Gull Industries, Inc. v. Allianz Underwriters Insurance Co.

|N THE COURT OF APPEALS OF THE STATE OF WASH!NGTON
DIV|S|ON ONE
GULL |NDUSTR|ES, lNC..
Appe||ant/Cross Respondent,
v.
STATE FAR|V| F|RE AND CASUALTY
CON|PANY and TRANSAN'|ER|CA
INSURANCE GROUP,
Respondents/Cross Appe|!ants,
ALLIANZ UNDERWR\TERS |NSURANCE
COMPANY,' AMERICAN ECONOMY
INSURANCE COMPANY; AN|ER|CAN
STATES |NSURANCE COMPANY (Successor
to WESTERN CASUALTY and SURETY
COMPANY); CH|CAGO |NSURANCE
COMPANY; COLUMB|A CASUALTY
COMPANY; FEDERAL |NSURANCE
CON|PANY; F|REMAN’S FUND |NSURANCE
COMPANY; GENERAL |NSURANCE
COMPANY OF AMER|CA§ GRAN|TE STATE
|NSURANCECOMPANY; |ND|ANA
INSURANCE COMPANY; NATIONAL UN|ON
F|RE |NSURANCE COMPANY OF
PITI``SBURGH, PA; PA; NORTH PAC|F|C
|NSURANCE CQN|PANY; OH|O CASUALTY
INSURANCE COMPANV; PAC|FIC
|NDEMN|TY CO|V|PANY; SAFECO
|NSURANCE COMPANY OF AMER|CA;
UN|TED STATES F|DELITY & GUARANTY
COMPANY; WESTF’ORT ENSURANCE
CORPORAT|ON; and ZURlCH-AMERICAN
|NSURANCECON|PANY.
Defendants.
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NO. 69569-0-|
PUBL|SHED OPINION
F|LEDZ June 2, 2014
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NO. 69569-0/2
VERELLEN, A.C.J. - The Mode| Toxics Contro| Act (MTCA), chapter 70.105D
RCW, imposes strict liability upon the owner or operator of contaminated property.
Such strict liability may trigger the duty to indemnify under commercial liability policies
even if no agency has taken or overtly threatened formal legal action.‘ We are asked to
decide what triggers a duty to defend "any suit" when the owner of contaminated
property faces strict liability under the MTCA. We conclude that the term "suit" is
ambiguous in this context and does not require that a summons and complaint be filed
or served or that an administrative action be commenced. Rather, under a functional
equivalent standard, the duty to defend is triggered if a government agency
communicates an explicit or implicit threat of immediate and severe consequences by
reason of the contamination.
The Department of Ecology (DOE) letter to Guil industries |nc. acknowledged
receipt of Gull’s voluntary report of contamination and intent to remediate. The letter did
not communicate any explicit or implicit threat of immediate and severe consequences.
Therefore, we affirm the partial summary judgment that State Farm Fire and Casualty
Company and Transamerica insurance Group (T|G) have no duty to defend.
We reject TlG’s challenge to the trial court’s CR 54(b) designation.
EA_C_I§
Guli owned a gas station in Sedro-Woolley. To insure itself against liability
arising from the operation of this station, Gull obtained liability coverage with TlG for
both bodily injury and property damage from 1981 until 1986.
l Weverhaeuser Co. v. Aetna Cas. & Sur. Co., 123 Wash. 2d 891, 896-97, 874 P.2d
142 (1994).
NO. 69569-0/3
Guli leased the Sedro-Woolley station to Hayes Johnson and Mary Johnson from
1972 to 1982. Under the terms of the |ease, the Johnsons were required to obtain
liability insurance to cover the service station’s operations. The Johnsons obtained
coverage from State Farm from Ju|y 28, 1977 through Juiy 28, 1978 under policy
number 98-59-34-77. The Johnsons then obtained another policy through State Farrn
under policy number 98-60-04-39, which covered the period from Ju|y 28, 1978 through
Ju|y 28, 1981. But this second policy was immediately cance|ied, and the cancellation
request was processed on August 4, 1978. Guli and State Farm dispute whether the
Johnsons renewed that policy with State Farm.z
Here, the reconstructed insurance policies at issue include the duty to defend
against a "suit."3 First, the parties agree that the State Farm policies stated:
This Company will pay on behalf of the insured all sums which the insured
shall become legally obligated to pay as damages because of bodily injury
or property damage, arising out of service station operations; and this
Company shall have the right and the duty to defend any suit against the
insured seeking damages payable under the terms of this policy, even if
any of the allegations of the suit are groundiess, false or fraudu|ent; but
this Company may make such investigation and settlement of any claim or
suit as it deems expedient.i"l
Simiiariy, the TlG policies stated:
The company will pay on behalf of the insured ali sums which the insured
shall become legally obligated to pay as damages because of bodily injury
or property damage to which this insurance applies, caused by an
2 State Farm argues that the second policy was in effect only 17 days after its
cancellation, providing coverage through August 21, 1978, but not through Ju|y 1981.
