Court Opinion

ID: 4846654
Source: CourtListenerOpinion
Date Created: 2021-08-23 20:31:45.46389+00
Date Added: 2024-06-11T08:11:42.074034
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

GULL INDUSTRIES, INC.,
                                     DIVISION ONE
      Petitioner/Cross-Respondent,
                                     No. 78277-1-I
                v.
                                     PUBLISHED OPINION
GRANITE STATE INSURANCE
COMPANY,

      Respondent/Cross-Petitioner,

ALLIANZ UNDERWRITERS
INSURANCE COMPANY; AMERICAN
ECONOMY INSURANCE COMPANY;
AMERICAN STATES INSURANCE CO.
(successor to WESTERN CASUALTY
and SURETY COMPANY); CHICAGO
INSURANCE COMPANY; COLUMBIA
CASUALTY COMPANY; FEDERAL
INSURANCE COMPANY; FIREMAN’S
FUND INSURANCE COMPANY;
GENERAL INSURANCE COMPANY
OF AMERICA; INDIANA INSURANCE
COMPANY; NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA; OHIO CASUALTY
INSURANCE COMPANY; PACIFIC
INDEMNITY COMPANY; SAFECO
INSURANCE COMPANY OF
AMERICA; STATE FARM FIRE AND
CASUALTY COMPANY; TIG
INSURANCE COMPANY; UNITED
STATES FIDELITY & GUARANTY
COMPANY; WESTPORT INSURANCE
CORPORATION; and ZURICH-
AMERICAN INSURANCE COMPANY,

                     Defendants.
No. 78277-1-I/2

       DWYER, J. — This complex environmental insurance coverage action

began when Gull Industries, Inc. (Gull) filed suit for declaratory relief and related

damages against a dozen insurance companies. Gull alleged that the insurers

breached their obligations under primary and excess policies to provide coverage

for environmental contamination liabilities at more than 200 retail gas stations

(sites) it owned or operated during a period of nearly 50 years.

       Over the course of nearly nine years of litigation and over 25,000 pages of

filings, the trial court has made multiple rulings interpreting insurance coverage

obligations, dismissed Gull’s claims pertaining to 115 sites on summary

adjudication, and found that one site triggered coverage following a bench trial on

several bellwether “test” sites. Every insurer, except for Granite State Insurance

Company (Granite State), has since settled with Gull or exhausted its policy

limits. Granite State’s coverage obligations remain unresolved on over 100 sites.

       Before proceeding further on the remaining sites where factual issues

prevent summary adjudication, the parties sought discretionary review of

numerous issues that will influence or control the future course of this litigation.

We accepted review. Now, for the reasons discussed below, we affirm some of

the trial court’s rulings and reverse others.

                                           I

       The core facts underlying this coverage action are largely undisputed.

Between 1959 and 2005, Gull owned or operated approximately 220 retail gas

stations throughout the Pacific Northwest. Gull also owned fuel tanker trucks and

employed drivers to deliver gasoline to underground storage tanks at its sites.

                                          2
No. 78277-1-I/3

                                                    A

        Gull purchased multiple primary general liability, primary automobile

liability, and excess umbrella liability policies during its years of operation.1

Granite State provided Gull excess umbrella liability insurance from 1980 to 1983

under three consecutive policies. Each policy provided $15,000,000 in coverage

per occurrence and in the aggregate.

        The first Granite State policy, effective October 1, 1980 to October 1,

1981, was excess to insurance issued by The Home Insurance Company

(Home). Home provided Gull comprehensive general liability (CGL) coverage for

property damage with a per occurrence limit of $100,000 and business

automobile liability (Auto Liability) coverage for property damage with a per

occurrence limit of $100,000. Home also provided coverage for personal injuries,

employer’s liability, and miscellaneous liability.

        Granite State’s two other policies, effective October 1, 1981 to October 1,

1983, were excess to insurance afforded by Transamerica Insurance Group

(TIG). TIG provided Gull primary CGL property damage coverage up to

$100,000 per occurrence and Auto Liability property damage coverage up to

$500,000 per occurrence.2

        1  A primary insurance policy provides “the first line of defense in the event of accident or
injury.” Safeco Ins. Co. of Ill. v. Auto. Club Ins. Co., 108 Wn. App. 468, 479, 31 P.3d 52 (2001).
Excess or umbrella insurance policies, “which do not activate until a primary policy has been
exhausted,” are meant “to protect the insured in the event of a catastrophic loss in which liability
damages exceed available primary coverage.” Safeco, 108 Wn. App. at 479-80 (citing 15 LEE R.
RUSS & THOMAS F. SAGALLA, COUCH ON INSURANCE 3D § 220:32 (2000)).
         2 Although not at issue here, the schedule of underlying insurance also contained

coverages with distinct limits for (1) CGL bodily injury liability, (2) Auto Liability bodily injury, (3)
Employer’s Liability, and (4) Miscellaneous Liability.

                                                    3
No. 78277-1-I/4

        The CGL and Auto Liability coverages provided by Home and TIG are

reflected in the “Schedule of Underlying Insurance” on each corresponding

Granite State excess policy. Gull’s property damage insurance coverage is

illustrated in the following table:

 Coverage Level                               Companies on the Risk

                                1980-81                 1981-82                 1982-83

 Excess                  Granite State              Granite State        Granite State
                         $15,000,000                $15,000,000          $15,000,000

 Primary                 Home                       TIG                  TIG
                         $100,000 (CGL)             $100,000 (CGL)       $100,000 (CGL)
                         $100,000 (Auto)            $500,000 (Auto)      $500,000 (Auto)

                                                B

        Since at least 1984, Gull has been continuously investigating and

remediating contaminated soil and groundwater at its sites. As is typical for gas

stations operated decades ago, Gull claims, gasoline was released at its sites

due to leaks from underground storage tanks, spills from customers over filling

their vehicle gas tanks, and spills from the unloading of bulk fuel trucks.

Consequently, many of its sites became demonstrably contaminated with

petroleum and other hazardous substances.

        Gull is jointly, severally, and strictly liable for remediating these sites under

Washington’s Model Toxics Control Act (MTCA), chapter 70.105D RCW,3 and to

third party claimants who share MTCA liability with Gull. “The primary intent of

         3 Effective June 2020, the legislature recodified chapter 70.105D RCW as chapter

70A.305 RCW, instructing that such changes “should be interpreted as technical in nature and
not interpreted to have any substantive, policy implications.” LAWS OF 2020, ch. 20, §§ 101-03.
We refer to the former version, which was effective at the time of the proceedings herein.

                                                4
No. 78277-1-I/5

MTCA is that ‘[p]olluters should pay to clean up their own mess.’” Pope Res., LP

v. Dep’t of Nat. Res., 190 Wn.2d 744, 751, 418 P.3d 90 (2018) (alteration in

original) (quoting State of Washington Voter’s Pamphlet, General Election 6

(Nov. 8, 1988)). “The provisions of [MTCA] are to be liberally construed to

effectuate the policies and purposes of this act.” Former RCW 70.105D.910

(1989). MTCA imposes joint and several liability on “current owners and

operators of a facility, persons who owned or operated a facility at the time

hazardous substances were disposed or released, and any other person who

caused the disposal or release of the hazardous substance at any facility.”

Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 661, 15 P.3d

115 (2000); former RCW 70.105D.040(1)(b) (1989).

       Gull asserted that it faces liability under MTCA because the releases at

some sites resulted in third party property damage implicating Gull’s primary CGL

and Auto Liability coverages. Gull further alleged that it has been threatened

with lawsuits at 15 sites, received cleanup notifications from regulatory agencies

at 19 sites, and has been sued by third parties at 9 sites. MTCA contribution

actions were filed by third parties against Gull concerning groundwater

contamination at Station 269 (Lynnwood) and Station 272 (Seattle). Gull

tendered its defense of these actions to primary insurer TIG under both the CGL

and Auto Liability coverages. TIG agreed to defend Gull against these actions

under its policies, subject to a full reservation of rights.

                                            5
No. 78277-1-I/6

                                              C

       In December 2011, Gull filed this action against Granite State and 12

other insurance companies, seeking coverage for its environmental response

costs at each of its current and former sites. Specifically, Gull sought (1) a

declaratory judgment stating that the insurers are jointly and severally liable for

all defense and indemnity costs to investigate and remediate groundwater

contamination at all 220 sites, (2) damages for and interest on all costs incurred

in connection with its liabilities, and (3) reasonable attorney fees and costs. It

alleged that property damage occurred continuously at its sites throughout

decades of insurance coverage, which triggered both CGL and Auto Liability

policies in each year of coverage.

       Given the number of insurers and sites involved in the case, the trial court

adopted a phased approach to the litigation. Phase I focused on Gull’s coverage

claims in connection with five bellwether “Test Sites.”4 Phase I(a) was limited to

insurance contract interpretation issues through summary judgment, while Phase

I(b) addressed all remaining triable issues at a bench trial.

       In April 2015, Gull moved for partial summary judgment seeking a ruling

that Granite State’s duty to indemnify is triggered upon the exhaustion of Gull’s

primary insurance immediately beneath the Granite State policy in the same

policy period (vertical exhaustion). Granite State countered that its excess policy

coverage is not triggered until all of Gull’s “valid and collectible” underlying

insurance is exhausted, regardless of the years in which those primary policies

       4 These test sites were: Station 220 (West Meeker), Station 224 (Sedro Woolley), Station
278 (Aurora Avenue), Station 611 (Omak), and Station 613 (Tonasket).

                                               6
No. 78277-1-I/7

were issued (horizontal exhaustion). The trial court denied Gull’s motion, ruling

that horizontal exhaustion would apply to Granite State’s coverage obligation:

                Granite State’s “other insurance” clause also limits the
        Granite State policy to being “excess” to other valid and collectible
        insurance and provides that the policy “shall not contribute with
        other such insurance.” The policy does not limit itself to a particular
        year; indeed the “other insurance” clause refers to “any other
        insurer” without limitation. In other words, Granite State has
        specifically limited its liability in the contract negotiated with Gull,
        both in the context of its definition of “ultimate net loss” and its
        reference to “other insurance.”

        . . . The contract places limits on Granite State’s liability in the face
        of its otherwise joint and several liability. Such a limitation does not
        violate public policy or Washington law.

        In July 2015, Granite State and TIG jointly moved for partial summary

judgment to dismiss Gull’s claims as to 109 sites based on the “owned property

exclusions” (OPE) in the insurers’ policies. They argued that the OPE sites

should be dismissed because (1) there was no evidence of contamination or (2)

the contamination was limited to soil. In an accompanying motion, TIG moved to

dismiss 128 “NCPD”5 sites, arguing that there was no evidence of compensable

property damage (i.e., groundwater contamination above MTCA cleanup levels)

during its policy periods.

        In response, pursuant to CR 41(a)(1)(B),6 Gull moved to voluntarily

dismiss without prejudice its claims for defense and indemnity at 75 sites.

Granite State and TIG opposed Gull’s motion, referencing the time and effort

        5 The trial court and parties used the acronym “NCPD” to stand for “no compensable

property damage.”
        6 Under this rule, the trial court may dismiss any action “[u]pon motion of the plaintiff at

any time before plaintiff rests at the conclusion of plaintiff’s opening case” and such dismissal
would be without prejudice unless otherwise noted. CR 41(a)(1)(B), (a)(4).

                                                   7
No. 78277-1-I/8

they had already expended in preparing the summary judgment motions. Gull

then moved to continue consideration of the insurers’ motions, which the trial

court granted. Gull then withdrew its CR 41(a)(1)(B) motion.

       In September 2015, Granite State brought a motion for summary judgment

seeking to dismiss Gull’s claims at each of the five bellwether sites for failure to

meet its burden of proof to trigger coverage of the excess policies. Relying on

Puget Sound Energy v. Certain Underwriters at Lloyd’s, London, 134 Wn. App.

