Boeing Co. v. Aetna Casualty & Surety Co.

prostitution the offense of that Leonard Slack committed under SMC 12A.10.010. loitering majority only

I therefore dissent from respectfully I reverse extent that would the conviction Petitioner presented in this Leonard Slack for insufficient evidence case. Pearson,

Callow, C.J., Utter, J., Tern., and J. Pro con- Smith, cur with J. En January 4, 1990.] Banc. 55700-4.

[No. Certification From the United States District Court Washington

Western District Boeing Casualty Company, Plaintiff, v. Aetna Surety Company, al, et Defendants. Rolling Northwest Inc., Steel Mills, Plaintiff, v. Fireman's Fund Company, Insurance al,

et Defendants. Corporation, RSR Plaintiff, v. Granite State Company, al, Insurance et Defendants. Manufacturing Company, Inc., John Fluke Plaintiff, Indemnity v. Hartford & Company, Accident al, et Defendants. Indemnity Company,

Hartford & Accident Plaintiff, Manufacturing Company, Inc., v. John Fluke al, et Defendants. Casualty Corporation,

Davis Walker v. Aetna Plaintiff, Surety Company, Defendant. Gordon, Gould, Charles C. A. William and Nicholas P. (of Coie); Sayler, Gellert Perkins Robert N. James R. (of Murray, Covington Burling)-, C. and Eric Bosset & Paul plaintiff Boeing. Carlson, R.

Sylvester, Ruud, Cruzen, Petrie & John T. Petrie and Bryan, plaintiff Robert W. for Northwest Steel. (Philip Don M. R. Gitlen, and Robert Cole H. Gulliford Nye, Whiteman,

Jonathan P. and Hanna, Osterman & of counsel), plaintiff for RSR. Phillips Boley, Grey Stoel, Rives,

Stevan D. and Jones & (George Berger, Philips, Benja- Roth, S. Nizer, Judith and counsel), plaintiff min, Ballon, Krim & of for John Fluke Manufacturing.

Jeffrey Leppo, Bogle Piekarska, W. Ruth L. and & plaintiff Corp. Gates, for Davis Walker Jerry Williams, & Gibbs, Edmonds, Kastner B. Patrick O'Loughlin, Roy Crain, M. A. Umlauf, Frankie A. and Col- Carney, Stephenson, Badley, Cook; Smith, leen M. Spellman Sylvia Luppert; Mueller & Carr, Goodson, and Margaret Foret, Warner, Hooks; Lee & and Michael Thorsrud, & Paulich, Thorsrud, Cane Mark and Patrick Lindsey, Sidney Paulich; Merrick, M. & R. Hofstedt Dinning; Snyder, Wilson, Jr., Smith, Ronald Cochran and Dickerson, Smith, Jacobi; David Hall- & Dennis and M. Keating Abbott, Jr., mark, Fitzharris, & William and Lang; Dunlap Soderland; & Soderland and Pamela David Sedgwick, Detert, & Arnold C. Raskoff, Moran and Mark for defendants insurers. George by Philip Morrison, Bassett, & W. R.

Bassett Margaret Morgan, Croessmann, A. and for defendant State Insurance. Granite by Jeffrey Mines, C.

Betts, & Grant and Mar- Patterson Highlands garet Wetherald, for defendant Insurance. E. by Miller, Israel, & Robert L. Moss David Lane Powell Douglas Schoeggl, Ende, J. for defendants London M. and Underwriters, al. et by Bayh, &

Rivkin, Radler, Feldman, Richard S. Dunne Bradbury, Jeffrey Brock; Steven Bliss and & Silberfeld, Forsberg, Bradbury Carl E. H. and for Riordan, John defendant Hartford. Kalis, Reiter, Thomas M. Brenner, Peter J. M.

David CIBA-Geigy Segerdahl Energy on R. behalf and James Corp., Industries; Carol Co., IBM, and NI A. Dow Chemical County; Kenneth PUD of Chelan 0. on behalf of Wardell Jerry Attorney Eikenberry, General, Ackerman and Lee George Molly Larson, Greer, E. Linda Rees, Assistants, R. State, S. Parris behalf of the Burke, Mark on Pierce B. Recovery, County, Seattle, Tacoma, Land Port Port of Reclamation; Brothers Land Norm Inc., and Leichner King County, Prosecuting Attorney Maleng, and James County, Deputy, King on Brewer, behalf Clark L. Senior Prosecuting County, Washington Association Attor- City Attorney, Douglas neys; Jewett, Seattle Terrence N. City Assistant; Barker, Tacoma Cullen, William J. J. Attorney, Stephen Karavitis, Assistant, Robert F. G. Washington State Association of Hauth on behalf Attorneys, plaintiffs. Municipal amici curiae for R. William Hickman on Co.; behalf of Safeco Insurance James, Jr., Thomas S. DeVore, P. Cameron Donald S. Kunze, Brunner, Thomas W. James Johnstone, M. Frederick S. Ansell on behalf of Insurance Environmental Litigation Association, amici curiae for defendants.

Dore, J. United States District Court for the Western District of has Washington certified the following question of state law to this court: Whether, law, Washington under environmental paid costs paid by insureds, or to be as the result of action by

taken the United States and the State of Washington under CERCLA, 42 seq., U.S.C. 9601 et constitute "damages" § within meaning comprehensive general liability poli- cies issued the insurers. Answer: Yes. Facts

In 1983, the United States Environmental Protection Agency designated the Western Processing hazardous waste facility Kent, Washington, as one of 400 hazardous waste sites requiring cleanup. February 25, 1983, On the EPA filed a complaint Western against Processing and its owners in the United States District Court for the Western District May 1983, Washington. pursuant to the Comprehen- sive Response, Environmental Compensation, and Liability Act (CERCLA), of 1980 42 U.S.C. et seq., the EPA § (hereinafter notified the appellants policyholders) they were generators of hazardous waste at the Western Pro- cessing site and were responsible parties for "response costs" at July this site. On the EPA and the State of Washington, as an plaintiff, additional poli- named the cyholders in a "Second Amended Complaint" as '"generator and transporter defendants' facing potential liability for all expended monies by the government at the Western Pro- site." cessing app., Certification order at 141. On August 1984, the court entered a "Partial Consent Decree” between the EPA policyholders and the cleanup for the of the sur- face of the Western Processing April 13, 1987, site. On poli- EPA entered Decree" between and

court a "Consent cleanup for of hazardous waste contamination cyholders the of the Western site. Processing of the subsurface EPA, policyholders in its that the complaint, alleged at hazardous substances found the generated transported or Further, such has con- migration that the of wastes site. aquifer (water-bearing geologi- the groundwater, taminated zone), agricultural property adjoining cal commercial and site, app., and surface waters. Certification order nearby the 324-73, Complaint" by filed United "Third Amended v. Processing States in United States Western Attorneys States, that United order to alleged Co. It further the groundwater, aquifer combat the effects of contaminated site, had incurred and property and the was adjoining by costs" as defined for incurring "response the were liable. CERCLA defines costs policyholders which costs of removal of hazardous sub- "response" to include the and costs of other reme- stances from the environment 9601(25). CERCLA provides any dial work. U.S.C. § entity a release or responsible or for person business be of hazardous substances "shall liable threatened release by removal remedial incurred ... all or action for costs or a State . . .".42 U.S.C. the United States Government § 9607(a)(4)(A). EPA, by policy- to action the Pursuant pay will to environmental paid holders have continue Processing to relating the Western hazard- response costs facility. ous waste gener- policyholders of time that

During period Western Pro- hazardous wastes to transported ated and Liability General they Comprehensive cessing, carried (herein- (CGL) respondents from the purchased insurance insurers). provision of four operative coverage after The " 'will on behalf of pay the insurer policies provide insured shall become obli- insured all sums which the or damages bodily injury prop- because gated pay by applies, caused an policy which erty damage to case, order, at 3. In one . . .'" occurrence. Certification all which "'for sums provides indemnification policy

g75 obligated pay Assured shall be . . . ... all fully as more defined the term "ultimate net loss" on (i) (ii) injuries Property account of: . . . [or] Personal Damage goes . . on to define "ultimate net loss" as any company Assured, '"the total sum which the or as his obligated pay by insurer, both, become . reason of . . property damage through adjudication . . . either or com- promise order, . . Certification at 3. The do not specifically "damages.” define policyholders sued the insurers for indemnification "response they relating

for the costs" incurred to the West- facility. Processing summary case, ern In each motions for judgment were filed in the United States District Court. question Since the motions raised a determinative of state question "response law, the of whether costs" constitute "damages” by within the CGL insurers, issued this question was certified to this court. No extrinsic evidence touching upon parties' interpretation coverage the provided clause was in this certification. It was the intent of the district court that extrinsic evidence not be considered by procedure court, since the certification is authorized questions questions law, to obtain answers to not of fact.

