Boeing Co. v. Aetna Casualty & Surety Co.

Callow, C.J.

(dissenting)—We are asked in this case to determine whether an insured's liability to pay CERCLA response costs constitute "sums which the insured [has] become legally obligated to pay as damages" within the meaning of a standard comprehensive general liability insurance policy. As the majority opinion itself acknowledges, the plain, ordinary, and popular meaning of the word damages is "reparation for detriment or injury sustained." Because CERCLA response costs are not "reparation for detriment or injury sustained," CERCLA response costs are not payable "as damages" within the plain meaning of the policies at issue. The majority's contrary holding upsets settled rules of insurance construction, violates controlling precedent, and contravenes public policy.

I

CERCLA Response Costs Are a Restitutionary, Not a Damage Remedy

A. Damage remedies are compensatory; equitable remedies are coercive or restitutionary.

*889 Washington law defines damages as:

[T]he sum of money which the law imposes or awards as compensation, or recompense, or in satisfaction for an injury done, or a wrong sustained as a consequence, either of a breach of a contractual obligation or a tortious act or omission.

Puget Constr. Co. v. Pierce Cy., 64 Wn.2d 453 , 392 P.2d 227 (1964) (citing 15 Am. Jur. Damages § 2). See also D. Dobbs, Remedies § 1.2, at 3 (1973).

Damages for injury to property are measured in terms of the amount necessary to compensate for the injury to the property interest. D. Dobbs § 5.1, at 311. Therefore, damages for injury to property are limited under Washington law to the lesser of diminution in value of the property or the cost to restore or replace the property. Koch v. Sackman-Phillips Inv. Co., 9 Wash. 405 , 37 P. 703 (1894); Burr v. Clark, 30 Wn.2d 149, 158 , 190 P.2d 769 (1948); Hogland v. Klein, 49 Wn.2d 216, 220 , 298 P.2d 1099 (1956); Grant v. Leith, 67 Wn.2d 234, 235 , 407 P.2d 157 (1965); Falcone v. Perry, 68 Wn.2d 909, 913 , 416 P.2d 690 (1966); Butler v. Anderson, 71 Wn.2d 60 , 426 P.2d 467 (1967), overruled on other grounds in Chaplin v. Sanders, 100 Wn.2d 853 , 676 P.2d 431 (1984). See also D. Dobbs, Remedies § 1.2, at 3, § 3.1, at 135-36. Damages compensate for the injured party's loss.

Restitution stands "in bold contrast" to damages, because it is based upon a benefited party's gain. D. Dobbs, Remedies § 3.1, at 137. Restitutionary recovery is appropriate when the defendant has received a benefit under circumstances which make it unjust for him to retain it. Chandler v. Washington Toll Bridge Auth., 17 Wn.2d 591, 601 , 137 P.2d 97 (1943).

"A person confers a benefit upon another if he gives to the other possession of or some other interest in money, land, chattels, or choses in action, performs services beneficial to or at the request of the other, satisfies a debt or a duty of the other, or in any way adds to the other's security or advantage. He confers a benefit not only where he adds to the property of another, but also where he saves the other from expense or loss. The word 'benefit,' therefore, denotes any form of advantage."

*890 (Italics mine.) Chandler, 17 Wn.2d at 602 -03 (quoting Restatement of Restitution § 1(b), at 12 (1937). The measure of recovery is the reasonable value of the benefit received by the defendant. Noel v. Cole, 98 Wn.2d 375, 383 , 655 P.2d 245 (1982). Unlike compensatory damages, the amount of a restitutionary recovery can therefore greatly exceed the value of any property harmed. Olwell v. Nye & Nissen Co., 26 Wn.2d 282, 285 , 173 P.2d 652 , 169 A.L.R. 139 (1946).

B. CERCLA response costs are restitutionary.

CERCLA authorizes the President, acting through the Environmental Protection Agency (EPA), to respond to the release or the substantial threat of a release of any hazardous substance or any pollutant or contaminant which may present an imminent and substantial danger to public health or welfare. 42 U.S.C. § 9604 (a)(1); Exec. Order No. 12,316, 46 Fed. Reg. 42,237 (1981). The EPA has broad authority to take whatever response measures it deems necessary to remove or neutralize hazardous waste. 42 U.S.C. § 9604 ; 42 U.S.C. § 9621 (a). Alternatively, the EPA may seek injunctive relief to compel "responsible parties" to take necessary response action. 42 U.S.C. § 9606 (a). Private citizens also have standing to sue to force compliance with CERCLA. 42 U.S.C. § 9659 (a)(1).

CERCLA permits certain governmental bodies (but not private citizens) to recover "damages for injury to, destruction of, or loss of natural resources." 42 U.S.C. § 9607 (a)(4)(C). CERCLA does not provide for compensation to private individuals for personal injury, property damages and economic losses resulting from releases of hazardous substances. See section 4(a) of S. 1480, 96th Cong., 1st Sess., 125 Cong. Rec. 17,991 (1979) (providing for such liability, but eliminated from CERCLA as ultimately passed), cited in Brett, Insuring Against the Innovative Liabilities and Remedies Created by Superfund, 6 J. Envtl. L. 1, 18 & n.95 (1986).

*891 Natural resource damages are essentially a compensatory remedy. The measure of natural resource damages is "the lesser of: restoration or replacement costs; or diminution of use values". (Italics mine.) 43 C.F.R. § 11.35 (b)(2). Natural resource damages must be based on actual injury or loss. 42 U.S.C. § 9601 (6). They are available only to governmental bodies "act[ing] on behalf of the public as trustee" of the natural resources. 42 U.S.C. § 9607 (f)(1). Artesian Water Co. v. New Castle Cy., 851 F.2d 643 (3d Cir. 1988). Total liability is limited to the value of the injured property. 42 U.S.C. § 9651 (c); 43 C.F.R. § 11.35 (b)(2).

