Weyerhaeuser Co. v. Commercial Union Insurance

142 Wash. 2d 654, 2000 WL 1867610

• Court: Washington Supreme Court
• Decided: December 21, 2000
• Docket: No. 67694-1
• Status: Published

Opinions

Sanders, J.

— Massive costs associated with hazardous waste cleanup prompt this litigation between insured and insurer to allocate financial responsibility pursuant to the terms and conditions of an insurance contract. The trial court resolved most claims on summary judgment, the remainder at trial. Neither party is satisfied. Commercial Union Insurance Company (CU) appeals and Weyerhaeuser cross-appeals the resulting final judgment. The Court of Appeals certified this proceeding to the Supreme Court for direct review and we accepted. Ruling Accepting Certification, No. 67694-1 (Mar. 8, 1999). In part we agree with the learned trial judge, but in part we do not. A number of issues are presented which we must resolve.

We affirm the trial court and hold: (1) the supplemental policy does not create a property damage aggregate limit; (2) CU is not entitled to offset settlements Weyerhaeuser received from other insurers; (3) CU is obligated to provide coverage for the Mid-State and Pasco sites; (4) the admission of expert testimony was proper; and (5) Weyerhaeuser is entitled to prejudgment interest for the five sites with liquidated damages. However we partially reverse the trial court to hold: (1) CU is entitled to a $500,000 per incident setoff against the underlying policy; (2) Weyerhaeuser is not entitled to prejudgment interest for (a) sites where damages are not liquidated, or (b) its award of attorneys’ fees; and (3) a material issue of fact remains as to whether the underlying insurer’s policy was properly exhausted, thus triggering CU’s duty to defend Weyerhaeuser.

Weyerhaeuser’s cross-appeal raises two additional issues concerning the proration of costs in relation to CU’s coverage at certain sites. CU concedes—and we agree—that in light of our subsequent holding in American National Fire Insurance Co. v. B&L Trucking & Construction Co., 134 Wn.2d 413, 951 P.2d 250 (1998), a remand to the trial court is necessary to determine the correct amount of Weyerhaeuser’s judgment for the sites where the jury prorated damages.

Accordingly, we affirm in part and reverse in part and remand to the trial court for proceedings consistent with this opinion.

FACTS

A. Background

Weyerhaeuser is the party responsible for cleaning up hazardous waste at approximately 130 sites nationwide under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601-9675, Washington’s Model Toxics Control Act (MTCA), chapter 70.105D RCW, and a variety of other state laws. Weyerhaeuser Co. v. Aetna Cas. & Sur. Co. (Weyerhaeuser I), 123 Wn.2d 891, 893, 874 P.2d 142 (1994). CERCLA and the MTCA impose strict liability for environmental cleanup. Id. at 898. The MTCA imposes joint and several liability for all natural resource damage and remediation costs. RCW 70.105D.040(2). Liability under both CERCLA and the MTCA extends broadly to current owners and operators of a facility, persons who owned or operated a facility at the time hazardous substances were disposed or released, and any other person who caused the disposal or release of the hazardous substance at any facility. See 42 U.S.C. § 9607(a); RCW 70.105D.040d).¹ Weyerhaeuser claims its past and future “worst case scenario” costs may be as high as in the hundreds of millions of dollars to clean up these sites. Br. of Resp’t/Cross-Appellant at 22 (citing Clerk’s Papers (CP) at 13410-13).

In 1992 Weyerhaeuser filed a declaratory judgment action against 34 insurance companies seeking a declaration of coverage with regard to property damage at 42 allegedly polluted sites in a number of states. CP at 142-214. Of these 42 sites only 15 are located in Washington (CP at 207-08), but because Weyerhaeuser is incorporated and headquartered in Washington, the trial court applied Washington law to the entire proceeding. CP at 295. Discovery and trial were divided into three phases or groups of sites. CP at 236-94.

Prior to trial the court granted the defendant insurer’s motion for summary judgment with regard to 15 sites, finding no coverage where the government had not instituted legal action because there was no claim of liability by a third party. Weyerhaeuser I, 123 Wn.2d at 894. We reversed, holding

Comprehensive General Liability (CGL) insurance policies, which provide coverage for all sums which the insured shall be obligated to pay by reason of the liability imposed by law for damages on account of property damage, may provide coverage when an insured engages in the cleanup of pollution damages in cooperation with an environmental agency. Such policies can reasonably be read to provide coverage for actions taken to clean up pollution damages required under environmental statutes which impose strict liability for such cleanup.

Id. at 896-97.

Subsequent to this decision and prior to the Phase I trial, all but one of the 34 insurance company defendants settled with Weyerhaeuser.² CU was the sole insurer that did not settle.

B. Employers’ Surplus Lines Supplemental Policy

As is common for large companies, Weyerhaeuser purchased its insurance in layers. See Pub. Util. Dish No. 1 v. Int’l Ins. Co., 124 Wn.2d 789, 793, 881 P.2d 1020 (1994). At trial Weyerhaeuser claimed coverage under a supplemental or excess policy (hereinafter “supplemental policy”) issued by Employers’ Surplus Lines Insurance Company, No. E 62079 (Pl.’s Trial Ex. 3). CU then appeared as successor to Employers’ Surplus Lines Insurance Co. CP at 223. The policy declarations page provided the policy was effective March 1, 1970 to March 1, 1973; however, an endorsement (No. 2) extended coverage from January 1,1970 to March 1, 1970 (referred to as the “stub policy” or the “stub period”). Pl.’s Trial Ex. 3. A subsequent endorsement (No. 6) terminated coverage one month early on January 31, 1973. Id. The Employers’ Surplus Lines policy supplemented the underlying Fireman’s Fund Insurance Company policy (“underlying policy’) pursuant to the following provision:

2. MAINTENANCE OF UNDERLYING INSURANCE

This policy is subject to the same terms, definitions, exclusions and conditions (except as regards the premium, the amount and limits of liability and except as otherwise provided herein) as are contained in or as may be added to the Underlying Policies stated in Item 2 of the Declarations [the Fireman’s Fund policy] prior to the happening of an occurrence for which claim is made hereunder.

Id. The supplemental policy specified limits of $1,500,000 in excess of the Fireman’s Fund $500,000 primary policy limits (CP at 8940), although the parties disagree as to whether the aggregate limit in the supplemental policy applies to, or limits, property damage coverage.³ CU claims the $1,500,000 aggregate limit applies to property damage. Weyerhaeuser claims it does not, and contends there is no aggregate limit on property damage.

C. Trial

The Phase I trial began in fall 1994, focusing on (1) the Mid-State landfill near Cleveland, Wisconsin, and (2) Weyerhaeuser’s wood-treating plant in DeQueen, Arkansas. CP at 592-93. After three weeks the jury found coverage for the Mid-State site but no coverage for the DeQueen site. The Phase II trial began in spring 1996 and included seven Washington sites. The jury found coverage for five of the seven sites. CP at 7130-44. The Phase III trial on 10 remaining sites was avoided by CU’s offer of judgment to Weyerhaeuser totaling $4,001,000 plus certain future costs. CP at 7168-72, 7415-18. Weyerhaeuser accepted the judgment offer, which was filed on May 30,1997. CP at 7415-25.

On December 19, 1997 the trial court entered the judgment on jury verdicts and declaratory judgment against CU in the amount of $7,873,200. CP at 11085. A supplemental monetary judgment of $556,200 in attorneys’ fees and costs was entered on January 23, 1998. CP at 11180.

CU appealed a number of trial court rulings to the Court of Appeals and Weyerhaeuser responded and cross-appealed. The Court of Appeals certified the following “issue of broad public import” to this court:

What is the extent and nature of insurance coverage for pollution damage, including any set off for settlements received from other insurers?

Order of Certification, No. 42024-1-1 (Feb. 26, 1999). The Commissioner accepted certification. Ruling Accepting Certification, No. 67694-1 (Mar. 8, 1999).

