Opinion
No. 52058-0-I, Consolidated with No. 52658-8
Filed: November 8, 2004 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 01-2-21446-2. Judgment or order under review. Date filed: 03/13/2003. Judge signing: Hon. Linda Lau.
Counsel for Appellant(s), Jacquelyn A. Beatty, Attorney at Law, 1201 3rd Ave Ste 2900, Seattle, WA 98101-3284.
Michael Edward Ricketts, Attorney at Law, 505 Madison St Ste 300, Seattle, WA 98104-1123.
Counsel for Respondent(s), Michael Alan Barcott, Attorney at Law, 999 3rd Ave Ste 2600, Seattle, WA 98104-4018.
Kara Heikkila, Holmes Weddle Barcott, 999 3rd Ave Ste 2600, Seattle, WA 98104-4011.
Eileen Bower, Ross, Dixon Bell, 70 West Madison Street, Suite 525, Chicago, IL 60602-4261.
Julie Burgener, Ross, Dixon Bell, 70 West Madison, Suite 525, Chicago, IL 60602-4261.
David E Prange, Abbot Prange PC, Us Bancorp Tower, 111 SW 5th Ave Ste 2650, Portland, OR 97204-3605.
Donald James Verfurth, Carney Badley Spellman, 700 5th Ave Ste 5800, Seattle, WA 98104-5017.
Matthew Taylor Boyle, Mitchell Lang Smith, 600 University St Ste 2505, Seattle, WA 98101-3134.
J.C. Ditzler, Cozen and O'Connor, 1201 3rd Ave Ste 5200, Seattle, WA 98101-3071.
Jodi Ann McDougall, Cozen O'Connor, 1201 3rd Ave Ste 5200, Seattle, WA 98101-3071.
Timothy John Tompkins, Hagerty Insurance Agency INc., 141 Rivers Edge Dr Ste 200, Traverse City, MI 49684-3299.
D. Clark Burton, Severson Werson, 1 Embarcadero Center, 26th Floor, San Francisco, CA 94111.
Katherine A. Knopoff, Severson Werson, 1 Embarcadero Center, 26th Floor, San Francisco, CA 94111.
Michael Murphy, Severson Werson, 1 Embarcadero Center, 26th Floor, San Francisco, CA 94111.
Melissa O'Loughlin White, Cozen OConnor, 1201 3rd Ave Ste 5200, Seattle, WA 98101-3071.
Joanne Thomas Blackburn, Attorney at Law, 2nd Seneca Bldg 18 Fl, 1191 2nd Ave, Seattle, WA 98101-3438.
Gary Dean Swearingen, Garvey Schubert Barer, 1191 2nd Ave Fl 18, Seattle, WA 98101-3438.
Olympic Pipe Line and Hiscox Insurance appeal a trial court's decision granting summary judgment to several insurers. They argue that the trial court improperly considered inadmissible evidence that went to the subjective intent of the parties, and that the court incorrectly defined terms in the insurance contract. We agree that certain evidence submitted in support of the motions for summary judgment should not have been considered by the trial court. But the commonly understood meaning of the challenged terms, combined with the language and purpose of the policies, clearly shows that Olympic was not a named insured under any of the policies. We therefore affirm the trial court's summary judgment orders.
I.
Olympic Pipe Line transports refined petroleum products from refineries in northwest Washington to Seattle and Portland. In mid-1999, Olympic's pipeline ruptured near Whatcom Creek in Bellingham, Washington. The petroleum ignited, and an explosion and fire caused significant damage. Three people died. Many lawsuits were brought against Olympic for personal injuries and economic loss. Hiscox Insurance provided coverage for Olympic, and exhausted its limits settling the lawsuits.
At the time of the incident, Olympic was owned by three separate companies — Equilon (37.5 percent), ARCO (37.4 percent), and GATX Terminals Corp. (GTC) (25.1 percent). Equilon functioned as the operator, managing the day-to-day operations. Olympic's board of directors consisted of six members with each owner-company appointing two board members.
GTC itself was a wholly owned subsidiary of GATC, which was wholly owned by GATX. Olympic and Hiscox Dedicated Corporate Member (collectively "Olympic") brought several suits to compel coverage under the excess policies purchased by Olympic's three owners. This case concerns the policies issued to GTC and its parent company GATX.