In addition to natural resource damages, CERCLA permits both the EPA and other parties to recover costs which they have incurred as a result of a response action from "responsible parties". 42 U.S.C. § 9607 (a)(4)(A), (B). Responsible parties include hazardous waste generators, hazardous waste transporters, and hazardous waste disposal facility owners and operators. 42 U.S.C. § 9607 (a).

CERCLA defines the term "response" to mean "removal . . . and remedial action . . . including] enforcement activities related thereto." 42 U.S.C. § 9601 (25). Among the many safety measures identified as potential response actions are monitoring, security fencing, dikes, on-site treatment or incineration, recycling, provision of alternative water supplies, and related enforcement activities. 42 U.S.C. § 9601 (23), (24).

CERCLA response cost liability is essentially restitutional:

When a party, governmental or nongovernmental, incurs response costs it is performing the duty of the responsible party. In seeking recovery of those costs under section 107(a) [ 42 U.S.C. § 9607 (a)], that party is asking for the return of money spent on behalf of the responsible party to safeguard public health. Thus, response cost recovery restores the status quo by returning to the plaintiff what rightfully belongs to it, rather than compensating the plaintiff for loss sustained to its interest as a result of the responsible parties' wrongful conduct, and is a classic example of equitable restitution.

*892 (Footnotes omitted.) Brett, Insuring Against the Innovative Liabilities and Remedies Created by Superfund, 6 J. Envtl. L. 1, 35 (1986).

The contrast between natural resource damage liability and response cost liability further indicates that CERCLA response costs are a restitutionary remedy. First, a responsible party can be held liable for response costs even though there is no property damage to compensate, because no actual release has yet occurred. 42 U.S.C. § 9604 . Second, parties without an economic interest in the affected property can maintain an action for response costs. 42 U.S.C. §§ 9607 (a)(4)(B), 9659(a). Finally, liability for response costs can greatly exceed the economic value of the affected property. See Abraham, Environmental Liability and the Limits of Insurance, 88 Colum. L. Rev. 942 , 969 (1988).

The contrast between response costs and natural resource damages makes clear that response costs are an equitable restitutionary remedy, not a compensatory damage remedy. Verlan, Ltd. v. John L. Armitage & Co., 695 F. Supp. 950 (N.D. Ill. 1988). Every court that has examined the nature of Superfund response costs liability outside of the insurance context has held that such costs are a form of equitable restitution. See, e.g., United States v. Northernaire Plating Co., 685 F. Supp. 1410 (W.D. Mich. 1988) (no right to jury trial); Wehner v. Syntex Corp., 682 F. Supp. 39 (N.D. Cal. 1987) (idem); United States v. Dickerson, 640 F. Supp. 488 (D. Md. 1986) (idem); United States v. Conservation Chem. Co., 619 F. Supp. 162, 206 (W.D. Mo. 1985) (permitting assertion of equitable defenses); Mardan Corp. v. C.G.C. Music, Ltd., 600 F. Supp. 1049 (D. Ariz. 1984) (idem); Penn Terra Ltd. v. Department of Envtl. Resources, 733 F.2d 267 , 278 (3d Cir. 1984) (response action not automatically stayed under Bankruptcy Code). In fact, this authority is so overwhelming that even the policyholders admit that "the governmental remedy under CERCLA is equitable." Brief of Policyholders, at 37. Therefore, this court must also hold that CERCLA response costs are a restitutionary remedy.

*893 II

The Insurance Policies Do Not Cover Restitutionary Remedies

The insurance policies in this case provide that the insurer "will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage . . Certification order, at 3. 6 This language unambiguously extends coverage only to compensatory "damages" liability, not claims for restitutionary CERCLA response cost liability.

The majority makes several arguments attempting to show that this language is ambiguous. First, the majority asserts that the language is ambiguous because the policyholders were not subjectively aware of its meaning. Majority, at 876. Second, because the phrase "as damages" is "sandwiched into the general coverage provisions", the majority implies that the contract is structurally ambiguous. Majority, at 877. Third, the majority asserts that the "plain, ordinary meaning" of damages can include the costs of complying with coercive and restitutionary remedies. Majority, at 877. Fourth, the majority argues that because "56 judges" have held that identical policy language cover CERCLA response costs, the policy language is ambiguous. Majority, at 878-82. Finally, the majority asserts that ambiguous policy language must be construed against the insurers because the "average lay person" rule of insurance interpretation applies equally to "corporate giant[s]." Majority, at 882-83. 7 I will address each argument in turn.

*894 A. The policyholders' subjective understanding of the meaning of the policies is irrelevant.

The majority argues that because these policyholders were subjectively unaware of the meaning of the policy's "as damages" clause, the policy language is unenforceable. 8 This argument was not advanced by the policyholders, and it flatly contradicts the law of this state.

Settled law requires this court to enforce an insurance policy according to its clear meaning and purpose, regardless of the coverage the insured may have thought he had. Nevers v. Aetna Ins. Co., 14 Wn. App. 906, 908 , 546 P.2d 1240 (1976). This court has on several occasions specifically declined to adopt the doctrine of reasonable expectations, under which the insured's subjective expectation of coverage determines the insurer's liability. Keenan v. Industrial Indem. Ins. Co. of the Northwest, 108 Wn.2d 314, 322 , 738 P.2d 270 (1987); State Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 485 , 687 P.2d 1139 (1984). The policyholder's subjective understanding of the "as damages" provision is therefore irrelevant.