228, 138 P.3d 1068 (2006) (PSE), for the proposition that “compensable property

damage” requires proof of contamination to third party property exceeding MTCA

cleanup levels during an insurer’s policy period, Granite State argued that Gull

had no such proof. Agreeing that there was no evidence of groundwater

contamination at that time for Station 278 and Station 613, Gull did not oppose

dismissal of those sites but claimed that issues of material fact remained for the

other test sites.

       The trial court granted Granite State’s motion, concluded that the “legal

standard” articulated in PSE, 134 Wn. App. at 253-54, “regarding necessary

proof to show compensable damages applies to this case,” and dismissed Gull’s

coverage claims for Stations 278 and 613.

       At this point in the litigation, all but three of the defendant insurance

companies had settled with Gull during Phase I(a) and two settled with Gull for

purposes of Phase I(b), leaving Granite State as the only defendant at trial.

       In November 2015, the bench trial commenced on the three remaining

Phase I(b) bellwether sites: Station 220 (West Meeker), Station 224 (Sedro

                                           8
No. 78277-1-I/9

Woolley), and Station 611 (Omak). Based on the evidence presented, the trial

court found that Gull had proved that the groundwater at West Meeker was

contaminated above MTCA cleanup levels during the Granite State policy years

of 1980-1983, and that the policies for those years were triggered. The trial court

also found that the evidence was insufficient to establish compensable third party

property damage, exceeding MTCA cleanup levels, at the two other stations

during the same period, thereby precluding coverage from Granite State for

those sites.

        In April 2016, the trial court entered an order determining Granite State’s

“attachment point”7 for West Meeker. The court noted that, under its prior ruling

on horizontal exhaustion, the “attachment points are cumulative where Gull is

able to prove a covered occurrence under more than one Granite State excess

policy.” Thus, as to West Meeker, the trial court found that “the coverage

afforded under the three Granite State excess policies is excess of a minimum of

$1,600,000.” It calculated this figure based on three unexhausted years of

primary Auto Liability coverage from Home and TIG with per occurrence limits of

$500,000 each year, and $100,000 of unexhausted primary CGL coverage from

Home.8

        7   An “attachment point” is the level of loss at which an excess insurer’s coverage
obligation begins. RESTATEMENT OF THE LAW, LIABILITY INSURANCE § 39 cmt. d.
         8 Home became insolvent in 2003 and made no payments toward Gull’s liabilities. The

trial court’s use of $500,000 as the limit of Home’s Auto Liability coverage appears to be in error,
as $100,000 is the correct amount of its limits of such coverage for property damage. This error
went unnoticed by the parties in the trial court and in their briefing on appeal. It was raised by the
court at oral argument. In the best tradition of the profession, Granite State’s attorney confirmed
the error in a letter to the court received by the court within two hours of the conclusion of
argument.
         This case is on interlocutory review. The discovery of this error may lead either or both of
the parties to reexamine the issues in the case. In this opinion, we will address the issues in

                                                  9
No. 78277-1-I/10

        In July 2016, Gull sought leave under CR 15(a)9 to file a fourth amended

complaint for the purpose of removing, without prejudice, 80 “Admitted sites” for

which it admitted contamination had not yet risen above MTCA cleanup levels

during the policy periods. The trial court denied this request.

        In August 2016, Granite State and other insurers renewed their previous

summary judgment motions to dismiss the OPE and NCPD sites with prejudice.

The trial court granted the insurers’ motions and entered orders dismissing a total

of 115 sites (including 19 OPE sites, 23 NCPD sites, and 80 Admitted sites).

        In March 2017, Gull and TIG entered a final settlement agreement that the

trial court approved as reasonable. Gull agreed “to resolve all policies of

insurance of any kind whatsoever issued by TIG” in exchange for TIG’s payment

of $6,400,000. Until then, TIG had been actively defending Gull in two pending

claims seeking contribution from Gull for environmental cleanup costs at Station

269 and Station 272. Based on this settlement, however, TIG withdrew its

defense at these two sites. Gull then tendered its defense of these claims to

Granite State.

        In July 2017, Granite State moved for partial summary judgment and

sought a declaration that it had no duty to assume TIG’s defense obligations for

accordance with the facts as they were understood by the parties upon filing their briefs. But to
be clear—no party has waived or forfeited any argument or claim arising from the discovery of the
error discussed. Nor does the law of the case doctrine—or any other principle of preclusion—
prevent either party from bringing to the trial court’s attention any argument or claim that is or was
impacted by the error.
         9 After a responsive pleading has been filed, CR 15(a) requires a party to “amend the

party’s pleading only by leave of court or by written consent of the adverse party” and “leave shall
be freely given when justice so requires.”

                                                 10
No. 78277-1-I/11

Station 269, Station 272, or at any other site. The trial court granted Granite

State’s motion, ruling in pertinent part that,

       Gull’s compromise settlement with TIG, and with its other primary
       insurers, does not shift the defense obligation to excess insurer
       Granite State.

       An excess insurer has no duty to defend unless and until the
       primary insurer has exhausted its obligation. The insured has the
       burden to prove exhaustion of its primary insurance coverage as a
       condition precedent to excess defense coverage. Gull has not
       shown all of its primary coverage to have been exhausted. Granite
       State’s subordinate duty to defend remains on “standby.”

       Also in July 2017, Granite State unsuccessfully moved to dismiss this

action without prejudice, arguing that no justiciable controversy remained

between Gull and Granite State. The trial court denied the motion and ruled that

“Gull’s claim for declaratory judgment to establish [that] Granite [State] owes it a

duty to defend and a duty to pay losses stemming from covered occurrences at

enumerated former station sites . . . is a justiciable controversy.”

       Since this action was filed, Gull has received approximately $49 million in

settlements and payments. Gull’s remediation and investigation costs, as of

August 2017, exceeded $17 million, its attorney fees and costs to pursue this

action were about $14 million, and its unreimbursed defense costs as to all sites

was around $274,000. Granite State’s coverage obligations remain unresolved

on over 100 sites.

                                           D

       In February 2018, Gull and Granite State sought and obtained from the

trial court an order certifying questions of law for discretionary review in this court

                                          11
No. 78277-1-I/12

pursuant to RAP 2.3(b)(4).10 In August 2018, the trial court revised its

certification order and a commissioner of this court granted discretionary review.

        Having had the benefit of the parties’ briefing and oral argument,11 we now

address the numerous issues presented.12

                                                  II

        In Washington, courts construe insurance policies as contracts, interpret

such policies as matters of law, and review them de novo. Overton v. Consol.

Ins. Co., 145 Wn.2d 417, 424, 38 P.3d 322 (2002); Quadrant Corp. v. Am. States

Ins. Co., 154 Wn.2d 165, 171, 110 P.3d 733 (2005) (citing Weyerhaeuser, 142

Wn.2d at 665). It is well settled that

        [a]n 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

        10   Under this rule, discretionary review may be accepted when
          [t]he superior court has certified, or all the parties to the litigation have stipulated,
          that the order involves a controlling question of law as to which there is
          substantial ground for a difference of opinion and that immediate review of the
          order may materially advance the ultimate termination of the litigation.
RAP 2.3(b)(4).
          11 After briefing and before oral argument, Gull filed a supplemental statement of

authorities citing to the California Supreme Court’s recent decision in Montrose Chemical Corp. v.
Superior Court of Los Angeles County, 9 Cal. 5th 215, 460 P.3d 1201, 260 Cal. Rptr. 3d 822
(2020), as relevant authority regarding horizontal versus vertical exhaustion. RAP 10.8 permits
parties to file statements of additional authorities, specifying that such a statement “should not
contain argument, but should identify the issue for which each authority is offered.” The purpose
of this rule is to provide parties with an opportunity to bring to the court’s attention cases decided
after the parties submitted their briefs.
          After oral argument, Granite State moved, under RAP 9.11, to supplement the record and
to allow supplemental briefing to address Montrose. We granted the motion for supplemental
briefing but denied the request to supplement the record. Both parties filed supplemental briefs.
          12 Although five certified questions were accepted for discretionary review, in our view

these questions raise several more issues that must be addressed to fully answer the questions
presented.

                                                 12
No. 78277-1-I/13

       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.

Am. Nat’l Fire Ins. Co. v. B&L Trucking & Constr. Co., 134 Wn.2d 413, 427-28,

951 P.2d 250 (1998) (citations omitted).

                                                 III

       The first issue we face is relatively straightforward. It is whether Gull met

its burden to prove that the limits of TIG’s underlying Auto Liability coverage have

been exhausted as to all sites. Gull did not.

       To obtain excess coverage, it is the insured’s burden to prove that the

underlying primary policies are exhausted. See McDonald v. State Farm Fire &

Cas. Co., 119 Wn.2d 724, 731, 837 P.2d 1000 (1992) (insured has the burden to

“show the loss falls within the scope of the policy’s insured losses”); Rees v.

Viking Ins. Co., 77 Wn. App. 716, 719, 892 P.2d 1128 (1995) (“An excess

carrier’s obligation to pay and defend begins when, and only when, the limits of

the primary insurance policy are exhausted.”); Quellos Grp., LLC v. Fed. Ins. Co.,

177 Wn. App. 620, 634, 312 P.3d 734 (2013) (“The critical and distinctive feature

of an excess insurance policy is that it provides coverage ‘only after the primary

coverage is exhausted.’” (quoting Diaz v. Nat’l Car Rental Sys., Inc., 143 Wn.2d

57, 62, 17 P.3d 603 (2001))).

       Gull acknowledges that TIG’s “underlying Auto coverage has not been

exhausted”13 and nothing in the voluminous record indicates otherwise. Gull

clearly failed to satisfy its burden on this issue.

       13   Br. of Petitioner/Cross-Respondent at 23, 24-30.

                                                13
No. 78277-1-I/14

                                           IV

       Gull contends that the trial court erred in ruling that it must exhaust all

available primary coverage, for each year in which it was insured, before Granite

State has any excess coverage obligations. This concept is referred to as

horizontal exhaustion. As to its claim of error, Gull’s argument is sound.

                                           A

       At the outset, the trial court correctly noted that no binding Washington

authority “has directly decided the issue of horizontal versus vertical exhaustion

for excess carriers when the underlying damages occur before, after and during

the coverage carrier’s excess policy,” when an insured “attempts to collect from

multiple primary [general liability] carriers that it maintains are jointly and

severally liable for all damages during the coverage period.” The California

Supreme Court, however, recently resolved this very issue.

       California courts interpret insurance policies under the same general rules

of construction as do the courts of Washington. As the California Supreme Court

explained:

               “The principles governing the interpretation of insurance
       policies in California are well settled. ‘Our goal in construing
       insurance contracts, as with contracts generally, is to give effect to
       the parties’ mutual intentions. “If contractual language is clear and
       explicit, it governs.” If the terms are ambiguous [i.e., susceptible of
       more than one reasonable interpretation], we interpret them to
       protect “‘the objectively reasonable expectations of the insured.’”’”
       If these rules do not resolve an ambiguity, we may then “‘resort to
       the rule that ambiguities are to be resolved against the insurer.’”

Montrose Chem. Corp. v. Superior Court of Los Angeles County, 9 Cal. 5th 215,

460 P.3d 1201, 1210, 260 Cal. Rptr. 3d 822 (2020) (citations omitted) (quoting

                                           14
No. 78277-1-I/15

Minkler v. Safeco Ins. Co. of Am., 49 Cal. 4th 315, 232 P.3d 612, 617, 110 Cal.

Rptr. 3d 612 (2010)).14 Satisfied that California and Washington courts similarly

interpret and construe insurance policies, we now examine Montrose.

