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Weyerhaeuser Co. v. Commercial Union Insurance Co.12/21/2000
in a number of states. CP at 142-214. Of these 42 sites only 15 are located in Washington (CP at 207- 08), but because Weyerhaeuser is incorporated and headquartered in Washington, the trial court applied Washington law to the entire proceeding. CP at 295. Discovery and trial were divided into three phases or groups of sites. CP 236-94.
Prior to trial the court granted the defendant insurers' motion for summary judgment with regard to 15 sites, finding no coverage where the government had not instituted legal action because there was no claim of liability by a third party. Weyerhaeuser I, 123 Wn.2d at 894. We reversed, holding Comprehensive General Liability (CGL) insurance policies, which provide coverage for all sums which the insured shall be obligated to pay by reason of the liability imposed by law for damages on account of property damage, may provide coverage when an insured engages in the cleanup of pollution damages in cooperation with an environmental agency. Such policies can reasonably be read to provide coverage for actions taken to clean up pollution damages required under environmental statutes which impose strict liability for such cleanup. Id. at 896-97.
Subsequent to this decision and prior to the Phase I trial, all but one of the 34 insurance company defendants settled with Weyerhaeuser. CU was the sole insurer that did not settle.
B. Employers Surplus Lines Supplemental Policy
As is common for large companies, Weyerhaeuser purchased its insurance in layers. See Pub. Util. Dist. No. 1 v. Int'l Ins. Co., 124 Wn.2d 789, 793, 881 P.2d 1020 (1994). At trial Weyerhaeuser claimed coverage under a supplemental or excess policy (hereinafter 'supplemental policy') issued by Employers' Surplus Lines Insurance Company, No. E 62079 (Pl.'s Trial Ex. 3). CU then appeared as successor to Employers' Surplus Lines Insurance Co. CP at 223. The policy declarations page provided the policy was effective March 1, 1970 to March 1, 1973; however, an endorsement (No. 2) extended coverage from January 1, 1970 to March 1, 1970 (referred to as the 'stub policy' or the 'stub period'). Pl.'s Trial Ex. 3. A subsequent endorsement (No. 6) terminated coverage one month early on January 31, 1973. Id. The Employers' Surplus Lines policy supplemented the underlying Fireman's Fund Insurance Company policy ('underlying policy') pursuant to the following provision:
2. MAINTENANCE OF UNDERLYING INSURANCE
This policy is subject to the same terms, definitions, exclusions and conditions (except as regards the premium, the amount and limits of liability and except as otherwise provided herein) as are contained in or as may be added to the Underlying Policies stated in Item 2 of the Declarations {the Fireman's Fund policy} prior to the happening of an occurrence for which claim is made hereunder. Id.
The supplemental policy specified limits of $1,500,000 in excess of the Fireman's Fund $500,000 primary policy limits (CP at 8940), although the parties disagree as to whether the aggregate limit in the supplemental policy applies to, or limits, property damage coverage. CU claims the $1,500,000 aggregate limit applies to property damage. Weyerhaeuser claims it does not, and contends there is no aggregate limit on property damage.
C. Trial
The Phase I trial began in fall 1994, focusing on (1) the Mid-State landfill near Cleveland, Wisconsin, and (2) Weyerhaeuser's wood-treating plant in DeQueen, Arkansas. CP at 592-93. After three weeks the jury found coverage for the Mid-State site but no coverage for the DeQueen site.
The Phase II trial began in spring 1996 and included seven Washington sites. The jury
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