We must consider and decide the following issues: (1) Does the supplemental policy create a property damage aggregate limit and, if not, is CU entitled to a $500,000 per incident setoff?; (2) To what extent is CU entitled to offset settlements received by Weyerhaeuser from other insurers?; (3) Is CU obligated to provide coverage for Weyerhaeuser’s legal liability arising from actions taken during the policy period by entities other than Weyerhaeuser when such actions result in liability to Weyerhaeuser imposed by law?; (4) Did the trial court properly admit expert testimony on the issue of damages at the Mid-State site?; (5) Is Weyerhaeuser entitled to prejudgment interest and, if so, from what date and on what awards?; (6) What was CU’s “duty to defend”?; and finally, (7) Did the trial court properly instruct the Phase II jury regarding the meaning of the term “accident” contained in the Fireman’s Fund policy? We discuss each of these issues, and their pertinent facts, in turn.

ANALYSIS

I

Limits of CU’s Liability for Property Damage

In June 1993 the trial court granted Weyerhaeuser’s motion for partial summary judgment, denying CU’s cross-motion for partial summary judgment, on the question of whether the supplemental policy contains an aggregate limit for property damage liability. The court found “no aggregate limit for property damage liability’ exists. CP at 579. Arguing the supplemental policy aggregate limit provision is virtually identical to the underlying Fireman’s Fund aggregate limit provision, CU moved for partial summary judgment, asking the court to declare the Fireman’s Fund policy likewise did not contain a property damage aggregate limit. CP at 1879. The trial court denied this motion on September 29,1994. CP at 2844. CU assigns error to both of these rulings, which are reviewed de novo. Mid-Century Ins. Co. v. Henault, 128 Wn.2d 207, 212, 905 P.2d 379 (1995).⁴

A. Aggregate Limit on Property Damage Liability.

We first consider whether the supplemental policy contains a property damage aggregate of $1,500,000, limiting the insurer’s total liability for property damage to this sum for the policy period.⁵ The trial court held the policy language imposes no aggregate limit for property damage claims, only aggregate limits for products liability and personal injury claims. CP at 579-80. We agree.

The criteria for interpreting an insurance contract are well settled:

In Washington, insurance policies are construed as contracts. An insurance policy is construed as a whole, with the policy being given a “fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.” If the language is clear and unambiguous, the court must enforce it as written and may not modify it or create ambiguity where none exists. If the clause is ambiguous, however, extrinsic evidence of the intent of the parties may be relied upon to resolve the ambiguity. Any ambiguities remaining after examining applicable extrinsic evidence are resolved against the drafter-insurer and in favor of the insured. A clause is ambiguous when, on its face, it is fairly susceptible to two different interpretations, both of which are reasonable.

B&L Trucking & Constr. Co., 134 Wn.2d at 427-28 (quoting Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wn.2d 618, 627, 881 P.2d 201 (1994)) (citations omitted).

The language particularly at issue in the supplemental policy follows in bold face:

II. LIMIT OF LIABILITY-UNDERLYING LIMITS

It is expressly agreed that liability shall attach to the Underwriters only after the Underlying Insurers have paid or have been held liable to pay the full amount of their respective ultimate net loss liability as follows:

$[500,000] ultimate net loss in respect of each occurrence, but

$[500,000] in the aggregate for each annual period during the currency of this Policy separately in respect of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured

and the Underwriters shall then be liable to pay only the excess thereof up to a further

$[1,500,000] ultimate net loss in all in respect of each occurrence — subject to a limit of

$[1,500,000] in the aggregate for each annual period during the currency of this Policy, separately in respect of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured.

Pl.’s Trial Ex. 3, at WEYO 000551-52 (emphasis and bold added to language at issue).⁶

Although both CU and Weyerhaeuser argue this language contains no ambiguity, both attribute opposite meanings to the aggregate clause. The trial court also found no ambiguity, agreeing with Weyerhaeuser’s interpretation that the clause set an aggregate limit for products liability and personal injury but not for property damage or anything else.

I find in favor of the plaintiff because I find that there is no ambiguity in this policy. I cannot find a general aggregate limit, and I cannot find a specific property aggregate. In order to find those things, I have to rearrange the punctuation in the policy.

Report of Proceedings (RP) at 33-34. A “fair, reasonable, and sensible” construction of the clause at issue supports the trial court’s conclusion that the clause imposes an aggregate limit for products liability and personal injury claims but calls out no general aggregate limit for other types of claims, including property damage.

The policy provides excess liability up to $1,500,000 for each occurrence, subject to a limit of $1,500,000 “in the aggregate for each annual period during the currency of this Policy, separately in respect of Products Liability and separately in respect of Personal Injury (fatal or non-fatal) by Occupational Disease sustained by any employees of the Assured.” Pl.’s Trial Ex. 3, at WEYO 000551-52 (emphasis added). CU strains to show that this sentence structure creates three aggregate limits: (1) a general aggregate limit for all claims—including property damage—other than products liability and personal injury; (2) an aggregate limit for products liability claims; and (3) an aggregate limit for personal injury claims. It argues its total exposure is therefore limited to $4,500,000—a dollar sum nowhere expressly reflected in the policy language. Weyerhaeuser Co. v. Commercial Union Ins. Co., No. 67694-1 (oral argument (cassette tape) June 8, 1999).

Contrary to CU’s assertion, we agree with the trial court that there is no ambiguity in this policy and that if CU had intended to place an aggregate limit on property damage it would have said so. Notwithstanding, CU’s liability is still limited by applicable policy provisions to $1,500,000 net loss in all respects for each occurrence. If there are multiple occurrences within an annual period the plain language of this policy does not limit the insured’s aggregate recovery for property damage or other types of loss aside from products liability and personal injury.

B. $500,000 Per Incident Setoff.

CU next argues if the supplemental policy’s aggregate clause does not impose an aggregate limit on property damage coverage, “the same interpretation must be applied to the same language used to describe the aggregate limits of the underlying policy [Weyerhaeuser] promised to maintain.” Revised Br. of Appellant at 34. We agree.

Weyerhaeuser’s underlying insurance policy with Fireman’s Fund contains the following clause:

(3) As respects Coverage B [property damage] subject to the above limit for any one occurrence or accident, the aggregate limit of the Company’s liability for all damages shall be $500,000. as a result of all occurrences or accidents happening during the policy period ....

Def.’s Trial Ex. 2592, at WEY4 418683. Although the parties do not dispute this clause clearly establishes a property damage aggregate limit, this clause appears in the underlying policy, not CU’s supplemental policy. CU therefore asks this court to examine language from its insurance policy to determine its right to offset the threshold exclusion for which Weyerhaeuser agreed to provide underlying insurance coverage—whether or not it successfully obtained that coverage.

CU notes the language used in its supplemental policy’s underlying aggregate exclusion clause is virtually identical to that used in the same policy’s supplemental aggregate clause which we construed in the previous section not to impose an aggregate limit on property damage claims. CU contends if it has no aggregate limit for property damage, the insured—by virtue of the same language— must be responsible for the first $500,000 of each property damage claim also without aggregate limit. The supplemental policy language here at issue provides:

It is expressly agreed that liability shall attach to the Underwriters only after the Underlying Insurers have paid or have been held liable to pay the full amount of their respective ultimate net loss liability as follows:

$[500,000] ultimate net loss in respect of each occurrence, but [$500,000] in the aggregate for each annual period during the currency of this Policy separately in respect of Products Liability and separately in respect of Personal Injury (fatal or nonfatal) by Occupational Disease sustained by any employees of the Assured

Pl.’s Trial Ex. 3, at WEY0 000551-52 (emphasis added to language at issue). CU argues the underlying aggregate exclusion clause should be given the same meaning as the supplemental aggregate limitation clause, thus entitling it to offset $500,000 against each property damage claim notwithstanding the fact Weyerhaeuser’s underlying policy does in fact impose a $500,000 aggregate limit on coverage to benefit its insured.