3 Because of the amount of time that has passed since these policies were
issued, original copies are no longer available. However, the parties have agreed as to
the likely original contract language. The language for the State Farm policy comes
from a "Service Station Policy" and for the TlG policy comes from a "B|anket Generai
Liability" policy. Clerk’s Papers at 112, 161.
" i_123 Wash. 2d 891, 874 P.2d 142 (1994).
9 § at 902.
l° Hadley v. |Vlaxwe||, 144 Wash. 2d 306, 310, 27 P.3d 600 (2001).
il Vallandigham v. Clover Park Sch. Dist. No. 400. 154 Wash. 2d 16, 26, 109 P.3d
805 (2005) (quoting cR se(c)).
121<1
13 Austl. Unlimited_ |nc. v. Hartford Cas. ins. Co., 147 Wash. App. 758, 785, 198
P.3d 514 (2008).
14 Polvqon Nw. Co. v. Am. Nat’l Fire |ns. Co., 143 Wash. App. 753, 785, 189 P.3d
777 (2008).
15 Quadrant Corp. v. Am. States lns. Co., 154 Wash. 2d 165, 171, 110 P.3d 733(2005).
NO. 69569-0/7
should be interpreted in accordance with that policy definition."16 if policy terms are not
defined, then they are to be given their "‘plain, ordinary, and popular"’ meaning."
Language in an insurance policy is ambiguous if susceptible of two different but
reasonable interpretations."i Ambiguous policy language must be liberally construed in
the insured’s favor.19 "But a court may not give an insurance contract a ‘strained or
forced construction which would lead to an extension or restriction of the policy beyond
what is fairly within its terms."’2° The interpretation of an insurance contract is a
question of law.21 We review questions of law de novo.22
The MTCA compels a potentially liable person (PLP) to address environmental
contamination through strict joint and several liability provisions, regardless of fault or
intent.23 Under the MTCA, DOE identifies hazardous waste sites and either requires
PLPs to clean up the waste or undertakes the cleanup itself and seeks reimbursement
15 Kitsap County v. Allstate ins. Co., 136 Wash. 2d 567, 576, 964 P.2d 1173 (1998).
17 l;l._(quoting Boeinq Co. v. Aetna Cas. & Sur. Co., 113 Wash. 2d 869, 877, 784
P.2d 507 (1990)).
18 McAllister v. Aqora Svndicate, lnc., 103 Wash. App. 106, 109, 11 P.3d 859(2000).
19 ld.
2° ig (internal quotation marks omitted) (quoting Tewell, Thorpe & Findlay, |nc. v.
Cont’l Cas. Co., 64 Wash. App. 571, 576, 825 P.2d 724 (1992)).
21 State Farm Gen. ins. Co. v. Emerson, 102 Wash. 2d 477, 480, 687 P.2d 1139(1984).
22 Mains Farm Homeowners Ass’n v. Worthinqton, 121 Wash. 2d 810, 813, 854
P.2d 1072 (1993).
23 RCW 70.105D.040. The federal equivalent of the MTCA, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42
U.S.C. §§ 9601-9675, refers to a "potentially responsible party" (PRP), which is the
equivalent cfa PLP under state law. The MTCA is "heavily patterned" after CERCLA.
Taliesen Corp. v. Razore Land Co., 135 Wash. App. 106, 127, 144 P.3d 1185 (2006).