Analysis any person responsible Under CERCLA for an "actual release" release" of or "threatened hazardous substances is response response paid by liable for costs. The costs responses insureds in the case before us concern to an "actual release" of hazardous substances which have already groundwater property contaminated the and real surrounding Processing question the Western site. The response remedy before us is whether these costs to an damages actual release of hazardous substances constitute comprehensive meaning general within the of the insureds' liability policies by policy- insurers. In issued order for the plain meaning indemnified, holders to be of the con- provide coverage subject "response tract for the must indem insurers can avoid Alternatively, before the costs."1 must be satisfied this court policyholders, nifying it be understood as would meaning "damages", plain coverage unmistakably precludes lay person, by average to be construed costs, is any ambiguity and for the insurer. against this burden attempted to meet have

The insurers limited, the word "dam- lines, increasingly around drawing reme- line law First, bright draw a between insurers ages." They assert common law. remedies under equity dies and includes "damages" meaning of technical legal monetary equi- but not injury monetary compensation with an paid comply as sums table remedies such insurers conclude that costs The restitution. injunction or and restitution injunction are like incurred under CERCLA legal than therefore, equitable are rather costs; they because policy language within the they "damages" are not insurers' linchpin damages. not award equity does legal its tech- given should be "damages" is that argument law reme- Next, a line between they draw nical meaning. damages, such restitution-type law dies, excluding through a line Finally, they draw remedies like CERCLA. everything exclude law common available damages. tort-type except the that, under the rules persuaded

The court the words "as Washington, analysis insurance contract restrictions. these communicate damages" policy, an insurance of language construing give so as to together must be construed contract the entire Ins. Co. v. Transcontinental each clause. effect to force and policy public of in the construction important of note the absence 1It policy, grave question implicitly presents of While this case insurance contracts. environment, presently polluting the task namely our the cost of should bear who under only requires the terms of us to construe this court before public policy rarely to override Washington invoke Washington courts law. Emerson, Ins. Co. v. Farm Gen. 102 State policy. express insurance terms of an Cameron, (1984); Progressive Co. v. Cas. Ins. 481-83, 477, 1139 687 P.2d Wn.2d (1986). 272, 282, App. 1096 724 P.2d Wn. 45

g77 452, 11 Sys., Pub. Dists.' Util. Wn.2d Washington Utils. (1988). Here, 456, subject the structure 760 P.2d 337 damages” "as argument defeats insurers' contracts clause, subject costs. The coverage cleanup precludes pro into the general coverage is sandwiched damages", "as an insurance contracts. This is odd visions of policyholders' Ins. Dairyland See coverage. to look for exclusions place (1974). Ward, 353, 358-59, v. Wn.2d 517 P.2d 966 Co. 83 Furthermore, more in the contracts. Under nothing there is "Exclusions", nothing there is the enumerated the title exclusionary "damages." Finally, about there are provision key contracts all the terms. long defining sections of the However, words about defining damages. there are no terms an insurance contract must be

Undefined Farm ordinary, popular" meaning. given "plain, their Miller, 70, 73, (1976); 9 ers Ins. Co. v. 87 Wn.2d 549 P.2d Lawrence, Ins. v. & Cas. Co. 45 Wn. Property Prudential ordinary P.2d 418 To determine the App. term, our courts standard of an undefined look to meaning See, Ins. Co. e.g., dictionaries. English language Safeco (1986) 161, 165, Davis, App. 44 Wn. Am. v. 721 P.2d 550 Inc., Indem. Co. v. 48 Wn. (entitle); Transport Sky-Kraft, (1987) 471, 487, 740 P.2d App. (performance); n.1, Title Ins. App. Miebach v. 49 Wn. Safeco (1987) (actual), denied, review 110 Wn.2d 743 P.2d 845 Maki, 599, 602, v. (1988); 48 Wn. Sperry App. (motor vehicle), denied, review 109 Wn.2d 1014 P.2d 342 ordinary meaning as defined plain, The insurers' dictio- dictionary argument. defeats Standard inclusively, uniformly "damages" define the word naries any sums awarded on a distinction between making without Third example, claim. For Webster's "legal" "equitable" or (1971) Dictionary defines "dam- New International money for detriment reparation estimated ages" as "the House Dictio- See also Random or sustained". injury (cost (2d 1987) English Language 504 ed. nary define Indeed, even the insurers' own dictionaries expense). 878 ordinary, popular, lay in accordance with the

"damages" understanding: "Damages. Legal. required The amount to Merit, Insurance Terms pay Glossary for a loss." 47 (1980); Rubin, Dictionary see also Barrons Insurance policyholder Terms Even a 71 with an insurance dictionary at hand would learn about the coverage- "damages" connotation to that restricting insurers argue obvious. (counsel and sister-state

Numerous federal decisions judges country) oral stated over 56 across the argument cleanup include costs. See Intel agree "damages" Corp. that Co., 1171, v. & Indem. 692 F. Supp. Accident Hartford (N.D. 1988); Aerojet-General Corp. Cal. v. San 1186-87 _ Court, 3d_, App. Mateo Cal. 257 Cy. Superior Cal. (1989) ("the 621, great weight 631 Rptr. authority is [Policyholder's position]"). This persuasive consistent with district courts authority California, includes federal Colorado, Pennsylvania, Missouri, New Michigan, Jersey, Massachusetts, York, Texas, and Delaware New and state Wyoming, Jersey, Carolina, New appellate courts North Intel F. Corp., Supp. 692 Michigan and Wisconsin. at 1188 n.24. cleanup essentially

These have found that costs are cases compensatory damages injury property, even though these be characterized may seeking "equitable costs Fid. & Guar. v. relief." States Co. Thomas Solvent United (W.D. 1139, Co., 1988); F. 1168 Mich. CPS Supp. 683 Co., 175, Chem. v. Ins. 222 Super. Co. Continental N.J. 536 (1988); A.2d Intel v. Accident & Corp. Hartford (N.D. 1988). Co., Supp. Indem. F. 1186-87 Cal. put way, "coverage hinge Or does not on the form another sought, taken or the nature of relief but on an action legal process payment actual or threatened use of to coerce v. policyholder." or conduct Fireman's Fund Ins. Cos. (E.D. 1987). Supp. Ex-Cell-O 662 F. Mich. Corp., Co., States Fid. & Guar. United court found once is found as a environmental con property damage result of tamination, cleanup costs should be recoverable as sums an earlier pay. According was liable the insured Ins. Travelers Co. v. States Aviex case, United (1983), the envi- 579, 589-90, N.W.2d 838 App. Mich. they are are covered because cleanup costs ronmental state law: "damages" under equivalent to in traditional "dam- in to recover were to sue court If the state up cleaning the incurred including the'state's costs ages", contamination, water, ground defendant's injury to the for the pay damages lawsuit and to against the obligation to defend standpoint of merely from the fortuitous be clear. It would to have the state has chosen plaintiff or defendant either problem, than remedy rather plaintiff the contamination suing clean-up itself and then choosing plaintiff the costs of to incur damage to the natural costs. The to recover those to in the cost to restore the water simply measured resources is its original state. under the "common-sense" consistently agree that Courts policy meaning within the damages standing causing policy which results "includes a claim [the his acts or omissions money sums of because pay to holder] [i.e., . . . parties. of third adversely rights affected Thomas Sol & Guar. Co. v. States Fid. public.]" United 1988). (W.D. 1139, Even F. 1168 Mich. Supp vent 683 insurers' "dam have rejected state trial courts our own argument.2 ages" ordinary meaning accorded plain

In contrast upon insist country, insurers by courts across the damages Insur meaning damages. legal and accepted an technical Co. v. Ross Elec. Travelers Ins. on rely primarily ers (W.D. 1988), Conti Wash., Inc., F. Wash. Supp. Chem. Pharmaceutical & v. Northeastern nental Ins. Cos. Surety Company, Farms, Casualty 2See, City e.g., Inc. v. Aetna Queen 1987) (order 4, denying (Sept. County defendants' King cause 86-2-06236-0 Mealey's Litigation Reports—Insurance reported "Damages"), motion: re: Company, (Nov. 24,1987); Corporation at Insurance v. Holland-America Isaacson (Dec. 1987). 17-18, County King cause 85-2-12843-5 rejected page Judge insurers' City Shellan Farms order In the Queen term purchaser understand the argument: average would of insurance "[t]he paid policies, monies to include 'damages', in the defendants' insurance as used damage pollution damage groundwater up or other to the clean and remediate parties rights affecting third . . .". (8th Co., 1988), F.2d 977 Cir. Maryland Cas. Co. v. Armco, Inc., (4th 1987), denied, 822 F.2d 1348 cert. Cir. U.S. 1008 definition of used Armco was taken Hanna, Aetna Cas. & Sur.

from Co. v. 224 F.2d (5th 1955) Cir. (damages "only payments include to third persons when persons those have a claim legal for dam- ages"). very As a recent case why stated is not clear "[i]t the Armco 30-year-old court turned to a case for a defini- tion of 'damages,' a definition which is essentially a tautol- ogy defining damages as payment person to a who has 'a claim for legal damages.'" Aerojet-General Corp., 257 Cal. Rptr. at 631. The Armco express opinion court did "dangerous it is a step" for courts to construe insurance "essentially to cover prophylactic" or "harm avoid- Armco, However, ance" costs. at 1353. a construction of "damages" equitable which includes relief "is not a bound- less universe—such 'damages' still must be 'because of' property damage. Thus Armco's conclusion that an insurer would be prophylactic safety measures, held liable for taken any advance of to is damage property, applicable not to the policies Aerojet-General under review." 257 Cal. Corp., Rptr. at 632. Pharmaceutical,

In Northeastern the Circuit in a Eighth sharply divided en banc decision reached a similar result as narrow, in Armco. majority primarily The relied on the espoused technical decision in Armco Hanna. and As with court, Armco the the Continental was majority concerned that absent a limited damages, definition of "'all sums which the insured shall become as legally obligated pay damages.'" would "'all sums be reduced to which the pay."' insured shall become Northeast- legally obligated to Pharmaceutical, ern However, at 986. Armco both and Northeastern effectively "damages" Pharmaceutical sever phrase from the additional restrictive "because of property Pharmaceutical, Northeastern Armco insur- damage." ers are effect out trying policy write of the CGL a that concept expressly damages paid is stated—that as a