Hiscox represents several other underwriters and subscribers participating in a $50 million layer of insurance coverage in which Olympic was the named insured.
GTC purchased marine terminal operator liability (MTOL) policies covering its terminal and pipeline operations. Somerset Marine and Navigators Insurance underwrote the first policy. Premiums for the policy were based on "throughput," or the amount of petroleum product GTC transported. The contract treated terminal and pipeline operations differently, imposing a separate premium for each, based on the annual throughput. For example, the premium covering terminal operations was $.70 per 1,000 barrels, while the premium for pipelines was $1.91 per 1,000 barrels transferred. The policy also contained a specific endorsement entitled "pipeline coverage." This endorsement listed five covered pipelines. Olympic was not one of these specified pipelines. Immediately below this the policy stated that "[i]n consideration of premiums as agreed, underwriters agree to indemnify the Assured in respect of any claims arising out of the above schedule operations up to a limit of $1,000,000 per incident occurring during the policy period, subject to policy terms. . . ."
The policy listed Central Florida Pipeline, CALNEV, Manchester Jetline Ltd., Inverness PSD, and Falmouth Swandals PDS.
GTC also obtained two excess policies for its terminal and pipeline operations. The first, also underwritten by Somerset and Navigators, provided coverage for claims exceeding $1 million up to $9 million for terminals, and up to $4 million for pipelines. This policy also charged a premium based on throughput. The second excess policy, underwritten by Somerset, Navigators, National-Ben Franklin and Continental, charged a flat premium. This policy provided coverage for claims between $10 million and $15 million, but excluded the five pipelines specifically covered in the primary and first excess policies.
The policy specified $.46 per 1,000 barrels for terminal operations, and $.89 per 1,000 barrels for pipeline operations.
GTC's parent corporation GATX had various policies issued to it that Olympic claimed included Olympic as a named insured. These policies provided four layers of excess liability coverage for GATX and its subsidiaries. The policies each defined "insured" as "such subsidiary or owned or controlled companies of the Named Insured. . . ."
The first excess policy issued to GATX, underwritten by American International Specialty Lines Insurance Company (AISLIC), provided a $25 million first layer of excess coverage. The policy provided a schedule of underlying amounts for each liability and specifically referenced pipelines. The policy had additional underlying limits for particular risks. For example, the policy set the underlying limit for pipelines at an additional $5 million.
The second layer of coverage GATX obtained is a form-following policy provided by Allianz Underwriters Insurance. This policy follows the exact terms found in the AISLIC policy except for the limits, period of coverage, premium, and renewal agreement. The policy provided $25 million in excess coverage.
The next layer of coverage involved policies with a number of insurers, including Lexington, New Hampshire, London Insurers, and Gerling-Konzern (hereinafter "Gerling"). These policies provided a $110 million layer of insurance covering losses exceeding $50 million. As with the first and second layer of coverage, these policies had additional underlying limits for particular risks. All relevant language in these insurance agreements is identical to those in the AISLIC policy.
The final layer of insurance, issued by Certain Underwriters at Lloyd's, Commercial Union, and Terra Nova (hereinafter "Lloyd's"), provided $100 million in coverage for losses exceeding $160 million. The language defining "insured" under the policy is also identical to the other policies.
The insurers brought summary judgment motions arguing that Olympic was not a named insured. Olympic responded that it was a named insured either as a "subsidiary or owned or controlled company," or as a joint venture under GATX's various policies.
The trial court granted summary judgment to all the insurers. Olympic and Hiscox timely appeal.
II.
At issue in these consolidated cases is whether Olympic was a named insured under the various policies purchased by GATX and GTC. The insurers contend that the parties did not intend to insure Olympic, and that the contracts reflect this intent. Olympic argues that it is included in the definition of "insured" and "assured" under the various contracts, and that the parties' post-hoc claims to the contrary are inconsistent with policy language and extrinsic evidence.
Interpreting an insurance policy is a matter of law that we review de novo. We first note that the insurers infer that Olympic does not have standing to enforce the contracts. But if Olympic is a named insured under the policy, then by definition Olympic is an intended beneficiary, and would have standing to enforce the policies. We will therefore address the merits of Olympic's arguments.
