# Allianz Global Risks v. ACE Property & Casualty Ins. Co.

> Oregon Supreme Court · March 25, 2021 · 367 Or. 711

URL: https://www.frixlaw.com/law-library/cases/10627414

## Case

- **Court:** Oregon Supreme Court
- **Decided:** March 25, 2021
- **Citations:** 367 Or. 711; 483 P.3d 1124
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Balmer
- **Cited by:** 15 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10627414

## How later opinions describe it (automated extraction)

- recognizing that an affir- mance of a trial court’s ruling on one basis obviates the need to reach arguments challenging alternate bases supporting trial court’s decision
- describing insurer’s right to seek contribution from other “liable or potentially liable” insurers
- recognizing that affirmance on one basis is sufficient to sustain the trial court’s judgment

## Opinion text

711

Argued and submitted September 16, 2020; decision of Court of Appeals
reversed, limited judgments of trial court affirmed in part and reversed in part,
and case remanded to trial court for further proceedings March 25, 2021

ALLIANZ GLOBAL RISKS
US INSURANCE COMPANY
and Allianz Underwriters Insurance Company,
Petitioners on Review,
v.
ACE PROPERTY & CASUALTY
INSURANCE COMPANY,
as Successor to Aetna Insurance Company;
Certain Underwriters at Lloyd’s London;
Certain London Market Insurance Companies;
General Insurance Company; and
Westport Insurance Corporation,
as Successor to Puritan Insurance Company,
Respondents on Review,
and
CON-WAY, INC.,
as Successor to Consolidated Freightways, Inc.,
Respondent on Review,
and
ALLSTATE INSURANCE COMPANY,
as Successor to Northbrook Excess and Surplus
Insurance Company, fka Northbrook
Insurance Company; et al.,
Defendants.
Court of Appeals
A159758 (Control)
ALLIANZ GLOBAL RISKS
US INSURANCE COMPANY
and Allianz Underwriters Insurance Company,
Petitioners on Review,
v.
ACE PROPERTY & CASUALTY
INSURANCE COMPANY,
as Successor to Aetna Insurance Company;
General Insurance Company; and
712 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Westport Insurance Corporation,
as Successor to Puritan Insurance Company,
Respondents on Review,
and
AMERICAN HOME ASSURANCE COMPANY;
Certain Underwriters at Lloyd’s London;
Certain London Market Insurance Companies;
Continental Casualty Company;
Lexington Insurance Company;
Northern Assurance Company of America,
Respondents on Review,
and
CON-WAY, INC.,
as Successor to Consolidated Freightways, Inc.,
Respondent on Review,
and
ALLSTATE INSURANCE COMPANY,
as Successor to Northbrook Excess and Surplus
Insurance Company, fka Northbrook
Insurance Company; et al.,
Defendants.
Court of Appeals
A159858
(CC 120404552)
(CA A159758 (Control), A159858)
(SC S067017)
483 P3d 1124

Plaintiff insurance company Allianz paid damages and defense costs for
its insured, Daimler, and sought contribution under the common law and the
Oregon Environmental Cleanup Assistance Act from defendants, who are his-
torical liability insurers of Freightliner, a now-defunct corporation purchased
by Daimler from intervenor Con-Way in the 1980s. The trial court entered
two limited judgments, dismissing with prejudice various of plaintiff’s claims
against defendants ACE, Westport, General, and London, based on indemnifi-
cation agreements between certain defendants and Con-Way and policy provi-
sions that excluded coverage of “pollution” claims. The trial court also denied
defendants’ and Con-Way’s motion for a directed verdict, in which defendants and
Con-Way argued that Allianz had no claim for contribution because Daimler had
never assumed Freightliner’s liabilities. The Court of Appeals held that Daimler
had not assumed Freightliner’s contingent liabilities, that Allianz cannot seek
contribution from Freightliner’s historical liability insurers, and that the trial
court had erred in denying motions for directed verdicts as to all defendants.
Cite as 367 Or 711 (2021) 713

Held: (1) Because evidence in the record supported the jury’s verdict that Daimler
expressly or impliedly assumed Freightliner’s liabilities, the trial court did not
err in denying defendants’ and Con-Way’s motion for a directed verdict. (2) The
issue of whether ACE, General, and Westport have a duty to defend or indem-
nify Freightliner against the claims here should have been decided by the trial
court based on the terms of the agreements in the insurance policies and without
regard to the side agreements or other extrinsic evidence. (3) The phrase “sud-
den, unintended[,] and unexpected” to describe pollution claims excluded from
insurance coverage was ambiguous and, thus, it was error for the trial court not
to interpret it for the jury.
The decision of the Court of Appeals is reversed. The limited judgments of the
trial court are affirmed in part and reversed in part, and the case is remanded to
the trial court for further proceedings.

On review from the Court of Appeals.*
C. Robert Steringer, Harrang Long Gary Rudnick P.C.,
Portland, argued the cause and filed the briefs for petitioners
on review. Also on the briefs were James E. Mountain, Jr.,
and Erica R. Tatoian, and, on the reply brief, Margaret H.
Warner and Ryan S. Smethurst, McDermott Will & Emery
LLP, Washington DC.
Robert Koch, Tonkon Torp, Portland, argued the cause
and filed the brief for respondent on review Con-Way, Inc.
Also on the brief were Frank J. Weiss and Anna K. Sortun.
Carl E. Forsberg, Forsberg & Umlauf, P.S., Seattle,
Washington, argued the cause and filed the brief for respon-
dents on review Certain Underwriters at Lloyd’s London
and Certain London Market Insurance Companies. Also
on the brief were Matthew S. Adams and Charles Henty,
Forsberg & Umlauf, P.S., Timothy R. Volpert, Tim Volpert,
P.C., Portland, and Matthew B. Anderson and William B.
Seo, Mendes & Mount, LLP, New York.
Thomas M. Christ, Sussman Shank LLP, Portland,
filed the brief for respondent on review General Insurance
Company.
Beverly Pearman, Assistant General Counsel, Portland,
and Seth H. Row, Portland, filed the brief for amici curiae
Port of Portland and United Policyholders.
______________
* On appeal from Multnomah County Circuit Court, Christopher J. Marshall,
Judge. 297 Or App 434, 442 P3d 212 (2019).
714 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Nadia H. Dahab, Stoll Stoll Berne Lokting & Shlachter,
Portland, filed the brief in support of the petition for review
and Lydia Anderson-Dana, Stoll Stoll Berne Lokting &
Shlachter, filed the brief on the merits for amicus curiae
Daimler Trucks North America LLC. Also on the brief on
the merits was Steven C. Berman.
Michael E. Farnell, Parsons Farnell & Grein, LLP,
Portland, filed the brief for amicus curiae Former Governor
Ted Kulongoski.
Before Walters, Chief Justice, and Balmer, Nakamoto,
Duncan, Nelson, and Garrett, Justices, and Rives Kistler,
Senior Judge, Justice pro tempore.**
BALMER, J.
The decision of the Court of Appeals is reversed. The lim-
ited judgments of the trial court are affirmed in part and
reversed in part, and the case is remanded to the trial court
for further proceedings.

______________
** Flynn, J., did not participate in the consideration or decision of this case.
Cite as 367 Or 711 (2021) 715

BALMER, J.
This case arises out of an insurance company’s civil
action seeking equitable and statutory contribution from
other insurers for claims and defense costs that it paid on
behalf of its insured. We describe the factual background
of the case and the claims in general terms before address-
ing the legal arguments in detail. For the reasons explained
below, we reverse the decision of the Court of Appeals, affirm
in part and reverse in part the trial court’s limited judg-
ments, and remand to the trial court for further proceedings.
I. BACKGROUND AND PROCEEDINGS BELOW
Daimler-Benz AG acquired Freightliner Corpora-
tion (Freightliner) from Consolidated Freightways (now
Con-Way) in 1981. As part of the transaction, it liquidated
Freightliner’s assets and liabilities into a subsidiary,
Daimler Trucks North America LLC (Daimler). Between
1952 and 1982, Freightliner and then Daimler had engaged
in business activities, primarily the manufacture of trucks,
that subsequently led to several environmental remedia-
tion proceedings, including claims related to the Portland
Harbor Superfund cleanup, and to some 1,500 asbestos
personal injury claims. Plaintiffs Allianz Global Risk US
Insurance and Allianz Underwriters Insurance Company
(Allianz) insured Freightliner in 1981 and Daimler from
1981 to 1986 through a general commercial liability insur-
ance policy. Daimler also purchased from Allianz another
policy to provide coverage for future claims that might be
made against Freightliner based on its past operations that
were “incurred but not yet reported.” By the time it filed the
operative complaint in this action in 2014, Allianz had spent
more than $24 million defending and paying environmental
and asbestos claims against Daimler and the now-dissolved
Freightliner arising from Freightliner’s business operations
between 1952 and 1982.
In this litigation, Allianz seeks contribution for the
payments it has made and will make in the future based
on those environmental and asbestos claims from insur-
ance companies that insured Freightliner—either directly
or through its parent, Con-Way—from 1976 to 1982. Those
include defendants ACE Property & Casualty Insurance
716 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Company (ACE), General Insurance Company (General), and
Westport Insurance Corporation (Westport). Allianz also
seeks contribution from Certain Underwriters at Lloyd’s,
London and Certain London Market Insurance Companies
(London), which had issued excess insurance policies to
Freightliner from 1977 to 1981.1 Defendant insurance com-
panies declined to defend Daimler or pay claims under the
relevant policies or to pay any contribution to Allianz for
the amounts that it has paid. Daimler assigned its claims
against defendants under the insurance policies to Allianz.
Allianz alleges that it is entitled to common-law
equitable contribution because of the “equitable doctrine
which holds that one who pays money for the benefit of
another is entitled to be reimbursed.” Carolina Casualty v.
Oregon Auto., 242 Or 407, 417, 408 P2d 198 (1965). It also
relies on ORS 465.475 to 465.484, the Oregon Environmental
Cleanup Assistance Act (OECAA), which provides that an
“insurer that has paid all or part of an environmental claim
may seek contribution from any other insurer that is liable
or potentially liable to the insured and that has not entered
into a good-faith settlement agreement with the insured
regarding the environmental claim.” ORS 465.480(4)(a).
The insurance companies’ threshold defense is
that they are not responsible for any payments by Allianz
because the liabilities that they insured for Freightliner
and Con-Way were not transferred to Daimler as part of the
acquisition and dissolution of Freightliner in 1981. For that
reason, they argue, they have no obligation at all to Daimler
directly or in its capacity as the assignee of Freightliner’s
liabilities, and Allianz therefore may not recover any contri-
bution from them.
A second line of defense for General, Westport, and
ACE is that, even if Daimler did assume the liabilities of
Freightliner, including the environmental and asbestos
liabilities at issue here, their policies require no payment
by them to Daimler (and thus no contribution payment to

1
We sometimes refer to General, ACE, Westport, and the London defendants
as “defendants” or “defendant insurance companies.” Other insurance companies
also insured Freightliner and are parties to the litigation, but their liability is
not at issue in this appeal.
Cite as 367 Or 711 (2021) 717

Allianz) because of side agreements, sometimes referred
to as “fronting agreements,” between themselves and
Freightliner’s parent, Con-Way. Under the side agreements,
Con-Way agreed to indemnify the insurers for all claims,
defense costs, and other expenses arising out of occurrences
subject to the policies. Con-Way intervened in support of
the insurers because, under the side agreements, “Con-Way
ultimately will be responsible for any damages assessed
against” them.
A third defense raised by the insurers is based on
“qualified pollution exclusion” provisions in the policies.
Policies issued by London and General excluded coverage for
pollution liability unless the pollution was “sudden, unin-
tended[,] and unexpected” (London) or was “sudden, unex-
pected, [and] unintentional” (General), which the parties
refer to as the “London” pollution exclusion.2 Policies issued
by Westport and ACE excluded pollution coverage unless
the pollution was caused by a “discharge” that was “sudden
and accidental” (the “Domestic” pollution exclusion).
At trial, the jury found that Daimler had assumed
the contingent liabilities of Freightliner and, thus, that the
insurers could be liable to Daimler for the claims at issue
here. However, based on the side agreements and other evi-
dence admitted at trial, the jury also found that, notwith-
standing the insurance policies issued by Westport, ACE,
and General, those insurers and Con-Way did not intend
that the insurers would have a duty to defend or indemnify
Freightliner. As to the pollution exclusion provisions, the
jury agreed with Allianz that the Domestic exclusion pro-
visions in the ACE and Westport policies did not exclude
the environmental claims at issue here, but also found that
the London exclusion provisions in the London and General
policies did exclude coverage of those environmental claims.
Based on the jury verdict, the trial court entered
the two limited judgments that are at issue here. In one,
the trial court declared, because the jury had found that

