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Division I Rules on 'Suit' Issue, Finds the Term Ambiguous

June 02, 2014

On June 2, 2014, in a case of first impression in Washington, Division I of the Washington Court of Appeals interpreted the word “suit” in the context of the insurer’s duty to defend against environmental cleanup liability claims.  In the Gull Industries environmental insurance coverage litigation, the insurers argued that they had no duty to defend Gull unless Gull has been sued in court.  As is the case in the vast majority of legally-mandated environmental cleanups in the State of Washington, Gull for the most part has conducted independent or “voluntary” cleanups, rather than waiting for the Department of Ecology or others to institute adversarial proceedings.  In apublished opinion that may be viewed here, the Court of Appeals affirmed the trial court’s holding that purely independent cleanups do not trigger the duty to defend.  However, the court held “that the term ‘suit’ is ambiguous in the environmental liability context” and therefore is not limited to civil actions in court.  Instead, the duty to defend may be triggered by “administrative enforcement acts that are the functional equivalent of a suit,” meaning that the agency has taken action that is explicitly or implicitly “adversarial or coercive in nature.”  Gull was represented on appeal by GTT&C lawyers Frank Cordell and Susannah Carr.

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