution is not
itself a physical injury, and a view is not tangible property.12
Id. at 538. Thus, it appears that under Washington law, dimi-
nution in property value would not be covered as property
damage under the “physical injury” language of the Industrial
general liability policy. See also New Hampshire Ins. Co. v.
Viera, 930 F.2d 696, 701 (9th Cir. 1991) (“[W]e are per-
suaded that diminution in value is not ‘physical damage’ to
‘tangible property’ ” under California law); Auto-Owners Ins.
Co. v. Carl Brazell Builders, 588 S.E. 2d 112, 116 (S.C.
2003) (“Most courts hold the diminished value of tangible
property does not constitute property damage within the
meaning of CGL policies which define property damage as
physical injury.”).

  [11] Nor can diminution in value fall within the realm of
“damages” that the “insured shall become legally obligated to
pay” because of “property damage.” While Washington courts
have interpreted such “damages” to include response costs
  11
     The Industrial policy defines “property damage” as “physical injury to
or destruction of tangible property” or “loss of use of tangible property.”
  12
     The Guelich court cited Prudential Prop. & Cas. Ins. Co. v. Law-
rence, 724 P.2d 418 (Wash. Ct. App. 1986), as persuasive authority. In
Prudential, the court found a duty to defend in a view obstruction suit
where the policy language did not include the limiting term “physical”;
however, the court implied that a different policy by the same insurer
requiring “physical injury” would not have created a duty to defend.
15588            GOODSTEIN v. INDUSTRIAL INDEMNITY
incurred by insureds in cooperation with an environmental
agency, see Weyerhaeuser, 874 P.2d at 145; Boeing, 784 P.2d
at 515, they have never extended such interpretation to
include diminution in property value as a surrogate for
response costs never incurred. Here, there is no indication that
the Sternoffs or Goodstein incurred any clean-up expenses or
compensated an environmental agency for its response costs;
indeed, they were “not required to expend any money . . . .”
Block v. Golden Eagle Ins. Co., 121 Cal. App. 4th 186, 196
(2004) (holding that diminution in property value does not
constitute “damages” under a liability policy). Furthermore,
Goodstein did not “constructively” expend any money for
remediation, because the sale was not conditioned on
remediation that the buyer would perform with the money
saved from the reduced purchase price.13

   [12] Accordingly, we affirm the district court’s holding that
Industrial had no obligation to indemnify Goodstein for the
loss associated with the sale of the polluted properties under
the policy.14
  13
      A contrary finding “would essentially convert a liability policy to one
that insures against a diminution in market value.” Block, 121 Cal. App.
4th at 196. Moreover, it would create perverse incentives for landowners
to sell contaminated properties “as is” at fire sale prices and reap a wind-
fall from their insurers under the guise of “diminution in market value”
damages.
   14
      As an alternative argument, Goodstein also asserts that Industrial
should be liable for coverage under a waiver and/or estoppel theory. In
support of that proposition, Goodstein argues that Industrial was aware
that Goodstein was filing a claim for coverage in his September 1990 let-
ter but elected not to assert a reservation of rights or deny coverage. Good-
stein makes no attempt to show that Industrial knew he was seeking to
invoke coverage and made a conscious decision not to raise any defenses
to coverage. See Dombrosky v. Farmers Ins. Co. of Wash., 928 P.2d 1127,
1134 (Wash. Ct. App. 1996). Indeed, as Goodstein himself stated in his
October 1990 letter that he did not understand the September 1990 letter
to be a claim for coverage, he is ill-positioned to maintain that Industrial
should have interpreted it as such. Further, Industrial’s internal documents
indicate only that it was preparing to assert defenses should Goodstein
ever tender a claim for coverage, not that it considered that one had
already been made. For the same reason, Goodstein has not shown reason-
able reliance on any representation, express or implied, by Industrial, a
required element of equitable estoppel. Id.
               GOODSTEIN v. INDUSTRIAL INDEMNITY             15589
                                IV.

  Goodstein also challenges the district court’s grant of sum-
mary judgment for Industrial on the duty to defend claim.

  A.   Duty to Defend vs. Duty to Indemnify

   [13] The district court held that Industrial had no duty to
defend Goodstein because the policy clearly did not cover his
claim for diminution in value damages. While it is true that
the duty to defend does not arise for “ ‘claims which are
clearly not covered by the policy,’ ” an insurer has a duty to
defend whenever “the insurance policy conceivably covers the
allegations.” Woo v. Fireman’s Fund Ins. Co., 164 P.3d 454,
459 (Wash. 2007) (en banc) (quoting Kirk v. Mt. Airy Ins.
Co., 951 P.2d 1124 (Wash. 1998) (en banc)) (emphasis
added). According to Goodstein, the DOE’s allegations of
contamination created a duty to defend, because claims for
environmental remediation are potentially covered under the
Industrial policy.