§81 occurrence by an caused damage property consequence policy the into to write policy—and the are covered covered sums are such there—that is condition "legal", to a pursuant imposed they if have been only The court liability. "equitable" basis to an opposed clause itself. language operative ignore cannot aas coverage clause interpret is to responsibility Our Pub. Washington Utils. Co. v. Ins. Transcontinental whole. 452, 456, 760 P.2d Sys., Wn.2d Dists.' Util. Armco, which Pharmaceutical Northeastern

Even costs, support cleanup do not include "damages" found that cases is that these The reason position. policyholders' "damages" of the word meaning common admit Pharmaceutical, In Northeastern all inclusive. broad and that: majority conceded legal distinguish between dictionary does not definition Thus, the view- monetary from equitable relief. damages and reasonably insured, lay "damages" the term could point of claims, are described monetary whether such claims include all as costs, expenses, or losses. damages, Armco, See omitted.) (limiting at 1352 (Citation 822 F.2d more 'damages' somewhat of the definition "the breadth "ordinary meaning.1'). than its narrowly" the insurers' Furthermore, helpful are not these cases Washington with they are inconsistent because position have never state, meanings legal technical law. man. of the common perception the common trumped learned judge whether a inquiry is not proper "[T]he an meaning of can, comprehend the study, with scholar insurance "whether instead insurance contract" but . . .''. layman to the meaningful be would policy contract Ward, Wn.2d 517 P.2d Ins. Co. v. Dairyland is to be of insurance language "The under- way it would be with the in accordance interpreted in technical sense." man, than a rather by average the stood the infirmities realizing in Insurers, perhaps Armco, that try argue Pharmaceutical Northeastern document, applies this court are used a words legal when v. See R.A. Hanson Co. legal interpretations.3 their usual (1980). Co., 290, 612 P.2d 456 App. Aetna Ins. 26 Wn. a However, company an insurance can avail itself of before words, a word or it must be clear legal meaning technical the parties language that both to the contract intended that Ezzell, Thompson v. legal meaning. have a technical (1963). 685, 688, the words 379 P.2d 983 Otherwise Wn.2d Farmers Ins. ordinary meaning. their given plain, will be (1976). Miller, 70, 73, Co. v. 87 Wn.2d 549 P.2d Here, there is about from the sub- nothing language parties indicates standard form ject disputed to the term. legal meaning apply intended a Therefore, interpreted the words "as should be damages" plain, ordinary meaning, accordance with its as dictated under Washington the well established rules of construction law. court, try when it is argue

Insurers also corporations, analyzes language with the contract dealing determines its without reference to what meaning See Transcontinen lay person understand. average might Co.; Paccar, Inc., Ins. Co. tal Ins. Continental v. 96 Wn.2d Ins. Co. 160, 634 P.2d 291 While Transcontinental lay person, and Paccar did not talk about the these average apply not hold that different rule should decisions did a Furthermore, this court corporations when are involved. corpora applied "layman" dealing rule when with has See, Schroeder, Inc. Globe Ins. e.g., Royal Phil v. tions. Penney v. J.C. Cas. arguments also relied on Detweiler in their oral 3Carriers Co., 99, 104, (1988), proposition applying a Ins. Wn.2d 751 P.2d 282 for the Detweiler, here, "[w]here, legal definition. the court stated technical policy, we our common law for 'accident' is not otherwise defined look to word omitted.) (Footnote law, said we look to the common definition." While court ordinary meaning employed popular interpreting of acci- accident the cases Metropolitan v. Ins. in the dictionaries. See Evans dent as defined Life 594, 605, support carriers' Thus Detweiler does not 174 P.2d 961 Wn.2d term, employ proposition legal is faced with a we the techni- that when this court legal meaning cal of the word.

§83 (1983) cleaning 65, (carpet P.2d 509 99 Wn.2d (1984); P.2d 186 modified, 101 Wn.2d company), Leasing 95 Wn.2d Indus., Corp., v. Rollins Inc. McDonald (1981) (crane company). P.2d 947 case, questionable it is event, facts of this In on the any less are no standard rules of construction these whether corporate itself a the insured is merely because applicable in policy question the critical fact remains The giant. company's the prepared policy a standard form is specific The by the insurer. selected experts, language with therefore, it not negotiated, was question language counsel. company have corporations irrelevant that some issued to policy form has been Additionally, this standard it the state. Therefore throughout big and small businesses different rules apply for the court to incongruous would be the the because once policyholder construction based on as a coverage form clause court construes the standard law, policyhold- the court's construction will bind matter of the size of their bus- regardless the state throughout ers iness. from these rules of attempt

Insurers to save themselves event, that, any criticism by arguing construction Inc., Wash., F. Supp. Ins. Co. v. Ross Elec. Travelers (W.D. 1988) heavily since it relies on Wash. fails Ross, the court In the matter came before Washington law. summary con partial judgment motion for on the insurer's motion, court In granting costs. cerning Pharmaceutical, Sea Armco, Northeastern on relied Chrysler Ply Northwest Sur. Co. v. Williams' Ralph board mouth, Inc., 504 P.2d 1139 81 Wn.2d rely on Seaboard for Ross and the insurers The court as characterized any lawsuit that could be proposition a claim for relief cannot constitute equitable for a claim for this However, not stand Seaboard does "damages." supports poli- indeed, analysis court's proposition; cyholders' position.

gg4 Seaboard, Attorney State sought General a judg- ment statutory penalties and to enjoin insured automobile dealer from "unfair methods of competition." General Attorney also alleged that the dealer had gained possession of, unlawfully withheld, property of members of the public, and accordingly sought "such addi- tional orders or judgments may be necessary to restore any person any interest property monies or may which have been acquired by means of an act or conduct of found to be in violation of RCW 19.86.020." [defendants] However, 81 Wn.2d at 742. Attorney General had no authority damages, only to recover statutory penalties. 81 Wn.2d at 741. insurer,

The dealer's Surety, Seaboard a sought judicial determination it had no duty to defend the suit policy because its required pay Seaboard to "sums which the Insured shall become obligated pay ... as the result any of final judgment for money damages resulting from (Italics ours.) . .. competition". In 81 Wn.2d at 741. unfair denying coverage, the Seaboard court did not rule that "damages" paid restitution; instead, cannot include sums the court looked to the substance of the damage claim to determine whether it constituted one competi- for unfair tion as ordinarily understood. The court concluded that damages for unfair competition can only by be recovered competitor, and that a suit brought by require the State to property the return of wrongfully withheld from customers did not constitute such a claim. contrast, the substance of the claim response for costs

in the present case concerns compensation for restoration of contaminated property. water and real The cost of repairing restoring property to its original condition has long been considered proper measure of damages property Koch v. damage. Sackman-Phillips Inv. (1894); Wash. 37 P. v. King Cy., Olson 71 Wn.2d 428 P.2d A.L.R.3d Consequently, the substance of the claim for costs constitutes a property claim for damage and falls within the of scope incorrectly by policy. coverage Thus Ross a CGL afforded Washington applied it relied on.4 law aware became counsel Furthermore, Ross Electric's when superior same that had addressed court cases5 two of they of reconsideration court, moved for issue before Judge ruling damages decisions. basis of these on the the Bryan briefing on for additional then wrote counsel binding superior ifor decisions were court these whether Supreme they required Court. to the State certification Electric. thereafter, settled with Ross the insurers Soon opinion of the benefit decided without Ross was Thus the only Washington reasoning court to have addressed the issue. persuaded relied on with the cases are not

We exclusively on the relied almost The Ross court insurers. logic Pharmaceutical, and Armco which Northeastern faulty Instead, we it Seaboard. find and misconstrued we country agree majority across the that the of cases with the damages distinguish plain meaning between does not "legal" "equitable" basis and that on a sums awarded may cleanup meaning plain to the include costs property these costs are incurred because extent that damage. "physical property damage policy defines property, tangible

injury occurs which to or destruction of app., period during policy at . . .". order Certification the Co., App. Ins. v. St. Paul Fire & Marine 42 Wn. also cite Felice 4The carriers Felice, denied, (1985), an review 352, In 105 Wn.2d 1014 711 P.2d 1066 elderly lady paid guardian himself attorney and himself as of an failed to remove Therefore, proceeding to remove attorney owing was an action to him. the fees not Seaboard, Felice damages. is not proceeding Like guardian, recover not a to the up paid by policyholder to to clean or applicable a the issue of whether sums meaning subject "damages" CGL property damage are within the restore policy. Company, King Casualty Surety Farms, City Inc. v. Aetna 5Queen 1987) (order 4, denying re: (Sept. motion: County defendants' cause 86-2-06236-0 (Nov. 24, 1987); Reports—Insurance reported Mealey's Litigation "Damages"), 17-18, King Company, at Corporation Insurance v. Holland-America Isaacson 1987). (Dec. 22, County cause 85-2-12843-5 412. "Property damage" includes of discharge hazardous Port waste into the In Portland v. water. Quality Water Syndicate, Ins. (9th 1188, 1986), F.2d Cir. court held that the discharge pollution into water caused "damage tangible property," within the meaning of the policy defining property damage physical injury to or destruction Broadwell Realty tangible property. Servs., Inc. v. Fidelity & Cas. Super. 516, 218 N.J. (1987), A.2d the court held the insurer was liable to pay as damages government cleanup costs, mandated on ground represented the costs legal obligation owing because of property damage.

