6i Settlement Agreement, Great American Insurance
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CONFIDENTIAL SETTLEMENT AGREEMENT AND RELEASE
This Confidential Settlement Agreement and Release, (the "Agreement"), is entered by and
between the Port of Seattle (the "Port,") and the Port Entities, as defined in Paragraph 1.K),
on one hand, and Great American Insurance Company and Great American Insurance
Company of New York, formerly American National Fire Insurance Company
(collectively, "Great American,") and the Great American Entities, as defined in Paragraph
1.G), on the other hand, as of the Effective Date (as defined in Paragraph 1.D below). The
Port and Great American may each be referred to as a "Party" and may be referred to
collectively as the "Parties."
WITNESSETH THAT:
WHEREAS, various Environmental Claims, as defined in Paragraph 1.E below, have been
asserted against the Port, and Environmental Claims may be asserted against the Port in
the future; and,
WHEREAS, Great American issued certain insurance policies to the Port providing general
liability coverage. The Port contends that Great American owes a duty to defend the Port
under certain primary policies. The list of the Great American Primary Policies, under
which the Port has claimed that Great American had and has a duty to defend
Environmental Claims, is included in Paragraph 1.H.; and
WHEREAS, the Port has incurred and may incur in the future certain liabilities, expenses
and losses arising out of Environmental Claims; and,
WHEREAS, the Port contends that Great American is and may be obligated to provide a
defense and/or indemnity to the Port with respect to Environmental Claims; and
WHEREAS, Great American contends that it has met any defense obligation it may have
had with respect to past and existing Environmental Claims, and contends that there is a
dispute between the Parties concerning whether certain claimed defense costs are
indemnity costs and a dispute concerning whether certain coverage defenses apply to the
Port's claims for insurance benefits arising from Environmental Claims; and
WHEREAS, the Port, Great American, and certain other parties who are not Parties to this
Agreement entered into a Settlement Agreement on or about July 22, 1986 resolving,
among other things, certain indemnity claims asserted by the Port with respect to Terminal
5 (hereafter, the "1986 Agreement"); and
WHEREAS, the Port and Great American entered into a Duty to Defend Settlement
Agreement and Partial Release on or about February 12, 1997, partially resolving claims
for alleged defense costs sought by the Port with respect to certain Environmental Claims
(hereafter, the "1997 Agreement"); and
WHEREAS, the Port and Great American entered into a Confidential Settlement, Release,
and Hold Harmless Agreement on or about February 27, 1998, resolving certain indemnity
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claims asserted by the Port with respect to the Tulalip Site and the Harbor Island Site, as
defined in that agreement (hereafter, the "1998 Agreement"); and
WHEREAS, the Port and Great American entered into letter agreements dated December
14, 2012, April 30, 2013, and October 24, 2014 relating to PRP Recovery efforts with
respect to T-91, the Lower Duwamish and the East Waterway, respectively, as set out in
those agreements (hereafter, respectively, the "December 12, 2012 Letter Agreement," the
"April 30, 2013 Letter Agreement," and the "October 24, 2014 Letter Agreement"); and
WHEREAS, the Port and Great American entered into a 2014 Duty to Defend Settlement
Agreement and Partial Release on or about August 26, 2014 (hereafter, the "2014
Agreement"), resolving certain alleged defense obligations and providing for the continued
defense of the Port with respect to certain environmental actions, as identified in that
agreement, subject to Great American's reservation of rights to dispute the reasonableness,
necessity, characterization as defense or indemnity costs, and relationship to the defense of
the environmental actions of certain costs claimed by the Port and to challenge their
ultimate obligation to indemnify the Port, and related addenda to that agreement, including
Addendum to 2014 Duty to Defend Settlement Agreement and Partial Release (for 2013-
14 costs), dated October 30, 2015, Addendum to 2014 Duty to Defend Settlement
Agreement and Partial Release (for 2015 costs), dated November 2, 2016, Addendum to
2014 Duty to Defend Settlement Agreement and Partial Release (for 2016 costs), dated
September 13, 2017, and Addendum to 2014 Duty to Defend Settlement Agreement and
Partial Release (for 2017 Costs), dated December 11, 2018; and
WHEREAS, the Port and Great American entered into a confidential 2018 Duty to Defend
Settlement Agreement and Partial Release on or about May 29, 2018 (hereafter, the "2018
Agreement"), resolving all outstanding defense issues for certain environmental actions
through the period December 31, 2014; and
WHEREAS, the Parties desire to settle any disputes in any way relating to or arising from
any Environmental Claims arising out of the East Waterway/Harbor Island Occurrence, the
Lower Duwamish Occurrence and the T-91 Occurrence, as defined in Paragraph
1. M. below, by making the settlement payments set forth in Article One below for the East
Waterway/Harbor Island Occurrence and the Lower Duwamish Occurrence, and by
entering into a coverage in place agreement for the T-91 Occurrence as set forth in Article
Two of this Agreement; and
WHEREAS, by this Agreement, the Parties intend to adopt, by way of compromise, and
without prejudice to or waiver of their respective positions in other matters, without trial
or adjudication of any issues of fact or law, and without Great American's admission of
liability or responsibility under the Policies, a full and final settlement that releases and
terminates all rights, obligations, and liabilities of the Port and Great American under the
Policies, or relating to or arising from the Policies, with respect to Environmental Claims
relating to or arising from the East Waterway/Harbor Island Occurrence, the Lower
Duwamish Occurrence and the T-91 Occurrence as provided below.
