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Queen City Farms Inc. v. Aetna Casualty & Surety Co.9/9/1994
BRACHTENBACH, J.--This case involves coverage issues under comprehensive general liability policies for losses resulting from contamination of groundwater when toxic materials leaked from waste pits where hazardous materials had been deposited. A number of issues involve construction of policy provisions, particularly pollution exclusions. Additional issues involve misrepresentation defenses raised by some insurers. We affirm the Court of Appeals' holding that coverage is provided under one insurer's policies, that factual questions remain as to whether there is coverage under the remaining policies at issue, and that the insurers' misrepresentation defenses fail. Our analysis differs in some respects from that used by the Court of Appeals, particularly as to the misrepresentation issues.
Queen City Farms, Inc. (QCF) brought this declaratory judgment action against several of its insurers seeking a determination that the insurers were responsible for clean-up costs incurred by QCF as a consequence of contamination resulting from leaking of hazardous wastes from a waste disposal site on property owned by QCF in Maple Valley. In 1979 the United States Environmental Protection Agency (EPA) and the Washington State Department of Ecology began investigating the property for hazardous waste contamination. In 1983, EPA testing revealed groundwater contamination. QCF was identified as a potential responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as amended, 42 U.S.C. ยง 9601 et seq. (1980). Strict liability is imposed under CERCLA. QCF entered consent decrees with the EPA agreeing, with The Boeing Company (Boeing) (the major disposer of wastes at the site), to clean up the site. By the time of trial, QCF had paid $1.8 million in clean-up costs, with potential liability of $5.5 million.
Queen City Farms, Inc., (QCF) was incorporated in 1966, and is a subsidiary of the Seattle Disposal Company (SDC). In 1951, SDC purchased land in Maple Valley, Washington known as Queen City Farms, for use as a hog farm. The hog farm operated for a few years in the 1950's.
In the mid-1950's, representatives from the King County Health Department approached SDC's owners and requested that they permit oil, paint, roofing materials, and tar to be disposed of on the property because the County did not own an adequate disposal site. In 1956, local industries began depositing industrial wastes into a natural depression on the property.
In order to expand the capacity of the waste pit, the owners scooped out the depression, and formed three pits separated by berms, arranged so that as the first pit filled, the liquid wastes would flow into the next pit, and then into the third when the second filled. The ponds covered about an acre, and had a total capacity of about 1 million gallons.
Seattle Disposal Company also dumped wastes into the pits, but most of the waste disposed of in the pits was trucked in by Boeing. Boeing dumped wastes from 1957 to 1969. In one 3-year period, nearly 3 million gallons of Boeing's wastes were dumped into the pit. Much of this waste consisted of metal plating wastes with high concentrations of heavy metals. When tested in 1983, groundwater contamination from the wastes in the pits had resulted in highly toxic levels of one of the chemicals used in the plating process, hexavalent chromium.
No permits were ever issued for the disposal operation, although the King County Health Department and the State Pollution Control Commission were aware of and monitored the operation to some extent. One of SDC's owners testified that the ponds were checked all the time but the operation was neve
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