Boeing Co. v. Aetna Cas. and Sur. Co.

• Decision Date: 04 January 1990
• Docket Number: No. 55700-4
• Citation: Boeing Co. v. Aetna Cas. and Sur. Co., 784 P.2d 507, 113 Wn.2d 869, 87 A.L.R.4th 405 (Wash. 1990)
• Court: Washington Supreme Court
• Parties: , 30 ERC 2001, 87 A.L.R.4th 405, 58 USLW 2447, 20 Envtl. L. Rep. 20,362 . AETNA CASUALTY AND SURETY COMPANY; et al., Defendants. NORTHWEST STEEL ROLLING MILLS, INC., a Washington corporation, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY, a foreign insurance company; et al., Defendants. RSR CORPORATION, Plaintiff, v. GRANITE STATE INSURANCE COMPANY, and American Centennial Insurance Company, Defendants. JOHN FLUKE MANUFACTURING COMPANY, INC., Plaintiff, v. HARTFORD ACCIDENT & INDEMNITY COMPANY; et al., Defendants. HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff, v. JOHN FLUKE MANUFACTURING COMPANY, INC.; et al., Defendants. DAVIS WALKER CORPORATION, a California corporation, Plaintiff, v. AETNA CASUALTY & SURETY COMPANY, a Connecticut corporation, Defendant. Supreme Court of Washington, En Banc

Page 869

113 Wn.2d 869

784 P.2d 507, 30 ERC 2001, 87

A.L.R.4th 405, 58 USLW 2447,

20 Envtl. L. Rep. 20,362

Certification from the United States District Court for the

Western District of Washington in

The BOEING COMPANY, Plaintiff, v.AETNA CASUALTY AND SURETY COMPANY; et al., Defendants.

NORTHWEST STEEL ROLLING MILLS, INC., a Washington

corporation, Plaintiff, v.FIREMAN'S FUND INSURANCE COMPANY, a foreign insurance

company; et al., Defendants.

RSR CORPORATION, Plaintiff, v.GRANITE STATE INSURANCE COMPANY, and American Centennial

Insurance Company, Defendants.

JOHN FLUKE MANUFACTURING COMPANY, INC., Plaintiff, v.HARTFORD ACCIDENT & INDEMNITY COMPANY; et al., Defendants.

HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff, v.JOHN FLUKE MANUFACTURING COMPANY, INC.; et al., Defendants.

DAVIS WALKER CORPORATION, a California corporation, Plaintiff, v.AETNA CASUALTY & SURETY COMPANY, a Connecticut corporation, Defendant.

No. 55700-4.

Supreme Court of Washington En Banc.

Jan. 4, 1990.

Perkins, Coie, Stone, Olsen & Williams, Charles C. Gordon, William A. Gould, Nicholas P. Gellert, Paul R. Carlson, Seattle, and Covington & Burlington, Robert N. Sayler, James R. Murray, and Eric C. Bosset, Washington, D.C., for plaintiff, Boeing Co.

Sylvester, Ruud, Petrie & Cruzen, John T. Petrie and Robert W. Bryan, Seattle, Wash., for plaintiff, Northwest Steel.

Don M. Gulliford, Robert R. Cole, Bellevue, and Whiteman, Osterman & Hanna, Philip H. Gitlen and Jonathan P. Nye, Albany, N.Y., for plaintiff, RSR.

Stoel, Rives, Boley, Jones & Grey, Stevan D. Phillips, Seattle, and Phillips, Nizer, Benjamin, Krim & Ballon, Judith S. Roth and George Berger, New York City, for plaintiff, John Fluke Mfg.

Bogle & Gates, Jeffrey W. Leppo and Ruth Piekarska, Seattle, for plaintiff, Davis Walker Corp.

Williams, Kastner & Gibbs, Jerry B. Edmonds, Patrick M. O'Loughlin, Roy Umlauf, Frankie A. Crain, Coleen Cook, Merrick, Hofstedt & Linsey, Sidney R Snyder, Jr., Ronald Dinning, Wilson, Smith, Cochran & Dickerson, Dennis Smith, David M. Jacobi, Hallmark, Keating & Abbott, William Fitzharris, Jr., Pamela LangCarney, Stephenson, Badley, Smith, Mueller & Spellman, Sylvia Luppert, Seattle, Carr, Goodson, Lee & Foret, Michael Hooks, Margaret Warner, Washington, D.C., Thorsrud, Cane & Paulich, Mark Thorsrud, Patrick M. PaulichDunlap & Soderland, David Soderland, Seattle, and Sedgwick, Detert, Moran & Arnold, Mark C. Raskoff, Los Angeles, Cal., for defendants, insurers.

Bassett & Morrison, W. George Bassett, Philip R. Croessmann, and Margaret A. Morgan, Seattle, for defendant, Granite State Ins.

Betts, Patterson & Mines, Jeffrey C. Grant and Margaret E. Wetherald, Seattle, for defendant, Highlands Ins.

Lane, Powell, Moss & Miller, David Schoeggl, Robert Israel, and Douglas J. Ende, Seattle, for defendants, London Underwriters, et al.

Rivkin, Radler, Dunne & Bayn, Jeffrey Silberfeld, Richard S. Feldman, and Steven Brock, Uniondale, N.Y. and Bradbury, Bliss & Riodan, John H. Bradbury and Carl E. Forsberg, Seattle, for defendant, Hartford.