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AGREEMENTS:
NOW, THEREFORE, in full consideration of the foregoing and of the mutual agreements
herein contained and intending to be legally bound thereby, the Parties agree as follows:
ARTICLE ONE GENERAL SETTLEMENT AGREEMENT
1. Definitions
The following definitions will apply to the listed terms wherever those terms appear
throughout this Agreement, including Article One, Article Two and Article Three. Each
defined term stated in a singular form shall include the plural form, each defined term stated
in plural form shall include the singular form, and each defined term stated in the masculine
form or in the feminine form shall include the other. The words "include," "includes," and
"including" are not limiting. The words "any" and "all" mean "any and all." The terms
"include," "includes," "including," "any," and "all" are not capitalized in this agreement.
A. Affiliate
The term "Affiliate" means a Person that is controlled by, under common control with, or
controls another specified Person.
B. Alleged Policies
The term "Alleged Policies" shall mean the primary insurance policies allegedly issued by
Great American for policy periods during 1962 and 1963.
C. Claim
The term "Claim" shall mean any past, present or future claims, rights, counts, demands,
actions, causes of action, suits, debts, accounts, cross-complaints, counter-complaints,
potentially responsible party letters, notices of responsibility, requests, letters,
administrative proceedings, inquiries, orders, notices and allegations of whatsoever nature,
character or kind, whether or not presently known or suspected. For the avoidance of doubt,
Claims includes any claims for insurance benefits, any claims for defense or indemnity or
reimbursement of defense or indemnity costs, any claims for interest, any claims for
attorneys' fees, any claims for bad faith, breach of implied covenant of good faith and fair
dealing, punitive, statutory or other extra-contractual damages of any type, any claims
relating to or arising out of the Policies, and any claims relating to or arising out of the
handling or disposition of any claims for insurance benefits, whether at law or equity,
whether sounding in tort, breach of contract, breach of any duty of good faith and fair
dealing, breach of statutory duties, actual or constructive fraud, actual or constructive
breach of fiduciary duty, or any other theory.
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D. Effective Date
The term "Effective Date" shall mean the first date on which Great American has made all
of the following payments comprising the Settlement Amount as defined and described in
Paragraph 2: (1) the East Waterway/Harbor Island Payment, (2) the Lower Duwamish
Payment, (3) the Supplemental Defense Payment, and (4) the Future Defense Payment.
E. Environmental Claim
The term "Environmental Claim" shall include any past, present, or future Claims by any
Person relating to or arising out of the actual or alleged discharge, dispersal, release, escape,
presence, or ingestion of or exposure to any Pollution or Contamination. The term
"Environmental Claim" includes but is not limited to any Claims by any Person for actual
or alleged property damage, bodily injury, personal injury, investigation, studies, cleanup,
remediation, and/or Natural Resource Damages relating to or arising out of any Pollution
or Contamination.
F. Execution Date
The term "Execution Date" shall mean the first date on which this Agreement has been
signed by both Parties and the respective signatures have been delivered to each Party.
