Queen City Farms, Inc. v. Central Nat'l Ins. Co. of Omaha

a factual inquiry as to whether any tribal custom existed and if so whether the customs contradict supplement Washington community law. property

Conclusion Public Law 280 permitted the State Washington to as- sume civil and jurisdiction criminal over Indians and Indian territory. The Washington Legislature jurisdic- assumed full tion over Indians and territory Indian respect eight subject areas. Domestic relations is of the eight subject one areas full jurisdiction where assumed. RCW 37.12.010(3). Community property law is included under do- mestic relations. RCW 26.16. Consequently, we answer the certified question in the affirmative and rule under RCW 37.12.010 Washington community law property applies to determine rights property as between an enrolled member of the Puyallup Tribe and his non-enrolled wife.

Utter, Dolliver, Guy, Smith, Johnson, Madsen, JJ., Tern., JJ. Pro Brachtenbach, Andersen concur. September

[No. 59594-1. En Banc. 1994.] City Queen Farms, Inc., Respondent, v. The Central Company Omaha, National Insurance Al, Et Petitioners. by Siljeg, Lang

Aiken, P.S., St. & Louis Pamela A. and Ste- by Campbell, Sofia; ven Karr Tuttle William J. Price and Jacquelyn Beatty (Wiley, Fielding, A. Rein & Thomas W. Troy, Brunner, Bell, Robert B. Sullivan, Daniel E. Russell Foggan, Barthel, Robinson, Laura A. Carol and Vicki counsel), petitioners for Central National Insurance Com- pany, Highlands Company, Maryland Insurance Casu- alty Company. Spears by Lubersky, Schoeggl,

Lane Powell David M. Wil- Clapham, petitioner Lawrence, bur J. and Linda Blohm for Companies. Earnest A. Moore & by Ellis, Preston & Lawrence, Gates Paul J. Desmond L. respondent. Brown, Poll, and Brian N. for James, Jr., Thomas S. and Donald S. Kunze on behalf of Litigation the Insurance Association, Environmental amicus petitioners. curiae for O’Loughlin; M. III,

Patrick Victor C. Harwood Edward Zampino, and Bernadette M. Peslak on behalf of Aetna Ca- sualty Surety Company, petitioners. amicus curiae for Liberty

Andrew H. Salter on behalf of Mutual Insurance Company, petitioners. amicus curiae for C.

Charles Gordon and William G. Clark on of The behalf Boeing Company, Champion Corporation, International Company, Company, Time Oil and Monsanto amici curiae respondent. for Prosecuting Attorney Conklin; Brockett,

Frank Donald C. Spokane County, Deputy, Emacio, and James ami- Chief respondent. cus curiae for Madsen, JJ., by amended orders by Utter and [Dissents 20, 1995, July Sep- 22 and Supreme Court March tember 1994.] — coverage issues

Brachtenbach, This case involves J. for losses general liability policies comprehensive under when toxic groundwater from contamination resulting where hazardous materials pits materials leaked from waste A of issues involve construction deposited. had been number exclusions. Addi- policy provisions, particularly defenses raised misrepresentation issues involve tional holding of Appeals’ We affirm the Court some insurers. fac- insurer’s policies, under one coverage provided there is under remain as to whether questions tual issue, the insurers’ mis- and that remaining policies differs in some analysis fail. Our defenses representation Appeals, particularly the Court of by from that used respects issues. misrepresentation as to the Farms, (QCF) declaratory Queen brought Inc. City seeking a de- several of its insurers judgment against action cleanup for responsible insurers were termination that contamination a of QCF consequence incurred as by costs from a dis- hazardous wastes waste leaking from resulting In QCF Maple Valley. in by owned posal property site on Agency Protection United States Environmental 1979 the (EPA) Ecology Washington Department State and the hazardous waste con- investigating property began 1983, groundwater testing EPA revealed In tamination. responsible potential as a QCF was identified contamination. Response, Environmental Comprehensive under party (current (CERCLA) Liability Act of Compensation, (1988)). liability is Strict seq. U.S.C. 9601 et at 42 version § with consent decrees QCF entered CERCLA. under imposed (the (Boeing) Boeing Company agreeing, EPA with By site. site), up the at the to clean of wastes major disposer costs, cleanup in trial, million QCF paid had $1.8 time of million. liability potential with $5.5 City incorporated Queen Farms, Inc., 1966, in and is (SDC). subsidiary Disposal Company of the Seattle In purchased Maple Valley, Washington, SDC in land known City hog hog Farms, Queen as for use as a farm. The farm operated years for a few in the 1950’s. representatives King County mid-1950’s,

In the from the Department approached requested Health SDC’sowners and they permit paint, roofing oil, materials, and tar to be disposed property County of on the because the did not own adequate disposal began site. In local industries depositing depression industrial wastes into natural on the property. expand capacity pit,

In order to of the waste the own- scooped depression, pits sepa- ers out the and formed three arranged pit berms, rated filled, so that as the first liquid pit, wastes would flow into the next and then into the ponds third when the second filled. The covered about an capacity gallons. acre, and had a total of about 1 million Disposal Company dumped Seattle also wastes into the pits, disposed pits but most of the waste of in the was trucked by Boeing. Boeing dumped in wastes from 1957 to 1969. In 3-year period, nearly gallons Boeing’s one 3 million wastes dumped pit. were into the Much this waste consisted of plating high heavy metal wastes concentrations of met- groundwater als. When tested in contamination from pits highly the wastes had resulted toxic levels of plating process, one of the chemicals in used the hexavalent chromium. permits disposal operation,

No were ever issued for the al- though King County Department Health the and State Pollution Control Commission were aware of and monitored operation to some extent. One of SDC’sowners testified ponds operation that the all were checked the time but the thorough investigation possible was shut down. never No investigation begun contamination ever occurred until the 1979, but in 1959 there was some evidence of contamination seeping nearby QCF into a stream. was advised of the When study. engineering problem, firm to conduct hired an it working engineer he in- firm testified that An for the sticking spected into the site, that branches and found coating on red material or stream had a of brownish lake (including Testing property well wa- on the them. ter) of water groundwater made, contamina- was but did not reveal tion. City incorporated, and title Queen

In 1966 Farms was (the people property to it same owned was transferred operate disposal QCF). site. QCF continued to SDC and Maple on the Val- of the owners owned summer homes Two supply ley ponds. property for the waste The water near the activity from an under- on the farm came homes and other ground spring 2,000 feet downhill and well located about (and SDC), ponds. QCF Josie of the owners of from the One annually, but no contami- Razore, had the well water tested been found in the well. nation has ever ponds overflowed, never established Evidence get Periodically, level would when the when it rained. even pits. high, This lowered the level. burn the the owners would sludge burning to the that would sink a tarlike created pits. testimony pits; lined the was of the there bottom hardpan clay testimony to lie was believed There was ground pits. evidence that There was also under the gravel, largely surrounding one and sand area pits sealed with before the were testified that of the owners ground, burning, where there into the waste would drain 12,1988), (May Testimony gravel. of Banchero was sand clay there, and area around that "there’s at 51. He also said clay might exactly been. far have how down I didn’t know 1988), (May Testimony He testi- at 51. of Banchero . . .” pitfulls dumping early years several in the fied that (May Testimony pits. liquid Banchero from the drained began prop- 1988), gravel on the 75-76, A business 86. operate. erty The owners and continues to in the 1950’s gravel thought clay, they sand, would filter testified the wastes. they expected

The owners testified that from never wastes ponds surrounding ground to contaminate and groundwater.

Dumping effectively 1969, continued until and then ponds property. Thereafter, ceased. remained on the brought QCF’s When this action was to determine insur- responsibilities coverage cleanup ers’ costs, for for the nu- merous settled, insurers were A defendants. number have brought summary and others have successful for motions judgment grounds. stage, of dismissal on various four At (1) Compa- remain in insurers the action: Ernest A. Moore & (2) (3) (Lloyd’s), Highlands Company, nies Insurance Central (4) Company Maryland Omaha, National Insurance Casualty Company. Highlands and Central National are companies, sister and will hereafter be referred to collec- tively provided as "Central National”. These insurers excess liability coverage during periods, January 1, relevant from January (Lloyd’s); January 1, 1, 1977, 1966 to from (Central (both National) companies); 11, March January January (Maryland 1, from alty). Casu- policies compre- The insurance issued the insurers are general liability policies, covering hensive all risks or dam- age arising an from "occurrence” unless excluded. Lloyd’s sought summary judg-

The insurers other than dismissing arguing coverage QCF’s claims, ment was pollution excluded as a matter law under exclusions (The policies. Lloyd’s policy pollu- their does not contain exclusion.) summary judgment tion motion jury theory denied. The case went to the under the that the provided exclusions for the same as did Mary- provisions the occurrence of the Central National and Casualty policies, land because the trial had court ruled functionally two clauses are the same. argued clause,

QCF which under occurrence happening "an defined occurrence as accident or or event repeated exposure or a continuous or to conditions which unintentionally unexpectedly personal in- results damage”, Papers (Appellant) jury, property 2, Clerk’s vol. subjective expectation 519, standard of applies. QCF if The trial ruled and instructed that court subjectively objectively expected or or either intended coverage. leakage groundwater, no into the there would be jury By special form, its in a found answers verdict expected 31, 1968, QCF intended that as of December or ponds material from the would leak into that waste groundwater.

Lloyd’s complete a National each asserted as Central misrepresenta- coverage QCF defense to that made material coverage. jury obtaining The intentionally found tions in insurance special QCF made that or its brokers verdict misrepresentations concealments QCF about the material or deceive. site to these insurers with the intent to arguing appealed, in sub- QCF that the trial court erred objec- question expectation mitting under about its relating to QCF raised a number of issues tive standard. also Casualty misrepresentation Maryland defenses. arguing cross-appealed, that the National Central coverage preclude policies a as their exclusion clauses law. matter of subjective agreed Appeals QCF that a

The of with Court ground- expectation applies question its to the standard contamination, a trial to determine and ordered new water Maryland Casualty’s coverage Central National’s and agreed under Appeals policies. QCF that The also Court timely Lloyd’s tender back failed to and Central National relying precluded premiums, a from on were and therefore Appeals misrepresentation concluded defense. The Court of policy responsible Lloyd’s because its for was leakage expected into QCF or intended inwas effect before misrepresen- groundwater, entitled to a and it entry Appeals remanded for The tation defense. Court City against Lloyd’s. judgment Farms, v. Central Queen Inc. (1992), App. review 827 P.2d Ins. 64 Wn. Nat’l granted, 120 Wn.2d 1025 petitioned insurers for petitions review. Their were

granted. QCF review, filed conditional petition asking court review certain if it only granted issues petitions for insurers’ review.

A number of amicus curiae briefs have been filed.

"Unexpectedly Unintentionally”:

Objective Subjective or Standard QCF Whether Preserved the Subjective-Objective

Issue for Appeal The trial court ruled on for summary motion judgment that personal injury or property damage was expected if intended the insured subjectively objectively intended or expected the injury or damage. jury was instructed QCF had the of proving burden it did not "intend or expect that materials would leak from disposal ponds groundwater” into and that "a reasonable in the person po- Queen sition of City Farms should not expected have that the materials from the disposal ponds would leak into groundwater.” 4; Instruction Papers Clerk’s (Appellant) vol. QCF at 1116. objected instruction, to the jury but did not object the special to verdict form. argue QCF insurers that has not properly preserved

the subjective/objective for appellate issue review because it objection made no to the special question incorporat- verdict ing objective the Question 2 special standard. on the verdict form asked: "Did there a Queen come time . . . that City intended, expected Farms or or should reasonably have expected, that ponds materials would leak from disposal its into groundwater?” Papers Clerk’s at (Appellant) vol. 1132. argument The insurers’ appears basic to be that lack any objection of to question constituted a waiver of QCF’s objection. Additionally specifically, and more argue QCF insurers have objected should to the com- pound question nature of the so a special verdict new QCF trial not have if necessary would been were to prevail on its for argument application subjective of a standard on

review, QCF’s to so a waiver and that failure do constituted expectation subjective under CR of the factual issue 49(a). 49(a), special governs forms, verdict

CR which the use part: provides in any by pleadings

If. . the omits issue of fact raised . court rights by a evidence, his to trial party each waives he jury retires jury of the issue so omitted unless before jury. As omitted demands submission to the issue its or, finding; if may a such demand the court make without finding so, in ac- do it shall be deemed to have made fails to special judgment with the on the verdict. cord argument. support QCF As rule does not the insurers’ subjective/objective correctly states, issue was resolved brought summary trial. The trial court on a motion before rul- the trial court’s to reconsider the matter. Under refused ing, subjectively jury QCF was decide whether leakage objectively expected into of material or intended the ruling, groundwater. nowas triable issue Under that there only subjectively, subjectively, QCF of fact as to whether expected leakage. Thus, no fur- there was or intended expectation subjective which should ther issue fact about jury. submitted to the have been rely upon Moreover, the insurers does the case which argument. Cryovac, support Inc., v. their In Anderson (1st 1988), sep- compound question combined F.2d 910 Cir. ambiguity way as in a which led to arate elements jury elements. Both either or both whether the found no rea- Here, contrast, there was were issue. elements question subjective expectation jury to decide the son light expectation question, objective separate from the ruling met, was if either standard the trial court’s although precluded. be deter- Thus, it cannot subjectively, jury’s QCF was that the verdict mined whether objectively expected subjectively objectively, or both groundwater, leakage the trial obvious that is into the absolutely an no to enter reason have had court would any subjective findings y Nor is there alone. on a standard judgment. any findings consistent with "deem” need to

63 Patently, jury this matter was submitted to the under ruling trial court’s an objective applied, that standard jury under stan- objective instructions contained the 49(a) There no waiver meaning dard. within the of CR right a jury subjective to determination on the stan- dard. QCF

The real question preserved whether its appeal subjective/objective specific issue. There is no rule per- taining to proper objecting method for to special jury verdict forms. Federal required compliance courts have 51, R. requiring timely exceptions Fed. Civ. P. to jury instructions, in order an properly preserve to to a objection special question. verdict Landsman Co. v. Packing Continen- (11th Co., 721, tal 1989); Can 864 F.2d 726 Cir. J.C. Motor Lines, Inc., Inc. v. Bus Trailways Sys., 689 F.2d 602 n.2 (5th 1982). Cir. 51(f) provides must,

CR that counsel to objecting giving any instruction, distinctly "state the matter objects which he grounds objection”. and the of his This court and the federal agree courts purpose requirement "sufficiently apprise any the trial court error in alleged order to afford it the opportunity to correct Invs., Inc., the matter if necessary”. Schmidt v. Cornerstone 148, 163, 115 Wn.2d P.2d 1143 795 51(f) We agree special that CR applies by analogy to However, verdict forms. under compli some circumstances ance with the rule purpose will excuse technical 645, 658, See v. noncompliance. Corp., Falk Keene 113 Wn.2d (1989) 782 P.2d an (holding concerning 974 issue instruction that was challenged properly at trial was before the had clear party position court where the made his through his objection give trial court’s failure to one instructions); of his 100 proposed Skagit Cy., Crossen v. (1983); Maloney, Wn.2d Bennett v. P.2d denied, (1991), App. Wn. 817 P.2d 868 review (1992); v. Packing Wn.2d Landsman Co. Continental cf.

Can supra 727-28. 51(f) case, require- CR objection In this the the purpose applicability has The issue concerning ment been met. for objective pretrial was on motion argued standard Although trial indicated that summary judge judgment. not summary would be judgment the matters decided on instructions, QCF jury the discussion of during reconsidered on objected objective expectation still to the instruction jury ap- was grounds objective standard not on the QCF’s argu- The trial understood judge standard. plicable ment, object- issue. unwilling By to reconsider but QCF gave the objective expectation, to the instruction on ing both the instruc- adequate change trial to opportunity court question. and verdict accompanying special tion objecting we conclude that in Appeals, As did the Court of standard, setting objective forth the jury instruction objection court of its QCF sufficiently the trial apprised standard, including special that set out objective verdict form. Objective Subjective Applies1 or Standard

Whether Central National Casualty policies Maryland damage coverage personal bodily for injury for provide "occurrence”, which is defined out of by arising caused or a continuous or "an or event or happening as accident unexpectedly which to conditions repeated exposure damage injury, property unintentionally personal results 448, 495, 519. vol. Papers (Appellant) .”. Clerk’s . . is determined expectation on dispute focuses whether Appeals The Court of subjective objective standard. by by properly number issues raised are QCF claim that a 1The insurers Review. All they a Conditional Petition for because were raised in before the court Appeals, Court but adequately brief in the issues addressed in QCF’s of the were on other because it resolved this case court did not address several issues issues, by any grounds. court of unless this court not seek review did QCF granted for the insurers’ Petitions Review. Petition for Review are in the Conditional We conclude that certain issues raised and, moreover, us, the Conditional Petition properly the issues set forth in before promote justice and the decision of the facilitate for Review should resolved 1.2(a). on the merits. See RAP case a subjective ruled that applies, relying upon standard Rod- Williams, riguez v. 107 Wn.2d 729 P.2d 627 We agree. note at

