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Overton v. Consolidated Ins. Co.

ELR Citation: 32 ELR 20476
Nos. No. 70562-3, 38 P.3d 322/(Wash., 01/17/2002)

The court holds that because the owner of an electrical transformer manufacturing and repair business knew of polychlorinated biphenyl (PCB) contamination on its property before purchasing comprehensive general liability (CGL) insurance policies, property damage stemming from that contamination could not constitute an occurrence and trigger coverage under the policies. In 1976, the U.S. Environmental Protection Agency (EPA) took soil samples from the property and discovered PCB contamination. The owner of the property was informed of the contamination but did not clean the site. The following year, the owner purchased a CGL policy. The property was later sold, and after the subsequent owners discovered and cleaned up the PCB contamination, they brought suit against the original owner for compensation. The court first holds that the original owner's insurance company properly denied coverage for the cleanup. There was no genuine issue of material fact as to when EPA notified the orignal owner of the presence of PCBs. The PCB contamination constitutes property damage as defined in the policy, and the original owner's knowledge of the PCBs predated its purchase of the policies. Thus, regardless of when the original owner became liable to the subsequent owners, the property damage was not unexpected from the original owner's standpoint, and, therefore, there was no occurrence triggering coverage under the policies. The court also holds that the insurance companies did not deny the original owner coverage for the subsequent owners' suit in bad faith or in violation of the Consumer Protection Act.

The full text of this decision is available from ELR (8 pp., ELR Order No. L-444).

Counsel for Petitioner
Russell C. Love
Thorsud, Cane & Paulich
1325 4th Ave., Ste. 1300, Seattle WA 98101
(206) 386-7755

Counsel for Respondent
R.M. Etter Jr.
Witherspoon, Kelley, Davenport & Toole
422 W. Riverside Ave., Ste. 1, Spokane WA 99201
(509) 624-5265