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Seattle Times Co. v. National Surety Corp.

United States District Court, W.D. Washington, Seattle

October 1, 2019

SEATTLE TIMES COMPANY, Plaintiff,
v.
NATIONAL SURETY CORPORATION; GENERAL INSURANCE COMPANY OF AMERICA; and TRAVELERS CASUALTY AND SURETY COMPANY as successor-in-interest to Aetna Casualty and Surety Company, Defendants. Insurer Type of Policy Policy Period

          MINUTE ORDER

          THOMAS S. ZILLY UNITED STATES DISTRICT JUDGE.

         The following Minute Order is made by direction of the Court, the Honorable Thomas S. Zilly, United States District Judge:

(1) The Court's proposed order on the motion brought by defendant General Insurance Company of America (“General”), docket no. 173, and joined by plaintiff Seattle Times Company (“Seattle Times”), docket no. 176, which seeks approval of a settlement between General and Seattle Times, a “bar order” against defendants National Surety Corporation (“National”) and Travelers Casualty and Surety Company (“Travelers”), and entry of a partial judgment pursuant to Federal Rule of Civil Procedure 54(b), is appended hereto as Attachment A. As reflected in the attached proposed order, the Court concludes that the settlement between General and Seattle Times is reasonable under all of the circumstances, but that the “bar order” proposed by General in connection with the proposed settlement must be modified to adequately protect the rights of National and Travelers, and that partial judgment pursuant to Rule 54(b) is unnecessary and inappropriate. Each party shall file a supplemental brief, not to exceed ten (10) pages in length, on or before October 25, 2019, indicating whether it consents to entry of an order substantially in the same form as Attachment A or, if not, setting forth its objections and/or proposed amendments thereto. No response or reply shall be filed unless requested by the Court. The Court will take into account all objections and/or comments, and make any appropriate revisions, before entering a final order. If the parties' filings indicate that a “bar order” satisfactory to all parties cannot be entered and, as a result, a material term of the settlement between General and Seattle Times cannot be consummated, then the Court will consider denying the pending motion.
(2) General's motion to approve settlement, for a “bar order, ” and for a partial judgment pursuant to Rule 54(b), docket no. 173, is RENOTED to October 25, 2019.
(3) The Clerk is directed to send a copy of this Minute Order to all counsel of record.

         ATTACHMENT A

         [PROPOSED] ORDER

         THIS MATTER comes before the Court on a motion brought by defendant General Insurance Company of America (“General”), docket no. 173, and joined by plaintiff Seattle Times Company (“Seattle Times”), docket no. 176, for (i) approval of a settlement between Seattle Times and General, (ii) an order barring future claims against General by co-defendants Travelers Casualty and Surety Company (“Travelers”) and National Surety Corporation (“National”), and (iii) entry of partial judgment pursuant to Federal Rule of Civil Procedure 54(b). Having reviewed all papers filed in support of, and in opposition to, the motion, the Court enters the following order.

         Background

         This matter concerns whether Seattle Times is entitled to indemnification under various insurance policies issued by General, Travelers, and National for amounts either already paid or still owed by Seattle Times to Touchstone SLU LLC and TB TS/RELP LLC (collectively, “Touchstone”) for remediation costs associated with hazardous substances released on real property bounded by Fairview Avenue North, Thomas Street, Boren Avenue North, and Harrison Street in Seattle, Washington (the “Property”). For different years between 1976 and 1986, each insurer issued either a primary commercial liability policy or an excess policy or both:

Insurer
Type of Policy
Policy Period

General

primary

1976-1979 [1]

General

primary

1979-1982 1

General

primary

1982-19851

Travelers

primary

1985-1986

General

excess (over $100, 000 per year)

1976-1979 [2]

General

excess (over $100, 000)

1979-1980

General

excess (over $100, 000)

1980-1981

General

excess (over $100, 000)

1981-1982

General

excess (over $100, 000)

1982-1983

General

excess (over $100, 000)

1984-1985

Travelers

excess (over $500, 000)

1985-1986

National

excess (over $10.5 million)

1985-1986

See Exs. 1-9 to Feig Decl. (docket no. 174-1); Exs. 31 & 32 to Rumsey Decl. (docket nos. 133-31 & 133-32); Ex. A to Eckman Decl. (docket no. 180).

