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Seattle Times Company v. National Surety Corp.

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

November 12, 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 Policy Limit

          ORDER

          THOMAS S. ZILLY UNITED STATES DISTRICT JUDGE.

         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). By Minute Order entered October 1, 2019, docket no. 189, the Court advised the parties of its tentative rulings concerning these requests, and directed the parties to file supplemental briefs indicating whether they consented or objected to the form of order attached to the Minute Order. Rather than submitting any briefs, the parties filed a “Proposed Stipulated Order”, docket no. 192, that incorporates with certain modifications, the conclusion section of the draft order attached to the earlier Minute Order. The parties have articulated no objection to the substance of the Court's proposed order, Attachment A to Minute Order (docket no. 189 at 3-22), and the Court, having reviewed all papers filed in support of, and in opposition to, the pending motion, now approves the proposed settlement as set forth in 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
Policy Limit

General

primary

1976-1979

$300, 000[1]

General

primary

1979-1982

$300, 0001

General

primary

1982-1985

$300, 0001

Travelers

primary

1985-1986

$500, 000

General

excess (over $100, 000 per year)

1976-1979

$6 million[2]

General

excess (over $100, 000)

1979-1980

$5 million

General

excess (over $100, 000)

1980-1981

$5 million

General

excess (over $100, 000)

1981-1982

$5 million

General

excess (over $100, 000)

1982-1983

$5 million

General

excess (over $100, 000)

1984-1985

$5 million

Travelers

excess (over $500, 000)

1985-1986

$10 million

National

excess (over $10.5 million)

1985-1986

$15 million

         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 by paying Seattle Times as follows:

(i) $3.8 million “in settlement of the Insurance Action, ” meaning this lawsuit;
(ii) $63, 759.00 for the attorneys' fees and costs owed to Ritt; and
(iii) $95, 969.39 in litigation expenses incurred by Seattle Times.

See Ex. 10 to Feig Decl. (docket no. 174-1). As part of such settlement, General wishes to bar Travelers and National from bringing against it any claim for contribution, allocation, subrogation, or equitable indemnification.

         B. Non-Settling ...


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