2
The pollution exclusions in the London and General policies have the minor
textual differences that appear in the quoted provisions, as well as other differ-
ences, which we discuss below. Nevertheless, as noted, the parties generally refer
to them both as the “London” pollution exclusion, and we do as well.
718 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Con-Way and the fronting insurers—General, ACE, and
Westport—did not intend that those insurers would have
a duty to defend Freightliner as to the claims at issue, that
Allianz was not entitled to contribution from those defen-
dants for the amounts that it paid with respect to the claims.
It therefore dismissed with prejudice all of Allianz’s claims
against ACE and claims against General and Westport that
related to some of the policies that they had issued. In the
second limited judgment, the court declared that London
was not required to defend Daimler and that Allianz was not
entitled to contribution from it because the London pollution
exclusion excluded such claims; it dismissed with prejudice
the claims related to certain policies issued by London.3
Allianz appealed, assigning error to various trial
court rulings related to the ACE, General, and Westport
policies, the side agreements, and the London pollution
exclusion. The thrust of its argument was that the trial
court had erred in submitting to the jury issues regarding
the effect of the side agreements and the interpretation of
the insurance policies, which, Allianz asserted, should have
been decided by the court as a matter of law. Con-Way and
defendant insurance companies cross-assigned error to the
trial court’s denial of their motion for a directed verdict
in their favor, arguing that Daimler had never assumed
Freightliner’s contingent liabilities in the first place and
therefore was not entitled to make any claims under the
policies. For that reason, Con-Way and the defendant insur-
ance companies contended, Allianz had no viable claim for
contribution.
The Court of Appeals determined that the cross-
assignment of error was dispositive and, accordingly, did not
address any of Allianz’s assignments of error. Allianz Global
Risks v. ACE Property & Casualty Ins. Co., 297 Or App 434,
439, 442 P3d 212 (2019). The court held that Daimler had not
assumed Freightliner’s contingent liabilities, that Allianz

3
The dismissal of claims against General based on the pollution exclusion
verdict was included with the other declarations as to General in the first lim-
ited judgment. Also, certain other claims and counterclaims in the case were
resolved by trial court rulings and settlements that are not before us. This appeal
is limited to the two limited judgments entered by the trial court and the claims
resolved by those judgments.
Cite as 367 Or 711 (2021) 719

cannot seek contribution from Freightliner’s historical pri-
mary and excess liability insurers, and that the trial court
had erred in denying motions for directed verdicts as to all
defendants. Id. at 445. It affirmed the limited judgments
on that alternative ground. Id. Allianz filed a petition for
review, which we allowed.
II. DAIMLER’S ASSUMPTION OF FREIGHTLINER’S
CONTINGENT LIABILITIES
We begin with the issue that the Court of Appeals
found dispositive: whether Daimler acquired Freightliner’s
contingent liabilities in 1981. As set out in the verdict, the
jury found that Daimler was “the successor to the liabilities
of Freightliner Corporation * * * by reason of * * * [e]xpress or
implied assumption of all liabilities.” On appeal, defendants
and Con-Way argued that the trial court erred in submit-
ting the issue to the jury because documents related to the
acquisition unambiguously show that Freightliner did not
transfer, and Daimler did not assume, Freightliner’s con-
tingent liabilities. The Court of Appeals accepted that argu-
ment, and for that reason held that the trial court should
have granted a directed verdict. Id. We disagree with the
Court of Appeals.
A. The Daimler-Freightliner Agreements Regarding the
Acquisition
On July 31, 1981, Daimler acquired all the stock
of Freightliner. Through three agreements executed on
August 14, 1981, Freightliner was liquidated and certain
of its assets and liabilities were transferred to the Daimler
subsidiary.4 (Freightliner was later dissolved and all of its
remaining assets transferred to Daimler.) The question is
whether Freightliner’s contingent liabilities were trans-
ferred to Daimler in the August 14, 1981, agreements. In the
“Agreement and Plan of Liquidation,” Daimler “expressly
assumes and agrees unconditionally to pay and discharge
4
The two parties to each of the agreements are the Daimler subsidiary
known as Freightliner Acquisition Corporation and Freightliner Corporation,
the entity that Daimler acquired from Con-Way. To avoid confusion, we refer
to Freightliner Acquisition Corporation by the name of its parent company,
Daimler.
720 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

any and all liabilities and debts” of Freightliner. That docu-
ment also provides that Daimler
“shall deliver to [Freightliner] an instrument of assump-
tion, under the terms of which [Daimler] shall expressly
assume and undertake to pay, perform, fulfill and dis-
charge all such liabilities and obligations of [Freightliner],
accrued to or existing at the time of transfer, whether abso-
lute or contingent, and of whatever nature, except as other-
wise provided for therein.”
(Emphases added.) Executed the same day was the refer-
enced “instrument of assumption,” titled the “Assumption.”
In the “Assumption,” Daimler
“expressly assumes and undertakes to pay, perform, ful-
fill and discharge all liabilities and debts of [Freightliner],
including, without limitation, all obligations, covenants
and duties under any and all leases of real and personal
property, obligations under licenses of United States and
foreign patents, trademarks, service marks and copyrights,
dealer agreements, pension and health plans, financial
and credit arrangements, contracts, indentures, mort-
gages, pledges, warrants, subscriptions, loan agreements,
export agreements, employment agreements, insurance
agreements and plans, sales and repurchase agreements,
indemnity agreements and plans of composition, and all
other liabilities and obligations whether accrued, absolute
or contingent, as of the date hereof.”
(Emphases added.) Daimler and Freightliner also executed
a “Transfer and Assignment” at the same time, in which
Freightliner
“hereby assigns and transfers to [Daimler] * * * all of the
properties and assets of [Freightliner], both real and per-
sonal, tangible and intangible, of every kind and nature,
and wheresoever located, except as set forth in Schedule A
hereto * * *[.]”
“Schedule A,” attached to the “Transfer and Assignment,”
excludes from the transfer agreement
“[a]ll contingent liabilities, and sufficient cash amounts as
are estimated to be necessary to satisfy such liabilities,
for which reserves have previously been established. This
includes, but may not be limited to, reserves for warranty
and insurance claims.”
Cite as 367 Or 711 (2021) 721

About two weeks later, on September 1, 1981, the
parties signed a letter agreement clarifying their intent
regarding Freightliner’s liquidation, primarily as to the
disposition of certain leases. The letter expressly excludes
from the “Transfer and Assignment” a list of 31 “real and
personal property leases for which the prior written con-
sent of the lessors is required.” It otherwise confirms that
the “Transfer and Assignment” was “intended to transfer
all properties and assets of Freightliner of every kind and
nature other than the liabilities of Freightliner referred to
in Schedule A and an amount of assets retained sufficient to
satisfy such liabilities * * *.”
As noted, the factual question of whether Daimler
had “express[ly] or implied[ly] assum[ed] * * * all liabilities”
of Freightliner, based on those agreements and other evi-
dence presented at trial, was presented to the jury. The jury
found that Daimler had assumed those liabilities.
B. The Court of Appeals Ruling on Defendants’ Cross-
Assignment of Error
The Court of Appeals concluded otherwise. That
court viewed the August 14, 1981, agreements as being
“ambiguous” as to “Daimler’s assumption of Freightliner’s
contingent liabilities.”
“The ‘Agreement and Plan of Liquidation’ and the
‘Assumption’ agreement state that Daimler assumes all
liabilities, ‘whether absolute or contingent, and of what-
ever nature,’ but the ‘Transfer and Assignment Agreement’
explicitly states that the transfer does not include
Freightliner’s contingent liabilities.”

Allianz, 297 Or App at 444. To resolve that ambiguity, the
court then looked to the September 1, 1981, letter agree-
ment, which it construed to be either part of the August 14
agreement or an addendum to the August 14 documents:
“The letter states explicitly that its purpose is to clarify the
terms of the August 14, 1981, agreement. It is signed by
the parties and unequivocally and unambiguously states
that Freightliner has not transferred, and Daimler has
not assumed, Freightliner’s contingent liabilities. Thus,
722 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

because the letter is properly viewed as part of the parties’
agreement, and because the text and context of the letter
resolve the issue, we do not consider extrinsic evidence of
the parties’ intent or maxims of construction.”

Id. at 444-45. The court concluded that, as a matter of law,
the agreement between the parties was unambiguous and
that Daimler had not assumed Freightliner’s contingent lia-
bilities. Id. at 444. Accordingly, it held that the trial court
“erred in denying the motion for a directed verdict as to all
defendants” and allowing the issue to go to the jury. Id. at
445.
On review, Allianz argues that the Court of Appeals
misinterpreted the contractual documents between Daimler
and Freightliner which, when read together, are not contra-
dictory. The transaction, Allianz maintains, was structured
to allow the defunct Freightliner to retain some assets so that
it could pay certain contingent liabilities after its liquidation
into Daimler but before it was formally dissolved. Doing so
would allow the entities to obtain favorable tax treatment on
their consolidated returns over a three-year period.5 Allianz
emphasizes that under the agreement Daimler expressly
assumed all contingent liabilities of Freightliner, although
Freightliner also remained obligated on some of its liabili-
ties; that is, both Freightliner and Daimler were responsible
for that subset of liabilities. Freightliner also retained “pre-
viously established” monetary reserves that would allow it
(rather than the new owner Daimler) to satisfy those liabil-
ities, which would provide tax benefits to the consolidated
entities. In Allianz’s view, the documents as a whole unam-
biguously reflect the intent just described; but, to the extent
that the August 14 agreements and the September 1 let-
ter might be ambiguous or internally inconsistent, Allianz
5
Two aspects of the August 14, 1981, agreements were based on tax con-
siderations. First, all of the Freightliner assets, except those identified in
Schedule A, were transferred to Daimler as of that date so that Daimler would
have a stepped-up basis in those assets. See 26 USC § 334(b)(2) (1976) (providing
step-up basis for assets of acquired corporation if liquidated within two years
after acquisition). Second, Schedule A provided that certain contingent liabili-
ties and assets reserved to pay those liabilities would continue to be liabilities of
Freightliner, because amounts paid to satisfy those liabilities could be deducted
as business expenses under 26 USC § 162(a) only if the payments were made by
Freightliner. No one appears to dispute those basic aspects of tax law.
Cite as 367 Or 711 (2021) 723

asserts, the trial court did not err in allowing the issue to
go to the jury, which heard extensive evidence and unan-
imously agreed that Daimler had explicitly or implicitly
assumed all Freightliner’s liabilities.6
The contractual documents support Allianz’s posi-
tion and the jury’s verdict. The text of the “Agreement
and Plan of Liquidation” could hardly be clearer: Daimler
“expressly assumes and agrees unconditionally to pay and
discharge any and all liabilities and debts” of Freightliner.
(Emphasis added.) It then provides that Daimler will deliver
to Freightliner “an instrument of assumption” under which
Daimler will “expressly assume and undertake to pay, per-
form, fulfill and discharge all such liabilities and obligations
of [Freightliner], accrued to or existing at the time of transfer,
whether absolute or contingent, and of whatever nature * * *.”
(Emphases added.) The unsurprisingly titled “Assumption,”
executed the same day, repeats the same language, again
setting out Daimler’s agreement to assume, pay, and dis-
charge “all liabilities and debts” of Freightliner, listing dif-
ferent categories of obligations not at issue here, and “includ-
ing * * * all other liabilities and obligations whether accrued,
absolute or contingent * * *.” (Emphases added.)
The Court of Appeals perceived a conflict between the
“Agreement and Plan of Liquidation” and the “Assumption,”
on the one hand, and the “Transfer and Assignment” on the
other, because the latter “explicitly states that the trans-
fer does not include Freightliner’s contingent liabilities.”
Allianz, 297 Or App at 444. For that conclusion, the court
relied on Schedule A of the “Transfer and Assignment.”
See id. at 442 (“Schedule A * * * explicitly excluded from
Daimler’s assumption Freightliner’s contingent liabilities.”).
To resolve that inconsistency or “ambiguity,” id. at 444, the
court looked to the September 1, 1981, letter agreement.
6
Allianz asserts that the three August 14, 1981, documents and the
September 1, 1981, letter unambiguously establish that Daimler assumed all
liabilities of Freightliner, including those at issue here, and that the trial court
therefore should have ruled in its favor as a matter of law, rather than permit
the consideration of extrinsic evidence and submit the question to the jury. See
Yogman v. Parrott, 325 Or 358, 361, 937 P2d 1019 (1997) (in the absence of ambi-
guity, court construes the words of a contract as a matter of law). Because the
jury found in Allianz’s favor on this issue in any event, we need not address that
aspect of its argument.
724 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

