Weyerhaeuser Co. v. Aetna Cas. and Sur. Co.

• Decision Date: 19 May 1994
• Docket Number: No. 61000-2,61000-2
• Citation: 874 P.2d 142,123 Wn.2d 891
• Court: Washington Supreme Court
• Parties: , 38 ERC 1739 WEYERHAEUSER COMPANY, a Washington corporation, Appellant, v. AETNA CASUALTY AND SURETY COMPANY, a Connecticut corporation, Defendant, Central National Insurance Company of Omaha, a Nebraska corporation (in rehabilitation); Commercial Union Insurance Company, a Massachusetts Corporation (as successor to Employer's Surplus Lines Insurance Company, a Massachusetts Corporation); Granite State Insurance Company, a New Hampshire Corporation; Insco Limited, a Bermuda Corporation; Insurance Company of North America, a Pennsylvania Corporation; the Insurance Company of the State of Pennsylvania, a Pennsylvania Corporation; Certain Underwriters at Lloyd's and London Market Companies; New Hampshire Insurance Company, a New Hampshire Corporation; Old Republic Insurance Company, a Pennsylvania Corporation; and Twin City Fire Insurance Company, an Indiana Corporation; Respondents, AIU Insurance Company, a New York Corporation; American Bankers Insurance Company, a Florida Corporation; American Re-Insurance Company, a Delaware Corporation; Appalachian Insurance Company, a Rhode Island Corporation; California Union Insurance Company, a California Corporation; Continental Insurance Company, a New York Corporation; Employer's Reinsurance Corporation, a Missouri Corporation; Eric Reinsurance Company (as successor to American Excess Insurance Company); Federal Insurance Company, a New Jersey Corporation; Fireman's Fund Insurance Company, a California Corporation (in its own capacity and as successor to Fireman's Fund Indemnity Company); First State Insurance Company, a Delaware Corporation; The Home Insurance Company, a New Hampshire Corporation; Indemnity Insurance Company of North America, a New York Corporation; Industrial Underwriters Insurance Company, a Texas Corporation; Interstate Fire & Casualty Company, an Illinois Corporation; Landmark Insurance Company, a California Corporation; Lexington Insurance Company, a Delaware Corporation; National Union Fire Insuranc

Page 891

123 Wn.2d 891

874 P.2d 142, 38 ERC 1739

WEYERHAEUSER COMPANY, a Washington corporation, Appellant, v.AETNA CASUALTY AND SURETY COMPANY, a Connecticut corporation, DefendantCentral National Insurance Company of Omaha, a Nebraska corporation (in rehabilitation); Commercial Union Insurance Company, a Massachusetts Corporation (as successor to Employer's Surplus Lines Insurance Company, a Massachusetts Corporation); Granite State Insurance Company, a New Hampshire Corporation; Insco Limited, a Bermuda Corporation; Insurance Company of North America, a Pennsylvania Corporation; the Insurance Company of the State of Pennsylvania, a Pennsylvania Corporation; Certain Underwriters at Lloyd's and London Market Companies; New Hampshire Insurance Company, a New Hampshire CorporationOld Republic Insurance Company, a Pennsylvania Corporation and Twin City Fire Insurance Company, an Indiana Corporation; RespondentsAIU Insurance Company, a New York Corporation; American Bankers Insurance Company, a Florida Corporation; American Re-Insurance Company, a Delaware Corporation; Appalachian Insurance Company, a Rhode Island Corporation; California Union Insurance Company, a California Corporation; Continental Insurance Company, a New York Corporation; Employer's Reinsurance Corporation, a Missouri Corporation; Eric Reinsurance Company (as successor to American Excess Insurance Company); Federal Insurance Company, a New Jersey Corporation; Fireman's Fund Insurance Company, a California Corporation (in its own capacity and as successor to Fireman's Fund Indemnity Company); First State Insurance Company, a Delaware Corporation; The Home Insurance Company, a New Hampshire Corporation; Indemnity Insurance Company of North America, a New York Corporation; Industrial Underwriters Insurance Company, a Texas Corporation; Interstate Fire & Casualty Company, an Illinois Corporation; Landmark Insurance Company, a California Corporation; Lexington Insurance Company, a Delaware Corporation; National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania Corporation; New England Insurance Company, a Massachusetts Corporation (as successor to New England Reinsurance Corporation, a Connecticut Corporation); North Star Reinsurance Corporation, a Delaware Corporation; Protective National Insurance Company, a Nebraska Corporation; St. Paul Mercury Insurance Company, a Minnesota Corporation; Transcontinental Insurance Company, a New York Corporation; The Washington Insurance Guaranty Association, a Washington statutory involuntary association; and John Does 1 Through 20, Defendants.

No. 61000-2.

Supreme Court of Washington, En Banc.

May 19, 1994.

Perkins, Coie, Charles C. Gordon, Jeffrey I. Tilden, Jeffrey M. Thomas, Seattle, Anderson, Kill, Olick & Oshinsky, P.C., Eugene R. Anderson, Robert M. Horkovich, William G. Passannante, Peter J. Andrews, New York City, Gabriel E. Gedvila, Asst. Gen. Counsel, Tacoma, for appellant.

Williams, Kastner & Gibbs, Frankie Adams Crain, Lane, Powell, Spears & Lubersky, William A. Pelandini, Raymond S. Weber, Gaitan & Cusack, Kenneth J. Cusack, William F. Knowles, Bliss, Riordan, Carl E. Forsberg, Seattle, WA, for respondents.