    As an initial matter, we note that whether DOE’s actions in
declaring the Sternoff properties polluted constituted a “suit”
within the meaning of the policy is an open issue under Wash-
ington law. The Washington Supreme Court has repeatedly
declined to resolve the issue. See Olds-Olympic, 918 P.2d at
928 n.7 (observing that “[c]ase law from around the country
. . . is split on what constitutes a ‘suit’ for purposes of the duty
to defend in environmental cleanup cases” and declining to
resolve the issue); Weyerhaeuser, 874 P.2d at 148 (same). But
Industrial has not argued in this court that the government’s
conduct related to the polluted properties did not constitute a
“suit,” so we do not endeavor to resolve the issue. Instead, we
assume that the DOE designation of the property was a “suit.”

   [14] So assuming, the issue is whether Industrial would
have been potentially liable for response costs under the pol-
icy. Because Washington courts agree that environmental
15590          GOODSTEIN v. INDUSTRIAL INDEMNITY
response costs can constitute covered “damages” under CGL
policies, see Boeing, 784 P.2d at 515, we are satisfied that the
DOE action implicated Industrial’s duty to defend.

   That Goodstein ultimately did not pay any response costs
is irrelevant to whether a duty to defend existed while such
response costs were potentially payable, because “[u]nder
Washington law, the duty to defend and the duty to indemnify
are separate obligations,” Dewitt Constr. v. Charter Oak Fire
Ins. Co., 307 F.3d 1127, 1137 (9th Cir. 2002), and “should be
examined independently,” Weyerhaeuser, 874 P.2d at 148.
However, once Goodstein sold the properties without per-
forming any remediation, he converted the response costs,
which may have been covered under the policy, into an eco-
nomic loss that clearly fell outside the scope of coverage.
Hence, while the duty to defend began at the time of the DOE
action, it terminated upon the sale of the properties. See Over-
ton v. Consol. Ins. Co., 38 P.3d 322, 334 (Wash. 2002) (“An
insurer’s duty to defend is a continuing one, and does not end
until the underlying action is resolved or it is shown that there
is no potential for coverage.”) (emphasis added). We there-
fore analyze the duty to defend solely with respect to the time
period from the DOE action up to the sale of the properties.

  B.     Invocation of the Duty to Defend

   Industrial argues that we need not further concern ourselves
with whether the duty to defend was breached, because Good-
stein’s claim that it was comes much too late. Given that the
duty to defend can be breached without implicating the duty
to indemnify, our analysis of the timing issue begins with
when, if at all, Goodstein invoked the duty to defend in the
first instance.

    1.    1990 Letters

  Goodstein asserts that he invoked the duty via the Septem-
ber 28, 1990 letter, which he claims gave Industrial notice of
                  GOODSTEIN v. INDUSTRIAL INDEMNITY                   15591
the fact that the DOE had declared the properties polluted.15
A review of the full record before us, however, makes clear
that this position is untenable.

   [15] Washington courts have rejected the notion that “a ten-
der of defense is sufficient if the insured puts the insurer on
notice of the claim.” Unigard Ins. Co. v. Leven, 983 P.2d
1155, 1160 (Wash. Ct. App. 1999). “[A]n insurer cannot be
expected to anticipate when or if an insured will make a claim
for coverage; the insured must affirmatively inform the
insurer that its participation is desired.” Id.; see also Griffin
v. Allstate Ins. Co., 29 P.3d 777, 782 (Wash. Ct. App. 2001);
Time Oil Co. v. Cigna Prop. & Cas. Ins. Co., 743 F. Supp.
1400, 1420 (W.D. Wash. 1990). Goodstein’s October 22,
1990 letter went to great pains to inform Industrial that no
claim had been made: “Please note, however, in case there is
any confusion, we are not presently making any claims under
the policies.” (Emphasis added). Far from informing Indus-
trial that its participation was desired in any investigation,
negotiation or defense regarding the extent of Goodstein’s lia-
bility for the pollution, see Unigard, 29 P.3d at 782, Good-
stein specifically disclaimed any intent to invoke coverage
under the policies. Goodstein cannot now claim Industrial’s
duty to defend arose as a result of that early correspondence.

