King Cnty. v. Travelers Indem. Co.

• Decision Date: 10 February 2017
• Docket Number: Civil Action No. 2:14–cv–01957–BJR
• Parties: KING COUNTY, Plaintiff, v. TRAVELERS INDEMNITY CO., Providence Washington Insurance Co., et al., Defendants.
• Court: U.S. District Court — Western District of Washington

234 F.Supp.3d 1074

KING COUNTY, Plaintiff,

v.TRAVELERS INDEMNITY CO., Providence Washington Insurance Co., et al., Defendants.

Civil Action No. 2:14–cv–01957–BJR

United States District Court, W.D. Washington, at Seattle.

Signed February 10, 2017

Michael J. Lynch, Paul E. Del Vecchio, Syed D. Ali, Douglas J. Simmons, K & L Gates LLP, Pittsburgh, PA, Martha Rodriguez–Lopez, John Craig Bjorkman, K & L Gates LLP, Seattle, WA, for Plaintiff.

Everett W. Jack, Davis Wright Tremaine, Portland, OR, Nancy Anne Brownstein, Steven P. Caplow, Davis Wright Tremaine, Kenneth James Cusack, Carl Edward Forsberg, Jillian M. Hinman, Michael P. Hooks, Forsberg & Umlauf, Curt H. Feig, Nicoll Black & Feig PLLC, David W. Howenstine, David M. Schoeggl, Stephania Camp Denton, Lane Powell PC, Jessica Bohl, Duane Morris LLP, Misty Anne Edmundson, Steven Soha, Soha & Lang PS, Joseph D. Hampton, Kathryn Naegeli Boling, Betts Patterson & Mines, Jeffrey David Laveson, Linda Blohm Clapham, Carney Badley Spellman, Justin Sean Landreth, Peter J. Mintzer, Selman Breitman LLP, Sally E. Metteer, Wilson, Smith, Cochran & Dickerson, Jodi Ann McDougall, Megan Kathleen Kirk, Nadia Bugaighis, Cozen O'Connor, Michael Edward Ricketts, Gordon Thomas Honeywell, Seattle, WA, Jocelyn Cornbleet, Paul Parker, Stacy S. Freel, Wayne Karbal, Karbal Cohen Economou Silk & Dunne LLC, Amy R. Paulus, Michael L. Duffy, Clausen Miller, Chicago, IL, Brian A. Kelly, Duane Morris, LLP, Colleen A. Cassidy, William J. Baron, Lauren M. Case, Duane Morris, San Francisco, CA, Robin Craig, Craig & Winkelman LLP, Berkeley, CA, Bryan M. Barber, Palo Alto, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART KING COUNTY'S MOTION FOR SUMMARY JUDGMENT AND DENYING TRAVELERS' MOTION FOR SUMMARY JUDGMENT

Barbara Jacobs Rothstein, U.S. District Court Judge

I. INTRODUCTION

Plaintiff King County brings this insurance action against, inter alia , The Travelers Indemnity Company and Travelers Casualty & Surety Company, f/k/a The Aetna Casualty and Surety Company (collectively, "Travelers").¹ King County alleges that Travelers and other Defendants in this action each breached their duty to defend the County against enforcement action by the United States Environmental Protection Agency (EPA) and the Washington Department of Ecology (DOE) related to the contamination of the Lower Duwamish Waterway and the Harbor Island Superfund sites. Dkt. 175, Pl.'s Second Am. Compl. at 10–11.

Both King County and Travelers move for partial summary judgment on the issue of whether Travelers breached its duty to defend King County against state and federal agency action. Joining Travelers in its Motion for Partial Summary Judgment [Dkt. #296] are Defendants Providence Washington Insurance Company ("Providence"), Hartford Accident and Indemnity ("Hartford") and its associated companies—First State Insurance Company, New England Reinsurance Corporation, and Twin City Fire Insurance—and Employers Insurance of Wausau ("Wausau").² These Defendants are united in their position that King County did not tender any "suit" that triggered their duty to defend under their respective commercial general liability (CGL) policies. King County asserts that its claims meet the minimum standard for coverage—that is, they are "conceivably" covered by Defendants' policies—and moves for judgment that Travelers, Hartford, Providence, and Wausau have breached their respective duties by refusing to defend the claims. Additionally, King County moves for summary judgment on its bad faith claims against Travelers, Providence, and Hartford.

Having reviewed the parties' briefing, the record of the case, as well as the relevant legal authority, the Court concludes that Travelers, Providence, and Wausau have each breached their duty to defend. Therefore, the Court denies Travelers' Motion for Partial Summary Judgment [Dkt. #296]. Relying on the same conclusion, the Court will grant King County's Motion for Partial Summary Judgment insofar as it seeks a ruling that Travelers, Providence, and Wausau each breached their duty to defend. As for King County's bad faith claims, the Court finds that the County has not carried its burden to demonstrate that the insurers acted unreasonably and thus denies the motion for summary judgment on these claims.