McDonald v. State Farm Fire Cas. Co., 119 Wn.2d 724, 730-31, 837 P.2d 1000 (1992).
See Restatement (Second) of Contracts sec. 302(1) (1979).
There are two types of policies at issue, the commercial excess policies issued to GATX and the MTOL policies issued to GTC. We therefore address each type of policy separately.
The Excess Policies
The four layers of excess insurance policies issued to GATX all define the insured as:
Only the following are included in the definition of "INSURED" under this Policy: —
(A) The Named Insured, and if the Named Insured in Item 1 (a) of the Declarations as a partnership or joint venture, the partnership or joint venture so designated and any partner or member thereof, but only with respect to their liability as such. The Named Insured shall also include, until such time as they may be sold or otherwise disposed of in any manner by the Named Insured: —
(i) such subsidiary or owned or controlled companies of the Named Insured as are in existence at the inception date of this Policy;
(ii) any subsidiary or owned or controlled company of the Named Insured created or acquired subsequent to the inception date of this Policy but coverage hereunder will not apply:
(a) to Person Injuries, Property Damage and/or Advertising Injury which is as a result of an accident. . . .
The policies each specifically exclude partnerships and joint ventures: This policy shall not apply to any claim or claims in respect of Loss or Losses: —
. . . .
b) arising out of the conduct of any partnership or joint venture of which the Insured is a partner or member and which is not designated in this Policy as a Named Insured;. . . .
Extrinsic Evidence
Under Berg v. Hudesman and its progeny, extrinsic evidence may be relevant in discerning intent when the evidence gives meaning to words used in the contract. We determine intent by viewing the contract as a whole, the subject matter and objective of the contract, the contracting parties' conduct, and the reasonableness of the parties' respective interpretations. The insurers argue that extrinsic evidence shows that GATX did not intend to cover Olympic when it obtained the various excess insurance policies. When interpreting contracts, Washington courts use the "context rule" of interpretation. Under Berg, parties may submit extrinsic evidence to give meaning to the contract language. This extrinsic evidence may be used whether or not the contract language is ambiguous.
115 Wn.2d 657, 801 P.2d 222 (1990).
Nationwide Mut. Fire Ins. Co. v. Watson, 120 Wn.2d 178, 189, 840 P.2d 851 (1992) (extrinsic evidence illuminates what was written, not what was intended to be written).
Berg, 115 Wn.2d at 667-68.
Berg, 115 Wn.2d at 667.
Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836 (1999).
U.S. Life Credit Life Ins. Co. v. Williams, 129 Wn.2d 565, 569, 919 P.2d 594 (1996) (citing Berg, 115 Wn.2d at 669).
Olympic argues that in GATX's application, under GTC's "description of products/operations," GATX described GTC as "[p]art owner in Olympic Pipe Line Company." And question three in the application asked GATX to attach a "list . . . of subsidiaries or affiliates of Applicant whose accounts are consolidated in the financial statements of the Applicant." GATX listed its complete operations, including Olympic.
The insurers argue that this information was included in the application as part of GATX's corporate family, and that it included Olympic to show what its operations encompassed. As support, the insurers point to evidence that GATX did not list Olympic as one of the unconsolidated subsidiaries or joint ventures for which it wanted to purchase coverage. They point to question four in the application, which asked GATX to list "any other unconsolidated subsidiary, affiliate, associated company, or joint venture to be fully insured." Olympic was not included in the list that GATX submitted answering this question. We conclude that this evidence is ambiguous at best, and does not evidence an intent to include or exclude Olympic as a named insured under the excess policies.
AISLIC and Gerling also point to other evidence showing that GATX did not intend to insure Olympic. In support of summary judgment, AISLIC and Gerling presented deposition testimony by GATX's insurance director that GATX did not intend to obtain coverage for Olympic either as a subsidiary or joint venture. During his deposition, the director explained that with respect to the policies at issue, GATX did not intend to include Olympic:
Q: Mr. Helfers, when GATX Corporation submitted the 1998-1999 application for excess liability insurance, did it intend to secure insurance on behalf of Olympic Pipe Line Company?
A: No.