No. 69569-0/8
from the PLPs.2‘1 DOE may issue a formal letter to a PLP outlining specific
requirements for cleanup.25 A PLP who refuses to comply with an order compelling
cleanup is liable for up to three times the cleanup costs incurred by DOE and a daily
civil penalty.26
After the passage of the MTCA and the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (CERCLA) (the federal equivalent of
the MTCA), 42 U.S.C. §§ 9601-9675, insureds began to seek reimbursement from
insurance companies for costs expended in order to comply with these |aws.27
Historically, comprehensive general liability (CGL) policies did not specifically address
coverage for property damage or defense costs incurred as a result of strict liability
under environmental laws.23 As a result, courts around the country have had to address
whether the strict liability imposed by environmental laws is sufncient to trigger
indemnification and defense coverage under these policies.
in Weyerhaeuser, the Washington State Supreme Court addressed whether an
insured could seek indemnification coverage for costs expended to clean up
contaminated property under the MTCA, even where DOE made no overt threat of
2" RCW 70.105D.020(26) (defining "potentiaily liable person" as a person found
liable by "credible evidence" under RCW 70.105D.040), .030-.050 (outlining
government’s jurisdiction for investigation, cieanup, and enforcement and the property
owner's iiability).
25 The federal Environmental Protection Agency (EPA) issues PRP letters that
similarly explain why the party is a PRP, outline the potential liability under CERCLA,
begin an exchange of information, invite voluntary cleanup before administrative
enforcement, and facilitate negotiation of a settlement agreement. Dennison, supra,
§ 2[a].
26 RCW 70.105D.050(1).
27 Dennison, supra, § 2[a].
28@
No. 69569-0/9
formal legal action, such as a suit in court or issuance cfa PLP letter.29 weyerhaeuser
filed a declaratory judgment action against its insurers, seeking a declaration of
indemnity coverage for cleanup expenses at dozens of polluted sites.3° The policies
provided indemnification for ali sums that the insured was obligated to pay by reason of
the liability imposed by law for damages to property.31 They did not require a "suit" in
order for coverage to attach.32
The insurers argued that there must be an adversarial proceeding, or at least the
threat of such a proceeding, before indemnification coverage exists.33 But the Supreme
Court concluded that nothing in the language of the insurance policy required a "claim"
or an overt threat of action before the insured became legally obligated to comply with
the mandatory provisions of the environmental statute.¢*" Characterizing this argument
as an attempt to add language to the policies. the court noted that if the insurers
intended to provide coverage only if there were a lawsuit or the threat cfa lawsuit, they
could have written policy language to reach that result.35 Furthermore, the Supreme
Court reasoned that requiring a lawsuit or an overt threat of legal action would
discourage parties subject to the MTCA to begin remedial action until formal
enforcement by DOE so that the costs would be covered by insurance?@ The effect of
29 weyerhaeuser, 123 Wn.2d at 896.
30 |_d_. at 893.
31 ld_. erase-91
32 |_d_. at 902.
33 ld_. at 899.
34 ld_. at 913.
35
36 i_¢ at 907-08.
NO. 69569-0)'10
such an outcome would be to "dramaticaliy slow the progress of hazardous waste
cleanup in Washington."¢*i
As in the commercial liability policies at issue here, many CGL policies recite the
duty to defend "any suit" without including any definition or description of what
constitutes a "suit."?*° washington courts have not yet addressed the issue of what
constitutes a "suit" for the purpose of triggering the insurer’s duty to defend
environmental liability claims against the insured. Nationally, whether administrative
actions that fall short of an actual lawsuit constitute a "suit" triggering the insurer’s duty
to defend environmental claims is a vigorously contested issue.39
Some courts have adopted a narrow construction of the term "suit" as used in
CGL insurance policies, requiring that a formal complaint be filed against the insured in
a court of law in order to trigger the duty to defend.‘° Under this approach, the term
"sult" is deemed unambiguous: if no complaint has been filed, there is no "suit" and the
insurer has no duty to defend.‘"
31 ld_. at 908.
32 §§ §u_p_r§ note 6.
39 Dennison, §gp_rg, note 6.
40 3_
‘11 See Foster-Gardner, |nc. v. Nat’l Union Fire ins. Co., 18 Cal. 4th 857, 869 n.6,
959 P.2d 265, 77 Cal. Rptr. 2d 107 (1998) (citing Lapham-Hickev Steel Corp. v. Prot.
Mut. ins. Co., 166 lll. 2d 520, 655 N.E.2d 842, 847-48, 211 lll. Dec. 459 (1995) ("suit" in
an all risks policy ciearly and unambiguously refers to a court proceeding so there is no
duty to defend environmental agency letters and proposed consent decree); Patrons
Oxford l\ilut. ins. Co. v. Nlarois, 573 A.2d 16, 20 (Nle. 1990) (administrative proceeding
is not a "suit")', Technicon Elecs. Corp. v. Amer. Home Assur. Co., 141 A.D.Zd 124,145-
46, 533 N.Y.S.Zd 91 (1988) (in dicta states that PRP letter does not constitute a "suit");
Aetna Cas. & Sur. Co. v. Gen. Dvnamics Corp.. 968 F.2d 707, 713-14 (8th Cir. 1992)
{EPA demand is not a suit for damages under Missouri law)).
