ELR Citation: ELR 20362
No(s). 55700-4 (Wash. Jan 4, 1990)

The court holds that response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are "damages" under a comprehensive general liability insurance policy. The court first holds that "damages" under the policy is not given its technical legal meaning as a remedy at law or as a label for certain kinds of legal relief. The insurance policy uses the term "damages" in the general coverage provision, not in the section on exclusions, and it is not a defined term in the contract. The term "damages" is given its ordinary, popular meaning. Standard dictionaries define "damages" inclusively, without distinguishing between remedies. Before an insurance company can avail itself of a technical meaning of a term, it must be clear that both parties to the contract intended the technical meaning. Here, there is nothing indicating that this is what the parties intended. Even when the contracting parties are corporations, the meaning applied is that which a layman would assume. Moreover, the contract is a standard form, prepared by the insurer, and a uniform interpretation is needed regardless of who the insured is. CERCLA response costs are essentially costs to restore contaminated water and real property, and this has long been considered a proper measure of property damage.

A dissenting judge would have held that response costs are not "damages" under the insurance policy, because response costs are restitutionary, not reparation for detriment or injury sustained. Damages under Washington law, the dissent says, would be the lesser of diminution in property value or the cost to restore or replace the property.

Counsel for Plaintiff
Charles C. Gordon, William A. Gould
Perkins & Coie
One Bellevue Ctr., Ste. 1800, 411 108th Ave. NE, Bellevue WA 98004
(206) 453-6980

Counsel for Defendants
Jerry B. Edmonds, Patrick M. O'Loughlin
Williams, Kastner & Gibbs
P.O. Box 21926, Seattle WA 98111-0040
(206) 628-6600

UTTER, BRACHTENBACH, DURHAM, ANDERSEN, and SMITH, JJ., and PEARSON, J. Pro Tem., concur. CALLOW, C.J., and DOLLIVER, J., dissent.