It concluded that the letter “eliminate[d] any ambiguity
* * * that Freightliner’s contingent liabilities had not been
transferred to Daimler” and that it “unambiguously states
that Freightliner has not transferred, and Daimler has not
assumed, Freightliner’s contingent liabilities.” Id. at 444-45.
To consider whether the Court of Appeals erred in
holding that the contracts outlined above demonstrate that
Daimler did not assume Freightliner’s contingent liabilities,
we take a step back and look at the agreement as a whole,
as set out in the four documents. The “Agreement and Plan
of Liquidation,” as its name indicates, sets out the central
terms of the “agreement” between Daimler and Freightliner
and the “plan” for the liquidation and later dissolution of
Freightliner. The other documents implement that plan.
The “Agreement and Plan of Liquidation” provides that
Daimler will deliver to Freightliner “an instrument of
assumption” expressly assuming all of Freightliner’s liabil-
ities, “whether absolute or contingent.” That instrument is
the “Assumption.” As discussed above, in the “Assumption,”
Daimler expressly assumes all contingent and other liabil-
ities. Moreover, it does so explicitly “in consideration of the
transfer and assignment” of all of Freightliner’s assets to
Daimler.
The “Agreement and Plan of Liquidation” also pro-
vides for the liquidation of Freightliner through the distri-
bution of its assets to Daimler. Under that document, the
assets of Freightliner are transferred to Daimler, beginning
with a “first distribution” and ending with a final distribu-
tion not more than “three (3) years from the close of the tax-
able year in which the first distribution * * * occurs.” That
step is accomplished by a third document, the “Transfer
and Assignment.” The “Transfer and Assignment” does
exactly what its name indicates: it “assigns and transfers
to [Daimler] as of the close of business on [August 14, 1981,]
all the property and assets of [Freightliner], both real and
personal, tangible and intangible * * * except as set forth
on Schedule A hereto * * *.” The remaining “property and
assets” are to be—and were—transferred to Daimler within
three years, after the consolidated entities had realized the
favorable tax consequences that accrued to them because
Freightliner paid certain liabilities from its remaining
Cite as 367 Or 711 (2021) 725

assets—the “previously established” reserves—over those
years.
As noted, the Court of Appeals relied on a fourth
document—the September 1, 1981, letter—to conclude that
Daimler had not assumed Freightliner’s contingent liabil-
ities. That document, however, had a different focus than
“eliminating any ambiguity” about whether “all” contingent
liabilities, including liabilities such as those at issue in this
case, had been transferred to Daimler. As the text of the
letter states, it was intended to
“clarify [the parties’] mutual intent with respect to the liq-
uidating distribution by [Freightliner to Daimler] effected
by the Transfer and Assignment * * * [and to] confirm that
such instrument was intended to transfer all properties
and assets * * * other than the liabilities of Freightliner
referred to in Schedule A and an amount of assets retained
sufficient to satisfy such liabilities and other than the fol-
lowing real and personal property leases for which the prior
written consent of the lessor is required.”
(Emphases added.) The September 1, 1981, letter then
specifies the 31 real and personal property leases to which
Freightliner was a party and provides details as to the dol-
lar amount of assets to be retained by Freightliner and the
handling of intra-corporate accounting matters between
Daimler and Freightliner.
We first consider and reject the Court of Appeals’
determination that the September 1, 1981, letter was
intended to clarify the “August 14, 1981, agreement” and
that it “unequivocally and unambiguously states that
Freightliner has not transferred, and Daimler has not
assumed, Freightliner’s contingent liabilities.” Allianz, 297
Or App at 444-45. To the contrary, as quoted above, the
letter explicitly states that it was intended to clarify the
parties’ intent regarding the “liquidating distribution * * *
effected by the Transfer and Assignment” of “all properties
and assets”—which was only one of the August 14, 1981,
documents. The document in which Daimler explicitly and
without any exceptions assumed all of Freightliner’s liabil-
ities, contingent and otherwise, was not the “Transfer and
Assignment,” but the “Assumption.” The September 1, 1981,
726 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

letter did not purport to clarify or modify the “Assumption”
or that document’s unequivocal assumption of “all liabilities
and obligations whether accrued, absolute or contingent[.]”
Rather, aside from repeating some of the terms of earlier doc-
uments, specifically the “Transfer and Assignment,” it sim-
ply sets out the leases for which Freightliner continues to be
liable because their assumption by Daimler would require
“the prior written consent of the lessors.” Additionally, the
letter, like the “Transfer and Assignment” that it “confirm[s]
and clarif[ies],” contains no legally binding obligation at all
as to the assumption by Daimler of the contingent liabilities
at issue in this case.
The September 1, 1981, letter and the “Transfer and
Assignment” did not “effect” any assumption of liabilities
by Daimler; rather, they “effected” the transfer and assign-
ment of Freightliner’s assets to Daimler. The assumption of
liabilities was “effected” by the “Assumption.”7 The letter,
like the “Transfer and Assignment,” refers to the “liabilities
of Freightliner referred to in Schedule A,” but adds no addi-
tional legal or factual support to the arguments of Con-Way
and defendants regarding the liabilities that Daimler did or
did not assume.
We turn to the dispute about the meaning of
Schedule A to the “Transfer and Assignment.” The Court
of Appeals read the “Transfer and Assignment” as “assign-
[ing] to Daimler all of its assets, except for its contingent
liabilities.” Id. at 441. That interpretation misconstrues the
plain meaning of the document. First, as quoted above, and
consistent with its title, the document “assigns and trans-
fers to [Daimler] * * * all of the properties and assets of
[Freightliner.]” (Emphasis added.) A party with assets may
“assign” or “transfer” those assets to another.8 However,
7
To the extent that the September 1, 1981, letter clarified or modified the
Transfer and Assignment as it related to “contingent liabilities,” it excepted from
the transfer to Daimler only the real and personal property leases listed in the
letter, for which the parties apparently had not yet secured the required approval
of the lessors.
8
See Black’s Law Dictionary 146-47 (11th ed 2019) (defining “assign” as “[t]o
convey in full; to transfer,” and “assignment” as “the transfer of rights or prop-
erty”). See id. at 1803 (defining “transfer” as “[t]o convey or remove from one place
or one person to another; to pass or hand over from one to another, esp. to change
over the possession or control of * * *[; t]o sell or give”).
Cite as 367 Or 711 (2021) 727

a party with obligations or liabilities ordinarily does not
“assign” or “transfer” those liabilities to another party.
Rather, the other party assumes those obligations and lia-
bilities, just as Daimler did here in the “Assumption.”9
The “Transfer and Assignment” employs words of common
and legal usage—“assign” and “transfer”—that connote a
change in ownership of assets and property, but does not
use the word “assumption,” a word that, again, in both
common and legal usage, connotes something quite differ-
ent, viz., the taking on by one party of another’s liability or
obligation.
The “Transfer and Assignment” implements the
comprehensive “passing” or “handing over” from Freightliner
to Daimler of “all the properties and assets of [Freightliner],
both real and personal, tangible and intangible, of every kind
and nature, and wheresoever located, except as set forth on
Schedule A * * *.” Schedule A then excludes from that trans-
fer of “all the properties and assets” of Freightliner a specific
subset of liabilities and associated assets:
“All contingent liabilities, and sufficient cash amounts as
are estimated to be necessary to satisfy such liabilities,
for which reserves have previously been established. This
includes, but may not be limited to, reserves for warranty
and insurance claims.”

(Emphases added.) The reference to this subset of liabilities
in Schedule A does not purport to alter Daimler’s assumption
of “all” of Freightliner’s liabilities “whether accrued, abso-
lute or contingent,” as set out in the “Assumption.” Rather,
it is included there to describe the Freightliner reserves that
had been set aside to pay that subset of liabilities and that
would therefore be excluded from the otherwise compre-
hensive transfer of all Freightliner’s assets to Daimler and
remain with Freightliner.
Contrary to the Court of Appeals’ holding and Con-
Way’s argument, the words of Schedule A do not unambigu-
ously exclude “Freightliner’s contingent liabilities” from the

9
See Black’s Law Dictionary at 154 (defining “assumption” as “[t]he act of
taking (esp. someone else’s debt or other obligation) for or on oneself; the agree-
ment to so take * * *”).
728 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

liabilities that Daimler assumed. Rather, they can be read
to exclude “contingent liabilities * * * for which reserves have
previously been established.”10 The range of potential liabil-
ities of a manufacturing company such as Freightliner can
be broad indeed. As individuals, other corporations, and gov-
ernment entities assert legal claims of one kind or another,
businesses often recognize and set aside reserves for the
purpose of later paying claims and related legal costs. That
is what Freightliner had done in the years leading up to the
sale to Daimler. Some $16 million in reserves were retained
by Freightliner and paid out during the three years after
the transaction closed.
In sum, although the Court of Appeals agreed with
Con-Way that the August 14, 1981, documents were “ambig-
uous” as to whether Daimler had assumed the contingent
liabilities of Freightliner, it nevertheless concluded that
the September 1, 1981, letter “unequivocally and unam-
biguously states that Freightliner has not transferred, and
Daimler has not assumed, Freightliner’s contingent liabil-
ities.” Allianz, 297 Or App at 444-45. It held that the trial
court erred in not granting the defendants’ motion for a
directed verdict in their favor.
Under the “Agreement and Plan of Liquidation”
and the “Assumption,” Daimler expressly assumed all
of Freightliner’s liabilities, contingent and otherwise. It
appears that certain leases and other specific liabilities for
which Freightliner had established reserves may have been
excluded from the otherwise comprehensive assumption of
liabilities because required approvals from lessors had not
yet been obtained or for tax purposes.11 But, for the reasons
10
Con-Way thus is incorrect in arguing that Freightliner “retained two things:
all of its contingent liabilities, and reserves to pay those liabilities.” (Emphasis
added.) Rather, the wording of Schedule A makes clear that Freightliner retained
(1) contingent liabilities for which reserves had been established, and (2) those
reserves. And to the extent there might be any ambiguity in that wording in
Schedule A, the jury resolved the issue in Allianz’s favor.
11
Con-Way argues that Daimler did not assume the contingent liabilities of
Freightliner, because it could not have obtained the favorable tax treatment it
sought unless Freightliner’s contingent liabilities remained with that corporate
entity. It cites Pacific Transport Company v. C.I.R., 483 F2d 209 (9th Cir 1973),
for the proposition that an acquiring company may not deduct amounts that it
paid to satisfy liabilities of an entity that it had acquired. In that case, however,
the acquiring company was denied the deduction not because it had assumed
Cite as 367 Or 711 (2021) 729

set out above, we disagree with the Court of Appeals and con-
clude that the contractual documents do not unambiguously
demonstrate that Daimler did not assume Freightliner’s lia-
bility for the contingent liabilities at issue here.
C. Disposition
Allianz also contends that the agreement between
Freightliner and Daimler was unambiguous, arguing that the
“Agreement and Plan of Liquidation” and the “Assumption”
unequivocally demonstrate that Daimler did assume all of
Freightliner’s liabilities, contingent and otherwise. Allianz
argues that, because the only reasonable interpretation of
the contractual documents is that Daimler assumed all of
Freightliner’s contingent liabilities, the trial court erred in
not granting Allianz’s motion for a directed verdict on that
issue.
As discussed at length above, a close reading of the
three agreements executed on August 14, 1981, and the let-
ter of September 1, 1981, provides substantial support for
Allianz’s position. But Con-Way is correct that some provi-
sions of the documents arguably are in tension with others.
For example, notwithstanding Daimler’s blanket assump-
tion of “all liabilities and obligations whether accrued, abso-
lute or contingent” in the “Assumption,” Schedule A can be
read to exclude from the transfer to Daimler, “[a]ll contin-
gent liabilities, and sufficient cash amounts as are esti-
mated to be necessary to satisfy such liabilities, for which
reserves have previously been established.” Even if the
commas setting off the adjectival phrase regarding “suffi-
cient cash amounts” limit the scope of the liabilities that are
excluded by Schedule A, that document undercuts Allianz’s
broad assertion that Daimler assumed all of Freightliner’s
liabilities. And the September 1, 1981, letter reiterates that
excluded from the Freightliner to Daimler transfer are “the
liabilities of Freightliner referred to in Schedule A and an
amount of assets retained sufficient to satisfy such liabili-
ties * * *.”

