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Weyerhaeuser Co. v. Commercial Union Insurance Co.12/21/2000
v. PEMCO Ins. Co., 108 Wn.2d 338, 340-41, 738 P.2d 251 (1987). Plain language susceptible to only one reasonable interpretation should be given effect to carry out the contracting parties' intent, and thus the court's initial undertaking is to examine the terms of the insurance contract to determine whether under its plain meaning there is coverage. See Kitsap County, 136 Wn.2d at 576. Also, the policy should be given a fair, reasonable, and sensible construction such as the average purchaser of insurance would give it. Kitsap County, 136 Wn.2d at 575; Queen City Farms, 126 Wn.2d at 65. The insurance contract must be viewed in its entirety. Allstate Ins. Co. v. Peasley, 131 Wn.2d 420, 424, 932 P.2d 1244 (1997).
The Commercial Union excess policy provided that the insurer would indemnify Weyerhaeuser for 'all sums' which Weyerhaeuser was obligated to pay by reason of liability imposed by law caused by or arising out of an 'occurrence.' Clerk's Papers (CP) at 13975. 'Occurrence' was defined in the Fireman's Fund policy, the underlying primary policy, as 'an event or continuous or repeated exposure to conditions, which unexpectedly causes injury during the policy period.' CP at 13980. The primary policy also provided that the insurer would pay all sums which the insured shall become obligated to pay as damages by reason of the liability imposed upon the insured by law, or assumed by the insured under contract or agreement, because of injury to or destruction of corporeal property, including all loss resulting therefrom, arising out of the business operations of the insured. CP at 13979 (emphasis added).
The majority reads this latter provision to require coverage where the liability arises out of the business operations of the insured, and reasons that Weyerhaeuser's liability arises out of the business operations of the insured because the joint and several strict liability of Weyerhaeuser under CERCLA results from its shipment of wastes to the two sites.
I believe the majority misreads and misapplies the policy language. The provision states that the insurer will pay 'all sums' which Weyerhaeuser has 'to pay as damages by reason of the liability imposed upon' Weyerhaeuser by CERCLA 'because of injury to or destruction of corporeal property . . . arising out of the business operations of the insured.' CP at 13979. In my view, the policy thus states that the injury to the property, which gives rise to the liability, must arise out of the business operations of the insured. Thus, reading the coverage provisions as a whole, for coverage to exist under the policies, liability imposed by law must be caused by or arise out of an occurrence, which, given the definition of 'occurrence,' requires that injury to property during the policy period must occur. Further, coverage exists only where the property damage arises out of the business operations of the insured. Because Weyerhaeuser's shipments of waste did not occur until after the policy period expired, no injury to property arose out of its business operations during that period and there is accordingly no coverage under the language of the policy.
Not only is this construction in accord with the language used in the policies, it achieves the important goal of giving the contract a fair, reasonable, and sensible construction. In similar circumstances, where the insured claimed coverage for CERCLA clean up costs resulting from pollution under a policy antedating any involvement by the insured with the damage sites, a California court declined to find coverage, reasoning that a complete factual predicate for liability subsequently imposed by law must exist during the policy period. FMC Corp. v. Plaisted &
Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Washington Personal Injury Attorneys
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