G. Great American Entities
The term "Great American Entities" shall mean:
(1) Great American Insurance Company and Great American Insurance
Company of New York, formerly known as American National Fire Insurance
Company; their predecessors; all their past and present subsidiaries and the
predecessors and successors of such subsidiaries; their past and present affiliates
and joint ventures, and their predecessors and successors; and all their past, present
and future assigns; and
(2) any other Person that was in the past or is now affiliated with, related
to or associated with Great American Insurance Company and/or Great American
Insurance Company of New York, formerly known as American National Fire
Insurance Company, including any corporations that have been acquired by,
merged into, or combined, as of the Execution Date, with Great American Insurance
Company and/or Great American Insurance Company of New York or their
predecessors, past and present subsidiaries, affiliates, successors, and assigns of
Great American Insurance Company and American National Fire Insurance
Company; and
(3) any and all past and present directors, officers, agents, servants,
employees, partners, limited partners, shareholders, members, representatives,
managers and attorneys, and their respective heirs, executors, administrators and
assigns, of Great American Insurance Company and/or Great American Insurance
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Company of New York, formerly known as American National Fire Insurance
Company, or of any other entities included in Paragraphs 1.G.(1) and (2) above.
H. Great American Primary Polices
The term "Great American Primary Polices" shall mean the following policies issued by
Great American to the Port, identified by their respective policy numbers and policy
periods:
Policy No. LX84870 1/1/64 1/1/65;
Policy No. LX89900 1/1/65 1/1/66;
Policy No. LX6267450 1/1/66 1/1/67;
Policy No. UAP 3888524 1/1/67 1/1/70;
Policy No. UAP 1153908 1/1/70 1/1/74;
Policy No. UAP 2646000 1/1/74 1/1/78;
Policy No. SLP 9456178 1/1/78 1/1/80;
Policy No. SLP 9461168 1/1/80 1/1/81;
Policy No. SLP 9465924 1/1/81 1/1/82;
Policy No. SLP 9472449 1/1/82 1/1/83;
Policy No. SLP 9438815 1/1/83 1/1/84;
Policy No. SLP 6255023 1/1/84 1/1/85; and
Policy No. SLP 6255023 1/1/85 1/1/86.
I. Person
The term "Person" shall include an individual, a corporation, a partnership, an association,
a trust, an estate, a limited liability company, any federal, state, or local government or any
governmental or quasi-governmental body or political subdivision or any agency,
department, board, or instrumentality thereof, and any other entity or organization.
J. Policies
The term "Policies" shall include the following:
(1) Policies issued or allegedly issued by Great American to the Port,
including the Great American Primary Policies and the Alleged Policies; and
(2) Any and all other known and unknown insurance policies issued by
the Great American Entities providing insurance to the Port.
K. Port Entities
The term "Port Entities" shall mean:
(1) the Port of Seattle, a municipal corporation organized under the laws
of the State of Washington, the Port of Seattle Commission; and
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(2) all past, present, and future departments, districts, divisions,
agencies, subsidiaries, commissioners, officials, officers, directors, employees,
servants, representatives, agents, attorneys, predecessors, successors, joint
ventures, and transferees and assigns of any of the entities included in the preceding
Paragraph 1.K(1), and the heirs and assigns of any Persons identified in this
Paragraph 1.K(2), but shall exclude any wholly unrelated third parties such as
tenants.
L. PRP Recoveries
The term "PRP Recoveries" shall mean the amounts actually received by thePort from
other PRPs as reimbursement for past, present and future costs or liabilities arising out of
any cost recovery efforts funded in whole or in part by Great American.