We the outset in other jurisdictions courts which have considered this issue in the context of claims for resulting from pollution split have on the question "unexpected whether and unintended” requirement a subjective objective determined or an standard. Some a subjective courts hold applies. standard E.g., Broderick Inv. Co. v. Accident & Indem. Hartford (10th 601, 954 Cir.), denied, F.2d 606 cert. 121 Ed. L. 2d 133 — (1992); Hatco v. Corp. Conn., W.R. Grace & Co. F. 801 Supp. (D.N.J. 1992). 1334 Other hold an objective courts that stan dard applies. E.g., Sylvester Bros. Dev. Co. v. Cent. Great Ins. (Minn. Co., (Mar. 480 N.W.2d 368 Ct. App.), review denied 26, 1992); Lane Elec. Inc. v. Coop., Federated Elec. Rural Ins. 156, 114 Or. Corp., 502, denied, 834 P.2d App. review 314 Or. (1992). 727, 843 P.2d 454 Similarly, split. comment is Com general mentators state as rules that expectation and in tendment are judged by objective an reasonable man stan dard, Barry Ostrager Newman, R. & Thomas R. Insurance (4th 1991), Coverage Disputes and, contrast, ed. § 7.03[c] require most courts an subjectivity element of as op posed the objective standard, person reasonable Thomas Westendorf, A. & Roger Gordon Liability Coverage Toxic for Tort, Hazardous Waste and Disposal Other Pollution Expo (1988-89). sures, 25 Idaho L. Rev. 567 We apply Washington law. Construction of an insur ance is a policy question courts, of law for the the policy is " whole, as a construed a policy given fair, the 'should be reasonable, and sensible as given construction would be ” the contract average purchasing person insurance.’ Brosseau, Ins. Co. v. 113 Grange Wn.2d P.2d (1989) (quoting Ass’n, Sears v. Grange 636, Ins. 111 Wn.2d (1988)). 638, 762 P.2d 1141 given Undefined terms should their plain, ordinary, and popular meaning. Boeing Co. v. Aetna Cas. & Sur. 113 Wn.2d 784 P.2d language poli- form standard A.L.R.4th understanding interpreted in cies accord of large average purchaser corpora- if the is a even insured company Boeing, at tion with counsel. 882-83. policies provide that an occurrence covered unexpectedly unintentionally in” dam results

"which age. City policies Farms, Queen at 854. The do define language "unexpectedly”, they term nor do contain ex subjective indicating objective pressly a standard whether meaning plain, ordinary, popular applies. The may "unexpected” mind, but term be said involve state — inquiry state of mind that does not resolve the whose Appeals person’s, insured’s, a reasonable as Court City Queen Farms, at 855. noted. average purchaser

However, of insurance would un- language policy provides for derstand negligence. resulting ordinary damage from acts As most recognized, objective Appeals an in this case the Court coverage for insurance standard is inconsistent with ordinary negligence. resulting Thus, who from the driver intentionally negligently up, a but so into backs car does right way, having path has acted inten- of vehicle objectively tionally it can be said that in manner where average may purchaser of insurance occur. The accident policy language reasonably from the would understand provided coverage the clause. was under occurrence difficulty recognized Rodriguez if an results in the that We apply "unexpected objective the were to to standard Rodriguez. requirement There, court in unintended” question within the whether incest was was with the faced per- policy scope for exclusion a homeowner’s insurance of injuries expected The court the insured. or intended sonal injury objectively argument rejected if the that the insurer’s expected act, it of an intended then as the result could be reasoning exclusion, the fall within would average purchaser doubtlessly [w]hile of insurance would the specifically policy child, a the harm incest would believe that expect Thus, harm. or intend must that the insured states objective language policy a blanket itself is inconsistent with policylanguage person standard, must control. More- used, over, act injury generally virtually no intentional objective an standard is if result in would be Intentional acts which ever covered. objec- injury. be to in An expected can result standard, fact, seem especiallyprovided tive would after coverage meaningless plain language providing render for certain intentional acts. for ours.) (Italics Rodriguez, at 386. light public policy considerations,

In of the court held that subjectively not intended it did matter whether the insured harm, as a matter of law. because intent would found opinion emphasized reasoning Nonetheless, the in the above is sound. average purchaser of

Because the insurance would under- negli- coverage provided ordinary for stand that gence, acts of "unexpected the more reasonable construction of requirement and unintended” is that it is determined under subjective a standard. recognize analysis employed an

We some courts have foreseeability requiring higher degree the rea some than ordinary foreseeability negligence. applicable sonable 1052, 1057 604 F.2d Sur. Carter Lk. v. Aetna Cas. & E.g., (8th 1979) (substantial urge probability). The Cir. insurers likely occur; more than not to test whether they problem maintain such standard will resolve ordinary negligence. argument persuasive. Despite insur do not find this

We objective applies, policy lan an standard ers’ claim that guage simply Nothing forth such a standard. does set says applies, objective an standard the occurrence clause objective any requires standard which some nor does hint objective "foreseeability” applying heightened degree an correctly expectation. notes, if the insur QCF As standard they easily objective apply, could ers wanted an standard language to that effect. See Aetna Cas. & Sur. Co. have drafted (1979).2 App. Dichtl, 78 Ill. 3d 398 N.E.2d v. argument presented clause at one that drafters of the occurrence 2We are clause, inserting express person reasonable standard into time considered We conclude the is at policy language ambiguous the least as to whether an objective subjective or a applies. standard ambiguities against Unresolved are resolved the drafter- insurer and in favor the insured. Greer v. Northwestern (1987). Co., 201, Ins. 191, Nat’l 109 Wn.2d 743 P.2d 1244 rule, Under subjective applies, standard as the insured has offered this reasonable policy construction of the lan- guage. many of

Finally, the cases relied upon by insurers "accident”, concern the of the meaning term and not specifi cally the issue expectation whether of harm should be determined under objective subjective an or standard. The i.e., determination of an accident, what constitutes whether damage "accident”, an injury has resulted from is not dis- positive on the standard for expectation damages. Thus, holding this court’s in v. Roller Stonewall Ins. (1990), Wn.2d 801 P.2d 207 that whether an accident determination, has is an objective occurred not does control whether question expectation injury an objective be decided under or subjective standard. upon Some of the cases relied insurers involve the unusual, an unexpected rule that is an "accident” and unforeseen where happening, the insured acts deliberately, no accident occurs unless there anis additional unexpected, independent unforeseen which happening Brosseau, caused the harm. Ins. Co. v. E.g., Grange (1989); Wn.2d 776 P.2d 123 Ins. Co. Am. v. Safeco Butler, 118 Wn.2d 823 P.2d 499 Again, these for expectation cases do concern standard resulting harm. Nevertheless, rejected upon but the idea. The relied are not in this materials record. regardless industry rejected person in whether insurance fact reasonable stan- dard, person they it is clear that had the drafters wanted a reasonable standard language could have made that intent clear of the clause. "foreseeability” suggested 3One commentator has that use of the word has been imprecise in certain of this decisions: court’s cases, analysis Washington foreseeability "In courts in the several have used 'expected language liability construing policies or intended’ or in the term unusual, 'accident’, unexpected, which has been defined as 'an unforeseen note, Appeals cases seem that some Court though, We Palouse objective expectation, e.g., standard of apply Co., 119, P.2d 593 App. Ins. 40 697 Seed Co. v. Aetna Wn. 360, 37 (1985); App. Ins. Wn. Medina v. Transamerica 69, denied, (1984), and that 680 P.2d review Wn.2d suggest cases an language may in some of this court’s some Nevertheless, previ- this court has standard. objective Rodriguez issue other than in ously addressed the before us (1986), Williams, v. P.2d 627 where the Wn.2d objective considered the effect standard. applying court subjective conclude that a standard based applies, We the lack of upon policy language, any examination of the (and out in the ease with objective policy standard set could been if that is the insur- which one have drafted what intended), meaning average purchaser ers and the which i.e., give language, injury damage that or policy would from resulting negligence, though precipitated acts of even act, by an intentional would be covered under the occurrence clause. ex-

Finally, deciding subjectively whether an insured is, pected damage, or intended the circumstantial evidence commentator course, suggested admissible. One has subjec- a objective the difference between an standard and a one: may standard not be substantial tive proof normally of mind is indirect or circumstan- Since state tial, subjective rely a on from which an even test must facts drawn, mind be such inference about the insured’s state of as the obviousness of must already-occurring harm. Abraham, Liability S. Environmental Insurance

Kenneth Law 134 foreseeable, may damage always happening.’. expected inadvert- . . Since courts expected legal ently term where the evidence intended use 'foreseeable’ strong. may argued damage damage [such] cases was . . . it While foreseeable, uniformly only expected whether dam- courts should not ask both determining age expected.” was Robert W. foreseeable when whether was — Petrie, Coverage Damage Searching Bryan Pollution & John T. "Occurrence” for Gonz, Policyholder’s Subjective Expectation, 28 L. Rev. 557 n.19 Actual (1992-1993). QCF has jury concluded that neither subjectively nor expected

objectively leakage intended the from the pits into groundwater prior Thus, December 1968. necessarily QCF follows from jury finding did not subjectively expect harm, or intend the groundwater contamination, prior However, date. the jury to that did not determine, solely standard, subjective under a whether leakage expected or intended on or after that date. As Appeals correctly concluded, Court of the insurers pre- sented considerable evidence which tended show that objectively person reasonable would have expected the damage. QCF presented considerable that subjec- evidence (and tively leakage resulting thus damage) was not expected. factual determination under subjective standard must be resolved on remand.

Burden of Proof question next is whether the insured or the insurer bears the burden of that the or proving injury damage was expected intended. Appeals upheld or The Court of the trial insured, court’s QCF, determination that the had the burden of proving that was neither nor expected intended. QCF argues the insurer the proof. bears burden of holding Court is E-Z Appeals’ supported by Loader Trailers, Co., 901, Boat Inc. v. Travelers Indem. 106 Wn.2d (1986). There, 726 P.2d policy provided 439 an insurance that there coverage was for an occurrence which resulted in "bodily or injury property damage expected neither [n]or Loader, intended the E-Z standpoint from Insured”. at 904 (quoting policy). The court said that a claim would be covered if the insured the only proved existence three ele ments, including that the occurrence in bodily resulted injury expected neither nor intended E-Z by the insured. Loader, at The court that upon principle 906. relied the the plaintiff burden is on the that a falls within the show loss policy. terms of the v. Aetna & Sur. Waite Cas. (1970), Loader, Wn.2d 467 P.2d E-Z cited in Co., 119 Wn.2d v. Fire & Cas. McDonald State Farm 906; (1992). 724, 731, 837 P.2d 1000 definition, and to come within

To satisfy the "occurrence” harm that coverage it must established provision, There is never or unintended. unexpected was or intended. expected where the harm bear QCF that the insurer should argues, though, that the insurer bears proof principle burden of under of exclusions from cover- proving applicability the burden of Kent, 447, Aetna Ins. Co. v. See age. App. 12 Wn. on grounds, rev’d other P.2d 85 Wn.2d 540 P.2d (1975). "unex- QCF points language out that while the "occurrence” pectedly unintentionally” appears in Grange Ins. Co. v. policies, definitions of these this court (1989) Brosseau, 91, 93, 97, 113 Wn.2d 776 P.2d 123 consid- ered one where such was in "oc- policies, language two language definition and the other where the currence” exclusion, "exclusionary”. in an both termed

However, argument "unexpected is not a language exclusionary particularly unintended” proof has the burden of strong argument deciding when who in the issue, "virtually language all on this because the insurer’s Insuring Agreement policies of CGL after legally all insured shall become promise 'pay sums the * *’* scope obligated pay qualifies limits Abraham, Environmen way in one or another.” K. promise Liability tal Insurance Law 140-41 exclusionary coverage is argument any limitation on The in nature and should be treated plainly as an exclusion is rationale, anything than the literally less wrong. Under any any at time promise pay to amount insurer’s unconditional an exclu- any and circumstances would be any for reason under It proof. of would would bear the burden sion and the insurer anything bring to prove necessary policyholder for the to not be argument betrays coverage. That its within the claim logic organization of misunderstanding of fundamental of coverage language defines the set policy. The an insurance of The define subsets covered. exclusions all claims that are set, are that, within the main nevertheless although claims of factors coverage language specifies a number excluded. present must be coverage property exist. That the damage by "caused an logi- occurrence” is one of them. It claimant, cal that the policyholder, as should bear the burden proof of of establishing that its claim is within the policy, including property that the damage was caused occurrence, that, so, once has done the insurer should bear proof establishing the burden of that the claim is within an exclusion. al.,

Mark N. Thorsrud et Insurance Pollution Coverage for Liability in Washington. What Constitutes an "Occurrence?” Perspective, Insurer’s 28 Gonz. L. Rev. 604 n.168 (1992-1993).

Moreover, although there is some E-Z tension between Brosseau, Loader and the court in Brosseau did not address issue, proof burden of but instead the case involved construction of the policy.

Professor Abraham suggests considerations, other includ- ing the notion that proof the burden of should be on the insured because the "likely insured is to be in possession of greater or have access to whatever information exists about its expectations Abraham, . intentions . . .” This 140. reasoning compelling in the subjective case where a stan- dard is applied. light

In of the conclusion in E-Z Loader that the burden of proof is on the insured show that injury damage was not expected or intended because the insured must establish within loss comes coverage provision the policy, light and in holding our above that a subjective standard for "expected applies, or intended” we conclude the burden of proof should be on subjec- the insured establish that tively injury or expected was neither nor intended.

The trial Court Appeals correctly court held QCF proof had the burden of on this issue.

The Pollution Exclusions Maryland Casualty Central National and cross-appealed denial Judg- trial court’s of their Motion for Summary pollution exclusions that, law, the ment as a matter of coverage. policies precluded The Court found in several reasoning Appeals err, held that the trial court did pollution clarifications, or restate- exclusions are that the Court of We affirm the ments, of the occurrence clauses. judgment properly Appeals’ holding summary reasoning. denied, but use somewhat different pollution clauses exclusion At the outset we note that many appellate policies generated de- have in standard form support opinions may which be found cisions. Published arguments virtually and the all of made the insurers many case, who have in well amici insured this as as catalog briefing. attempt provided made here to all the No is supporting proposition decisions, all cited. nor are cases Anyone attempting to law in this area will find research the secondary ample guidance primary In- in the and sources. opinion explain attempts stead, those cases to persuasive in are on the various issues authorities which light Washington Washington for constru- law rules ing insurance contracts. pollution at issue. Cen-

There are three exclusion clauses pollution policies contain absolute tral National’s excess provide but in those exclusions that cover- exclusion clauses coverage age "except as available is excluded insofar underlying . insurances . .”. Clerk’s in the the Insured Papers (Appellants) Thus, to deter- 520. vol. pollution the Central Na- under mine necessary policies, cover- examine the relevant tional it is primary policies place provisions age in in the exclusion policies. during National’s Central same time frame as pollution policies primary of the three contain two Those at issue here. exclusion clauses Exclusion” "Qualified Pollution pri- pollution found exclusions of the two first policy

mary policies is com- what Central National’s under monly "qualified clause” exclusion known as (CGL) found standard comprehensive general liability policies from 1970 to 1986. provides: It

This insurance apply: does not bodily injury or property damage arising out of the dis- charge, dispersal, escape smoke, soot, release or vapors, fumes, acids, alkalis, chemicals, liquids gases, toxic waste irritants, materials or other contaminants or pollutants into or land, upon atmosphere any the body or water course or of wa- ter; but this if apply discharge, exclusion does not such dis- persal, accidental; escape release or is sudden and 2, 140, Papers Clerk’s (Appellant) vol. at 267.

The insurers principally argue that as of matter law the deliberate dumping of waste materials into the pits over many years in the regular course of business is not "acciden- tal”, and therefore Thus, not "sudden and accidental”. ac- cording insurers, to the the exception found in the exclusion- (reinstates) ary clause which provides coverage where the "discharge, dispersal, release or is escape” "sudden and ac- cidental” is not applicable, coverage and precluded. is The insurers disposal also maintain that of waste into materials the was not pit exception "sudden” and therefore does apply. not

In addition to the rules of construction set forth above, e.g., construction of policy language is for the court given undefined terms should plain, ordinary, their in popular meaning accord with understanding of average insurance, of purchaser an additional of rule i.e., construction applies, exclusions should be construed Schroeder, strictly against the insurer. Phil Royal Inc. v. (1983), Ins. Globe Wn.2d 659 P.2d 509 modified reconsideration, 830, on 101 Wn.2d 683 P.2d 186 first step is to examine the of language poli noted, cies and construe it As as whole. for pol damage policies lution caused under the Central National is determined reference to the primary policies under the policies. Central is encompassed by National To decide what in qualified pollution pri exclusion found some context, is, we in mary policies, examine the exclusion that in light primary policies’ language those as a whole. as follows: in those

Coverage policies is provided which insured all sums on behalf of the company pay will obligated pay damages as legally to become the insured shall damage] this in- [bodily which injury property because by an . . .. applies, surance caused occurrence 2, at 267. vol. Papers (Appellant) Clerk’s accident, including an continuous means "[0]ccurrence” conditions, bodily injury which results in exposure repeated from the expected nor intended property or standpoint neither . the insured . .. vol. 299. Papers (Appellant) Clerk’s as the same exactly definition Note themselves. We policies contained the Central National are constitutes "occur- not here concerned what meaning policies, Central National rence” within the burden of objective/subjective nor standard and with the solely above. are concerned with proof issues addressed We in certain of the qualified pollution pri- exclusion what means, part by question resolved mary policies primary policies, rest of the language reference contain. they "occurrence” definition which including the written, com were policies Before "occurrence”-based (now commercial) liability general policies were prehensive did policy standard form "accident” "accident”-based. The "accident”, and the term became define the term Note, The "Sudden subject Murphy, of Sharon M. dispute. Clause to the Pollution Exclusion Exception and Accidental” Policies: The Liability General Insurance in Comprehensive L. 45 Rev. Liability, Knot Environmental Vand. Gordian (1992). courts, however, defined the 161, A 165 number event,” "unintended, sudden, includ unexpected an term as Manus, Peter M. Ballard & ing ongoing events. Nancer Gen Comprehensive Anatomy Waters: Clearing Muddy 610, Exclusion, L. Rev. 75 Cornell Liability Pollution eral (and al., (1990) therein); M. et Thomas Reiter cases cited 623 Law: Staying Ohio Exclusion Under Pollution (and (1991) cases cited 1165, 1188 Course, Rev. 59 U. Cinn. L. therein). 1966,