The issue of when costs are or are not incurred "because property of" is illustrated in Aerojet, damage by following hypothetical: Petitioners underground have two storage tanks for toxic waste. Tank has leaked wastes into the soil which have #1 migrated to groundwater polluted or otherwise the envi- leaked, ronment. Tank has not government but inspectors §2 discover comply it does not regulatory requirements, with eventually and could leak unless corrective measures are taken. Response costs associated with Tank will be covered as #1 damages, pollution because has occurred. Tank would not be #2 Likewise, expense capital covered. improvements pre- pollution facility none, vent improvements in an area of a where there is or safety paraphernalia required by government regulation causally property and not damage, related to would

not be covered as "damages." Aerojet-General Corp. v. San Cy. Court, Mateo Superior _Cal. 3d_, App. Rptr. Thus, 257 Cal. costs owing because of property are remedial mea- sures taken pollution occurred, after has but preventive measures taken before pollution has occurred are not costs incurred because of property damage.

The occurrence of the hazardous wastes leaking into the ground contaminating the groundwater, aquifer adjoin- ing property "property constituted damage" trig- and thus gered the "damages" provision of the policies carried policyholders. The costs against policyholders assessed by underlying lawsuits are by subject poli covered cies to the extent these costs property are because of damage. duty pay This money is no different from the legal obligation that burdens a held party who has been liable to restore to the property prior condition it was the occurrence of the tortfeasor's conduct or con sisting of amounts necessary to restore to its property quo. status See CPS Chem. Co. v. Continental Ins. N.J. Super. 536 A.2d

Conclusion Response costs in response to actual haz releases of ardous wastes are "damages" within the of CGL meaning coverage clauses at issue. The term "damages" does not cover safety measures or preventive other costs taken any advance of damage to property. Consequently, we con cur with the great majority of judges country across the that response costs incurred under "damages" CERCLA are to the extent these costs are incurred "because of" property damage within the meaning of the CGL coverage clauses at issue. reported The decisions country, across the the lay dictionary, the insurance dictionary, the failure of the insurance industry to meant, write down what it each of these facts lays waste to insurers' argument. For us to read the words "as damages” to exclude coverage cleanup costs, require would this court principles to rewrite the insurance contract analysis Washington, and then to retroactively apply these rewritten principles policy to the that bought However, holders their ago. decades we decline to do this. The industry protect knows how to itself and it knows how to write exclusions and conditions. The damages" words "as do not stand exclusionary guard for industry represent a vast coverage. exclusion from The term "damages" given plain, ordinary is to be its meaning by the technical advocated meaning insurers. asks question the District Court certified law, Washington [w]hether, under the environmental insureds, by paid paid to be the the result of action costs or as by Washington under the United States and the State of

taken CERCLA, "damages" 42 U.S.C. 9601 et constitute seq., § liability poli- comprehensive general the meaning the of within cies by issued the insurers. us, submitted to question, In answer to this on facts law, costs" Washington "response that under conclude we are to the extent "damages" under CERCLA incurred and property damage costs are incurred "because of" these policies fall within the of the CGL issued meaning therefore insurers. answer: Yes. We and Brachtenbach, Andersen, Durham, Smith,

Utter, JJ., Tern., J. Pro concur. Pearson, are this case to (dissenting)—We C.J. asked

Callow, pay liability whether an insured's to CERCLA determine which the insured response costs constitute "sums [has] damages" to as pay within legally obligated become general liability a meaning comprehensive of standard opinion itself acknowl- policy. majority insurance As meaning the word plain, ordinary, popular edges, "reparation injury for or sustained." damages is detriment for "reparation costs are not response Because CERCLA sustained," costs are injury or CERCLA detriment meaning "as within the payable damages" plain upsets majority's contrary holding issue. The construction, controlling rules of insurance violates settled public policy. and contravenes precedent,

I Response Restitutionary, a Are Costs Damage Remedy Not reme- equitable are Damage compensatory; A. remedies restitutionary. or dies are coercive law defines as: Washington money imposes sum which the law or awards com- [T]he done, pensation, recompense, injury or in satisfaction for an or wrong consequence, or a contractual sustained as a either of a breach of a obligation or a act or tortious omission. v. Puget Cy., Constr. Co. Pierce 64 Wn.2d 392 P.2d 227 (1964) 2). Damages See also D. (citing 15 Am. Jur. § Remedies Dobbs, 1.2, at 3 § for

Damages injury property are measured terms of necessary compensate injury amount for the to the property 5.1, Therefore, interest. D. Dobbs at 311. dam § ages injury property are limited under Washington law to the lesser property diminution value of the Koch v. Sack replace the cost to restore or property. Inv. man-Phillips Burr (1894); 9 Wash. 37 P. Clark, v. Hogland 149, 158, (1948); 30 Wn.2d 190 P.2d 769 Klein, v. Grant v. 216, 220, (1956); 49 Wn.2d 298 P.2d 1099 Leith, v. 234, 235, Falcone (1965); 67 Wn.2d 407 P.2d 157 Perry, Butler v. 909, 913, (1966); 68 Wn.2d 416 P.2d 690 Anderson, overruled on 60, (1967), 71 Wn.2d 426 P.2d 467 other grounds Chaplin Sanders, in v. 853, 100 Wn.2d 676 (1984). See also D. Remedies Dobbs, 1.2, P.2d 431 at § § 3.1, at Damages compensate party's 135-36. for the injured loss.

Restitution stands "in damages, bold contrast" to upon Dobbs, because it is based a benefited D. party's gain. Remedies 3.1, Restitutionary recovery at 137. is appropri § ate when the defendant has received a cir benefit under him cumstances which make it for to retain it. unjust Washington Auth., Chandler v. Bridge Toll 17 Wn.2d (1943). 601, 137 P.2d 97 upon if person gives "A confers a benefit another he to the land, possession money, other chattels, of or some other interest action, or performs or choses services to beneficial other, duty request

at the satisfies a debt or a other, He confers a benefit not any way security advantage. the other's or or adds to only property where he adds to another, expense other or but also where he saves the from 'benefit,' therefore, any denotes form of advan- loss. The word tage." 890

(Italics mine.) Chandler, (quoting at 602-03 17 Wn.2d (1937). 1(b), 12 The mea- Restatement Restitution § of the benefit is the reasonable value recovery sure of Cole, 375, 383, Noel v. 98 by the Wn.2d defendant. received (1982). damages, compensatory 245 Unlike 655 P.2d restitutionary recovery greatly can therefore of a amount Nye v. & harmed. Olwell any property the value of exceed 282, 285, P.2d 169 A.L.R. Nissen 26 173 Wn.2d restitutionary. costs are response B. CERCLA President, through acting CERCLA authorizes (EPA), to the respond to Agency Protection Environmental any hazard- of a release of release or substantial threat may contaminant which any pollutant substance or or ous public to present danger an imminent and substantial 9604(a)(1); Exec. Order No. or U.S.C. health welfare. § 42,237 The EPA has broad 12,316, Reg. 46 Fed. deems it authority to take whatever measures waste. or hazardous necessary remove neutralize 9621(a). the EPA 9604; Alternatively, 42 U.S.C. U.S.C. § § parties" injunctive compel "responsible relief to may seek 9606(a). Pri- action. U.S.C. necessary response to take § compliance have to sue force standing vate citizens also 9659(a)(1). CERCLA. U.S.C. with § (but not permits governmental certain bodies citizens) to, for destruc- private "damages injury to recover of, resources." U.S.C. loss of natural tion § 9607(a)(4)(C). CERCLA does compensation provide for personal injury, property damages individuals private hazardous from releases of resulting and economic losses 4(a) 1st substances. See section Cong., of S. 96th 17,991 (1979) such lia- Sess., (providing Rec. Cong. ultimately passed), as eliminated from CERCLA bility, but Brett, Insuring Against the Innovative Liabilities cited 1,L. 18 & Superfund, and Remedies Created 6 J. Envtl. n.95

Natural resource are damages essentially compensatory a remedy. The measure of natural resource is "the lesser replacement costs; restoration or or diminution of of: (Italics mine.) 11.35(b)(2). use values". 43 C.F.R. Natural § resource damages must be based on actual injury or loss. 9601(6). U.S.C. They are available only governmental § "act[ing] bodies on behalf of the public as trustee" of the 9607(f)(1). natural resources. 42 U.S.C. Artesian Water § (3d 1988). Co. v. New Castle Cy., 851 F.2d 643 Cir. Total liability is limited to the value of the injured property. 9651(c); 11.35(b)(2). U.S.C. 43 C.F.R. § § In addition to natural resource damages, per- mits both the EPA parties and other to recover costs which they have incurred as a result of response a action from "responsible parties". (B). 9607(a)(4)(A), U.S.C. § Responsible parties include hazardous waste generators, hazardous waste transporters, and hazardous disposal waste facility 9607(a). operators. owners and 42 U.S.C. §

CERCLA defines "response" the term to mean "removal . .. and remedial action . . . including] enforcement 9601(25). activities related thereto." 42 U.S.C. Among § many safety measures potential identified response actions are monitoring, security dikes, fencing, on-site incineration, treatment or recycling, provision of alternative supplies, water and related enforcement activities. 9601(23), U.S.C. §