10
No. 69569-0/11
Other courts have adopted a broader construction of the term "suit" and
concluded that the issuance cfa potentially responsible party (PRP)‘2 letter to an
insured is the functional equivalent cfa suit, triggering the duty to defend.“ These
courts reason that given the strict liability imposed under the environmental laws, the
term "suit" is ambiguous in this context and may include administrative actions that do
not rise to the level of an actual iawsuit."‘ These cases focus on the devastating
financial consequences if a PRP fails to cooperate with the government cleanup effort,
making a lawsuit unnecessary to compel compliance with any cleanup orders.‘~"
Finally, some courts have held that whether a "suit" exists depends on the
coerciveness of the specific regulatory action taken by the government.‘e These courts
42 S_ee_ supra note 23.
43 Dennison, sugra, §§ 4, 5[a].
"‘1 §e_e Foster-Gardner, 18 Cal. 4th at 871-73 & n.7 (citing SCSC Corp. v. Allied
Mut. ins. Co., 536 N.W.2d 305, 315 (Minn.1995) ("suit" includes a request for
information), overruled on othggrounds bv Bahr v. Boise Cascade Cor_g, 766 N.W.2d
910 (Minn. 2009); Coaklev v. Me. Bonding & Cas. Co., 136 N.H. 402, 417-18, 618 A.2d
777 (1992) (PRP notice and state agency administrative order are a "suit"); §§
Spangg Constr. Co. v. lndus. Crankshaft & Enq’LCo., 326 N.C. 133, 154, 388 S.E.2d
557 (1990) (compliance orders were an attempt by the State to gain an end by legal
process and hence were "suits"); Avondaie indus., |nc. v. Travelers lndem. Co., 887
F.2d 1200, 1206 (2d Cir. 1989) (under New York law, demand letter from administrative
agency is a "suit"); Morrisviile water & Light Dep’t v. U.S. States Fid. & Guar. Co., 775
F. Supp. 718, 731-32 (D. Vt. 1991) (PRP letter from the EPA is a "suit" under Vermont
law)).
45 Dennison, sugra, § 2[a].
46 § Foster-Gardner, 18 Cal. 4th at 871-72 & n.8 (citing Hazen Pager Co. v.
U.S. Fid. & Guar. Co., 407 Mass. 689, 694-97, 555 N.E.2d 576 (1990) ("[t]he
consequences of the receipt of the EPA letter were so substantially equivalent to the
commencement cfa lawsuit that a duty to defend arose immediate|y"; no such duty
arose as to a different agency letter because it "does not allege the occurrence of any
damage that falls within the policy coverage"); Prof'i Renta|, |nc. v. Shelbv ins. Co., 75
Ohio App. 3d 365, 372, 599 N.E.2d 423 (1991) ("suit" includes "substantial efforts which
force the insured to take action or suffer serious consequences if the insured fails to
11
No. 69569-0/12
also conclude that the term "suit" is ambiguous.‘" As an example of this approach, in
Rj@n v. Roval insurance Co. of America, the First Circuit Court of Appeals considered
whether government correspondence that was not a PRP letter could trigger the duty to
defend."*’ There, Ryan received several letters from the New York Department of
Environmental Conservation (NYDEC) after reporting groundwater contamination on his
property."g The first letter stated that federal law required correction of hazardous waste
contamination, that the United States Environmental Protection Agency (EPA) retains
primary responsibility for the implementation of the corrective action provision, and it
elaborated on the kinds of corrective activities usually required in EPA consent orders.~"°
N¥DEC indicated that it would place the contaminated site on an informational listing of
all sites known or suspected to contain hazardous wastes and that the state Superfund
program would address the site if the EPA did not do so.51 The letter further explained
what the state Superfund program customarily entailed, remarked on deficiencies in the
site assessment report submitted by Ryan, and requested Ryan to submit plans for any
proposed remedial work.52 in two subsequent letters, NYDEC first advised Ryan of the
cooperate"); Hartford Accident & lndem. Co. v. Dana Corp, 690 N.E.2d 285, 296-97
(lnd. Ct. App. 1997) ("coercive and adversarial administrative proceedings" are "suits,"
but less coercive actions such as "mere notification or investigation when no
enforcement action is contempiated" are not "suits"); Rvan v. Roval ins. Co. of Am., 916
F.2d 731, 741 (1st Cir. 1990) (potential liability alone, without any adversarial or
coercive action by an administrative agency, is not a "suit")).
