Certification From the United States District Court for the Western District of Washington in the Boeing Company…

Summary

The Washington Supreme Court answered a certified question from the United States District Court for the Western District of Washington by holding that environmental response costs paid or to be paid under CERCLA constitute 'damages' within the meaning of the comprehensive general liability policies at issue, to the extent those costs are incurred 'because of' property damage. Applying Washington's rule that undefined policy terms take their plain, ordinary meaning as understood by the average lay person, the court held that 'damages' does not distinguish between sums awarded on a legal or equitable basis, that the substance of a response-cost claim is compensation for restoring contaminated property, and that preventive or safety measures taken before any property damage occurs are not covered. Chief Justice Callow, dissenting, joined by Justice Dolliver, would have held that CERCLA response costs are a restitutionary rather than compensatory remedy and therefore not payable 'as damages,' contending that the majority's holding contradicts controlling precedent, misapplies construction rules to corporate insureds, and violates public policy.