CERCLA response liability cost is essentially restitu- tional: party, governmental When nongovernmental, incurs

response performing duty responsible costs it is 107(a) party. In seeking recovery of those costs under section 9607(a)], party U.S.C. asking for the return of [42 § money spent public responsible party on behalf of the safeguard Thus, health. recovery cost restores the status quo by returning plaintiff it, to the rightfully belongs what compensating plaintiff rather than interest as a result of for loss sustained to its conduct, responsible parties' wrongful example equitable and is a classic restitution. 892 omitted.) Innova-

(Footnotes Brett, Insuring Against 6 J. by Superfund, Created Liabilities and Remedies tive 1, L. 35 Envtl. liability resource damage

The contrast between natural indicates liability further that response cost First, respon- remedy. restitutionary costs are a response response though costs even party can be held liable for sible compensate, because no damage is no property there Second, 42 U.S.C. 9604. yet release has occurred. actual § prop- economic interest the affected parties without an 42 U.S.C. response an action for costs. erty can maintain §§ 9659(a). 9607(a)(4)(B), liability response costs Finally, prop- value of the affected greatly can exceed the economic the Lim- Abraham, Liability and erty. See Environmental Insurance, 969 88 Colum. L. Rev. its of response and natural resource The contrast between costs equitable response makes clear that costs are an remedy. restitutionary not a remedy, compensatory damage Co., Verlan, F. Armitage Supp. Ltd. v. L. & 695 950 John (N.D. 1988). Every Ill. court has examined the nature that insur liability costs outside of the Superfund response equita are a context has held that such costs form of ance See, e.g., States v. Northernaire ble restitution. United 1988) (no Co., (W.D. Plating Supp. right F. Mich. 685 1410 trial); Syntex Corp., Supp. v. 682 F. 39 jury Wehner 640 F. 1987) Dickerson, (N.D. (idem); States v. Cal. United (D. 1986) Conser (idem); States v. 488 Md. United Supp. (W.D. 1985) Chem. F. Mo. Supp. vation defenses); Corp. Mar dan equitable (permitting assertion (D. 1984) Ltd., Music, F. Ariz. Supp. v. C.G.C. (idem); Department Penn Ltd. v. Envtl. Terra 1984) (3d action Resources, (response Cir. 733 F.2d Code). fact, Bankruptcy stayed under automatically even the authority policyhold overwhelming this is so under CERCLA governmental remedy admit that "the ers Therefore, Policyholders, at 37. Brief of equitable." are a must that CERCLA costs court also hold restitutionary remedy.

II The Insurance Policies Do Not Cover

Restitutionary Remedies provide The insurance this case pay insurer "will on behalf of the insured all sums which the insured shall become as dam legally obligated pay . . . . ages property damage because of . Certification order, coverage at 3.6 This extends language unambiguously only compensatory liability, to claims for "damages" restitutionary CERCLA cost response liability. majority

The makes several to arguments attempting First, show that this is language ambiguous. majority the that the language ambiguous policy asserts is because the holders were not subjectively meaning. Major aware of its Second, ity, at 876. because the phrase damages" "as is "sandwiched into the general coverage provisions", the majority implies that the structurally ambigu contract is Third, ous. at 877. Majority, the asserts that the majority "plain, ordinary meaning" damages of can include the costs of with complying restitutionary coercive and remedies. Fourth, Majority, 877. the that because majority argues "56 have judges" policy held that identical cover language costs, response the is policy language ambiguous. at 878-82. Majority, Finally, majority the asserts that policy the ambiguous language against must be construed lay insurers because the rule of insurance "average person" interpretation applies equally "corporate giant[s]." at 882-83.7 I will address each turn. Majority, argument fact, policies slightly language, pro- 6In one of the insurance contains different viding coverage obligated pay . . . "for all sums which the Assured shall be order, [p]roperty damage ... on account of. . . . . .". Certification at 3. separately language, implicitly holding majority it The does not address this policies. agree I has the same effect as that contained in the other Because with conclusion, separately language I either. the do not address majority improperly purports whether CERCLA 7The also to determine liability property damage" mean- cost arises "because of . . . within the by policies. Majority, question ing at 886. This was not certified to us of these federal court. understanding subjective policyholders' A. The is irrelevant. meaning policies policyholders because these argues The majority policy's of the meaning unaware of the subjectively were is unenforceable.8 clause, language the policy damages" "as This policyholders, was not advanced argument the law of this state. contradicts flatly it an insurance court to enforce requires this law Settled regard- purpose, meaning its clear according to policy he had. thought may insured have coverage the less 906, 908, P.2d App. Ins. 14 Wn. v. Aetna Nevers specifically several occasions This court has on expectations, reasonable the doctrine of adopt declined of cover- expectation subjective the insured's which under v. Industrial Keenan liability. insurer's determines age 314, 322, Northwest, 108 Wn.2d Ins. Co. Indem. Emerson, 102 Co. v. Farm Gen. Ins. (1987); State P.2d policyholder's The 477, 485, P.2d 1139 Wn.2d damages" provision the "as understanding subjective irrelevant. therefore ambiguous. structurally are not The

B. damages" "as implies next that because majority instead but exclusionary provision, in not an is clause these coverage provisions," general into the "sandwiched explic court has This structurally ambiguous.9 are State ambiguity. doctrine of structural itly rejected policyholders, indemnifying the "Alternatively, the insurers can avoid before 'damages', meaning would be plain as it be satisfied that court must coverage unmistakably precludes for lay person, by average understood Major- against costs, any ambiguity the insurer." be construed response is to ity, at 876. that, insurance contract persuaded the rules of under is not "The court damages' these restrictions." Washington, communicate analysis the words 'as Majority, 876. subject argument contracts defeats 9"Here, insurers' the structure clause, subject cleanup 'as dam- coverage The damages' precludes costs. for 'as policyholders' coverage provisions insur- general ages', into the is sandwiched coverage. place look for exclusions This is an odd ance contracts. Emerson, Farm Gen. Ins. Co. v. 102 Wn.2d (1984). Moreover, P.2d 1139 general coverage provisions are exactly where one would expect to find language describing the basic coverage granted.

The exclusionary absence of an if provision, anything, strengthens argument that "damages" do not encom pass restitutionary liabilities like CERCLA response costs. Exclusions subtract from the coverage which an insurance policy provide. would otherwise See Harrison & Plumbing Heating, Hampshire Inc. v. New Ins. Group, App. 37 Wn. 621, 627, 681 P.2d 875 The general coverage provi policies only sions of these extend coverage to sums which an insured is legally obligated pay "as damages." There fore, they provide do not coverage from which a "damages" exclusion could subtract. These policies are structurally consistent. damages"

C. The "as phrase plainly to compensa- refers tion injuries.

1. The standard definition of the word "damages"—

reparation for detriment injury or sustained—plainly distinguishes damages from restitution. asserts that majority because standard dictionaries

do explicitly distinguish between "legal" "equita claims, ble" the "as damages" clause can reasonably be interpreted provide coverage for dictionary costs. Standard definitions of "damages," including the cited the majority,10 in fact definition unambiguously distinguish from restitution. "Damages" are compensatory—reparation for detriment or Furthermore, nothing 'Exclusions', there is more in the contracts. Under the title nothing exclusionary provision 'damages.'" there the enumerated about (Citation mine.) Majority, omitted. Italics at 877. uniformly 'damages' inclusively, "Standard dictionaries define the word making any 'legal' 'equi- without distinction between sums awarded on a example, Dictionary table' claim. For Webster's Third New International (1971) 'damages' money reparation defines as 'the estimated for det- injury Majority, riment sustained'." or at 877.

896 liability, injury response con- CERCLA cost sustained. restitutionary—reimbursement trast, of a benefit is by responsible party. supra. unjustly a See retained dictionary explicitly course, Of no defines equitable a word "not relief." Dictionaries define what everything means, does mean. But standard a word not "damages" of do establish that dictionaries' definitions ordinary, meaning" "damages" "plain, popular is of injury reparation or Because for detriment sustained. reparation for or costs are not detriment they "plain, injury sustained, fall ordi- do not within nary damages. popular meaning" of "damages"—cost of or

2. The alternative definition expense—is informal and makes no sense when both policy placed a into context as whole. recognized policyholders majority, that if

Unlike the "damages" given plain, ordinary meaning, the word not cover their CERCLA will insurance entry dictionary's complete "damages" This for is: money injury damages pi reparation : the estimated for detriment or 3 imposed by wrong compensation law a or satisfaction for sustained : right legal Cbring [damage]s> injury a suit of a violation caused compensatory [damagejs $4000>—compare of <was damnum awarded see COMPENSATORY GENERAL NOMINAL ABSQUE INJURIA; DAMAGES, DAMAGES, Syn SPECIAL DAMAGES CHARGE PUNITIVE 4 EXPENSE, : DAMAGES, COST, DAMAGES, injury see Dictionary New International Webster's Third 571 virtually identical See The other dictionaries contain definitions. Numerous (2d English Dictionary Language 1987); The Random House 504 ed. Encyclopedic Dictionary (1987); Heritage Illustrated Collins American 431 Penguin English Language Dictionary 353-54 (1987); The Wordmaster Cobuild Dictionary Unabridged Dictionary New (1987); Webster's Universal 315 174 Dictionary (2d Heritage 1982); (1983); College American 364 ed. Oxford Dictionary (1981); English Dictionary 14 (1980); American The Con- 159 Oxford Dictionary Dictionary (1976); Advanced Learner's cise 256 Oxford Oxford English (1974); English Dictionary (1972); Collins Webster's Current 219 248 (2d 1972); Dictionary Language College the American New World 356 ed. Dictionary English Comprehensive (1962); Thorndike-Barnhart Cassell's (1962); English Dictionary (1961); Dictionary New Webster's Desk Oxford (2d Dictionary English Language 1960); Swan’s International ed. Dictionary Anglo-American advocate They vigorously therefore liabilities. response cost the word expense" interpretation alternative "cost or an ("Here, 11 the Policyholders, Brief of at See "damages." 'costs' pay' to the 'legally obligated are policyholders (Ital- .".) . . cleanup comprehensive program conducting a mine.) ics Dictionary House The Random does cite majority