47 Foster-Gardner, 18 Cal. 4th at 872-73.
18 916 F.2d 731 (1st Cir. 1990).
49 ]g at 732.
so j_g__
ld.
51
52| _
12
No. 69569-0/13
need to submit a complete closure plan and thereafter told Ryan that N¥DEC would
likely not pursue certain treatment, storage, and disposal violations at the site if Ryan
accomplished closure in an approved manner.53
The First Circuit concluded that potential liability alone, without any adversarial or
coercive action by an administrative agency, did not constitute a "suit" under the
insurance policy.¢"‘ Although a lawsuit need not be commenced in order to constitute a
"suit," there must be more than an invitation to initiate cleanup in order to trigger the
insurer’s duty to defend.~"~" The court held that the correspondence from NYDEC did not
indicate "coerciveness ora serious state enforcement effort" and could not "reaiistically
be termed adversarial."55 lt rejected Ryan’s argument that strict liability under an
environmental statute constituted a "suit":
Even though environmental liability may be strict, it is only when the
government actually purposes to enforce the law against a property owner
that the latter will bear the consequences of strict liability. if the
government decides for any reason (e.g., shortage of funds) not to pursue
public rights, the property owner will avoid liability, no matter how dim his
prospects on the law and the facts. Thus, absent serious pursuit of the
public interest by the agency charged-what the district court, and other
authorities, term "adversariness"-the factual expectancy of liability is too
low to satisfy either the principle of indemnity or any plausible construction
of the policy language.Wl
we conclude that the undefined term "suit" is ambiguous in the environmental
liability context and may include administrative enforcement acts that are the functional
equivalent of a suit. This is consistent with the weyerhaeuser court’s acknowledgment
53
|_5
54 l
Q.
. at 741.
a
iii
56|
Q.
. at 741-42.
. at 742.
57|
lo.
13
No. 69569-0/14
that "[i]nsurance coverage in the environmental claims area may be quite different than
in other insurance settings" because "[e]nvironmental statutes impose liability, often
without fault, on polluters in order to safeguard society in general."§@ lt makes no
difference whether an insured voluntarily cleans up contamination or waits until after
government intervention-it is liable either way.59 For this reason, a strict reading of
"suit" is not appropriate here.
we do not agree with Gull’s contention that liability under the MTCA alone,
without any direct enforcement action by DOE, is the functional equivalent cfa suit for
the purposes of the duty to defend. lnstead, we adopt the analysis outlined in Bj@ and
hold that an agency action must be adversarial or coercive in nature in order to qualify
as the functional equivalent cfa "suit."
Here, the only communication Guli received was a letter from DOE
acknowledging receipt of Gull’s notice that the property was contaminated and that it
intended to pursue an independent voluntary cleanup. DOE gave notice to Guli that
Gull’s report reveals the soil and groundwater are above the MTCA "Method A Cleanup
levels" and that DOE placed the property on the leaking underground storage tank list
with an "Awaiting Cleanup" status.*"° The letter also advised Guli to "be aware that there
are requirements in state law which must be adhered to" but did not advise of any
consequences that might attach to the failure to adhere to those requirements.‘“ The
58 weyerhaeuser, 123 wn.2d at 909.
59 |_d_. at 909-10 (quoting 1 Too l. ZuckERr\/¢AN & MARK C. RAskoFF, ENviRoNt/\ENTAL
lNsuRANcE LmoAnoN § 3.02, at 3-8 (1992)).
60 Clerk’s Papers at 142.
61 _|_d_. at 143.