Mark S. Parris, Peggy J. Williams, Seattle, Thomas M. Reiter, Pittsburgh, PA, David M. Brenner, Seattle, WA, Robert N. Sayler, John G. Buchanan, III, William F. Greaney, Washington, DC, amici curiae for appellant on behalf of Boeing, Paccar, Asarco, Univar, Washington Natural Gas, Aluminum Co. of America, and Northwest Alloys.

Mark S. Parris, Peggy J. Williams, Seattle, amicus curiae for appellant on behalf of the Ass'n of Wash. Cities.

Christine O. Gregoire, Atty. Gen., Kathryn L. Gerla, Asst. Atty. Gen., Olympia, amicus curiae for appellant.

Thomas S. James, Jr., Seattle, Laura A. Foggan, John E. Barry, Jonathan M. Shaw, Washington, DC, amicus curiae for respondents on behalf of Ins. Environmental Litigation Ass'n.

ANDERSEN, Chief Justice.

FACTS OF CASE

In 1992, the Weyerhaeuser Company filed a declaratory judgment action against many of its insurers seeking a declaration of coverage with regard to alleged property damage at some 42 allegedly polluted sites in a number of states.

The insurance policies involved were issued over a period of time from approximately 1951 through 1985.The policies were described as various primary, umbrella, and excess Comprehensive General Liability (CGL) policies.The defendant insurers presently remaining in the case all appear to be excess insurers.Weyerhaeuser asserts that some policies contain a standard form qualified pollution exclusion while some contain somewhat different language regarding pollution damages.The actual portions of the insurance contracts regarding exclusions or limitations to coverage are not before us.

The insurers filed a motion for summary judgment with regard to 18 of the sites arguing that there was no coverage because the government environmental agencies involved in the cleanup efforts at the various sites had not yet filed legal actions or threatened to do so.The trial court granted summary judgment and dismissed Weyerhaeuser's complaint with prejudice, with regard to 15 of those sites.The basis for the trial court's order was that "there is no claim by a third party of liability to pay damages because of property damage ..."The remediation costs for the sites at issue in this part of the case are alleged to be approximately $28 million.

The motion for summary judgment was denied as to three sites: Lemberger, Wisconsin, Lunenberg, Massachusetts, and Asheville, North Carolina.The insurers withdrew the Lemberger and the Lunenberg sites from its motion because one was the subject of a third party claim and the other involved receipt by Weyerhaeuser of a PRP (potentially responsible party) letter.The trial court refused to grant the motion with regard to the Asheville site on the basis of "the tenor of the letter [from the state agency] and the threats imposed".The trial court found the actual or threatened use of legal process to be evident from the agency's letter.

Two of the fifteen sites were also the subjects of different motions for summary judgment which were granted on other grounds than those advanced in this appeal.The trial court's Summary Judgment Order in this case includes the Enumclaw and Mt. Solo sites in its grant of summary judgment, but notes that these two sites have also been dismissed on other grounds in separate orders.Enumclaw was dismissed due to an "owned property exclusion".The parties stipulated that all claims regarding Mt. Solo were dismissed.

A large portion of the record in this case is sealed by court order pursuant to the parties' stipulation regarding confidential and privileged information revealed in discovery.We have carefully reviewed the entire record and conclude that a detailed site-specific factual description of the governmental action which occurred at each of the various sites is unnecessary to the reader's understanding of the resolution of the present issue.Therefore, in light of the trial court's confidentiality order, we do not include site-specific details regarding the various allegedly polluted sites.The following generalized statement of facts is sufficient to frame the legal question.

Generally, Weyerhaeuser was proceeding with efforts to clean up what is alleged to be pollution damage at various sites in cooperation with government environmental agencies.The Weyerhaeuser remediation managers for the sites submitted affidavits stating that the work undertaken was mandated by various state and federal statutes which impose strict, joint and several liability for pollution damage.Some of the sites allegedly involved situations where Weyerhaeuser was required by law to report leaks or spills or contamination to government authorities.A number of the sites allegedly involve contamination of the groundwater.The correspondence between Weyerhaeuser and some of the environmental authorities refers to meetings between Weyerhaeuser and the authorities and monitoring by the agencies of the cleanup efforts.A number of the sites have been listed by the State of Washington Department of Ecology(DOE) on the hazardous sites list pursuant to the Model Toxics Control Act, RCW 70.105D.

Weyerhaeuser submitted an affidavit from Carol Fleskes, program manager of the Toxics Cleanup Program of the DOE which states that under RCW 70.105D.040, the owner or operator of a facility is strictly liable, jointly and severally, for all remedial action costs resulting from the release of hazardous substances.Fleskes stated that the DOE maintains a hazardous sites list containing the names of sites at which the DOE has determined remedial action is necessary and sites are ranked according to the Washington Ranking Method Scoring Manual with sites having the highest priority given a ranking of "1" and the lowest a ranking of "5".As sites with higher priority rankings are remedied and removed from the list, sites with lower rankings will be re-ranked.Fleskes states that in the absence of an independent remedial action that satisfies the DOE, any site listed on the hazardous sites list will at some point in time become the subject of a cleanup initiated by the DOE.This last statement is corroborated in the amicus brief submitted by the DOE which cites to RCW 70.105D.050(1).

Weyerhaeuser appealed the grant of summary judgment to the Court of Appeals.This court accepted certification from the Court of Appeals.

One ultimate issue is here presented.

ISSUE

Can there be insurance coverage under a Comprehensive General Liability (CGL) policy for property damage when the policyholder has incurred environmental cleanup costs pursuant to statute, but where the involved government environmental agency has not made an overt threat of formal legal action?

DECISION

CONCLUSION.We conclude that Comprehensive General Liability (CGL) insurance policies,...