In policy standard form was revised "occurrence”-based policy. part Occurrence was in in defined accident, standard CGL policy as "an including injurious exposure to conditions . . .” which resulted in a loss. We agree with commentator, cited, one widely who reasons that under this "new language” the occurrence clause would "pollution cover liability that gradual arose from losses” provided that the loss was unexpected and unintended. E. Rosenkranz, Note, Joshua The Pollution Exclusion Clause (1986) Through Glass, 1237, Looking Geo. L.J. in, quoted Int’l, e.g., Morton Inc. v. General Accident Ins. Co. Am., 134 N.J. 831, (1993); 629 A.2d New Castle Cy. v. 1162, Accident & Indem. 933 F.2d Hartford (3d 1991). 1196-97 Cir. Prior to the pollution addition of the clause, then, the occurrence clause allowed for losses from arising gradual events, provided that the loss otherwise definition, fell within the "occurrence” particu- larly the loss was unexpected unintended. The so-called qualified pollution exclusion was added to the standard CGL policy, first as a mandatory endorsement in and then as in part policy 1973. Also in the occurrence to provide definition was altered that an "oc- " 'an accident, currence” is including continuous repeated conditions, exposure to which results in bodily injury or property damage neither nor expected intended from ” standpoint Tyler, insured.’ Robert M. Jr. & Todd J. Wilcox, Pollution Exclusion in Interpreta- Clauses: Problems tion and Application Under the Li- Comprehensive General ability Policy, 17 Idaho L. Rev. This defini- tion is the one found certain of the primary policies underlying the Central policies National this case. As can seen, clearly contemplates gradual definition events. did if pollution do,

What exclusion anything, change coverage for damage from resulting gradual where injury neither expected nor intended? qualified pollution exclusion both an contains exclu- an exception Coverage sion and to the exclusion. is excluded

77 dispersal, damage "arising discharge, release of the out exception escape” pollutants is or or of contaminants. exclusion, is where in the last of the found clause discharge, dispersal, provided "if such release nonetheless escape is and accidental”. or sudden qualified exclu

None these in the of terms interpreted they policy. Thus, are to in the be sion is defined understanding average purchaser of the accord with the given plain, their insurance, and the terms are be meaning may ordinary meaning. popular That be ascer English by dictionaries. Estate tained reference to standard Co., Indem. 120 Wn.2d Jordan v. Accident & Hartford of 502, (1993);Boeing v.Aetna & Sur. P.2d 403 Co. Cas. 844 P.2d A.L.R.4th Wn.2d exclusionary language, looking First to the of’ "Arise out "arise out of’ certain listed conditions. must originating specific commonly from understood to mean Dictionary 117 source, Third New International Webster’s (1986), average purchaser that what the we conclude originating it to mean. The would understand insurance "discharge, dispersal, damage must source of the escape” pollutants Thus, or contaminants. release or damage-causing on events. exclusion focuses certain leakage pits, urges QCF on the from the the court to focus urge pits. disposal initial into the insurers and not the pits. disposal into the to focus on the initial court escape” "discharge, dispersal, are not release The terms disposing "Discharge” encompass appears acts of defined. pits. to the dis- The exclusion refers into waste wastes upon dispersal, escape charge, land . . .”. "into or release language is that includes of the One construction dumping upon "upon” i.e.,in case land, the wastes depression ground later, con- natural pits separated berms. structed "discharge”, "dispersal”, "release”, and However, the terms meanings ordinary, plain, popular "escape”, indi- which have cate that disposal the initial pits into the is not the rele- "Discharge” vant event. has as meaning give one "to outlet pour forth”, to : and "a flowing issuing or . out . .”. Web- ster’s, at 644. may This definition apply to mean the release from the pits. "Dispersal” is "the act or of dispers- result Webster’s, ing”. "Disperse” at 653. includes the meaning spread "to or a distribute from fixed or constant source Webster’s, . . .”. at 653. of "Escape” is "the act or escaping the fact having escaped: of as . . leakage . esp. outflow of a Webster’s, steam or . liquid . .”. at 774. "Release” includes set restraint, "to free from confinement, or servi- tude . . .” and a from "discharge Webster’s, restraint. .”. . at 1917.

These definitions, are not the only dictionary they but are popular meanings which in have common the of an notion escape confinement, release from dispersal or the from a place. They migration fixed well to of apply the wastes the pits groundwater. from into the They do not well apply disposal to into pits. construing

In policies, we are concerned what the average purchaser would understand the terms to In mean. regard, it is important policies these are compre- general liability hensive policies, average purchaser expect would broad for liability arising from busi- operations. ness It easy, point from the vantage of time passed, recognize to the environmental dangers and costs of disposing of into hazardous wastes landfills and the like.

However, aptly as one court has explained: began "When landfills to be licensed the late 1960s and early 1970s, operators many landfill and even environmental of- design expected ficials of a landfill would function to contain pollutants. particular, In the soil beneath landfills was expected act as a filter prevent pollutants migrating from into the underlying surrounding ground and surface waters. Since expected landfills any were and intended to contain wastes them, placed pollutants deposited only in a landfill could "discharge, cause if a property dispersal, there was escape” pollutants release or of those from the landfill into the Thus, surrounding deposit pollutants environment. of into a event; rather, triggering "escape” landfill cannot be the inquiry purposes determining applicabil- the critical ity pollution exclusion. our pollution supports itself language of the exclusion to a exception apply its

interpretation. Both the exclusion and All of escape” pollutants. "discharge, dispersal, release or of a substance carry of the issuance the connotation these terms normally used containment; of the terms is none from state of into an area confine- placement of substance to describe ment.

(Footnote omitted.) v. Sylvester Bros. Dev. Co. and citations (Minn. Co., App.), Ct. 373-74 Great Cent. Ins. N.W.2d (Mar. 26, 1992); v. Cy. see also New Castle review denied (3d 1162, 1167 Cir. Accident & Indem. 933 F.2d Hartford 1991) known about (noting that in the late 1960’s little was landfills; recog few danger posed by sanitary environmental threatened nized the extent which landfills groundwater). safety technology understanding

The then and disposal characteristics of waste sites containment It an average pur are far different. seems to us that now justi in earlier have been years chaser of insurance would placement that there was for the thinking fied landfill, a which was pit, expected of into a waste or wastes it expected to contain the wastes and from which was not release, or into discharge, escape would they disperse, the or from it was believed groundwater, the which is, average That the safely would be filtered. waste materials that mere of insurance would have understood purchaser thought which would place of wastes into a placement not have been an event contain or filter the wastes would hold therefore which would fall within the exclusion. We polluting discharge, dispersal, event the that the relevant environment, release, into of toxic material escape or in a which was place has deposited where material been material, as such safely contain or filter believed would landfill, event polluting disposal pit sanitary a or waste release, place from that escape or discharge, dispersal, water, land, or the air or upon into containment groundwater. including has occurred does event polluting

A determination exclusion, found exception to the inquiry. not end the retriggers coverage the last exclusion, clause if the polluting point event is "sudden and accidental”. The first language discharge, about is that is the same dispersal, escape discharge, dispersal, release, or Csuch escape”) or release as that out of which the arises. point discharge, dispersal, release, second is that the escape reading must be Thus, sudden and accidental. exception together, only damage causing exclusion and the discharges, dispersals, escapes releases, or which are non- coverage. sudden and nonaccidental are excluded from subject The terms "sudden and accidental” have been the primarily debate, of enormous which centers on the word recognition is, however, "sudden”. There wide that various "unexpected”, dictionaries define the word "sudden” both as connoting temporal abrupt, and in terms idea instanta- generally, neous, duration, short in or the like. See Nancer Clearing Muddy Manus, Ballard & Peter M. Waters: Anat- omy Comprehensive Liability General Pollution Exclu- (1990) (summarizing sion, 75 Cornell L. Rev. 614 n.9 definitions). dictionary numerous A number common, of courts have noted the two reason- meanings meaning "unexpected” sudden, able as and as abrupt, quick, duration, like, ofor short instantaneous ambiguous and have concluded the term is in the context of qualified E.g., Cy., exclusion. New Castle 1193-95; 333, 335, Claussen v. Aetna Cas. & Sur. 259 Ga. (1989); Reclamation, Ltd., 380 S.E.2d Just v. Land 2d 155 Wis. 456 Wis. 2d N.W.2d meanings court, too, This has noted the two reasonable "sudden”, the word machinery albeit in the a and context of boiler policy. In &

insurance Anderson Middleton Lum- ber Co. v. Lumbermen’s Mut. Cas. Wn.2d (1959), P.2d 34 A.L.R. 731 the issue was whether there policy coverage provided a was under which if a by "accident”, was an was as loss caused which "defined breaking wheel, sudden and accidental the bandsaw or it while thereof, separate parts into two more any or part Anderson, at 405. for use.” use or connected that insurance general rules The with the began court to its according be must construed policy language generally exists, be it should ambiguity where ordinary meaning, and against in favor the insured insurer/ construed Anderson, at The then reasoned drafter. 405-06. court Wagnalls Standard is defined in Funk & [t]he word "sudden” as, English quickly and Language "happening Dictionary of the instant; as coming or in an sud- warning; unexpectedly without den International death; In New sudden dismissal.” Webster’s (2d ed.), "Happening previous it is defined: without Dictionary notice; occurring coming unexpect- very or with brief or notice edly; shower, death, unforeseen; for; as, a sudden unprepared better, enemy.” or attack of the emergency, turn for the respondent to of the contract was insure the purpose against equipment breakdown of the covered accidental was, course, placed in the policy. word "sudden” a it to assume that it purpose. for Is more reasonable contract coverage of a placed to an intent to exclude was break which did not there show instantaneously, to happen exclude un- coverage avoidable? a which was unforeseen and therefore break It seems us that the risk the insurer would began with a same, whether break was instantaneous period the final developed which over a of time until crack occurred, progress cleavage long as its was undetectible. On as hand, permitted proceed not be other the insured should if it had been recklessly and hold the insurer liable steps to have taken possible of a break and could forewarned resulting there- interruption it or avoid an of business forestall from. as instantaneous] the word [The . . . court does construe usage, meaning, common is not "instanta- primary

when neous” but its unexpected.” rather "unforeseen Anderson, at 408-09. in other contexts argue here

While insurers meaning, we "sudden”, given temporal has been term in the in Anderson is as sound reasoning conclude that at issue in policy as in the it was policies context of these unam- may sometimes be term "sudden” case. That the always does not mean context biguous depending upon one, one, only meaning. given must be 82 maintain, however,

The insurers that in context the term unambiguous is here because for the word "accidental” to independent something effect, have "sudden” must mean unexpected other than quality. because "accidental” has at least that reasoning. A number of courts have followed this g., Dynamics Corp., E. Aetna Cas. & Sur. v.Co. General 968 (8th 1992); Sylvester F. 2d 707 Cir. Bros. Dev. Co. v. Great (Minn. App.), Co., 368, Cent. Ins. 480 N.W.2d 376 Ct. review (Mar. 1992); 26, denied Lumbermens Mut. Cas. Co. v. Bel Indus., Inc., 675, 680, 568, leville 407 Mass. 555 N.E.2d 572 (1990). agree unambiguous

We do not that the term is in the policies. language, context of First, these the same "sudden accidental”, Second, was involved in Anderson. "acci- independent dental” has effect as "unintended”. See New Cy., Cy. Moreover, Castle at 1194. as the in court New Castle appropriately policies observed, insurance often use words meanings, qualified pollu- which similar have such as in the "discharge, dispersal, tion exclusion where the words release escape” possible polluting are all used to describe events. Cy., New Castle at 1194. ambiguous.

Thus, we hold the term "sudden” Under general construing policies, ambiguity our rules insurance may policy through in a be resolved extrinsic evidence as to parties’ Grice, intent. American Star Ins. Co.v. 121Wn.2d (1993), opinion supplemented, 869, 874, 854 P.2d 622 123 (1994). However, Wn.2d 865 P.2d 507 no evi extrinsic parties’ dence as to the intent Moreover, this record. parties’ may helpful while evidence of the mutual intent recognized contexts, in some we have lan sometimes guage policies negotia in standard does not involve mutual Boeing tions between the insurers and the insureds. In v.Co. 869, 883, Aetna Cas. & Sur. 784 Wn.2d P.2d (1990), damages” we A.L.R.4th observed the term "as policies by found standard CGL was selected the insurer negotiated. Similarly, Jersey and was not as the New Su preme qualified noted, Court exclusion was by drafted the insurance industry; there was no participa tion insureds in the drafting Int’l, of the clause. Morton Inc. Am., v. General Accident Ins. Co. 134 N.J. (1993), A.2d denied, 851-52 cert. 114 S. Ct. 2764

Thus, we are left with ambiguity in a nonnegotiated standard form insurance provision. Unresolved in ambiguity insurance language contract against is resolved the insurer. Greer v. Co., Northwestern Nat’l Ins. 109 Wn.2d 743 P.2d 1244 Where exceptions to limitations upon coverage concerned, are principle applies with added Greer, force. at 201. We thus construe the ambiguity in the pollution exclusion against drafter-insurer, and in ac cord with a reasonable interpretation policy language.

QCF argues that a interpretation reasonable of the am- biguous pollution exclusion is that "sudden and accidental” means "unexpected unintended”, and that the focus of the exclusion is on the resulting damage. For this interpre- tation, QCF relies in part upon history certain of the clause.

A number of courts have examined the drafting and marketing history of the qualified pollution exclusion in interpreting the clause. The Court Appeals in this case relied in part upon an article chronicling certain of the drafting and marketing history of the pollution exclusion Queen Farms, clause. City Inc. v. Co., Central Nat’l Ins. 64 (1992) 838, 879-80, Wn. App. 827 P.2d 1024 (quoting S. Brad- Intent, bury, Revisionism, Original and the Meaning Policies, (1989)). CGL 282-83, Envt’l Claims J. insurers maintain the court did so improperly, as no evi- dence of the history record, found in the in any event is, the insurers argue, irrelevant to the parties’ mutual clause, intent about the meaning of the as there is no evi- QCF dence about what QCF intended the exclusion to mean. counters arguing history should not consid- intent, ered as evidence of the parties’ but instead should be considered as one reasonable interpretation ambigu- of the ous exclusionary language. reported decisions,

As in published representations were made to state regulators insurance exclu- pol- for intentional sion was intended to exclude in example, clause. For clarify luters and the occurrence Ga. Cas. & Sur. Claussen v. Aetna (1989), the court noted S.E.2d 686 (which [djocuments Rating Board by the Insurance presented to the industry participated) on which Aetna represents the "pollution exclu- [Georgia] sion” was Commissioner when Insurance suggest that clause was intended adopted first Rating Board only polluters. The Insurance exclude intentional on [pollution clause] exclusion impact of the represented "the changed.” be not majority of risks would the vast omitted.) (Citation Claussen, at 337. held hear- commissioner Virginia,

In the insurance West pro- approve whether inclusion to consider ings in that state. As language policies exclusionary posed Virginia explained, in West Appeals Court of Supreme language], the exclusion conjunction [of with the submissions also the Mutual Rating apparently Board and the Insurance Board, members and Rating acting on behalf of their Insurance proposed submission of the . . included with their subscribers exclusion . explanation which stated: language an in provided or contamination is Coverage most pollution for damages can policies because the present cases under by are excluded or intended and thus expected said to be exclu- [the exclusion occurrence. above the definition of situa- clarifies this present case] in issue in the sion which is Coverage is contin- any question of intent. as to avoid tion so ued for injuries when caused or contamination . . from an accident. results pollution or contamination view, industry represented thus the insurance In this Court’s Virginia through Virginia, acting the West to the State West Commissioner Insurance, which is in issue exclusion that the "occur- merely pre-existing case clarified present in the rence” clause. Co., Va. Ins. 187 W. v. Mut. Liberty Inc.

Joy Technologies, (1992). 747-48, 421 493 742, S.E.2d representa- also noted similar the court Jersey, In New effect to give and refused regulators, state tions made to con- exclusion, which the court of the language the literal Because, court rea- coverage. as a restriction strued merely as the clause soned, misrepresented insurers

85 clause, clarifying occurrence the court an applied estoppel theory, saying, equity by fairness,

[a]s matter of industry the insurance IRB, should be hound representations desig- of the its agent, nated in presenting pollution-exclusion clause to regulators. state Morton Inc. v. Int’l, Am,., General Accident Ins. Co. 1, 75-76, denied, 831, N.J. cert. (1993), 629 A.2d 114 S. Ct. (1994). The court concluded: that, notwithstanding [W]e hold the literal terms of the stan- pollution-exclusion clause,

dard that clause will be construed to provide coverage identical provided with that under the prior policy, occurrence-based except that the clause will be inter- preted preclude coverage in cases which the insured intentionally discharges a pollutant, known irrespective of resulting whether the property damage was ex- intended or pected. Int’l, Inc., Morton at 78.

Other courts have also examined history of the clause in interpreting the qualified pollution exclusion. New E.g., Cy. Castle v. Accident & Indem. 933 F.2d Hartford (3d Reclamation, Just v. 1991); 1196-98 Cir. Ltd., Land Wis. 2d Wis. 2d 456 N.W.2d 570

We agree QCF the insurance industry statements examined may these courts be considered insofar they as represent a reasonable construction of the ambiguous policy language. [W]hen issue is how to interpret ambiguous policy pro-

vision, interpretation if the proposed by the insured came from the mouth of the drafter be some evidence provision, ordinarily this would proposed interpretation that the is reason- able. argument admitting for post- least certain forms of promulgation stronger. evidence Typically organization is standard-form ISO) promulgated that has files the policy (usually then policy approval by the Insurance Commissioners the states where the policy Explanatory is to be marketed. statements made in support application approval of the are for not an those of individual in the a course of deliberative draft- ing process, agent but of an all companies of the insurance who subsequently policy question. issue the or endorsement in example filing most celebrated of such statement involves the state Insurance "pollution of the exclusion” with various an setting by in 1970. In such a statements Commissioners clarifying the mean- industry agent interpreting insurance might ing Committee stat[e]ments policy provisions resemble particular insurance is, setting. such legislative in That Reports judgment might taken to state collective be binding highly of the not but is indicative the drafters that is legisla- in of the many of those who vote favor intentions tion, although setting in which the statements precise would scope authority of their maker were made and the event, policyholder’s any seem relevant. In where also ambigu- interpretation that its merely burden is to show interpretation, evidence provision is but one reasonable ous by at least some interpretation subscribed to that the policyholder’s to the same as or similar was the drafters interpretation would seem relevant. proposed ours.) (Footnote Abraham, Envi- Italics Kenneth S. omitted. Law 38-39 Liability ronmental Insurance representa- reaching reported In our conclusion that regulators may industry of the insurance state tions interpreta- a reasonable they present insofar as considered the statements we do not treat policy language, tion of the explained intent. As parties’ of the as extrinsic evidence intent in above, mutual parties’ there is no evidence of in However, ambiguity exists record. where unresolved bring entitled to the insured is provision, an insurance policy of the reasonable construction any the court before con- particular That the to the insured. language favorable identified which courts have happens to be one struction from the insurance representations decisions as published lan- exclusionary when of the industry approval advanced our consideration sought preclude does guage any impropriety is there construction. Nor particular representations upon a construction based considering made in some was in fact dispute do not which the insurers states. explanation historical with the

In accordance coverage, "sud cases, clarified that the clause in the recited and unintended”. "unexpected means den and accidental” the occur under to be covered is, injury That nor intended. expected clause, must be neither rence occurrence fall within the may events polluting Gradual in and unintended they unexpected clause result provided Like the as to whether there was damage. inquiry clause, the inquiry covered event under the occurrence exclusion is whether there qualified pollution under release, discharge, dispersal, escape pollutants was a or air or water upon or contaminants the land or into the (the in damage exclusionary portion which resulted of the clause), and, so, release, discharge, if was that or dispersal, (the unforeseen, escape unexpected, excep- and unintended tion)? (under Expected damage or intended the occurrence clause) (under expected polluting or or intended events exclusion) are not pollution resulting damage covered. Coverage is otherwise provided.

