United States District Court, W.D. Washington, Seattle
ORDER GRANTING THIRD PARTY DEFENDANTS CONTINENTAL
CASUALTY COMPANY, ET AL.'S MOTION TO APPROVE SETTLEMENT
AND BAR CONTRIBUTION AND TO DISMISS CLAIMS
Barbara Jacobs Rothstein U.S. District Court Judge
2013, Plaintiff King County tendered claims for defense and
indemnity to a number of its insurers, including Continental
Casualty Company, Phoenix Assurance Company of New York,
Commercial Insurance Company of Newark, New Jersey, Pacific
Insurance Company, and the Continental Insurance Company
(collectively, “CNA”). CNA acknowledged King
County's tender and assumed the County's defense
under a reservation of rights. However, many of the
County's other insurers refused coverage, which led King
County to file the instant insurance action. Dkt. 1. One of
these insurers, Defendant Travelers Indemnity Company and its
affiliates (“Travelers”), filed a third-party
complaint against CNA for allocation, subrogation, and
equitable indemnity. Dkt. 46. Having already resolved its
coverage dispute with King County, CNA now seeks an order
from the Court barring any additional contribution claims and
moves to dismiss Travelers' claims against it.
basis of CNA's motion is a settlement agreement
(“2016 Agreement”) with King County in a related
proceeding, in which CNA sought a declaratory judgment that
King County's environmental claims were precluded by a
prior settlement agreement (“1998 Agreement”)
between the parties. See Continental Casualty Co., et al.
v. King County, Case. No. 2:15-cv-00797-JCC, Dkt. 1.
Travelers-joined by many of its co-defendants-opposes
CNA's motion. Having reviewed the parties' briefing,
the record of the case, as well as the relevant legal
authority, the Court will grant CNA's motion. The
reasoning for the Court's decision is set forth below.
following facts are undisputed. In 1990, the United States,
on behalf of the National Oceanic and Atmospheric
Administration (NOAA), filed a complaint against the
Municipality of Metropolitan Seattle (“Metro”).
Dkt. 389-1, Ex. 1 at 3. The complaint sought to recover
damages from Metro for injury to, destruction of, and loss of
natural resources resulting from the release of hazardous
substances in and around the Duwamish River and Elliott Bay.
Id. In 1998, King County, acting as Metro's
successor in interest, executed a settlement agreement with
CNA, in which CNA agreed to pay $3.1 million for the costs
incurred by the County as a result of environmental
contamination. Dkt. 389-1, Ex. 2 at 3. In exchange for this
payment, King County agreed to release CNA from any liability
for past, present, and future claims that “allegedly
arise out of or are in any way connected with” the
Lower Duwamish Waterway and Elliott Bay. Id. at 4.
2013, King County tendered claims to a number of its
insurers, including CNA, related to environmental cleanup
efforts at the Lower Duwamish Waterway and Elliott Bay
Superfund sites. CNA accepted the County's tender and
assumed its defense under a reservation of rights. While CNA
was determining coverage, the County filed the instant
insurance action against a series of insurers that had
refused coverage and defense, including Travelers. As part of
this litigation, Travelers filed a third-party complaint
against numerous insurers, including CNA, for allocation,
subrogation, and equitable indemnity. Dkt. 46.
concluding that its acceptance of the County's tender was
in error, CNA filed a declaratory judgment action seeking a
ruling that the 1998 Agreement precluded the claims that King
County had tendered to CNA in 2013. See Continental
Casualty Co., et al. v. King County, Case No.
2:15-cv-00797-JCC, Dkt. 1. In June 2016, CNA reached a
settlement agreement with the County. Id. at Dkt.
23. Pursuant to the terms of the 2016 Agreement, CNA-joined
by King County-now moves for an order dismissing
Travelers' third-party claims and barring any future
contribution claims by the non-settling insurers in this
case. Travelers opposes this motion, arguing that the 2016
Agreement is collusive and that a contribution-bar order
would not adequately protect its interests.
Court has “the inherent equitable power to enter an
order precluding subsequent claims for contribution . . . by
non-settling parties.” Bank of Am. v. Travelers
Indem. Co., No. C07-0322-RSL, 2009 WL 529227, at *1
(W.D. Wash. March 2, 2009) (internal citation omitted).