Q: At any time during your tenure as director of corporate insurance, has GATX corporation set out to obtain liability insurance coverage benefiting Olympic Pipe Line Company?
A: No.
Q: Stated slightly differently, did GATX Corporation make the affirmative decision not to obtain insurance coverage benefiting Olympic Pipe Line Company?
A: Yes.
Olympic argues that these assertions cannot properly be considered by a court when interpreting a contract. Because they are assertions of intent, they go to the subjective intent of the party.
The purpose and use of extrinsic evidence in this context is substantially limited:
[P]arol evidence is admissible to show the situation of the parties and the circumstances under which a written instrument was executed, for the purpose of ascertaining the intention of the parties and properly construing the writing. Such evidence, however, is admitted, not for the purpose of importing into a writing an intention not expressed therein, but with the view of elucidating the meaning of the words employed. Evidence of this character is admitted for the purpose of aiding in the interpretation of what is in the instrument, and not for the purpose of showing intention independent of the instrument. It is the duty of the court to declare the meaning of what is written, and not what was intended to be written. If the evidence goes no further than to show the situation of the parties and the circumstances under which the instrument was executed, then it is admissible.
Lynott v. Nat'l Union Fire Ins. Co., 123 Wn.2d 678, 683-84, 871 P.2d 146 (1994) (emphasis added) (quoting Berg, 115 Wn.2d at 669).
Evidence of a party's unilateral or subjective intention about the meaning of what is written is not admissible. Absent allegations of fraud or mistake, courts will not consider evidence that would show an intention independent of the instrument, or evidence that would vary, contradict, or modify the written words in the contract. The context rule allows parties to present evidence showing what the contract means, but it is not a mechanism to introduce testimony explaining what each party subjectively intended the contract to be. The trial court should not have considered this testimony in its summary judgment ruling.
Lynott, 123 Wn.2d at 684.
See In re Marriage of Schweitzer, 132 Wn.2d 318, 326-27, 937 P.2d 1062 (1997); U.S. Life, 129 Wn.2d at 569-70; Nationwide, 120 Wn.2d at 189. See also The Lakes at Mercer Island Homeowners Ass'n v. Witrak, 61 Wn. App. 177, 181-82, 810 P.2d 27 (1991) (determining that extrinsic evidence was admissible to elucidate the parties' meaning of the word "fence" in a restrictive covenant).
Olympic points to other insurance policies to establish that, contrary to Helfers' assertion, GATX specifically listed Olympic on other policies. In its American Excess Insurance Association (Bermuda) policy, language defined named insureds as "[u]nconsolidated subsidiaries as shown in GATX Corporate Structure sheets." Because Olympic was listed on GATX's corporate structure sheets, this language would include Olympic. Certain other Bermuda policies also contained language identifying Olympic. More significantly, several of the other insured companies in the Bermuda policy are companies in which GATX's consolidated subsidiaries owned only a minority stake. For example, CALJET LLC was 25 percent owned by GATX/Caljet Corp. And GMR Aviation Partners Ltd. was only partly owned by GATX Third Aircraft.
See, e.g., AEIA policy 1996 application.
But this evidence does not establish that GATX intended to insure Olympic in the policies at issue. The "named insured" language in the Bermuda excess policies was substantially different from that at issue here: The "Insured" means . . . (1) the Named Insured and . . . (2)(a) any subsidiary or affiliate of the Named Insured . . . whose accounts . . . (i) are consolidated in the financial statements of the Named Insured . . . (b) any subsidiary, affiliate or associate company of the Named Insured listed on Schedule A hereto.
And although GATX later submitted an application to the excess insurers that contained language arguably covering Olympic, the excess insurers rejected that language and substituted the language at issue here. We conclude that evidence submitted by both sides purporting to show GATX's intent is not helpful in determining whether Olympic was a named insured under the policies.
The language in the application requested "GATX Corporation and its present, former and future directly and indirectly owned, operated, associated or affiliated organizations."