the liability, but because it was the entity that had paid the money to satisfy the
obligation. Id. at 212. Here, Daimler left certain funds in the Freightliner shell
that were used to pay certain Freightliner obligations. Freightliner, not Daimler,
paid those obligations and took those deductions.
730 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

We have explained above why those minor tensions
between different phrases in the documents do not substan-
tially undermine Allianz’s view that Daimler assumed all of
Freightliner’s liabilities, or at least all of its liabilities other
than the 31 leases referred to in Schedule A and several
specific categories of other liabilities for which Freightliner
already had established reserves. Allianz has the better
reading of the contractual documents as a whole. But we
need not decide whether that is the only way to read the par-
ties’ written agreements and thus whether the trial court
erred in denying Allianz’s motion for a directed verdict. To
the extent that the agreements contain any ambiguity as
to what liabilities were assumed by Daimler, extrinsic evi-
dence of the parties’ intent was relevant to interpreting the
contract. That evidence was presented to the jury, which
found that Daimler had “express[ly] or implied[ly]” assumed
those liabilities. Moreover, as the special verdict makes
clear, the verdict also could have been based on a finding
of Daimler’s “implied assumption” of Freightliner’s liabili-
ties. See Erickson v. Grande Ronde Lbr. Co., 162 Or 556, 568,
92 P2d 170, reh’g den, 162 Or 579, 94 P2d 139 (1939) (pur-
chaser may impliedly assume debts and obligations of trans-
feror). On review, then, the remaining and dispositive ques-
tion is whether the jury’s verdict that Daimler expressly or
impliedly assumed all of Freightliner’s liabilities must be
set aside.
“This court cannot set aside a jury’s verdict unless
there was no evidence from which the jury could have found
the facts necessary to establish the elements of plaintiff’s
cause of action.” Woodbury v. CH2M Hill, Inc., 335 Or 154,
159, 61 P3d 918 (2003). We briefly summarize the evidence
in the record that the parties intended that Daimler assume
all of Freightliner’s liabilities.
As discussed above, Con-Way argues that Schedule
A of the “Transfer and Assignment” excluded “all contin-
gent liabilities” from that which was being transferred
from Freightliner to Daimler. Allianz responded with a
different and much narrower interpretation of Schedule A,
arguing that the “exception” there did not encompass all of
Freightliner’s liabilities, contingent or otherwise, but only
those “contingent liabilities * * * for which reserves have
Cite as 367 Or 711 (2021) 731

previously been established.” Evidence at trial showed
that as of 1981 Freightliner had established five different
reserve funds for contingent liabilities: “warranty expense,”
“Department of Transportation recall expense,” “policy
adjustment expense,” “self-insurance expense for product
liabilities,” and “vacation/holiday pay.” Freightliner had
established no reserves for environmental or asbestos
claims. The jury’s verdict that Daimler assumed the lia-
bilities of Freightliner at issue here is consistent with that
evidence.

Evidence at trial also showed that the specific
environmental remediation and asbestos claims for which
Allianz seeks contribution were unknown and unanticipated
in 1981. The first asbestos lawsuit against Daimler was
filed in 1994, and its potential liability for the three environ-
mental remediation proceedings was not known until 1983,
1991, and 2000, respectively. Based on evidence that the
claims at issue here were not known at the time of Daimler’s
acquisition of Freightliner in 1981, the jury could have found
that the parties did not intend to exclude those unknown
and contingent claims as part of the liabilities “for which
reserves had previously been established” in Schedule A,
but rather that they were included as part of Daimler’s
unqualified assumption of “all * * * liabilities and obligations
of [Freightliner], accrued to or existing at the time of trans-
fer, whether absolute or contingent, and of whatever nature
* * *.”

The jury also heard evidence that, in the years
after 1981, Daimler never disputed its responsibility for
Freightliner’s liabilities, including liabilities that had not
been identified or known at the time of the acquisition.
Former Daimler executives and a corporate tax expert tes-
tified that Daimler (or its insurers) had paid and continue
to pay all of Freightliner’s liabilities and obligations based
on its pre-1981 operations. Evidence of such subsequent
conduct is admissible to determine whether one party has
impliedly assumed the debts of another. Erickson, 162 Or at
569. Based on that evidence, a jury could find that Daimler
impliedly assumed the liabilities of Freightliner at issue
here.
732 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Because evidence in the record supported the jury’s
verdict that Daimler expressly or impliedly assumed
Freightliner’s liabilities, the trial court did not err in deny-
ing defendants’ and Con-Way’s motion for a directed verdict
in favor of defendants.
III. THE INSURANCE POLICIES AND
THE SIDE AGREEMENTS
Because the Court of Appeals ruled in favor of Con-
Way and defendant insurance companies on their cross-
assignment of error, it did not reach Allianz’s challenges
to the limited judgments entered by the trial court. Con-
Way and defendants made a contingent request that, if we
were to reverse the Court of Appeals, we remand the case to
that court to consider Allianz’s assignments of error in the
first instance. We decline to do so. Most of the issues were
extensively litigated at trial, are well-briefed on appeal, and
a decision from this court will expedite further proceed-
ings in the trial court and the ultimate resolution of the
case.
Allianz challenges the jury’s verdict that Con-Way
and ACE, General, and Westport did not “intend” that
those insurance companies, despite the policies they issued
to Freightliner, “would have a duty to defend or indem-
nify Freightliner” against the environmental and asbestos
claims at issue here. As discussed above, the centerpiece of
defendants’ position is that the side agreements between
the insurance companies and Con-Way eliminated any obli-
gation on the part of the insurance companies under the
policies. Allianz argues, first, that the question should not
have been submitted to the jury because insurance policies
are interpreted by the court as a matter of law, Hoffman
Construction Co. v. Fred S. James & Co., 313 Or 464, 469,
836 P2d 703 (1992), and, second, that any ambiguities in the
interpretation of an insurance policy are resolved in favor
of coverage, also as a matter of law, North Pacific Ins. Co. v.
Hamilton, 332 Or 20, 25, 22 P3d 793 (2001). For those and
other reasons discussed below, Allianz asserts that the trial
court erred in not granting its motion for a directed verdict
to the effect that the insurers had “duties to defend, all envi-
ronmental and all asbestos case claims at issue” according
Cite as 367 Or 711 (2021) 733

to the terms of the policies they had issued.12 Alternatively,
Allianz argues that errors in jury instructions given and
not given, evidentiary rulings, the verdict form, and the
denial of its post-trial motion to set aside the jury verdict
require the reversal of the limited judgment declaring that
the defendant insurers had no duty to defend or indemnify
Con-Way.
Con-Way and defendants counter that the trial
court did not require the jury to interpret the policies them-
selves, but only the side contracts or “fronting agreements,”
and that parties to an insurance policy are permitted to
negotiate such agreements about coverage. They argue that
Hoffman stands for the proposition that, even in the insur-
ance context, “ ‘[t]he primary and governing rule of the con-
struction of insurance contracts is to ascertain the intention
of the parties,’ ” 313 Or at 469 (alteration in original), and
that Allianz’s suggestion that the side agreements be disre-
garded is inconsistent with accepted principles of contract
interpretation.13
A. The Trial Court’s Submission of the “Policies” to the Jury
We first consider the threshold issue of whether
the trial court erred in submitting to the jury the follow-
ing question: “Did Con-Way and [the insurers] intend that
[the insurers] would have a duty to defend or indemnify
Freightliner against the claims at issue?” We conclude that
the trial court erred.
In this case, Allianz alleged that, in the insurance
policies that they issued, the insurers promised to defend
and indemnify Freightliner against the claims at issue.
When we consider whether an insurer has a duty under a
policy to defend a lawsuit brought against its insured, we
look at only the insurance policy and the complaint that the
12
Con-Way and General argue that plaintiffs failed properly to assign error
in their Court of Appeals’ brief to the trial court rulings regarding the insurance
policies and related agreements. We have reviewed those arguments and con-
clude that plaintiffs sufficiently preserved their objections in the trial court and
identified their assignments of error in the Court of Appeals for us to consider
them.
13
In a related argument, the parties dispute the effect of “endorsements” to
the ACE and Westport policies. We discuss that argument below.
734 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

insurer is being asked to defend. Ledford v. Gutoski, 319 Or
397, 399, 877 P2d 80 (1994). Oregon’s longstanding statutes
and case law make it clear that the interpretation of insur-
ance policies is a question of law to be decided by the court.
The Insurance Code provides: “[E]very contract of insurance
shall be construed according to the terms and conditions of
the policy.” ORS 742.016(1). And “policy” is defined as “the
written contract or written agreement for effecting insur-
ance * * * and includes all clauses, riders, indorsements and
papers which are a part thereof.” ORS 731.122 (emphases
added). This court’s cases are consistent with those statutes.
See, e.g., St. Paul Fire v. McCormick & Baxter Creosoting,
324 Or 184, 192, 923 P2d 1200 (1996) (“The interpretation
of the terms of an insurance policy is a question of law.”).
The court is to consider the plain meaning of the relevant
policy terms; if a term is ambiguous, the court considers the
context in which the term appears and then the context of
the policy as a whole; if ambiguity remains, the term is con-
strued against the drafter—here, the insurer. McCormick
& Baxter Creosoting, 324 Or at 192; Hoffman, 313 Or at
469-71.
Because ORS 742.016(1) and our cases treat the
interpretation of insurance policies as legal questions,
decided based on the “terms and conditions of the policy,”
our approach is sometimes referred to as a “four-corners”
rule, excluding the consideration of evidence outside the
“four corners” of the policy itself. See West Hills Development
Co. v. Chartis Claims, 360 Or 650, 653, 385 P3d 1053 (2016).
Similarly, our determination of whether an insurer has a
duty to defend a particular claim depends on the allegations
in the complaint. If “the allegations in the complaint assert
a claim covered by the policy, then the insurer has a duty to
defend.” Id. By “limiting the analysis to the complaint and
the insurance policy,” we generally do not consider extrinsic
evidence, an approach sometimes called the “eight-corners”
rule. Id.
The insurance policies issued here are primary,
standard-form general liability policies, each providing cov-
erage, with a $1,000,000 limit, for claims for bodily injury
or property damages against Freightliner, including defense
costs. The premise underlying Con-Way’s and the insurers’
Cite as 367 Or 711 (2021) 735

