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Weyerhaeuser Co. v. Commercial Union Insurance Co.12/21/2000
Oral Argument Date: 05/09/2000 06/08/1999
En Banc
Massive costs associated with hazardous waste cleanup prompt this litigation between insured and insurer to allocate financial responsibility pursuant to the terms and conditions of an insurance contract. The trial court resolved most claims on summary judgment, the remainder at trial. Neither party is satisfied. Commercial Union Insurance Co. (CU) appeals and Weyerhaeuser cross-appeals the resulting final judgment. The Court of Appeals certified this proceeding to the Supreme Court for direct review and we accepted. Ruling Accepting Certification, No. 67694-1 (Mar. 8, 1999). In part we agree with the learned trial judge, but in part we do not. A number of issues are presented which we must resolve.
We affirm the trial court and hold: (1) the supplemental policy does not create a property damage aggregate limit; (2) CU is not entitled to offset settlements Weyerhaeuser received from other insurers; (3) CU is obligated to provide coverage for the Mid-State and Pasco sites; (4) the admission of expert testimony was proper; and (5) Weyerhaeuser is entitled to prejudgment interest for the five sites with liquidated damages. However we partially reverse the trial court to hold: (1) CU is entitled to a $500,000 per incident setoff against the underlying policy; (2) Weyerhaeuser is not entitled to prejudgment interest for (a) sites where damages are not liquidated, or (b) its award of attorneys' fees; and (3) a material issue of fact remains as to whether the underlying insurer's policy was properly exhausted, thus triggering CU's duty to defend Weyerhaeuser.
Weyerhaeuser's cross-appeal raises two additional issues concerning the proration of costs in relation to CU's coverage at certain sites. CU concedes--and we agree--that in light of our subsequent holding in Am. Nat'l Fire Ins. Co. v. B&L;Trucking & Constr. Co., 134 Wn.2d 413, 951 P.2d 250 (1998), a remand to the trial court is necessary to determine the correct amount of Weyerhaeuser's judgment for the sites where the jury prorated damages.
Accordingly, we affirm in part and reverse in part and remand to the trial court for proceedings consistent with this opinion.
FACTS
A. Background
Weyerhaeuser is the party responsible for cleaning up hazardous waste at approximately 130 sites nationwide under the Comprehensive Environmental Response, Compensation, and Liability act (CERCLA), 42 U.S.C. sec.sec. 9601- 9675, Washington's Model Toxics Control Act (MTCA), RCW 70.105D, and a variety of other state laws. Weyerhaeuser Co. v. Aetna Cas. & Sur. Co. (Weyerhaeuser I), 123 Wn.2d 891, 893, 874 P.2d 142 (1994). CERCLA and the MTCA impose strict liability for environmental cleanup. Id. at 898.
The MTCA imposes joint and several liability for all natural resource damage and remediation costs. RCW 70.105D.040(2). Liability under both CERCLA and the MTCA extends broadly to current owners and operators of a facility, persons who owned or operated a facility at the time hazardous substances were disposed or released, and any other person who caused the disposal or release of the hazardous substance at any facility. See 42 U.S.C. sec. 9607(a); RCW 70.105D.040(1). Weyerhaeuser claims its past and future 'worst case scenario' costs may be as high as in the hundreds of millions of dollars to clean up these sites. Br. of Resp't/Cross-Appellant at 22 (citing Clerk's Papers (CP) at 13410-13).
In 1992 Weyerhaeuser filed a declaratory judgment action against 34 insurance companies seeking a declaration of coverage with regard to property damage at 42 allegedly polluted sites
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