David M. Brenner, Seattle, Peter J. Kalis, Thomas M. Reiter, James R. Segerdahl, Pittsburgh, Pa., Carol A. Wardell, Wenatchee, Douglas N. Jewett, Seattle City Atty., Terrence J. Cullen, Asst. City Atty., Seattle, William J. Barker, Tacoma City Atty., G. Stephen Karavitis, Asst. City Atty., Tacoma, Robert F. Hauth, Kenneth Eikenberry, Atty. Gen., Jerry Ackerman, Lee Rees, Asst. Attys.Gen., Ecology Div., Olympia, George E. Greer, Linda R. Larson, Molly B. Burke, Mark S. Parris, Norm Maleng, King County Prosecutor, and James L. Brewer, DeputyCounty Prosecutor, Seattle, amicus curiae for plaintiffs on behalf of Washington State Ass'n of Mun. Attys.

William R. Hickman, Seattle, Frederick S. Ansell, Washington, D.C., Thomas S. James, P. Cameron Devore, and Donald S. Kunze, Seattle, amicus curiae for defendants on behalf of Ins. Environmental Litigation Ass'n.

DORE, Judge.

The United States District Court for the Western District of Washington has certified the following question of state law to this court:

Whether, under Washington law, the environmental response costs paid or to be paid by the insureds, as the result of action taken by the United States and the State of Washington under CERCLA, 42 U.S.C. § 9601 et seq., constitute "damages" within the meaning of the comprehensive general liability policies issued by the insurers.

ANSWER: Yes.

FACTS

In 1983, the United States Environmental Protection Agency designated the Western Processing hazardous waste facility at Kent, Washington, as one of 400 hazardous waste sites requiring cleanup.On February 25, 1983, the EPA filed a complaint against Western Processing and its owners in the United States District Court for the Western District of Washington.In May 1983, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et seq., the EPA notified the appellants(hereinafter policyholders) that they were generators of hazardous waste at the Western Processing site and were responsible parties for the "response costs" at this site.On July 17, 1984, the EPA and the State of Washington, as an additional plaintiff, named the policyholders in a "Second Amended Complaint" as " 'generator and transporter defendants' facing potential liability for all monies expended by the government at the Western Processing site.' "Certification order app., at 141.On August 28, 1984, the Court entered a "Partial Consent Decree" between the EPA and the policyholders for the cleanup of the surface of the Western Processing site.On April 13, 1987, the Court entered a "Consent Decree" between EPA and policyholders for the cleanup of hazardous waste contamination of the subsurface of the Western Processing site.

EPA, in its complaint, alleged that the policyholders generated or transported hazardous substances found at the site.Further, that the migration of such wastes has contaminated the groundwater, aquifer (water bearing geological zone), commercial and agricultural property adjoining the site, and nearby surface waters.Certification order app., at 324-73, "Third Amended Complaint" filed by United States Attorneys in United States v. Western Processing Co.It further alleged that the United States, in order to combat the effects of contaminated groundwater, aquifer and property adjoining the site, had incurred and was incurring "response costs" as defined by CERCLA for which policyholders were liable.CERCLA defines the costs of "response" to include costs of removal of hazardous substances from the environment and the costs of other remedial work.42 U.S.C. § 9601(25).CERCLA provides that any person or business entity responsible for a release or threatened release of hazardous substances "shall be liable for ... all costs of removal or remedial action incurred by the United States Government or a State ..."42 U.S.C. § 9607(a)(4)(A).Pursuant to the action by EPA, the policyholders have paid and will continue to pay environmental response costs relating to the Western Processing hazardous waste facility.

During the period of time that the policyholders generated and transported hazardous wastes to Western Processing, they carried Comprehensive General Liability (CGL) insurance purchased from the respondents(hereinafter insurers).The operative coverage provision of four of the policies provide that the insurer " 'will pay on behalf of the insured all sums which the insured shall become obligated to pay as damages because of bodily injury or property damage to which this policy applies, caused by an occurrence....' "Certification order, at 3.In one case, the policy provides indemnification " 'for all sums which the Assured shall be obligated to pay ... for damages ... all as more fully defined by the term "ultimate net loss" on account of: (i) Personal injuries ... [or](ii) Property Damage ...' ", and goes on to define "ultimate net loss" as " 'the total sum which the Assured, or any company as his insurer, or both, become obligated to pay by reason of ... property damage ... either through adjudication or compromise ...' " Certification order, at 3.The policies do not specifically define "damages."

The policyholders sued the insurers for indemnification for the "response costs"they incurred relating to the Western Processing facility.In each case, motions for summary judgment were filed in the United States District Court.Since the motions raised a determinative question of state law, the question of whether "response costs" constitute "damages" within the CGL policies issued by insurers, this question was certified to this court.No extrinsic evidence touching upon the parties' interpretation of the coverage clause was provided in this certification.It was the intent of the district court that extrinsic evidence not be considered by this court, since the certification procedure is authorized to obtain answers to questions of law, not questions of fact.

ANALYSIS

Under CERCLA any person responsible for an "actual release" or "threatened release" of hazardous substances is liable for response costs.The response costs paid by the insureds in the case before us concern responses to an "actual release" of hazardous substances which have already contaminated the groundwater and real property surrounding the Western Processing site.The question before us is whether these response costs to remedy an actual release of hazardous substances constitute damages within the meaning of the insureds' comprehensive general liability policies issued by insurers.In order for the policyholders to be indemnified, the plain meaning of the contract must provide coverage for the subject "response costs."¹ Alternatively, before the insurers can avoid indemnifying the policyholders, this court must be satisfied that the plain meaning of "damages", as it would be understood by the average lay person,...