The damages English Language the attempt in an to show that The at 877. expense". Majority, "cost or can also mean dictionary labels the to mention that majority neglects The entire definition definition informal. expense" "cost or reads: money equivalent for detriment damages,

2. or law. the estimated cost; damages. Informal, Often, expense; injury sustained. 3. my damages job on are the the lubrication charge: What car? Language Dictionary English the The Random House (1973). 365 expense" the "cost or definition reject

This court should First, phrase obligated to "legally for several reasons. document, legal lies at the heart of a pay damages" as Every dictionary cited indi legal liability. insuring against appropriate to "compensation" definition cates that contrast, that evaluates every dictionary In legal context. informal, colloquial or expense" or as describes "cost usage slang.11 to meaning

Second, "compensation" gives definition defini- expense" the "cost or clause while damages" the "as damages" redundant. The "as damages" renders "as tion shall sums which the insured phrase "all qualifies clause order, 3. pay." to Certification obligated become legally sus- injury or reparation for detriment payable Amounts insured is the amounts an a subset of tained constitute Dictionary the related Third New International 11Only Webster's Collegiate Dictionary expense" identify defini- New the "cost or Webster's do not spe- informal, colloquial, slang. These dictionaries do or tion of (10th Sheehy, to Works See E. Guide cially identify usages. such Reference 1986). ed. "compensation" definition pay." to The "legally obligated meaningfully clause therefore makes the "as damages" referent. qualify its expense," or contrast, if to mean "cost interpreted referent. redundantly repeats its clause damages"

"as "legally obligated insured is sums which an Because all insured, expense" already constitute a "cost pay" surplusage, because becomes "mere damages" the "as clause Cas. Maryland would be covered." any pay obligation denied, (1987), cert. Armco, Inc., F.2d Co. v. 484 U.S. 1008 effect to each clause force and give

This court will Washington v. Ins. Co. Transcontinental policy. insurance 452, 456, 760 P.2d Sys., Util. Wn.2d Pub. Utils. Dists.' "cost or reject must therefore court interpretation damages. expense" do not make jurisdictions other results Contrary D. from Washing- ambiguous under damages" language the "as ton law. have held emphasizes judges" that "56 next majority

The cleanup costs. include CERCLA can "damages" that "head-count" is judicial 878.12 While the at Majority, as the as one-sided nearly it is not dispositive, hardly by discussed to the three cases In addition implies. majority also hold that reported cases following the majority, the damages": "as are not covered costs (4th Co., F.2d 979 & 857 Ins. Co. v. Milliken Cincinnati law); v. Cana 1988) Mraz Carolina (applying South Cir. 1986) (4th Co., F.2d 1325 Cir. Ins. 804 dian Universal Co., F. Cas. 688 law); Maryland v. Hayes Illinois (applying superior Washington deci- court 12Apparently in count are two included any prece- sions, unpublished foreign Neither has decisions. well as numerous 10.4(h); Washington Bankers Washington See RAP law. under dential value 463, (1975); Bank, 598 P.2d 719 Washington 92 Wn.2d Mut. Sav. v. Ass'n (1978); n.5, State v. Fitz- Ross, App. P.2d 1110 455 580 Wn. State v. 661, 668, App. patrick, 491 P.2d 262 5 Wn.

g99 L. Verlan, v. John Ltd. (N.D. 1988); Fla. Supp. 1988). (N.D. Ill. F. Co., Supp. & Armitage sug- policyholders' must the course, reject court the Of deci- conflicting of these mere existence that the gestion The fact ambiguous. is "damages" sions establishes dif- construed policy has been in an insurance that a term term mean that does not ferently jurisdictions in other State Farm Crunk v. law. Washington under ambiguous is (1986) 23, 29-30, Co., 719 P.2d 106 Wn.2d Fire & Cas. (Dore, J., at 31-32 (Goodloe, J., 106 Wn.2d concurring), are majority foreign The cases discussed dissenting). only persuasiveness for the ultimately important they employ. reasoning For reasoned. in fact not persuasively cases are

These hold- the rationale for stem case that sets out example, response costs encompass CERCLA ing "damages" Mich. Travelers Ins. Aviex Co. v. United States (1983) (quoted major- 579, 589-90, 336 N.W.2d 838 App. 879). its reasoning. I with ity, disagree at fire at a chemical Aviex, putting used out a water seep into chemicals to facility caused toxic manufacturing underneath contaminating groundwater the ground, The manufac- at 840. property. 336 N.W.2d manufacturer's its against declaratory judgment action brought turer form a standard rights establish its under seeking insurer clause damages" contained an "as which liability policy N.W.2d case. 336 present at issue identical to those 840. argu- insurer's "persuasive" found court appeals in the costs incurred do not include "damages" ment that at 842. How- 336 N.W.2d orders. complying injunctive with act, was the State ever, that under the state court noted the full value suit "to recover to file empowered 125 the state". of to the natural resources injuries done Because the 589, 842-43. 336 N.W.2d at App. at Mich. chosen to the state has was fortuitous "that court felt it problem, remedy the contamination plaintiff have the itself clean-up of the costs to incur choosing than rather 900 costs",

and then suing plaintiff to recover those the court held that the insurer was policy. liable under the 125 Mich. 590, App. at 336 N.W.2d at 843.

Aviex consists of two syllogisms that do not connect. The Aviex if correctly recognized court the State had (as sought compensatory remedy empowered state law it do), policy provided the insurance would have coverage any liability. Aviex resulting correctly court also if recognized policy the insurance covered one form of equitable recovery—reimbursement of the State's cleanup pointless costs—it would have been to condition coverage on the form of equitable remedy—injunction reimburse- pursue. ment—that the State chose to Aviex by equating compensatory damage remedy errs sought equitable the State could have with the remedies which in The State's rem- sought. the State fact choice of edy fundamentally recovery: affected the measure of recovery cleanup distinction between costs and recov- [T]he ery "merely fortuitous" to either the insured as a CERCLA and RCRA defendant or the insurer. The cost of cleaning up original waste site often exceeds its a hazardous hand, excep- natural resources are value. On the other some greatly could exceed the

tional value and their destruction cost cleaning up any waste contamination. hazardous Continental Ins. Cos. v. Northeastern Pharmaceutical & (8th 1988) Co., 977, Chem. 842 986-87 Cir. (applying F.2d law). Missouri in the majority opinion

The other cases cited foreign depend either on Aviex or do not involve CERCLA liabil Aviex law ity. applied controlling was state two of federal district court cites: United majority decisions Co., States v. F. Fid. & Guar. Co. Thomas Solvent 683 (W.D. 1988) (cited 1139, Supp. majority, 1168 Mich. at 878) Corp., Fund Ins. Cos. v. Ex-Cell-O and Fireman's (E.D. 1987) (cited Supp. majority, F. Mich. at 878). exclusively A on Aviex. Intel v. Corp. third case relies Co., F. Supp. & Indem. Accident Hartford 878). 1988) (cited (N.D. CPS majority, Finally, Cal. Super. v. Continental Ins. N.J. Chem. Co.

g()l 878) with (cited dealt (1988) majority, 311, 316 A.2d envi- under a state cleanup for costs liability insurer's an Therefore, foreign no law, under CERCLA. not ronmental holding. its supports persuasively by majority the case cited not "damages" do held that has squarely court E. This liabilities. restitutionary encompass directly contradicts analysis also majority's v. Ralph Sur. Co. Williams' in Seaboard holding court's Inc., 740, 504 Plymouth, 81 Wn.2d Chrysler Northwest virtually indistinguishable is Seaboard P.2d 1139 case. present from the brought enjoin suit to Seaboard, Attorney General

In the competition methods of for "unfair an dealer automobile and for the resti- practices", acts or deceptive and unfair or by the dealer. 81 withheld wrongfully property tution of action, suit in this underlying Like the 741-42. Wn.2d at public agency in Seaboard involved a suit underlying the interest. The court public emphasized protect acting specifically distinguished Act Protection that the Consumer restitutionary, and remedies. damage injunctive, between similarly distinguishes CERCLA 744-45. 81 Wn.2d at restitutionary, remedies. damage injunctive, between in Seaboard for provided coverage policy The insurance obligated pay Insured shall become which the "all sums him . . . for liability imposed upon by law reason . . . competition". from unfair money damages resulting provide cover- Similarly, present policies Wn.2d at 741. . property of. . damages because payable for "sums age damage." for in an action Seaboard, the court determined that recovery competition, the measure for unfair

damages at 743. Because restitutionary. 81 Wn.2d compensatory, only injunctive sought action Attorney General's is not that "the dealer relief, the court held restitutionary ." . . damages judgment of a prospect faced with for although mine.) Similarly, 744. (Italics 81 Wn.2d at for compensatory recovery provides resources, natural EPA underlying action the has only costs, sought reimbursement of its a restitu- tionary Therefore, form of relief. the court should hold that policyholders are not faced with a judgment payable "as damages." Seaboard

According to the majority, holds that Attorney General's suit for restitution would result however, judgment "damages"; of the suit such seeking methods for competition could not "damages" unfair of result in a judgment competition. for damages for unfair at 883-84. Given Majority, the in the reasoning rest of the majority's opinion, explanation totally is untenable. If "damages" restitution, the word includes certainly "unfair competition" includes unfair methods of competition.