B. The policies are not structurally ambiguous.

The majority next implies that because the "as damages" clause is not in an exclusionary provision, but instead "sandwiched into the general coverage provisions," these policies are structurally ambiguous. 9 This court has explicitly rejected the doctrine of structural ambiguity. State *895 Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 484 , 687 P.2d 1139 (1984). Moreover, the general coverage provisions are exactly where one would expect to find language describing the basic coverage granted.

The absence of an exclusionary provision, if anything, strengthens the argument that "damages" do not encompass restitutionary liabilities like CERCLA response costs. Exclusions subtract from the coverage which an insurance policy would otherwise provide. See Harrison Plumbing & Heating, Inc. v. New Hampshire Ins. Group, 37 Wn. App. 621, 627 , 681 P.2d 875 (1984). The general coverage provisions of these policies only extend coverage to sums which an insured is legally obligated to pay "as damages." Therefore, they do not provide coverage from which a "damages" exclusion could subtract. These policies are structurally consistent.

C. The phrase "as damages" plainly refers to compensation for injuries.

1. The standard definition of the word "damages"— reparation for detriment or injury sustained—plainly distinguishes damages from restitution.

The majority asserts that because standard dictionaries do not explicitly distinguish between "legal" and "equitable" claims, the "as damages" clause can reasonably be interpreted to provide coverage for CERCLA response costs. Standard dictionary definitions of "damages," including the definition cited by the majority, 10 in fact unambiguously distinguish damages from restitution. "Damages" are compensatory—reparation for detriment or *896 injury sustained. CERCLA response cost liability, in contrast, is restitutionary—reimbursement of a benefit unjustly retained by a responsible party. See supra.

Of course, no dictionary explicitly defines damages as "not equitable relief." Dictionaries define what a word means, not everything a word does not mean. But standard dictionaries' definitions of "damages" do establish that the "plain, ordinary, and popular meaning" of "damages" is reparation for detriment or injury sustained. Because CERCLA response costs are not reparation for detriment or injury sustained, they do not fall within the "plain, ordinary and popular meaning" of damages.

2. The alternative definition of "damages"—cost or expense—is both informal and makes no sense when placed into context in the policy as a whole.

Unlike the majority, the policyholders recognized that if the word "damages" is given this plain, ordinary meaning, the insurance policies will not cover their CERCLA *897 response cost liabilities. They therefore vigorously advocate an alternative "cost or expense" interpretation of the word "damages." See Brief of Policyholders, at 11 ("Here, the policyholders are 'legally obligated to pay' the 'costs' of conducting a comprehensive cleanup program . . .".) (Italics mine.)

The majority does cite The Random House Dictionary of the English Language in an attempt to show that damages can also mean "cost or expense". Majority, at 877. The majority neglects to mention that this dictionary labels the "cost or expense" definition informal. The entire definition reads:

2. damages, law. the estimated money equivalent for detriment or injury sustained. 3. Often, damages. Informal, cost; expense; charge: What are the damages for the lubrication job on my car?

The Random House Dictionary of the English Language 365 (1973).

This court should reject the "cost or expense" definition for several reasons. First, the phrase "legally obligated to pay as damages" lies at the heart of a legal document, insuring against legal liability. Every dictionary cited indicates that the "compensation" definition is appropriate to a legal context. In contrast, every dictionary that evaluates usage describes "cost or expense" as informal, colloquial or slang. 11

Second, the "compensation" definition gives meaning to the "as damages" clause while the "cost or expense" definition renders "as damages" redundant. The "as damages" clause qualifies the phrase "all sums which the insured shall become legally obligated to pay." Certification order, at 3. Amounts payable in reparation for detriment or injury sustained constitute a subset of the amounts an insured is *898 "legally obligated to pay." The "compensation" definition therefore makes the "as damages" clause meaningfully qualify its referent.

In contrast, if interpreted to mean "cost or expense," the "as damages" clause redundantly repeats its referent. Because all sums which an insured is "legally obligated to pay" already constitute a "cost or expense" to the insured, the "as damages" clause becomes "mere surplusage, because any obligation to pay would be covered." Maryland Cas. Co. v. Armco, Inc., 822 F.2d 1348 , 1352 (1987), cert. denied, 484 U.S. 1008 (1988).

This court will give force and effect to each clause of the insurance policy. Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.' Util. Sys., 111 Wn.2d 452 , 456, 760 P.2d 337 (1988). The court must therefore reject the "cost or expense" interpretation of damages.

D. Contrary results from other jurisdictions do not make the "as damages" language ambiguous under Washington law.

The majority next emphasizes that "56 judges" have held that "damages" can include CERCLA cleanup costs. Majority, at 878. 12 While the judicial "head-count" is hardly dispositive, it is not nearly as one-sided as the majority implies. In addition to the three cases discussed by the majority, the following reported cases also hold that CERCLA response costs are not covered "as damages": Cincinnati Ins. Co. v. Milliken & Co., 857 F.2d 979 (4th Cir. 1988) (applying South Carolina law); Mraz v. Canadian Universal Ins. Co., 804 F.2d 1325 (4th Cir. 1986) (applying Illinois law); Hayes v. Maryland Cas. Co., 688 F. *899 Supp. 1513 (N.D. Fla. 1988); Verlan, Ltd. v. John L. Armitage & Co., 695 F. Supp. 950 (N.D. Ill. 1988).

Of course, the court must reject the policyholders' suggestion that the mere existence of these conflicting decisions establishes that "damages" is ambiguous. The fact that a term in an insurance policy has been construed differently in other jurisdictions does not mean that the term is ambiguous under Washington law. Crunk v. State Farm Fire & Cas. Co., 106 Wn.2d 23, 29-30 , 719 P.2d 1338 (1986) (Goodloe, J., concurring), 106 Wn.2d at 31-32 (Dore, J., dissenting). The foreign cases discussed by the majority are ultimately important only for the persuasiveness of the reasoning they employ.