14
No. 69569-0/15
letter expressly indicated DOE has not determined that Guli is a PLP and does not imply
that DOE "has formally reviewed and approved of the remedial action" planned by
Gull.62 Final|y, the letter explains that Guli "may request assistance from Ecology under
the Voluntary Cleanup Program," which was "established in response to the public’s
need for Ecology to provide formal, detailed guidance to parties conducting independent
cleanups, and to more readily review cleanup actions undertaken."“ The letter did not
present an express or implied threat of immediate and severe consequences by reason
of the contamination.€" Therefore, consistent with By_at_r_\, Guli has not met its burden on
summary judgment to establish there is the functional equivalent of a "suit" here.
triggering the duty to defend.
Guli and DOE argue that interpreting the term "suit" to exclude voluntary
remediation by an insured who is liable under the MTCA but not yet subject to formal
enforcement action by DOE will destroy any incentive for property owners to voluntarily
remediate, contrary to the policy concerns addressed in weyerhaeuser. The public
policies addressed in weyerhaeuser are compelling But such policy concerns have
limited significance in a duty to defend analysis.'"’5 “[T]his is very much a secondary
reason-no court has ever held that it was the primary reason" for finding a duty to
defend.€@ Under the language of these policies, the public policy of promoting voluntary
62 ld_. ar142.
63 ld_. @1143.
64 § Ryan, 916 F.2d at 742.
65 _S_ee 2 Too l. ZuckERMAN, ENviRoNi\/\ENTAL lNsuRANcE LmoArion § 12:34 (2d ed.
2013).
66 ld.
15
NO. 69569-0/16
cleanups alone does not compel an automatic duty to defend; the duty to defend is
triggered by the functional equivalent of a lawsuit,
Gull’s remaining arguments are not persuasive. Guli argues that United States v.
Atlantic Research Corp.°i supports finding a "suit" here. There, the United States
Supreme Court considered whether CERCLA allows PRPs with a cause of action to
recover costs from other PRPs in the absence of formal litigation.@“ But that was a
contribution case that did not address the meaning of "suit" in a duty to defend ciause.
Therefore, it is not helpful here.
Guli argues that there should be a duty to defend because insureds need
insurance proceeds to help pay for the necessary first step of investigation, But Guli
cites no authority that the construction of an insurance policy turns on the needs of an
insured.
Guli argues that "suit" should not be given a "technical" or "lawyerly" definition'”
and that the average policyholder does not distinguish between being forced to pay
legal and other "defense" costs as a resuit of actual coercive action from a government
agency, as opposed to the implicit threat of such action under the MTCA. But the duty
to defend implies the necessity to "defend" against something_ in the face of no
adversarial or coercive interaction whatsoever, an average policyholder would not likely
believe such a duty was triggered
Because DOE did not communicate an explicit or implicit threat of immediate and
severe consequences by reason of the contamination of the Sedro-Woolley site, Guli
57 551 U.S. 128, 127 S. Ct. 2331, 168 L. Ed. 2d 28 (2007).
58 |;i_. at 131.
59 Appellant‘s Opening Br. at 27-31.
16
No. 69569-0/17
was not faced with the functional equivalent of a suit. TlG and State Farm had no duty
to defend.
TlG contends that the trial court abused its discretion in granting Gull’s motion for
a CR 54(b) designation. we disagree.
CR 54(b) makes an immediate appeal available in situations in which it could be
unjust to delay entering a judgment on a distinctly separate claim until the entire case
has been finally adjudicated.’° Four elements are required for a CR 54(b) final
judgment: "‘(1) more than one claim for relief or more than one party against whom relief
is sought; (2) an express determination that there is no just reason for delay; (3) written
findings supporting the determination that there is no just reason for delay; and (4) an
express direction for entry of the judgment.’"i‘
in determining whether there is no just reason for delay, the trial court should
consider the following five factors:
"(1) [T]he relationship between the adjudicated and the unadjudicated
claims, (2) whether questions which would be reviewed on appeal are still
before the trial court for determination in the unadjudicated portion of the
case, (3) whether it is likely that the need for review may be mooted by
future developments in the trial court, (4) whether an immediate appeal
will delay the trial of the unadjudicated matters without gaining any
offsetting advantage in terms of the simplification and facilitation of that
tria|, and (5) the practical effects of allowing an immediate appeal."i72l
Essential to whether CR 54(b) certification should be granted is whether waiting for final
judgment on all the claims or parties will expose the appellant to some danger of
70 Doerf|inqer v. N.Y. Life ins. Co., 88 Wash. 2d 878, 880, 567 P.2d 230 (1977).
71 Hulbert v. Port of Everett, 159 wn. App. 389, 405-06, 245 P.3d 779 (2011)
(internai quotation marks omitted) (quoting Fluor Enters., |nc. v. walter Constr., Ltd.,
141 wn, App. 761, 766-67, 172 P.3d 368 (2007)).