         Seattle Times purchased the Property in 1985, while the third General primary policy (for 1982-1985) was still in effect, and continued to own the Property until 2011, when title to the Property passed to Touchstone pursuant to the terms of a purchase and sale agreement. In connection with the transfer of the Property, Seattle Times and Touchstone entered into an Environmental Remediation and Indemnity Agreement (“ERIA”), under which Seattle Times agreed to reimburse Touchstone for certain remedial costs, including the additional expenses of transporting and disposing of contaminated soil. To date, Seattle Times has paid Touchstone $4, 783, 434.17.

         In the related matter of Seattle Times Company v. LeatherCare, Inc., et al. v. Touchstone SLU LLC, et al., W.D. Wash. No. C15-1901 TSZ, the Court conducted an 18-day bench trial and ruled as follows:

(1) The total amount due from Seattle Times to Touchstone pursuant to the ERIA is $8, 160, 527.61. Taking into account the sum already paid by Seattle Times, judgment was entered against Seattle Times and in favor of Touchstone, in connection with the ERIA claim, in the amount of $3, 377, 093.44. See Order at 117 (C15-1901 TSZ, docket no. 270); Judgment (C15-1901 TSZ, docket no. 271).
(2) The total recovery due to Touchstone, pursuant to either the ERIA or Washington's Model Toxics Control Act (“MTCA”), for remediation expenses already incurred, is $8, 364, 111.02. Of this amount, the sum allocated to Seattle Times is $2, 928, 678.78, which consists of (i) $429, 211.77 for costs due solely under the ERIA, (ii) $283, 762.64 in groundwater treatment and regulatory review expenses, and (iii) $2, 215, 704.37 in contaminated soil transportation and disposal costs. See Order at 118 (C15-1901 TSZ, docket no. 270). The balance ($5, 435, 432.24) of Touchstone's total recovery was allocated, pursuant to MTCA, to LeatherCare, Inc. (“LeatherCare”), which leased a portion of, and operated a dry cleaning business on, the Property for over 25 years. See id. at 29-33 & 117. LeatherCare's obligation to Touchstone was reduced by the amount already paid by Seattle Times that was over the sum allocated to it, and Seattle Times is entitled to reimbursement from LeatherCare in the amount of $1, 854, 755.39.
(3) Any future response costs relating to groundwater treatment, regulatory review, or operation of the injection wells installed at the Property are equitably allocated as follows: 31/103 to Seattle Times, 29/103 to LeatherCare, and 43/103 to Touchstone. See id. at 120.
(4) Seattle Times is required to pay $398, 889.73 to Touchstone in reasonable attorneys' fees pursuant to the ERIA and/or MTCA. See Order at 7 (C15-1901 TSZ, docket no. 328).[3]
(5) Seattle Times is required to pay $117, 488.60 to Steven Ritt and the marital community composed of Steven Ritt and Laurie Rosen-Ritt (collectively, “Ritt”) in reasonable attorneys' fees pursuant to MTCA. See Order at 6 (C15-1901 TSZ, docket no. 336). Seattle Times also owes $10, 029.66 to Ritt in taxable costs. See Order at 1-2 (C15-1901 TSZ, docket no. 338).

         The Court takes judicial notice of the fact that Touchstone sold the Property earlier this year for $740 million. See Seattle Times (March 26, 2019) (Ex. A to Flannery Decl., Ex. A to Reply (docket no. 351-1 in No. C15-1901 TSZ)). The purchaser, Ponte Gadea Seattle LLC, has entered into a consent decree with the Washington Department of Ecology (“Ecology”) pursuant to which it has agreed inter alia to maintain the injection wells installed at the Property, monitor the groundwater, perform in-situ groundwater treatment if needed, and operate a ventilation system designed to minimize contaminated vapors in the subsurface parking garage. See Ex. B to Marten Decl. (docket no. 188-1). Since the Court's ruling in August 2018, Touchstone has continued to incur costs relating to groundwater treatment, regulatory review, and/or operation of the various injection wells, and it has sought reimbursement from Seattle Times on a quarterly basis. See Ex. E to Marten Decl. (docket no. 188-1 at 105-07). Touchstone requested that Seattle Times pay $56, 562.60 in December 2018, and $9, 869.80 in March 2019, to satisfy its share (31/103) of future response costs. Id.

         A. Proposed Settlement

         In this matter, General seeks to resolve the pending declaratory judgment and breach of contract claims against it ...


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