The majority's reasoning completely thus contradicts both Seaboard's and result. Seaboard in fact rationale to requires this court hold that these liability insurers are indemnify their only required insured's compensatory liabilities, the but not cost of with complying equitable remedies. Appeals squarely

The Court of has also held that a lia bility required to indemnify insurer not its insured's res v. St. Paul Felice Fire & Marine Ins. liability. titutionary Co., 352, 357, 42 review App. (1985), Wn. 711 P.2d 1066 (1986).13 denied, 1014 policyholders 105 Wn.2d Even the that Felice reached result, a proper admit conceding that damages" "might the "as clause also exclude paid sums in money had restitution of and received." Brief of Boeing Co., If "damages" at 35. does not encompass this form of restitution, encompass it also does not CERCLA response costs. purports majority distinguish grounds Felice on the pro- 13The that- "the ceeding guardian, proceeding was an action to remove the not a to recover dam- ages." Majority, fact, complaint sought Felice n.4. In in at 885 both Felice's guardian, attorney charged. App. removal as of restitution fees he had 42 Wn. Felice, therefore, proceeding "damages," at 355. did involve a to recover at least as majority interpret would the term.

gQ3 addition, cases jurisdictions In numerous from other hold liability indemnify need their insurers not insured's liabilities, See, if in restitutionary payable money. even e.g., Co., River Falls v. United Fire & Cas. 336 N.W.2d Thief (Minn. 1983); Ladd Constr. Co. v. Insurance Co. 274 N. of Am., (1979); 73 Ill. 391 N.E.2d 568 App. 3d Garden Am., Inc. v. Insurance Co. N. Sanctuary, So. 2d (Fla. 1974); Hanna, Aetna Sur. Dist. Ct. Cas. & Co. v. App. (5th 1955); v. New 224 F.2d 499 Desrochers York Cir. Cas. A.2d example, N.H. For Desrochers, the insureds had been enjoined remove placed holding their land. upon culvert insurer not complying injunction, liable for the cost with court stated: mandatory compliance injunction The cost with the is not reasonably Damages Torts, payable as a sum regarded damages." to be "as Restatement, recompense injuries are sustained. They preventive, s. remedial 902. are rather than pecuniary Sedgwick

the usual nature. sense are on Dam- (9th ed.) expense ages restoring plaintiff's ss. 29. The property remedy state will injury previ- to its former ously done, paid injured parties. be to the nor will it . . . short, expense complying ... the of with the order is the insured obligated pay neither sum which is to as dam- any equivalent nor it in real sense ages, equitable thereto. No principle requires pay it, to the and it is not within [insurer] scope undertaking the of its as a . . reasonable man . would interpret it. (Citations omitted.) 99 N.H. at 131-33. "average

F. The rule lay person" insurance interpreta- of apply corporations negotiate tion does not able to a position terms equal bargaining contract from power. in damages" policies

The "as clause these unambiguously remedies, compensatory limits coverage damage not res- like titutionary response remedies costs. How- ever, if "as phrase damages" even this ambiguous, were automatically against term should not be construed 904 inter- rule of insurance "average lay person" The

insurer. corporate pretation apply giants. does not must in insurance principle ambiguities from a rec- the insurer derives strictly against be construed relationship purchaser between typical ognition Ordi- and the insurance carrier. of an insurance contract the insurance contract unilaterally the carrier drafts narily, reasons, any for thus, responsible is held policy v. See, Company e.g., Shell Oil language. ambiguity 14-15, No. Casualty Company, Insurance Accident and 1988) (Cal. 13, Ct., County, July Sup. San Mateo 278953 exhibit 2. Policyholders, in Brief of reprinted strictly constru- rule of early adopted on This court to this the insurer against policy language ing bargaining power. inequality of form, prepared was standard policy, although of the "The interests their own insurers, presumed to have had are who doubtful, it meaning is view; hence, when primarily insured, had who favorably to the most construed should be thereof." preparation nothing to do with 274, 276- Soc'y, 53 Wash. v. Assur. Stables Union Montana Cent. v. American (1909) Matthews (quoting P. 77, 101 882 (1897)). sub Numerous 449, 48 N.E. 751 Co., 159 N.Y. Ins. rule, and the both have reaffirmed sequent cases v. Mutual Union See, Stusser e.g., rationale. underlying (1923); Guaranty 455, 221 P. 449, 331 Co., Wash. Ins. 127 683, 688, Co., Wash. Ins. 159 Co. v. Continental Trust Life Co., Cas. v. Northwest (1930); Motor Co. Braley P. 585 v. Order (1935); Kane 52-53, 47, 49 P.2d 911 184 Wash. 359-60, 355, Am., 3 Wn.2d Travelers Comm'l United Co., Ins. 6 Wn.2d (1940); Equitable Zinn v. P.2d 1036 Life Co., Pac. Ins. v. (1940); Doke United 385, 379, 107 P.2d (1942); John P.2d 71 536, 544, P.2d 15 Wn.2d Auto. Ins. 70 Wn.2d Mut. v. State Farm son McManemy, v. Co. Am. (1967); Ins. 424 P.2d 648 Safeco Ins. (1967); Continental 211, 213, 432 P.2d 72 Wn.2d 160, 167, P.2d 291 Paccar, Inc., 96 Wn.2d Co. v. some of the that at least majority acknowledges The "corporate are present giant[s]." case policyholders do possess insureds at 883.14 Because these Majority, policy, ability expertise negotiate language con lay person" applicable typical rule to the "average case. not extend to this sumer insurance contract should apply these fact, explicitly In court has declined to corporate defendant: involving large in a case a rules construing policy opinion that the rule We are of the this case. against does not the circumstances the insurer fit policy language, it is party drafted the Regardless of which proration of the party that neither considered uncontested policy they agreed unambiguous on the aggregate at the time terms.

(Italics mine.) Paccar, Inc., v. Continental Ins. Co. 160, 167, P.2d 291 See also Transconti Wn.2d Washington Sys., Pub. Utils. Dists.' Util. nental Ins. Co. v. (1988).15 452, 456, Indeed, applica 760 P.2d 337 Wn.2d unfairly corporate benefit the might tion of such a rule well Oil, (corporate at 18 insured intention insured. See Shell ally language left unclarified so that rule would ambiguous apply).

Ill Holding Majority's Policy Violates Public pertinent rules of misapplying addition to construc- tion, also relevant majority opinion ignores public pol- icy implicitly presents grave considerations. case "[T]his question namely pol- who should bear the cost of policy, at 876 n.l. In inter- luting Majority, our environment^]" contract, public the court will look to preting an insurance in a relevant enactment. State policy expressed legislative page policy question majority at 883 that: "the . . . 14The asserts [was] company's experts, language prepared by with selected the insurer. The negotiated nothing specific language question . was not . .".I note that in the substantiates this recitation of "facts.” District Court's certification order language quotation simply majority's of this belies the asser- 15The italicized apply corpora- that Paccar "did not hold that a different rule should when tion Majority, 892. are involved." tions Farm Gen. Emerson, 477, 481, 483, Ins. Co. v. 102 Wn.2d (1984). Nevertheless, 687 P.2d 1139 the majority opines " that important is to note the absence of public policy [i]t in the construction of insurance contracts." Majority, at 876 n.l. The majority's interpretation of these insurance poli- ignores cies the public policy expressed by the United in Congress States CERCLA. enacting A. Congressional intent.

Congress enacted extraordinarily CERCLA's novel liabil- ity provisions impose in order to the cost of cleaning up hazardous waste on those who have "profited or otherwise benefited commerce involving from sub- [hazardous] 848, Rep. 98, stances." S. No. 96th 2d Cong., Sess. Comm, reprinted Works, in Senate on Env't & Legis- Pub. lative History Comprehensive Environmental Response, 1980, Act Compensation, Liability Public 96-510, (1980) (state- 308, 320, Law 97th Cong., at 2d Sess. Costle). ment of EPA administrator Congress intended that financially those who benefited from polluting activity internalize the health and environmental costs of that activity doing Rep. 848, into their cost of business. S. No. at 34, congressional 13 n.2. This intent in summarized polluter pay." "make the See slogan Developments Law, Litigation, 1458, Toxic 99 Harv. L. Rev. Waste clearly corporate

Congress recognized polluters have reaped past benefits from their inadequate enormous waste disposal practices. practices These created significant savings polluters, resulting higher profits short-term for them, long-term caused enormous harm in the but form CERCLA degradation. response of environmental cost lia- bility polluters disgorge profits. forces these these from whom these polluters The insurers now seek indemnification, contrast, premium did not charge Note, See liability. cover cost Cleanup Liability Costs General Insurance Comprehensive Under Property Damage Damage, Policies: or Economic 56 Ford- L. As itself has rec- Congress ham Rev. provisions simply CERCLA's innovative were ognized issued. See policies unforeseeable the time these were Act of Superfund Amendments and Reauthorization 253(1), 1, 109, Rep. reprinted H. R. No. 99th 2d Sess. Cong., & Cong. (disap- in 1986 U.S. Code Ad. News policy interpretation trends proving "judicial regarding pay have called old for claims that were upon policies written”). By not envisioned at the time the were indemnify insurers to requiring corporate pollu- these cleanup, permits ters for the cost of the majority pollu- reap ters to both the benefits and avoid the costs pollution. directly attributable to their This violates the polluters intent internalize congressional pollu- their Brett, Insuring Against tion costs. See Innovative Lia- by Superfund, bilities and Remedies Created 6 J. Envtl. L. I, 52

B. liability fundamentally CERCLA uninsurable. public also violates majority holding policy because liability

it insurers to insure which is requires fundamen- tally uninsurable: The innovative new features of CER- simply prevent scheme liability CLA's insurers from charging premiums any and that bear calculating real rela- liability. tion to the risk of CERCLA liability differ from provisions ordinary CERCLA's tort respects. First, liability many important CERCLA imposes liability upon responsible an strict especially par Liability ties. attaches even to those who nonnegligently dispose using of a hazardous substance state of the art pro See, States e.g., cedures. United v. Monsanto 858 F.2d (4th Price, 1988); 160 Cir. United States v. 377 F. Supp. 1983). 1103, 1114 (D.N.J.