                                                  B

        In Montrose, Montrose Chemical was sued for causing continuous

environmental damage between 1947 and 1982. 460 P.3d at 1203. “For each

policy year from 1961 to 1985, Montrose had secured primary insurance and

multiple layers of excess insurance” and Montrose sought to access this

insurance to cover amounts it owed in connection with the environmental claims.

Montrose, 460 P.3d at 1203. The parties filed cross-motions for summary

adjudication on whether vertical or horizontal exhaustion triggered access to

multiple layers of excess liability coverage. Montrose, 460 P.3d at 1205-06. The

trial court ruled that “the excess policies required horizontal exhaustion in the

        14As discussed supra, Washington law regarding the interpretation of insurance
contracts has been summarized by our Supreme Court.
                 The criteria for interpreting insurance contracts in Washington are well
        settled. We construe insurance policies as contracts. Weyerhaeuser Co. v.
        Commercial Union Ins. Co., 142 Wn.2d 654, 665, 15 P.3d 115 (2000). We
        consider the policy as a whole, and we give it a “‘“fair, reasonable, and sensible
        construction as would be given to the contract by the average person purchasing
        insurance.”’” Id. at 666 (quoting Am. Nat’l Fire Ins. Co. v. B&L Trucking & Constr.
        Co., 134 Wn.2d 413, 427-28, 951 P.2d 250 (1998) (quoting Key Tronic Corp. v.
        Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wn.2d 618, 627, 881 P.2d 201
        (1994))). Most importantly, if the policy language is clear and unambiguous, we
        must enforce it as written; we may not modify it or create ambiguity where none
        exists. See id.
                 We will hold that a clause is ambiguous only “‘when, on its face, it is fairly
        susceptible to two different interpretations, both of which are reasonable.’” Id.
        (quoting B&L Trucking, 134 Wn.2d at 427-28). If a clause is ambiguous, we may
        rely on extrinsic evidence of the intent of the parties to resolve the ambiguity. Id.
        Any ambiguity remaining after examination of the applicable extrinsic evidence is
        resolved against the insurer and in favor of the insured. Id. . . . Finally, in
        Washington the expectations of the insured cannot override the plain language of
        the contract. See Findlay [v. United Pac. Ins. Co.], 129 Wn.2d [368,] 378[, 917
        P.2d 116 (1996)].
Quadrant Corp., 154 Wn.2d at 171-72.

                                                  15
No. 78277-1-I/16

context of this multiyear injury.” Montrose, 460 P.3d at 1206. The California

Court of Appeals affirmed this ruling in 2017. Montrose, 460 P.3d at 1206.

       The California Supreme Court granted review to determine “whether

vertical exhaustion or horizontal exhaustion is required when continuous injury

occurs over the course of multiple policy periods for which an insured purchased

multiple layers of excess insurance.” Montrose, 460 P.3d at 1206. The parties’

dispute centered on “the meaning of the ‘other insurance’ clauses in the excess

insurance policies,” which provided, “in a variety of ways, that each policy shall

be excess to other insurance available to the insured, whether or not the other

insurance is specifically listed in the policy’s schedule of underlying insurance.”

Montrose, 460 P.3d at 1210.

       The Montrose court noted that “[t]he ‘other insurance’ clauses at issue

clearly require exhaustion of underlying insurance, but none clearly or explicitly

states that Montrose must exhaust insurance with lower attachment points

purchased for different policy periods.” 460 P.3d at 1210. It explained that,

historically, “‘“other insurance” clauses were designed to prevent multiple

recoveries when more than one policy provided coverage for a particular loss,’”

Montrose, 460 P.3d at 1211 (quoting Dart Indus., Inc. v. Commercial Union Ins.

Co., 28 Cal. 4th 1059, 52 P.3d 79, 93, 124 Cal. Rptr. 2d 142 (2002)), and that

such clauses “have not generally been understood as dictating a particular

exhaustion rule for policyholders seeking to access successive excess insurance

policies in cases of long-tail injury.” Montrose, 460 P.3d at 1211.

                                         16
No. 78277-1-I/17

       Montrose Chemical argued that the schedules of underlying insurance—

all for the same policy period—referenced in the excess policies provided “a

presumptively complete list of insurance coverage that must be exhausted before

the excess policy may be accessed, with the ‘other insurance’ clauses serving as

a backstop to prevent double recovery in the rare circumstance where underlying

coverage changes after the excess policy is written.” Montrose, 460 P.3d at

1212. The insurers countered, under a theory of horizontal exhaustion, that the

underlying schedules represented “only a fraction—perhaps only a small

fraction—of the insurance policies that must be exhausted before a given excess

policy may be accessed.” Montrose, 460 P.3d at 1212. Disagreeing with the

insurers, the California Supreme Court held that access to the excess coverage

was triggered upon vertical exhaustion, concluding:

       [T]he “other insurance” clauses do not clearly specify whether a
       rule of horizontal or vertical exhaustion applies here. Read in
       isolation, the “other insurance” clauses might plausibly be read to
       perform the function the insurers ascribe to them. But read in
       conjunction with the actual language of other provisions in the
       policies, and in light of their historical role of governing allocation
       between overlapping concurrent policies, the insurers’ reading
       becomes less likely. Rather, in the absence of any more
       persuasive indication that the parties intended otherwise, the
       policies are most naturally read to mean that Montrose may access
       its excess insurance whenever it has exhausted the other directly
       underlying excess insurance policies that were purchased for the
       same policy period.

Montrose, 460 P.3d at 1212-13.

       “Consideration of the parties’ reasonable expectations,” the Montrose

court said, also “favors a rule of vertical exhaustion rather than horizontal

exhaustion.” 460 P.3d at 1213. To begin, it informed that “applying the

                                         17
No. 78277-1-I/18

horizontal exhaustion rule would be far from straightforward,” explaining that

nothing “in the text of these [excess] policies tell us how an ‘other insurance’

clause in a policy from one period ought to apply to a policy from another period

that contains both a lower attachment point and a higher coverage limit.”

Montrose, 460 P.3d at 1213.

       From the insured’s perspective, “because the exclusions, terms, and

conditions may vary from one policy to another, a rule of horizontal exhaustion

would create significant practical obstacles to securing indemnification” and

“‘would create as many layers of additional litigation as there are layers of

policies.’” Montrose, 460 P.3d at 1213 (quoting Westport Ins. Corp. v. Appleton

Papers Inc., 327 Wis. 2d 120, 787 N.W.2d 894, 918 (2010)). Moreover,

“requiring a policyholder to litigate the terms and conditions of all policies with

lower attachment points in every policy period before accessing policies with

higher attachment points would effectively,” the court noted, “increase the

attachment point—thereby undermining the policyholder’s reasonable

expectation that coverage would be triggered upon the exhaustion of the amount

listed as the policy’s stated attachment point.” Montrose, 460 P.3d at 1213.

Thus, it reasoned, “[o]bjectively speaking, the parties could not have intended to

require the insured to surmount all these hurdles before the insured may access

the excess insurance it has paid for.” Montrose, 460 P.3d at 1213.

       Ultimately, the California Supreme Court concluded:

       [I]n a case involving continuous injury, where all primary insurance
       has been exhausted, the policy language at issue here permits the
       insured to access any excess policy for indemnification during a

                                          18
No. 78277-1-I/19

        triggered policy period once the directly underlying excess
        insurance has been exhausted.

Montrose, 460 P.3d at 1215.15

        In July 2020, a division of the California Court of Appeal analyzed and

applied Montrose. See SantaFe Braun, Inc. v. Ins. Co. of N. Am., 52 Cal. App.

5th 19, 265 Cal. Rptr. 3d 692 (2020), review denied, No. S264060 (Cal. Sep. 30,

2020). There, the insured, SantaFe, filed a declaratory judgment action against

its insurers to obtain coverage for asbestos-related claims under various excess

liability insurance policies. SantaFe, 52 Cal. App. 5th at 21. The parties

engaged in phased litigation lasting over 10 years. After determining that

SantaFe failed to establish that it had horizontally exhausted its primary and

certain layers of underlying excess insurance, the trial court granted summary

judgment in favor of the excess insurers. SantaFe, 52 Cal. App. 5th at 21.

        SantaFe appealed, arguing that “the [trial] court erred in interpreting the

excess insurers’ policies to require horizontal rather than vertical exhaustion.”

SantaFe, 52 Cal. App. 5th at 24. The SantaFe court observed that the Montrose

decision “expressly leaves unanswered the question now before us,” which was:

        15    The insurers argued that a rule of vertical exhaustion was unfair “because ‘decades’
worth of environmental damage [could] fall on the shoulders of disfavored insurers who happened
to provide excess insurance . . . during that single unlucky year or two.’” Montrose, 460 P.3d at
1214 (alterations in original). But the California Supreme Court rejected this argument on several
grounds. First, it said, there was “no evident unfairness to insurers when their insureds incur
liabilities triggering indemnity coverage under the negotiated policy contract.” Montrose, 460 P.3d
at 1214. Second, it explained that “nothing about the rule of vertical exhaustion requires a single
insurer to shoulder the burden of indemnification alone,” because “insurers may seek contribution
from other excess insurers also liable to the insured” and the “exhaustion rule does not alter the
usual rules of equitable contribution between insurers.” Montrose, 460 P.3d at 1214. Lastly, it
distinguished a case upon which the insurers heavily relied, Community Redevelopment Agency
v. Aetna Casualty & Surety Co., 50 Cal. App. 4th 329, 57 Cal. Rptr. 2d 755 (1996), clarifying:
“This case, unlike Community Redevelopment, is not a contribution action between primary and
excess insurers; it is, rather, a coverage dispute between excess insurers and their insured.”
Montrose, 460 P.3d at 1215.

                                               19
No. 78277-1-I/20

        [W]hen the insured has incurred continuous losses extending over
        the coverage periods in multiple primary policies, whether all
        primary insurance covering all time periods must be exhausted
        (“horizontally”) before the first level excess policies are triggered,
        or, as [SantaFe] contends, whether coverage under the excess
        policies is triggered once the directly underlying primary policies
        specified in each excess policy is exhausted (“vertically”).

SantaFe, 52 Cal. App. 5th at 27.

        The SantaFe court noted how the excess policies before it contained

“comparable language to that interpreted in” Montrose and, pursuant thereto, “in

the absence of explicit language to the contrary, [the policies] require the excess

carriers to assume responsibility for defense and indemnity once the directly

underlying primary policies have been exhausted.” 52 Cal. App. 5th at 28-29. It

then held “that (absent an explicit policy provision to the contrary) the insured

becomes entitled to the coverage it purchased from the excess carriers once the

primary policies specified in the excess policy have been exhausted.” SantaFe,

52 Cal. App. 5th at 29.

        The reasoning underlying the decisions in Montrose and SantaFe and the

application of vertical exhaustion to continuous environmental or asbestos

damage claims in those cases is sound and persuasive.16 Additionally,

Montrose’s conclusions about the parties’ reasonable expectations (e.g., once an

        16  In Cadet Manufacturing Co. v. American Insurance Co., 391 F. Supp. 2d 884 (W.D.
Wash. 2005), United States District Judge Franklin Burgess, applying Washington law, declined
to rule that horizontal exhaustion applied under either Washington law or an excess insurance
policy issued by Granite State that was identical in all material respects to the policy here at
issue.
         The Court is also unpersuaded by Granite State’s proposal that the Court should
         require horizontal exhaustion of all primary insurers because to do so flies in the
         face of the terms of Granite State’s own policies and Washington’s law of joint
         and several liability among insurers of a continuous loss.
Cadet Mfg. Co., 391 F. Supp. 2d at 892.