M. Occurrences
The terms "East Waterway/Harbor Island Occurrence," "Lower Duwamish
Occurrence," and "T-91 Occurrence" shall have the respective meanings set out below:
(1) The term "East Waterway/Harbor Island Occurrence" shall
mean the Pollution or Contamination at or from the Harbor Island Superfund site,
which encompasses all the operable units of that Superfund site, as described in the
Fourth Five-Year Review Report for Harbor Island Superfund Site, prepared by the
U.S. EPA, dated September 23, 2015, at page i of the Executive Summary,
including all property immediately adjacent to the operable units of the Superfund
site, and all actual or alleged sources of Contamination of the operable units of that
Superfund site;
(2) The term "Lower Duwamish Occurrence" shall mean the
Pollution or Contamination at or from the Lower Duwamish Waterway ("LDW")
Superfund Site, which encompasses "the northern 5 miles of the Duwamish River
to the southern tip of Harbor Island (Figure 1 [on page 3 of the LDW Record of
Decision ("ROD")]), and includes upland sources of contamination as well as the
waterway," as described on page 1 of the ROD, including all property immediately
adjacent to the LDW, and all actual or alleged sources of Contamination of the
LDW; and
(3) The "T-91 Occurrence" shall mean the Pollution or Contamination
at or from the Terminal 91 Facility, which encompasses the Tank Farm Affected
Area ("TFAA"), the Submerged Lands Area, and the Uplands Area described in
the June 2010 Agreed Order DE 7321 entered into between the Port and the
Department of Ecology and shown in Exhibit A of that Agreed Order, including all
property immediately adjacent to the T-91 Facility, and all actual or alleged sources
of Contamination of the T-91 Facility.
The East Waterway/Harbor Island Occurrence, the Lower Duwamish Occurrence and the
T-91 Occurrence are collectively referred to as the "Three Occurrences."
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N. Pollution/Contamination
The term "Pollution," as well as the term "Contamination," shall each include any toxic or
non-toxic contaminants, pollutants, chemicals, smoke, vapors, soot, fumes, acids, alkalis,
liquids, gases, sludges, tailings, waste material, irritants, nuclear material, radioactive
material, radiological material, and any other physical matter of any nature that actually or
allegedly resulted or results in property damage, personal injury or bodily injury.
2. Settlement Amount, Payment Provisions and T-91 Coverage in Place
Agreement
A. Settlement Amount
Within thirty (30) days of the Execution Date, Great American shall pay to the Port the
total amount of Twenty Four Million Nine Hundred Thirty Nine Thousand Four Hundred
and Ninety-Five United States Dollars ($24,939,495) (hereinafter, the "Settlement
Amount"). The Settlement Amount consists of the total of the following four amounts: (1)
$10,127,995 to resolve indemnity Claims for the East Waterway/Harbor Island Occurrence
("East Waterway/Harbor Island Payment"), (2) $12,086,784 to resolve indemnity Claims
for the Lower Duwamish Occurrence ("Lower Duwamish Payment"), (3) $604,560 to
resolve any remaining defense issues for the submitted Environmental Claims relating to
the East Waterway/Harbor Island Occurrence, the Lower Duwamish Occurrence and the
T-91 Occurrence for costs incurred through December 31, 2019 ("Supplemental Defense
Payment"), and (4) $2,120,156 to resolve claimed,alleged, or potential defense costs
incurred or to be incurred after December 31, 2019 relating to the East Waterway/Harbor
Island Occurrence and Lower Duwamish Occurrence ("Future Defense Payment").
B. Settlement Payment
The Settlement Amount shall be paid by means of a wire or ACH transfer to the Port;
specific banking instructions have been provided separately and securely between the Port
and Great American.
C. T-91 Coverage in Place Agreement
In addition to the Settlement Amount and Settlement Payment, the Port and Great
American also agree to enter into a T-91 coverage in place agreement, as set forth in Article
Two of this Agreement.
D. Settlement Payment under Certain Conditions
If, before the total Settlement Amount has been paid, the Port becomes a debtor in a
bankruptcy case or insolvency proceeding, under Title 11 of the United States Code or
otherwise, then, as a condition precedent to Great American's obligations to pay any
settlement money, the Port shall obtain an order from the Bankruptcy Court approving this
Agreement under Bankruptcy Rule 9019 and authorizing the assumption by the debtor(s)
of this Agreement under Bankruptcy Code Section 365, or in the event the insolvency case
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is proceeding under other law, shall obtain a similar order from the court overseeing the
insolvency case approving this Agreement and confirming the binding effect thereof. If
the Port becomes a debtor in a bankruptcy case or insolvency proceeding before the total
Settlement Amount has been paid, absent a waiver by Great American of this Paragraph 2.
D. of this Agreement, Great American is relieved of any obligation to pay any unpaid part
of the Settlement Amount until such an order is obtained.