position that the insurance issues were properly submitted
to the jury is that the jury was not asked to “interpret the
policies,” but rather, as General puts it, to “interpret * * *
the ‘fronting agreement’ that accompanied the policies.”14
But that characterization is incomplete at best. The head-
ings of the three questions on this issue that were submitted
to the jury explicitly stated that the questions were about
insurance policies: “General Policies,” “ACE P&C Policy,”
and “Westport Policy.” (Emphases added.)15 And the jury
instructions—many of which Allianz objected to because
they went beyond the terms of the insurance policies
themselves—demonstrate that the jury was being asked to
interpret the terms of the insurance policies as part of the
overall “agreement” between Con-Way and each insurer.
Instruction 21, for example, told the jury that, when “deter-
mining the intent of ACE P&C and Con-Way,” the jury must
consider the “terms of the January 24, 1975[,] agreement
[(the side agreement)] and of the insurance policy issued by
ACE P&C,” as well as the “situation of [the parties] at the
time they agreed to the agreement,” “[s]tatements [the par-
ties] made, and things they did, that related to the agree-
ment,” and other evidence that is plainly outside the four
corners of the policy. And, of course, the side agreements
themselves have no relevance or context other than in con-
nection with the insurance policies.
The jury thus was asked to consider the policies
themselves, the side agreements, the statements and con-
duct of the parties, and other evidence to answer the question
whether the parties “intend[ed]” that the insurers “would
have a duty to defend or indemnify Freightliner against
the claims at issue.” Allianz repeatedly objected to the trial
court’s decision to involve the jury in deciding the meaning
14
Although Con-Way and the insurance companies refer to the agreements
as “fronting agreements,” the ACE and Westport agreements are each titled
“Indemnification Agreement,” and the General agreement is titled “Agreement.”
We generally refer to them as “side agreements,” but nothing turns on the partic-
ular nomenclature.
15
Con-Way argues that Allianz failed to object to the word “policies” being
used in the headings of the verdict questions. But Allianz objected to the sub-
mission of the questions to the jury in the first place and to the related jury
instructions. We refer to the headings simply to indicate that the trial judge and
the parties all understood that the questions turned, at least in part, on the
insurance policies.
736 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

of the insurance policies. It filed a motion in limine to exclude
extrinsic evidence as to the interpretation of the policies,
moved for a directed verdict and a peremptory instruction
on that issue, and objected to instructions requiring the jury
to consider extrinsic evidence. It based its arguments on the
statutes and cases discussed above, and also on the fact that
its contribution claims against the insurers turn entirely on
their obligations under the insurance policies that they had
issued to Freightliner, Con-Way, or both—and not on the
side agreements that Con-Way had made with the insurers.
Allianz asserts that its claims against the insurance com-
panies “turn on whether their policies cover the underlying
claims against Daimler, not whether [the insurance compa-
nies] have indemnity rights against Con-Way under the side
agreements if plaintiffs prevail.”

We agree with Allianz that the trial court erred in
asking the jury to interpret the insurance policies. What
the policies did or did not mean—that is, the correct legal
interpretation of the policies—is an issue for the court to
decide as a matter of law. The question whether the insurer
is required to defend against particular claims depends on
the policy and allegations in the complaint asserting the
claims—the “four-corners” and “eight-corners” rules dis-
cussed above. The question of whether an insurer must pay
or indemnify its insured for particular claims is a question
of fact for the jury, if the facts are disputed, and depends
on whether the circumstances established the insured’s
liability.

Con-Way seeks to distinguish our past decisions
regarding the interpretation of insurance policies, but we
find none of its arguments persuasive. It first argues that
even cases involving the interpretation of insurance pol-
icies, such as Hoffman, ultimately turn on the parties’
intent. However, Hoffman itself declares that “[w]e deter-
mine the intention of the parties based on the terms and
conditions of the insurance policy.” 313 Or at 469 (empha-
sis added). Contrary to Con-Way’s implication, nothing in
Hoffman suggests that extrinsic evidence of the parties’ con-
duct or other side agreements is appropriate to consider in
determining the intent of parties as to the obligations set
Cite as 367 Or 711 (2021) 737

out in an insurance policy. That is a question of law for the
court.16
Con-Way also argues that Oregon’s rules for inter-
preting insurance policies apply only to “form” insurance
policies, and the side agreements were negotiated contracts,
not “form” insurance policies. That ignores the undisputed
fact that the actual insurance policies that were issued
by General, ACE, and Westport are standard-form pri-
mary general liability policies approved for use by Oregon
insurance regulators. Although the jury also was asked to
consider other evidence, including the side agreements, in
determining whether Con-Way and the insurance compa-
nies had agreed that the insurance companies would “have
a duty to defend or indemnify” Freightliner, that determina-
tion necessarily required the jury to interpret the terms of
the insurance policies, contrary to well-established Oregon
law. And while, as between Con-Way and the insurance com-
panies, the side agreements are plainly intended to require
Con-Way to indemnify the insurance companies for claims
those companies paid to injured parties and attorney fees
incurred in defending those claims, those terms do not mod-
ify the obligations set out in the policies themselves and,
thus, are irrelevant in this inter-insurer contribution case.
Con-Way argues that the side agreements sub-
stantially altered the allocation of risk between it and the
insurers, that Con-Way’s agreement to indemnify the insur-
ers for claims payments and litigation costs severely lim-
ited the insurers’ liability, and that, as result, the premi-
ums that it paid for the policies were “nominal.” That is all
undoubtedly true. Although Allianz argues at some points
that side agreements are illegal, the record and multiple
outside sources make it plain that agreements like those
here are a common practice and that they can serve legit-
imate business purposes for both the insured and insurer.

16
Oregon statutes reinforce that longstanding rule. To repeat, insurance
policies “shall be construed according to [their] terms and conditions,” ORS
742.016(1), which are found in “the written contract or written agreement for or
effecting insurance * * * and includes all clauses, riders, indorsements and papers
which are a part thereof[.]” ORS 731.122 (emphases added). However one char-
acterizes the side agreements, they are not “clauses, riders, indorsements [or]
papers” that are “a part” of the policy.
738 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

But the complaint in this case is based on the policies them-
selves and the insurers’ obligations under them. In these
circumstances, the trial court’s fusion of the two different
agreements—a standard form insurance policy and a nego-
tiated side agreement—and the resulting submission to the
jury of the single, overarching question based on both doc-
uments whether the parties “intend[ed]” that the insurer
would “have a duty to defend and indemnify” the insured
was error.
If the case before us were a dispute between Con-
Way and the insurance companies over the meaning of the
side agreements, then the terms and business purposes of
those agreements and, perhaps, extrinsic evidence of the
parties’ intent in entering into them, would be relevant.
And the terms of the insurance policies also would likely
be considered in such a dispute, although, even in those cir-
cumstances, our case law and statutes regarding insurance
policies indicate that the policy terms would be construed by
the court as a matter of law. But that is not the case before
us. For the reasons discussed above, the interpretation of
the insurance policies at issue here to determine whether
the insurers had a “duty to defend or indemnify Freightliner
against the claims at issue” should not have been submitted
to the jury.
B. Plaintiffs’ Contribution Claim and the Role of the Side
Agreements
The complaint in this case is by an insurer that
has paid claims and attorney fees on behalf of its insured,
Daimler, and now seeks contribution from other insurers
of Daimler’s predecessor, Freightliner, whose contingent
liabilities Daimler assumed. Equitable contribution claims
by one insurer against co-insurers are not uncommon, and
this court has recognized them for many years. In Carolina
Casualty, we emphasized that the right to such contribution
arises “out of the equitable doctrine which holds that one
who pays money for the benefit of another is entitled to be
reimbursed,” and not as a result of contractual “subroga-
tion.” 242 Or at 417. And, as discussed below, that tradi-
tional equitable remedy has been supplemented in Oregon
by the OECAA.
Cite as 367 Or 711 (2021) 739

1. The Common-Law Contribution Claim

The Court of Appeals addressed a similar co-insurer
contribution issue in Certain Underwriters v. Mass. Bonding
and Ins. Co., 235 Or App 99, 230 P3d 103, rev den, 349 Or
173 (2010), adh’d to as modified on recons, 245 Or App 101,
260 P3d 830 (2011). There, an insurer sought contribution
from co-insurers that had entered into a settlement agree-
ment with the insured that released them from the insured’s
claims. The co-insurers argued that the release that was
part of their settlement agreement with the insured barred
the contribution claim. The Court of Appeals rejected that
claim, holding that “the right to equitable contribution
among insurers is not based on a subrogation or contract
theory, whereby an insurer stands in the shoes of its insured.
Rather, the right is grounded in principles of equity and
is a right that inures to the benefit of the insurer”—not the
insured. 235 Or App at 113 (emphasis added). We find the
Court of Appeals’ reasoning in Mass. Bonding persuasive.
For the same reason that the settlement agreement in that
case did not bar the plaintiff insurance company’s contribu-
tion claim based on the common obligation it shared with
the settling insurers of the same insured, id., the side agree-
ments here do not bar Allianz’s claim against the defendant
insurance companies.

Con-Way argues that Mass. Bonding is distin-
guishable because, there, the court held only that the set-
tlement agreements did not prevent the settling insurers
from having to contribute to defense costs incurred before
they settled and, in fact, declined to express an opinion as
to the co-insurers’ contribution liability for defense costs
incurred after the settlement. Id. at 116 n 8. But Con-Way
does not explain why the equitable doctrine of co-insurer
contribution—which, after all, is based on the terms of
the insurance policies that establish common obligations
of different insurers for covered claims against the same
insured—should depend on the timing of any side agree-
ment. Rather, Con-Way tries to contrast its indemnifica-
tion agreements with the settlement agreements in Mass.
Bonding that included releases of the insurance companies
by their insureds by suggesting that, in its agreements, “the
740 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

duty to defend was released even before it was incurred.”
Con-Way asserts that none of the insurance companies can
be liable to Allianz because they never had any obligation
to Freightliner in the first place—essentially arguing that
the “insurance policies” were meaningless because, under
the side agreements, Freightliner had agreed to indemnify
the insurers against all liability for claims made under the
policies.
But that argument proves too much. If the insur-
ance policies included no “duty to defend or indemnify” at
all, a co-insurer could never recover contribution from other
insurers. Here, however, the insurance policies themselves
do include a duty to defend and a duty to indemnify for cov-
ered claims, even though Freightliner separately agreed to
indemnify each insurer for damages and defense costs that
it might incur under the policies it issued. A court sitting in
equity and considering an inter-insurer contribution claim
will be guided by the goal of preventing unjust enrichment.
It will thus be required to consider damages and settlement
amounts that a defendant insurer has paid or is obligated
to pay to its insured or to claimants under the policy. And
if, under a side agreement, the insured has repaid or agreed
to repay its insurance company for claims or defense costs,
those amounts will be considered in determining the extent
of any required contribution from co-insurers.17 But an
insurance company that issues a policy that, by its terms,
covers a particular claim cannot simply walk away from an
injured third party—or a co-insurer seeking contribution—
and claim that, because of a private side agreement with its
insured, it has no obligation whatsoever because its “duty to
defend was released even before it was incurred.”
Neither party has cited a case that is directly on
point regarding the effect of an insured/insurer side agree-
ment on a co-insurer’s contribution claim against the insurer,
but several cases from other jurisdictions strongly suggest

