§17.5 - Preliminary Issues in Environmental Coverage Litigation

• Jurisdiction: Washington

§17.5 Preliminary Issues in Environmental Coverage Litigation

Preliminary issues such as choice of law and justiciability are discussed below.

(1) Choice of law

A very important preliminary issue in environmental insurance coverage litigation is the question of which states law applies to the construction or interpretation of the insurance policies. Choice of law has a growing importance because disagreements among jurisdictions on critical environmental coverage issues can make choice of law outcome determinative. As a threshold matter, there must first be a conflict between more than one states law on a particular issue. If there is a conflict, and the issue is one of insurance contract interpretation, Washington courts have adopted the most significant relationship test as set forth in Restatement (Second) of Conflicts of Laws §188 (1971), which sets forth the following contacts to be considered:

(a)	the place of contracting
(b)	the place of negotiation of the contract,
(c)	the place of performance,
(d)	the location of the subject matter of the contract and
(e)	the domicil, residence, nationality, place of incorporation and place of business of the parties.

Canron, Inc. v. Fed. Ins. Co., 82 Wn.App. 480, 492, 918 P.2d 937 (1996) (quoting Restatement (Second) of Conflicts of Laws §188 (1971)).

By contrast, when the issue is one sounding in tort (potentially including common-law duties of good faith), Washington courts apply the test set forth in Restatement (Second) of Conflicts of Laws §145 (1971), which sets forth the following contacts to be considered:

(a)	the place where the injury occurred,
(b)	the place where the conduct causing the injury occurred,
(c)	the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d)	the place where the relationship, if any, between the parties is centered.

Rice v. Dow Chem. Co., 124 Wn.2d 205, 213, 875 P.2d 1213 (1994) (quoting Restatement (Second) of Conflicts of Laws §145 (1971).

Washington courts also follow the doctrine of Restatement (Second) of Conflicts of Laws §6 (1971), which sets forth the general framework within which the choice of law principles are intended to operate and the overarching principles that all choice of law rules are intended to serve. See Baffin Land Corp. v. Monticello Motor Inn, Inc., 70 Wn.2d 893, 899-900, 425 P.2d 623 (1967). These factors are as follows:

(a)	the needs of the interstate and international systems,
(b)	the relevant policies of the forum,
(c)	the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d)	the protection of justified expectations,
(e)	the basic policies underlying the particular field of law,
(f)	certainty, predictability and uniformity of result, and
(g)	ease in the determination and application of the law to be applied.

Restatement (Second) of Conflicts of Laws §6 (1971).

Washington courts balance the above contacts and factors to determine which state has the most significant relationship to the particular issue. The question is not what state has the most contacts, but rather, the question is what state has the qualitatively most significant contacts bearing on the particular issue.

When the environmental cleanup will occur in Washington, but another state has more significant contacts with the issues (for example, when the policy was negotiated, contracted, and issued in a state other than Washington, and all...