Thus, clause, to the pollution similar occurrence exclu- precluding coverage damage resulting sion is aimed at for from intentional which is pollution pollution expected.

This coordination of the meaning of the occurrence clause recognized by and the exclusion was the Court of Appeals Union, Inc., United Pac. Ins. Co. v. Van’s Westlake 34 Wn. 1040, denied, App. 664 P.2d 39 A.L.R.4th review (1983), though acknowledge Wn.2d 1018 we that some of reasoning there differs from ours. In Van’s Westlake Union, large quantities gasoline leaked for several months underground gasoline from a small hole in an at a ser- pipe discovered, vice station. When the leak was the station was and, blocks, closed along surrounding several was cordoned while was gasoline pumped off several weeks surrounding out of the A number of businesses made ground. damage resulting claims for loss of and similar from profits closure of the area. The claims were tendered to the insurer station, pay. of the which declined to defend or The insurer what, action to determine if brought declaratory judgment obligations quali- were. The insurer relied any, upon its coverage. fied exclusion as precluding The court in Van’s Westlake Union reasoned that because damage gasoline resulting neither nor the escape intended, exclusion expected qualified pollution apply preclude coverage. did not That conclusion is reasoning sound under our here. respect explanation

However, in one we find that the industry upon by QCF the insurance relied would lead to an is, unreasonable construction of the QCF exclusion. That argues that the focus of the exclusion is on the polluting length not the event. As we have discussed some language polluting above, the of the exclusion involves the damages. majority event, and not the resultant The vast agree, including courts those which otherwise find the exclu ambiguous, E.g., Cy. sion as we have. New Castle v. Hartford (3d 1991) Accident & Indem. 933 F.2d Cir. (while finding pollution ambiguous, exclusion nevertheless discharge damages); reasons clear that is on focus and not Co., 333, 336, Claussen v. Aetna Cas. & Sur. 259 Ga. 380 (1989) (same); Corp. 686, S.E.2d 688-89 Outboard Marine v. (1992) Liberty Co., 90, Mut. Ins. 154 Ill. 2d 607 N.E.2d 1204 (same); Coals, United States Fid. & Guar. Co. v. Star Fire (6th 1988); Inc., 31, Borden, 856 F.2d 34 Cir. Inc. v.Affiliated (S.D. 1987), Supp. Co., 927, d, FM Ins. 682 F. 930 Ohio 865 aff (6th Cir.), (1989); denied, F.2d 1267 cert. 493 U.S. 817 Hart Co., Accident & Indem. Co. v. U.S.Fid. & Guar. 962 F.2d ford (10th Cir.) (under law), 1484, denied, 121 1490 Utah cert. L. (1992); Corp. Ed. 2d 335 Technicon Elecs. v. American Home (1989); Co., 66, Assur. 74 N.Y.2d 542 N.E.2d 1048 Lumber Indus., Inc., 675, mens Mut. Cas. Co. v. Belleville 407 Mass. (1990);Mays 568, 679, N.E.2d 571 v. Transamerica Ins. (1990), App. Co., 578, denied, 103 Or. 799 P.2d 653 review (1991); Pub’g City v. Fire & Or. 150 Oklahoma Co. Kansas (W.D. 1992); Supp. Co., Marine Ins. 805 F. Okla. but e.g., see, Reclamation, Ltd., 737, 157 v. Land 155 Wis. 2d Just in 2d 456 N.W.2d 570 The court Van’s West- Wis. damages; appears to focused on how

lake Union also have question escape ever, it whether the of the also discussed gasoline expected intended. polluting of the exclusion is on the

Because the focus damages, event, the construction and not the we conclude QCF industry the insurance by by offered as advanced in decisions is not rea- published appellate described court from only damage resulting sonable insofar as it focuses on Manus, event. See Nancer Ballard & Peter M. polluting Muddy Anatomy Waters: Clearing Comprehensive Exclusion, General Pollution 75 Cornell L. Rev. Liability (1990) (observing the standard explanatory industry ignores memorandum of the insurance the fact pollutants exclusion refers to the release of releases). not the such caused Moreover, if all the exclusion did was restate the occur- clause, is, coextensive, rence if it were it would wholly contrast, be as an In giving ineffective exclusion. effect language exclusion which focuses on the polluting event also some ef- giving independent results fect to the exclusion. v. Fire & See McDonald State Farm (1992) (an Cas. 119 Wn.2d 837 P.2d 1000 insur- policy give ance should be so as to to each interpreted effect provision). note that pol-

We because we conclude that the relevant release, luting may discharge, event be the dispersal, of material from a landfill or of contain- escape place similar ment, damage/discharge may insignifi- distinction many cant cases as a matter. The distinction practical however, nonetheless serves a as purpose, explained by valid the Third Circuit: hypothetical city unexpected pol-

Our first is insured for all Although expects discharge it landfill to damage. lution leachate into the its

environment, expect it does not the leachate city any appreciable property damage. Because this is to cause results, damage any unexpected insured if improve on the other arises from an it has no incentive to design city, operation or of its landfill. The second hand, only damage that pollution is insured for Therefore, if

unexpected discharge pollutants. leachates, discharging city this is not insured for knows that its landfill is any ensuing damage, regardless property damage not. Given that it would expected of whether the is or damage, city, second any consequential be covered for discharging has a pollutants, that its landfill is once it realizes strong designed precautions incentive to take to minimizethe damage. risk of environmental Cy. New Castle v. Accident & Indem. 933 F.2d Hartford 1991). (3d 1162, 1202 Cir. Finally, urges only polluters” QCF "active fall within exclusionary language. reject polluter” We the "active terminology urged by argues coverage QCF, which only polluters”. language excluded for "active Such is not policy, nothing analysis. in found and adds to the See Susquehanna Broadcasting Co., Federal Ins. Co. v. 727 F. (M.D. 1989) Supp. (quoting 169, 177 Pa. Fireman’s Fund Ins. (E.D. Corp., Supp. 1317, Cos. v. Ex-Cell-O 702 F. Mich. 1988), (1990), part, Supp. d, 738 F. modified aff (3d Cir.), denied, F.2d 1131 cert. 116 L. Ed. 2d 58 Appeals

While the Court of used term in Van’s West- light any Union, lake it did so in In then sound case law. nothing analysis, case, while the term itself adds to the underlying premise is, has merit. That the court Van’s polluter” Westlake Union reasoned "active is not polluting resulting damage found where the event and the — coverage expected were neither nor intended and thus analysis would be found. This result accords with our here. expected coverage intended, If there is no polluting under the occurrence clause. If the ex- event is pected intended, then is excluded under the qualified pollution exclusion. "unexpected” hold that means in the context

We "sudden” containing qualified pollution policies exclusion. CGL "unexpected Thus "sudden and accidental” means and unin- given meaningful Reading tended”. Both terms are effect. together, pollution the occurrence clause and the exclusion damage resulting including accident, from an continuous or repeated exposure conditions, which is neither intended expected is under the occurrence clause. The nor exclusionary language covered qualified exclusion damage resulting pol- precludes coverage the listed from

91 luting discharge, polluting may events. The event be the dispersal, place escape release, or of materials from a they containment into the environment dam- where cause age. Coverage retriggered, exception however, is under the discharge, dispersal, exclusion, to the release, where the escape unexpected accidental, sudden i.e., is and and unin- dispersal Therefore, tended. if the results from the groundwater place of materials into the from of contain- they ment where the insured believed would remain or they safely filtered, from which would be and that dis- persal unexpected unintended, was and then is provided policies. under the primarily language conclusion,

Our drawn from the policies, by proposition is reinforced when a that judicial placed upon phrases prior is construction words policy the issuance of which those uses words and phrases, presumed by it is that construction intended (2d parties. George Couch, § 15:20, J. Insurance at 195-96 1984). ed. rev. vol. The term "sudden and accidental” was construed & Anderson Middleton Lumber Co. v. Lumber Co.,

men’s Mut. Cas. 53 Wn.2d 333 P.2d 34 A.L.R. (1959), policies issued, before these were sudden "unexpected”. Cigna to mean construed See Time Oil v.Co. (W.D. Property Supp. 1400, 1408 & Cas. Ins. 743 F. Wash. 1990) (Washington law is that in the settled "sudden” con temporal text of an insurance exclusion does not have a meaning). presumed parties It is thus intended the "unexpected”. Salisbury, term to mean also A. See Carl Pol Liability Coverage, lution Insurance the Standard-Form Pol Industry: Study Exclusion, lution and the A Insurance Case (1991) ("[p]rior Amnesia, in Collective L. Envt’l drafting pollution exclusion, to the . . . the standard phrase had 'sudden and accidental’ been used insurance policies repeatedly interpreted various courts ”). 'unexpected’ mean summary, qualified pollution

In we conclude the exclusion ambiguous. Resolving ambiguity favorably the in- agree coverage, against insurer, sured and we language policy is that a reasonable construction of polluting damage resulting from of the named events one unexpected polluting covered, is not event was unless and unintended. the facts establish that materials Where placed disposal a which was believed were into waste site safely them, but, fact, the materi- would or contain filter discharged unintentionally unexpectedly or als are escape disperse environment, into released into the or or resulting coverage environment, there for the dam- age. exception scenario, Under such a to the exclusion discharge, dispersal, escape apply: or would release and therefore would be sudden accidental would be afforded. questions special jury

Here, resolve the answers to verdict period. question part Ques- for of the relevant this factual special a form "Did there come tion on the verdict asked: City expected intended, . Farms or Queen time . . that or reasonably expected, materials would leak have that should groundwater?” Papers disposal ponds Clerk’s from its into ques- (Appellant) above, this vol. As we have held 1132. objective improper standard tion is insofar as it contains damage. expectation It answers the QCF’s nevertheless for period up coverage question to December for the subjectively jury nor QCF neither said that because leakage pits expected objectively from the or intended event) (the polluting noted, it necessar- until that time. As finding expected ily QCF and intended from that follows safely pits the mate- filter waste would contain or that the rial. questions date, however, remain. factual

On and after that expected reasoning that whether was Our above applies equally subjective to the determination intended is pits escape was material from determination whether expected clauses dis- occurrence As with the or intended. subjective/objective issue, with the cussed in connection nothing qualified which indicates in the exclusion resulting ambiguity applies. favor- We construe standard ably subjective apply insured, and standard. to the QCF trier fact must subjectively determine whether expected or, the materials contained pits, conversely, QCF whether subjectively expected intended that the materials would leak from the into the pits groundwater. noted, As we agree with the Court of Appeals the record contains a great deal evidence which tend would to show that objectively leakage was to be expected. jury Whether would have reached the same conclusion, leakage expected or intended as of standard, December a subjective under simply not clear from this record. Remand resolution of this question factual is necessary.

Finally, we point out that the intentional polluter, or the polluter dumps materials into landfills or waste dis- posal sites knowing while or expecting that will materials migrate or disperse into environment, will not find coverage under the standard CGL policies containing the qualified pollution exclusion. The pollution exclusion with its exception thus serves policy the obvious purpose precluding coverage damage resulting for from expected and pollution. intended oneAs has explained: commentator public The regulatory objective general and liability of insur- ance is to types transfer the risk of certain of business-related words, losses that could threaten viability. insureds’ In other public view, from a regulatory and point of CGL insurance is designed promote stability. to business time, At the same of types the losses that insurance covers be limited companies must continue to serve their so that insurance can survive and providing stability of function economic Generally, to their insureds. the limitations on insurance cover- age losses. categories: fall expected into two losses and intentional Expected frequently by losses are not covered insurance risks; they because are more like expenses business than true predicted these losses can be and calculated in the course of responsible not true planning business are efforts. Intentional losses also the ability risks because insured has the avoid them. liability Furthermore, public policy forbids the transfer for of certain intentional losses. interpretation qualified pollution [the An of exclusion] which

provides coverage unanticipated for of and unintended releases pollutants is consistent with well-settled insurance risk trans- principles goals encouraging fer and twin responsible the of practices providing stability. Thus, business and business pro- exclusion] adoption [the surprising not community, industry, regulatory by moted insurance public [and]the . . .. (Footnotes omitted.) Manus, M. Ballard & Peter Nancer Anatomy Clearing Muddy Comprehensive Gen- Waters: Liability L. Exclusion, 75 Cornell Rev. eral Pollution Other Pollution Exclusions pol- pollution at include a two exclusions issue other policies primary under found in other lution exclusion pollution policy, in the exclusion National Central pollution Maryland Casualty policy. exclusion The second policies primary policies National under Central property bodily injury coverage or excludes discharge resulting by on matter ... personal prop- or from the "caused any water, real land[,] into air other or or erty” or unexpected, discharge sudden, unin- "if but spillage, "Discharge "release, of matter” includes tentional”. leakage by dumping, emptying, pumping due or means of or resulting any any equipment other from failure of Papers (Appellant) vol. or cause whatsoever”. Clerk’s source 2, at 250. Casualty Maryland policy for dam- excludes seepage, pollu- cleanup

age property costs "caused seepage, pollu- "such not where but tion contamination” by sudden, unintended is caused or contamination tion (Appellant) happening”. Papers unexpected 2, vol. Clerk’s 460. policies "sudden”, which, as the word contain

All these susceptible may one reason- above, to more than noted meaning. However, exclusions each these able expressly provides polluting "unex- event must be also "unexpected” pected”. is used in Because the word superfluous language, excepting to render "sudden” it would "unexpected”. meaning interpret it as having temporal reading mean- a as However, "sudden” period occurring beginning abruptly, ing, a short over or like problems in instantaneous, constru- to time, also leads or ing language. In each of the exclusions there are words i.e., a suggesting gradual release or discharge, "leakage” speak and It does not make sense "seepage”. to abrupt, seepage leakage, instantaneous or nor of seepage a leakage occurring period over short of time.

Thus, a reading having "sudden” as either temporal nature or as leads meaning "unexpected” confusing inconsistent of the meanings language. policy conclude,

We as did Court these Appeals, ambiguous, exclusions are and therefore should construed drafter-insurer, against polluting to mean that if the unintended, event is unexpected is coverage provided. qualified As pollution exclusion clause above, discussed there is the further question about what constitutes relevant event. In polluting the case of the primary policies under policy, Central National land, event discharge is the on or into water or air. "Dis charge” matter”, is defined in the policy as the "emission of through, among release, things, other spillage, leakage "its means dumping, emptying Clerk’s pumping”. [or] Papers (Appellant) vol. "leakage” 222. "Release” and may obviously pertain to contaminants migration of a from waste site or a disposal sanitary landfill. The policy language is ambiguous as to "leakage” whether the of materials from pit waste disposal dumping or the initial the pit into is the relevant In event. accord with the rules construing am biguity, including the evident purpose policy pro vide unless arises from or in expected tended pollution, against we construe the clause drafter- insurer mean polluting the relevant event is the release or escape pit of materials from a waste which intended and expected to contain the material. Although "dumping” event, polluting given listed as a "dumping” may be effect our holding "dumping” may pertain accord with to the depositing indiscriminate of hazardous materials on land does disposal expected which not constitute site contain materials. intended to waste 96 "seepage, Maryland Casualty policy,

In the escape may also to mean contamination” be construed the of pit. the contaminants from the Like the other exclusions at ambiguous issue, the as the relevant event. We clause to escape mean conclude the clause should be construed to the disposal expected a and materials from waste site in- tended to contain the materials. leakage expected jury

The has determined that the was 1968, thereafter; 31, and intended as December and objective however, it an Remand is did so under standard. leakage necessary ifof and when was for determination subjectively expected and intended.

Misrepresentation Issues complaint, Lloyd’s In their to the and Central answers misrepre- QCF made material National each asserted that obtaining coverage. QCF moved to sentations in insurance misrepresentation defenses on the basis that dismiss right Lloyd’s and had waived the to assert Central National they timely any back because had tendered the defenses premiums alleged learning misrepresen- QCF after The court the motion to dismiss al- tations. trial denied go jury. misrepresentation The defenses to lowed jury had the burden of was instructed that the insurers cogent, convincing proving clear, evidence that mis- representations of the which material to the issuance were policies made in connection with insurance were 7, 8; insurers. Instructions Clerk’s the intent to deceive the jury Papers (Appellant) 4, 1120. returned vol. Lloyd’s and Central National on is- favor of verdict sue. holding timely Appeals reversed, that lack

The Court of precluded misrepresentation defenses under Neat tender P.2d 32 & 170 Wash. United States Fid. Guar. v. (1932) Searle, P.2d v. Wn.2d Glandon expressed the continued viabil- doubt as to court holdings ity cases, We reverse the those however. of the Appeals, tender issue because but not reach the do Court hold, reasons, we misrepresentation other de- fenses fail. a challenge misrep-

We first address to Central National’s QCF argues judg- resentation defense. its motion for ment on issue misrepresentation n.o.v. defense of Central National granted should have been because there insufficient evidence verdict support jury’s against QCF on the issue.