3. Releases
A. Releases by the Port
(1) Upon the Effective Date, the Port Entities, and any subsequently
appointed trustee or representative acting for the Port Entities shall be deemed to
and do hereby release, remise, covenant not to sue, and forever discharge the Great
American Entities and their reinsurers (as such) from and against:
(a) any Claims for insurance benefits under the Policies,
including both Claims for defense costs and indemnification costs, relating
to or arising from past, present, and future Environmental Claims involving
the East Waterway/Harbor Island Occurrence, including Claims relating to
or arising from the East Waterway/ Harbor Island, the West Waterway,
NRD Claims, or Terminal 5;
(b) any Claims for insurance benefits under the Policies,
including both Claims for defense costs and indemnification costs, relating
to or arising from past, present, and future Environmental Claims involving
the Lower Duwamish Occurrence, including the LDW, NRD Claims,
Terminal 108, Terminal 115 North, Terminal 115 South, Terminal 117, the
South Park Marina, or the Thompson/Isaacson Property; and
(c) any Claims for insurance benefits under the Policies,
including both Claims for defense costs and indemnification costs, relating
to or arising from past, present, and future Environmental Claims involving
the T-91 Occurrence, including the T-91 uplands and submerged lands and
sediment claims, which are subject to the T-91 coverage in place agreement
set out in Article Two of this Agreement;
(2) Upon the Effective Date, the Port Entities, and any subsequently
appointed trustee or representative acting for the Port Entities shall be also
deemed to and do hereby release, remise, covenant not to sue, and forever
discharge the Great American Entities and their reinsurers (as such) from
and against:
(a) any Claims arising out of or relating to any past, present, or
future act, omission, representation, or conduct of any sort in connection
with the Policies or the response to Claims under the Policies relating to the
Three Occurrences, including any violations of the Consumer Protection
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Act, the Insurance Fair Conduct Act, or any regulation of statute pertaining
to insurance and the handling of Claims released under Paragraph 3.A.(1)
of this Agreement, including all such Claims for:
(i) breach of contract;
(ii) declaratory relief pursuant to the Declaratory Judgment
Act;
(iii) breach of fiduciary duty;
(iv) bad faith;
(v) violations of the Consumer Protection Act, Insurance Fair
Conduct Act, or of any regulations or statutes pertaining
to insurance and handling of claims under insurance
contracts;
(vi) negligence, compensatory, punitive, or statutory damages
and claims for attorney fees pursuant to Olympic
Steamship Co. v. Centennial Ins. Co., under policy
provisions or otherwise, which concern exclusively Great
American Entities' previous refusal to accept and to pay
for amounts the Port claimed with respect to the Claims
released under Paragraph 3.A.(1); and
(vii) prejudgment interest on any amounts the Port claimed
with respect to the Claims released under Paragraph
3.A.(1).
(3) Subject to Paragraph 4.B, the Port acknowledges and agrees that
Great American's payment of the East Waterway/Harbor Island Payment and the
Lower Duwamish Payment exhausts all of the Great American Primary Policies'
per occurrence limits applicable to the Environmental Claims relating to or arising
out of the East Waterway/Harbor Island Occurrence and the Lower Duwamish
Occurrence. Upon the Effective Date, the Port agrees not to tender to Great
American any Environmental Claims arising from either the East Waterway/Harbor
Island Occurrence or the Lower Duwamish Occurrence, and the Port further agrees
upon payment of the Settlement Amount that it will expressly withdraw any
Environmental Claims previously tendered to Great American pertaining to either
the East Waterway/Harbor Island Occurrence or Lower Duwamish Occurrence, or
both. Once the Great American Primary Policies' per occurrence limits are
exhausted for the East Waterway/Harbor Island Occurrence and the Lower
Duwamish Occurrence, Great American shall have no further liability or any
obligation to pay any defense, indemnity, or other costs relating to or arising from
any portion of any Environmental Claim for any damages, costs or expenses arising
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out of the East Waterway/Harbor Island Occurrence or Lower Duwamish
Occurrence.
(4) Except as addressed in the T-91 coverage in place agreement set out
in Article Two, the Parties reserve their rights with respect to exhaustion of the
Great American Primary Policies for occurrences other than the East
Waterway/Harbor Island Occurrence and the Lower Duwamish Occurrence. The
Parties also reserve their rights with respect to whether any aggregate limits stated
in the Great American Primary Policies are exhausted, except that the Parties agree
that the Great American Primary Policies' aggregate limits for property damage
arising out of the Port's premises or operations are exhausted under the following
two Great American Primary Policies: Policy No. SLP 9456178, issued for the
policy period from January 1, 1978 through January 1, 1980, and Policy No. SLP
9438815, issued for the policy period from January 1, 1983 through January 1,
1984.