When interpreting a contract our primary goal is to discern the intent of the parties, and such intent must be discovered from viewing the contract as a whole. Tanner Elec. Coop. v. Puget Sound Power & Light Co., 128 Wn.2d 656, 674, 911 P.2d 1301 (1996). Our rules require interpreting the whole contract by giving it a “ ‘fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.’ ” B&L Trucking & Constr. Co., 134 Wn.2d at 427 (quoting Key Tronic Corp., 124 Wn.2d at 627).

A fair, reasonable, and sensible construction compels us to agree that nearly identical language in these two clauses of the same policy must have the same meaning. See Holier v. Nat’l Union Fire Ins. Co., 1 Wn. App. 46, 50, 459 P.2d 61 (1969) (“In the absence of anything in the context of a contract clearly indicating a contrary intent, when the same word is used in different parts of the contract, it will be presumed to be used in the same sense throughout the contract.”).

Because the CU aggregate limits clause cannot be read to provide an aggregate property damage limit on CU’s liability, the exclusion clause similarly limits CU’s liability to that in excess of $500,000 per incident, no matter how many incidents. Pl.’s Trial Ex. 3, at WEY0 000551-52. See MacKenzie v. Empire Ins. Cos., 113 Wn.2d 754, 759, 782 P.2d 1063 (1989) (catastrophe policies provide coverage excess to that provided by the primary policy); Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 9, 13, 665 P.2d 887 (1983) (liability of excess insurer does not arise until after the limits of the coverage under the primary policy have been exceeded); Mitchell L. Lathrop, Insurance Coverage for Environmental Claims § 8.03 [3], at 8-39 (1992) (excess insurer’s “obligation to defend and indemnify the insured upon exhaustion of the primary insurance is commanded by the terms of the excess policy itself.”); Thomas V. Harris, Washington Insurance Law § 31.3, at 31-2 (1995) (describing “Umbrella and Excess [Insurance] Policies”).

Weyerhaeuser improperly focuses on CU’s admission that the underlying Fireman’s Fund policy contains a property damage aggregate by mistakenly overlooking the crucial fact that it is bound by its contract with CU and, by the terms of that contract, CU’s liability arises only for sums in excess of $500,000 per incident without aggregate limit.⁷

Accordingly, we reverse the trial court, holding CU is entitled to a $500,000 per incident setoff with no aggregate limit on the number of setoffs for property damage.

II

Settlement Setoffs

Following the Phase II trial, CU moved to set off settlement funds received by Weyerhaeuser from other insurance carriers against the Phase I and Phase II jury verdicts. CU attempted to show the settlement funds received by Weyerhaeuser were sufficient to pay all proven and covered damages at the Phase I, II, III and other released sites, plus collateral claims for attorneys’ fees and statutory interest, with over $5,000,000 remaining. The trial court denied CU’s motion (CP at 11128-29)⁸ and orally ruled:

THE COURT: Based upon the materials that I have reviewed and upon the oral argument presented, I am prepared to rule in the following way: I am denying CU’s motion. The reason I am denying CU’s motion is that I believe that they have not met the requirements of the Pederson Farms [sic] [Pederson’s Fryer Farms, Inc. v. Transamerica Ins. Co., 83 Wn. App. 432, 922 P.2d 126 (1996)] case; that in order to meet the requirements of Pederson Farms in a civil standard, they have to show by a preponderance of the evidence that there has been double recovery here.

Given the facts that we have before us, the form that the releases come in, the multiplicity of the claims and the parties, it is impossible to be able to sort that out at this point and for the court to say affirmatively that Commercial Union has demonstrated that Weyerhaeuser has been made whole.

RP at 4611.

In support of its claimed entitlement to offset other settlement funds received by Weyerhaeuser, CU argues, “A fundamental rule of damages prohibits multiple recovery.” Revised Br. of Appellant at 36 (citing Monjay v. Evergreen Sch. Dist. No. 114, 13 Wn. App. 654, 658, 537 P.2d 825 (1975)). Weyerhaeuser demurs: “All parties agree that ‘double recovery’ should not be permitted.” Br. of Resp’t/ Cross-Appellant at 28. But even assuming the existence of a general rule barring double recovery absent policy language to that effect, the insured must first be fully compensated for its loss before any setoff is ever allowed. See Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215, 219-20, 588 P.2d 191 (1978).

CU relies upon contractual language that requires it “ ‘to indemnify the Assured for all sums which the insured shall be obligated to pay.’ ” Revised Br. of Appellant at 36 (quoting Pl.’s Trial Ex. 3, at WEYO 000551) (emphasis added).⁹ Indemnification, according to CU, means to make whole; it does not mean an insured is entitled to double recovery. See also Sec. Serv., Inc. v. Transamerica Title Ins. Co., 20 Wn. App. 664, 669, 583 P.2d 1217 (1978) (to indemnify is to reimburse for any loss). Even accepting CU’s legal argument, we must first decide which party carries the burden of proving a double recovery where an insured has received general releases from other insurers. Amicus Lloyd’s of London asks this court to reject the Court of Appeals decision in Pederson’s Fryer Farms, Inc. v. Transamerica Insurance Co., 83 Wn. App. 432, 451-52, 922 P.2d 126 (1996), which places the burden upon the insurance company seeking the setoff to prove a double recovery.

In Pederson’s the court was faced with a substantially similar, albeit less complex, situation. The insured, Pederson’s, sought to recover expenses incurred in cleaning up contamination from an underground gas tank. Pederson’s Fryer Farms, 83 Wn. App. at 435. Pederson’s settled with two insurers for $32,000. Id. at 436. Pederson’s then prevailed in a suit for cleanup costs from a third insurer, Transamerica. Id. Despite the principle of inappropriate “double recovery” and the policy’s “other insurance” clause, the court held setoff was not allowed.

The settlement, however, was not mere payment for Pederson’s cleanup costs; it was in exchange for a release of liability for all past, present and future environmental claims. Transamerica did not demonstrate what part, if any, of the settlement was attributable to cleanup costs. Thus, no showing of double recovery was made. The trial court acted appropriately by not reducing the award.

Id. at 452.

As Weyerhaeuser correctly notes, the insurers that chose to settle in this case received far more than a simple release of liability at specific sites. Rather these companies also purchased certainty by avoiding the risks of an adverse trial outcome—not to mention forgoing the expenses associated with a lengthy trial and appeal. As the insurers “paid Weyerhaeuser for a release from an unquantifiable basket of risks and considerations,” Br. of Resp’t/Cross-Appellant at 23, we cannot say the settlements simply constituted payment for Weyerhaeuser’s cleanup costs. Further, the rule articulated by Pederson’s is supported by “Washington’s strong public policy of encouraging settlements.” Seafirst Ctr. Ltd. P’ship v. Erickson, 127 Wn.2d 355, 366, 898 P.2d 299 (1995). Were we to hold the insured bears the burden of proving it has not received a double recovery, such a rule would encourage litigation and reward the nonsettling insurer for refusing to settle.

CU and amicus Lloyd’s further argue whatever the efficacy of the Pederson’s rule it cannot survive our more recent holding in B&L Trucking, which established joint and several liability for all insurers at risk during a time of ongoing damage, B&L Trucking & Constr. Co., 134 Wn.2d at 424, and ask us to apply tort principles and statutes governing contribution in tort cases to interpret an insurance contract. The only Washington case to have considered this issue has refused the invitation. Dash Point Vill. Assocs. v. Exxon Corp., 86 Wn. App. 596, 606-07, 937 P.2d 1148, 971 P.2d 57 (1997).

Further, CU ignores the language in its own supplemental policy, which is dispositive. CU benefits from two exclusionary clauses in its contract that serve to limit its liability below a threshold in the nature of a deductible. See supra note 9. But CU tactically opted against arguing these clauses and did not provide this court with a sufficient record to review the applicability of the supplemental policy’s “other insurance” clause. Id. In effect CU now seeks applicability of these exclusionary clauses under another name. The burden of showing entitlement to an exclusion of liability based upon the existence of other insurance is properly CU’s. See Queen City Farms, Inc. v. Cent. Nat’l. Ins. Co., 126 Wn.2d 50, 71, 882 P.2d 703, 891 P.2d 718 (1994) (noting insurer bears burden of proving applicability of exclusions from coverage); see also Kenneth S. Abraham, Environmental Liability Insurance Law 121 (1991) (where insurers are jointly and severally liable for environmental damages, “[o]ther [i]nsurance” clauses supply basis for apportionment).