                                               20
No. 78277-1-I/21

underlying policy is exhausted, excess coverage will apply without the need to

commence various declaratory actions concerning policies purchased before and

after the policy at issue) supports the application of vertical exhaustion herein.17

        Having so determined, we must nevertheless now review the language of

Granite State’s policies, which all contain identical terms and conditions, to

determine if they clearly mandate something other than the application of vertical

exhaustion.

                                                 C

        A review of Granite State’s policies reveals no explicit terms that require

Gull to horizontally exhaust all of its underlying primary insurance as a condition

of triggering excess coverage obligations. We begin with Granite State’s “limit of

liability” provision, which states:

                 II. LIMIT OF LIABILITY. 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”):
        and then only up to a further sum as stated in item 3(a) of the
        Declarations in all in respect of each occurrence, subject to a limit
        as stated in item 3(b) of the Declarations in the aggregate for each
        annual period during the currency of this Policy, separately in
        respect of Products Liability and in respect of Personal Injury (fatal
        or non-fatal) by Occupational Disease sustained by any employees
        of the Assured.
        In the event of reduction or exhaustion of the aggregate limits of
        liability under said underlying insurances by reason of losses paid
        thereunder, this policy shall

        17 We note that, at the time it ruled that horizontal exhaustion applied to the disputes
herein, the trial court did not have the benefit of the Montrose and SantaFe decisions.

                                                 21
No. 78277-1-I/22

                (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, subject to all the terms and conditions of this policy.

          The schedule of Underlying Limits sets forth the insurances directly under

a given Granite State policy. For instance, the schedule for the October 1981 to

October 1982 policy period identifies multiple TIG primary “policies” (i.e., CGL,

Auto Liability, Employers Liability, and Miscellaneous Liability) that provide

“coverages” for one or more types of liability (i.e., Bodily Injury Liability, Property

Damage Liability, and Non-Owned Aircraft Liability), which have their own “limits”

(i.e., $100,000, $500,000, and $5,000,000). This schedule does not identify any

primary insurance policies purchased before 1981 or after 1982.18

          Next, we review the “other insurance” condition in Granite State’s policies,

which reads:

                 L. OTHER INSURANCE. If other valid and collectible
          insurance with any other insurer is available to the Assured covering
          a loss also covered by this policy, other than insurance that is in
          excess of the insurance afforded by this policy, the Insurance
          afforded by this policy shall be excess of and shall not contribute
          with such other insurance. Nothing herein shall be construed to
          make this policy subject to the terms, conditions and limitations of
          other insurance.

This provision does not expressly identify any other specific primary insurance

that Gull must exhaust in order to trigger Granite State’s excess coverage.

          Lastly, we look to the policies’ definition of “ultimate net loss,” which

states:

                 6. ULTIMATE NET LOSS. The term “Ultimate Net Loss”
          shall mean the total sum which the Assured, or any company as his

          Similarly, the schedules underlying Granite State’s two other policies do not identify
          18

any primary insurances purchased or applicable outside of those respective policy periods.

                                                22
No. 78277-1-I/23

        insurer, or both, become obligated to pay by reason of personal
        injury, property damage or advertising liability claims, either through
        adjudication or compromise, and shall also include hospital,
        medical and funeral charges, and all sums paid as salaries, wages,
        compensations, fees, charges and law costs, premiums on
        attachment or appeal bonds; interest, expenses for doctors,
        lawyers, nurses, investigators and other persons, and for litigation,
        settlement, adjustment and investigation of claims and suits which
        are paid as a consequence of any occurrence covered hereunder,
        excluding only the salaries of the Assured’s or of any underlying
        insurer’s permanent exployees [sic].

        The Company shall not be liable for expenses as aforesaid when
        such expenses are included in other valid and collectible insurance.

        In sum, this clause simply says Granite State will not pay for expenses

included in other “valid and collectible” insurance. But when looking at the

policies as a whole, as we must do, the only valid and collectible insurances we

see are those set forth in the schedules attached to each Granite State policy.

This provision does not suggest that horizontal exhaustion is required herein.

        We conclude that no provision in Granite State’s policies expressly

requires horizontal exhaustion of primary policies issued over a variety of policy

periods.

        Additionally, because a reasonable person would read Granite State’s

policies to mean that Gull may access excess coverage upon exhausting the

schedule of underlying primary coverage during the same policy period, we

conclude that the rule of vertical exhaustion applies to this case. Both the policy

language and the principles explained in Montrose and SantaFe lead to this

conclusion.19

        19 An evil inherent in application of horizontal exhaustion through a long series of primary
policy periods was noted by the California appellate court. Where there is a continuing loss,
multiple primary level policies with different coverage levels, and numerous excess policies with

                                                23
No. 78277-1-I/24

                                                  D

        In this case, the trial court arrived at an attachment point of $1,600,000 for

the West Meeker site at the conclusion of the bellwether trial.20 In so doing, it

erred. For reasons we explain in the following sections, the trial court would

have correctly arrived at a $600,000 attachment point.21

                                                  V

        The parties do not dispute that TIG exhausted its $100,000 CGL policy

limits. Given this, we are tasked with determining whether Granite State’s

excess coverage attaches as to all sites even though TIG’s Auto Liability

coverage was not exhausted as to all sites. The trial court ruled that it did not

and we agree.

        Gull claims that Granite State’s excess coverage “attaches on a first-dollar

basis above” TIG’s exhausted CGL coverage. This is so, Gull argues, because

its coverages for CGL and Auto Liability do not overlap and are capable of

triggering coverage based on different “occurrences,” or “accidents” (depending

on the policy implicated). See Queen City Farms, Inc. v. Cent. Nat’l Ins. Co. of

Omaha, 64 Wn. App. 838, 866 n.18, 827 P.2d 1024 (1992) (noting auto liability

different coverages, if “horizontal exhaustion of all primary insurance were required to trigger the
coverage, the level of liability at which the excess coverage would attach would be
unascertainable. . . . The difference between premiums paid for excess and for primary policies
does not justify an interpretation that renders the point of attachment so unpredictable and
unascertainable when the policy is issued.” SantaFe, 52 Cal. App. 5th at 29 (emphasis added).
         20 While the parties hotly dispute the attachment point result reached by the trial court,

neither party claims error in the court’s decision to identify an attachment point or to the necessity
for so doing.
         21 Our analysis of the attachment point is conducted in accordance with the observations

set forth in note 8, supra.

                                                 24
No. 78277-1-I/25

insurance is in a separate category from comprehensive general liability

insurance), aff’d, 126 Wn.2d 50, 882 P.2d 703, 891 P.2d 718 (1994).

       Relying on Aetna Insurance Co. of Hartford v. Kent, 85 Wn.2d 942, 540

P.2d 1383 (1975), Gull contends its primary CGL and Auto Liability policies are

mutually exclusive. The Aetna case concerned two policies of insurance, one for

automobile liability and the other for contractor’s (general) liability, written by the

same insurance carrier. 85 Wn.2d at 943-44. The automobile policy covered

liability “arising out of the ownership, maintenance or use, including loading and

unloading, of any automobile,” while the contractor’s policy expressly did not

cover liability “arising out of the ownership, maintenance, operation, use, loading

or unloading of . . . any automobile.” Aetna, 85 Wn.2d at 946 (italicization

omitted). An accident occurred when a rock fell out of the contractor’s truck due

to improper loading. The insurer admitted coverage on the automobile liability

policy but denied coverage under the contractor’s policy, “claiming that to

construe that policy as imposing coverage would constitute duplicate coverage

never intended either by [the insurer] or by the insured.” Aetna, 85 Wn.2d at

944-45.

       Our Supreme Court agreed with the insurer’s contention, holding that in

view of the “virtually identical language” of each of the two policies, “the language

evidences an intention that the automobile policy provide liability coverage of a

kind the contractor’s policy excludes.” Aetna, 85 Wn.2d at 947.

       As Gull correctly notes, its TIG Auto Liability policies provide coverage for

“bodily injury or property damage to which this insurance applies, caused by an

                                           25
No. 78277-1-I/26

accident and resulting from the ownership, maintenance or use of a covered

auto.” But Gull’s TIG CGL policies expressly exclude from coverage:

                (g) to bodily injury or property damage arising out of the
                ownership, maintenance, operation, use, loading or
                unloading of
                (1) any automobile or aircraft owned or operated by or
                rented or loaned to any insured, or
                (2) any other automobile or aircraft operated by any person
                in the course of his employment by any insured.

        Therefore, Gull concludes that a petroleum release from its driver’s action

in filling an underground storage tank from a tanker truck constitutes an

“accident” triggering the Auto Liability policies, but a release from a leaking

underground storage tank constitutes an occurrence triggering the CGL

policies.22 In essence, Gull argues that the two policies insure against different

risks, that property damage in the form of pollution arises from both risks, that its

primary coverage for property damage from the risk of leakage from tanks and

pipes is exhausted, and that, therefore, Granite State’s excess coverage as to

that risk must be triggered.

                                                A

        Against this backdrop, Gull avers that the trial court mistakenly applied

Granite State’s “other insurance” provision to require exhaustion of TIG’s Auto

Liability coverage within a particular policy period. Gull asserts that the “other

insurance” provision applies only when the coverage is concurrent and supports

this assertion by citation to Devington Condominium Association v. Steadfast

        22  Gull also claims that the differing premiums it paid TIG ($9,864 CGL and $20,640 Auto
Liability for 1982-83) for the coverages it received ($100,000 CGL and $500,000 Auto Liability)
further demonstrate that the two coverages are mutually exclusive.

                                               26
No. 78277-1-I/27

Insurance Co., No. C06-1213 MJP, 2007 WL 869954 (W.D. Wash. Mar. 20,

2007), a Western District of Washington federal court case in which a developer

sued its contractor for defective construction.

       In Devington, a contractor had three general liability insurers: the first

issued a policy covering October 1998 to March 2000, the second provided

coverage for the period of March 2000 to June 2001, and the third issued

coverage from August 2001 to August 2003. 2007 WL 869954 at *1. One of the

insurers moved for summary judgment and requested a ruling that the “other

insurance” clause in its policy exempted it from coverage. Devington, 2007 WL

869954 at *1-2. The motion was denied.

       In reaching this decision, after discussing relevant authorities, District

Judge Marsha Pechman explained that some legal commentators have noted

that

       “other insurance” clauses only apply in the context of concurrent
       policies because “while successive policies might insure the same
       type of risk, they do not insure the same risk” and because applying
       “other insurance” clauses to successive policies might make
       insurers liable for damages occurring outside their policy periods.
       DOUGLAS R. RICHMOND, ISSUES AND PROBLEMS IN “OTHER
       INSURANCE,” MULTIPLE INSURANCE, AND SELF-INSURANCE, 22 PEPP. L.
       REV. 1373, 1376-77 (1995); see also 22 ERIC MILLS HOLMES,
       HOLMES’ APPLEMAN ON INSURANCE 2D § 140.1[A] (1998) (“‘Other
       insurance’ refers to the existence of other insurers that insure the
       same risk, for the same benefit of the same entity, during the same
       period of time.”); 3 LAW AND PRAC. OF INS. COVERAGE LITIG. § 38.2
       (West 2006) (“To be deemed ‘other insurance,’ two or more policies
       must insure the same risk and the same interest over the same
       period of time.”); 1 INSURANCE CLAIMS AND DISPUTES § 6.47 (West
       2006) (noting that “other insurance” clauses should not apply to
       successive policies).

                                          27
No. 78277-1-I/28

Devington, 2007 WL 869954 at *3. Judge Pechman then recognized that “other

insurance” refers to other insurers that insure (1) the same risk (2) for the same

entity (3) during the same period. Devington, 2007 WL 869954 at *3-4

(concluding “that ‘other insurance’ clauses do not apply where the at-issue

policies provided consecutive rather than concurrent insurance coverage”).