       2.   Failure to Invoke the Duty

   Industrial’s position is just as unpersuasive. Industrial
asserts, as it also did in the district court, that it could not have
breached the duty to defend because Goodstein never invoked
that duty. Accordingly, Industrial argues, because the duty to
  15
     To support their claim that the September 28, 1990 letter invoked a
duty to defend, Goodstein points to the fact that he mailed a similar letter
to other insurers and those insurers responded by sending Goodstein reser-
vation of rights letters. There is nothing in the record, however, to suggest
that those insurers also received letters similar to the October 20, 1990 let-
ter sent to Industrial.
15592             GOODSTEIN v. INDUSTRIAL INDEMNITY
defend never arose in the first place, Washington’s late notice
rule,16 under which an insurer must prove that the insured’s
delay in tendering the defense claim caused the insurer “ac-
tual and substantial prejudice” to avoid liability for defense
costs, does not apply.17 See Mutual of Enumclaw Ins. Co. v.
USF Ins. Co., 153 P.3d 877, 882 (Wash. Ct. App. 2007); see
also Pub. Util. Dist. No. 1 v. Int’l Ins. Co., 881 P.2d 1020,
1029 (Wash. 1994); Griffin, 29 P.3d at 782.

   [16] Industrial’s argument is creative, but it cannot fly. As
an initial matter, Industrial cites no case law supporting the
notion that there is a meaningful distinction between a late
invocation of the duty to defend and a failure ever to invoke
that duty.18 That is probably because, as a matter of both
  16
      Industrial has stated specifically and repeatedly that it is not asserting
a late notice defense. In its brief to this court, Industrial declared that it
“was not asserting late notice as a defense to coverage, it was moving to
dismiss [the duty to defend claim] on the grounds that a defense was never
requested.” Similarly, Industrial informed the district court that it “ha[d]
not asserted late notice” as a defense to coverage in its summary judgment
motion.
   17
      We note that the prejudice requirement is not limited to circumstances
concerning late notice. Washington also, for instance, requires proof of
prejudice where the insurer asserts as a defense to liability that the insured
breached the policy’s cooperation clause, which precludes coverage where
the insured litigates or settled a lawsuit without involving the insurer. E.g.,
Ore. Auto. Ins. Co. v. Salzberg, 535 P.2d 816, 819 (Wash. 1975); see also
Pederson’s Fryer Farms, Inc. v. Transamerica Ins. Co., 922 P.2d 126, 131
(Wash. Ct. App. 1996) (stating general rule that “[e]ven where an insured
breaches the insurance contract, the insurer is not relieved of its duty to
pay unless it can prove actual and substantial prejudice caused by the
insured”). Industrial has not argued in this court that Goodstein breached
the cooperation clause, nor has it put forth a theory of prejudice arising
from such a breach. We therefore do not address the impact of the policy’s
cooperation clause. Should the issue be raised on remand, the district court
may, of course, address it.
   18
      Industrial’s argument is predicated on Unigard’s statement that to
invoke the duty to defend, “the insured must affirmatively inform the
insurer that its participation is desired.” 983 P.2d at 1160. Assuming that
the filing of this lawsuit somehow failed to satisfy that standard, Unigard
                 GOODSTEIN v. INDUSTRIAL INDEMNITY                   15593
Washington law and of simple logic, it makes no sense to say
that a duty to defend was never invoked when, as here, the
insured has sued the insurer for a breach of the duty to defend.
The filing of the lawsuit itself constitutes a request for pay-
ment of defense costs under the policy,19 and at that point, the
late notice rule applies.

   The logic of a recent Washington Court of Appeals case
illustrates the point by analogy. In Mutual of Enumclaw, 153
P.3d 877, the insured was sued for construction defects. The
insured tendered indemnification and defense claims to two
insurance companies (collectively “Enumclaw”), but specifi-
cally decided not to tender the claims to a third (“USF”). Id.
at 879-80. Enumclaw then settled the lawsuit. Id. at 880. As
part of the settlement, the insured assigned its rights under all
other policies to Enumclaw. Id.