Having properly determined CU bears the burden of establishing a double recovery, we now address CU’s contention it carried its burden and proved the settlement funds obtained from other insurers fully compensated Weyerhaeuser. We conclude it did not and agree the trial court’s finding that Weyerhaeuser has not been made whole is supported by substantial evidence. See Price v. Kitsap Transit, 125 Wn.2d 456, 464, 886 P.2d 556 (1994).¹⁰

Weyerhaeuser submitted evidence establishing its past costs alone greatly exceed the settlement funds received from other insurers. CP at 13411-13. CU failed to persuasively rebut these figures and, in fact, submitted the same evidence to the trial court. Although CU asserts it conclusively showed Weyerhaeuser had been made whole and, in fact, had $5,000,000 remaining, its citations to the record in support of this assertion are wholly inadequate. CU simply directs this court to its earlier trial memoranda and a 400-page declaration from counsel—documents consisting almost entirely of confidential settlement agreements—with no showing of how this evidence supports CU’s allegations. Further, confidential settlement communications are inadmissible for purposes of establishing Weyerhaeuser’s liabilities. See ER 408 (offers of compromise are inadmissible to prove the amount of a claim); see also 5A Karl B. Tegland, Washington Practice: Evidence Law and Practice § 408.1, at 48 (4th ed. 1999) (offers of compromise are irrelevant “because an offer to settle may be motivated solely by a desire to buy peace . . . .”).

We affirm the trial court on this point and hold CU failed to carry its burden to demonstrate Weyerhaeuser has been fully compensated for its liabilities. Accordingly, we conclude the trial court properly denied CU’s request to offset settlements received from other insurers.

III

Extent of Coverage

Of the six sites tried to a jury and found covered under the Phase I and II trials, two were landfills: Mid-State, Wisconsin, and Pasco, Washington. The Pasco landfill began operating in 1956 as a dump, but it was converted to a sanitary landfill in 1971. CP at 7099. Mid-State became an operational sanitary landfill in 1971. CP at 11942.

The supplemental policy was effective March 1, 1970 to March 1, 1973. Pl.’s Trial Ex. 3, at WEY0 000544. Two supplemental endorsements resulted in coverage commencing on January 1, 1970 and ending on January 31, 1973. Pl.’s Trial Ex. 3, at WEY0 000546 and WEY0 000549. Although both the Mid-State and Pasco landfills were operational during the supplemental policy period, Weyerhaeuser did not ship waste to these sites until after the expiration of the supplemental policy. CP at 7099, 11942.¹¹

In December 1993 CU moved for partial summary judgment dismissing the Mid-State site on grounds that the supplemental policy did not provide coverage for contamination because Weyerhaeuser did not ship waste to the site until 1974. CP at 13890-906. Although the trial court deferred ruling on whether property damage in fact occurred at Mid-State before the supplemental policy expired, it ruled the policy covered property damage that occurred during the policy period—even though damage was not attributable to Weyerhaeuser’s waste. CP at 14164-65.

CU claims it is not obligated to provide coverage for Weyerhaeuser’s legal liability that arose due to actions of entities other than Weyerhaeuser during the policy period and disputes the following awards (excluding interest): (1) $1,500,000 judgment for damages at the Mid-State site (CP at 11088); and (2) $143,542 judgment for damages at the Pasco landfill (CP at 11093). CU argues that before its obligation to provide coverage is triggered, any property damage that occurred during the policy period must arise out of Weyerhaeuser’s business operations as opposed to damage “caused by a stranger to the policy.” Revised Br. of Appellant at 48.

The supplemental policy provided the following under “Coverage”:

Underwriters hereby agree ... to indemnify the Assured for all sums which the Assured shall be obligated to pay by reason of the liability

(a) imposed upon the Assured by law, or

(b) assumed under contract or agreement by the Named Assured ... for damages, direct or consequential and expenses on account of:....

(c) Property Damage,

caused by or arising out of each occurrence happening anywhere in the world, and arising out of the hazards covered by and as defined in the Underlying Policies ....

Pl.’s Trial Ex. 3, at WEY0 000551. The underlying Fireman’s Fund policy agreed

TO PAY on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of the liability imposed upon the insured by law, or assumed by the insured under contract or agreement, because of injury to or destruction of corporeal property, including all loss resulting therefrom, arising out of the business operations of the insured.

Def.’s Trial Ex. 2592, at WEY4 418663 (Coverage B). The Fireman’s Fund policy defined “Occurrence” as “an event or continuous or repeated exposure to conditions, which unexpectedly causes injury during the policy period.” Id. at WEY4 418690.

It is uncontroverted that pursuant to current federal and state environmental statutes, Weyerhaeuser, as a responsible party, is jointly and severally liable for the cleanup of all contamination at these sites, including contamination caused by parties other than Weyerhaeuser at a time when Weyerhaeuser had no connection to or involvement with the property. See 42 U.S.C. § 9607(a); RCW 70.105D.040d). Also Weyerhaeuser’s liability arose out of its business operations, as it is undisputed Weyerhaeuser disposed waste at these sites. Further the actions that gave rise to Weyerhaeuser’s legal liability occurred during the policy period. What did not occur was damage directly caused by Weyerhaeuser during the covered period. We must, therefore, address the issue of whether a comprehensive, general liability insurance policy covers property damage arising from the conduct of a third party at a time when the insured had no relation to or connection with the property.

Two federal district courts applying Washington law have ordered coverage under nearly identical circumstances and policies. One court reasoned:

Boeing’s liability in the underlying litigation, relating to 1961-64, clearly arose out of its “operations,” i.e., its post-1964 depositing of toxic wastes at the site. The phrase “all sums” is limited by the policy definitions of “occurrence” or “accident,” but is not limited by any requirement that the insured’s act be a proximate cause of the damages it is “legally obligated to pay.” In Washington, if there is any ambiguity, policy language should be interpreted to promote coverage.

Boeing Co. v. Aetna Cas. & Sur. Co., “Order on Plaintiff’s Motions for Partial Summary Judgment Regarding Extent of Duty to Defend and Coverage for Policy Years 1961-1964 at Western Processing,” 1991 WL 575712 (W.D. Wash., Oct. 16, 1991) (No. C86-352WD) (citation omitted) (not reported in F. Supp.) (CP at 641). Accord Puget Sound Power & Light v. Aetna Cas. & Sur. Co., Order (May 19, 1998) (No. C95-1376C) (not reported in F. Supp.). Although these decisions are unpublished, we find their reasoning compelling.

Here the plain language of the policy requires coverage as the definition of “occurrence” is not limited to actions taken by Weyerhaeuser but includes any event which unexpectedly causes injury during the policy period. Def.’s Trial Ex. 2592, at WEY4 418690. And the nature of the liability imposed by the federal and state statutes compels coverage where the insurer has agreed to pay “all sums which the insured shall become obligated to pay as damages by reason of the liability imposed upon the insured by law .. . .” Id. at WEY4 418663. Because the property damage occurred during the policy period and Weyerhaeuser has become obligated by reason of law, the plain language of the contract requires coverage.