These cases are in fact not persuasively reasoned. For example, the stem case that sets out the rationale for holding that "damages" encompass CERCLA response costs is United States Aviex Co. v. Travelers Ins. Co., 125 Mich. App. 579, 589-90 , 336 N.W.2d 838 (1983) (quoted in majority, at 879). I disagree with its reasoning.

In Aviex, water used in putting out a fire at a chemical manufacturing facility caused toxic chemicals to seep into the ground, contaminating the groundwater underneath the manufacturer's property. 336 N.W.2d at 840 . The manufacturer brought a declaratory judgment action against its insurer seeking to establish its rights under a standard form liability policy which contained an "as damages" clause identical to those at issue in the present case. 336 N.W.2d at 841, 840 .

The appeals court found "persuasive" the insurer's argument that "damages" do not include the costs incurred in complying with injunctive orders. 336 N.W.2d at 842 . However, the court noted that under the state act, the State was empowered to file suit "to recover the full value of the injuries done to the natural resources of the state". 125 Mich. App. at 589 , 336 N.W.2d at 842-43 . Because the court felt it was fortuitous "that the state has chosen to have the plaintiff remedy the contamination problem, rather than choosing to incur the costs of clean-up itself *900 and then suing plaintiff to recover those costs", the court held that the insurer was liable under the policy. 125 Mich. App. at 590 , 336 N.W.2d at 843 .

Aviex consists of two syllogisms that do not connect. The Aviex court correctly recognized that if the State had sought a compensatory remedy (as state law empowered it to do), the insurance policy would have provided coverage for any resulting liability. The Aviex court also correctly recognized that if the insurance policy covered one form of equitable recovery—reimbursement of the State's cleanup costs—it would have been pointless to condition coverage on the form of equitable remedy—injunction or reimbursement—that the State chose to pursue.

Aviex errs by equating the compensatory damage remedy the State could have sought with the equitable remedies which the State in fact sought. The State's choice of remedy fundamentally affected the measure of recovery:

[T]he distinction between recovery of cleanup costs and recovery of damages is not "merely fortuitous" to either the insured as a CERCLA and RCRA defendant or the insurer. The cost of cleaning up a hazardous waste site often exceeds its original value. On the other hand, some natural resources are of exceptional value and their destruction could greatly exceed the cost of cleaning up any hazardous waste contamination.

Continental Ins. Cos. v. Northeastern Pharmaceutical & Chem. Co., 842 F.2d 977 , 986-87 (8th Cir. 1988) (applying Missouri law).

The other foreign cases cited in the majority opinion either depend on Aviex or do not involve CERCLA liability. Aviex was applied as controlling state law by two of the federal district court decisions the majority cites: United States Fid. & Guar. Co. v. Thomas Solvent Co., 683 F. Supp. 1139, 1168 (W.D. Mich. 1988) (cited in majority, at 878) and Fireman's Fund Ins. Cos. v. Ex-Cell-O Corp., 662 F. Supp. 71, 75 (E.D. Mich. 1987) (cited in majority, at 878). A third case relies exclusively on Aviex. Intel Corp. v. Hartford Accident & Indem. Co., 692 F. Supp. 1171, 1187 (N.D. Cal. 1988) (cited in majority, at 878). Finally, CPS Chem. Co. v. Continental Ins. Co., 222 N.J. Super. 175 , 536 *901 A.2d 311, 316 (1988) (cited in majority, at 878) dealt with an insurer's liability for cleanup costs under a state environmental law, not under CERCLA. Therefore, no foreign case cited by the majority persuasively supports its holding.

E. This court has squarely held that "damages" do not encompass restitutionary liabilities.

The majority's analysis also directly contradicts this court's holding in Seaboard Sur. Co. v. Ralph Williams' Northwest Chrysler Plymouth, Inc., 81 Wn.2d 740 , 504 P.2d 1139 (1973). Seaboard is virtually indistinguishable from the present case.

In Seaboard, the Attorney General brought suit to enjoin an automobile dealer for "unfair methods of competition and unfair or deceptive acts or practices", and for the restitution of property wrongfully withheld by the dealer. 81 Wn.2d at 741-42 . Like the underlying suit in this action, the underlying suit in Seaboard involved a public agency acting to protect the public interest. The court emphasized that the Consumer Protection Act specifically distinguished between injunctive, restitutionary, and damage remedies. 81 Wn.2d at 744-45 . CERCLA similarly distinguishes between injunctive, restitutionary, and damage remedies.

The insurance policy in Seaboard provided coverage for "all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law . . . for money damages resulting from . . . unfair competition". 81 Wn.2d at 741 . Similarly, the present policies provide coverage for "sums payable as damages because of. . . property damage."

In Seaboard, the court determined that in an action for damages for unfair competition, the measure of recovery is compensatory, not restitutionary. 81 Wn.2d at 743 . Because the Attorney General's action only sought injunctive and restitutionary relief, the court held that "the dealer is not faced with the prospect of a judgment for damages . . ." (Italics mine.) 81 Wn.2d at 744 . Similarly, although CERCLA provides for compensatory recovery for damages *902 to natural resources, in the underlying action the EPA has only sought reimbursement of its response costs, a restitutionary form of relief. Therefore, the court should hold that the policyholders are not faced with a judgment payable "as damages."

According to the majority, Seaboard holds that the Attorney General's suit for restitution would result in a judgment of "damages"; however, the suit seeking such "damages" for unfair methods of competition could not result in a judgment for damages for unfair competition. Majority, at 883-84. Given the reasoning in the rest of the majority's opinion, this explanation is totally untenable. If the word "damages" includes restitution, certainly "unfair competition" includes unfair methods of competition.

