Port Of Longview v. London Market Insurers, 46654-6

Background

Port of Longview sought coverage from London market insurers for groundwater contamination at two sites, TWP and TPH, under primary and excess policies issued 1977–1985.
Port learned of contamination by 1991–1999 but did not timely notify LMI; excess notices occurred in 2010; suit filed in 2010, with phase one on coverage and phase two on damages.
Trial court found late notice caused no prejudice for TWP but raised factual issues for TPH; mistrial occurred due to undisclosed documents; second trial yielded verdict for Port on all issues.
Port’s purchase of the IP plant area in 1999 and knowledge of contamination raised “known loss” and occurrence arguments; MTCA framework imposed PLP status and potential cleanup costs.
Trial awards of Olympic Steamship attorney fees were narrowed: fees under primary policies disallowed due to late notice; fees under excess policies allowed; remand to determine excess-fee amount.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether late notice prejudiced LMI for TWP site	Port argues prejudice shown by delayed notice; secondary evidence supports reasonable defense preparation.	LMI contends late notice caused actual and substantial prejudice as to its ability to defend claims.	No reversible error; factual questions remained; Port not precluded from excess policy coverage; prejudice not presumed as matter of law.
Whether late notice prejudiced LMI for TPH site	Port asserts prejudice limited to some evidence and knowledge; delay affected investigation and witnesses.	LMI asserts substantial prejudice from delayed notice across TPH claims.	Trial court's denial of summary judgment on prejudice for TPH affirmed; factual issues remained; prejudice not presumed.
Whether known loss principle precludes coverage for TWP	Port argues IP/MFA knowledge does not preclude coverage because knowledge was not at policy-issuance time for these policies.	LMI argues Port’s knowledge at issue times supports known loss exclusion.	Known loss principle does not apply to IP plant area (purchase date after policy issuance); MFA claim unpersuasive for known loss.
Whether occurrence requirement was met for Port's claims	Port contends it did not expect groundwater contamination before policy periods; evidence supports non-recognition of contamination as occurrence.	LMI argues Port’s 1999 IP plant purchase shows expected/intentional contamination; evidence insufficient to prove otherwise.	Evidence supported jury finding that Port did not expect groundwater contamination before policy periods; occurrence requirement satisfied.
Whether qualified pollution exclusion bars excess policy coverage	Port must show groundwater release was sudden and accidental; burden on Port under instruction 11.	LMI argues exclusion applies unless discharge was sudden/accidental; Port bears burden.	Waiver of challenge; evidence supports Port did not expect/release contaminants; exclusion not applicable to excess policies.
Olympic Steamship attorney fees—are Port fees recoverable under primary or excess policies	Port seeks Olympic Steamship fees for obtaining coverage; argues benefit conferred by excess-policy declaration.	LMI contends fees disallowed for primary policies due to late notice; fees allowed only for excess policies with remand to allocate.	No fee under primary policies; fees awarded under excess policies; remand to determine exact excess-fee amount.

Key Cases Cited

Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 164 Wn.2d 411 (Wash. 2008) (actual and substantial prejudice standard for late notice)
Queen City Farms, Inc. v. Central Nat’l Ins. Co. of Omaha, 126 Wn.2d 50 (Wash. 1994) (definition of occurrence and burden of proof on non-existence of expected damage)
Klickitat County PUD No. 1 v. International Ins. Co., 124 Wn.2d 789 (Wash. 1994) (presumed prejudice and knowledge-based exclusions; known loss context)
Pederson’s Fryer Farms, Inc. v. Transamerica Ins. Co., 83 Wn. App. 432 (Wash. App. 1996) (presumed prejudice factors in late notice cases)
Canron, Inc. v. Fed. Ins. Co., 82 Wn. App. 480 (Wash. App. 1996) (prejudice factors and evidence sufficiency in late notice)
Overton v. Consol. Ins. Co., 145 Wn.2d 417 (Wash. 2002) (occurrence definition and timing relevance)
ALCOA v. Aetna Cas. & Surety Co., 140 Wn.2d 517 (Wash. 2000) (known loss principle burden on insurer)
Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37 (Wash. 1991) (Olympic Steamship attendance—fee recovery for obtaining coverage)
Barton v. Dep’t of Transp., 178 Wn.2d 193 (Wash. 2013) (CR 37 sanctions standards and Burnet factors)
Mayer v. Sto Indus., Inc., 156 Wn.2d 677 (Wash. 2006) (CR 37 sanctions and appellate standard)