CU argues that imposing liability upon the insurer of one company for the harms caused by another violates the basic rules of construction of an insurance contract. That is, imposing liability outside of the contract period is not a “ ‘fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance. ” B&L Trucking & Constr. Co., 134 Wn.2d at 427-28 (quoting Key Tronic Corp., 124 Wn.2d at 627). But the broad nature of the coverage Weyerhaeuser purchased defeats this argument.¹² If there is unfairness it is the statute which creates the liability, not the insured which attempts to insure against it. The policy required payment of “all sums which the Assured shall be obligated to pay by reason of the liability (a) imposed upon the Assured by law. . . .” Pl.’s Trial Ex. 3, at WEYO 000551 (improved resolution). The triggering event is an “occurrence,” which is not limited to an act by Weyerhaeuser. Def.’s Trial Ex. 2592, at WEY4 418690. Although the parties may not have predicted liability of this nature would be imposed, it is nevertheless a legal liability imposed upon Weyerhaeuser by an occurrence as defined in Weyerhaeuser’s insurance policy. Weyerhaeuser contracted—and paid higher premiums—for comprehensive coverage encompassing just such a situation.

CU also argues that liability did not arise out of property damage that occurred during the policy period, as Weyerhaeuser’s liability for its shipments arose after the expiration of the supplemental policy. In support CU notes the California Court of Appeals, Sixth District, has held coverage exists only where the insured is liable for the damage at the time it occurred. FMC Corp. v. Plaisted & Cos., 61 Cal. App. 4th 1132, 1154-55, 72 Cal. Rptr. 2d 467, 480 (1998); A.C. Label Co. v. Transamerica Ins. Co., 48 Cal. App. 4th, 1188, 1192-93, 56 Cal. Rptr. 2d. 207, 209 (1996). However, the Court of Appeals, Fifth District, reached the opposite conclusion. Garriott Crop Dusting Co. v. Superior Court, 221 Cal. App. 3d 783, 791-92, 270 Cal. Rptr. 678, 682-83 (1990).

During the pendency of this litigation the United States Court of Appeals for the Ninth Circuit resolved the apparent conflict favorably to the position here advocated by Weyerhaeuser. That court characterized the question almost identically to the one presented here:

“Where the state seeks recovery for damage to state-owned groundwater contained within certain property, does the property owner’s comprehensive general liability policy provide coverage if the damage occurred within the policy period, but the insured purchased the property after the policy period . . . ?”

In re KF Dairies, Inc. & Affiliates, 224 F.3d 922, 924 (9th Cir. 2000) (quoting KF Dairies, Inc. v. Fireman’s Fund Ins. Co., 179 F.3d 1226, 1227 (9th Cir. 1999)).

The Ninth Circuit answered affirmatively, holding: “[W]e reject the analysis in A.C. Label and FMC Corp., and hold that coverage is provided under a [comprehensive general liability] policy if the damage occurred within the policy period, but the insured purchased the property after the policy period . . . In re KF Dairies, Inc. & Affiliates, 224 F.3d at 925.

This holding of the Ninth Circuit is directly on point and persuasive. See King County v. Cent. Puget Sound Growth Mgmt. Hearings Bd., 138 Wn.2d 161, 179, 979 P.2d 374 (1999) (citing Inland Empire Distrib. Sys., Inc. v. Utils. & Transp. Comm’n, 112 Wn.2d 278, 283, 770 P.2d 624 (1989)).

CU seeks further support for its position from Wellbrock v. Assurance Co. of America, 90 Wn. App. 234, 951 P.2d 367, review denied, 136 Wn.2d 1005, 966 P.2d 902 (1998). There the court held that an “occurrence” for insurance coverage purposes is determined by reference to the time of injury, not the time of initial negligence or damage. Id. at 242. However here the property damage, for which Weyerhaeuser is jointly and severally liable, did occur during the policy period. See also Villella v. Pub. Employees Mut. Ins. Co., 106 Wn.2d 806, 811-12, 725 P.2d 957 (1986) (denying coverage because insured failed to show either that actual damage had occurred during the covered period or that a continuing process of damage had commenced during that period).

Support for CU’s coverage obligation may be found in our holding in Weyerhaeuser I. There we pointed out that the nature of liability imposed under environmental cleanup acts requires coverage—notwithstanding the extent of the insured’s fault—as such statutes “impose liability, often without fault, on polluters in order to safeguard society in general.” Weyerhaeuser I, 123 Wn.2d at 909. Recognizing CU’s coverage obligation is consistent with the nature of the legal liability imposed by CERCLA and the MTCA: it is strict, joint and several, and retroactive. The legal responsibility to clean up the property damage that occurred at the sites during the policy period is now Weyerhaeuser’s.

The following excerpt is particularly applicable here:

We recognize and even sympathize with the dismay of insurers who issued “occurrence” (as opposed to “claims made”) policies many years ago without advance knowledge that in 1980 Congress would enact CERCLA and impose retroactive liability upon insureds who had “disposed of hazardous waste in a completely legal, nonactionable manner”. Boeing [Co. v. Aetna Cas. & Sur. Co]., 113 Wn.2d [869,] 907[, 784 P.2d 507 (1990)] (Callow, C.J., dissenting). But our Supreme Court has rejected these same public policy arguments as we are now hearing, in Boeing. Our Supreme Court has declined to “rewrite the principles of insurance contract analysis in Washington, and then to retroactively apply these rewritten principles to the policy-holders that bought their policies decades ago.” Boeing, 113 Wn.2d at 887.

Queen City Farms, Inc. v. Cent. Nat’l Ins. Co., 64 Wn. App. 838, 888, 827 P.2d 1024 (1992), aff’d, 126 Wn.2d 50, 882 P.2d 703, 891 P.2d 718 (1994).

We hold the plain language of the contract, the comprehensive nature of the policy, and the nature of the liability imposed by CERCLA and the MTCA mandates coverage. The trial court properly denied CU’s motion for summary judgment on this issue.

IV

Expert Testimony—Property Damage at Mid-State

Kathryn Huibregtse was the principal engineer responsible for the remediation design at the Mid-State landfill site. RP at 852. She is a professional engineer with a degree in chemical engineering who specializes in the evaluation of how chemical constituents are transported through the environment underground. RP at 833-41. The trial court allowed Huibregtse, over objection, to offer opinions regarding the transport and deposit of chemicals and the existence of groundwater contamination at Mid-State. RP at 900-01.

Huibregtse’s testimony involved six key subject areas: (1) the nature of the wastes placed into the site; (2) local rainfall data from 1971-72; (3) local and site-specific geology and hydrogeologies; (4) observation of on-site equipment operators; (5) documentation of site conditions by the Owen Ayres consulting firm; and (6) observation concerns of state officials regarding depth of bedrock and other operational issues. Pl.’s Trial Ex. 3679.

CU argues the trial court improperly admitted the expert testimony of Huibregtse. Specifically, CU alleges that because Weyerhaeuser “offered no proof of the factual assumptions underlying Huibregtse’s opinion, her opinion was improperly admitted.” Revised Br. of Appellant at 56.

The admissibility of expert testimony is governed by Evidence Rules (ER) 702 and 703.¹³ The determination of the admissibility of expert testimony is within the discretion of the trial court and will not be disturbed absent an abuse of discretion. See, e.g., State v. Stenson, 132 Wn.2d 668, 715, 940 P.2d 1239 (1997), cert. denied, 523 U.S. 1008, 118 S. Ct. 1193, 140 L. Ed. 2d 323 (1998). A court abuses its discretion when its decision is based on untenable grounds or is manifestly unreasonable or arbitrary. Testimony that will assist the trier of fact to understand the evidence or to determine a fact is to be admitted. ER 702.¹⁴ However, it is an abuse of discretion for a court to admit expert testimony that lacks an adequate foundation. Walker v. State, 121 Wn.2d 214, 218, 848 P.2d 721 (1993).

CU challenges two aspects of Huibregtse’s testimony and argues there was “no evidence” that (1) drainage trenches were dug to the level of bedrock, or (2) sufficient hazardous materials were deposited to cause subsequent contamination. But CU both misconstrues Huibregtse’s testimony and ignores evidence that supports it. Huibregtse’s testimony made clear when she was offering an opinion based upon evidence generally relied upon by experts in her field. RP at 876, 898-99. When an expert bases her opinion on evidence “of a type reasonably relied upon by experts in the particular field,” the underlying facts or data need not be admissible. ER 703. Further, Huibregtse’s assumptions are supported by substantial evidence. See, e.g., Pl.’s Trial Ex. 1008, at 2 (noting size of service area); Pl.’s Trial Ex. 3679, at 2 (noting hazardous nature of household waste); id. at 7 (initial trenches dug to bedrock); id. at 3-4 (monthly rainfall at site from August 1971 to December 1972); id. at 4 (site began accepting waste in August 1971 and one trench was half full by October 1971).