The majority's reasoning thus completely contradicts both Seaboard's rationale and result. Seaboard in fact requires this court to hold that these liability insurers are only required to indemnify their insured's compensatory liabilities, but not the cost of complying with equitable remedies.

The Court of Appeals has also squarely held that a liability insurer is not required to indemnify its insured's restitutionary liability. Felice v. St. Paul Fire & Marine Ins. Co., 42 Wn. App. 352, 357 , 711 P.2d 1066 (1985), review denied, 105 Wn.2d 1014 (1986). 13 Even the policyholders admit that Felice reached a proper result, conceding that the "as damages" clause "might also exclude sums paid in restitution of money had and received." Brief of Boeing Co., at 35. If "damages" does not encompass this form of restitution, it also does not encompass CERCLA response costs.

*903 In addition, numerous cases from other jurisdictions hold that liability insurers need not indemnify their insured's restitutionary liabilities, even if payable in money. See, e.g., Thief River Falls v. United Fire & Cas. Co., 336 N.W.2d 274 (Minn. 1983); Ladd Constr. Co. v. Insurance Co. of N. Am., 73 Ill. App. 3d 43 , 391 N.E.2d 568 (1979); Garden Sanctuary, Inc. v. Insurance Co. of N. Am., 292 So. 2d 75 (Fla. Dist. Ct. App. 1974); Aetna Cas. & Sur. Co. v. Hanna, 224 F.2d 499 (5th Cir. 1955); Desrochers v. New York Cas. Co., 99 N.H. 129 , 106 A.2d 196 (1954). For example, in Desrochers , the insureds had been enjoined to remove a culvert placed upon their land. In holding the insurer not liable for the cost of complying with the injunction, the court stated:

The cost of compliance with the mandatory injunction is not reasonably to be regarded as a sum payable "as damages." Damages are recompense for injuries sustained. Restatement, Torts, s. 902. They are remedial rather than preventive, and in the usual sense are pecuniary in nature. 1 Sedgwick on Damages (9th ed.) ss. 2, 29. The expense of restoring the plaintiff's property to its former state will not remedy the injury previously done, nor will it be paid to the injured parties. . . .

... In short, the expense of complying with the order is neither a sum which the insured is obligated to pay as damages, nor is it in any real sense equivalent thereto. No equitable principle requires the [insurer] to pay it, and it is not within the scope of its undertaking as a reasonable man . . . would interpret it.

(Citations omitted.) 99 N.H. at 131-33 .

F. The "average lay person" rule of insurance interpretation does not apply to corporations able to negotiate contract terms from a position of equal bargaining power.

The "as damages" clause in these policies unambiguously limits coverage to compensatory damage remedies, not restitutionary remedies like CERCLA response costs. However, even if the phrase "as damages" were ambiguous, this term should not automatically be construed against the *904 insurer. The "average lay person" rule of insurance interpretation does not apply to corporate giants.

The principle that ambiguities in insurance policies must be strictly construed against the insurer derives from a recognition of the typical relationship between the purchaser of an insurance contract and the insurance carrier. Ordinarily, the carrier unilaterally drafts the insurance contract and thus, for policy reasons, is held responsible for any ambiguity in the language. See, e.g., Shell Oil Company v. Accident and Casualty Insurance Company, at 14-15, No. 278953 (Cal. Sup. Ct., San Mateo County, July 13, 1988) as reprinted in Brief of Policyholders, exhibit 2.

This court early on adopted the rule of strictly construing policy language against the insurer in response to this inequality of bargaining power.

"The policy, although of the standard form, was prepared by insurers, who are presumed to have had their own interests primarily in view; and hence, when the meaning is doubtful, it should be construed most favorably to the insured, who had nothing to do with the preparation thereof."

Montana Stables v. Union Assur. Soc'y, 53 Wash. 274, 276-77 , 101 P. 882 (1909) (quoting Matthews v. American Cent. Ins. Co., 159 N.Y. 449 , 48 N.E. 751 (1897)). Numerous subsequent cases have reaffirmed both this rule, and the underlying rationale. See, e.g., Stusser v. Mutual Union Ins. Co., 127 Wash. 449, 455 , 221 P. 331 (1923); Guaranty Trust Co. v. Continental Life Ins. Co., 159 Wash. 683, 688 , 294 P. 585 (1930); Braley Motor Co. v. Northwest Cas. Co., 184 Wash. 47, 52-53 , 49 P.2d 911 (1935); Kane v. Order of United Comm'l Travelers of Am., 3 Wn.2d 355, 359-60 , 100 P.2d 1036 (1940); Zinn v. Equitable Life Ins. Co., 6 Wn.2d 379, 385 , 107 P.2d 921 (1940); Doke v. United Pac. Ins. Co., 15 Wn.2d 536, 544 , 131 P.2d 436 , 135 P.2d 71 (1942); Johnson v. State Farm Mut. Auto. Ins. Co., 70 Wn.2d 587, 590 , 424 P.2d 648 (1967); Safeco Ins. Co. of Am. v. McManemy, 72 Wn.2d 211, 213 , 432 P.2d 537 (1967); Continental Ins. Co. v. Paccar, Inc., 96 Wn.2d 160, 167 , 634 P.2d 291 (1981).

*905 The majority acknowledges that at least some of the policyholders in the present case are "corporate giant[s]." Majority, at 883. 14 Because these insureds do possess the ability and expertise to negotiate the language of the policy, the "average lay person" rule applicable to the typical consumer insurance contract should not extend to this case.

In fact, this court has explicitly declined to apply these rules in a case involving a large corporate defendant:

We are of the opinion that the rule of construing the policy against the insurer does not fit the circumstances of this case. Regardless of which party drafted the policy language, it is uncontested that neither party considered proration of the aggregate at the time they agreed on the unambiguous policy terms.

