Washington Public Utility Districts' Utilities System v. Public Utility Dist. No. 1 of Clallam County
| Decision Date | 09 February 1989 |
| Docket Number | No. 54647-9,No. 3,No. 2,No. 1,1,3,2,54647-9 |
| Parties | WASHINGTON PUBLIC UTILITY DISTRICTS' UTILITIES SYSTEM, an unincorporated association comprised of Public Utility Districtof Benton County, a Washington municipal corporation; Public Utility Districtof Grays Harbor County, a Washington municipal corporation; Public Utility Districtof Jefferson County, a Washington municipal corporation; Public Utility Districtof Kitsap County, a Washington municipal corporation; Public Utility Districtof Klickitat County, a Washington municipal corporation; Public Utility Districtof Lewis County, a Washington municipal corporation; Public Utility District of Mason County, a Washington municipal corporation; Public Utility Districtof Mason County, a Washington municipal corporation; Public Utility Districtof Okanogan County, a Washington municipal corporation; Public Utility Districtof Pacific County, a Washington municipal corporation; Public Utility Districtof Pend Oreille County, a Washington municipal corporation; Public Utility Districtof Skagit County, a Washington municipal corporation; Public Utility Districtof Skamania County, a Washington municipal corporation; Public Utility Districtof Stevens County, a Washington municipal corporation; and Public Utility Districtof Wahkiakum County, a Washington municipal corporation, Plaintiffs/Appellants, v. PUBLIC UTILITY DISTRICT NO. 1 OF CLALLAM COUNTY, a Washington municipal corporation; Warner E. Childress, individually and in his official capacity as Treasurer/Controller of Public Utility Districtof Clallam County; Lawrence H. Haas and Hugh E. Simpson, Jr., individually in their capacities as ratepayers and in their official capacities as elected Commissioners of Public Utility Districtof Clallam County; Robert Graham, in his official capacity as State Auditor; and The State of Washington, Defendants/Respondents. |
| Court | Washington Supreme Court |
Essenburg & Staton, Jan L. Essenburg, Jeffrey P. Stark, Dennis J. Pothoven, Seattle, for plaintiffs-appellants.
Armstrong & Gleysteen, David H. Armstrong, Bremerton, for Childress.
Platt, Irwin, Colley, Oliver, Miller & Wood, Bart G. Irwin, Port Angeles, for PUD # 1, et al.
This case involves the validity and coverage of a self-insurance agreement executed jointly by There are two questions. First, whether a public utility district (PUD) has the constitutional and statutory authority to enter into a self-insurance agreement with other state PUDs to provide coverage for indemnification against judgment and defense costs of the PUD's own treasurer upon a direct claim by the PUD against that treasurer. Second, whether the self-insurance agreement at issue in this case provides such coverage.
Washington state public utility districts. Plaintiffs/appellants, Washington Public Utility Districts' Utilities System (WPUDUS), brought a declaratory action seeking a determination of its duty to provide coverage under such an agreement. On cross motions for summary judgment the Superior Court granted defendants' motion for summary judgment finding that the agreement was valid and provided coverage for the claims in question. We granted direct review
WPUDUS is an unincorporated association comprising a majority of Washington's public utility districts. WPUDUS was formed in 1953 for the purpose of facilitating the joint purchase of insurance for its members. Defendant/respondent, Public Utility District No. 1 of Clallam County (Clallam), is a member district. Defendant/respondent Warner E. Childress (Childress), is Clallam's treasurer/controller.
In 1974, WPUDUS purchased a comprehensive general liability policy from Fidelity and Casualty Company (F & C policy). In November 1976, WPUDUS learned that the F & C policy could not be renewed on terms acceptable to the member districts. Thus, WPUDUS decided to jointly self-insure against liability claims. In December 1976, the members entered into the Washington Public Utility Districts' Utilities System Liability Self-Insurance Agreement (Agreement). The Agreement was amended and restated as of July 21, 1978. Clerk's Papers, at 472. The Agreement incorporates certain parts of the nonrenewed F & C policy Paragraph 11 of the Agreement, as amended October 21, 1982, which describes coverage provided to members and their officers, provides in part:
and provides first layer liability coverage 1 for the participating districts and their officers and employees. Each of the member districts make annual contributions to the self-insurance pool to fund coverage. The contributions are computed by an agreed formula that considers such factors as the district's size and loss experience
The System [WPUDUS] shall pay from the fund any amount which any member may become legally obligated to pay, subject to the other provisions of this Agreement, arising out of any occurrence which happens during the time that the member was a party hereto. The System shall also pay from the fund subject to the other provisions of this Agreement, any amount which any officer, commissioner or employee of a member shall become legally obligated to pay while acting within the scope of his duties as an officer, commissioner or employee during the time that the member was a party hereto; provided no such amount shall be paid in any case where the Court has found such a person was not acting in good faith.