   Enumclaw later discovered the USF policy and sued USF
for contribution. Id. The trial court granted summary judg-
ment for USF, holding that USF was “excused from its duty
to perform under its policy or to contribute to a settlement
procured by a coinsurer,” because the insured had affirma-
tively chosen not to tender the claim to USF. Id. The Wash-
ington Court of Appeals reversed, holding that Enumclaw,
standing in the shoes of the insurer, could invoke the late ten-
der rule through the instant lawsuit. Id. at 878, 881-82. Conse-
quently, the court held, USF would be liable to contribute

does not support the notion that Industrial can avoid liability without prov-
ing prejudice. After the quoted statement, the Unigard court went on to
engage in prejudice analysis, id. at 1161-63, which suggests that even if
the insured does not affirmatively inform the insurer that a defense is
desired, the insurer remains liable for the breach of the duty to defend
absent proof of “actual and substantial prejudice.” See Enumclaw, 153
P.3d at 882.
   19
      Industrial has not argued in this court that the government’s conduct
related to the polluted properties did not constitute a “suit,” and we there-
fore do not consider the issue here.
15594             GOODSTEIN v. INDUSTRIAL INDEMNITY
unless it could prove actual and substantial prejudice. Id.
Enumclaw’s logic dictates that even if a claim for defense
costs is never made until after the lawsuit is settled, and even
if that claim is asserted in the form of a coverage suit rather
than by a letter to the insurer demanding a defense or submit-
ting defense costs, the insurance company is still liable for the
defense costs absent evidence of substantial prejudice.

   [17] Accordingly, the fact that Goodstein may never have
tendered a defense request to Industrial before filing this law-
suit20 does not relieve Industrial of its obligation to prove prej-
udice.
  20
     We note that even if Goodstein can show a breach of the duty to
defend upon remand, he will not be able to recover as damages the amount
by which the property value was depressed due to its polluted state. “[T]he
well-accepted measure of damages for a good faith, but unjustified breach
[of the duty to defend is] the costs and reasonable attorneys’ fees incurred
by the insured in defending itself plus consequential damages that the
insured incurred as a result of the breach.” Underwriters at Lloyds v.
Denali Seafoods, Inc., 927 F.2d 459, 464 (9th Cir. 1991) (applying Wash-
ington law). The discounted price Goodstein received for selling the land
“as is” cannot possibly be considered to have been caused by Industrial’s
failure to defend. And, given our conclusion that Goodstein did not invoke
the duty to defend until he filed this lawsuit, well after the sale of the pol-
luted properties was completed, the decision to sell for a depressed price
cannot be traced to any breach of the duty to defend either. Goodstein’s
diminution in value loss, then, did not come about as “a result of the
breach” and is not recoverable as damages for the alleged breach of the
duty to defend. See id.
   If Goodstein can establish a breach of the duty to defend upon remand,
consequently, he will be able at most to recover as damages any pre-
transfer costs incurred in defending, including, for example, costs incurred
in investigating the environmental contamination such as hiring an expert
to assess the pollution. See Unigard, 983 P.2d at 1159 & n.9; cf. Truck Ins.
Exch. v. VanPort Homes, Inc., 58 P.3d 276, 281 n.5 (Wash. 2002) (“An
insurer may be responsible for defense costs prior to tender.”).
                 GOODSTEIN v. INDUSTRIAL INDEMNITY                  15595
       3.   Prejudice

   [18] Industrial cannot establish prejudice as a matter of law
on the record before us. The existence of prejudice is a ques-
tion of fact, Tran v. State Farm Fire & Cas. Co., 961 P.2d
358, 365 (Wash. 1998), as to which the insurer “has the affir-
mative burden of proof,” Pulse v. Nw. Farm Bureau Ins. Co.,
566 P.2d 577, 579 (Wash. Ct. App. 1977). To establish preju-
dice, Washington courts “reject speculation, and require evi-
dence of concrete detriment resulting from delay, together
with some specific harm to the insurer caused thereby.” Can-
ron, Inc. v. Fed. Ins. Co., 918 P.2d 937, 941 (Wash. Ct. App.
1996); see also Unigard, 983 P.2d at 1161 (“To establish
actual prejudice, the insurer must demonstrate some concrete
detriment, some specific advantage lost or disadvantage cre-
ated, which has an identifiable prejudicial effect on the insur-
er’s ability to evaluate, prepare or present its defenses to
coverage or liability.”).