The Insured Definition Under the Excess Policies
When construing the language of an insurance policy, courts give the policy a fair, reasonable, and sensible construction "as would be given to the contract by the average person purchasing insurance." When the policy language is clear and unambiguous, a court must enforce the policy as written "`and may not modify it or create ambiguity where none exists.'" Courts give undefined terms their ordinary meaning. One reliable way courts use to determine this ordinary meaning is to consult a standard English dictionary. If the language or term is fairly susceptible to two different, but reasonable interpretations, ambiguity exists, and the court will apply the interpretation most favorable to the insured.
Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 682, 801 P.2d 207 (1990).
Ellis Court Apartments Ltd. P'ship v. State Farm Fire Cas. Co., 117 Wn. App. 807, 814, 72 P.3d 1086 (2003) (quoting Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 665-66, 15 P.3d 115 (2000)).
Queen City Farms, Inc. v. Central Nat'l Ins. Co. of Omaha, 126 Wn.2d 50, 66, 882 P.2d 703, 891 P.2d 718 (1994).
Boeing Co. v. Aetna Cas. Sur. Co., 113 Wn.2d 869, 877, 784 P.2d 507 (1990).
Allstate Ins. Co. v. Peasley, 131 Wn.2d 420, 424, 932 P.2d 1244 (1997).
Olympic is not covered as a subsidiary company
We first address the inclusion of "any subsidiary . . . company" within the definition of named insureds. Olympic provides several different dictionary definitions for "subsidiary" to show ambiguity in its meaning. The trial court relied on the definition provided by Webster's New Twentieth Century Dictionary, which defines subsidiary as "a company controlled by another company which owns most of its shares." Olympic agues that for an owned company to be considered a subsidiary, the parent corporation need not own a majority of the company's shares.
Webster's New Twentieth Century Dictionary Unabridged (1982).
Olympic's interpretation is inconsistent with case law from other jurisdictions and standard dictionary definitions. Appellate decisions from other jurisdictions considering the term "subsidiary corporation" have defined it as "one which is controlled by another corporation by reason of the latter's ownership of at least a majority of the shares of the capital stock." Black's Law Dictionary takes the same approach, defining "subsidiary corporation" as "one in which another corporation (called parent corporation) owns at least a majority of the shares, and thus has control."
Rimes v. Club Corp. of Am., 542 S.W.2d 909, 912 (Tex.Civ.App. 1976); see also Comptroller of Treasury v. Crown Central Petroleum Corp., 451 A.2d 347, 352-53 (Md. 1982); Fairbanks Morse Co. v. District Court In and For Palo Alto County, 247 N.W. 203, 207 (Iowa 1933); cf. Baker v. Fenley, 128 S.W.2d 295, 298 (Mo. 1939).
Black's Law Dictionary (6th ed. 1999); See also Ballantine's Law Dictionary (3d ed. 1969) (definition of "subsidiary").
Webster's New Twentieth Century Dictionary, relied on by the trial court, defines "subsidiary company" in a corporate context as "a company controlled by another company which owns most of its shares." The American Heritage Dictionary of the English Language defines subsidiary company as "a company having more than half of its stock owned by another company." These definitions are consistent with the Random House Unabridged Dictionary and Webster's Third New International Dictionary. Olympic refers to several other dictionaries in an attempt to establish that the word "subsidiary" is at best ambiguous. The Encarta Dictionary, referenced by Olympic in its reply brief, provides little support. The dictionary defines "subsidiary" as
Webster's New Twentieth Century Dictionary Unabridged.
American Heritage Dictionary of the English Language 1283 (4th ed. 2000).
Random House Webster's Unabridged Dictionary 1896 (2nd ed. 1998) (defining subsidiary company as "a company whose controlling interest is owned by another company."); Webster's Third New Int'l Dictionary 2279 (1993) (a subsidiary company is "a company wholly controlled by another that owns more than half of its voting stock.").
1. assignment of power to smaller units the principle that political power should be exercised by the smallest possible unit of government. 2. quality of being subsidiary the fact or quality of being subsidiary.
Encarta World English Dictionary 1781 (1999).
The dictionary then goes on to define subsidiary company by referring to definition 2, quoted above. Olympic also submitted a definition from the Oxford American College Dictionary, which defines "subsidiary" as "a company controlled by a holding or parent company" and "a company controlled by a holding company." While Olympic is correct that these definitions do not explicitly require majority ownership, the definitions do imply control by a single company. The other definitions supplied to the trial court were consistent and clear. We conclude that a subsidiary company is one that has a majority of its shares owned by another company.