Since misrepresentation affirmative de fense, proof the burden of Central National. is on defendant Seattle, See Haslund v. 607, 620-21, 86 Wn.2d 547 P.2d 1221 Clement, v. (1976); Olpinski 73 Wn.2d 442 P.2d 260 (1968). Misrepresentation in obtaining insurance must be proved clear, gener evidence. See by cogent, and convincing ally v. 457, 462, 76 Wn.2d Beckendorf, 457 P.2d Beckendorf (1969). 603 The standard of proof high one, is a requiring "that the trier of fact be convinced that the fact issue is Colonial v. Imports, Inc. Carlton North 'highly probable’.” (1993). west, Inc., 121 Wn.2d 853 P.2d 913 Jury instruction 8 instructed the that jury National/Highlands Central have a asserted defense that Queen City intentionally Farms its brokers concealed and/or Queen material facts about the business City conducted at property for applying prevail Farms’ insurance. To on this defense, National/Highlands by clear, Central prove must co- gent convincing following: evidence the First, company requested that the insurance the material application. fact be disclosed on the insurance Second, Queen City that Farms concealed material fact applied when it for insurance.

Third, Queen City knowingly that Farms concealed the ma- terial fact with the intent deceive to the Central National/ Highlands. Fourth, National/Highlands that Central were unaware of they policies. the concealed when issued its [sic] fact

Fifth, that the concealed facts were material to the issuance of the insurance. The to the facts concealed were material issu- knowledge ance the insurance if true would facts have influenced the insurer’s decision about the insurance contracts. 4, at Papers Clerk’s vol. 1120. (Appellant) only objection to this instruction ground objected insurers, that the instruction who on Exceptions required jury to an intent to deceive. find 1988), objec (May Thus, 15. there is no Instructions requires jury it insofar as tion to this instruction prove request risk for National a disclosure of Central request ponds. whether a the waste We do not address misrep proper a of Central National’s disclosure is element given by a trial court a defense. Instructions resentation applicable jury properly law if not ob are as the treated Cy., Day jected generally v. Snohomish to. See Lutheran Care (1992) (citing 91, 113, 829 15 Lewis H. 119 Wn.2d P.2d — Tegland, Prac., B. Wash. Trial Practice Orland & Karl (4th 1986)), denied, § 380, L. Ed. 2d cert. Civil at 56 ed. (1993); e.g, Ng, 750 P.2d see, v. 110 Wn.2d State agree QCF Central National has failed We misrepresentation. proving National Central in its burden of prove requested risk, information about the nor it did any misrepresentation prove was material its did Having in mind the about the insurance contracts. decision proof, cogent, convincing clear, we review standard judgment n.o.v. denial the motion for the trial court’s notwithstanding the judgment ver- ruling a motion for In on dict, accept must no discretion. court trial court exercises all favor- nonmoving party’s evidence draw the truth of the reasonably The evidence may that be evinced. able inferences nonmoving light most to the in the favorable must viewed only is may grant where there no the motion party; court that would sustain inference competent evidence reasonable " any justifiable nonmoving party. 'If there a verdict for might reach conclusions reasonable minds upon which evidence ” verdict, jury.’ is for the question sustain the that omitted.) (Footnotes Douglas Freeman, 242, v. 117 Wn.2d (1991)(quoting AC&S, Inc., v. 247, Lockwood 814 P.2d 1160 (1987) Levy (quoting 243, v. 235, 744 P.2d 605 Wn.2d 109 Ins., 90 Wn.2d Health Am. Co. & North for Life (1978))). P.2d favorably Viewing National, to Central most the evidence drawing favor, there is in its all reasonable inferences and convincing cogent, clear, and insufficient evidence under Central National. standard to sustain verdict for any any request about risk as- First, for information as to upon ponds, National relies with the waste Central sociated testimony Lea, who authorized of Ed the underwriter policy. Lea testified issuance of Central National’s 1977 applications questions used on behalf on the what its the insured did and Central National asked what "generally everything type experience losses, been, had Testimony (May of Lea we could learn about the risk itself’. present 25,1988), However, he had no at 10. he also testified policies any memory issue, at and the Central National specific application National for Central did not recall the application if the insurance insurance. He did not recall pollution-related He that he risks. testified asked about asking thought on the about about activities would not have testimony particularly years farm earlier. The latter pits largely important, inactive for since the waste had been Appellant City years. Farms, Queen at 6 See Br. of those 7 1970”) activity effectively ("[d]isposal ceased 1969 or . . . 98-99). 1988), (citing Testimony (May of Banchero there inferences This evidence and the reasonable cogent, proof clear, are not sufficient under from any request convincing Central standard that there was ponds the asso waste National for disclosure of the of the evidence is that risk. The most favorable view ciated applica were when the QCF what its activities was asked experience and losses made, and what its insurance tion inquiries in elicited would have had been. Neither of these years involving pits activity waste formation about pits. Lea’s statement earlier, nor the existence "generally everything [that QCF been asked for would have National] too risk itself’ is learn about the Central could vague general the inference from which to draw requested

QCF was to disclose risks associated with the ponds. specula- waste A verdict cannot be founded on mere Hojem Kelly, tion. v. 93 Wn.2d 606 P.2d 275 (1980). Any inference drawn from Mr. Lea’s statement "everything” about that Central National "could learn” speculative clearly would best, was not sufficient cogent, convincing clear, under the standard. importantly, failing prove request More aside from a as required by completely instruction Central National failed prove materiality, to ponds i.e., whether disclosure of the waste property

on the would have influenced its decision Although about the insurance contracts. Lea testified he liquid would not have underwritten a risk which described a disposal piece property, waste site on a he also testified that he would not decision, have made the and he did not they Testimony (May "if know 25,1988), would have written it”. of Lea thought

at 13. Whether this witness he would have By or would not have written the contracts is irrelevant. his own admission he did not make the decision and did not know what the decision would have been had the risk been disclosed.4 upon testimony by

Central National also relies Lee company, Lindeen, an underwriter for different insurance the risk However, would have been declined. Mr. Lindeen was not a underwriter, National and was Central speculating company might about what another insurance purely speculative testimony have done. Mr. Lindeen’s is not cogent, convincing clear, sufficient under the standard proof to establish that Central National would have made a different decision about the if insurance contracts it had ponds. known of the waste

Because as matter of law Central National failed in its proof, denying burden of QCF’s trial court erred in motion interest, 4Of some Lea stated as a fact from information the insurer’s file that (the insurer) Unigard primary willing coverage, accept primary since probably risk, satisfactory Unigard good excess would be a because was a under writer. That statement undercuts his own claim that he would not have written risk, even had the decision been his. on mis- verdict notwithstanding jury’s judgment for a representation. Lloyd’s misrepresenta- to the QCF’s challenge

We turn to hired insurance brokers SDC/QCF’s owners tion defense. and its related for SDC comprehensive obtain insurance hauling busi- including garbage a commercial companies, QCF. pro- In an letter written 1965 to 8-page ness and insurers, the various activi- QCF’s broker described spective He described companies. ties and risks associated with the buildings of SDC "also have QCF by stating that the owners a 160-acre farm plus rent and some vacant land they which Farms) hog a ranch but formerly which was (Queen City (Respondent) vol. Papers which now is vacant.” Clerk’s least two fact, In was 320 acres with at at 3224. the site site. houses, dump the hazardous waste buildings, other back letter, Lloyd’s broker telexed receiving After AND SURROUND- RUBBISH DISPOSED asking "WHERE (Dec. 21, A-62 EXPOSURE.” Exhibit ING NUISANCE cable). "ASSURED QCF’s responded [INSURED] broker NO RE- RUBBISH AND ONLY DELIVERS GARBAGE EXPO- THEREFORE NO DUMPSITE SPONSIBILITY UM- GOOD RISK THIS ASPECT AND CONSIDER SURES cable). (Dec. 23, At Exhibit A-62 BRELLA STOP.” knew sent, QCF’s owners and its broker time this cable was Queen City Farms. pits about the waste QCF materially misrepresented maintains Lloyd’s farm. To show insuring with the risk associated Lloyd’s presented materiality misrepresentation, underwriter, which Drysdale, Andrew Lloyd’s a testimony of who testified QCF’s Drysdale, objection. over was admitted QCF site that the witness, the fact opined expert as an have site would dump waste large-scale a industrial 1966, and that underwriter to London important been truth, likely most they told the had been if the underwriters did, agree they than what something other would have done a mini- and for de conditions QCF site no insure the 1988), at 40- (May Testimony Drysdale mis premium. 42.

QCF argues that the trial court abused its discretion when QCF’s it overruled foundational objection to the expert testimony Drysdale concerning underwriting practices Lloyd’s syndicates regarding waste disposal sites opera- QCF tions. argues Drysdale lacked the factual "knowl- edge, skill, experience, training, education” required by ER strayed from the area of his expertise, gave opinion without sufficient foundational facts upon which to base the opinion.

ER 702 provides that scientific, technical,

[i]f specialized or other knowledge will assist the trier of fact to understand the evidence or to deter- issue, mine a fact in qualified witness an expert by as knowl- edge, skill, experience, training, education, may testify thereto in the form an opinion or otherwise.

"The admissibility of expert testimony under Rule 702 will depend upon whether the witness qualifies as an expert and upon whether an expert opinion would be help ful to the trier of fact.” 5A Karl Tegland, Prac., B. Wash. (3d 288, 1989); Evidence at 380 ed. In § see re 122 Young, (1993). 1, 57, Wn.2d 857 P.2d 989 "Trial courts retain broad in discretion determining whether an expert is qualified and will be only reversed for manifest Groth, abuse.” Harris v. 438, 450, 99 Wn.2d 663 P.2d 113 An expert must within stay the area of his expertise. Orner, See 887, 889, McBroom v. 95, 64 Wn.2d 395 P.2d 11 (1964); A.L.R.3d 914 M., Sehlin v. Chicago, R.R., St. P. & Pac. (trial App. 125, 132-33, 38 Wn. 686 P.2d 492 court did not err by refusing to allow railroad worker to testify expert as where no effort was made to lay sufficient foundation to qualify the witness as to proper methods of rerailing railroad cars), denied, (1984); review 102 Wn.2d 1022 Co. v. Boeing cf. (1987) Sierracin Corp., 38, 50-51, 108 Wn.2d 738 P.2d 665 (court did in excluding not err testimony engineer of who had almost no experience with reverse of engineering the needed). type addition,

In while ER 703 is intended to broaden the acceptable bases for expert opinion, there is no in an value wholly lacking opinion 5A some factual basis. Municipality Tegland § 451; v. 304, at see Davidson of App. P.2d review Seattle, 43 Metro. Wn. (1986). Also, under ER 705 denied, while 106 Wn.2d underlying expert the facts and data need not disclose judge opinion requires otherwise, the her his or unless the required "may any expert to disclose event underlying ER 705. or data on cross examination.” facts probe knowl- to "Rule allows cross-examiner relating edge facts and elements of witness omitted.) (Footnote Tegland opinion.” 5A the witness’s expert opinion § 313, at is no basis for the 489. Where there testimony expert speculation, than other theoretical should be excluded.

Drysdale Lloyd’s market was that the insurance testified society consisting grouped 30,000 into of some members 1988), Testimony (May syndicates. Drysdale about managed by corpo- syndicates, turn, 7-8, 31. were manager underwriting as for the rations that acted syndicate. syndicate specialized in risks. Each certain syndicate

Drysdale his did underwrite testified that any insurance, QCF and that he had never underwrit- covering disposal operation site or ten insurance waste any syndi- personal knowledge of the other 149 had no underwriting practices He for such risks. testified cates’ up say "were to” with he couldn’t what other underwriters regard type insurance, he was not aware Lloyd’s underwriting practices underwriters of other dump respect he had no knowl- sites. He admitted edge way was is- another underwriter one other that Drysdale suing dump never talked to cover sites. insurance Drysdale (May Testimony to the actual underwriters. 1988), 51-53, 31-35, at 62-63. testimony Drysdale’s opinion agree QCF that

We its and the trial court abused excluded should have been Although Drysdale admitting testimony. the discretion Lloyd’s practices expert may certain of an as to have been underwriting prac- expert as to the underwriters, and tices of his own syndicate, he not qualified testify as Lloyd’s the at policies issue and misrepresenta- whether QCF material, i.e., tions by were "knowledge whether the true facts would have influenced the insurer’s decisions about the 7; insurance contracts.” Instruction Clerk’s Pa- pers (Appellant) vol. at 1119. testimony strayed His be- yond i.e., his field of expertise, he lacked the factual "knowledge, skill, experience, training, education” re- quired ERby in that he had no knowledge whatever underwriting the practices of syndicates which QCF, insured and could not state a generally accepted practice standard for all of the Lloyd’s syndicates. His testimony also should have been it excluded because lacked sufficient foundational support opinion facts to his that actual underwriters would have reached a different deci- sion issuing they about insurance had known ponds. waste testimony His that they would not have done so is conjecture speculation. issue, on

Lastly this Lloyd’s maintains if the trial court in allowing erred any the testimony, error was harm- less. Lloyd’s deposition reasons of Mal- testimony Beard, colm who was an Lloyd’s underwriter on one of the policies, was materiality sufficient evidence as to the of the misrepresentations. deposition Beard’s found Papers. Clerk’s The verbatim transcript part indicates that of the testimony was read to the jury. Report Verbatim Proceedings 25,1988), However, (May 9-10. testimony transcribed, was not possible it to determine which part deposition Thus, jury heard.5 is not possible to determine deposition testimony whether Beard’s jury which supports heard determination of material- ity. reason, For we deposition. do not consider the Beard designation deposition testimony jury 5A to be and read introduced has provided, permitted designated been but it is unknown whether the trial court portions to read. Lloyd’s expert that witness’s light In of our conclusion excluded, have and our conclusion testimony should been materiality of no on this record of proof that there remains QCF, Lloyd’s materiality defense misrepresentations any by be rejected.6 must

Conclusion li- holding Lloyd’s We affirm the Court of Appeals’ from damage resulting able under its excess policies has jury escape pits. of toxic materials from the waste QCF that material expected determined that intended groundwater leak ponds from waste would into objective subjective under either an standard as of Decem- 31,1968, any pol- ber and the does not contain Lloyd’s policy Also, Lloyd’s lution exclusion which must be considered. misrepresentation defense fails.

There remain factual insofar as the questions expectation Central National’s Maryland Casualty and intention of and concerned, policies are which must be resolved under subjective case is remanded for res- standard. This therefore in- remaining questions involving olution factual analysis surance issues in accord with our herein. Central defense, and prove misrepresentation National failed to its reasserting is foreclosed from it on remand. Smith, Johnson, JJ.,

Dolliver, and concur. — dissenting) (concurring C.J. concur I Andersen, reasoning all of the issues with the result and the with the opinion exception majority Justice Brachtenbach’s misrepresentation respect issue. With of the material issue, dissenting opinion with Utter’s agree I Justice reasonably jury from which presented that evidence not, challenges by Lloyd’s not, mis made QCF need and do reach other 6We representation defense. could have found material misrepresentation we respect should the jury’s finding of fact on that issue.

[Dissent amended orders the Supreme Court March July 1995.] — J. (dissenting) I disagree majority’s Utter, conclusion the trial court improperly denied a for a motion judgment n.o.v. with respect Lloyd’s policy. London Because presented evidence was from which the reason- jury ably could have inferred a material misrepresentation was made, respect we should jury’s finding the of fact on this is- sue. jury

The was instructed that the insurers bore the burden of proving by clear, cogent, convincing evidence that a material misrepresentation had been made by the insured 7, the intent to deceive the insurers. Instructions 8. Papers 4, Clerk’s (Appellant) vol. at 1119-20. jury re- Lloyd’s turned a verdict in favor of and Central National. A judgment may granted when, n.o.v. only viewing the evidence and reasonable that can be drawn from inferences it most favorably nonmoving can party, say court aas of matter law there is no substantial evidence to support Ass’n, the verdict. Nord v. Shoreline Sav. 116 Wn.2d (1991) 477, 486, 805 (citing P.2d 800 Crowley Cowsert v. Mar- (1984)). itime 101 Wn.2d 680 P.2d 46 Corp., Substan- tial evidence is evidence which "would an unpre- convince judiced, thinking mind of the truth declared premise.” 405). Nord, Cowsert, 486 (quoting 116 Wn.2d at 101 at Wn.2d The record contains substantial evidence to support jury’s verdict both with to the respect misrepresenta- fact tion was made The jury was material. heard the evidence described below. Farms, Disposal Company/Queen City

Seattle Inc. owners comprehensive hired insurance brokers insur- obtain (SDC) Disposal ance Company for Seattle and its related including a companies, hauling commercial busi- garbage

107 Farms, broker who Queen (QCF). City ness and Inc. See Ronald Kokesh. Lloyd’s obtained the was 19, 1988), at Testimony (May of R.E. Kokesh transcript 19. prospective

In 8-page an letter written activities insurers, Mr. Kokesh described the various QCF He companies. risks with the described associated have of SDC "also operation by owners explaining plus land they which rent and some vacant buildings Farms) hog was a (Queen City formerly which acre [farm] Papers (Respon- now Clerk’s ranch but which dent) is vacant.” 17, fact, In acres with at 3224. the site vol. at houses, and an indus- buildings, airstrip, least other two site, consisting open pits liquid trial dump waste John Ban- Testimony See transcript industrial waste. 12,1988), dumping ceased (May Although chero 14-15. filled with pits property 1969 or remained on industrial wastes. liquid letter,

Upon receipt Lloyd’s of Kokesh’s broker telexed AND DISPOSED SUR- asking back "WHERE RUBBISH (Dec. EXPOSURE.” Exhibit A-62 ROUNDING NUISANCE cable). ONLY DE- esponded "[INSURED] Kokesh NO RESPONSIBILITY LIVERS GARBAGE RUBBISH AND EXPOSURES THIS ASPECT DUMPSITE THEREFORE NO Exhibit AND GOOD RISK UMBRELLA STOP.” CONSIDER (Dec. cable). A-62 made, it is uncon- representation