17
The OECAA addresses the issue of settlements by a “liable or potentially
liable” insurer by providing that an insurer that has paid an environmental
claim may not seek contribution from another insurer that has “entered into a
good-faith settlement agreement with the insured regarding the environmental
claim.” ORS 465.480(4)(a). None of the insurers or Con-Way argue that they have
entered into good-faith settlement agreements regarding these claims.
Cite as 367 Or 711 (2021) 741

that a side agreement in which an insured party agrees to
indemnify its insurer does not, standing alone, bar a contri-
bution claim by a co-insurer that has paid claims for or to
its insured for the same covered obligations. In Continental
Cas. v. National Union Fire Ins. Co., 812 F3d 1147, 1150 (8th
Cir 2016), the insurer against whom contribution was being
sought argued that it was not liable for contribution because,
under a side agreement, the insured had agreed to indem-
nify it for all claims and, therefore, it had no “duty to defend”
the insured. The Eighth Circuit rejected that defense, hold-
ing that,
“although [the insured] was ultimately financially respon-
sible for certain defense costs under its agreements with
[the insurer], it did not have to pay for its defense in the
first instance. Rather, in different ways, various agree-
ments obliged [the insured] to indemnify, reimburse, or
advance money to [the insurer] * * * which, by implication,
actually paid for the defense. By the terms of the agree-
ments, the basic arrangement was that [the insurer] would
pay the expenses and [the insured] would pay [the insurer].
Far from being free from any obligation to pay for [the
insured’s] defense, * * * [the insurer] was on the hook unless
and until [the insured] performed or [the insurer] exercised
its rights.”
812 F3d at 1150-51 (footnote omitted). The court affirmed
the trial court’s summary judgment requiring the insur-
ance company to contribute to the damages and defense
costs paid by a co-insurer: the defendant insurer “had a
duty to defend [its insured] and therefore ha[d] an equitable
obligation to contribute to paying the costs of the defense”;
the insured’s separate “agreement to pay” the insurer’s costs
did not defeat the co-insurer’s “right to contribution.” Id. at
1153. Rather, the court stated, “Th[ose] are distinct obliga-
tions.” Id.
Similarly, the terms of the insurance policies at
issue here made the defendant insurance companies respon-
sible for claims covered by the policies, for the benefit of
claimants and of Freightliner. Although Freightliner agreed
to indemnify the insurance companies for expenses they
incurred under the policies, the insurance companies were
“on the hook unless and until [Freightliner] performed.”
742 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

Other cases emphasize the critical role of equita-
ble contribution in ensuring that liability is appropriately
shared when multiple insurance policies cover the same
claims. As the California Court of Appeal has stated:
“[T]he right to equitable contribution exists independently
of the rights of the insured. It is predicated on the common
sense principle that where multiple insurers or indemni-
tors share equal contractual liability for the primary
indemnification of a loss or the discharge of an obligation,
the selection of which indemnitor is to bear the loss should
not be left to the often arbitrary choice of the loss claimant,
and no indemnitor should have any incentive to avoid pay-
ing a just claim in the hope the claimant will obtain full
payment from another coindemnitor.”

Fireman’s Fund Ins. Co. v. Maryland Cas. Co., 65 Cal App
4th 1279, 1295, 77 Cal Rptr 2d 296, 304-05 (1998) (empha-
sis in original). In a dispute over multi-insurer coverage in
an environmental clean-up case, Judge Posner identified
the problem with allowing an insurer and its insured to dis-
claim liability for contribution:
“The right is not the insured’s to disclaim. It is a right of
other insurers, who are not parties to the insurance policy,
and it is a right founded not on the concept of third-party
beneficiaries of contracts and hence not on ‘the wishes of
the insured’ but rather on notions of equity and unjust
enrichment.”

Rhone-Poulenc Inc. v. International Ins. Co., 71 F3d 1299,
1305 (7th Cir 1995) (citing Illinois cases). Here, too, “notions
of equity and unjust enrichment” bar the defendant
insurers from using side agreements with their insured to
disclaim, in a contribution action by another insurer, liabil-
ities covered by the policies that they issued.
2. Contribution Under the OECAA
Allianz’s contribution claim against the defendant
insurers also relies on the OECAA. As amicus curiae former
Governor Kulongoski points out, the OECAA “was enacted
to assure the prompt availability of insurance proceeds due
and owing” from the insurance companies whose insureds
“ ‘face potential liability for their ownership of or roles at
Cite as 367 Or 711 (2021) 743

polluted sites in this state.’ ” (Quoting ORS 465.478.) The
statute does so, amicus Kulongoski explains, “by prescribing
rules of construction, imposing consequences for delay and
obfuscation, and rewarding performing insurers by vest-
ing them with contribution rights against nonperforming
insurers.”
The two key provisions of that statute that are at
issue here are an “all sums” provision that makes all insur-
ers liable for claims that come within the terms of their pol-
icies, regardless of other insurance that may be available,
and a statutory contribution right for an insurer that has
paid covered claims to seek recovery from other “liable or
potentially liable” insurers. The “all sums” provision, ORS
465.480(3)(a), states:
“An insurer with a duty to pay defense or indemnity costs
or both, to an insured for an environmental claim under
a general liability insurance policy that provides that the
insurer has a duty to pay all sums arising out of a risk cov-
ered by the policy, must pay all defense or indemnity costs,
or both, proximately arising out of the risk pursuant to the
applicable terms of the policy, including its limit of liabil-
ity, independent and unaffected by other insurance that may
provide coverage for the same claim.”
(Emphases added.) Amicus Kulongoski describes that pro-
vision as “transfer[ring] the risk of an intransigent insurer
from the insured to its other insurers, where it is more eas-
ily and more fairly borne.” But the potential sweep of the
“all sums” provision is offset by an insurer’s right to seek
contribution from other insurers:
“An insurer that has paid all or part of an environmen-
tal claim may seek contribution from any other insurer that
is liable or potentially liable to the insured and that has not
entered into a good-faith settlement agreement with the
insured regarding the environmental claim.”
ORS 465.480(4)(a) (emphasis added).
Here, Allianz paid environmental claims on behalf
of Daimler, including contingent claims against Freightliner
that Daimler had assumed when it acquired Freightliner,
and it now seeks contribution from Freightliner’s co-insurers
744 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

during the time of the business operations that gave rise to
those claims. Under the OECAA, an insurer that has paid
environmental claims may seek contribution from other
co-insurers, unless the co-insurers have entered into good-
faith settlement agreements with their insured (which has
not happened here). And each insurer’s obligations are tied
directly to “applicable terms of the policy,” including those in
“general liability polic[ies].” ORS 465.480(3)(a). The OECAA
is thus consistent with our longstanding recognition of
common-law inter-insurer contribution claims, see Carolina
Casualty, 242 Or at 417, as well as our decisions interpret-
ing insurance policies as a matter of law according to their
“applicable terms,” see Hoffman, 313 Or at 469 (intention of
parties to an insurance policy determined by policy’s “terms
and conditions”).
The existence of side agreements, indemnification
promises, or an insured’s waiver of policy terms is simply
irrelevant to the contribution rights set out in the OECAA.
Under that statute, as under our coverage cases, see Ledford,
319 Or at 399-400, whether an insurance company has a
“duty to defend or indemnify” its insured depends on two
documents: the insurance policy and the complaint. Here,
whether defendant insurers had a duty to defend or indem-
nify Freightliner under their policies—and therefore are
“liable or potentially liable” for contribution to Allianz on
the environmental claims—are questions of law for the
court, and they turn solely on the terms of the applicable
insurance policies and the complaints that raise the envi-
ronmental claims at issue.
3. The Statutory Context of Insurance Regulations
Finally, Con-Way’s position is contrary to the state
and federal regulatory structures surrounding insurance
and businesses that are required by law to purchase insur-
ance. Con-Way states that the policies that it purchased
from the insurance companies, when taken together with
the side indemnification agreements, were simply a means
of “self-insurance,” and that the insurer’s “duty to defend
was released even before it was incurred.” But that view of
the insurance policies as strictly private business transac-
tions between Con-Way and the insurers is divorced from
Cite as 367 Or 711 (2021) 745

the regulatory and legal world in which the transaction took
place.18 Freightliner could not have lawfully operated its
business of building and transporting trucks without meet-
ing specific federal and state legal requirements, including
maintaining insurance or other security acceptable to the
regulatory authorities. See 49 USC § 13906 (2018); former 49
USC § 315 (1970); former 49 USC § 10927 (1994); ORS 825.160
(2019) (all requiring demonstration of financial responsibil-
ity for motor carriers operating on public highways). Those
regulatory requirements exist to ensure that the public will
be protected against injury or damage caused by Con-Way’s
and Freightliner’s business activities, even if the businesses
dissolve or become bankrupt. State and federal law ensures
that protection by requiring businesses to buy insurance to
cover harms that arise from their activities.
Con-Way had no legal authority to “self-insure” or to
act as an insurer under Oregon or federal law. State and
federal law instead required it to purchase and main-
tain insurance from insurers authorized to do business in
Oregon. It met those statutory obligations by purchasing the
policies at issue here, those policies were required to—and
did—have provisions approved by Oregon regulators, and
under Oregon law they must be interpreted and applied in
accordance with those terms. The side agreements between
Con-Way and its insurers do not alter the insurers’ duties,
as set out in the policies, to defend or pay for claims covered
by those policies or the statutory or equitable contribution
claims of other insurers, such as plaintiff, that have paid
damages or defense costs for such claims.
Because the “Limited Judgment as to Fronting
Insurers and Intervenor Con-Way, Inc.” was based on a jury
verdict that incorrectly asked the jury to interpret insur-
ance policies that should have been interpreted by the trial
court, it must be set aside.

18
We do not mean to suggest that a separate side agreement between an
insured and an insurer never may affect the rights of third parties under an
insurance policy. Here, however, where the insurance policies were purchased to
meet federal and state legal requirements and protect the public, the insurer’s
agreement to indemnify the insurer against any potential liability or responsi-
bility set out in the policy may not be interposed to prevent injured parties from
seeking to recover under the policy.
746 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

C. The “Endorsement” Issue in the ACE and Westport
Policies
Before the Court of Appeals and this court, Allianz
challenged the trial court’s rulings regarding certain “endorse-
ments” to the ACE and Westport policies that limited their
liability under those policies. As with the side agreements,
Allianz asserts that the legal effect of the endorsements
should have been decided by the court as a matter of law,
rather than being presented to the jury as part of questions
6 and 7 in the verdict form. It argued that the jury instruc-
tions on the endorsement issue, the denial of its motion for a
directed verdict, and the denial of its post-trial motion to set
aside the verdict constituted reversible error.
In contrast to the dispute over the side agreements,
however, no party appears to argue that the endorsements
were not part of the policies. See ORS 731.122 (“policy” for
purposes of the Insurance Code “includes all clauses, riders,
indorsements and papers which are a part thereof * * *”).19
For the reasons discussed above, we agree with Allianz that
the meaning of the disputed “endorsements,” as part of the
ACE and Westport policies, should have been decided by the
trial court, rather than by the jury. For that reason, as well,
the “Limited Judgment as to Fronting Insurers and Con-
Way, Inc.” must be set aside.
D. Proceedings on Remand
We have held that the trial court erred in submit-
ting to the jury the questions of whether ACE, General, and
Westport have a duty to defend or indemnify Freightliner
against the environmental remediation and asbestos claims
that are the subject of this case. That issue should be decided
by the trial court based on the terms in the insurance pol-
icies and without regard to the side agreements or other
extrinsic evidence.
In some cases when this court has vacated a trial
court judgment—including some insurance contribution
cases—we have simply determined the judgment that
should have been entered, see, e.g., Carolina Casualty, 242
19
And no party argues that “endorsement” has a different meaning than
“indorsement.”
Cite as 367 Or 711 (2021) 747

Or at 418. Here, the complexity of the record regarding the
insurance policies, the different time periods covered by the
policies, differences in the wording of some of the policies,
and similar potentially important details preclude us from
accurately determining the nature of the appropriate judg-
ment. On remand, the trial court should conduct further
proceedings consistent with this opinion before entering a
judgment on plaintiffs’ claims for equitable contribution and
for contribution under the OECAA.
As to the interpretation of the endorsements to the
ACE and Westport policies, we also hold that the trial court
erred in submitting the issue to the jury. In contrast to the
side agreements, however, the endorsements are part of the
insurance policies, and, on remand, their meaning should
be decided by the court as part of interpreting the policies.
IV. THE POLLUTION EXCLUSIONS
The final issue we must resolve involves the
“qualified pollution exclusion” clauses found in certain of
Freightliner’s insurance policies. As with Allianz’s chal-
lenge to the trial court rulings regarding the effect of the
side agreements, the Court of Appeals did not reach this
issue, and Con-Way and defendants request that we remand
for the Court of Appeals to consider it in the first instance.
We decline to do so for the reasons previously described.
A. Background of the Pollution Exclusion Issue
The insurance policies contained versions of a qual-
ified pollution exclusion providing that those policies did not
cover bodily injury or property damage resulting from pollu-
tion.20 Those provisions, however, each contained an excep-
tion that described categories of pollution or circumstances
to which the exclusion did not apply (hence the description
of the exclusions as “qualified”) and where the policy thus
would provide coverage. As relevant on review and described
earlier, there are two primary variations of the qualified