In support of its argument, CU relies entirely on two cases wherein the appellate court affirmed a trial court’s decision not to admit expert testimony (State v. McDonald, 98 Wn.2d 521, 529, 656 P.2d 1043 (1983) and State v. Pittman, 88 Wn. App. 188, 198, 943 P.2d 713 (1997)). CU’s use of these cases ignores that we review the trial court’s decision for abuse of discretion. As we explained in McDonald, the trial court did not abuse its “very wide discretion in deciding” to exclude the expert opinion evidence as the “testimony did not establish to the court’s satisfaction” the first factual matter, nor did the offered testimony “satisfy the court” on the second issue. McDonald, 98 Wn.2d at 529 (emphasis added).

The trial court did not abuse its discretion to admit the expert testimony of Ms. Huibregtse.

V

Prejudgment Interest

After the Phase I and II trials concluded, Weyerhaeuser moved for an award of prejudgment interest. The trial court’s final judgment included three disputed awards of prejudgment interest: (1) for the Phase I and II trial sites where clean-up invoices existed and damages were arguably liquidated, interest was awarded from the date of the invoice through the date of the verdict; (2) for the Longview site where damages were unliquidated (CP at 10819-20), interest was awarded from the date of the verdict; and (3) for attorneys’ fees awarded pursuant to Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d 37, 811 P.2d 673 (1991), interest was awarded from the date of the court order awarding attorneys’ fees. CP at 11125-27A.

A. Interest from Date of Invoices

Weyerhaeuser’s entitlement to prejudgment interest is controlled by our decision in Frier v. Refrigeration Engineering Co., 74 Wn.2d 25, 442 P.2d 621 (1968). There we held in Washington a party is entitled to prejudgment interest where the amount due is “liquidated,” id. at 32, and defined a “liquidated” claim as one where the evidence furnishes data which, if believed, make it possible to compute the amount due with exactness, without reliance on opinion or discretion. Id.

It would seem that the existence of a dispute over the whole or part of the claim should not change the character of the claim from one for a liquidated, to one for an unliquidated, sum, and this conclusion finds support in the cases. . . . [T]he sum is still “liquidated” according to what is believed to be the better view, although the sum is not fixed by agreement and although the facts upon which the claim is based may be disputed, and even though the adversary successfully challenges the amount and succeeds in reducing it.

Under this view, only those claims would be termed “unliquidated” where the exact amount of the sum to be allowed cannot be definitely fixed from the facts proved, disputed or undisputed, but must in the last analysis depend upon the opinion or discretion of the judge or jury as to whether a larger or a smaller amount should be allowed. If this be so, a claim, for the full amount of a note for $1,000 is “liquidated” though the defendant claims, and the evidence is in dispute on such defense, that he has paid half this sum. So also a claim for $1,000 alleged to have been in small amounts at different times embezzled by a bank cashier should be considered “liquidated,” though the fact and amount of each separate taking is disputed. In short, it is the character of the claim and not of the defense that is determinative of the question whether an amount of money sued for is a “liquidated sum.”

Id. at 33 (underline added) (quoting Charles T. Mccormick, Handbook on the Law of Damages § 54, at 215-16 (1935)).

Weyerhaeuser persuasively argues its claims fit within the Prier framework. Here, the parties disputed the amount of insurance coverage available and the amount of damage sustained. Once liability was established, however, calculating the amount due required no discretion—it equaled the invoices for the cleanup work performed. The questions before the jury were simply ones of liability and did not involve opinion or an exercise of discretion regarding the amount of the award, as would be the case with general damages. Weyerhaeuser factually established its costs through the presentation of invoices. The date those invoices were paid established the proper time interest began to run.

CU seeks to distinguish Prier, contending that the complexities of this case and the nature of its defense defeat its application, but we find this argument unpersuasive. Our rule in Prier is clearly applicable where, as here, the damage amount was established or could be ascertained with certainty based upon the facts before the court.

We affirm the trial court’s award of prejudgment interest for the five sites with invoices for cleanup costs.

B. Longview Site Interest

The trial court awarded interest from the verdict date through the judgment date for the Longview site. Weyerhaeuser concedes damages were unliquidated as “establishing Weyerhaeuser’s Longview damages required testimony allocating certain vendor bills between environmental remediation (for which coverage existed) and capital improvements (for which it did not) (RP at 1816-25).” Br. of Resp’t/Cross-Appellant at 58; see also CP at 11126, ¶ 1(b). As such, this award of prejudgment interest was error.

By statute, interest is awarded from the date of entry of judgment. RCW 4.56.110(3). We have explicitly rejected the contention that interest should run from the date of entry of verdict. Kiessling v. NW Greyhound Lines, 38 Wn.2d 289, 297-98, 229 P.2d 335 (1951). Weyerhaeuser cites no contrary authority and admits Kiessling is against it.

Weyerhaeuser does not ask us to overrule Kiessling and effectively ignore RCW 4.56.110(3); thus, we follow precedent. Interest for the nonliquidated damages for the Longview site runs only from date of judgment. We reverse the trial court’s ruling to the contrary.

C. Prejudgment Interest on Attorneys’ Fees

The trial court awarded prejudgment interest on Weyerhaeuser’s Olympic Steamship15 attorneys’ fees. Weyerhaeuser does not argue that attorneys’ fees are liquidated and thus properly the subject of prejudgment interest. Instead, it relies upon the “spirit” of Olympic Steamship and notes fees are awarded to allow the insured “ ‘to obtain the full benefit of his insurance contract....’” Br. of Resp’t/Cross-Appellant at 60 (quoting Olympic S.S. Co., 117 Wn.2d at 53). Notwithstanding, an award of attorneys’ fees is precisely the type of discretionary claim where we have rejected the right to prejudgment interest. Prier, 74 Wn.2d at 32-33. In fact, Weyerhaeuser cites no authority permitting an award of prejudgment interest for fees.

The majority of courts that have considered this issue have concluded prejudgment interest on attorneys’ fees is improper. See Bocek Bros. v. Anchorage, 750 P.2d 335, 338 (Alaska 1988); Harvey v. Gerber, 153 Mich. App. 528, 396 N.W.2d 470, 471 (1986) (per curiam); Maynard v. Mine Hill Township, 244 N.J. Super. 298, 303, 582 A.2d 315, 318 (1990); Canyon Country Store v. Bracey, 781 P.2d 414, 422 (Utah 1989). Florida, however, allows interest to be calculated from the date a decision is made to award attorneys’ fees, even though the amount is not yet determined, until the date the fees are paid. Quality Engineered Installation, Inc. v. Higley S., Inc., 670 So. 2d 929, 931 (Fla. 1996). The court based its decision on the same equitable principles argued by Weyerhaeuser. Id. Perhaps delay in the award of fees might be considered with respect to whether current or historical rates apply, see, e.g., Missouri v. Jenkins, 491 U.S. 274, 283-84, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989), but prejudgment interest is not available.

Although Weyerhaeuser’s arguments are resounding in their equity, they are nevertheless best categorized as matters of “sound public policy.” Br. of Resp’t/Cross-Appellant at 60-62. As such, this court is not the proper forum to establish a right to such an award. See Burkhart v. Harrod, 110 Wn.2d 381, 385, 755 P.2d 759 (1988) (public policy is matter usually left to the legislature and not the courts). Accordingly, we reverse the trial court’s award of prejudgment interest for Weyerhaeuser’s attorneys’ fees.

VI

Duty to Defend—Stringfellow

Shortly before filing this suit, Weyerhaeuser notified CU of 95 sites for which it was seeking coverage. The Stringfellow site included civil claims by local residents as well as the clean-up action brought by the Environmental Protection Agency and the State of California. CP at 4497-501.