At time this was the about the QCF’s and Mr. Kokesh knew tested that owners of Queen transcript at Farms. See pits City industrial waste 19, 1988), 16. of It was therefore Testimony (May Kokesh misrepresenta- to a province conclude jury’s well within the QCF had no that responded tion was made when Kokesh of mis- materiality that for a responsibility dumpsite. jury. of for the question a fact was likewise representation reasonably which it heard from jury evidence Because we should a misrepresentation, have inferred material could a n.o.v. judgment of affirm trial court’s denial a Drysdale, testimony of Andrew heard the jury to underwriter, significance indicated who Lloyd’s pits: the waste to mention Kokesh’s failure insurer of — Q: Now, I’d. you question also ask like ask to another about the December letter. you fairly Do consider that lengthy, letter to be in terms receive, type you giving letters would in terms of potential information about insureds in period? that time A: Yes. Q: And fairly complete, again, it is relative type to let- you ters during period received that respect time to potential insurers? A: I am gets cynical underwriter, afraid one as an and it underwriting letter, is an axiom of longer that the least it will disclose the one vital element information required. Q: Well, that can may also be because at the time the element not anyone’s seem to be material to mind? A: It would be a most person thought incredible who that a dump placement site was immaterial to the Seattle Dis- posal Company’sinsurances. Q: Well, you do believe that it would have been an honest writing mistake for sponse in Mr. Kokesh back to his Telex re- assume, assumed, you you as have were focusing, Disposal the Lloyd focusing broker was on Seattle Queen City not in asking Farms about the dumping practices? insured’s IA: don’t think it is me to fathom workings the inscrutable of Mr. mind. Kokesh’s Q: certainly possible ... It is honestly that Mr. Kokesh could fully he answering have felt was question about [the] details where attle dumped, answering rubbish was about Se- Disposal, isn’t that correct? A: Mr. Kokesh important question was asked an gave categoric negative. assurance He telling lie, either knew that what he was was if he lie, didn’t know that was a he had failed instructions. ask his client question proper and secure Q: you’re willing give So your Mr. Kokesh the benefit of you presumption when read his December 11th letter that you would garbage have asked about Seattle Disposal’s operations, and that that particular aspect being asked about in the Telex? answer, I think A: in his Mr. Kokesh himself reveals either to be a or a fool knave. knave, Q: . . . A fool or a he [have] but could been an honest one? certainly imagine A: He can be an It is honest fool. difficult to an honest knave. Q: I you question. would also like to ask another The Telex Lloyd’s going from the Mr. broker to Kokesh asked for surrounding nuisance disposed and details where rubbish surrounding nuisance exposure. Isn’t it correct the been exposures most concerned about there would have dump? associated with the noise smell — A: In Kokesh had described That is correct. the letter Mr. Q: you, Drysdale. question. Thank Mr. You have answered Now, rub- responding questions in about details where to response the effect that disposed, isn’t it true that a to bish area, rubbish, garbage not near disposed is in isolated homes, of type positive been the

surrounding would have looking for? was response Lloyd’s that the broker that Mr. looking for confirmation Lloyd’s A: The broker was activities; his client’s accurately letter described Kokesh’s ran namely, garbage, not that he either that he collected dump garbage dump. site or a (Italics mine.) of Andrew Transcript Testimony Drysdale of 20, 1988), (May at 58-60.

The have majority Drysdale’s testimony maintains should grounds "wholly lacking [in] been excluded it was on "no basis for the expert some factual basis” there was speculation”, Drys- other than theoretical because opinion QCF had dale did not underwrite insurance at issue and knowledge Lloyd’s underwriting practices personal no of generally. majority, See at 103. testimony majority’s Drysdale’s characterization of Lloyd’s an underwriter at dur- Drysdale

unwarranted. was such, pres- As he was ing period question. qualified anof industrial waste opinion presence ent his whether Lloyd’s to a underwriter site would have been material it was the sort of information which and whether by Lloyd’s inquiry regarding generally would be elicited Testimony Drysdale See exposure. transcript nuisance 1988), 40-42. (May its support advances majority

The other reason erroneously admit- Drysdale’s testimony was conclusion majority maintains is likewise unpersuasive. ted proper scope expert testimony beyond went Drysdale’s however, specifically averred on Drysdale, testimony. of Testi- transcript See Kokesh’s state of mind. question ("It for 20, 1988), at 40-42. (May Drysdale mony mind.”) of Kokesh’s workings to fathom the inscrutable me That determination jury make, jury made it.

In addition to Mr. Drysdale’s testimony, the jury heard testimony from other professionals who had been in the in- surance in the industry 1960’s. Some presence indicated the of an industrial waste site should have been upon disclosed a request general for description of the property, and that this information would have been material an insurer to during the period;7 relevant testimony. others contested this Because the testimony materiality about at was contested trial, it was for the to jury evaluate the credibility of the parties assertions, their its findings and enter accord- ingly. us,

On record before the majority’s trial conclusion the judge a improperly judgment denied motion for n.o.v. to the respect Lloyd’s policy is untenable. Construing the ev- presented idence and the inferences that reasonably can be favor, must, drawn from it in Lloyd’s as we trial court denied the properly motion. Davidson, example, employed by 7For Catherine who was Travelers Insurance Company 1960’s, testimony pres as an underwriter in the indicated in her that the presented exposure, ence of such a have site would a nuisance would have affected insure, transcript 24,1988), Testimony (May the decision to of of Catherine Davidson 22, application at and should have been identified on for insurance. See Davidson,

transcript Testimony of of at She 26-27. also testified that underwriters becoming pollution at Travelers Insurance of were aware risks in the 1960’s. Davidson, Transcript Testimony of at of 24. Linden, liability underwriting manager Indemnity a Mr. at Industrial Insurance, aspects pollution becoming appreci- testified that the insurance of were Transcript 5,1988) Testimony (May to ated in mid late 1960’s. of Lee of Linden 1, although application probably vol. at 38. He also testified that the insurance se, inquired per transcript Testimony not would have about risks of see of 12, 2, requested description property, specifi- Linden vol. at it would have of the cally types property dump example, "the of For that were owned: a store or a site land, presenting purposes.” vacant whatever the insured is to use insurance Transcript 1, Testimony of Linden of vol. at 10-11.He also testified that had in- liquid company ponds probably surance known about the industrial waste it would Testimony Transcript at have insured site. of Linden vol. 10. See also indicating transcript Testimony knowledge of Linden such would vol. to have affected the decision insure.

Ill Lloyd’s required City tender Queen maintains that preserve misrepresenta- premiums defense of back all argument unpersuasive. tion. The prior a offering to trial on behalf two The record contains letter premiums tender back the of the named insurers understanding premi- indicating "it that the is our single of all in a sum on behalf were tendered ums making policies, difficult to now named insureds under proportionate go compute of the share QCF’s back mine.) (Italics Resp’ts app. premium.” II Letter, A Br. Issues). (Misrepresentation further The letter and Evidence proportionate premiums owed states that the share ruling misrepresenta- pending postponed on the should be proportionate issue, sums after share tion which the computed supervision. court’s owed could be with the Lloyd’s to and could be construed The letter does not refer given Indemnity only If and U.S. Fire. to refer to Industrial interpretation Lloyd’s, still to there its broadest include speak question can for remains the of whether one insured Only question if another, the a that need not be reached. remedy party must the defrauded elects the of rescission party payments under the contract. See tender the received (1966) Searle, 199, 204, 412 P.2d 116 68 Glandon v. Wn.2d Co., 170 Wash. and Fid. & Guar. Neat v. United States (tender (1932) required party payments a of P.2d policy). a seeks to rescind who permits misrepresentation law, a material

Under contract possible party remedies: to from three the defrauded elect bargain against damages, the rescission, enforcement according party’s rep- party the fraudulent to the fraudulent bargain. Williston, Con- 12 Samuel the See resentation of 1970). (3d Lloyd’s case, § In this 1523, at ed. 606-07 tracts policy sought policy, and affirm the the could have rescind policy misrepresentation, or, and did, affirm the as sue for misrepresentation as a defense. assert party the elects not to rescind here, the If, as defrauded required: payments contract, is tender of a There is brought wide distinction between an action to re- re- to ground fraud, scind a on contract the an and action damages arising cover for fraud out of contract. The action nature, rescind is of equitable party seeking and the equity must must so equity. discovering fraud, do On party injured the contract, tender back to other party the benefits of the him, far by place as received and party nearly other as possible as der quo]. promptly, keep [in status He must act ten- his available, bring delay. his action without unreasonable The action damages is a law money action judgment, for tender, requires no may brought by injured party any at time within the statute limitations. af- Nor does an firmance of the discovery contract after of the fraud extin- guish right damages an action for on account of the only right fraud. An affirmance bars to rescind. .(Italics mine.) and boldface Pronger Bank, v. Old Nat’l 625-26, Wash. 56 P. 391

QCF’s Searle, reliance on v. supra Glandon Neat v. United States Fid. & Guar. supra, misplaced. cases, In both sought the insurers to rescind the on contract ground misrepresentations insured’s rendered the policies Glandon, void ab initio. 203; Neat, 68 Wn.2d at Wash. at 632. Because does Lloyd’s not seek to rescind contract, but rather to affirm the contract under the terms represented Queen as City Farms, the absence tender does not to waive operate right its to assert the defense of misrepresentation. Queen

Also unpersuasive City’s contention that RCW 48.18.080 required the trial court to exclude from evidence the correspondence preceding Lloyd’s issuance of the insur- ance policy. requires The statute application insured’s for insurance to be attached to the when policy issued:

No application any for the issuance of policy insurance or contract shall be admissible in evidence in any action relative to policy contract, or copy such attached to or unless a application true of the was a part

otherwise made policy when issued and delivered. 48.18.080.

RCW respect The critical inquiry to this issue is whether correspondence parties between an constituted appli- cation for the purposes construing the attachment statute. would be it To hold otherwise conclude that did not. We into negotiations applications, paper transform all trails of Moreover, Leg- intended. neither so party even where the (protective) to have intended appear islature does where so- apply situations requirement attachment with one negotiating are commercial entities phisticated it to Legislature at arm’s Had the wished length. another an in that con- apply, required application it could have (in has Legislature text. 48.18.060 which the See RCW applica- to have expressly required companies insurance an upon "life contract any disability tions for or insurance (Italics mine.) individual”, exceptions). with some between statements recognizes The statute the differences ap- during negotiations appearing made and those on it to the former pro- for insurance. With respect plication vides: warranty in the misrepresentation or made [N]o oral written contract, negotiation in his the insured or insurance behalf, defeat or avoid con- [to] shall be deemed material attaching, misrepresentation prevent

tract or unless warranty is made with the intent to deceive.

RCW 48.18.090. v. Mutual Queen maintains that Lundmark City (1972) requires P.2d Ins.

Omaha Wn.2d parties to find that between correspondence this court There, completed an insured application. constitutes an thereafter, Shortly for insurance. application written had not ailment which he he had an insured discovered A disclosed, company. it to insurance communicated new information was subse- reflecting the memorandum insurer, which then rewrote by the quently prepared claim, the trial court later filed When the insured policy. under the memorandum application both the excluded insured entitled 48.18.080, ground on the RCW him, if it could used before application have the whole Lundmark, at 807. 80 Wn.2d a defense. against him as because from the case bar distinguishable Lundmark first made in the had been application case a written in that application initially instance. made, Where an has been it require is sensible to attached to the substantial modifications to to be original policy. Lundmark does not estab- application, where, here, lish that correspondence as there no initial all application. should be treated as an apply sum, In I conclude the attachment statute does not require on these facts. The statute its terms does not a application formal and the here; under the circumstances at issue correspondence City’s Queen between broker and Lloyd’s any properly negotia- is, event, characterized as Accordingly, "applica- tions. tion” it should not be treated as

under RCW 48.18.080. holding prevent Our on this issue does not an insurance company making coverage contingent upon from insurance completion application chooses; of a if formal it so nor preclude Legislature amending does it from the statute encompass presented the circumstances if here it sees fit. Guy Durham, C.J., JJ., and J. Madsen, Andersen, Tern., Pro concur with Justice Utter’s resolution of the issue Lloyd’s precluded raising misrep- whether should from a premiums resentation defense due to failure tender back correspondence preced- trial, before ing Lloyd’s and the issue whether policies issuance of its should have been excluded from evidence under RCW 48.18.080. — (dissenting) majority

Guy, J. concludes hazardous City groundwater Queen wastes at Farms leaked into the suddenly years. majority over course Because ignores plain meaning City’s poli- Queen insurance respectfully cies, I dissent. consequences

These, believe, I will be some of the majority’s opinion: majority’s opinion First, the forecloses qualified pollution coverage. By finding future sales of ambi- guity majority’s opinion exists, where none obliterates any among pollution. majority distinction risks of con- phrase ambiguous cludes the "sudden and accidental” is "unexpected construes it to mean In unintended”. addi- majority requires tion, the the trier of fact to determine City expected Regard- subjectively Queen what or intended. jury may majority remand, less of what on decide you any you contamination, tells insure all. Those individuals or businesses that wish to if insurers: insure risk of insure against truly sudden discharge and accidental pollution and pay premium limited to that risk will find no such coverage available. will either They purchase expensive environmental impairment insurance, liability placing them in pool Queen the risk City’s counter- parts, or attempt against self-insure all risk.

This elimination of choices results ignoring from the court clear and unambiguous qualified terms exclusion. The majority reads the exclusion to conclude the migration of triggers waste the clause. That clause excludes coverage for discharging pollutants onto the land as well as for failing to contain toxins once the sludge pit. The exception to the exclusion states: "this exclusion does not if apply such discharge, dispersal, release or escape is sud- (Italics mine.) den and accidental”. Clerk’s Papers (Respon- dent) 1, 140, 2, vol. vol. at 267. Until majority’s opinion, the word "or” disjunctive, requiring the court to interpret each of the four nouns separately. Dumping toxic wastes into the sludge is a pit clearly "discharge . . . of . . . toxic chemicals into or upon land”. Papers Clerk’s (Respondent) vol. at 140. To reach the conclusion, contrary the majority must change "or” to "and” and on a rely legal fiction, the average purchaser. This ais am- manufactured biguity.

The opinion also misinterprets "sudden and accidental”. The majority attempts distinguish this court’s opinion in Roller v. Co., Stonewall Ins. 115 Wn.2d 801 P.2d 207 (1990), where we concluded: [Pjursuant definition, to the common sense "accident” a is not

subjective Thus, perspective term. opposed of the insured as to the tortfeasor inquiry. is not a relevant Either an incident an accident or it is not. Roller, 115 Wn.2d at majority 685. The sidesteps ruling by redefining "accidental” as "unintended” and then by judging intent with a subjective standard. Roller Nothing permits such a step.

Furthermore, "sudden”, the definition of the word to make sense, any must have a temporal element. Contamination of groundwater cannot happen suddenly years; over 30 I con- gradual correctly average major- The purchaser? at 66. Who is this Majority, the driver of a car who by analogy, ity suggests, Majority, into traffic. at 66. negligently up backs obscures average purchaser use of the fictional The court’s buyers in the of diversity sophistication the substantial insurance, sellers, preceding types negotiations Here, educated language given policy. of a purchase, and the contracts, pur- in insurance people, business well versed not home- general liability policies, comprehensive chased The court’s reduction or automobile insurance. owners only maxims simplistic transactions into complex business do no favors of these cases. We benefits the court’s resolution we their policies equate when buyers to the commercial an automobile driver’s under- of insurance knowledge a collision deductible. standing of at another a second time average appears purchaser defining To opinion. justify in the point majority’s

critical the polluting from, event as escape discharge rather than into, sludge pit, the majority announces this unsup- ported assumption: It seems to us an average purchaser of insurance in earlier years would justified have been in thinking that there was placement for the of wastes pit, into waste or a

landfill, which was expected to contain the wastes and from which it was not expected they that groundwater discharge, disperse, would release, escape into the .... Majority, Kokesh, at 79.8Ronald Queen City’s insurance bro ker, made no such assumption. On December Kokesh intentionally misrepresented to Queen the insurers City’s information about pits waste in order to obtain A insurance. substantial gap exists between the majority’s speculation about an average purchaser’s thoughts and what actually happened this case.

Third, the court would reward the irresponsible polluter. By adopting a subjective standard to judge both whether damage from an occurrence was unexpected and unintended and whether discharge of pollution was sudden and acciden- tal, owners of sludge pits, toxic waste dumps, landfills, and other Superfund sites need only plead ignorance thereby escape responsibility. majority accepts the plea polluters, noting "in the late 1960’s little was known about environmental danger posed by sanitary landfills; recog- few nized the extent to which landfills threatened pollution of groundwater.” Majority, at 79. Contrast this assertion about the lack of understanding of threat of pollution, even in the 1960’s, with the facts in this case. For over a Boeing decade trucked hundreds of thousands of 55-gallon drums full of heavy metals and other Queen hazardous wastes City dumped them into the sludge pits. In one 3-year period, Boe- ing discharged nearly gallons 3 million of toxins into the pits. These pits had a total capacity only gallons. million equally plausible assumption, majority, 8An endorsed at times is that the discharge, disperse, escape containment, toxic wastes would release or from but they because of natural filtration would not cause when reached the groundwater. way, average purchaser only Phrased this failed to foresee dam age wastes, migration from hazardous not their from containment. go? hazardous wastes gallons Where did 2 million of Protection concluded: Agency Environmental samples analyses sludge and some of the soil Chemical of the significant concentra- ponds] presence [from the confirm metals, hydrocarbons, phenolic com- heavy tions of chlorinated hydrocarbons, polychlorinated bi- pounds, polycyclic aromatic ketones, hydrocarbons. phenyls, and aromatic (Petitioners) Consent, vol. Papers EPA Order on Clerk’s See of at least 43 dangerous The EPA identified levels at 471. arsenic, including Queen City’s chemicals in ponds, toxic chloroform, carcino- nickel, PCB’s, benzene, and all known Queen sole City’s than the three gens. digging ponds, Other was to burn the site to contain these toxins preparation of to line the rely sludge on the tarlike liquid wastes pits. in the same circum- though a reasonable landowner

Even will certainty that toxins may know with absolute stances fact the trier of surrounding groundwater, contaminate must, disregard proof majority’s opinion, under the self-asserted, polluter’s favor of credible evidence ignorance. subjective Williams, 729 P.2d 627

In v. 107 Wn.2d Rodriguez The court (1986), such an absurd result. accept we could not whether, a test to decide subjective in Rodriguez adopted in- policy, Williams Williams’ homeowner under defendant when he com- 15-year-old stepdaughter to harm his tended had no such The court assumed Williams mitted incest. intent intent, subjective actual but then ruled his subjective law, construed the court As a matter was irrelevant. faced with the on Williams’ acts. When intent to harm based test, the court created subjective a consequences obvious for incest. special exception nine nearly After Rodriguez. tries to soften majority a subjec- analysis support well-written complex, pages has commentator standard, "[o]ne because of an If majority insubstantial difference? opinion says, polluters’ means what it credible evidence — ignorance they intended, expected, never or foresaw the — trial, escape of contaminates must at even in triumph the face of overwhelming contrary objective evidence of Proof of the leaching. polluters’ subjec- reasonableness of is, definition, by tive belief irrelevant.

