Bosko v. Pitts & Still, Inc.

• Decision Date: 01 May 1969
• Docket Number: No. 39456,39456
• Court: Washington Supreme Court
• Parties: Nick BOSKO, Russell G. Davis and John F. Heard, Respondents and Cross-Appellants, v. PITTS & STILL, INC., and John Doe, Underwriter at Lloyd's of London, Appellants.

Page 856

75 Wn.2d 856

454 P.2d 229

Nick BOSKO, Russell G. Davis and John F. Heard, Respondents and Cross-Appellants, v. PITTS & STILL, INC., and John Doe, Underwriter at Lloyd's of London, Appellants.

No. 39456.

Supreme Court of Washington, Department 2.

May 1, 1969.

Ross & Schweinler, Lawrence M. Ross, Tacoma, for appellants.

Comfort, Dolack, Hansler & Billett, Robert A. Comfort, Tacoma, for respondents.

HILL, Judge.

Nick Bosko, Russell G. Davis and John F. Heard, d.b.a. Bosko Engineering Company (hereinafter Bosko), brought this action against Pitts & Still, Inc., a general insurance agency, ¹ and an unknown underwriter at Lloyd's of London (hereinafter Lloyd's) for the failure of the insurer to pay claims and defend an action arising from the activities of Bosko in the construction of a sewer line.

In the spring of 1962, Bosko had entered into a contract with the city of Tacoma for the construction of a sewer line. Under the contract, Bosko was required to take out insurance to cover any claims arising out of the construction. Bosko contracted for this insurance through Pitts & Still, Inc., general agent for Lloyd's. The policy purchased was a 'Broad Form Property Damage Liability' subject to a $250 deductible. The policy provided, Inter alia, that

(T)he Insurers agree to provide coverage from and against all loss which the Assured may sustain or incur by reason of or in consequence of:

(a) Any and all liability imposed by law against the Assured for loss of or damage to or destruction of property of others (including but not limit to, damage resulting from loss of use of property damaged or destroyed and all other indirect and consequential damage for which legal liability exists in connection with such damage to or destruction of property of others) sustained or alleged to have been sustained during the currency of this Insurance and arising from any cause whatsoever out of the operations, activities, work and/or business of the Assured * * * in connection with the Assured's business as stated above; * * *

During the construction of the sewer line, it became necessary for Bosko to dispose of certain excavated waste material. Arrangements were made to dump such material on property owned by one Engoe. This property was situated on the edge and slope of a gulch through which ran the track of the Chicago, Milwaukee, St. Paul and Pacific Railroad (hereinafter Milwaukee). This was a rather deep and steep gulch. The Engoe ownership ran from the street level at the top of the gulch to about 30 feet from the toe of the slope; and it was stipulated that the Milwaukee right-of-way 'extends about 50 feet east of the tract (track), the easterly 30 feet being a continuation of the steep Engoe slope previously mentioned.' The waste material (approximately 50 truckloads) was transported to the site by dumptruck on May 22, 1962, and was dumped at the top of the gulch. On May 28, 1962, the waste material suddenly, and without warning, slid down the side of the gulch with part of it coming to rest on the Milwaukee track and the remainder (approximately 1700 yards) resting on the steep hillside which was part of Milwaukee's right-of-way. One of Milwaukee's engines ran into the slide and sustained $22 physical damages, with the accident resulting in a delay costing Milwaukee an additional $25.02. On the next day, Bosko's employees cleaned the material off the track at a cost of $100. The material which lay on the right-of-way slope, however, was not cleaned off or stabilized. Shortly thereafter and several times during 1962, Milwaukee demanded that Bosko make restitution for the damage to the track and engine and that Bosko remove the remaining material from its right-of-way. Bosko took no action on these demands except to forward them to the insurer. The insurer refused to take action on the demands, contending that the material resting on the right-of-way constituted a trespass not covered by the policy and that the amount of physical damage to the track and the engine was not in excess of $250, therefore excusing the insurer from liability under the deductible clause.

In December 1962 and early 1963, there occurred four additional slides during which some of the material slid further down the slope and onto the track. These slides required expenditures totaling $335.41 by Milwaukee to clear its track.