        In reply, Granite State argues, and the trial court herein agreed, that Gull

must exhaust the primary coverages for CGL and Auto Liability because Gull

claimed that indivisible property damage was caused by its general and

automobile operations, and, accordingly, claimed that both Gull and its insurers

were jointly and severally liable for all remediation costs. For this reason, Granite

State contends, Gull’s primary CGL and Auto Liability policies covered the same

risk.

        The flaw in Granite State’s position is that it conflates “risk” with the type of

loss or damage that resulted. However, the terms “risk” and “loss” are not the

same.

        “The ‘risk’ covered by [a] policy is, in general, the category of loss the

insurer agreed to provide cover under the terms of the policy.” 7 LEE R. RUSS &

THOMAS F. SAGALLA, COUCH ON INSURANCE 3D § 101:3 (2006). “Coverage for a

particular activity ordinarily includes those risks inherent in that activity unless the

risk is specifically excluded.” 7 RUSS & SAGALLA, supra, § 101:6 (emphasis

added). Hence, the definition of “loss,” which is “[a]n undesirable outcome of a

risk.” BLACK’S LAW DICTIONARY 1132 (11th ed. 2019). A comparison of the two

                                           28
No. 78277-1-I/29

terms supports the notion that “loss” is the product of a risk; it is not itself a risk.23

The term “risk,” unless otherwise defined, cannot be read to mean the loss that is

generally at issue. We understand risk to mean the activities or events that give

rise to a loss.

        Applying that definition here, we view the “loss” at issue to be gasoline

contamination and the “risk” giving rise to that loss as customer spills, employee

delivery spills, and underground storage tank leaks. Because tank leakage was

a risk insured under TIG’s CGL policy and delivery spills were risks insured under

its Auto Liability policy, those policies cannot be read to cover the same risk. In

any event, the risks those policies insured against are not the loss that ultimately

resulted (e.g., contamination).

        At first blush, then, Gull appears to have a sound argument. Because the

two underlying primary policies are triggered by different occurrences and insure

against different risks, it seems to follow that the excess coverage should attach

upon the exhaustion of either one, but not necessarily both, of the primary

policies. And, if it was true that we look to the language of the underlying policies

to answer this question, Gull would prevail.

                                               B

        However, we do not look to the language of the underlying policies to

answer this question. Instead, when seeking to determine the obligations

imposed by an excess insurance policy, we first look to the language of the

         Our discussion of “loss” herein is with regard to the issue presented and should not be
        23

read more broadly than that.

                                               29
No. 78277-1-I/30

excess policy itself. And a review of the pertinent portions of the excess policies

herein provides needed clarity.

       Granite State agreed to insure Gull, but limited the amount of coverage

available, as follows: for all sums which Gull “shall be obligated to pay by reason

of the liability (a) imposed upon the Assured by law . . . for damages, direct or

consequential, and expenses . . . on account of: (ii) Property Damage . . . caused

by or arising out of each occurrence happening anywhere in the world.” But

Granite State limited the amount of insurance coverage available to Gull as

follows:

               I. COVERAGE. The Company hereby agrees, according to
       the terms and conditions but subject to the limitations 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 . . .
               ...
       for damages, direct or consequential, and expenses, all as more
       fully defined by the term “ultimate net loss” on account of:
               ...
                      (ii) Property Damage,
               ...
       caused by or arising out of each occurrence happening anywhere
       in the world.
               II. LIMIT OF LIABILITY. The Company shall only be liable
       for the ultimate net loss, the excess of . . .
               (a) The limits of the underlying insurances as set out in the
       schedule in respect of each occurrence covered by said underlying
       insurances, . . .
               ...
       and then only up to a further sum as stated in item 3(a) of the
       Declarations in all in respect of each occurrence, subject to a limit
       as stated in item 3(b) of the Declarations in the aggregate for each
       annual period during the currency of this Policy . . . .
               ...
               5. OCCURRENCE. The term “Occurrence” wherever used
       herein shall mean an accident, or a happening, or event, or a
       continuous or repeated exposure to conditions which unexpectedly
       and unintentionally results in personal injury, property damage or

                                         30
No. 78277-1-I/31

       advertising liability during the policy period. All such exposure to
       substantially the same general conditions existing at or emanating
       from one premises location shall be deemed one occurrence.

(Emphasis added.)

       Granite State’s “limit of liability” provision is a statement of limitation. The

policies plainly state that Granite State will be liable for “each occurrence covered

by said underlying insurances.” And then it sets forth the definition of occurrence

that controls the excess policy.

       Thus, an “occurrence” includes “a continuous or repeated exposure to

conditions” which results in property damage to the property of another.

However, all such exposure to conditions “existing at or emanating from one

premises location shall be deemed one occurrence.” Thus, the excess policy

itself defines as one occurrence that which is two different risks where referenced

in the underlying policies. Because the limits of the underlying policies that

covered this occurrence have not been both exhausted as to all sites, Granite

State’s excess obligation is not triggered.

       Gull’s argument thus fails.

                                          VI

       Applying the principles discussed and conclusions reached to this point,

the correct attachment point is $600,000. Because TIG’s $100,000 CGL limits

and $500,000 Auto Liability limits are the only underlying insurances implicated in

this dispute, their combined limits of $600,000 is the amount at which Granite

State’s obligations commence.24

       24   Again, see note 8, supra.

                                          31
No. 78277-1-I/32

       The trial court found that Gull had incurred and paid $325,818, as of

November 2015, in remediation costs at the West Meeker site. It also found that

Gull would incur additional costs, explaining:

       Additional MTCA-required costs will be incurred at West Meeker in
       the future. [Washington’s Department of] Ecology has not issued a
       “No Further Action” letter at West Meeker, and obtaining this
       documentation will itself require further expenditure. Additional
       remedial work remains to be done at the West Meeker [site] in
       order to achieve MTCA compliance.

       Therefore, on remand the trial court must determine whether Gull’s

remediation costs incurred at the West Meeker site have reached the attachment

point, thereby triggering Granite State’s excess policy obligations.

                                         VII

       The next question to be addressed is whether the trial court correctly ruled

that Granite State has no duty to defend Gull in the lawsuits brought against Gull

by third parties arising out of property damage (pollution) caused to the property

of those third parties, by Gull’s actions, at Station 269 and Station 272. Our short

answer is that these rulings will need to be revisited by the trial court on remand.

       We have previously noted that the trial court correctly ruled that Gull had

not shown that TIG’s Auto Liability policy had been exhausted as to all sites

referenced in the declaratory judgment complaint. Based on both this ruling and

its application of horizontal exhaustion, the trial court subsequently ruled that this

meant that Granite State’s duty to defend had not been triggered at any site—

                                          32
No. 78277-1-I/33

and thus Granite State had no duty to defend Gull in the litigation arising out of

accidents at Station 269 or 272.25

        To determine whether this ruling is necessarily correct, we must answer

this question: Is it possible for Gull to establish that TIG’s Auto Liability policy was

exhausted as to a particular site in a particular policy period even though it could

not establish that the same policy was exhausted as to all sites in all policy

periods? The answer is yes.

        As previously discussed, Granite State’s policy is triggered by exhaustion

of the TIG CGL policy ($100,000) and payment of $500,000 by TIG (the limits of

its Auto Liability policy). This results in an attachment point (applying vertical

exhaustion) of $600,000 in any policy period. Once that attachment point is

reached, Granite State’s duties are clear.

        It remains undisputed that TIG paid Gull $6,400,000 in exchange for a

release of all claims against it. Can the receipt of this $6,400,000 benefit Gull in

its dispute with Granite State regarding Gull’s assertions that Granite State has a

duty to defend it in—for instance—the Station 269 litigation? We believe it can.

        To begin, it is clear that TIG’s payment was made as a result of Gull

having incurred legal liability as the result of property damage to the property of

others arising out of an “accident” (in the language of the TIG Auto Liability

policy) or “occurrence” (in the language of the Granite State excess policy) at (at

least) some of the sites referenced in Gull’s lawsuit against TIG (this lawsuit).

        25 In so ruling, it correctly rejected Gull’s contention that it does not matter whether the
TIG Auto Liability policy is exhausted, so long as the TIG CGL policy is exhausted (which all
parties agree is the case).

                                                  33
No. 78277-1-I/34

       Granite State appears to argue that—for any of the $6,400,000 paid by

TIG to be applied to exhaust TIG’s obligation at Station 269—Gull must be able

to prove that it specifically contracted with TIG to so provide, or, put differently,

that TIG’s state of mind was that it was so doing. Not so. Expansive settlements

are often the product of opposing parties agreeing on a settlement amount

without agreeing as to the particular “value” of each component part of the

various claims settled.

       Here it is clear that the $6,400,000 payment meets most of the basics of

the bargain Granite State struck when it sold the excess policy to Gull. There

was a payment from the underlying insurances (the exhausted CGL insurance

and the Auto Liability policy) in at least the amount of their respective policy limits

(per site, in a policy period). The payments were the result of a legal liability

incurred by Gull. That legal liability arose from an occurrence (as defined in

Granite State’s policy) during the policy period. Thus, if Gull can establish that at

least $500,000 of the $6,400,000 was attributable to property damage arising

from activity at Station 269, Granite State’s policy obligations will be triggered

because the situation will be that which it bargained for in its policy.

       So, can Gull do so? We first address the significance of the mental state

of TIG in making the payment to Gull. In this regard, Granite State has no

enforceable interest in being treated well by either the underlying insurer or its

insured. As was noted by United States District Judge Richard Jones in a similar

dispute:

       Chartis [the excess insurer] complains that the settlement was the
       product of collusion for the purpose of triggering its duty to defend.

                                          34
No. 78277-1-I/35

          There is no question that [the settling parties] colluded for this
          purpose . . . . But there is nothing presumptively improper about
          collusion for the purpose of obtaining insurance coverage.

Chartis Specialty Ins. Co. v. Queen Anne HS, LLC, 867 F. Supp. 2d 1111, 1122

(W.D. Wash. 2012) (applying Washington law).

          Thus, had TIG been of a mindset to collude with Gull in order to trigger

Granite State’s excess policy obligations, Washington law would not stand in the

way. And if the underlying insurer can act with such a collusive attitude toward

excess coverage, it stands to reason that coverage can result even when the

underlying insurer is of an agnostic mindset toward the question.

          This makes sense. It is not the settling parties’ subjective goals that

control the excess insurer’s obligation. Instead, it is the language of the excess

policy.

          [T]he document that governs an excess insurer’s duty is the excess
          policy itself. Weyerhaeuser, [142 Wn.2d at 690]. But excess
          insurance provides no greater license to deny a defense to an
          insured. An excess insurer must defend if an insured engages in
          conduct that conceivably triggers the defense obligation described
          in the excess policy.

Chartis, 867 F. Supp. 2d at 1121.

          Had this dispute arisen solely as the result of the Station 269 plaintiff filing

its complaint against Gull and Gull tendering defense to Granite State, no one

would dispute that, had TIG paid both the $100,000 CGL limits and the $500,000

Auto Liability limits, Granite State would have a duty to defend. This would be

true even if Gull did not immediately turn over the $600,000 to the plaintiff while

the litigation remained ongoing. After all, by purchasing excess insurance from

Granite State, Gull did not enter into a suicide pact. It need not fund its

                                             35
No. 78277-1-I/36

opponent’s litigation efforts as a condition of receiving the benefits of its Granite

State policy.