   [19] Industrial has never articulated any theory of prejudice
in this action, nor has it proffered any evidence in support of
such a defense. Instead, it points to the fact that Washington
courts have, on occasion, found prejudice as a matter of law
and suggests we do the same.21 See, e.g., Nw. Prosthetic v.
Centennial Ins., 997 P.2d 972, 975-96 (Wash. Ct. App. 2000);
Unigard, 983 P.2d at 1163; see also Twin City Fire Ins. Co.
v. King County, 749 F. Supp. 230, 233-34 (W.D. Wash.
1990), aff’d, 942 F.2d 794 (9th Cir. 1991) (unpublished).
Such cases are not the norm, however — they are “extreme
  21
    Washington state courts sometimes refer to the existence of a pre-
sumption of prejudice, citing Felice v. St. Paul Fire & Marine Ins. Co.,
711 P.2d 1066 (Wash. Ct. App. 1985). See, e.g., Pub. Util. Dist. No. 1, 881
P.2d at 1029. However in Felice, the court did not merely presume preju-
dice but found actual prejudice, because the insured had already pro-
ceeded to trial before informing the insurance company. Felice, 711 P.2d
at 1071 (“This actually prejudiced [the insurer] because it precluded the
opportunity to evaluate the facts and determine whether a trial and
expenses for an appeal were warranted.”).
15596         GOODSTEIN v. INDUSTRIAL INDEMNITY
cases.” Pub. Util. Dist. No. 1, 881 P.2d at 1029; Pulse, 566
P.2d at 579; see also Pederson’s Fryer Farms, Inc. v. Trans-
america Ins. Co., 922 P.2d 126, 132 (Wash. Ct. App. 1996)
(recognizing that “Washington courts have found prejudice as
a matter of law in only a few cases”).

   Moreover, even in these “extreme” cases the Washington
courts engaged in a close evaluation of the specific injury
alleged by the insurer, such as the loss of opportunity to
mount a viable defense or the loss of opportunity to investi-
gate a questionable claim against the insured, before conclud-
ing that prejudice existed as a matter of law. See Nw.
Prosthetic, 997 P.2d at 973, 976 (finding prejudice estab-
lished as a matter of law where insured settled a debatable
defamation claim before the insurer had a meaningful oppor-
tunity to investigate it, and the settlement was “achieved by
parties who shared an interest in characterizing the $325,000
payment as defamation damages,” because that was the only
claim covered under the policy); Unigard, 983 P.2d at 1161-
63 (concluding insurer established prejudice as a matter of
law where insurer lost the opportunity to mount the defense
that its insured was not a strictly-liable “former operator” of
contaminated site, which could have been based on insured’s
own statement that he had no “operations or involvement” in
the site); see also Tran, 961 P.2d at 365-66 (finding actual
prejudice as a matter of law where insured’s refusal to provide
financial documents containing material information not
available from any other source prevented the insurer from
being able to investigate the possibility that the insured’s
claim was fraudulent). Industrial has not asserted that any
similar situation existed here.

   Indeed, Washington has expressly refused to find prejudice
as a matter of law in an environmental cleanup case where
because of late notice the polluted property was investigated,
assessed by experts, and completely remediated without the
insurer’s participation. Pederson’s Fryer Farms, 922 P.2d at
130-32. The court in Pederson’s Fryer Farms denied Trans-
              GOODSTEIN v. INDUSTRIAL INDEMNITY           15597
america’s motion for directed verdict on the prejudice issue
because “Transamerica fail[ed] to indicate how this delay
hampered its ability to investigate, evaluate or defend against
the State’s assertion that Pederson’s was required to remedy
the contamination.” Id. at 132. Moreover, “Pederson’s did not
deprive Transamerica of its right to control the litigation, as
no action was filed against Pederson’s.” Id. Finally, the court
rejected Transamerica’s argument that it could have disputed
Pederson’s liability for the cleanup costs because there was no
evidence even arguably falling within any of the narrow
exceptions to the Model Toxic Act’s strict liability provisions.
Id. at 132-33. As in Pederson’s Fryer Farms, there is no evi-
dence in the record of this case suggesting Industrial could
have taken any steps to mitigate or dispute Goodstein’s liabil-
ity for the pollution, or that Industrial was in any other way
damaged by Goodstein’s alleged breach.

   [20] In sum, Industrial has in its motion for summary judg-
ment fallen short of meeting its burden to warrant judgment
as a matter of law on the duty to defend claim. It has failed
to demonstrate that this is such an “extreme” case that the
prejudice determination should not be decided by a jury, as it
normally is under Washington law. Indeed, Industrial has
failed to articulate any theory at all by which it could be said
to have suffered actual and substantial prejudice due to Good-
stein’s alleged breach of its obligations under the policy.

   [21] We therefore reverse the district court’s grant of sum-
mary judgment for Industrial on the duty to defend claim, as
Goodstein invoked the duty by filing this lawsuit for damages
and Industrial has failed to establish that it was prejudiced as
a matter of law by Goodstein’s late notice of the claim. We
emphasize that we express no view on the merits of the duty
to defend cause of action, including whether there was a duty
to defend at all on these facts and whether, if so, any damages
were incurred for its breach.

 AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.