PORT ANGELES — The Port of Port Angeles has received a $2 million settlement over insurance companies’ refusal to provide coverage for three harbor clean-up projects.
Port commissioners voted 3-0 Tuesday on a series of actions that ended 4½ years of litigation, provided an unrestricted $2 million for the port and secured liability for the cleanups of the KPly site, the Marine Trades Area and western Port Angeles Harbor site.
Commissioner Colleen McAleer, who served on the commission that voted to sue the insurance companies in 2015, described the settlement a “big win” for the port.
“I just want to reiterate that four years ago, we had insurance carriers that were not stipulating that they needed to cover our claims, our liability in the harbor and other locations,” McAleer said in Tuesday’s port meeting.
“So now, today, move forward four years, we have achieved that and we’ve received $2 million, which will cover the legal costs plus some. So that’s a big win.”
McAleer credited Seattle attorney Mark Nadler with representing the port and negotiating a fair settlement.
“It takes courage to undertake litigation like this, and it takes perseverance to stick it out,” Nadler told Commissioners Connie Beauvais, Steve Burke and McAleer.
“And it also takes some terrific staff, and the port’s staff have been terrific to work with. So a tip of the hat all the way around.”
The lawsuit — Port of Port Angeles v. Certain Underwriters at Llyods, London and Certain London Market Companies, et al. — sought unspecified damages, declaratory relief and attorneys fees.
It alleged that numerous insurance companies, some of which have covered the port since the 1960s, breached their duties of good faith by failing to cover the port’s environmental liabilities.
The state Department of Ecology identified the port as being partially responsible for removing potentially harmful substances from the three sites.
“The port was forced to bring this lawsuit to obtain the benefits of its insurance policies issued by the defendants because the defendants breached their obligations to investigate, defend and/or indemnify the port pursuant to the terms of the policies,” according to the initial complaint filed in Clallam County Superior Court.
McAleer and former port Commissioners John Calhoun and Jim Hallett voted in January 2015 to sue the insurance carriers over the three environmental cleanup projects.
“It was a continuation of a series of cases that we were doing for other port districts where we were seeking coverage under essentially the same insurance policies that had been issued in the ’60s, ’70s and ’80s under the Northwest Marine Terminal Association,” Nadler told the port commission Tuesday.
“During the pendency of the case, the port was wrapping up its remediation of the KPly site, which alone is an extraordinary story because very few entities have taken on projects like that and done them with such dispatch, which was a terrific efficiency for everybody involved.
“But in any event, the port went through a mediation on the KPly site and reached a settlement with ExxonMobil and Rayonier, which actually recovered more money than the port had left to reimburse,” Nadler added.
“The recovery was large enough that the as-yet unfunded portion of the port’s liability for that site was more than paid for, and money was left over, which is how between $4 million and $5 million was placed into the court registry, which is also part of the posture of this case.”
Given disputes over entitlements to the excess funds, the court ordered the $4.58 million to be placed into a court registry, port attorney Brian Wendt said in a Tuesday memo to commissioners.
“The port is settling its claims with the London market and certain other related entities,” Nadler said at the meeting.
“They essentially were interested in reaching a settlement after events in other cases, and then some events in this case where we obtained summary judgments on certain aspects of the claim.”
Under the terms of the settlement, the port will receive an unrestricted $2 million and insurance coverage for future environmental remediation costs related to the environmental clean-ups, Wendt said.
The remaining $2.58 million in the court registry will be “split up among the insurance carries according to the payment schedule that we’ve got set out in our proposed order,” Nadler said.
No funds will be left in the court registry.
Hadler said half of the port’s settlement comes from Liberty Mutual, which owed the port money for bad faith and attorney’s fees.
“The other million dollars, I would be hard pressed to tell you exactly what those dollars are for, but it represented what the parties were willing to compromise their claims for,” Nadler said.
Wendt said the $2 million settlement plus insurance was a “great result” for the port.
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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at rollikainen@peninsuladailynews.com.