Oxford American College Dictionary 1374 (2001).
Olympic is not covered as an "owned" company
Olympic argues that it was covered under GATX's policy as an "owned" company. Olympic's only argument supporting this assertion is that the corporate excess policies included no modifiers such as "wholly," "wholly owned," or "majority owned" to limit coverage. But Olympic's argument is unpersuasive. It would mean that any corporation partly owned as an investment by GATX, however insignificant the extent of ownership, would have coverage under the excess policies. Olympic provides no authority for its position, and we reject it.
Olympic is not covered as a "controlled" company
Olympic and Hiscox argue that Olympic is covered because GATX, through its subsidiary GTC, exerted "control" over the pipeline. Much is made of the fact that Equilon managed the day-to-day operations of the pipeline. But if either GATX or GTC, as insureds under the policy, exercised "control" over Olympic, then Equilon's management role is irrelevant.
The excess insurers also argue that because GTC is a subsidiary of a subsidiary, GATX's policy does not cover GTC's minority ownership of Olympic. But the policies issued to GATX contemplate coverage for second, third, and even fourth tier subsidiaries and joint ventures.
There are two possible definitions urged to interpret the meaning of "control." The first, put forth by Olympic, defines "control" using Federal Securities law and banking and finance treatises. The Securities and Exchange Commission has defined "control" to mean "the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise."
See, e.g., 17 C.F.R. sec. 230.405 (defining control); Investment Company Act of 1940, 15 U.S.C. sec. 80 a-2(a)(9) (presumption of control if ownership exceeds 25 percent of voting securities).
17 C.F.R. sec. 230.405; see also Guarino v. Interactive Objects, Inc., 86 P.3d 1175 (2004) (recognizing SEC's definition of "control" and applying to case).
The second, advocated by the insurers, utilizes basic dictionary definitions, which define "control" as: "the act or fact of controlling . . . power or authority to guide or manage: directing or restraining domination."
Webster's Third New Int'l Dictionary 496 (1993).
Other jurisdictions have followed this second definition in different contexts. For example, the Oregon Supreme Court applied this definition of "control" in Western Generation Agency v. Department of Revenue. The court examined whether a utility was taxable under a state statute which required that the entity be "owned, used, operated, or controlled" to be taxable. The court referred to the definition in Webster's and concluded that "control" in that context meant the "power or authority to guide, manage or direct [such property], or even [the power to] . . . `restrain' another entity's `domination' of that property."
959 P.2d 80 (Or. 1998).
Western Generation, 959 P.2d at 83 (interpreting Webster's Third New Int'l Dictionary 496 (1993)).
While Olympic's definition has some support in federal securities law, there is no evidence that the insurers and GATX had this specific definition in mind when they contracted for coverage. And in insurance contracts, unless the parties clearly intended to use terms of art to define standard words, courts will not construe the contract using such technical definitions. We read "control" to mean actual managerial control, and not merely enough ownership to appoint less than a majority of the board members.
We note that accepting Olympic's definition of "control" would broaden coverage to include many unintended parties. For example, a person sitting on a board of directors who had proxy for other's stock totaling as little as ten percent might have involuntary coverage through a corporate excess insurance policy issued to his employer.
Olympic is not covered as a joint venture or partnership under endorsement 11.
In its policy, AISLIC specifically excluded claims arising from "the conduct of any partnership or joint venture of which the Insured is a partner or member and which is not designated in this Policy as a Named Insured." The policy then added an endorsement amending this exclusion and providing coverage for partnerships and joint ventures:
Notwithstanding Exclusion b) of this Policy [the joint venture and partnership exclusion], this Policy is amended in that it shall apply to the Insured's liability arising from their participation in any past or present joint venture or partnership, hereinafter referred to as "Joint Venture(s)."
It is understood and agreed that coverage provided by this Endorsement is only in respect of the Insured's interest in the Joint Venture and that nothing contained herein shall be deemed to include any other partner or member thereof within the definition of "INSURED" under this Policy unless specifically agreed otherwise.