Second, liability Responsible CERCLA is retroactive. parties waste in a disposed completely who of hazardous before the legal, nonactionable manner enactment of See, potentially response CERCLA are now liable costs. 908 Corp., Hooker Chems. & Plastics

e.g., United States v. (W.D.N.Y. 1988). F. Supp.

Third, makes individuals liable for regularly CERCLA and sev- they imposes joint harms did not cause. CERCLA connected with a liability every responsible party eral upon Therefore, 42 U.S.C. 9607. both the hazardous waste site. § may response recover costs government private parties virtually showing with no "responsible party" from a Steinberg, Super- & R. RCRA causation. C. Schraff ¶ Forms, [3], 2.05 at 2-26 A Practice Guide with fund: Realty Corp., New York v. Shore 759 F.2d See also 1985) (CERCLA (2d requires showing no Cir. causation). any proprietary

Fourth, citizens without interest private standing have to sue to enforce property harmed 9659(a). 9607(a)(4)(B), To recover 42 U.S.C. CERCLA. §§ only outlay need show an costs, private party response consistently were incurred with the costs and that the costs EPA. promulgated by Plan See Contingency National Brett, & n.87. supra at 16 the initiation

Fifth, response authorizes CERCLA the threat of a hazardous waste response action example CERCLA 9604. For authorizes release. U.S.C. § the costs of health assessment recoup government 9607(a)(4)(D). studies. U.S.C. and health effects § may be Therefore, parties held liable for responsible any in the costs even absence of actual See, e.g., States v. United persons property. harm to & Chem. F. Supp. Northeastern Pharmaceutical 1984). (W.D. Mo. liability cost is inevitable. Sixth, response CERCLA system eventually containment will hazardous waste Every liability even if hazardous imposes leak. Because CERCLA manner, every in a state of the art disposed waste is eventually subject to be to expect responsible party should liability. response CERCLA liability essentially cost

Seventh, response The EPA has an boundless, in and duration. both amount

9Q9 recoup whatever incur and to discretion unfettered almost up a site. necessary to clean are it believes costs response EPA cur- 9621(a). Moreover, because U.S.C. §§ from further releases parties settling grant to rently refuses indefinitely exists liability party's responsible a litigation, to clean paid much it has of how regardless future into the Liti- Law, Waste in Toxic Developments See a site. up see 42 But 1458, 1509 L. Rev. Harv. gation, enter 9622(f) EPA discretion to with (providing U.S.C. § sue). to covenant into insurers provisions mean that broadly worded

CERCLA's may lead conduct what insured predicting way have no or "pollutant defines example, CERCLA For liability. to substance, element, com- "any include contaminant" the envi- . . . which after release into mixture pound, or cause may reasonably anticipated be . . or . will ronment 9601(33). Because U.S.C. . . . toxic § effect]'1. [a any dependent: substance are dose toxic characteristics dependent upon ad highly statute is of the application [t]he "pollu- a of a substance as hoc characterizations post hoc and literally [Therefore], party has no . . . or contaminant." tant requirements prohi- and conduct to the his ability to conform ability to avoid party A also has little or no Act. bitions pollutant contaminant because release of a or liability for the advance, know, any whether release will constitute he cannot prohibited conduct under CERCLA. actionable A Prac- Steinberg, Superfund: & R. RCRA C. Schraff ¶ 1-11 CER- 1.02[5], Forms With tice Guide problems. broadly defined terms create similar other CLA's ¶ Superfund, 1.07. See, RCRA e.g., who do not upon parties of standing conferral CERCLA's uncertainty. multiplies this requirements satisfy traditional discretion liability provisions enormous give "The broad incur how to party deciding responding the amounts recoverable." virtually no limit on costs with Brett, at 18. supra result liability provisions retroactive strict

CERCLA's cannot be dis- risks that failure to reduce for the liability An insurer care. the exercise of reasonable through covered who undertakes to insure liability cost will there- fore be liable for risks that are undiscovered and largely undiscoverable at the time the actions are taken. "Because magnitude of such risks is inestimable—they are unknowable when insured against—it impossible is confi- dently price to set a against Abraham, for insurance them." Liability Environmental and the Insurance, Limits Colum. L. Rev. making response

Another factor particularly costs diffi- cult to imposition insure is CERCLA's liability for harms a cause. Such party liability: did not special uncertainty, probability creates because the of liabil- ity-—and behavior of consequent loss for the insurer—is affected nonpolicyholders whom the insurer cannot neces- sarily identify in scope liability advance. When the poten- is

tially very large, uncertainty that magnified. is . . . threat, against ... In order to insure this insurers would nearly impossible have to make potential calculations based on both the parties of the other behavior whose might activities combine with the insured's to cause damage, prob- on ability parties prove that these would judgment proof. to be Abraham, at 959-60.

Finally, inevitability of CERCLA response costs totally renders them uninsurable under traditional occur- (such rence-type case): as the ones policies at issue [Ijnsurance ordinarily contracts do not cover economic detri- type occurring regularly ment of a so in relation to an insured enterprise activity commonly that it regarded or as a cost activity Second, enterprise. rather than a risk of that insur- ance contracts do not cover economic detriment is not point of person fortuitous from the view of the (usually the insured) whose detriment is asserted basis of the insur- liability. er's (Footnote omitted.) Insurance Law Keeton, R. 5.3(a), § 278-79 example,

For it is an "elemental proposition" under law that Washington insurance do not cover losses expected which are or intended standpoint from the insured, . . generally being against public policy "this . Detweiler v. J.C. Penney Cas. Ins. insure." 110 Wn.2d

gn (1988). Thus, an insured took where 99, 105, P.2d 282 sewage plant from a pollution risk that calculated business have we held nearby property, would contaminate its indemnify it for insurer to look its insured could not the event. prevent failure to liability from its resulting Am., 716, 722, 380 Wn.2d General Ins. Co. Tieton v. of system can per Because no containment P.2d 127 waste, polluters of hazardous manently prevent escape very at least take a calculated their wastes dump who response CERCLA eventually incurring of risk business liability. cost on the study group report

A authorized congressionally liability for rec- private insurance CERCLA availability of radically unique approach to CERCLA's ognizes that potential insured's of costs renders the imposition response liability cannot be assessed liability limitless such so to levels. See seeking premium insurers set by prospective Insurance Treasury, Adequacy Private of Dep't U.S. of Envi- Comprehensive Section 107 Protection Under of Liability Act Response, ronmental Compensation, 301(b) A Section P.L. Compliance 1980: in With Report (June 1983). 96-105, fact, 83-87, 94-95 since at CERCLA, has pollution insurance become enactment Brett, 44; E.g., market. any insurance unavailable SARA: An Smith, Weishaar, Light, & Hurricane Ledbetter Amendments, Toxics Superfund Introduction are unable Rep. L. The fact that insurers liability today even response cost provide coverage such cov- highlights finding the fundamental unfairness before CERCLA's radical erage years written have possibly anticipated. new liabilities could been

IV

Conclusion response cost Congress enacted CERCLA's innovative the threat liability properly in order to address provisions disposal prac- waste past hazardous posed by inadequate substantially liability differs accordingly tices. CERCLA from ordinary tort liability. Normal tort liability results in a compensatory "damages" remedy. cost liability, contrast, results in a restitutionary remedy.

The insurance policies at issue in this case require the insurer to indemnify the insureds for "all sums which the insured shall legally be obligated pay . . .". plain, ordinary and popular meaning of damages, as recognized by the majority, is "reparation for detriment or injury sustained." Because CERCLA response costs do not constitute reparation for detriment or injury sustained, they do not constitute "damages" within the meaning of policies. these On-point mandatory precedent, the better cases, reasoned foreign public policy all support result.

I respectfully dissent. J., Dolliver, Callow, concurs with C.J. Reconsideration April denied 1990. January 18, 1990.] 56118-4. En Banc.

[No. Appellants, v. J. Michael Bennett, al, Laura et Respondents. Hardy, al, et

Case Details

Case Name: Boeing Co. v. Aetna Casualty & Surety Co.

Court Name: Washington Supreme Court

Date Published: Jan 4, 1990

Citation: 784 P.2d 507

Docket Number: 55700-4

Court Abbreviation: Wash.