(Italics mine.) Continental Ins. Co. v. Paccar, Inc., 96 Wn.2d 160, 167 , 634 P.2d 291 (1981). See also Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.' Util. Sys., 111 Wn.2d 452 , 456, 760 P.2d 337 (1988). 15 Indeed, application of such a rule might well unfairly benefit the corporate insured. See Shell Oil, at 18 (corporate insured intentionally left ambiguous language unclarified so that rule would apply).

Ill

The Majority's Holding Violates Public Policy

In addition to misapplying pertinent rules of construction, the majority opinion also ignores relevant public policy considerations. "[T]his case implicitly presents a grave question of policy, namely who should bear the cost of polluting our environment^]" Majority, at 876 n.l. In interpreting an insurance contract, the court will look to public policy expressed in a relevant legislative enactment. State *906 Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 481, 483 , 687 P.2d 1139 (1984). Nevertheless, the majority opines that " [i]t is important to note the absence of public policy in the construction of insurance contracts." Majority, at 876 n.l. The majority's interpretation of these insurance policies ignores the public policy expressed by the United States Congress in enacting CERCLA.

A. Congressional intent.

Congress enacted CERCLA's extraordinarily novel liability provisions in order to impose the cost of cleaning up hazardous waste on those who have "profited or otherwise benefited from commerce involving [hazardous] substances." S. Rep. No. 848, 96th Cong., 2d Sess. 98, reprinted in Senate Comm, on Env't & Pub. Works, Legislative History of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Public Law 96-510, at 308, 320, 97th Cong., 2d Sess. (1980) (statement of EPA administrator Costle). Congress intended that those who financially benefited from polluting activity internalize the health and environmental costs of that activity into their cost of doing business. S. Rep. No. 848, at 34, 13 n.2. This congressional intent is summarized in the slogan "make the polluter pay." See Developments in the Law, Toxic Waste Litigation, 99 Harv. L. Rev. 1458 , 1477 (1986).

Congress clearly recognized that corporate polluters have reaped enormous benefits from their past inadequate waste disposal practices. These practices created significant short-term savings for polluters, resulting in higher profits for them, but caused enormous long-term harm in the form of environmental degradation. CERCLA response cost liability forces these polluters to disgorge these profits.

The insurers from whom these polluters now seek indemnification, in contrast, did not charge a premium to cover response cost liability. See Note, CERCLA Cleanup Costs Under Comprehensive General Liability Insurance *907 Policies: Property Damage or Economic Damage, 56 Ford-ham L. Rev. 1169, 1176 (1988). As Congress itself has recognized CERCLA's innovative provisions were simply unforeseeable at the time these policies were issued. See Superfund Amendments and Reauthorization Act of 1986, H. R. Rep. No. 253(1), 99th Cong., 2d Sess. 1, 109, reprinted in 1986 U.S. Code Cong. & Ad. News 2835, 2891 (disapproving "judicial trends regarding policy interpretation that have called upon old policies to pay for claims that were not envisioned at the time the policies were written”). By requiring these insurers to indemnify the corporate polluters for the cost of cleanup, the majority permits the polluters to both reap the benefits and avoid the costs attributable to their pollution. This directly violates the congressional intent that polluters internalize their pollution costs. See Brett, Insuring Against the Innovative Liabilities and Remedies Created by Superfund, 6 J. Envtl. L. I, 52 (1986).

B. CERCLA liability is fundamentally uninsurable.

The majority holding also violates public policy because it requires insurers to insure liability which is fundamentally uninsurable: The innovative new features of CER-CLA's liability scheme simply prevent insurers from calculating and charging premiums that bear any real relation to the risk of CERCLA liability.

CERCLA's liability provisions differ from ordinary tort liability in many important respects. First, CERCLA imposes an especially strict liability upon responsible parties. Liability attaches even to those who nonnegligently dispose of a hazardous substance using state of the art procedures. See, e.g., United States v. Monsanto Co., 858 F.2d 160 (4th Cir. 1988); United States v. Price, 377 F. Supp. 1103, 1114 (D.N.J. 1983).

Second, CERCLA liability is retroactive. Responsible parties who disposed of hazardous waste in a completely legal, nonactionable manner before the enactment of CERCLA are now potentially liable for response costs. See, *908 e.g., United States v. Hooker Chems. & Plastics Corp., 680 F. Supp. 546 (W.D.N.Y. 1988).

Third, CERCLA regularly makes individuals liable for harms they did not cause. CERCLA imposes joint and several liability upon every responsible party connected with a hazardous waste site. 42 U.S.C. § 9607 . Therefore, both the government and private parties may recover response costs from a "responsible party" with virtually no showing of causation. 1 C. Schraff & R. Steinberg, RCRA and Superfund: A Practice Guide with Forms, ¶ 2.05 [3], at 2-26 (1989). See also New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985) (CERCLA requires no showing of causation).

Fourth, private citizens without any proprietary interest in the property harmed have standing to sue to enforce CERCLA. 42 U.S.C. §§ 9607 (a)(4)(B), 9659(a). To recover response costs, a private party need only show an outlay of costs and that the costs were incurred consistently with the National Contingency Plan promulgated by the EPA. See Brett, supra at 16 & n.87.

Fifth, CERCLA authorizes the initiation of response action in response to the threat of a hazardous waste release. 42 U.S.C. § 9604 . For example CERCLA authorizes the government to recoup the costs of health assessment and health effects studies. 42 U.S.C. § 9607 (a)(4)(D). Therefore, responsible parties may be held liable for CERCLA response costs even in the absence of any actual harm to persons or property. See, e.g., United States v. Northeastern Pharmaceutical & Chem. Co., 579 F. Supp. 823 (W.D. Mo. 1984).