The policy does not define "joint venture" or "partnership." "The essential elements of a joint venture are (1) a contract, express or implied; (2) a common purpose; (3) a community of interest; (4) an equal right to a voice, accompanied by an equal right to control." This ownership can be by partnership, or through a closely held corporation. GTC's ownership in Olympic along with ARCO and Equilon satisfies these requirements.
Paulson v. County of Pierce, 99 Wn.2d 645, 654, 664 P.2d 1202 (1983).
See, e.g., Ballo v. James S. Black Co., 39 Wn. App. 21, 28, 692 P.2d 182 (1984) (finding joint venture where parties formed closely held corporation).
The next endorsement to the policy, entitled "SPECIFIC JOINT VENTURE ENDORSEMENT," explains that "[n]otwithstanding Exclusion b) of this Policy, this Policy is amended in that it shall apply to the following Joint Ventures. . . ." The endorsement then lists 14 separate companies, and explains that "[t]his policy is further amended in that the provisions of Endorsement No. 11 shall not apply to the aforesaid Joint Ventures." The main policy excludes joint ventures and partnerships. But the first endorsement grants coverage for these business arrangements on the narrow basis that liability coverage is limited to the proportion of GATX's ownership in the joint ventures. This endorsement does not specify or limit the joint ventures to which it applies. The policy then includes a second endorsement that specifically enumerates 14 joint ventures where a loss is fully covered, regardless of ownership percentage.
If Olympic falls under endorsement 11 as a partnership or joint venture, then its absence from endorsement 12 has no bearing on whether it is covered. Rather, its absence from the second endorsement means that the liability of the underwriters is limited to the percentage interest of GATX or GTC in the applicable joint venture.
Although Olympic may be a joint venture under endorsement 11, the losses suffered by Olympic are not covered. Olympic cannot claim that it becomes a named insured simply by being a joint venture participated in by an insured. The endorsement specifically states that the policy only applies to "the Insured's [GTC's] liability arising from their participation in any past or present joint venture or partnership."
The policy only covers the insured's liability. The policy does not cover the underlying damage or loss. Instead, the policy provides indemnity for the insured's proportional share of its liability arising from the occurrence. If the accident causes a loss, but the insured is not personally liable for this loss, the policy does not cover the loss. The clause contemplates coverage only when legal liability attaches to the insured. This endorsement affords the insured protection from certain liability exposures the insured may face from participating in joint ventures, but does not afford coverage to the joint venture itself.
For example, at one point in the endorsement the policy states that it will cover more than the proportional share of liability "in the event that the Insured is adjudged legally liable for a percentage interest [greater than the insured's ownership percentage]."
There is no evidence in the record that GTC — or GATX for that matter — has any liability arising from the loss. Because Olympic is not a named insured under this endorsement, Olympic's loss is irrelevant.
The Lloyd's Policy
Lloyd's underwrote GATX's fourth layer of coverage. This policy provided $100 million in coverage for losses exceeding $160 million. This policy contained a definition for "insured" identical to the other policies, and contained an exclusion for joint ventures and partnerships. The policy also contains an endorsement entitled "joint venture endorsement." But this language is different from the endorsement 11 language in the other excess policies because it does not apply "notwithstanding Exclusion b) of this policy." Instead the clause explains that:
This policy was underwritten by Certain Underwriters at Lloyd's, Commercial Union Assurance Co. PLC, and Terra Nova Insurance Co. Ltd. (collectively "Lloyd's").
Whereas this Policy applies to the insured's interest in partnerships and joint ventures, hereinafter referred to as Joint Venture(s),
. . . the liability of underwriters under this Policy shall be limited to the product of (a) the percentage interest of the Insured in the applicable Joint Venture and (b) the total limit of liability afforded the Insured by this Policy.
Another difference is that the Lloyd's policy does not contain a separate endorsement identifying specific joint ventures.
This language does not expand the scope of coverage for partnerships and joint ventures as the language in endorsement 11 does. Under the Lloyd's policy and endorsement, partnerships and joint ventures must still be listed as named insureds for coverage to take effect. The only purpose of this clause is to further limit Lloyd's liability for joint ventures to the percentage of GATX's ownership. Because Olympic is not a named joint venture under the policy, the policy does not provide coverage.