(5) It is the intention of the Port Entities to reserve no rights or benefits
whatsoever under or in connection with the Policies with respect to any past,
present, or future Environmental Claims relating to or arising from the Three
Occurrences (except as set out in the T-91 coverage in place agreement in Article
Two below), and to assure the Great American Entities their peace and freedom
from any Claims relating to or arising from such Environmental Claims and from
all assertions of rights in connection with any such Environmental Claims.
(6) The Port Entities acknowledge that they have been advised by their
attorneys with respect to the possibility of unknown Claims and future Claims they
might have against the Great American Entities relating to or arising from the Three
Occurrences. Subject to the coverage in place agreement set out in Article Two,
the Port Entities expressly release and waive any and all rights with respect to
Claims relating to or arising from the Three Occurrences, which the Port Entities
do not know or suspect to exist at the time of executing this release, even as to
Claims which, if known by the Port Entities, might have materially affected their
settlement with the Great American Entities.
(7) The Port Entities expressly assume the risk that acts, omissions,
matters, causes, or things may have occurred which the Port Entities do not know
or do not suspect to exist with respect to the Three Occurrences. The Port Entities
hereby waive the terms and provisions of any statute, rule or doctrine of common
law which either: (a) narrowly construes releases purporting by their terms to
release Claims in whole or in part based upon, arising from, or related to such acts,
omissions, matters, causes, or things; or, (b) which restricts or prohibits the
releasing of such Claims.
B. Releases by Great American
Upon the Effective Date, the Great American Entities, and any subsequently appointed
trustee or representative acting for the Great American Entities, shall be deemed to release,
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remise, covenant not to sue, and forever discharge the Port Entities from and against any
Claims that the Great American Entities have ever had, now have or hereinafter may have
relating to the Claims released by the Port Entities in Paragraph 3.A. of this Agreement,
including any Claims that the Port is required to pay any deductibles or retrospective
premium with respect to any Environmental Claims arising out of the Three Occurrences.
C. Full and Complete Releases
It is the Parties' intention that the releases provided in this Agreement shall be effective as
a bar to all Claims released herein. The Parties acknowledge that they may hereafter
discover facts in addition to or different from the fact that they now believe to be true with
respect to the Claims released in this Agreement, but the Parties acknowledge and agree
that they have taken that possibility into account in reaching this Agreement and agree that
the releases given in this Agreement shall remain in effect as full and complete releases
notwithstanding the existence or discovery of such additional or different facts, as to which
the Parties expressly assume the risk.
D. Parties' Right to Enforce Settlement Despite Releases
Nothing in the release shall limit the right of the Parties to enforce any obligation under
this Agreement through the Disputes provision set out in Paragraph 27, including, but not
limited to, the provisions of the T-91 coverage in place agreement set forth in Article Two.
E. Insurer Protection Provisions
(1) Good Faith Settlement
The releases by the Port in this Agreement shall bar the contribution, indemnity or
subrogation rights that any other insurers of the Port may have against Great American as
of the Effective Date with respect to any Environmental Claim relating to or arising out of
any of the Three Occurrences, provided that a court of competent jurisdiction subsequently
determines that this settlement bars such claims. Unless otherwise agreed by the Parties,
the Port and/or Great American shall seek such a claims bar order in the event: (1) coverage
litigation is initiated between the Port and other insurers involving any Environmental
Claims relating to or arising out of the Three Occurrences and the other insurers contend
that the Great American Entities have unfulfilled obligations with respect to the Three
Occurrences; (2) coverage litigation or contribution claims are brought against Great
American by another insurer involving such Environmental Claims; or (3) one of the
Parties elects to seek a claims bar order after twenty four months has passed since the
Effective Date of the Agreement. When any of the preceding events occur, either the Port
or Great American may pursue a good faith settlement and claims bar order involving such
Environmental Claims. The Parties agree to cooperate with each other to obtain such a
claims bar.