20
The exclusions themselves refer to the “discharge” of matter onto land or
into air or a body of water, with some variations in the degree of specificity with
which that “discharge” is described. The parties appear to agree, however, that
these exclusions were generally directed at “pollution,” and so we use that term
as shorthand.
748 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

pollution exclusion—the Domestic exclusion, which appears
in the ACE and Westport policies, and the London exclusion,
which is in the London and General policies. The Domestic
version excepts from the pollution exclusion—and thus pro-
vides insurance coverage for—claims arising out of a dis-
charge of pollutants that is “sudden and accidental.”21 The
London version excepts from the pollution exclusion—and
thus provides insurance coverage for—claims arising from
pollution that results from a “happening” that is “sudden,
unintended[,] and unexpected.”22
The two different pollution exclusions were the sub-
ject of extensive and repeated discussion among the par-
ties and the trial court, including various trial motions and
disputes over the verdict form and the jury instructions.
The positions of the parties, however, were generally consis-
tent throughout the trial proceedings.23 Allianz viewed the
Domestic and London exclusion clauses as having the same
legal effect. It relied on this court’s decision in McCormick
& Baxter Creosoting, 324 Or 184, to argue that the different
pollution exclusions should be interpreted as a matter of law

21
The exception in the ACE and Westport policies provides: “* * * this exclu-
sion does not apply if such discharge, dispersal, release or escape is sudden and
accidental[.]”
22
The parties and the trial court considered the ACE and Westport policies,
which had the Domestic exclusion, together and gave one jury instruction that
covered both of those policies. The variations between the exclusions in those
policies appear to be negligible. The parties and the trial court also considered
the London and General policies together and gave two separate but virtually
identical jury instruction as to those policies. Although the parties did not appear
to differentiate between the exclusions in the London and General policies at
trial, referring to them both as having “London exclusions,” the policies issued
by the London defendants provide that the exclusion does not apply “where such
seepage, pollution or contamination is caused by a sudden, unintended[,] and
unexpected happening.” (Emphasis added.) The exclusion in the General policies
does not apply “if the discharge is sudden, unexpected, [and] unintentional.” We
express no opinion as to the effect, if any, of those differences in the terms of the
London and General policies. Rather, our decision in this case concerns the nar-
row question of construing the two phrases “sudden and accidental” and “sudden,
unintended[,] and unexpected.”
23
Con-Way and the defendant insurers raise various preservation objec-
tions regarding Allianz’s challenges to the trial court rulings on the pollution
exclusion issue. Some of Allianz’s arguments at trial and assignments of error on
appeal could have been more clearly presented, but there is little doubt that the
parties and the trial court understood the central disputes between the parties.
Allianz’s assignments of error are sufficiently raised and developed for this court
to address them.
Cite as 367 Or 711 (2021) 749

to provide insurance coverage for the kind of environmen-
tal pollution at issue here. In that case, which we describe
in greater detail below, we interpreted the term “sudden and
accidental” in a pollution exclusion provision to mean “unin-
tended and unexpected”—that is, not to have the “temporal
meaning” that is often associated with the word “sudden.”
Id. at 215-16. Allianz argued that the “sudden and acciden-
tal” wording in the Domestic exclusion and the term “sudden,
unintended[,] and unexpected” in the London exclusion should
be interpreted similarly as not having a temporal element.
Defendants responded that neither the exceptions
for “sudden and accidental” or “sudden, unintended[,] and
unexpected” pollution applied to the kind of gradual, long-
term environmental contamination that Allianz alleged
in the complaint. They argued for a narrow reading of
McCormick & Baxter Creosoting as applied to the Domestic
exclusion and against its extension to the London exclu-
sion.24 Defendants’ proposed instructions for both versions
of the exclusions included the following sentence: “In this
respect, sudden means short in time or duration, or quick.”
The trial court gave separate instructions on the
Domestic and London exclusions. As to the Domestic exclusion
in the ACE and Westport policies, the instruction described
the pollution exclusion and the exception to the exclusion for
the discharge of pollutants that is “sudden and accidental.”
Following McCormick & Baxter Creosoting, the court then
provided the interpretation of that policy term that the jury
was to use: “In this respect, sudden and accidental means
unexpected and unintended.” In describing the London
exclusion in the London and General instructions, the trial
court also described the pollution exclusion and quoted the
exception to the exclusion in the policy providing that there
would be insurance coverage if the discharges were “sud-
den, unintended[,] and unexpected.”25 The final instruction
24
Defendants’ proposed instructions on the London and General policies
were separate, but used similar language.
25
The quoted phrase is from the instruction for the London policy and is
based on the wording in the policy. The General policy used the slightly different
phrase “sudden, unexpected, [and] unintentional,” and the instruction for the
General policy tracks that wording. No party argues that those two phrases have
a different legal meaning.
750 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

regarding the London exclusion emerged from a confer-
ence with the trial court. Allianz objected to London’s pro-
posed definition of “sudden” as “short in time or duration, or
quick,” arguing that it was contrary to McCormick & Baxter
Creosoting, where this court had interpreted “sudden” in the
term “sudden and accidental” not to have a temporal mean-
ing. 324 Or at 214-15. The trial court agreed with plaintiff to
that extent and rejected London’s proposed definition, but it
did not use Allianz’s proposed definition. Thus, the instruc-
tions to the jury regarding the Domestic exclusion included
a definition of “sudden and accidental” as “unexpected and
unintended,” while the instructions regarding the London
exclusion included no definition of “sudden, unintended[,]
and unexpected.”
The jury returned different verdicts as to the
Domestic and London exclusions. In its answer to verdict
form question 21, regarding the ACE and Westport policies,
the jury found that the “discharge of pollutants that caused”
“property damage” was “sudden and accidental” and thus
came within the exception set out in the Domestic pollution
exclusions in those policies. It found those defendants liable
for contribution to Allianz as outlined in the complaint.26
As to the London and General policies (jury verdict form
question 22), however, the jury answered “NO” to the ques-
tion of whether “the discharge of pollutants that caused any
of the property damage [was] sudden, unintended[,] and
unexpected.” Because the evidence as to the nature of the
pollution was the same for all four policies, the jury neces-
sarily found that the alleged pollution did not come within
the exception to the London pollution exclusion. Based on
that jury verdict, the trial court entered the limited judg-
ment in favor of the London defendants. The verdict in
favor of General on the pollution exclusion is reflected
in the limited judgment as to the fronting insurers and
Con-Way.
On appeal, Allianz assigned error to various trial
court rulings regarding the London pollution exclusions.
Allianz reprised the arguments outlined above, asserting
26
The jury verdicts involving the pollution exclusions in the ACE and
Westport policies are not part of the limited judgments before us and we express
no opinion as to those verdicts.
Cite as 367 Or 711 (2021) 751

that the London and Domestic exclusions had the same legal
meaning and that the trial court erred in submitting the
London exclusions to the jury for interpretation, rather than
interpreting them for the jury as a matter of law. Allianz
also argued that, because the same evidence was presented
as to environmental claims under all the policies, if the jury
had been given the same instructions about the meaning of
the London exclusion as it had about the Domestic exclusion,
it would have reached the same conclusion: that the policies
covered the environmental claims. It therefore requests that
the jury verdict as to the London exclusion—verdict question
22—be set aside. Allianz further asks, based on the errors
at trial, that this court exercise its authority under Article
VII (Amended), section 3, of the Oregon Constitution to
direct that a judgment be entered in its favor on the London
pollution exclusion issue.
Defendants respond that there was no ambigu-
ity in the London exclusion, and so the trial court was not
required to interpret the terms of the policy for the jury.
Additionally, defendants argue that Article VII (Amended),
section 3, does not permit an appellate court to apply the
jury’s answer to one special verdict question to a different
verdict question, as Allianz requests. If the trial court erred,
defendants assert, the remedy is to remand to the trial court
for further proceedings.
B. Merits
For reasons that we set out below, we conclude that
Allianz is correct that the trial court erred in failing to
instruct the jury on the meaning of the London pollution
exclusion. We also agree with Allianz that, properly inter-
preted, the term “sudden, unintended[,] and unexpected”
in the London policy and the term “sudden, unexpected,
[and] unintentional” in the General policy have the same
legal meaning that we ascribed to the term “sudden and
accidental” in the policies at issue in McCormick & Baxter
Creosoting and that the jury should have been so instructed.
But we reject Allianz’s request that this court substitute the
jury’s verdict in favor of plaintiff on the ACE and Westport
policies for the defense verdict that the jury actually reached
regarding the London and General policies.
752 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

We begin with the issue of whether the trial court
erred by failing to instruct the jury as to the meaning of
the policy term “sudden, unintended[,] and unexpected.”
Allianz asserts that that phrase in the London exclusions
was ambiguous and that the trial court erred in not deter-
mining its meaning as a matter of law and directing the
jury to use that meaning in applying the exclusion to the
facts. As explained at length above, the interpretation of an
insurance contract is a question of law, the goal of which
is to ascertain the intent of the parties at the time of con-
tracting. Hoffman, 313 Or at 469. If terms in the policy are
not defined and there are reasonable, “competing, plausible
interpretations,” the court must determine what the dis-
puted terms mean, using the principles set out in Hoffman.
Id. at 470-71. In McCormick & Baxter Creosoting, for exam-
ple, we found the term “sudden and accidental” in an insur-
ance policy’s pollution exclusion clause to be ambiguous and
proceeded to interpret the term as a matter of law. 324 Or
at 215-16. Allianz argues that we should follow the same
path here and interpret the admittedly different term in the
policies at issue here in the same way.
Defendants do not purport to seek reversal of
McCormick & Baxter Creosoting, but rather argue that it is
distinguishable because the phrase “sudden, unintended[,]
and unexpected” is not ambiguous as used in the London
and General policies here, and, therefore, the trial court did
not err in failing to interpret that term as a matter of law
for the jury.
Given our prior decisions, particularly McCormick
& Baxter Creosoting, defendants’ position is untenable. In
McCormick & Baxter Creosoting, the policy at issue excluded
from coverage bodily injury or property damage arising
from various enumerated types of pollution, but provided
that the “exclusion d[id] not apply if such discharge, disper-
sal, release, or escape is sudden and accidental.” 324 Or at
212 (emphasis and quotation marks excluded). The insurers
in McCormick & Baxter Creosoting argued that “sudden”
had “a temporal meaning, connoting an abruptness and
short duration,” and “accidental” meant “unintended,” but
could not be something that occurred over a long period of
time as a part of regular business practices. Id. at 212-14.
Cite as 367 Or 711 (2021) 753