Six months after this suit was filed, Weyerhaeuser settled its coverage disputes with the primary insurer, Fireman’s Fund. Pursuant to this settlement, Fireman’s Fund paid Weyerhaeuser an amount agreed to be the then-present value of the remaining policy limits for property damage claims under all the Fireman’s Fund policies at issue. CP at 4452-81. This settlement did not include payment for Weyerhaeuser’s environmental defense costs nor did it include payment for bodily injury claims. Id.

Pursuant to its policies, Fireman’s Fund subsequently reimbursed Weyerhaeuser for some of its attorneys’ fees incurred in defending the Stringfellow claims. CP at 4708-13. On November 26, 1993, Weyerhaeuser notified CU the settlement had exhausted the Fireman’s Fund aggregate property damage limits and asked CU to assume the costs of defending the environmental claims, including those at Stringfellow. CU refused to pay these costs.

At trial, Weyerhaeuser moved for partial summary judgment requesting CU be required to pay Weyerhaeuser’s reasonable defense costs at Stringfellow. CP at 4316. The trial court granted the motion and ordered CU to pay these costs as the underlying policy “has been tendered, that it is exhausted, and the duty to defend becomes the excess carrier’s responsibility on the date of notification.” CP at 4747. The trial court subsequently awarded Weyerhaeuser Olympic Steamship attorneys’ fees incurred in establishing CU’s defense obligation. CP at 11057-59; 10459-60; 11095 ¶ 18.

Although CU does not deny its duty to defend, it contends its duty had not been triggered because Fireman’s Fund’s obligation to defend was still in force.¹⁶ “[A] primary insurer’s duty to defend continues until the suit it is defending is resolved by settlement or judgment, and . . . the primary insurer may not relieve itself of its defense obligation by tendering its policy limits prematurely.” Reply/Resp. Br. of Appellant/Cross-Resp’t at 34.

The duty to defend and the duty to indemnify are distinct obligations, Weyerhaeuser I, 123 Wn.2d at 902, the former being broader. Viking Ins. Co. v. Hill, 57 Wn. App. 341, 346, 787 P.2d 1385 (1990). An excess insurer’s obligation to defend is generally defined by the excess policy. Mitchell L. Lathrop, Insurance Coverage for Environmental Claims § 8.03 [3], at 8-39 (1992). Here, the supplemental policy is silent regarding CU’s duty to defend. But an excess insurer’s duty to defend may also arise when: (1) the claim is covered under the language of the excess policy; (2) the excess policy does not expressly eliminate any defense obligation; and (3) the coverage and obligations of the underlying insurers have been validly exhausted. Id., § 8.03 [1] [c], at 8-33; Aetna Cas. & Sur. Co. v. Certain Underwriters at Lloyd’s of London, 56 Cal. App. 3d 791, 800, 129 Cal. Rptr. 47, 53 (1976). If an excess insurer were required to defend before exhaustion of an underlying carrier’s duty, then the “primary carrier would profit from its wrongful failure to defend.” Truck Ins. Exch. of Farmers Ins. Group v. Century Indem. Co., 76 Wn. App. 527, 531, 887 P.2d 455 (1995).

In this case, the underlying policy required Fireman’s Fund to “defend in the name and on behalf of the insured any such suit or other proceeding in the event no settlement thereof is made . . . .” Def.’s Trial Ex. 2592, at WEY4 418667-68. But the policy also required Fireman’s Fund to go beyond its limit of liability, if necessary, to pay defense costs prior to settlement. Id. at WEY4 418668 (l)(c).

The majority of jurisdictions adhere to the following rule: once the underlying insurer has paid its limits in settlements or judgments, the supplemental insurer’s obligation to defend arises. Perez Trucking, Inc. v. Ryder Truck Rental, Inc., 76 Wn. App. 223, 233-34, 886 P.2d 196 (1994); Zurich Ins. Co. v. Raymark Indus., Inc., 118 Ill. 2d 23, 53, 514 N.E.2d 150, 163, 112 Ill. Dec. 684 (1987); Colo. Farm Bureau Mut. Ins. Co. v. N. Am. Reinsurance Corp., 802 P.2d 1196, 1198 (Colo. Ct. App. 1990). However, a mere tendering of policy limits does not abrogate an underlying insurer’s duty to defend. Perez Trucking, Inc., 76 Wn. App. at 233-34.

Although the trial court order provides the Fireman’s Fund policy had been exhausted, it does not state how this exhaustion occurred. CP at 4747. Weyerhaeuser contends the policy was exhausted by consent decrees entered into at the Stringfellow site. However, with the exception of one sample decree, which does not show a dollar amount (CP at 4676-77), and Weyerhaeuser’s offer to submit more detailed information (CP at 4663 n.4), there is no complete accounting of the costs of these consent decrees. CU does not dispute the existence of these decrees, but questions whether they constitute “settlements” for the purpose of exhausting the underlying policy.

When determining issues of coverage, the relationship of an administrative action to a lawsuit is a major concern. See Kenneth S. Abraham, Environmental Liability Insurance Law 264-66 (1991) (noting advantages and disadvantages of equating an administrative action to a lawsuit for purposes of compelling coverage). However, Washington resolved this issue in Weyerhaeuser I where we held the insurers were obligated to pay for the hazardous waste cleanup costs imposed by law, even if a lawsuit had not been filed. When an insured “engages in the cleanup of pollution damages in cooperation with an environmental agency,” coverage exists. Weyerhaeuser I, 123 Wn.2d at 896-97. Thus Fireman’s Fund had an obligation to pay for cleanup costs imposed via consent decrees, and the exhaustion of its policy through such cleanup costs is the equivalent of exhaustion by settlement. If this occurred, Fireman’s Fund’s legal obligation to defend was similarly exhausted, thus triggering CU’s obligation to pay the defense costs at Stringfellow.

Still, the question remains whether these consent decrees and other covered obligations exhausted the Fireman’s Fund policy. Weyerhaeuser is entitled to prevail on summary judgment only if there is no genuine issue as to any material fact. CR 56(c). The total coverage amount of the underlying Fireman’s Fund policy is $3,000,000. CP at 13888. The estimated costs for Stringfellow alone were more than this amount and the actual costs far exceeded this amount. CP at 9004. However, construing all the facts in the light most favorable to CU, we conclude CU demonstrates a genuine question of material fact exists as to whether Fireman’s Fund’s settlement with Weyerhaeuser was a premature tender and thus did not discharge Fireman’s Fund’s duty to defend.¹⁷

We hold the payment of funds for costs of complying with a consent decree is the functional equivalent of a settlement, and the underlying insurer’s duty to defend ceases once its policy has been exhausted by payments made for this purpose. When an underlying insurer’s policy is exhausted in this manner, the supplemental insurer’s duty to defend is triggered. However, because a question of material fact remains as to whether the Fireman’s Fund policy was properly exhausted, we reverse the trial court’s order granting Weyerhaeuser partial summary judgment and remand for further proceedings. We also reverse the trial court’s award of Olympic Steamship attorneys’ fees to Weyerhaeuser on this issue pending remand.

VII

Jury Instruction—“Accident”

In the event of a remand, Weyerhaeuser argues that jury instruction 15 given in the Phase II trial (CP at 7122) was erroneous and must be reformulated.

Weyerhaeuser offers no argument, citation, or direction on this issue, but instead refers us to its argument to the trial court. Id. at 82. A party may not fail to argue an assigned error by mere citation to trial memorandum.

Only issues raised in the assignments of error . . . and argued to the appellate court are considered on appeal.

If this court allowed parties to expand the issues subject to appeal by reference to trial memoranda, the Rules of Appellate Procedure would be rendered meaningless.

State v. Kalakosky, 121 Wn.2d 525, 540 n.18, 852 P.2d 1064 (1993) (emphasis added) (citations omitted); see also RAP 10.3(a)(5) (appellant’s brief must provide argument and citations); RAP 12.1(a) (appellate court will decide case only on the basis of issues set forth in briefs). Accordingly, we decline to review this issue.