Sixth, CERCLA response cost liability is inevitable. Every hazardous waste containment system eventually will leak. Because CERCLA imposes liability even if hazardous waste is disposed of in a state of the art manner, every responsible party should expect eventually to be subject to CERCLA response liability.

Seventh, CERCLA response cost liability is essentially boundless, both in amount and duration. The EPA has an *909 almost unfettered discretion to incur and recoup whatever response costs it believes are necessary to clean up a site. 42 U.S.C. §§ 9604 , 9621(a). Moreover, because the EPA currently refuses to grant settling parties releases from further litigation, a responsible party's liability exists indefinitely into the future regardless of how much it has paid to clean up a site. See Developments in the Law, Toxic Waste Litigation, 99 Harv. L. Rev. 1458 , 1509 (1986). But see 42 U.S.C. § 9622 (f) (providing EPA with discretion to enter into covenant not to sue).

CERCLA's broadly worded provisions mean that insurers have no way of predicting what insured conduct may lead to liability. For example, CERCLA defines "pollutant or contaminant" to include "any element, substance, compound, or mixture . . . which after release into the environment . . . will or may reasonably be anticipated to cause . . . [a toxic effect]'1. 42 U.S.C. § 9601 (33). Because the toxic characteristics of any substance are dose dependent:

[t]he application of the statute is highly dependent upon ad hoc and post hoc characterizations of a substance as a "pollutant or contaminant." . . . [Therefore], a party has literally no ability to conform his conduct to the requirements and prohibitions of the Act. A party also has little or no ability to avoid liability for the release of a pollutant or contaminant because he cannot know, in advance, whether any release will constitute actionable or prohibited conduct under CERCLA.

C. Schraff & R. Steinberg, RCRA and Superfund: A Practice Guide With Forms ¶ 1.02[5], at 1-11 (1989). CER-CLA's other broadly defined terms create similar problems. See, e.g., RCRA and Superfund, ¶ 1.07.

CERCLA's conferral of standing upon parties who do not satisfy traditional requirements multiplies this uncertainty. "The broad liability provisions give enormous discretion to the responding party in deciding how to incur response costs with virtually no limit on the amounts recoverable." Brett, supra at 18.

CERCLA's retroactive strict liability provisions result in liability for the failure to reduce risks that cannot be discovered through the exercise of reasonable care. An insurer *910 who undertakes to insure response cost liability will therefore be liable for risks that are undiscovered and largely undiscoverable at the time the actions are taken. "Because the magnitude of such risks is inestimable—they are unknowable when insured against—it is impossible confidently to set a price for insurance against them." Abraham, Environmental Liability and the Limits of Insurance, 88 Colum. L. Rev. 942 , 958 (1988).

Another factor making response costs particularly difficult to insure is CERCLA's imposition of liability for harms a party did not cause. Such liability:

creates special uncertainty, because the probability of liability-—and of consequent loss for the insurer—is affected by the behavior of nonpolicyholders whom the insurer cannot necessarily identify in advance. When the scope of liability is potentially very large, that uncertainty is magnified. . . .

... In order to insure against this threat, insurers would have to make nearly impossible calculations based on both the potential behavior of the other parties whose activities might combine with the insured's to cause damage, and on the probability that these parties would prove to be judgment proof.

Abraham, at 959-60.

Finally, the inevitability of CERCLA response costs renders them totally uninsurable under traditional occurrence-type policies (such as the ones at issue in this case):

[Ijnsurance contracts do not ordinarily cover economic detriment of a type occurring so regularly in relation to an insured enterprise or activity that it is commonly regarded as a cost rather than a risk of that activity or enterprise. Second, insurance contracts do not cover economic detriment that is not fortuitous from the point of view of the person (usually the insured) whose detriment is asserted as the basis of the insurer's liability.

(Footnote omitted.) R. Keeton, Insurance Law § 5.3(a), at 278-79 (1971).

For example, it is an "elemental proposition" under Washington law that insurance policies do not cover losses which are expected or intended from the standpoint of the insured, "this generally being . . . against public policy to insure." Detweiler v. J.C. Penney Cas. Ins. Co., 110 Wn.2d *911 99, 105 , 751 P.2d 282 (1988). Thus, where an insured took a calculated business risk that pollution from a sewage plant would contaminate nearby property, we have held that the insured could not look to its insurer to indemnify it for its liability resulting from its failure to prevent the event. Tieton v. General Ins. Co. of Am., 61 Wn.2d 716, 722 , 380 P.2d 127 (1963). Because no containment system can permanently prevent the escape of hazardous waste, polluters who dump their wastes at the very least take a calculated business risk of eventually incurring CERCLA response cost liability.

A congressionally authorized study group report on the availability of private insurance for CERCLA liability recognizes that CERCLA's radically unique approach to the imposition of response costs renders the insured's potential liability so limitless that such liability cannot be assessed by prospective insurers seeking to set premium levels. See U.S. Dep't of Treasury, Adequacy of Private Insurance Protection Under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980: A Report in Compliance With Section 301(b) of P.L. 96-105, at 83-87, 94-95 (June 1983). In fact, since the enactment of CERCLA, pollution insurance has become unavailable in any insurance market. E.g., Brett, at 44; Smith, Weishaar, Ledbetter & Light, Hurricane SARA: An Introduction to the 1986 Superfund Amendments, Toxics L. Rep. 1104, 1110 (1987). The fact that insurers are unable to provide coverage for response cost liability even today highlights the fundamental unfairness of finding such coverage in policies written years before CERCLA's radical new liabilities could possibly have been anticipated.