In July 1986, a dispute arose between Clallam and its treasurer. The resulting lawsuit involves the coverage described in paragraph 11. Clallam and two of its commissioners, Lawrence H. Haas and Hugh E. Simpson, Jr., individually as ratepayers and in their official capacities, filed a complaint naming as defendants/respondents Childress, individually and in his official capacity as treasurer/controller of Public Utility District No. 1 of Clallam County; Robert Graham, in his official capacity as State Auditor; and the State of Washington. The complaint alleged that In September 1986, WPUDUS accepted defense of Childress in the Clallam lawsuit with a full reservation of rights. Pursuant to the terms of the Agreement, Clallam requested that WPUDUS provide coverage for the claims against Childress. Shortly thereafter, WPUDUS initiated this declaratory action in King County Superior Court. The trial court, on cross motions for summary judgment, ordered on the merits as follows:
Childress was liable in damages to Clallam for breach of a public official's duty. The claims were premised on theories of negligence and strict accountability, and alleged that Childress caused the loss of $1.7 million of district funds by investing those funds in a securities plan that fell apart. There is no claim of dishonesty
The Self-Insurance Agreement, as amended, provides coverage to Warner Childress, Treasurer/Controller of Public Utility District No. 1 of Clallam County, against liability for the loss sustained by Public Utility District No. 1 of Clallam County as generally described by Summons and Complaint filed in Clallam County Superior Court under Cause No. 86-2-00427-3; and that the coverage includes both coverage for loss and defense costs.
That public utility districts of the State of Washington have the authority and the power to enter into and perform the Self-Insurance Agreement, as amended, which includes the coverage above described.
That pursuant to CR 54(b), the court hereby makes an express determination that there is no just reason for delay and the court expressly directs that the above order is a final judgment of the court upon which an appeal can be taken.
WPUDUS has appealed this order arguing that there is no authority under Washington law to enter into the Agreement and that the Agreement would nevertheless prohibit coverage for the claims in question. In addition, Clallam has cross-appealed the trial court's order denying Clallam's motion to strike portions of affidavit submitted in support of WPUDUS's motion for summary judgment.
Washington PUD's, as municipal corporations, are limited to those powers expressly granted and to powers
necessarily or fairly implied in or incident to the powers expressly granted, and also those essential to the declared objects and purposes of the corporation.
Port of Seattle v. State Utils. & Transp. Comm'n, 92 Wash.2d 789, 794-95, 597 P.2d 383 (1979); see Chemical Bank v. WPPSS, 99 Wash.2d 772, 792, 666 P.2d 329 (1983); Tacoma v. Taxpayers, 108 Wash.2d 679, 692, 743 P.2d 793 (1987).
Public utility districts are expressly authorized by statute "to exercise jointly all powers granted to each individual district," RCW 54.16.200; to "sue in any court of competent jurisdiction," RCW 54.16.110; to indemnify their officers and employees against liability claims, RCW 54.16.097; and to purchase liability insurance for officers and employees, RCW 54.16.095, .096; see RCW 36.16.138. These provisions are to be construed liberally in order to effectuate the purposes of RCW Title 54, which deals specifically with public utility districts. RCW 54.44.900.
This court's primary objective in interpreting a statute is to ascertain and give effect to the intent of the Legislature. State v. Keller, 98 Wash.2d 725, 728, 657 P.2d 1384 (1983). The intent must be determined primarily from the language of the statute itself; however, if the intent is not clear from the language of the statute, the court may resort to statutory construction. Department of Transp. v. State Employees' Ins. Bd., 97 Wash.2d 454, 458, 645 P.2d 1076 (1982). But " 'where the language of a statute is clear and unambiguous, there is no room for judicial interpretation.' " PUD 1 v. Public Empl. Relations Comm'n, 110 Wash.2d 114, 118, 750 P.2d 1240 (1988) (citing Roza...
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