VIII

Appellate Attorneys’ Fees

Pursuant to RAP 18.1, Weyerhaeuser seeks attorneys’ fees on appeal. As Weyerhaeuser has prevailed on a number of coverage-related issues, an award of such fees is proper. See Olympic S.S. Co., 117 Wn.2d at 53.

CONCLUSION

We conclude the trial court properly held the supplemental policy does not create a general property damage aggregate limit but we hold CU is entitled to a $500,000 per incident setoff against the underlying policy without aggregate limit and therefore reverse the trial court’s ruling to the contrary. We affirm the trial court’s ruling that CU was not entitled to set off the settlements Weyerhaeuser received from other insurers. We also affirm the trial court’s holding that CU was obligated to provide coverage for the Mid-State and Pasco sites and uphold the admission of Ms. Huibregtse’s expert testimony.

We affirm the trial court’s award of prejudgment interest for the five sites where damages were liquidated, but we reverse the award of prejudgment interest for the site where damages were not liquidated and we reverse the award of prejudgment interest on awarded attorneys’ fees.

Although we hold the costs of complying with consent decrees is the functional equivalent of a settlement and the exhaustion of the underlying insurer’s policy through such payment triggers the supplemental insurer’s duty to defend, we conclude an issue of material fact remains as to whether the Fireman’s Fund policy was exhausted prior to the trial court’s grant of partial summary judgment. Accordingly, we reverse both the order granting partial summary judgment and the award of attorneys’ fees to Weyerhaeuser for securing that order and remand this issue to the trial court for further proceedings.

Finally, we remand for recalculation of damages for the sites where damages were prorated to bring these amounts in line with our holding in B&L Trucking. Because Weyerhaeuser prevailed on a number coverage-related issues, we award reasonable attorneys’ fees to Weyerhaeuser.

Guy, C.J., and Smith, Alexander, and Ireland, JJ., concur.

1 The legislature instructed, “Because it is often difficult or impossible to allocate responsibility among persons liable for hazardous waste sites and because it is essential that sites be cleaned up well and expeditiously, each responsible person should be hable jointly and severally.” RCW 70.105D.010C5) (“Declaration of policy.”). The MTCA is ‘liberally construed to effectuate [its] policies and purposes .. ..” RCW 70.105D.910.

2 The settlement negotiation documents and the briefing are sealed.

3 During the two-month stub period the supplemental policy specified limits of $1,000,000 in excess of the Fireman’s Fund $1,000,000 primary policy limits for this period (CP at 8940), but this is not relevant to resolve the issues raised.

4 There are no relevant factual disputes pertaining to this issue.

5 An aggregate limit defines an insurer’s total liability under a policy. Jeffrey W. Stempel, Law of Insurance Contract Disputes § 9.03[a][2], at 9-62 (2d ed. 1999). See also Cont’l Ins. Co. v. PACCAR, Inc., 96 Wn.2d 160, 164-65, 634 P.2d 291 (1981).

6 Coverage limits, as shown in brackets, may be found at Plaintiff’s Trial Ex. 3, at WEYO 000553.

7 We note a “battle of the footnotes” regarding the agency relationship that allegedly exists between the parties in this case and Marsh & McLennan, an insurance consulting firm that worked on the supplemental and underlying policies, CP at 11438-39; Def.’s Trial Ex. 2592 at WEY4 318653. However, we also note that at no point, either explicitly or implicitly, has Weyerhaeuser argued it should not be bound by any contract because of this agency relationship. Thus, we need not consider the agency law implications, if any, of CU and Marsh & McLennan’s relationship in interpreting the plain language of the contract. See U.S. Life Credit Life Ins. Co. v. Williams, 129 Wn.2d 565, 571 n.2, 919 P.2d 594 (1996) (court will not consider agency law implications not properly before it).

8 CU’s original motion is apparently a Motion to Alter or Amend Judgment, CR 59(h), although it is not denominated as such. As such, the denial is properly appealable. RAP 2.2(a)(9).

9 The supplemental policy contains a clause providing that if any loss covered hy CU is also covered by prior insurance, CU’s liability will be reduced "by any amounts due to the Assured on account of such loss under” prior insurance. Pl.’s Trial Ex. 3, at WEYO 000552, at ¶ 1. We have upheld similar clauses in the context of settlements received from tortfeasors. See, e.g., Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215, 219, 588 P.2d 191 (1978). But there is a clear distinction between a settlement received from a tortfeasor and one received from an insurance company to which a premium has been paid for coverage.

The supplemental policy also contains an “OTHER INSURANCE” clause that arguably could apply to limit CU’s liability. Pl.’s Trial Ex. 3, at WEYO 000552, at ¶ 5. However, CU has not chosen to invoke that clause. Further, an analysis of an “other insurance” clause requires the other applicable insurance policies to be before the court. See Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 9, 12, 665 P.2d 887 (1983). Although both the supplemental policy and the underlying Fireman’s Fund policy are part of the record in this case, no other insurance policy has been submitted to this court. See Commercial Union v. Weyerhaeuser, No 42024-1-1, Stipulation and Order Regarding Agreed Trial Exhibits (July 22, 1998).

10 We do not find Weyerhaeuser’s figures are necessarily correct; rather, we simply recognize there is substantial evidence to support the trial court’s resolution of this factual dispute.

11 Weyerhaeuser shipped waste to Pasco between July 1973 and November 1974 (CP at 7099), and it shipped waste to Mid-State “from early 1974 until the landfill’s closure in 1979.” CP at 11942.

12 Comprehensive general liability (CGL) policies may be “occurrence” policies or “claims-made” policies. “Claims-Made pobcies simply limit their coverage to claims first made against the insured during the policy period, whereas Occurrence policies cover claims made against the insured at any time, so long as the bodily injury or property damage at issue occurred ‘during the policy period.’ ” Abraham, supra, at 92 n.l. Occurrence policies insure for unknown liabilities that may occur after the expiration of the policy, and coverage is “essentially open-ended so long as the injury or damage occurs during the policy period.” A. C. Label Co. v. Transamerica Ins. Co., 48 Cal. App. 4th 1188, 1196, 56 Cal. Rptr. 2d 207, 211 (1996) (Premo, A.P.J., dissenting).

13 ER 702 states:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.

ER 703 states:

The facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing. If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence.

14 The Federal Rules of Evidence Advisory Committee’s Note on the identically worded Fed. R. Evid. 702 states:

An intelligent evaluation of facts is often difficult or impossible without the application of some scientific, technical, or other specialized knowledge. The most common source of this knowledge is the expert witness, although there are other techniques for supplying it.

(quoted in Robert H. Aronson, The Law op Evidence in Washington 702-1 (3d ed. 1998)). The official comment to ER 702 states “[t]his rule is the same as Federal Rule 702 and is consistent with previous law giving the court broad discretion to determine whether a witness is qualified to express an expert opinion.” Washington Court Rules at 131 (1999). See also 5B Karl B. Tegland, Washington Practice: Evidence Law and Practice § 702.1, at 30 (4th ed. 1999) (citing Advisory Committee Note on Fed. R. Evid. 702 to support fact that Washington ER 702 “reflectfs] the widely-held view that a reasoned evaluation of the facts is often impossible without the proper application of scientific, technical, or specialized knowledge.”).

15 When insureds are forced to file suit to obtain the benefit of their insurance contract, they are entitled to attorneys’ fees. Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 52-53, 811 P.2d 673 (1991).

16 CU has not appealed the ruling that the Fireman’s Fund policy limits were exhausted and concedes it is obligated to defend new property damage claims asserted against Weyerhaeuser after the date of exhaustion.

17 On review of an order granting or denying summary judgment, we consider only the evidence and issues called to the attention of the trial court. RAP 9.12. The order granting or denying summary judgment shall designate the documents and other evidence the trial court considered. Id.