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King County v. The Travelers Indemnity Co.

United States District Court, W.D. Washington

June 11, 2018

KING COUNTY, a Washington municipal corporation, Plaintiff,
v.
THE TRAVELERS INDEMNITY CO., et al., Defendants.

          ORDER GRANTING DEFENDANTS LEXINGTON AND NATIONAL UNION'S MOTION FOR SUMMARY JUDGMENT

          BARBARA JACOBS ROTHSTEIN U.S. DISTRICT COURT JUDGE

         I. INTRODUCTION

         The instant case involves claims by Plaintiff King County against multiple insurers, seeking defense and indemnity related to the County's liability for contamination in and around the Lower Duwamish Waterway located in the City of Seattle. Two such insurers, Defendants Lexington Insurance Company and National Union Insurance Company of Pittsburgh, PA, (collectively, the “AIG Defendants”), have filed this Motion for Summary Judgment, seeking dismissal from this action. They argue that the County's claims against them are barred by a settlement agreement and release King County signed in 1997. Having reviewed the pleadings filed in support of and opposition to this motion, the Court finds and rules as follows.

         II. BACKGROUND

         In the early and mid 1990s, environmental contamination at multiple sites in the City of Seattle, including around the Lower Duwamish Waterway area at issue in this litigation, was the subject of several lawsuits brought against, among others, the Municipality of Metropolitan Seattle (“Metro”). In response to these lawsuits, Metro tendered claims against its insurers, including the AIG Defendants Lexington and National Union, and several other AIG affiliates. See Declaration of Linda Clapham, Dkt. No. 629 (“Clapham Decl.”), Ex. 3. Disputes arose over whether, and to what extent, Metro was entitled to coverage. In 1997, in resolution of those disputes, Metro and the “AIG-Related Companies” executed a Settlement Agreement and Release (the “Agreement”), expressing a “wish to (i) avoid litigation, and (ii) fully, finally, completely and in good-faith resolve all disputes and disagreements between them arising from, or connected in any way with, environmental contamination or pollution connected in any way” to the Lower Duwamish Waterway, among other sites. Clapham Decl., Ex. 1, ¶ M. Notably, in 1994 King County and Metro had merged, and it was King County that executed the 1997 Agreement, “as successor to the Municipality of Metropolitan Seattle.” Id. at p. 1.

         In the instant action, which involves some of the same environmental contamination in the Lower Duwamish Waterway, King County is claiming coverage under four AIG excess policies: one issued by National Union to King County (policy number 1225707), and three issued by Lexington to Metro (policy numbers GC 403544, GC 5502773, and 5510602). See Clapham Decl., Ex. 2. By this motion, the AIG Defendants claim that the 1997 Agreement was intended to, and did, resolve all of the parties' disputes and disagreements related to contamination at the Lower Duwamish Waterway, known and unknown, current and future, including the instant dispute over these four policies. King County disagrees, arguing that (1) the Agreement does not apply to the National Union policy issued to King County, because the County signed the Agreement “as successor” to Metro, not on its own behalf; that (2) the Agreement does not apply to the three Lexington policies issued to Metro, because the parties did not intend for the Agreement to apply to Lexington; and (3) the Agreement does not apply to any of the four policies, because it released only certain “enumerated” policies listed in the Agreement, none of the four among them.

         For the reasons set forth below, the Court finds that the intent of the parties to the 1997 Agreement, as expressed in the language of the Agreement, was that it be broad enough to include both policies issued to King County and policies issued by Lexington; and, more specifically, the four policies at issue in this action, and therefore grants the AIG Defendants' Motion for Summary Judgment.

         III. DISCUSSION

         A. Summary Judgment Standard and Washington Principles of Contract Interpretation

         Summary Judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c), Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where there is no dispute of material fact, the construction of a contract is appropriate on summary judgment. Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 191 P.3d 866 (W.2d 2008); Brinkerhoff v. Campbell, 994 P.2d 911, 915 (Wn. App. 2000). Courts interpret settlement agreements using the same principles used in interpretation of other contracts. McGuire v. Bates, 234 P.3d 205 (Wn.2d 2010). The parties agree that interpretation of the Agreement at issue in this diversity action is governed by Washington law, and that “[t]he party moving to enforce a settlement agreement carries the burden of proving that there is no genuine dispute over the existence and material terms of the agreement.” AIG Defs.' Mot. at 6; King County Opp. at 7, citing Brinkerhoff.

         In Berg v. Hudesman, the seminal Washington case governing the construction of contracts, the Washington Supreme Court directed “every court [to] heed the strong words of Corbin: . . . that language at its best is always a defective and uncertain instrument, that words do not define themselves, that terms and sentences in a contract, a deed, or a will do not apply themselves to external objects and performances.” 115 801 P.2d 222, 227 (Wn.2d 1990). Thus, Berg v. Hudesman instructs courts to determine the intent of the contracting parties in light of not just the language used, but also “the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.” Id. With this directive in mind, the Court turns to the Agreement at issue in this motion.

         B. The 1997 Agreement Releases Policies Issued to King County.

         The 1997 Agreement was executed “by and between (I) King County, as successor to The Municipality of Metropolitan Seattle (together with all related and affiliated entities, ‘Metro')” and multiple AIG insurers. Clapham Decl., Ex. 1 at p. 1. King County argues that the qualifier “as successor to” Metro, found several other times in the Agreement, necessarily limits the scope of the Agreement to only those policies issued to Metro, and does not include policies issued to King County itself. See Clapham Decl., Ex. 1, § 16(a) (notices to be provided to “King County, as successor to the Municipality of Metropolitan Seattle); p. 12 (Agreement signed by “KING COUNTY, as successor to the Municipality of Metropolitan Seattle”). The County therefore claims that the release in the Agreement does not include the National Union policy under which it claims coverage in this case, which was issued to King County in the 1980s, long before its merger with Metro.

         As the AIG Defendants point out, however, King County also executed the Agreement on behalf of “all” of Metro's “related and affiliated entities, ” a category to which King County undeniably belonged by the time the Agreement was executed. Clapham Decl., Ex. 1 at p. 1. Furthermore, the definition of “policies” released by the Agreement does not articulate the County's proposed limitation. That definition provides “‘Policies' is defined as all policies issued by National Union . . . with respect to . . . the excess policies including, but not limitedto, those set forth below.” Id. ¶ A. (2) (emphases added). Elsewhere in the Agreement, the parties expressed the intent that the “Scope of Releases” not be limited to Metro, but include “all . . . entities that are or purport to be insureds under the AIG-Related Companies Policies.” Id. ยง 7(a). In this action, King County is in fact claiming to be an ...


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