Queen City should be responsible for pollution knew, known, or should have resulted from its operations. merges definition "occurrence” two elements: knowl- edge (damage is unexpected) (damage and intent is unin- tended). 2, Clerk’s Papers (Respondent) 448, 466, 495, vol. ("accident. . . which unexpectedly unintentionally results . . . property damage”). Because of the critical require need to businesses pollu- to internalize the cost of tion, the court should adopt objective standard of expec- (knew known) or, tation minimum, should have at a cre- an exception ate subjective standard for polluting events which the insured reasonably could foresee. See Jac- quelyn A. Beatty, Exclusions Exclude: Let the Pollution (1992-1993) Mean What It Says, Gonz. L. Rev. ("polluters are best positioned to be aware of and to mitigate release”). gradual extent of contaminant

I agree with Justice Utter that the majority has inappro- priately taken the issues of misrepresentation away from jury. with majority opinion may interpret well qualified pollution exclusion to extinction. The net re- sult, however, will be to end any hope of affordable insur- coverage pollution ance actually sudden and ac- cidental.

I Queen would affirm the jury’s City determination expected or intended material from the waste would ponds groundwater leak into the and that insurance excluded. Madsen, JJ., Guy,

Durham and with concur J. Septem- amended order of the Court Supreme [Dissent ber 1994.] —

Madsen, (dissenting) Washington J. courts have pur- exclusion; analysis sued a tortured of the qualified pollution they ambiguous have labeled this exclusion and have elimi- Be- policies altogether. Jacquelyn nated it from insurance A. Mean It atty, Exclusions Exclude: Let the Pollution What (1992-1993). Says, Unfortunately, 28 Gonz. L. Rev. majority’s today perpetuates the result of the decision extends this tortured interpretation even substantial, persuasive authority exclusion the face of contrary. disagree nearly holding by major- While I every I ity, only points will address those which cause me most concern. Contrary majority’s holding,

1. to the the pollution

exclusion is not ambiguous. majority qualified pollution The is correct that exclu- generated divergent sion has much discussion and several interpreting language. the exclusion As one approaches commentator has observed: uniformly Paradoxically, ignored almost courts have phrase

insurers’ intent and distorted the "sudden and acciden- beyond recognition. exceptions, few the courts have tal” With policies containing pollution ex- extended the " ” they just clusion 'to mean what choose it to mean.’ Rosenkranz, Note, E. Joshua The Pollution Exclusion Clause (1986) 1237, Glass, 1240 74 Geo. L.J. Through Looking (1946) Carroll, Glass 94 Through Looking Lewis (quoting (Speech Humpty Dumpty)).

However, of the recent and better reasoned decisions many pollution exclusion have qualified which have addressed unambiguous. is language now concluded that the exclusion 1264-68; Rosenkranz, Elecs. v. American Corp. Technicon (1988) Co., 124, 131, 141 A.D.2d 533 N.Y.S.2d 91 Home Assur. (recent judicial emerging demonstrate "an nationwide cases unambigu- 'pollution exclusion’ clause consensus ous and discharge . . . the intentional of pollutants Lumbermens excluded); over extended of time” period Indus., Inc., Mut. Cas. Co. v. Belleville 407 Mass. (1990) (concluding reasoned, N.E.2d 568 the "better recent,

and particularly the more judicial interpretations of the pollution exclusion clause” conclude it is clear and unambiguous).9 9A total of 17 state courts have considered whether the term "sudden” is ambiguous. Massachusetts, Supreme Michigan, Minnesota, Florida, Courts of Ohio, York, California, appellate North Carolina and New as well as courts in Oregon, Carolina, temporal South and Utah have concluded that "sudden” has meaning pollution ambiguous. Furthermore, and that the exclusion is not federal applying courts the law of various states have concluded that under the law of Kansas, Hampshire, Maine, Kentucky, Pennsylvania, Tennessee, New Oklahoma temporal meaning and Texas the term "sudden” has and the exclusion unambiguous. Technologies, Property clause is ACL Inc. v. Northbrook & Cas. Ins. Co., App. 1773, Rptr. (1993); 17 Cal. 4th 22 Cal. 2d 206 Dimmitt Chevrolet. Inc. v. (Fla. Corp., 1993);Liberty Southeastern Fid. Ins. 636 So. 2d 700 Mut. Ins. SCA Co. v. Servs., Inc., 330, (1992); Upjohn Hampshire 412 Mass. 588 N.E.2d 1346 Co. v. New Co., 197, (1991); Sylvester Ins. 438 Mich. 476 N.W.2d 392 Bros. Dev. Co. v. Great 1992); (Minn. Co., (Mar. App.), 26, Cent. Ins. 480 N.W.2d 368 Ct. review denied Corp. Co., 139, (1993); Petr-AllPetroleum v. Fireman’s Ins. 188 A.D.2d 593 N.Y.S.2d 693 Carolinas, Mgt. Co., 688, 340 (1986); Waste Inc. v Peerless Ins. 315 N.C. S.E.2d 374 Hybud Co., Equip. Corp. Sphere 657, v. Drake Ins. 64 Ohio St. 3d 597 N.E.2d 1096 (1992); Mays Co., App. v. Transamerica Ins. 103 Or. 799 P.2d review denied, (1990); Fund, Cy. 311 Or. 150 Greenville v. Insurance Reserve 311 S.C. (Ct. 1993); App. Gridley Assocs., Co., 427 S.E.2d 913 Ltd. v. Transamerica Ins. (Utah 1992); App. Corp. P.2d 524 Ct. In re E. Texas Transmission PCB Contamina- (3d Coverage Litig., 1994); tion Ins. 15 F.3d 1249 Cir. American Motorists Ins. Co. (10th Corp., Cir.), grounds v. General Host 946 F.2d 1482 vacated on other on rehear- (1991); ing, Co., 946 F.2d 1489 A. Johnson & Co. v. Aetna Cas. & Sur. 933 F.2d 66 (1st 1991); Corp. Cir. Great Lks. Container v. National Union Fire Ins. 727 F.2d (1st 1984); (M.D. Gould, CNA, 1992); Supp. Cir. Inc. v. 809 F. Pa. Oklahoma (W.D. Pub’g City Co., Supp. 1992); Co. v. Kansas Fire & Marine Ins. 805 F. 905 Okla. (D. Co., Supp. United States Fid. & Guar. Co. v. Morrison Grain 734 F. 437 Kan. 1990); Co., Murray Mfg. Supp. United States Fid. & Guar. Co. v. Ohio 693 F. 617 (M.D. 1988). Colorado, only Supreme Georgia, Tenn. In contrast Courts of Il- linois, Virginia ambiguous West and Wisconsin have found the term "sudden” is only Dakota, applying Jersey, while federal courts the law of New South Connect- icut, ambiguous. Delaware and Arizona have concluded that "sudden” is Hecla (Colo. Co., 1991); Mining Hampshire Co. v. New Ins. 811 P.2d 1083 Claussen v.Aetna Co., (1989); Corp. Cas. & Sur. 259 Ga. 380 S.E.2d 686 Outboard Marine v. Lib Co., erty (1992);Joy Technologies, Mut. Ins. 154 Ill. 2d 607 N.E.2d 1204 Inc. v. Co.,

Liberty (1992); Mut. Ins. 187 W. Va. 421 S.E.2d 493 Just v. Land Reclama tion, Ltd., 737, 157 507, 456 (1990); Hughes 155 Wis. 2d Wis. 2d N.W.2d 570 Smith v. 122 regarding retrospect, prediction

In of consensus pollution may optimistic. However, it is exclusion have been clearly say correct to that the "better reasoned” decisions unambiguous following have found the as the exclusion amply discussion will demonstrate. regarding

Most of the debate the exclusion clause revolves around the use of the and and terms "sudden” "accidental” ambiguous. persua- whether the term "sudden” is The most analysis sive on this concludes that the term is not issue ambiguous language quoted as below: demonstrated reasonably process

We cannot call "sudden” a occurs time, slowly long incrementally relatively and over a no mat- unexpected "discharge, A process. ter how or unintended the dispersal, escape” pollutants happens gradu- release or ally continuously years ordinary for is not "sudden” in the Thus, popular necessarily sense of word. "sudden” a temporal contains element addition to its connotation of unexpected. (Citations omitted.) Shell Oil Co. v. Winterthur Swiss Ins. App. Rptr. Co., 15 Cal. 2d 815 Cal. 4th along large court, with a number of recent The Shell Oil considering opinions "sudden”, term concluded court meaning. temporal This that the term must be attributed give any mean- conclusion is based on the rationale that to ing meaning assigned "sudden”, to the term it must be separate particularly "accidental”, where, from the term as appear here, terms in the in the exclusion the two conjunctive. explained: Shell Oil court As the making and "accidental” approach

This also avoids "sudden” unexpected as "accidental” redundant. Dictionaries define unintended events. . . . (D. 1991); Corp., Remington Arms Co. v. Lib- Supp. Co. Ariz. 783 F.

Aircraft (D. Co., Mary’s erty 1992); Benedictine Sisters St. Supp. Mut. Ins. 810 F. Del. (8th Co., 1987); Harleysville Hosp. v. St. Paul Fire & Marine Ins. 815 F.2d 1209 Cir. (D. 1993); Cy., Chemical Leaman Supp. Mut. Ins. Co. v. Sussex 831 F. Del. (D.N.J. 1993). Lines, Supp. More- Tank Inc. v. Aetna Cas. & Sur. 817 F. Connecticut, Delaware, over, applying and Arizona law cases noted above while the they pol- ambiguous have denied the term "sudden” to be have found discharge was not accidental. under the exclusion clause because lution

123 Therefore, accidental,” . phrase, . . in the "ac- "sudden and conveys cidental” an unexpected sense of and unintended event, conveys unexpected while "sudden” the sense of an event abrupt that is or immediate in nature. "Sudden and accidental” ambiguous give significance. is not if we the words their A full ambiguous court not a phrase by unreasonably should make truncating meaning. a word’s

(Footnote omitted.) Oil, and citations Shell at 755. See also ("[f|or any Lumbermens, at 680 the word to have 'sudden’ significant purpose, surplusage he and not to used . . when . conjunction 'accidental,’ the word it must have a temporal aspect meaning”); Township to its Lower Paxon v. Super. Co., 558, United Fid. & 577, States Guar. 383 Pa. 557 (to (1989) A.2d 393 define as "a "sudden” mere restatement requirement accidental, would render the suddenness surplusage”); mere Chevrolet, Dimmitt Inc. v. Southeastern (Fla. ("sudden” 1993) Corp., Fid. 700, Ins. 636 So. 2d 703 has temporal meaning); Technologies, ACL Inc. v. Northbrook Property App. Co., & Ins. 1773, 1787, Cas. 17 Cal. 4th 22 Cal. (for (1993) Rptr. independent 2d 206 "sudden” to have an meaning given temporal from "accidental” must its meaning); Sylvester Co., Bros. Dev. v. Great Co. Cent. Ins. 480 (Minn. ("sudden” App.) tempo- 368, N.W.2d 376 Ct. carries "abruptness”; ral connotation since accidental means "unexpected”, relatively quick, "sudden” mean must (Mar. long 1992); period), Liberty over a review denied Servs., Inc., Mut. Ins. SCA Co. v. 412 Mass. 588 (1992) ("sudden N.E.2d 1346 and accidental” exclusion "abrupt”); clause means Indem. Accident & Co. v. Hartford (10th Cir.) (pol Co., 1484, 1489-90 U.S.Fid. & Guar. F.2d unambiguous lution exclusion all contamina excludes except damage discharges tion from that are time”), period both accidental and occur a "short over (1992); denied, cert. L. 121 Ed. 2d New York v. AMRO (2d 1991) (for Realty Corp., F.2d Cir. release time); period to be sudden it must occur a short A. over Co., Johnson & v. Sur. Co. Aetna Cas. & 933 F.2d 75-76 (1st (hazardous 1991) disposed Cir. wastes of waste dis groundwater; posal (lagoon) site contaminated regular concomitant took as place which contamination sudden of time not period extended activity over business Indem. Travelers v. Ogden Corp. release); and accidental 1991) (contamination (2d resulting Co., 39, 42 Cir. 924 F.2d is not because it is excluded discharges from continuous 2d Ins. 544 So. v. American Resources Hicks "sudden”); (the (Ala. 1989) unambigu is exclusion 952, pollution 954 involving á claim coverage applied when ous and bars of toxic discharge by purposeful the caused pollution Sunnes, Co. v. App. 77 Or. Transamerica Ins. chemicals); (1985) (the 140-41, qualified 212 136, 711 P.2d unambiguously precludes clearly exclusion discharges pollutants). and nonsudden intentional cases is best illustrated in the above cited analysis The following passage: the discharge coverage unless the pollution exclusion denies The held that the The district court is both sudden accidental. an extended occurring over unexpected events includes phrase unexpected, "accidental” includes time. Since period of to the gave no effect however, construction the district court’s believe, consid- "sudden,” we "when The term word "sudden.” sense,... is defined easily plain and understood ered in its the imme- together conceptually joins element 'temporal ” Company v. New Upjohn unexpected.’ diate and the 392, 197, 397-98 476 N.W.2d Hampshire Ins. 438 Mich. "acci- Indeed, meaning to both "sudden” assigning court ambiguity. The district any perceived dental” eliminates found "sudden” abrupt mean ambiguous it could because to be unexpected, includes Because "accidental” unexpected. or would abrupt. To hold otherwise however, mean "sudden” must superfluous. "sudden” render the word F.2d Corp., 968 Dynamics Co. v. General Cas. & Sur.

Aetna 1992). (8th 707, Cir. 710 whether are divided on that cases observes

The majority meaning- This division ambiguous. the term "sudden” conclusion however, underlying basis less, when the reasoning clear to the In contrast is flawed. ambiguity in various engaged have above, courts other referred cases language in the ambiguity forms find analysis to of tortured con- reached this have which The decisions exclusion. generally elusion lines of reasoning, follow three all Lumbermens, equally unpersuasive. 679. The first ap- proach analyze is to being the occurrence clause as conflict with the exclusion For example, clause. court Union, Inc., United Pac. Ins. v.Co. Van’s Westlake App. Wn. P.2d A.L.R.4th (1983) denied, review 100 Wn.2d 1018 compared the lan- guage of the clause occurrence with that of the exclusion clause and found a conflict. Since two could not be reconciled, the court concluded the pollution exclusion ambiguous. must Citing be Van’s Westlake the Colorado Supreme stating: Court concluded likewise In occurrence, portion policies defining accident is defined to include "continuous repeated exposure or or to condi-

tions, bodily damage, which result in injury property neither expected nor from standpoint intended of the insured.” If given "sudden” were to a temporal of abrupt connotation immediate, then phrase "sudden and immediate, discharge” accidental would an abrupt mean: and continuous or re- peated discharge. phrase "sudden and accidental” thus inherently becomes contradictory and meaningless. City of Chevron, U.S.A., Inc., Northglenn v. 634 F.Supp. (D.Colo.1986); Co., United States v. Conservation Chem. 653 152, F.Supp. (W.D.Mo.1986); Union, Inc., 203-04 Van’s Westlake 711-15, 34 App. Wash. at 664 P.2d at 1265-66. Co., Hecla Co. v. Mining Hampshire New Ins. P.2d 811 (Colo. 1991); 1092 see also Outboard Marine v. Corp. Liberty (1992) Co., Mut. 154 122-23, Ins. Ill. 2d 607 N.E.2d 1204 (court must each give meaning term the policy unless to do so would render the clause or policy inconsistent inherently construing to contradictory; "sudden” mean "abrupt” creates contradiction with the language the clause) Co.). (citing Mining occurrence Hecla Cases approach, Westlake, which follow this as such Van’s fail to appreciate the distinction between the occurrence clause and the exclusion 416. Beatty, clause. See at Further- more, reject most analysis. Majority, courts now this at 88. recognize Recent cases the focus of the occurrence property damage damage clause is on the and whether such contrast, In expected was intended. the focus of the is exclusion clause on the release itself and it does not 126 Lumbermens, at damage by the release.

concern the caused 679. in the approach finding ambiguity toward second is unsound. These deci-

language equally of the exclusion public are on considerations. These courts policy sions based but meaning that "sudden” has acknowledge temporal Instead, find am- meaning. decline to this these courts apply the by looking drafting history underlying the biguity exclusion. give is this state

The critical issue whether courts of should exclusionary meaning literal of an clause effect dramatically previously materially and reduces the by cir- property pollution, caused under available for by exclusionary clause approval cumstances in which the regulatory the insurance state authorities induced merely industry’s "clarified” representation that clause scope prior coverage. Co., 1, 72, Int’l, 134 N.J.

Morton Inc. v. General Accident Ins. (1994). (1993), denied, 2764 See A.2d cert. 114 S. Ct. Co., 933 v. & Indem. Cy. also New Castle Accident Hartford (3d 1991) ("[w]hen Cir. first confronted with F.2d issue, likely be that reader’s initial reaction is this considering drafting history 'abrupt’ yet means 'sudden’ ambiguous). finds term case, courts, majority in this

Finally, along other analysis find the third which have followed the line so, This is cases because ambiguous. say, term "sudden” nothing word means one reasonable definition under & See, v. Aetna Cas. e.g., than Claussen "unexpected”. more (1989); Land S.E.2d Just v. 259 Ga. Sur. 507, 456 737, 746, 157 Wis. Reclamation, Ltd., 155 2d 2d Wis. conclusion, have reaching In courts N.W.2d 570 sig- recognizing without isolation construed "sudden” Lumbermens, word "accidental”. companion nificance of the by an ambiguity found A courts have at 679. number these for the definition dictionary more than one simply finding term have failed to evaluate the These courts word "sudden”. See, language. e.g., remaining exclusion in the context Reclamation, Ltd., 745-46; Just v. Land at Outboard Ma- 120-21; rine, Claussen, at 338.10 in analyzed When con- text, a unless the term "sudden” is accorded temporal meaning, exclusionary the "sudden and accidental” excep- tion "unexpected becomes and the term unintended” "accidental” itself "unexpected means and unintended”. Thus, the superfluous word "sudden” is rendered under this approach.