IV

Conclusion

Congress enacted CERCLA's innovative response cost liability provisions in order to properly address the threat posed by inadequate past hazardous waste disposal practices. CERCLA liability accordingly differs substantially *912 from ordinary tort liability. Normal tort liability results in a compensatory "damages" remedy. CERCLA response cost liability, in contrast, results in a restitutionary remedy.

The insurance policies at issue in this case require the insurer to indemnify the insureds for "all sums which the insured shall be legally obligated to pay as damages . . .". The plain, ordinary and popular meaning of damages, as recognized by the majority, is "reparation for detriment or injury sustained." Because CERCLA response costs do not constitute reparation for detriment or injury sustained, they do not constitute "damages" within the meaning of these policies. On-point mandatory precedent, the better reasoned foreign cases, and public policy all support this result.

I respectfully dissent.

Dolliver, J., concurs with Callow, C.J.

Reconsideration denied April 11, 1990.

In fact, one of the insurance policies contains slightly different language, providing coverage "for all sums which the Assured shall be obligated to pay . . . for damages ... on account of. . . [p]roperty damage . . .". Certification order, at 3. The majority does not separately address this language, implicitly holding that it has the same effect as that contained in the other policies. Because I agree with the conclusion, I do not separately address this language either.

The majority also improperly purports to determine whether CERCLA response cost liability arises "because of . . . property damage" within the meaning of these policies. Majority, at 886. This question was not certified to us by the federal court.

"Alternatively, before the insurers can avoid indemnifying the policyholders, this court must be satisfied that the plain meaning of 'damages', as it would be understood by the average lay person, unmistakably precludes coverage for response costs, and any ambiguity is to be construed against the insurer." Majority, at 876.

"The court is not persuaded that, under the rules of insurance contract analysis in Washington, the words 'as damages' communicate these restrictions." Majority, at 876.

"Here, the structure of the subject contracts defeats insurers' argument that 'as damages' precludes coverage for cleanup costs. The subject clause, 'as damages', is sandwiched into the general coverage provisions of policyholders' insurance contracts. This is an odd place to look for exclusions of coverage. *895 Furthermore, there is nothing more in the contracts. Under the title 'Exclusions', there is nothing in the enumerated exclusionary provision about 'damages.'" (Citation omitted. Italics mine.) Majority, at 877.

"Standard dictionaries uniformly define the word 'damages' inclusively, without making any distinction between sums awarded on a 'legal' or 'equitable' claim. For example, Webster's Third New International Dictionary 571 (1971) defines 'damages' as 'the estimated reparation in money for detriment or injury sustained'." Majority, at 877.

*896 This dictionary's complete entry for "damages" is:

3 damages pi : the estimated reparation in money for detriment or injury sustained : compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right Cbring a suit for [damage]s> <was awarded compensatory [damagejs of $4000>—compare damnum ABSQUE INJURIA; see COMPENSATORY DAMAGES, GENERAL DAMAGES, NOMINAL DAMAGES, PUNITIVE DAMAGES, SPECIAL DAMAGES 4 : EXPENSE, COST, CHARGE Syn see injury

Webster's Third New International Dictionary 571 (1981).

Numerous other dictionaries contain virtually identical definitions. See The Random House Dictionary of the English Language 504 (2d ed. 1987); The American Heritage Illustrated Encyclopedic Dictionary 431 (1987); Collins Cobuild English Language Dictionary 353-54 (1987); The Penguin Wordmaster Dictionary 174 (1987); Webster's New Universal Unabridged Dictionary 315 (1983); The American Heritage Dictionary 364 (2d College ed. 1982); Oxford English Dictionary 14 (1981); Oxford American Dictionary 159 (1980); The Concise Oxford Dictionary 256 (1976); Oxford Advanced Learner's Dictionary of Current English 219 (1974); Collins English Dictionary 248 (1972); Webster's New World Dictionary of the American Language 356 (2d College ed. 1972); Cassell's English Dictionary 282 (1962); Thorndike-Barnhart Comprehensive Desk Dictionary 215 (1962); Oxford English Dictionary 14 (1961); Webster's New International Dictionary of the English Language 664 (2d ed. 1960); Swan’s Anglo-American Dictionary 435 (1952).

Only Webster's Third New International Dictionary and the related Webster's New Collegiate Dictionary do not identify the "cost or expense" definition of damages as informal, colloquial, or slang. These dictionaries do not specially identify such usages. See E. Sheehy, Guide to Reference Works 148 (10th ed. 1986).

Apparently included in this count are two Washington superior court decisions, as well as numerous unpublished foreign decisions. Neither has any precedential value under Washington law. See RAP 10.4(h); Washington Bankers Ass'n v. Washington Mut. Sav. Bank, 92 Wn.2d 453, 463 , 598 P.2d 719 (1975); State v. Ross, 20 Wn. App. 448 , 455 n.5, 580 P.2d 1110 (1978); State v. Fitzpatrick, 5 Wn. App. 661, 668 , 491 P.2d 262 (1971).

The majority purports to distinguish Felice on the grounds that- "the proceeding was an action to remove the guardian, not a proceeding to recover damages." Majority, at 885 n.4. In fact, the complaint in Felice sought both Felice's removal as guardian, and restitution of attorney fees he had charged. 42 Wn. App. at 355 . Felice , therefore, did involve a proceeding to recover "damages," at least as the majority would interpret the term.

The majority asserts at page 883 that: "the policy in question [was] . . . prepared by the company's experts, with language selected by the insurer. The specific language in question was not negotiated . . .".I note that nothing in the District Court's certification order substantiates this recitation of "facts.”

The italicized language of this quotation simply belies the majority's assertion that Paccar "did not hold that a different rule should apply when corporations are involved." Majority, at 892.