PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      4e 
ACTION ITEM 
Date of Meeting     August 19, 2014 
DATE:    August 11, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   Craig Watson, General Counsel 
Soojin Kim, Senior Port Counsel 
SUBJECT:  2014 Duty to Defend Settlement Agreement and Partial Release between the Port
of Seattle and Great American Insurance Company and Great American Insurance
Company of New York ("Great American Companies") 
Settlement amount:  $1,500,000.00  payable to the Port of Seattle within 45 days after
Agreement's Effective Date. 
Subject of settlement: Settle the Port's claims relating to certain categories of environmental
response costs incurred by the Port from 1997 through 2012, which the Port claims Great
American is obligated to pay pursuant to its duty to defend under liability policies it issued to the
Port and which Great American contends it has no obligation to pay. 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute the proposed 2014
Duty to Defend Settlement Agreement and Partial Release between the Port of Seattle and Great
American Insurance Company and Great American Insurance Company of New York. 
SYNOPSIS 
The Port Commission is being asked to approve a proposed partial settlement agreement and
release between the Port and one of its liability insurers, Great American Insurance Company,
relating to certain environmental response costs incurred by the Port from 1997 through 2012,
which the Port claims Great American is obligated to pay pursuant to its duty to defend under the
liability policies it issued to the Port, and which Great American contends it has no obligation to
pay. The proposed agreement provides that Great American will pay $1,500,000 to the Port to
fully and finally settle claims relating to the certain categories of costs incurred through 2012;
this $1,500,000 will be payable within 45 days after the second party to sign the agreement has
signed it ("Effective Date"). 
The proposed partial settlement agreement and release is attached and is titled "2014 Duty to
Defend Settlement Agreement and Partial Release between the Port of Seattle and Great
American Insurance Company and Great American Insurance Company of New York ("Great
American Companies"). As enumerated in paragraph II.E. of the Agreement, the categories

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 25, 2014 
Page 2 of 3 
include invoices for which the specific work done cannot be determined, Port overhead and
employee costs, costs billed by mistake, some legal expense, and interest. The specific claims
being released are described with particularity in Attachments 1 through 9 to the Agreement.
The Port is settling only its claim for those costs itemized on Attachments 1 through 9. The Port
is reserving all other claims, including claims for costs incurred from 1997 through 2012 that are
not listed in the attachments to the Agreement. Attachments 1 through 9 (constituting several
hundred pages are also attached). 
BACKGROUND, KEY DETAILS AND JUSTIFICATION 
Counsel for the Port recommends that the proposed partial settlement and release be approved.
The settlement eliminates the need for future attorney fees and potential litigation expense
relating to categories of costs for which there is a genuine coverage dispute between the Port and
its insurer. In exchange for a substantial cash payment now, the Port resolves the uncertainty
regarding whether it is entitled to reimbursement for the disputed claims. The partial settlement
also significantly narrows the remaining areas of dispute between the Port and its insurer, and
permits the parties to focus their future efforts on those remaining disputes, without the
distraction of the claims being settled now. 
The Port has tendered numerous claims/demands to Great American under insurance policies
issued over the years (dating back to the 1960s) for payment of defense costs. These defense
costs have been incurred because of claims and notices asserted against the Port by the U.S.
Environmental Protection Agency (EPA) and other agencies. These agencies have asserted
claims against the Port because of alleged contamination of land, groundwater and sediments at
or adjacent to certain sites such as East Waterway and West Waterway (cleanup claims),
Terminal 91, Elliott Bay/Duwamish River (natural resource damage claim), and Lower
Duwamish Waterway (cleanup claims).
The Port's liability arises from alleged property damage, cleanup, and remediation arising out of
the Port's alleged acts, omissions and liability as a generator, disposer, manufacturer, distributor,
transporter, lessor, lessee, or owner of real property. Great American issued insurance policies to
the Port providing general liability coverage. Under these policies, we believe Great American
owes to the Port a duty to defend the Port. 
The Port and Great American entered into a Duty to Defend Settlement Agreement and Partial
Release on February 12, 1997 (1997 Agreement) resolving certain defense obligations. In the
1997 Agreement, Great American agreed to pay certain past incurred defense costs (incurred
prior to 1997 Agreement). In the 1997 Agreement, Great American also agreed to pay certain
defense costs to be incurred after February 12, 1997 - subject to a reservation of the right to
challenge all claimed defense costs for reasonableness, necessity, characterization as defense or
indemnity costs and relationship to defense of environmental actions. Following the 1997
Agreement, Port submitted claims for defense costs incurred since that Agreement; Great
American has been disputing payment of some of those costs, but is willing to settle certain

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 25, 2014 
Page 3 of 3 
categories of these disputed costs and pay the Port $1.4 Million this year in consideration for a
release. 
This proposed 2014 Agreement would settle certain costs claimed by the Port for defense work
performed on or before December 31, 2012. GAIC and the Port are reserving rights in the
following/not settling: GAIC's duty to defend the Port with respect to costs for work performed
after December 31, 2012; GAIC's duty to defend the Port with respect to certain costs that are
outside the categories referenced in the 2014 Agreement - even if cost was for work performed
before January 1, 2013; the Port's claims for indemnity. 
The 2014 Agreement includes a release in consideration of the $1.5 Million to be paid by GAIC
this year. The release would cover all claims under insurance policies issued to the Port for
"Certain Past Incurred Defense Costs" (as defined in the 2014 Agreement) and claims arising out
of the alleged previous refusal by GAIC to accept and pay for such costs. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternatives and implications have been considered as discussed in attorney-client privileged
communications. 
ATTACHMENTS TO THIS REQUEST 
2014 Duty to Defend Settlement Agreement and Partial Release and its Exhibits A and
B. 
Attachment 1: GAIC Indeterminate 1997-2012  summary, spreadsheets (47 pp). 
Attachment 2: Employee time 1997-2012  summary, spreadsheets (297 pp). 
Attachment 3: Overhead 1997-2012  summary, spreadsheets (53 pp). 
Attachment 4: Legal overage (defense counsel) 1997-2012  
summary, spreadsheets (10 pp). 
Attachment 5: Other sites 1997-2012  summary, spreadsheets (4 pp). 
Attachment 6: Past due/Dupe billing 1997-2012  summary, spreadsheets (4 pp). 
Attachment 7: Interest 1997-2012  summary, spreadsheets (4 pp). 
Attachment 8: Paid vendor charges 1997-2012  summary, spreadsheets (4 pp) 
Attachment 9: Gradient Indeterminate 1997-2012  summary, spreadsheets (27 pp). 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
None.