The insured company argued in response that “sudden and
accidental” simply meant “unintended and unexpected.”
Id. at 213. Neither “sudden” nor “accidental” was defined in
the policy, and on review we noted that both sides offered
evidence of their competing interpretations, including case
law from other jurisdictions as well as statements by rep-
resentatives of the insurance industry. Id. at 216. We con-
cluded in that instance that the exclusion was ambiguous
and that the competing case law and statements from indus-
try representatives “simply help[ed] to demonstrate that the
exclusion [was] ambiguous.” Id.
Defendants assert, however, that because the
London exclusion used the words “unexpected and unin-
tended”—rather than “accidental”—together with the word
“sudden” in the exception to the pollution exclusion, the
ambiguity that this court identified in the McCormick &
Baxter Creosoting policy does not exist. Rather, they say that
the jury could simply be instructed—as it was in this case—
to give the contractual terms “their ordinary meaning,
unless you decide that the parties * * * intended the words to
have another meaning.” Defendants’ argument appears to
rest on the fact that, while the court in McCormick & Baxter
Creosoting held that “unexpected” was a plausible interpre-
tation of “sudden” in the policy at issue there, “unexpected”
is not a plausible interpretation of “sudden” in the London
exclusion because the word “unexpected” itself also appears
in the exclusion. Defendants argue that to interpret “sud-
den” as “unexpected” in the London exclusion would be to
render the word “sudden” a meaningless redundancy, con-
trary to one of our principles of insurance contract interpre-
tation referred to in Hoffman, 313 Or at 472 (“We assume
that parties to an insurance contract do not create meaning-
less provisions.”).
The plain meanings of the policy terms do not pro-
vide much clarity. As we explained in McCormick & Baxter
Creosoting, the word “sudden” may either have or not have a
temporal element:
“1a : happening without previous notice or with very brief
notice : coming or occurring unexpectedly : not foreseen or
prepared for * * * b : changing angle or character all at once
: precipitous * * * : abrupt * * * c : come upon or met with
754 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

unexpectedly 2a : characterized by or manifesting hasti-
ness : rash, headlong.”
324 Or at 213 (quoting Webster’s Third New Int’l Dictionary
2284 (unabridged ed 1993)) (internal quotation marks omit-
ted, alterations in original). In that case, we also looked to
the common meaning of the word “accidental”:
“ ‘2 : occurring sometimes with unfortunate results by
chance alone : a : unpredictable : proceeding from an unrec-
ognized principle, from an uncommon operation of a known
principle, or from a deviation from normal.’ Webster’s at 11
[(1993)].
“The dictionary goes on to state that, ‘when it is used in
reference to events, accidental may stress lack of intent.’
Ibid. In other words, an accidental event may be an unin-
tentional, or chance, event.”
324 Or at 213-14. Likewise, the words “unexpected” and
“unintended” are defined, respectively, as “not expected
: unlooked-for, unforeseen, surprising,” Webster’s Third
New Int’l Dictionary 2494 (unabridged ed 2002), and “not
intended; esp. not deliberate,” Webster’s at 2499 (2002).
Defendants argue that “sudden” as used in the
London exclusion must unambiguously have a temporal
element and mean, essentially, “abrupt,” because to read
it otherwise would be to duplicate the term “unexpected.”
Allianz argues that the word is ambiguous and could rea-
sonably be interpreted as having a similar meaning to the
words that follow—“unexpected” and “unintended”—as
opposed to having a dissimilar meaning, such as “abrupt.”
We agree with defendants that, where a policy con-
tains both the words “sudden” and “unexpected,” it would
not make sense to interpret the word “sudden” to mean
“unexpected.” The court in McCormick & Baxter Creosoting
notably did not conclude that “sudden” can only mean “unex-
pected,” but rather that the phrase used was ambiguous,
partly because “sudden” might reasonably have several
meanings—in addition to “unexpected”—that lack any
temporal element, such as “unforeseen” and “unprepared
for.” 324 Or at 214-16. The holding in McCormick & Baxter
Creosoting—that where the phrase claimed to be ambiguous
Cite as 367 Or 711 (2021) 755

was “sudden and accidental,” “sudden” might reasonably be
interpreted to lack a temporal meaning, and be synonymous
with “unexpected,” “unforeseen,” or “unprepared for”—was
specific to the policy at issue. But courts do not interpret
single words in insurance contracts in isolation; rather, we
construe the words in the context of the particular provision
and of the policy as a whole. Hoffman, 313 Or at 470-71.
Although we agree with defendants that “sudden” may not
mean “unexpected” where that word appears as part of the
same policy term, it is not, in our view, unambiguously clear
that “sudden” in that context does not mean “unforeseen” or
“unprepared for.” Put another way, it is not unambiguous
from the words used in the policy that “sudden” in this con-
text must mean “abrupt,” as defendants argue.
As in McCormick & Baxter Creosoting, both parties
cite case law from other jurisdictions in support of their argu-
ments. Compare Helena Chemical v. Allianz Underwriters,
357 SC 631, 641 n 4, 594 SE2d 455, 460 n 4 (2004) (apply-
ing the same interpretation to exclusions using the phrases
“sudden and accidental” and “sudden, unintended, and unex-
pected happening”), and Cotter Corp. v. American Empire
Surplus, 90 P3d 814, 821 (Colo 2004) (noting that previous
cases had interpreted both the phrases “sudden and acci-
dental” and “sudden, unintended, and unexpected” in pollu-
tion exclusions as meaning “unexpected and unintended”),
with Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal App
4th 715, 753, 15 Cal Rptr 2d 815 (1993) (“If covered pollution
has to be ‘a sudden, unintended and unexpected happen-
ing,’ then we must distinguish ‘sudden’ from ‘unexpected’
and ‘unintended.’ That distinction lies in the temporal con-
notation inherent in the ordinary meaning of ‘sudden.’ ”),
and EDO Corp. v. Newark Ins. Co., 878 F Supp 366, 374-75
(D Conn 1995) (“If ‘sudden’ meant ‘unexpected,’ * * * then
the * * * policies would read, ‘unexpected, unintended, and
unexpected.’ Such a reading would render the word ‘sudden’
superfluous and * * * [the court] will not subscribe to such
an interpretation.”). As we noted in McCormick & Baxter
Creosoting, 324 Or at 215, although it is not conclusive, we
do consider differing judicial interpretations of an insurance
policy clause as evidence that that clause is ambiguous.
Jones v. Ins. Co. of North America, 264 Or 276, 282 n 1, 504
756 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

P2d 130 (1972) (so stating). See also John Alan Appleman
and Jean Appleman, 13 Insurance Law and Practice § 7404
(1976) (“The very fact that a number of courts have reached
conflicting conclusions as to the interpretation of a certain
provision is frequently considered evidence of ambiguity.”).
We conclude that, like the Domestic exclusion at
issue in McCormick & Baxter Creosoting, the London exclu-
sion’s term “sudden, unintended[,] and unexpected” is sus-
ceptible to different interpretations and that the London
and General policies in which the term appears do not
resolve those ambiguities. The contrast between the way
the jury was instructed regarding the Domestic and London
exclusions was particularly stark here, where the court gave
the jury a definitive legal (and perhaps nonintuitive) defini-
tion to apply to the term “sudden and accidental,” while giv-
ing no specific definition of the term “sudden, unintended[,]
and unexpected.” That left the jury with only the standard
instruction, applicable to all 22 of the special verdicts, that
it interpret words according to “their ordinary meaning.”
Given the ambiguity in that critical wording of the exclu-
sion exception and the requirement that ambiguous terms
in insurance policies be interpreted as a matter of law by
the court, it was error for the trial court not to interpret the
London exclusion for the jury. That part of the verdict and
the aspects of the limited judgments based on it must be set
aside.
C. Remedy
Having concluded that the trial court should have
interpreted the London exclusion for the jury, we turn to
the question of the proper interpretation of that exclusion.
As discussed above, London seeks to distinguish this court’s
interpretation of “sudden and accidental” in McCormick &
Baxter Creosoting. It argues that the word “sudden” as used in
the London exclusion—in contrast to its use in the Domestic
exclusion—should be read as including a temporal element
because otherwise the word would be redundant of the other
words in the term, “unintended” and “unexpected.” But our
cases do not suggest that the fact that a policy includes words
that may be interchangeable or the definitions of which may
overlap does not foreclose those definitions. Indeed, the
Cite as 367 Or 711 (2021) 757

insurers in McCormick & Baxter Creosoting argued that the
interpretation eventually adopted by this court was imper-
missibly redundant, but we rejected that argument. 314 Or
at 214. Moreover, the various words used in McCormick &
Baxter Creosoting to describe what is excepted from the pol-
lution exclusion—“sudden,” “accidental,” “unintended,” and
“unexpected”—are the very words included in the London
exclusion.
More significantly, London ignores the holdings in
Hoffman and McCormick & Baxter Creosoting that, where
a word or phrase in an insurance policy is susceptible to
differing plausible interpretations and the ambiguity can-
not be resolved by considering the context of the wording
and of policy as whole, we construe the ambiguous term in
favor of coverage. Hoffman, 313 Or at 470-71; McCormick &
Baxter Creosoting, 324 Or at 216. In McCormick & Baxter,
this court undertook a similar exercise when it construed
the ambiguous term “sudden and accidental” not to include
a temporal element and to mean “unintended and unex-
pected.” Because, as we conclude above, the term “sudden,
unintended[,] and unexpected” is ambiguous, those cases
support Allianz’s argument that the term should be con-
strued against the drafter and in favor of coverage.27 That
construction requires a jury instruction similar to that used
for the Domestic exclusion.
Finally, we turn to Allianz’s argument that the
jury’s verdict on the Domestic policies can be applied to the
London policies as well. London disagrees, taking the posi-
tion that Article VII (Amended), section 3, of the Oregon
Constitution does not permit the court to direct that the
jury’s verdict on one policy be applied to another policy.
We agree with London that Allianz’s requested
relief is not appropriate. Allianz cites Carolina Casualty
27
London argues for the first time on review that, because Allianz is a
“stranger” to the insurance policies, it is not “entitled” to have any ambiguities
construed in its favor. We do not foreclose the possibility that in other circum-
stances it may be appropriate to preclude a nonparty to an insurance policy from
benefiting from that rule of construction. In this contribution context, however,
we adhere to our longstanding rule that ambiguities in an insurance policy be
“construe[d] against the drafter,” McCormick & Baxter Creosoting, 324 Or at 216,
“against the insurer,” Hoffman, 313 Or at 474, and “in favor of extending coverage
* * *.” North Pacific Ins. Co., 332 Or at 25.
758 Allianz Global Risks v. ACE Property & Casualty Ins. Co.

for the proposition that, “under the Oregon Constitution,
Article VII, Section 3, if this court can ascertain with cer-
tainty the judgment that should have been entered in
the trial court, it is proper for this court to direct it to be
entered.” 242 Or at 418. Allianz argues that here, too, we
can “ascertain with certainty the judgment that should
have been entered in the trial court.” In Carolina Casualty,
the court held that the trial court had erred in admitting
parol evidence regarding a potential “sham” lease and that,
without the introduction of that parol evidence, the written
terms of the contract would control and one party would
clearly prevail. Id. at 417-18. In that sense, the issue in that
case was clear-cut: Were it not for the introduction of the
parol evidence, the issue could be resolved as a matter of
law from the face of the contract and, therefore, Article VII
(Amended), section 3, permitted this court to enter the cor-
rect judgment.
Given the complicated factual circumstances and
the procedural posture of this case—including that we are
remanding the “side agreement” issue to the trial court
for decision—we conclude that it is not appropriate for this
court to step into the shoes of the jury. Rather, we conclude
that the proper resolution is to remand the pollution exclu-
sion issue to the trial court with instructions to give the
jury a similar instruction regarding the term “sudden, unin-
tended[,] and unexpected” in the London exclusion as it did
regarding the term “sudden and accidental” in the Domestic
exclusion.28
V. CONCLUSION
In summary, we reverse the Court of Appeals’ hold-
ing that Daimler did not assume the contingent liabilities
of Freightliner—including the liabilities at issue here—and
affirm the jury verdict on that issue. On Allianz’s appeal, we
agree that the trial court erred in submitting to the jury the
question of whether, because of the side agreements between
Con-Way/Freightliner and the insurers, those insurers

28
This holding is limited to the issue before us regarding the interpretation
and jury instructions as to the portions of the London pollution exclusion that
we discuss. We express no opinion as to the meaning of other provisions in the
London and General policies.
Cite as 367 Or 711 (2021) 759

had a “duty to defend or indemnify Freightliner.” In this
inter-insurer contribution case, that question is to be decided
by the trial court as a matter of law based on the relevant
policies. Finally, as to the London pollution exclusion, we
agree with Allianz that it was error for the trial court not to
provide a legal interpretation of a key provision in the policy
as part of the jury instructions. We also conclude that the
jury instructions regarding the London pollution exclusion
should be similar to those regarding the Domestic exclusion.
The decision of the Court of Appeals is reversed. The
limited judgments of the trial court are affirmed in part and
reversed in part, and the case is remanded to the trial court
for further proceedings.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10627414. Public record. Not legal advice.