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Northwest Pipe Co. v. Rli Insurance Co.

United States District Court, D. Oregon

April 10, 2014

NORTHWEST PIPE COMPANY, fka NORTHWEST PIPE & CASING COMPANY, an Oregon corporation, Plaintiff,
v.
RLI INSURANCE COMPANY, an Illinois corporation, and EMPLOYERS INSURANCE COMPANY OF WAUSAU, a Wisconsin corporation, Defendants. EMPLOYERS INSURANCE COMPANY OF WAUSAU, a Wisconsin corporation, Counter-Claimant,
v.
NORTHWEST PIPE COMPANY, fka NORTHWEST PIPE & CASING COMPANY, an Oregon corporation, Counter-Defendant. RLI INSURANCE COMPANY, an Illinois corporation, Third-Party Plaintiff,
v.
ACE FIRE UNDERWRITERS INSURANCE COMPANY, a Pennsylvania company, ad ACE PROPERTY AND CASUALTY INSURANCE COMPANY, a pennsylvania company, Third-Party Defendants.

MARGARET E. SCHROEDER, MICHAEL B. MERCHANT, Black Helterline, Portland, OR, Attorneys for Plaintiff, and Counter-Defendant Northwest Pipe Company.

CHRISTOPHER W. THOMPKINS, Betts Patterson & Mines PS, Seattle, WA, MICHAEL D. PROUGH, Morison & Prough, LLP, Walnut Creek, CA, BRUCE C. HAMLIN, Martin Bischoff Templeton, Langslet & Hoffman, Portland, OR, Attorneys for Defendant, Counter-Defendant, Counter-Claimant, Third-Party Plaintiff, Cross-Claimant, and Cross-Defendant RLI Insurance Company.

BRYAN M. BARBER, Barber Law Group, Palo Alto, CA, DARREN C. BEATTY, WILLIAM G. EARLE, Davis Rothwell Earle & Xochihua, PC, Portland, OR, Attorneys for Defendant, Counter-Claimant, Third-Party Defendant, Cross-Claimant, and Cross-Defendant Employers Insurance Company of Wausau.

R. LIND STAPLEY, Soha & Lang, P.S., Seattle, WA, RICHARD A. LEE, Bodyfelt Mount, LLP, Portland, OR, Attorneys for Third-Party, Defendants, Third-Party, Plaintiffs, and Counter-Claimants, Ace Fire Underwriters Insurance, Company, Ace Property and Casualty Insurance Company.

OPINION AND ORDER

ANNA J. BROWN, District Judge.

This matter comes before the Court on Defendant Employers Insurance Company of Wausau's Request (#261) for Judicial Notice and Wausau's Motion (#258) for Partial Summary Judgment on the Issue of Exhaustion of Policy Limits. For the reasons that follow, the Court GRANTS Wausau's Request (#261) for Judicial Notice and DENIES Wausau's Motion (#258) for Partial Summary Judgment.

BACKGROUND

I. Pertinent Procedural Background

On November 12, 2013, Wausau filed its Answer to Northwest Pipe's First Amended Complaint in which it also asserts Counterclaims for declaratory relief against Northwest Pipe on the basis that Wausau has exhausted the aggregate property-damage limits of the policies at issue in this matter in connection with environmental claims that are the subject of this action. Wausau previously filed its Motion (#258) for Partial Summary Judgment on the same exhaustion issue October 10, 2013. After Northwest Pipe responded with its own Cross-Motion (#268) and briefing, the Court heard oral argument on Wausau's Motion on January 24, 2014, denied Northwest Pipe's Motion (#268) with leave to renew if necessary and directed Wausau and Northwest Pipe to file supplemental memoranda in further support of their positions as to the exhaustion issue. The Court heard oral argument a second time on Wausau's Motion on February 25, 2014, and the Court directed Wausau and Northwest Pipe to file additional supplemental memoranda.

The Court took Wausau's Motion under advisement on March 18, 2014.

II. Factual Background

The following facts are undisputed unless otherwise noted.

A. The Policies

Wausau issued the following liability insurance policies (the policies)[1] to Northwest Pipe & Casing, now known as Northwest Pipe:

(1) Policy No. 2324-00-043510 for the period July 8, 1983, to July 8, 1984;
(2) Policy No. 2325-00-043510 for the period July 8, 1984, to July 8, 1985;

The basic insuring agreement in the Wausau policies provides:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
Coverage A, bodily injury or Coverage B, property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

Emphasis added.

The limit of liability in each of the Wausau policies for property-damage claims is $100, 000 for each occurrence subject to an aggregate limit of $100, 000.

The policies also require: "The insured shall cooperate with the company and, upon the company's request, assist in making settlements, in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of injury or damage with respect to which insurance is afforded under this policy.... The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of accident. " Emphasis added.

The Wausau policies contain an "Additional Insured" endorsement that names Schnitzer Investment as an insured with respect to "liability arising out of the ownership, maintenance or use of that part of the premises designated below leased to the named insured...." The "Schedule of Designated Premises" lists "12005 N. Burgard, Portland, OR."

B. The Claims

On November 19, 1999, the Oregon Department of Environmental Quality (DEQ) sent a letter requesting Northwest Pipe to perform a preliminary assessment with sampling in accordance with the Environmental Cleanup Law, Oregon Revised Statutes ยง 465.200 et seq.

In a letter dated December 8, 2000, the United States Environmental Protection Agency (EPA) informed Northwest Pipe that the EPA had identified Northwest Pipe as a potentially responsible party in connection with the release or threatened release of hazardous substances, pollutants, or contaminants at the Portland Harbor Superfund Site. Schnitzer Investment, an Additional Insured under the policies, also was named as a potentially responsible party in connection with the Portland Harbor Superfund Site.

In a January 16, 2002, letter Northwest Pipe notified Nationwide, the company that administers the policies, about the environmental claims involving the Portland Harbor Superfund Site and tendered those claims to Nationwide Indemnity[2] for defense and indemnity under the policies.[3]

In a February 18, 2002, letter Wausau agreed to defend Northwest Pipe under the 1983-84 and 1984-85 policies subject to a reservation of rights, but Wausau denied coverage under its 1985-86 policy based on the absolute pollution exclusion in that policy. In that letter Wausau, among other things, notified Northwest Pipe that the policies did not "provide coverage for property ...


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