II. BACKGROUND

King County has been implicated in the contamination of two Superfund sites in the Seattle area—the Lower Duwamish Waterway (LDW) site and the Harbor Island site. Superfund sites are those sites designated under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for investigation and remediation of contamination. See Anderson Bros., Inc. v. St. Paul Fire and Marine Ins. Co. , 729 F.3d 923, 927 n.2 (9th Cir. 2013). CERCLA is administered by the EPA, while the Washington DOE administers its own state environmental cleanup scheme, the Model Toxics Control Act (MTCA). RCWA 70.015D.010, et seq. As part of its enforcement action pursuant to CERCLA, EPA designates "potentially responsible parties" (PRPs), while DOE designates "potentially liable parties" (PLPs) under the MTCA. Designees under both statutory schemes are subject to strict liability for environmental contamination. Finding no practical or legal difference between the two designations, the Court uses the terms interchangeably. The County has been designated as a potentially responsible party (PRP) with respect to both sites and has worked cooperatively with EPA and DOE, as well as with other responsible parties, including the City of Seattle, the Port of Seattle, and The Boeing Company to effectuate and fund response and remedial action at both sites.

In July 2013, King County tendered four claims related to this response action to Travelers and the other Defendants in this case demanding that they assume the County's defense against enforcement action by EPA and DOE. Two of these claims are at issue in King County's motion for summary judgment—"Lower Duwamish Waterway Superfund Site RI/FS, Cleanup, and Cost Allocation" (hereinafter, "LDW Claim") and "East Waterway Sediments, Operable Unit 10, Harbor Island Superfund Site" (hereinafter, "Harbor Island Claim").³ Travelers moves for summary judgment as to the same two claims and also moves for summary judgment as to a third claim tendered by King County after this suit was initiated—the 2016 Natural Resources Damages Assessment (hereinafter, "NRD Claim").

A. Lower Duwamish Waterway Superfund Site RI/FS, Cleanup, and Cost Allocation

In its tender, King County notified Travelers of the following with respect to enforcement action at the LDW site:

On December 1, 2000, the United States Environmental Protection Agency (EPA) proposed the Lower Duwamish Waterway (LDW or Site) for inclusion on the National Priorities List under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or Superfund), 42 U.S.C. 9601 et seq. EPA has notified King County that it is a Potentially Responsible Party (PRP) at the Site and demanded that it negotiate an administrative order with EPA and with other PRPs at the Site to perform a Remedial Investigation/Feasibility Study (RI/FS). On August 2, 2000, the Washington Department of Ecology (Ecology) notified King County that it was a Potentially Liable Party (PLP) under the Washington Model Toxics Control Act (MTCA), Chapter 70.105D RCW, and demanded that it enter into an administrative order with it and with other PLPs to perform an RIIFS at the Site (Appendix F). EPA and Ecology share statutory enforcement authority over cleanup of the Site.

On December 28, 2000, EPA and Ecology, on the one hand, and King County, The Boeing Company, The City of Seattle, and the Port of Seattle, on the other hand, executed their Administrative Order on Consent for Remedial Investigation/Feasibility Study (RI/FS AOC), No. CERCLA 10–2001–0055 (US EPA Region 10) and No. OOTCPNR–1895 (Ecology)(Appendix G). King County has and will continue to incur defense costs and cleanup costs under the RI/FS AOC.

On February 28, 2013, EPA issued its Proposed Plan, Lower Duwamish Waterway Superfund Site proposing its final cleanup remedy for the Site.1 EPA expects to issue its Record of Decision (ROD) in 2014. In anticipation of EPA's approval of its final cleanup plan and issuance of the ROD, King County, The Boeing Company, the City of Seattle, and the Port of Seattle are initiating an allocation mediation process to reallocate past RI/FS costs and EPA and Ecology oversight costs as well as assign shares of financial responsibility for future cleanup costs for the LDW Site. King County has and will incur defense costs reallocating past costs and allocating future costs and will incur future cleanup costs.

Dkt. 298–5, Ex. 14 at 3. The County attached copies of the relevant agency correspondence to its tender. Id. at 9.

B. East Waterway Sediments, Operable Unit 10, Harbor Island Superfund Site

In its 2013 tender, the County notified Travelers of the following with respect to the Harbor Island site:

EPA listed the Harbor Island Superfund Site on the National Priorities List on September 8, 1983. EPA later established the East Waterway Sediments operable unit (EW–OUl0) of the Harbor Island Superfund Site. On April 21, 2006, EPA notified King County that it considered it a potentially responsible party at the EW–OU10 and that EPA expected King County to cooperate with the Port of Seattle in performing a supplementary RI/FS (SRI/FS) for the EW–OU10 (Appendix H). On March 27, 2006, King County, the Port and others entered into a Memorandum of Agreement (EW–OU10 MOA) to perform the SRI/FS (Appendix I).

King County has and will continue to incur defense costs and cleanup costs under the SRI/FS and the EW–OU10 MOA.

Id. at 7.

C. 2016 Natural Resources Damages Assessment

In February 2016, King County tendered a new claim to Travelers, demanding that it assume its defense against enforcement action by the Elliott Bay Trustee Council—composed of the National...