        What does this all mean? On remand, if Gull can establish that it has

allocated, dedicated, encumbered, and reserved $500,000 of the $6,400,000

paid by TIG to the Station 269 claim, it can put Granite State in the same

position—with regard to Station 269—that it would be in had the Station 269

lawsuit been the only factor in this case. By ensuring that Granite State is in that

position, the attachment point is met and Granite State’s duties are clear. 26

        At that point, the only remaining question is does the Station 269 plaintiff’s

complaint conceivably allege damages in excess of $600,000? If so, Granite

State’s policy obligations are triggered. Hayden v. Mut. of Enumclaw Ins. Co.,

141 Wn.2d 55, 64, 1 P.3d 1167 (2000) (a duty to defend “exists merely if the

complaint contains any factual allegations which could render the insurer liable to

the insured under the policy” (citing Holland Am. Ins. Co. v. Nat’l Indem. Co., 75

Wn.2d 909, 912-13, 454 P.2d 383 (1969))); Chartis, 867 F. Supp. 2d at 1121.

        What we have just discussed also holds true for the lawsuit arising out of

activity at Station 272. On remand, the trial court must revisit its analysis of

these issues.27

        26  The attachment point being $600,000, that point is reached by combining the $100,000
CGL limit (that all parties agree has been exhausted) with $500,000 of Auto Liability payment
from TIG.
         27 The trial court’s reengagement with its rulings will not be constrained by CR 59 or any

other state or local procedural rule. Our purpose in accepting discretionary review of this case is
to assist the trial court. It should pay no heed to claims that any unreviewed rulings remain as the
“law of the case” or any other such claim. All of the trial court’s rulings remain interlocutory, and
thus subject to change. The trial court has free rein to alter any ruling it has heretofore made as a
result of the issuance of this opinion.

                                                36
No. 78277-1-I/37

        We granted review of the duty to defend question as to litigation only at

Stations 269 and 272. Thus, we do not address any other site.28, 29

                                              VIII

                                                A

        The next question is whether the trial court correctly ruled that, for the

insurer to have liability in this MTCA-property-damage-to-third-parties lawsuit, the

insured (Gull) was required to prove that property damage to the property of a

third party took place during a Granite State policy period, and that such damage

exceeded the MTCA mandatory cleanup level during the same policy period. In

so ruling, the trial court followed a decision of our court which, in our view, is

inconsistent with the language of pertinent Supreme Court decisions. Thus, we

conclude that the trial court did not properly apply the law in this respect.

        Before venturing into the case law, it is prudent to set forth the various

scenarios that can arise in a continuous loss, liability only for damage to the

property of others, pollution remediation, insurance dispute such as this. To

illustrate, this case involves allegations of environmental property damage arising

from three causes: (1) leaking underground gasoline tanks and pipes, (2)

customers spilling gasoline when filling their tanks, and (3) employees spilling

gasoline when refueling underground storage tanks.

        Such spills or leakage can and did manifest itself in different degrees at

different sites. Moreover, the causes of action that arise from damage to the

        28 Having said this, it stands to reason that Gull cannot allocate $500,000 of the TIG
settlement amount to more than 12 sites. Having done so will leave only $400,000 remaining.
        29 The statement in note 28 is made in accordance with note 8.

                                               37
No. 78277-1-I/38

property of third parties can be both statutory (i.e., MTCA) and common law

(trespass, nuisance, or negligence). Indeed, MTCA specifically provides that it

does not abrogate, supplant, or in any way alter common law claims:

        Nothing in [the MTCA] affects or modifies in any way any person’s
        right to seek or obtain relief under other statutes or under common
        law, including but not limited to damages for injury or loss resulting
        from a release or threatened release of a hazardous substance.

Former RCW 70.105D.040(7) (2013).

        What constitutes damage to the property of another? In this situation, it

means either damage to the real property owned by a third party or damage to

groundwater. “[G]roundwater belong[s] to the State of Washington, a third party,

under RCW 90.44.040 and article XXI, section 1 of our constitution.” Olds-

Olympic, Inc. v. Commercial Union Ins. Co., 129 Wn.2d 464, 476, 918 P.2d 923

(1996) (footnote omitted).30

        Thus, spilled or leaking gasoline can manifest itself (or not) in several

ways:

        1. It may cause no damage to the insured’s property or to the property of

others;

        2. It may cause damage to the insured’s property but no damage to the

property of others;

        3. It may cause damage to the insured’s property but no damage to the

property of others in the policy period;

        30 RCW 90.44.040 states in pertinent part that “all natural groundwaters of the state . . .

are hereby declared to be public groundwaters and to belong to the public.” W ASH. CONST. art.
XXI, § 1 provides: “The use of the waters of this state for irrigation, mining and manufacturing
purposes shall be deemed a public use.”

                                                 38
No. 78277-1-I/39

        4. It may cause damage to the insured’s property and cause slight

damage (below MTCA mandatory cleanup levels) to the property of others during

the policy period, with no evidence that the damage to third party property

eventually met MTCA levels;

        5. It may cause damage to the insured’s property and slight damage to

third party property (below MTCA levels) during the policy period, with evidence

that the damage to the property of others did eventually meet MTCA levels; or

        6. It may cause damage to the insured’s property and damage to the

property of others meeting MTCA levels during the policy period.

        In the first scenario, there is no property damage and, thus, the insurer

has no obligation to indemnify.

        In the second scenario, there is no damage to the property of another and,

thus, pursuant to the policy’s owned property exclusion, the insurer incurs no

obligation to indemnify.31

        In the third example, there is no “occurrence,” as defined by the Granite

State policy, because there is no third party property damage during the policy

period. Thus, the insurer has no obligation to indemnify.

        In the fourth example, there is third party property damage during the

policy period. Thus, there is an “occurrence,” as defined in the Granite State

        31   Granite State’s owned property exclusion clause states:
         It is hereby understood and agreed that except to the extent that coverage is
         available to the assured in the underlying insurances as set out in the attached
         schedule (Form P433), this policy shall not apply to any liability for injury to or
         destruction of any property (including the loss of use thereof) leased by, rented
         to, used by or in the care, custody or control of the assured, their agents or sub-
         contractors, or to any property as to which the assured, their agents or sub-
         contractors are for any purpose exercising physical control.
(Capitalization omitted.)

                                                 39
No. 78277-1-I/40

policy. The insured could be liable in common law tort to the third party. The

insurer would have an obligation to indemnify for that liability. But the owner

would not yet have MTCA liability. Thus, the insurer would have no MTCA

indemnification obligation.32

        In the fifth example, there is third party property damage during the policy

period and the damage ultimately reached MTCA levels. There is an

“occurrence.” The insured is liable for the continuing tort/continuing loss under

MTCA. The insurer is obligated to indemnify.

        In the sixth example, there is third party property damage reaching MTCA

levels in the policy period. There is an “occurrence.” The insured is liable under

MTCA and the insurer is obligated to indemnify.

        The superior court adopted and applied a view of the law that resulted in

Granite State being responsible to Gull only in circumstances fitting the sixth

example. We disagree, reverse the trial court’s decision, and instruct the trial

court to revisit all rulings made in reliance on that view of the law.

        In the remainder of this section of our opinion, we explain our reasons for

so ruling.

                                               B

        Again, we begin by examining the excess policy’s language. Granite

State promised to indemnify Gull for all sums Gull becomes legally obligated to

        32 A question of fact could be presented as to whether, pursuant to the evidence

adduced, it was more likely than not that MTCA levels would ultimately be reached. This could
impact the court’s declaration of rights in a UDJA (Uniform Declaratory Judgments Act, chapter
7.24 RCW) action.

                                              40
No. 78277-1-I/41

pay, up to the policy limits, due to third party property damage caused by an

“occurrence” as defined in the policy:

               I. COVERAGE. The Company hereby agrees, according to
       the terms and conditions but subject to the limitations 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 . . .
               ...
       for damages, direct or consequential, and expenses, all as more
       fully defined by the term “ultimate net loss” on account of:
               ...
                      (ii) Property Damage,
               ...
       caused by or arising out of each occurrence happening anywhere
       in the world.
               ...
               3. PROPERTY DAMAGE. The term “Property Damage”
       wherever used shall mean (1) physical injury to or destruction of
       tangible property, which occurs during the policy period, including
       loss of use thereof at any time resulting therefrom; or (2) loss of use
       of tangible property, which has not been physically injured or
       destroyed provided such loss of use is caused by an occurrence
       during the policy period.

       The policy does not indicate a specific amount of property damage that

Gull needs to establish before it can access Granite State’s excess coverage.

Nor does the policy define “damages.” But our Supreme Court has “explained

the term ‘damages’ in an insuring agreement refers to the cost of compensating a

claimant for damage done to the property,” while the term “‘[d]amage’ means the

actual loss, injury, or deterioration of the property itself.” Overton, 145 Wn.2d at

428 (citing Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wn.2d 869, 877, 784 P.2d

507 (1990); Am. Stevedores v. Porello, 330 U.S. 446, 450 n.6, 67 S. Ct. 847, 91

L. Ed. 1011 (1947)).

                                         41
No. 78277-1-I/42

        As to the controlling statute itself, MTCA imposes liability on the “owner or

operator of the facility”33 or “[a]ny person who owned or operated the facility at

the time of disposal or release of the hazardous substances,” but does not

impose that liability directly on their insurers. Former RCW 70.105D.040(1)

(2013). Each party liable under MTCA “is strictly liable, jointly and severally, for

all remedial action costs and for all natural resource damages resulting from the

releases or threatened releases of hazardous substances.” Former RCW

70.105D.040(2) (2013). Thus, each liable party is severally liable and jointly

liable for remediating environmental property damage. This is so, regardless of

whether the liable party contributed the first drop of pollutant, the last drop of

pollutant, or the drop that caused the pollution to reach MTCA cleanup levels.

        There is no dispute that Gull is legally obligated to clean up the property

damage at its current and former contaminated sites. And, to the extent that any

of the property damage for which Gull is jointly and severally liable resulted from

an “occurrence” during Granite State’s policy periods, Gull is entitled to coverage.

“[A]ll insurers on the risk during the time of ongoing damage have a joint and

several obligation to provide full coverage for all damages.” B&L Trucking, 134

Wn.2d at 424. This is so because “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

        33 An “owner or operator” is “[a]ny person with any ownership interest in the facility or who

exercises any control over the facility.” Former RCW 70.105D.020(22)(a) (2013). A “facility”
includes any “building,” “equipment,” “pipe or pipeline,” “storage container,” or “any site or area
where a hazardous substance, other than a consumer product in consumer use, has been
deposited, stored, disposed of, or placed, or otherwise come to be located.” Former RCW
70.105D.020(8) (2013).

                                                42
No. 78277-1-I/43

in order to safeguard society in general.’” Weyerhaeuser, 142 Wn.2d at 681

(quoting Weyerhaeuser Co. v. Aetna Cas. & Sur. Co., 123 Wn.2d 891, 909, 874

P.2d 142 (1994)).

       At the time Granite State’s policies were issued, of course, MTCA had not

yet been enacted. So Gull could not have been found liable in 1982 or 1983 for

MTCA damages.

       However, Granite State’s policy insured Gull against common law property

damage claims during the policy period, such as trespass, nuisance, or

negligence actions. See, e.g., Tiegs v. Boise Cascade Corp., 83 Wn. App. 411,

413, 922 P.2d 115 (1996) (pollution of groundwater, which was prohibited by

statutes, gave rise to a nuisance action); Tiegs v. Watts, 135 Wn.2d 1, 4, 954

P.2d 877 (1998) (lead opinion by Smith, J.) (affirming verdict finding former

landowners “liable for breach of a farm lease and for creating a nuisance by

contaminating well water used for commercial farming”).

       Indeed, Gull’s complaint for declaratory relief does not seek a declaration

of coverage based solely on MTCA liability. To the contrary, it alleges more

generally that “[c]ompensable and covered damage to property at each of the

[s]ites, in the form of environmental contamination to the soil and groundwater,

occurred during the periods of the [p]olicies.”