The policy also contains an endorsement that purportedly grants GATX the exclusive right to make claims on behalf of all insureds. Because we hold that Olympic is not an insured under the policy, we need not address this issue.
The provision reads:
GATX Corporation shall have the exclusive Authority on behalf of all Insureds to exercise any and all options under this policy and at their option may exclude any person, persons, entity or entities which would otherwise be included as an Insured hereunder.
Marine Terminal Operator Liability
The MTOL policies defined the insured as "[GTC], and any subsidiary, affiliated, interrelated, associated companies or corporations, whether wholly or partially controlled through ownership or management as now exists or may hereafter be constituted, created or acquired." Olympic and Hiscox claim that Olympic is covered as either a subsidiary, an affiliated company, or as partially controlled through ownership.
Somerset argues that MTOL policies are unique and only cover liabilities associated with marine terminal operations. But reading the language in the policy, there is no exclusion for other property damage or injuries. The policy language explains that it covers 100% interest in the legal and/or assumed liability of the Assureds arising out of the premises and/or operations, including products hazard or completed operations hazard and independent contractors, of U.S. and U.K. locations including all owned pipelines whether on premises or not, and also including worldwide any operations, including products and completed operations, incidental to the above which occur away from the above locations.
Under this broad language, the fact that Olympic was not a marine terminal operation does not necessarily preclude coverage. To determine if Olympic is an insured under the MTOL policies, we examine the context of the policies.
We conclude that the MTOL policies provide a clear indication of the intended coverage. These policies base the premium on the level of throughput from the pipelines. Thus, while the general language defining an "insured" could arguably include Olympic, the specific policy language clearly indicates that Olympic is not an intended insured under the policies.
By specifically enumerating the pipelines in the policy, and tying the policy premium to the throughput of only those pipelines, the policy specifically denotes both the basis for the premium and the intended beneficiaries of the coverage. Olympic is not listed as one of the pipelines, and GTC did not pay a premium based on its throughput. We conclude that Olympic is not an insured under the MTOL policies.
Fees and Costs
Olympic also argues that the trial court erred in awarding the entire cost of deposition transcripts used in the summary judgment. We review an award of costs for an abuse of discretion. RCW 4.84.010 narrowly defines costs to include specific fees the prevailing party has incurred. Items that the statute allows for as costs include: filing fees, costs of service of process, notary fees, costs of reports and records as evidence, statutory attorney and witness fees, costs of transcription of depositions used at trial or arbitration and "costs otherwise authorized by law. . . ." The right to costs is a substantive right, "`purely a matter of statutory regulation.'" Although the statute authorizes the cost of taking depositions, the statute explicitly states that "the expenses of depositions shall be allowed on a pro rata basis for those portions of the depositions introduced into evidence or used for purposes of impeachment." But the award for deposition costs may have included fees for deposition transcripts that were not used in the summary judgment.
See Panorama Village Condominium Owners Ass'n Bd. of Dir. v. Allstate Ins. Co., 144 Wn.2d 130, 141-42, 26 P.3d 910 (2001).
Gerken v. Mutual of Enumclaw Ins. Co., 74 Wn. App. 220, 231, 872 P.2d 1108 (1994).
Gerkin, 74 Wn. App. at 231 (quoting Platts v. Arney, 46 Wn.2d 122, 128, 278 P.2d 657 (1955)).
Compare, at CP 6498: "The Court reviewed and considered in its entirety the depositions introduced. . . ." and "The depositions were limited by this Court to the `named insured' issue. . . ."
The insurers argue that the entire transcripts were necessary because they provided context to the portions relied on in their summary judgment motions. The trial court has discretion to consider any portions of submitted depositions in order to rule on parties' motions, and to award costs for those portions so considered. Deposition costs for entire depositions may not properly be awarded, however, simply because the depositions were attached to a motion and reviewed in part by the court. Here, the court apparently considered only a fraction of the depositions for its summary judgment ruling. We therefore remand for the sole purpose of recalculating fees based only on the portion of the transcripts actually relied on by the trial court.
Olympic's request for attorney fees on appeal is denied.
AFFIRMED IN PART, REVERSED IN PART.
SCHINDLER, J. and ELLINGTON, A.C.J., Concur.