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(2) Port to use Reasonably Diligent Efforts to obtain Release from
Other Insurers
In any future settlement agreement between the Port and one or more of the Port's insurers
that are not Parties to this Agreement, where such insurer(s) assert(s), or could assert any
Claim against the Great American Entities relating to the matters released herein, the Port
shall use reasonably diligent efforts to obtain a release of any claim against the Great
American Entities from such settling insurer with respect to any Environmental Claim
arising out of the East Waterway/Harbor Island Occurrence, the Lower Duwamish
Occurrence, or the T-91 Occurrence, so that the Claim by such other insurer against the
Great American Entities for the claims released herein is thereby satisfied and extinguished
entirely. The Port agrees not to seek any further payments from any other insurer for
defense costs or indemnity costs actually paid by Great American for any Environmental
Claim arising out of the East Waterway/Harbor Island Occurrence, the Lower Duwamish
Occurrence, or the T-91 Occurrence.
(3) Great American's Agreement not to Pursue Other Insurers
(a) In consideration of the promises in this Agreement, Great American
agrees not to pursue any other insurer for contribution, indemnity, subrogation or
any other type of recovery for any amounts Great American paid for the East
Waterway/Harbor Island Occurrence or the Lower Duwamish Occurrence, unless
another insurer pursues contribution, indemnity, subrogation or any other type of
recovery from Great American for any monies that other insurer pays for the East
Waterway/Harbor Island Occurrence or Lower Duwamish Occurrence, in which
case Great American reserves all rights to assert Claims against such other insurer
for amounts Great American pays under this Agreement and any other amounts
Great American paid to or on behalf of the Port.
(b) Notwithstanding the foregoing Paragraph 3.E.(3)(a), Great
American retains its rights, if any, to pursue any claim for contribution, indemnity,
subrogation or any other type of recovery against any other insurer of the Port,
including U.S. Fire Insurance Company, for any sums Great American has paid or
will pay for the T-91 Occurrence, until the time that Great American has paid the
Remaining T-91 Occurrence Limit, as defined in Article Two below. Great
American agrees that, upon paying the Remaining T-91 Occurrence Limit, Great
American shall not pursue any other insurer for contribution, indemnity,
subrogation or any other type of recovery for any amounts Great American paid for
the T-91 Occurrence, unless another insurer pursues contribution, indemnity,
subrogation or any other type of recovery from Great American for any monies that
insurer pays for the T-91 Occurrence, in which case Great American reserves all
rights to assert Claims against such other insurer for amounts Great American pays
under this Agreement and any other amounts Great American paid to or on behalf
of the Port.
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(c) Notwithstanding the foregoing. Great American retains its rights to
pursue claims against its reinsurers for any payment made or obligation undertaken
in connection with this Agreement.
(4) Judgment Reduction
Unless and until the Port or Great American, or both, have obtained a bar order as provided
in Paragraph 3. E. (1) above, the following provisions shall apply:
(a) In any Environmental Claim arising out of the Three Occurrences
involving the Port and one or more of the Port's insurers, where the Port has brought
or brings Claims against any other insurer(s), and any such insurer(s) assert(s) any
Claim against Great American for recovery of amounts that comprise defense costs
or indemnity costs for the aforesaid occurrences, which the Port has sought or seeks
from such insurer(s), any Claim made by, or judgment or other award obtained by,
the Port against such other insurer(s) shall be automatically reduced by the amount,
if any, that Great American would have been liable to pay to other insurer(s) as a
result of such insurer(s)'s Claim against Great American, so that the Claim by such
other insurer(s) against Great American is thereby satisfied and extinguished. Such
a reduction in the Port's Claim, judgment or other award against such insurers(s)
will be accomplished by subtracting from the Claim, judgment, or other award
against such other insurer(s) the share of the Claim, judgment or other award, if
any, that is allocable to Great American.
(b) The Port further agrees that, in order to effectuate the terms of this
Paragraph 3.E.(4), in any action referred to in this subparagraph where Great
American is not a party, the Port shall use reasonably diligent efforts to obtain a
finding from that court of what amount of defense costs and indemnity costs for the
Three Occurrences Great American would have been required to pay such other
insurer(s) under its Claim against Great American, before entry of judgment or
other award as to such other insurer(s).