72 |cl_. at 406 (alteration in originai) (internai quotation marks omitted) (quoting
Lindsav Credit Corp. v. Skarperud, 33 Wash. App. 766, 772, 657 P.2d 804 (1983)).
17
No. 69569-0/18
hardship or injustice that can be alleviated only through an immediate interlocutory
appeal.73 The decision to enter a judgment under CR 54(b) is reviewed for abuse of
discretion.”
Here, in support of the CR 54(b) designation, the trial court entered the following
findings of fact:
7. The Court finds that Guli has asserted more than one claim in
this action against more than one party. Gull’s Amended Compiaint raises
multiple claims against all twelve defendants in this case.
8. Guli is not seeking a stay of the litigation with respect to any of
those claims,
9. The Court’s Orders Denying State Farm’s and T|G’s Duty to
Defend represent an adjudication cfa single issue at a single site, namely,
State Farm’s and T|G’s defense obligation to Guli at the Highway 20 site
located in Sedro-woolley, washington.
10. The Court’s decision that State Farm and TlG owe Guli no
defense obligation at the Sedro-Woolley Site constitutes a final
adjudication on that one issue.
11. Gull’s remaining claims against all defendants are unaffected
by that decision.
12. The Court finds that the issue of whether State Farm and TlG
owe Guli a duty of defense with respect to environmental contamination at
the Sedro-Woolley site is segregable from the other issues in this case
and that an immediate appeal of that issue will not prevent the existing
litigation from going fon/vard.
13. The court finds that an appellate [court] should review the
ruling that there is no duty to defend as opposed to a duty to indemnify as
outlined in weyerhaeuser Co. v. Aetna, 123 wn.2d 891, 874 P.2d 142(1994) to avoid a lengthy and costly second trial if an appellate court
concludes that the court’s ruling should be reversed
73 Doerfiinger, 88 wn.2d at 882; Fox v. Sunmaster Prods., lnc., 115 wn.2d 498,
503, 798 P.2d 808 (1990); Pepper v. Kinq Courm, 61 Wash. App. 339, 350, 810 P.2d 527(1991).
74 Hulbert, 159 wn. App. at 404.
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14. The Court finds that there is no just reason to delay entry of a
final judgment in favor of State Farm and TlG with respect to their duty to
defend Guli at the Sedro-Woolley site.l75l
TlG argues that "the trial court’s ruling is incomplete until it is applied to the costs
that Guli has incurred for Sedro-woolley," namely, a decision on which costs incurred
by Guli are indemnity costs and which costs are duty to defend costs.76 lt argues that
such issues are closely intertwined and not separate from the duty to defend issue and,
therefore, should not be appealed piecemeal TlG relies on Doerflinqer v. New York
Life insurance Co.77 There, the washington State Supreme Court held that where an
appellant relies upon nearly identical facts or allegations to establish multiple theories
for relief, the multiple claims requirement for CR 54(b) is not met.73 But here, the duty to
defend and the duty to indemnify are independent duties, each requiring the court to
analyze separate contractual provisions and separate facts. They are separate claims,
and Doerfiinger is not applicable.
TlG also argues that Guli did not show any hardship or injustice that this appeal
would prevent. The risk of hardship or injustice without an immediate appeal is a critical
consideration for a CR 54(b) determination. Normally, a vague assertion of the length
and cost cfa second trial would be an inadequate basis for certification. But Guli did
not make a purely abstract or artificial showing of risk of harm. in its briefing to the trial
court, Gull’s primary hardship argument focused on the impact of the duty to defend
issue on numerous contaminated sites across the state. Given the potential impact of
75 Clerk’s Papers at 943-44.
73 Br. of Respondent TlG at 29.
77 88 Wash. 2d 878, 567 P.2d 230 (1977).
78 ig at ear
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this legal issue on other cases, the risk of hardship or injustice is established. The trial
court did not abuse its discretion.
we affirm.
WE CONCUR:
swint 1
/ a
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