Contribution-bar orders are recognized as “consistent
with the public policy encouraging settlement.”
Canal Indem. Co. v. Global Dev., LLC, No.
2-14-CV-00823-RSM, 2015 WL 347753, at *3 (W.D. Wash. Jan 26,
2015) (citing Puget Sound Energy v. Certain Underwriters
at Lloyd's, 133 P.3d 1068, 1079 (Wash. App.
2006)). However, “the public policy favoring settlement
and the Court's interest in expeditiously clearing
complex litigation from its docket must . . . ‘be
tempered by the need to assure factual fairness and the
correct application of legal principles' when considering
a contribution bar.” Bank of Am., 2009 WL
529227, at *1 (quoting Franklin v. Kaypro Corp., 884
F.2d 1222, 1225 (9th Cir. 1989)). Therefore, a bar order is
only appropriate where (1) the proposed settlement is
reasonable; and (2) the interests of the non-settling
defendants are protected. Id.
reasonableness requirement is “not a high
hurdle.” Id. “[T]he Court must simply
ensure that the settlement is not patently collusive or
inadequate.” Id. Here, CNA asserts that the
Court should enter the proposed contribution-bar order
because the 2016 Agreement is the product of
arms's-length negotiation and is, therefore, reasonable.
Travelers questions whether the settlement was actually the
product of arm's-length negotiation and alleges that CNA
and King County conspired to craft a “sweetheart
deal” through which King County can “extinguish
its potential indemnification obligation” to Travelers
and other insurers. Dkt. 405 at 7.
indemnification obligation to which Travelers is referring
ostensibly arises out of a provision contained in the 1998
Agreement. The Agreement provides that King County will
defend, indemnify, and hold harmless CNA “from and
against any demand, claim, suit, cause of action, or request
of other insurers of the County . . . including claims for
apportionment, indemnity, and contribution.” Dkt.
390-4, Ex. 2 at 5. Travelers insists that this
indemnification provision exists for the benefit of Travelers
and other insurers similarly situated and may not be
extinguished. But the indemnification provision served the
same purpose in 1998 as the bar order would now-it allows CNA
to enter into a settlement unencumbered by the threat of
further claims from non-settling parties. The 1998 Agreement
neutralized this threat by promising that King County would
stand in CNA's shoes in any future contribution
litigation. The 2016 Agreement merely replaces that provision
with a court order that serves the same purpose while also
advancing the public interest in settling complex, multiparty
litigation and “reward[ing] compromise.” Bank
of Am., 2009 WL 529227, at *1.
the second requirement for a claim-bar order-that the
interests of non-settling parties be protected-Travelers
argues that the order would “simply eviscerate”
its rights to contribution. Travelers' provides no
support-and the Court finds no authority-for its argument
that its right of contribution is unassailable. On the
contrary, the Ninth Circuit has approved an order
extinguishing a non-settling party's right of
contribution even where the right was guaranteed by federal
statute. See Franklin, 884 F.2d at 1229. Weighing
the “overriding public interest in settling and
quieting litigation, ” the court determined that
Congress had not “intended the right to contribution to
be inextinguishable.” Id. Likewise, this Court
finds that the 1998 Agreement does not prevent it from
extinguishing Travelers' right to seek contribution from
CNA in the interest of promoting settlement in this complex,
extent that Travelers is concerned about greater financial
exposure if it is unable to seek contribution from CNA, that
concern “does not in itself render the bar order
inappropriate.” Canal Indem., 2015 WL 347753,
at *5. Indeed, courts in this district have entered
contribution-bar orders that left non-settling defendants
exposed to 50% or more of the total damages awarded.
Id. (citing Cadet Mfg. Co. v. Am. Ins. Co.,
No. C04-5411FDB, 2006 WL 910000 at *2 (W.D. Wash. April 7,
2006); Zidell Marine Corp. v. Beneficial Fire and Cas.
Ins. Co., No. C03- 5131RBL, at Dkt. #254, pg. 6 (W.D.
Wash. May 24, 2004)). Here, in contrast, Travelers is one of
over 20 remaining defendants in this case and is seeking
contribution from several insurers. Thus, the Court is not
convinced that Travelers would be left to shoulder an
unreasonable burden if CNA is extracted from this litigation.
Further, any attempt by the Court to measure an ...