Although majority the in this case at acknowledges least context, the importance of in reviewing policy the terms of a Instead, it never answers above concern.11 the majority argues though that even term may "sudden” sometimes in unambiguous, the context of the pollution exclusion the term ambiguous is (citing Anderson & Middleton Lum- ber Co. v. Lumbermen’s Mut. Cas. 53 Wn.2d 333 P.2d (1959)). 938, 34 Majority, A.L.R. at 82. In that case "sud- den” by held court to be ambiguous.

There are a number of problems with on relying Anderson for the proposition that "sudden” is in ambiguous the con- text First, of the pollution exclusion. obvious that Anderson did not Rather, involve pollution exclusion. in appeal that case the interpretation involved of a boiler Second, and machinery policy. the court strug- there was gling with meaning of "accidental” to determine cover- age in coverage. fact, the context of based In "accident” stated, court 10Having ambiguous, found that the term courts then "sudden” these find that "unexpected” by construing ambiguity against "sudden” means either turning drafting history.

insurer or interesting majority gets superfluity 11It is also to note that around this problem way opinion language in a later in when with novel its it is faced property another exclusion which excludes cleanup by seepage, pollution costs "caused but not where contamination” "such seepage, pollution sudden, contamination is caused unintended and unex pected happening”. majority recognizes refusing give the term "sudden” temporal meaning superfluous conjunction renders that term when used However, "unexpected”. away by finding it whisks the concern that "sudden” is in "seepage”, majority says, any authority, consistent with which the without cite to period Majority, does not occur short over a of time. at 95. suggestion policy meant to There is no that the was not cover resulting breakage machinery latent in the from defects or not, fatigue. result, The nor is one which from cause is the it is result, only claimed is excluded. It is contended that the in or- happened coverage policy, der to be within the must have instantaneously.

Anderson, at 408.

In the the term was to policy issue there "sudden” used define, part, meaning in the of the term "accidental”. The term "accidental” defined as "the and accidental sudden wheel, thereof, any into breaking part of the bandsaw two it was for separate parts more while in use or connected Anderson, at holding use”. 405. In that context the court’s makes that "sudden” did not mean instantaneous sense since, out, insurer pointed as the court "the risk to the would same, or began be the whether a break was instantaneous a time until developed period with a crack which over the Anderson, .”. at 408. cleavage final occurred . . contrast, here pollution In "sudden” is used in a exclusion. Moreover, to "accidental”. In- "sudden” is not used define both the "sudden” and employs stead the exclusion words did in the The Anderson court conjunctive. "accidental” in the question appearing answer the of whether "sudden” temporal would mean- with "accidental” have conjunctive is analogy Anderson as an further The usefulness of ing. in fact risk to insurers the case limited the the the by by greater much than that caused Anderson, in in this case where particularly break at issue 30-year period. over a Mor- the contaminants were released language ton, (acknowledging at 72 literal result in "a severe restriction pollution exclusion clause will damage”). pollution-caused property for shaky its con- attempts strengthen to majority next stating that insur- ambiguous by "sudden” is clusion that meanings. which similar often use words have policies ance in However, out ACL as the court pointed at 82. Majority, of individual thing meanings "[i]t is one Technologies, them so interpret It another overlap. quite words in they add the context in which are they nothing used.” ACL at 1787. Technologies,

Finally, majority’s conclusion violates all relevant First, policy language rules of construction. insurance must way it would be understood interpreted Zuver, average person. National Union Fire Ins. Co. v. Wn.2d P.2d on It borders say incredible that the release of contaminants over 30- year period "suddenly”. Surely average person occurred expect would not this result. great aspects One of less remarked war over the means,

pollution exclusion is this: whatever "sudden” it does not gradual. ordinary mean person would think that never something which happened gradually happened suddenly. also The antonyms. words are

ACL 1788. Technologies, at an

Second, provision ambiguous insurance is when it is fairly susceptible to different interpretations, two both of Am., which are Stanley reasonable. v. Ins. Co. 109 Safeco (1988). 738, 741, Wn.2d 747 P.2d 1091 objectively "[N]o rea- policyholder sonable would word expect the 'sudden’ to al- low for coverage gradual pollution. 'Sudden’ never means ” both 'unexpected and at gradual.’ ACL 1789. Technologies,

Finally, be policy insurance should so as to interpreted give provision; effect each not be exclusions should read out policies. Co., McDonald v. Fire & State Farm Cas. 724, 734, (1992); Wn.2d Freight, 837 P.2d 1000 Fiscus Motor Co., Inc. v. Universal Sec. Ins. App. Wash. denied, Disregard-

P.2d review 113 Wn.2d 1003 ing meaning of temporal the "sudden” and it as interpreting meaning only when "accidental” also means "unexpected” any significance. "sudden” of "unexpected” deprives 2. The at are not pollution exclusions issue qualified as to relevant event.

ambiguous polluting the "discharge, concludes that the terms dis- majority they or are can be persal, ambiguous release because escape” the of wastes migration defined in manner consistent with groundwater. from an earthen into pit majority’s point internally on this is inconsistent artifi- analysis Moreover, rulings it is of the ma- supported cial. the courts issue. jority of which have addressed the First, majority acknowledges majority the that the vast agree pollution courts the focus of the exclusion is on event, resulting polluting damage. Majority, the not the — I point pollution 88. On this the exclusion focuses agree contaminants, upon discharge pollution not on dam- age. The latter is clause. See Be- the focus of occurrence atty, at 411. conclusion, that the critical majority finds

Despite release qualified contaminant under the exclusion i.e., migration discharge property, to third party migration focus on the as groundwater. escape into This way equating event another polluting simply clause the exclusion since focuses occurrence clause resulting on damage. cogent in Broderick Inv. appears

A discussion particularly (10th Indem. F.2d 601 Co. v. Accident & Hartford 1992). Cir. urges "discharge” may interpreted rea- BIC the term go,” mean "release from confinement” or "to sonably to "to let "discharge” stand give outlet to.” The term does not alone read in the context of the remainder of policy the the charge” precedes must be clause; significantly, most the term "dis- language of the upon land.” Even when phrase "into "discharge,” place of employ BIC’sdefinitions in the word we we — discharged go” BIC or or "released from "let conclude — upon "into or the land.” Because the confinement” containment the waste land, any ponds interpretation of the are other "discharge upon . into land” runs counter to . . or the phrase sense, usage. plain meaning, ordinary common ponds in the to contain waste argues that it intended the BIC escape release or that contaminated subsequent and that the argu- With this groundwater expected. not intended the discharge ment, tries to the focus the second BIC shift damages onto graft requirement related attempts to intent unambiguous policy’s of the exclusion clause. language the ground- seep into However, intended the waste to whether BIC damage discharges into the water and cause after the initial land relevant.

(Footnotes omitted.) by Broderick, on at 607. The cases relied damage, majority resulting pol- on not the the likewise focus luting particularly from the discussion event. This is clear support majority’s in one of the cases which conclusion: any expected Since landfills were and intended to contain them, placed pollutants deposited wastes in a landfill could only "discharge, property cause if there was a dis- persal, escape” pollutants release or of those from the landfill Thus, surrounding deposit pollut- into the environment. event; rather, triggering ants into a landfill cannot be the "escape” inquiry is the critical . . ..

Sylvester Bros. Dev. Co. v. Great Cent. Ins. 480 N.W.2d (Minn. (Mar. 1992). App.), 373-74 Ct. review denied rejected great precisely It is that focus which has been majority of courts.12 ordinary

Second, case, us, in the such as the one before polluting beginning there but one continuous event say dumping. the initial It is an unreasonable stretch to migration polluting separate ais event from the initial dumping pollutants ground. By employing into the this majority coverage artificial distinction the rarely, insures that will secondary ever, event, if be denied since the activity migration, will not be attributable to an of the insured. overwhelming majority importantly,

More of courts considering explicitly implicitly, question held, have above, citing majority interpre passage quoted its states 12Prior escape discharge, dispersal, on release or must be made based tation of the terms expect average purchaser expectation insurance who "would broad Majority, Again, liability arising operations”. at 78. from business Further, clause. it is clause instead of the exclusion focuses on the "occurrence” policy average purchaser includes of an insurance which difficult to believe that the dumping polluting of barrels that the of thousands an exclusion for would conclude pits 30-year period would be covered. into earth over a contaminants 132 pollution

that the focus of the exclusion is on the initial disposal environment, into the in this case onto the land. relatively early Dingwell, case, In a Travelers Indem. Co. v. (Me. 1980), Supreme 414 A.2d 220 the Court of Maine recognized pollution that the ini exclusion relates to the polluting migration subsequent event, tial not to the which damage. high causes The Maine court held that the trial relying allegations court had erred in on that contami "permeated ground” "spread nants had in the wa determining polluting discharges ter table” in whether were "sudden and accidental”. The court said that pollutants environment, "behavior in the re after analyzing pollution lease, is irrelevant” to exclusion. Travelers, at 224-25. recently, Michigan Supreme

More Court held that suing damages resulting pesticide spray- insured from its ing coverage quali- activities was not entitled to under though because, fied exclusion even the insured dispersal had not intended the further within the environ- damage, property "[i]t ment that caused the is clear that the discharge, dispersal, escape release, or to which both the exception discharge, exclusion and the refer is the initial subsequent migration.” . . . not the Protective Nat’l Ins. Co. (1991); Woodhaven, 154, 162, v. 438 Mich. 374 N.W.2d — (focusing discharge Broderick, i.e., see also at 607 on pits; placement "[w]ithout of wastes into unlined held that discharge holding ponds, resulting ground- into the simply developed”); water contamination would not have Mays App. Co., 578, 585, v. Transamerica Ins. 103 Or. (1990) (where pollut- P.2d 653 insured intended to release excluded), coverage pit years, ants into waste over 12 to 13 (1991); Pub’g denied, review 311 Or. 150 Oklahoma Co. v. (D. City Supp. Co., & 805 F. Kansas Fire Marine Ins. (routine 1992) discharge years Okla. over of hazardous waste accidental). disposal at waste site is not sudden or recently The facts of another case decided New York’s highest vividly majority’s court illustrates the flaw the discharge approach. high said that intentional court down a creek that caused contamination of wastes into and, therefore, exclusion not accidental stream was downstream, unintended property for the barred Assur. v. American Home damage. Corp. Technicon Elecs. New Had the 74 N.Y.2d 542 N.E.2d case, coverage majority York followed the court it is the subsequent would not have been excluded because the pollution which is the focus of "migration” event of Thus, pol the initial according majority. exclusion to the creek, event, would luting the of the dumping pollutants this absurd majority be irrelevant. The seeks to avoid may event stating polluting result that the relevant discharge polluter” the initial when "active dumping (bad at 90. This distinction polluter) Majority, is involved. (bad an "intentional and the polluter” polluter) between in landfills polluter only discharges who contaminants ultimately only can be ef (good polluter) is artificial and by making polluting fectuated the relevant event into either moving target. analysis supportable This is not nor rule of policy language any recognized under by this court. adopted construction and should not be Queen City The initial contaminants into the deposit 3. of was not "accidental”. pits is the unambiguous, the term "sudden” is so too

Just as "sud- Unless the event is both polluting term "accidental”. case, In this den” and "accidental” is excluded. certainly daily, dumping pollutants continuous accidental. it incor- this issue because majority does not reach event, pollut- migration on the second

rectly focuses nearly every court resulting damage. Again, with its ants implic- explicitly this issue has found either considering initial, of contaminants dispersal intentional itly that and is excluded the environment is not "accidental” into persua- conclusion is coverage. from The rationale for this decision court appellate in a recent federal sively discussed case, rejected the court law. In that Jersey New applying from damage arising argument pollution the insured’s its disposal sludge intentional of waste at a landfill was not barred coverage by from exclusion. The court noted that presented

no evidence was to the court below to demonstrate Triangle expect sludge dumped did not and intend its to be upon ground sludge by- at the landfill. The was a normal product Triangle’s manufacturing operation. company hired trucks to haul Triangle the waste to the Ohio landfill. And landfill,

corresponded persons discussing at the liquidity sludge being dumped semi-solid at the fill. this, agree open Given we with the district court dumping sludge ground, of a particularly per- onto the when regular part activity, formed as business cannot be consid- discharge ered an accidental of the contaminant. Indus., Inc.,

Liberty Mut. Ins. Co. v. Triangle F.2d (4th denied, cert. Cir.), 113 S. Ct. 78 Technicon stated, As the New York court the pollution exclusion should to intentional apply discharges even where subsequent of contaminants could be as ac dispersal seen case, cidental. Were this not the the court said "there would always potential coverage be . . . even where the insured is land, deliberately repeatedly polluted shown to have the time, water or air a long period merely over because it can not be known where the toxic substance will flow or what Technicon, damage will result”. 141 A.D.2d at ultimately 139. See also Realty New York v. AMRO 1420, 1428 Corp., 936 F.2d (2d 1991) (the Cir. release of hazardous waste land or upon into a through long practice watercourse term industrial is into intentional release the environment which cannot be Co. v. Central Nat’l accidental); Simpson Paper considered 1994) (W.D. (order Ins., C92-1352C, 20, No. 7-8 Wash. Jan. on summary judgment) (discharge defendants’ motion for pollutants by permit Angeles County industrial to Los Sani neither plant tation District treatment excluded as "sudden” Co., Weber v. IMT Ins. "accidental”); 283, nor 462 N.W.2d 287 (Iowa 1990) (court if spillage need not decide waste on spill material road was sudden since the was not acciden tal and pollu therefore not sudden and accidental under the Chemco, Co., Powers Inc. v. Federal Ins. exclusion); tion 74

135 (intentional (1989) 1301 dis N.Y.2d 548 N.E.2d pollu pits, posal in ultimate of hazardous wastes with the a environment, as matter tion of is "accidental” Corp. Assur. law under v. American Home Technicon Elecs. (1989)). Co., 74 N.Y.2d 542 N.E.2d 1048 significant in where the court It is also that even cases coverage ambiguous was has nonetheless found "sudden” language pollu- denied under the "accidental” been Cy., Harleysville 831 Mut. Ins. Co. v. Sussex tion exclusion. (D. 1993) Supp. (applying law; Delaware con- Del. F. dumping pollutants a was act of into landfill cluded excluded); Remington not accidental and thus was (D. Supp. Liberty Del. Co. v. Ins. F. Arms Mut. 1992) (applying law the court found that while Connecticut ambiguous discharge term is here "sudden” exclusion); intentional thus fell within the (D. Corp., Supp. Hughes F. Smith v. Co. Aircraft 1991)(applying found "sud- Ariz. Arizona law court ambiguous, coverage for would however disallowed den” pollution practices spanning 20-year period). a drafting history case is

4. A consideration of unwarranted. unnecessarily unjustifiably majority intro- has

The drag rule of construction order duced new insurance history drafting into this court’s from other states justify majority it is this, states that To consideration. history presented considering drafting states, in other but, rather, whether to decide not as extrinsic evidence interpretation ex- contract terms another reasonable offering majority a differ- without distinction ists. published their have fact that other courts ence. mere drafting evidence, his- here the consideration of extrinsic tory, extrin- law. It still that evidence to does not elevate Moreover, this this court. considered sic evidence when support majority its con- uses "new” rule which presented drafting history, which was neither sideration of in this below, insurance law contra to nor considered runs state. In Washington, extrinsic evidence is not admissible unless ambiguity is found. Greer v. Northwestern Nat’l Ins. Wn.2d 743 P.2d 1244 An ambiguity will not be found unless there are two reasonable construc- tions of the terms in dispute. Stanley, at 741. majority here evidence, uses extrinsic the drafting history, to find an- other reasonable interpretation of contract terms. Extrinsic evidence has never been admitted this state as aid to finding ambiguity. The majority is needlessly setting a dan- gerous precedent.

Conclusion The routine dumping wastes many years over is neither sudden nor accidental. When property damage arises from planned discharges conducted as normal business opera- tions, regardless of whether the insured intended the ensu- ing damage, the discharge cannot accidental, be sudden or unexpected or unintended and the pollution exclusion bars coverage. JJ., Guy,

Durham concur J. Madsen, modification, After further reconsideration denied March 22, 1995. April

[No. En 59429-5. Banc. 1995.] Leroy Washington, State of Respondent, v. James Brett, Appellant. a notes majority sider that event. the court in Anderson & Middleton Lumber Co. v. Lumber- (1959) men’s Mut. Cas. 53 Wn.2d 333 P.2d However, a refused to define sudden as "instantaneous”. single analysis. case decided in 1959 does not substitute for The court in Anderson had evidence of a sudden occurrence — — coverage. to find wobbling a bandsaw wheel sufficient The Anderson court’s definition as "unforeseen sudden defines the term "ac- unexpected” appropriately more cidental”. unambigu- phrase I believe the "sudden and accidental” ous, warning, design, or intent. meaning quickly and without use of results from the consequence majority’s second "the judicially average purchaser created factor called to disre- legal majority insurance”. This fiction enables the as it reaches for the most gard given agreement the facts of abstract, "average resolution available. The term formalistic First, majority’s opinion. twice in the purchaser” appears standard based on this majority adopts subjective would under- average purchaser "the of insurance premise: for language provides policy stand that ordinary negligence.” from most acts of damage resulting

Notes

notes majority tive standard objective difference between suggested one”. not be a substantial may standard subjective and a jury’s verdict court reverse at 69. Would this Majority,

Case Details

Case Name: Queen City Farms, Inc. v. Central Nat'l Ins. Co. of Omaha

Court Name: Washington Supreme Court

Date Published: Jul 20, 1995

Citation: 882 P.2d 703

Docket Number: 59594-1

Court Abbreviation: Wash.