On June 5, 1964, Milwaukee brought an action against Bosko for $171.15 for certain specific items of damage and for $3,000 for the correction of the then existing condition, I.e., waste material still on its right-of-way slope. Bosko tendered defense of the suit to the insurer; the tender was refused and it was necessary for Bosko to retain attorneys to defend the suit. Eventually this suit was settled for a total of $1,913.27. This included the $47.02 for damages to the engine and the cost of the delay caused by the original slide; $335.41 for removing the material from the subsequent slides from the track; and $1,330 for future correction and abatement of the material on the slope of the right-of-way, together with 10 per cent of the foregoing items for supervisory costs ($171.24) and $20.60 courts costs.

It was stipulated that the cost of stabilizing the material immediately following the first slide would have been approximately $3,000. In the settlement of the Milwaukee suit, Bosko's attorneys spent a total of 39 1/4 hours; Bosko was charged $750 for their services, and paid that amount.

In March, 1965, Bosko brought this action, claiming coverage under the policy and asking for $1,663.27 (the $1,913.27 settlement less the $250 deductible), plus attorneys' fees incurred in the settlement, plus $53.80 in incidental costs, for a total of $2,467.07. The insurer answered, denying coverage for reasons hereinafter discussed. The trial court concluded that the insurance policy covered the losses and damages resulting from the slide and that the insurer breached the policy in refusing to defend the action brought by Milwaukee. The trial court awarded Bosko damages of $1,394.42 plus court costs, but allowed only $500 of the $750 attorneys' fees in the Milwaukee litigation, for a total of $1,923.12.

The explanation of the difference between the $1,663.27 prayed for and the $1,394.30 allowed by the trial court is that the trial court refused to allow the $335.41 (plus 10 per cent for supervision) expended for cleaning up after the four subsequent slides in December 1962 and early 1963, following the original slide in May 1962, on the ground that they were 'too remote.' The trial court did, however, allow the additional $100 which it had cost Bosko to clean up the Milwaukee track after the first slide.

Lloyd's appeals from the judgment, and Bosko cross-appeals from the failure of the trial court to allow recovery as to the subsequent slides and the failure to allow the full amount of the attorneys' fee.

These appeals raise several substantive issues dealing with the policy coverage.

1. Did the policy cover the cost of stabilization of the waste material which had not yet physically damaged Milwaukee's track or equipment?

It is conceded that the costs of repairing Milwaukee's engine and of removing the debris from the track immediately after the first slide were not in excess of the $250 deductible clause. It is further conceded that the major portion of Milwaukee's claim against Bosko was for the costs of stabilizing the material on the hillside that was part of Milwaukee's right-of-way, so that it would not slide further down the hill and onto the track. The insurer urges that since this material had not yet caused any actual damage to Milwaukee's property, the costs of stabilizing the material were not covered by the policy. However, the insurer overlooks a recognized area of the law of torts as well as the explicit terms of its own contract.

The presence of the waste material on Milwaukee's right-of-way was clearly a trespass, conceded to have been caused by Bosko's negligence in failing 'to put in a retaining wall or other factor to shore up and hold said 50 truckloads of waste material.' See 1 Restatement (Second) of Torts § 165 (1965). In such a case the possessor of the land is entitled to recover damages from the person causing the trespass. This right in Milwaukee to recover from Bosko is a

liability imposed by law against (Bosko) for * * * damage to * * * property of (Milwaukee) * * * sustained during the currency of this Insurance and arising from * * * the operations, activities, work and/or business of (Bosko) * * * ²

and thus presents a prima facie case of coverage under the policy, and the burden is on the insurer to prove that the sliding of the waste material was not within the coverage of the policy. Labberton v. General Cas. Co. of America, 53 Wash.2d 180, 186, 332 P.2d 250 (1958); Hill v. Great N. Life Ins. Co., 186 Wash. 167, 57 P.2d 405 (1936). The insurer's contention that the mere presence of the material on the right-of-way had not resulted in actual damages to Milwaukee's property does not carry that burden. The presence of the material on the steep hillside on the Milwaukee right-of-way and above its track constituted an ever present danger of inundation by further slides, which could cause further damage to its track and equipment. This constituted an interference with Milwaukee's unrestricted use and enjoyment of its right-of-way, (see Labberton v. General Cas. Co., Supra, 53 Wash.2d at 186--187, 332 P.2d 250), which could be remedied only by removal or proper stabilization of the waste material then wrongfully and precariously resting on the slope of that right-of-way. Milwaukee clearly was damaged to the extent of the expense required to remove or stabilize the material. That, by the law of trespass, Bosko was liable for this expense is not the sole basis for the insurer's liability in this situation. The liability to Milwaukee for the slide and the consequential...