       Hence, from our reading of Granite State’s policies and of Gull’s

complaint, we see no requirement that Gull establish a certain amount or level of

“property damage” before coverage is implicated. Instead, any amount of third

party property damage, no matter how small, that is the result of an “occurrence”

                                         43
No. 78277-1-I/44

during the policy period is sufficient to trigger coverage. See Boeing, 113 Wn.2d

at 886 (“The occurrence of the hazardous wastes leaking into the ground

contaminating the groundwater, aquifer and adjoining property constituted

‘property damage’ and thus triggered the ‘damages’ provision of the policies.”);

B&L Trucking, 134 Wn.2d at 425 (when damage, even if minute, occurs during a

policy period that policy is triggered). It is the “occurrence” that is tied to the

policy period—not the determination of the extent of damages owed or even the

theory of legal liability employed by the third party claimant.

                                           C

       Granite State argues to the contrary, justifiably asserting that a jury

instruction referenced in PSE, 134 Wn. App. at 253, correctly states the law as to

when property damage is compensable under MTCA. The trial court agreed and

applied the wording of that instruction as the law of this case. However, for a

variety of reasons that we now discuss, the instruction at issue in PSE did not

correctly state the law.

       The PSE opinion concerned a multi-year environmental insurance

coverage action filed by Puget Sound Energy (PSE) against multiple insurance

companies to recover cleanup costs at three sites. 134 Wn. App. at 232. Given

the complexity of the issues therein, the litigation was split into three phases.

Phase II asked a jury to determine: “(1) Whether or not there is coverage under

any policies at issue as to each site; and (2) If any coverage is found under any

policies, the trier of fact will determine the amount of damages plaintiff is entitled

                                           44
No. 78277-1-I/45

to recover as to each site.” PSE, 134 Wn. App. at 232-33. At the conclusion of

Phase II,

       the jury returned special verdicts with regard to the three sites.
       With regard to the Buckley Headworks and Shuffleton Steam Plant
       sites, the jury found that groundwater property damage did not
       occur at those sites during the policy periods in question. Thus,
       [the insurer] was not liable to cover Puget’s remediation costs for
       those sites. However, the jury found that groundwater property
       damage occurred at the Grady Way site during the policy periods in
       question.

PSE, 134 Wn. App. at 235-36.

       Following later proceedings and the completion of Phase III, the insurer

appealed on several grounds. PSE cross-appealed, claiming that Phase II’s jury

instruction 13 was erroneous. PSE, 134 Wn. App. at 238, 253. Instruction 13

stated:

              “In order to establish that it caused compensable property
       damage to groundwater, Puget Power must prove by a
       preponderance of the evidence that it contaminated groundwater,
       and that during the policy periods the contamination exceeded the
       levels mandated for cleanup or remediation under the Washington
       State Model Toxics Control Act [(MTCA)].

             Puget Power must also prove by a preponderance of the
       evidence that the claimed costs were incurred because there was
       compensable damage to groundwater.”

PSE, 134 Wn. App. at 253 (alteration in original). On appeal, as we explained,

“[f]or strategic reasons, P[SE] raise[d] this issue only with regards to the Buckley

Headworks verdict.” PSE, 134 Wn. App. at 253.

       As to the cross-appeal, we deemed jury instruction 13 to be a correct

statement of the law because,

       in order for London’s policies to have been triggered, there must
       have been “compensable damage” or “a covered injury or loss”

                                         45
No. 78277-1-I/46

       during the policy periods. Under the terms of London’s insurance
       policies, compensable damage is damage that the policyholder is
       legally obligated to pay. Under the MTCA, a property owner is
       legally liable for third party property damage only when
       contamination exceeds the limits set forth in the MTCA. For Puget
       to be legally liable under the MTCA for groundwater contamination
       during the policy periods in question, it must be proven that the
       alleged contamination exceeded MTCA levels during those policy
       periods. If an MTCA exceedance is not proved during the periods
       of London’s coverage, there is no compensable property damage
       under the MTCA during those periods and London’s policies are not
       triggered. Jury instruction 13 was not erroneous.

PSE, 134 Wn. App. at 253-54 (footnotes omitted). But in reaching this

conclusion, we misapplied the rule announced in Villella v. Public Employees

Mutual Insurance Co., 106 Wn.2d 806, 725 P.2d 957 (1986), the sole authority

upon which the statement was based and the sole authority cited by us in this

section of the opinion.

       Villella involved a claim of continuous loss that, in fact, was not a

continuous loss. There, an insured homeowner purchased a new home in 1979.

Villella, 106 Wn.2d at 808. By 1983, the foundation on one side of the house

sank eight inches. The homeowner sought recovery for damage to the home

under insurance policies in effect between 1979 and 1982, arguing that the

builder “had negligently failed to install a proper drainage system, and that this

negligence set in motion a continuous process of soil destabilization which

eventually resulted in the inability of the soil under his house to sustain the

foundation or the house itself.” Villella, 106 Wn.2d at 808-09. This argument

was rejected by our Supreme Court, which reasoned that

       [t]here was no “continuing process” of damage to the plaintiff’s
       residence. The residence itself sustained no damage prior to
       November 20, 1983. Consequently there was no damage to the

                                         46
No. 78277-1-I/47

        house during the period of October 25, 1979 to August 26, 1982,
        when the homeowners policy was in effect. Mr. Villella could not
        have filed a claim during the policy period, as the Gruol[34] plaintiff
        could have done, because there was no compensable damage
        during the policy period.

Villella, 106 Wn.2d at 811-12.35

        Then, in its discussion regarding the requirement that property damage

occur during the policy period to trigger coverage, the Supreme Court observed

that “when courts are dealing with property damage situations where damages

slowly accumulate, courts have generally applied the exposure theory. So long

as there is tangible damage, even if minute, courts have allowed coverage from

that time.” Villella, 106 Wn.2d at 814 (quoting Ins. Co. of N. Am. v. Forty-Eight

Insulations, Inc., 633 F.2d 1212, 1222 n.18 (6th Cir. 1980)). The Supreme Court

then held that, to trigger coverage, an insured must have sustained “a covered

injury or loss, however minute, during the effective period of the policy.” Villella,

106 Wn.2d at 814 (emphasis added). But, in that case, “Villella simply did not

sustain a covered loss during the coverage period of [the] policy.” Villella, 106

Wn.2d at 814.

        In PSE, however, we misunderstood Villella to mean that a particular level

of damage was required within a policy period. Villella clearly does not support

        34 Gruol Constr. Co. v. Ins. Co. of N. Am., 11 Wn. App. 632, 524 P.2d 427 (1974).
        35 Immediately before this explanation, the Villella court distinguished Villella’s case, both
factually and legally, from that of Gruol. It said: “Gruol involved an undiscovered, progressively
worsening condition of dry rot. The actual damage to the building was initiated at the time of
construction and continued throughout the time that each of the three insurers provided
coverage.” Villella, 106 Wn.2d at 811. Further, “[t]he damage to the structure was a continuous
process which increased with time,” “the structure was damaged by dry rot during each policy
period,” and “[i]f at any point the dry rot had been discovered, the insured could have forced the
insurer to pay for the damages.” Villella, 106 Wn.2d at 811. Thus, Gruol involved an
“occurrence” happening during the policy period (property damage). Villella, however, involved
no property damage during the policy period and, hence, no “occurrence.”

                                                 47
No. 78277-1-I/48

that proposition. This error on our part is further illustrated by B&L Trucking, in

which our Supreme Court clarified its Villella decision:

       We held there was no continuing process of damage to the
       residence, the policy required that damage occur during the policy
       period, and, therefore, the policy did not cover the damage. . . .
       [W]e noted that . . . coverage under the occurrence clause requires
       the insured to sustain damage during the effective period of the
       policy. Villella, 106 Wn.2d at 814. In other words, when damage
       occurs during a policy period, that policy is triggered.

       . . . Hence, in Villella, we accepted that when damage is continuing,
       all triggered policies provide full coverage.

B&L Trucking, 134 Wn.2d at 425; see also Seattle City Light v. Dep’t of Transp.,

98 Wn. App. 165, 172, 989 P.2d 1164 (1999) (“no minimum level of ‘hazardous

substance’ is required to trigger MTCA liability”); PacifiCorp Envtl. Remediation

Co. v. Dep’t of Transp., 162 Wn. App. 627, 658, 259 P.3d 1115 (2011)

(explaining that if the evidence shows that a hazardous substance “had some

effect (no matter how small)” on contamination levels, “then DOT [the

Department of Transportation] is liable under the MTCA, provided DOT falls

within a definition of an applicable liability provision”).

       We note that our PSE decision was originally an unpublished opinion,

consisting of 44 paragraphs, of which 41 were devoted to other issues.36 In fact,

the three-paragraph discussion of the MTCA cleanup level therein was dicta. We

say this because the record reveals that the trial court properly instructed the jury

in instruction 12, which said:

              Property damage is harm or injury to or destruction of
       property owned by third parties. The State of Washington owns all
       groundwater in the state. Property damage includes harm or injury
       to groundwater by the presence in the groundwater of hazardous or

       36   In briefing, the parties invited us to examine the record in PSE. We have done so.

                                                48
No. 78277-1-I/49

         toxic substances as defined in these instructions. You must
         determine if property damage occurred and if so, when such
         property damage first occurred and over what period of time such
         property damage continued.

                When property damage first occurred and over what period of
         time property damage continued can be determined without
         reference to any specific quantity of property damage. Any damage,
         however minute, is sufficient.

(Emphasis added.)

         The PSE jury was also given an interrogatory which asked: “Did

groundwater property damage occur at the Buckley Headworks site during the

following policy periods: [listing 23 policy periods between June 1939 and April

1965].” The jury answered “no.” Given this finding, it is plain that the jury never

considered the question of whether the damage it found was compensable

property damage, as defined in instruction 13. Having found no damage at all,

as defined in instruction 12, the jury did not continue on to the question of

whether the property damage was compensable. Thus, PSE’s cross-appeal

should have been summarily rejected on the basis that the jury never considered

instruction 13.

         For the reasons stated above, it was wrong for PSE to suggest that a

landowner’s insurer is not responsible for cleanup damages simply because the

property damage had not exceeded MTCA cleanup levels during the policy

period. The landowner is liable when damage to third party property first takes

place—at the first drop of contaminant. Later, when the contamination reaches

MTCA levels, the landowner is jointly and severally liable for all remediation

costs.

                                         49
No. 78277-1-I/50

        Because the first drop of contaminant constitutes property damage to the

property of another, there is an “occurrence” during the policy period. This

triggers policy coverage. That the scope or extent of the “damages” for which the

landowner is ultimately responsible cannot be determined within the policy period

is of no moment. When there is an “occurrence” within the policy period, the fact

of the landowner’s liability is fixed, as is the obligation of the insurer.37 Only the

extent of the liability remains to be determined. That what began as tort liability

only later became MTCA liability does not alter the insurer’s responsibility to

indemnify for “all sums” owed.

        As was ably expressed:

        Insureds are not purchasing “almost comprehensive” coverage.
        CGL policies[38] are marketed by insurers as comprehensive in their
        scope and should be strictly construed when the insurer attempts to
        subtract from the comprehensive scope of its undertaking.

Olds-Olympic, 129 Wn.2d at 471.

        As explained herein, we misspoke in PSE. On remand, the trial court

must revisit its rulings made in reliance on our error and apply the law as our

Supreme Court has deemed it to be.

                                               IX

        With this holding in mind, we now address the trial court’s summary

judgment rulings dismissing the NCPD sites, Admitted sites, and OPE sites.

        37 Indeed, MTCA was not enacted until 1989. MTCA liability in 1982 or 1983, when the

insured “occurrences” took place, could not then have been proved. That such a theory of liability
came into being after the policy period does not annul the duties to indemnify or cover.
        38 Granite State’s policy is in excess to both TIG’s CGL and Auto Liability policies.

