Jury Sides with Port of Longview in Dispute with Insurance Companies

By Erik Olson, November 20, 2013, The Daily News

The Port of Longview won an important, first-round in court victory Wednesday in its effort to secure nearly $200 million insurance coverage to clean up land contaminated decades ago.

A Cowlitz County jury ruled unanimously that cleanup costs at two sites should be covered by the port’s “primary” insurance policies, which are worth up to $500,000.

The port must still prove that cleanup is eligible for additional coverage from companies operating under the Lloyd’s of London insurance exchange. At stake in this second phase of the trial, expected to take place next summer, is whether the ports “excess” liability policies cover up to $193 million in cleanup. Wednesday’s ruling, though, bolsters the port’s argument that decades-old contamination can be fully covered.

“This is a huge win for the port,” said Frank Randolph, the port’s attorney.

About 20 different insurers are involved in the case. Wednesday’s verdict followed a two-week trial before Cowlitz County Superior Court Judge Stephen Warning. Jurors deliberated for three hours before handing down the verdict.

The sites in question are at the former International Paper Co. creosote plant and a rail line where an underground pipe leaked bunker fuel from the Berth 1 docks to an old storage tank owned by Longview Fibre Paper and Packaging Co.

The contamination dates back to the 1970s but was discovered in the late 1980s. Port officials filed the insurance claim in 2009. Attorneys for the insurance companies had argued unsuccessfully that the policies no longer applied because port officials waited too long to file claims.

Port officials estimate total cleanup would cost about $30 million, but they have not conducted a detailed cost analysis. With the contamination cleared out, port officials say they could better market the redeveloped land and bring more jobs to the area, which is in the port’s west industrial park near the Lewis and Clark Bridge.

Without insurance, port officials say the cleanup would take much longer and be less thorough. “We would be doing it with a teaspoon instead of a backhoe,” port CEO Geir Kalhagen said following the Wednesday verdict.

Port officials say they plan to seek attorneys’ fees, which will cost millions by the time the trial is finished.

Port attorneys also accepted a $950,000 settlement in February with three of the defendants, Arrowood Indemnity Co, Indemnity Marine Assurance Co. and Marine Indemnity Insurance Co. of America. These three insurers no longer are involved in the case.

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