## Facts

- The EPA identified Western Processing, a hazardous-waste facility in Kent, Washington, as requiring cleanup due to releases of hazardous substances.
- The United States and the State of Washington incurred environmental “response costs” to investigate, remove, and remediate contamination of surrounding land and water.
- Boeing and other insured companies were notified as potentially responsible parties under CERCLA and faced liability for those response costs.
- The insureds sought coverage under comprehensive general liability (CGL) policies requiring insurers to pay “all sums” the insured became legally obligated to pay “as damages because of … property damage.”
- The policies did not define “damages.”
- Insurers denied coverage, arguing CERCLA response costs are equitable/restitutionary relief rather than covered “damages.”

## Issues

1. Whether CERCLA environmental response costs imposed on insureds constitute “damages because of … property damage” under Washington law governing standard-form CGL policies.

## Decision

- The court answered the certified question yes: CERCLA response costs are “damages” within the meaning of the CGL coverage grant when they remedy an actual release of hazardous substances.
- The court concluded contamination from hazardous-waste leakage is “property damage” because it is physical injury to tangible property.
- The court rejected limiting “damages” to technical “legal damages” or to money judgments in traditional civil actions.
- A dissent would have held response costs are restitutionary and outside “damages” as a technical legal term.

## Legal Principles

- Insurance policies are construed as a whole, giving effect to each clause.
- Undefined policy terms are given their plain, ordinary, and popular meaning as understood by an average purchaser of insurance; dictionaries may be used to determine that meaning.
- A technical legal meaning will not be applied to policy language unless it is clear both parties intended that specialized meaning.
- The “average purchaser” standard applies even when the insured is a sophisticated corporation.
- When a CGL policy promises to pay sums the insured is legally obligated to pay “as damages” and does not define “damages,” the term includes monetary obligations awarded on legal or equitable grounds.
- Costs to restore contaminated property may qualify as “damages because of property damage” where the liability arises from physical injury to land and water.

## Conclusion

CERCLA-mandated cleanup costs to investigate and remediate contamination from hazardous-substance releases qualify as covered “damages because of property damage” under Washington CGL policies that leave “damages” undefined and are interpreted according to ordinary, nontechnical meaning.


Boeing Co. v. Aetna Cas. & Sur. Co., 784 P.2d 507 (Wash. 1990)