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       We review summary judgment orders de novo and engage in the same

inquiry as the trial court. Youngblood v. Schireman, 53 Wn. App. 95, 99, 765

P.2d 1312 (1988). Summary judgment is appropriate if “there are no genuine

issues of material fact and the moving party is entitled to judgment as a matter of

law.” Camicia v. Howard S. Wright Constr. Co., 179 Wn.2d 684, 693, 317 P.3d

987 (2014) (citing CR 56(c)). A material fact is one upon which the outcome of

the litigation depends. Greater Harbor 2000 v. City of Seattle, 132 Wn.2d 267,

279, 937 P.2d 1082 (1997). We view all facts submitted and the reasonable

inferences therefrom in the light most favorable to the nonmoving party. Greater

Harbor 2000, 132 Wn.2d at 279.

                                           A

       We first address the NCPD sites (the sites where there was evidence of

contamination of third party property taking place during the policy periods but

not evidence that the contamination had reached MTCA mandatory remediation

levels during the same periods). Did the trial court err by granting summary

judgment in favor of Granite State and dismissing with prejudice Gull’s claim for

coverage relating to those sites? We conclude that it did.

       Granite State moved for partial summary judgment seeking to dismiss the

claims arising from all such sites. Relying on PSE, it argued: “Where the

contamination at a particular site did not exceed the minimum clean-up regulated

limits set forth by the state during the policy period, Gull is not legally obligated

for the alleged contamination and therefore, there can be no compensable

property damage under the policies.” The trial court accepted this premise and

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No. 78277-1-I/52

granted Granite State’s motion, thus dismissing 23 NCPD sites. For the reasons

previously discussed, the trial court thus applied the wrong legal standard in

making its rulings.

       Because the wrong legal standard was applied, we reverse the trial court’s

entry of partial summary judgment.

                                           B

       Gull admitted that it had no evidence of contamination to third party

property during the policy period at some sites and no evidence of such damage

exceeding MTCA cleanup levels at others. We next review the trial court’s ruling

entering partial summary judgment for Granite State at these sites.

                                          1.

       As to the sites at which no property damage to the property of others was

shown, we affirm the trial court’s ruling. Given the absence of property damage,

no “occurrence,” as defined in the excess policy, had been proved. Thus,

coverage had never been triggered.

       In addition, based on the factual record herein, the evidence was that

where property damage had not yet taken place, at this late date it was unlikely

to do so.

       Moreover, the trial court based its decision on two other considerations:

(1) the length of time that this litigation had been ongoing, and (2) the fact that it

had been over a year (prior to its ruling) since Granite State had first noted its

motion. Thus, the trial court ruled, Gull had ample time to produce any evidence

that it could produce.

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No. 78277-1-I/53

        Because no “occurrence” was proved to have taken place, the motion to

dismiss was properly granted.

        Because of the length of time that had elapsed in the litigation and since

the motion was first noted, the trial court did not abuse its discretion by making

the dismissal with prejudice.39 See Vallandigham v. Clover Park Sch. Dist. No.

400, 154 Wn.2d 16, 26, 109 P.3d 805 (2005) (summary judgment is proper

where the nonmoving party fails to “‘present evidence that demonstrates that

material facts are in dispute’” (quoting Atherton Condo. Apartment-Owners Ass’n

Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 515-16, 799 P.2d 250 (1990))).

                                                    2.

        We next turn to those claims arising out of sites at which there is evidence

that property damage to the property of others was caused during the policy

periods. We reverse the trial court’s dismissal of these claims. The damage to

the property of others established a common law tort (trespass, nuisance, or

          39 Gull also contends that the trial court erred by denying its motion for leave to file a

fourth amended complaint, which sought to remove all of the Admitted sites from this litigation
without prejudice. We disagree. Pursuant to CR 15(a), a party may amend a pleading once as a
matter of course at any time before service of a responsive pleading, but thereafter “only by leave
of court or by written consent of the adverse party.” Such leave should be freely given and
denied only when delay, dilatory practice, or prejudice to the nonmoving party are shown.
Tagliani v. Colwell, 10 Wn. App. 227, 234, 517 P.2d 207 (1973). A trial court’s refusal to grant
leave to amend a complaint will not be disturbed on appeal unless the decision was a manifest
abuse of discretion. Haselwood v. Bremerton Ice Arena, Inc., 137 Wn. App. 872, 889, 155 P.3d
952 (2007), aff’d, 166 Wn.2d 489, 210 P.3d 308 (2009). A trial court abuses its discretion when
its decision rests on untenable grounds or is made for untenable reasons. Haselwood, 137 Wn.
App. at 889.
          In denying Gull’s motion, the trial court ruled that “dismissal of these sites, at this stage of
litigation would unduly prejudice defendants” and that the “investment of time, money and
resources into defending against these claims—some five years after this lawsuit was filed—
would be completely wasted if dismissed now.” We cannot say that no reasonable judge would
rule as the trial court herein ruled, nor can we say that all reasonable judges would have ruled in
accordance with Gull’s desired ruling. Neither can we say that the judge’s ruling was based on
untenable grounds. Thus, no abuse of discretion has been demonstrated. There was no error.
We affirm the trial court’s denial of Gull’s CR 15(a) motion.

                                                   53
No. 78277-1-I/54

negligence) and resulted in there being an “occurrence,” within the meaning of

the Granite State policy, during the policy period.

       On remand, the trial court will need to review the factual record, and any

additional evidence submitted, and determine whether evidence exists that

contamination reaching MTCA remediation levels may yet occur, thus supporting

the MTCA claim, and, if not, whether sufficient damage is shown to support a

common law claim. If called upon, it may then revisit its rulings, in light of this

opinion, and resolve the questions then presented.

                                           C

       We next address the trial court’s grant of partial summary judgment as to

the claims arising from sites at which the only damage was to Gull’s own

property. We affirm the trial court’s ruling as to these sites.

       In the trial court, Granite State moved for summary judgment dismissal of

all claims arising from these sites, citing its policy’s “owned property exclusion.”

“An owned property exclusion prevents a CGL policy from providing first-party

benefits to the insured.” Olds-Olympic, 129 Wn.2d at 478 (citing TODD I.

ZUCKERMAN & MARK C. RASKOFF, ENVIRONMENTAL INSURANCE LITIGATION § 7.02, at

7-4 (Supp. 1994)). “Third party insurance involves protection for the policyholder

for liability it incurs to someone else, while first party insurance involves

protection for losses to the policyholder’s own property.” Olds-Olympic, 129

Wn.2d at 479 (citing Weyerhaeuser, 123 Wn.2d at 909).

       Thus, to the extent that the trial court dismissed claims arising from sites

at which the evidence established contamination only to soil owned by Gull, the

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trial court properly ruled that the owned property exclusion applied. Property

damage to those sites was not entitled to coverage under the policies. The

claims were rightly dismissed.

                                          X

       Finally, Granite State argues that there is no justiciable controversy

between the parties given the amount of money Gull has already obtained in

settlement with other insurers and Gull’s unknown future liability exposure. Gull

responds, stating that it has already incurred $17 million in past liability and faces

more than a dozen lawsuits and cleanup demands. Thus, it contends, it likely

faces future exposure for years or even decades to come. Agreeing with Gull,

the trial court ruled that “Gull’s claim for declaratory judgment to establish Granite

[State] owes it a duty to defend and a duty to pay losses stemming from covered

occurrences at enumerated former station sites under Granite [State] policies in

effect from 1980 to 1983 . . . is a justiciable controversy.” We agree.

       The Uniform Declaratory Judgments Act (UDJA), chapter 7.24 RCW,

provides:

       A person interested under a deed, will, written contract or other
       writings constituting a contract, or whose rights, status or other
       legal relations are affected by a statute, municipal ordinance,
       contract or franchise, may have determined any question of
       construction or validity arising under the instrument, statute,
       ordinance, contract or franchise and obtain a declaration of rights,
       status or other legal relations thereunder.

RCW 7.24.020.

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        A justiciable controversy must exist in order to invoke a court’s jurisdiction

pursuant to the UDJA. Pasado’s Safe Haven v. State, 162 Wn. App. 746, 759,

259 P.3d 280 (2011). To be justiciable, a claim must involve

        “(1) . . . an actual, present and existing dispute, or the mature
        seeds of one, as distinguished from a possible, dormant,
        hypothetical, speculative, or moot disagreement, (2) between
        parties having genuine and opposing interests, (3) which involves
        interests that must be direct and substantial, rather than potential,
        theoretical, abstract or academic, and (4) a judicial determination of
        which will be final and conclusive.”

To-Ro Trade Shows v. Collins, 144 Wn.2d 403, 411, 27 P.3d 1149 (2001)

(alteration in original) (quoting Diversified Indus. Dev. Corp. v. Ripley, 82 Wn.2d

811, 815, 514 P.2d 137 (1973)).40 This requirement prevents a party from

obtaining relief on hypothetical, speculative, or premature claims. Where these

elements are not satisfied, a court risks issuing a prohibited advisory opinion.

Bloome v. Haverly, 154 Wn. App. 129, 141, 225 P.3d 330 (2010) (quoting

Branson v. Port of Seattle, 152 Wn.2d 862, 877, 101 P.3d 67 (2004)).

        It is clear, based upon our holdings and conclusions herein, that a

justiciable controversy remains.

        Alternatively, Granite State asks this court (as it asked the trial court) to

invoke its equitable authority to dismiss Gull’s declaratory judgment action

without prejudice, subject to what it contends should be Gull’s exhaustion of a

$16.7 million surplus of settlement payments already received. Gull, relying on

Sorenson v. Pyeatt, 158 Wn.2d 523, 146 P.3d 1172 (2006), counters that Granite

         40 An exception to this requirement exists only in “‘rare occasions where the interest of

the public in the resolution of an issue is overwhelming.’” To-Ro, 144 Wn.2d at 416 (quoting In re
Disciplinary Proceeding Against Deming, 108 Wn.2d 82, 122-23, 736 P.2d 639, 744 P.2d 340
(1987) (Utter, J., concurring)). The parties do not argue that this exception applies.

                                               56
No. 78277-1-I/57

State must defeat its declaratory judgment claim based on principles of law, not

equity.

          In Sorenson, the court announced that “it is a fundamental maxim that

equity will not intervene where there is an adequate remedy at law” and, in

determining whether to exercise equitable powers, “Washington courts follow the

general rule that equitable relief will not be accorded when there is a clear,

adequate, and complete remedy at law.” 158 Wn.2d at 543.

          Given that Gull’s declaratory judgment claim is justiciable, Granite State

has not set forth sufficient grounds to warrant equitable relief.

          Affirmed in part, reversed in part, and remanded.41, 42

WE CONCUR:

          41 We note that final judgment has not been entered in this case. Thus, all of the trial

court’s rulings remain interlocutory and are subject to revision by the trial court. “[T]he authority
of trial courts to revisit interlocutory orders ‘allows them to correct not only simple mistakes, but
also decisions based on shifting precedent.’” Chaffee v. Keller Rohrback LLP, 200 Wn. App. 66,
76-77, 401 P.3d 418 (2017) (quoting United States v. Martin, 226 F.3d 1042, 1049 (9th Cir.
2000)). Accordingly, the parties are free to ask the trial court to revisit its rulings, in light of this
opinion, if warranted. And the trial court is free to do so, even absent a request from the parties.
          42 This is an extremely complex case. Although we have revised several of the trial

court’s rulings, we wish to express our admiration for the obvious hard work and diligence the trial
court has expended on this litigation so far.
          Similarly, after reviewing the appellate briefing and the actions of the attorneys in the trial
court, as reflected in the record presented, we wish to acknowledge the excellent work done by
the lawyers herein. All parties are ably represented. That is clear—even when answers to the
legal issues created by their imaginations and ingenuity are not.

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