(c) To ensure that such a reduction under this Paragraph 3.E.(4) is
accomplished, Great American shall be entitled to assert this Paragraph 3.E.(4). as
a defense in any Claim against it for recovery of defense costs and indemnity costs
for the Three Occurrences by one or more of the Port's other insurers, or any other
insurer(s) relating to Claims by the Port against such insurer(s), and Great American
shall be entitled to have the court or other appropriate tribunal issue such orders as
are necessary to effectuate the reduction to protect Great American from any
liability for such recovery sought by such other insurer(s).
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4. Great American's Defense of the Port, Payment of PRP Recovery Costs, and
Allocation of PRP Recoveries
A. Status of Defense
The Port and Great American agree that Great American's duty to defend with respect to
Claims relating to or arising out of the East Waterway/Harbor Island Occurrence or the
Lower Duwamish Occurrence under the Policies and under any prior agreement, including
the 1997 Duty to Defend Settlement Agreement and Partial Release, shall terminate upon
the Effective Date. Upon the Effective Date, Great American shall have no further duty to
defend the Port or to pay defense costs to the Port with respect to Environmental Claims
relating to or arising out of the East Waterway/Harbor Island Occurrence and the Lower
Duwamish Occurrence. Notwithstanding anything else contained in this Agreement, the
Port's and Great American's rights and obligations with respect to defense of any
Environmental Claims arising out of the T-91 Occurrence shall be governed by Article
Two below. For the avoidance of doubt, Great American will have no further obligation
to do any further review of or reimbursement of costs for the East Waterway/Harbor Island
Occurrence and the Lower Duwamish Occurrence once the Effective Date occurs.
B. PRP Recovery Efforts
Subject to the terms set forth in this subparagraph 4.B., and notwithstanding anything set
forth in any other section of this Agreement, the Port and Great American will continue to
pursue PRP Recoveries from other potentially responsible parties ("PRP's") relating to the
East Waterway Superfund claim and the Lower Duwamish Superfund claim.
Notwithstanding anything else contained in this Agreement, the Port's and Great
American's rights and obligations with respect to PRP recoveries concerning T-91 shall be
governed by Article Two below.
(1) General Provisions relating to PRP Recovery Efforts
(a) Great American agrees to the Port's retention of the Stoel
Rives firm as counsel for PRP cost recovery efforts relating to the East
Waterway Superfund claim and the Lower Duwamish Superfund claim.
Fees and costs incurred by Stoel Rives for activities approved by the Port in
connection with PRP cost recovery efforts at billing rates approved by Great
American will be presumed reasonable and necessary, although the
presumption is rebuttable. The Port and Great American reserve their rights
in connection with the rates counsel charge for PRP recovery efforts after
December 31, 2019. The Port and Great American agree to cooperate with
one another in the pursuit of recoveries from other PRPs and the conduct of
litigation with PRPs, recognizing that the Port ultimately will make final
decisions relating to the PRP recovery efforts.
(b) If Great American exercises its option to stop funding PRP
recoveries with respect to either the East Waterway Superfund claim or the
Lower Duwamish Superfund claim as provided in this Paragraph 4,
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subsequent PRP Recoveries with respect to each PRP recovery effort will
be allocated to Great American and the Port in proportion to the
unreimbursed PRP recovery costs paid by Great American and the Port until
those costs have been fully reimbursed.
(c) Within 6 months after the Effective Date, the Port agrees to
provide an accounting of the PRP Recoveries for the East Waterway and
Lower Duwamish as of December 31, 2019. Within 6 months after the
Effective Date, Great American agrees to provide an accounting of the PRP
recovery costs for the East Waterway and the Lower Duwamish as of
December 31, 2019. Unless otherwise agreed in writing, the Port and Great
American agree to update those accountings for each subsequent calendar
year by March 31 of the following year, until Great American has been
reimbursed for its PRP recovery costs for the East Waterway and the Lower
Duwamish claims. Should the Port start paying any PRP recovery costs for
the East Waterway or Lower Duwamish, the Port will provide an accounting
of such costs each calendar year by March 31 of the following year it pays
such costs, until it has been reimbursed for such PRP recovery costs.
(2) East Waterway PRP Recovery Efforts
(a) Great American agrees to continue to fund (a) reasonable
and necessary PRP recovery costs incurred solely on the Port's behalf with
respect to the East Waterway Superfund claim, and (b) the Port's share of
any reasonable and necessary PRP recovery costs incurred under
agreements as of the Execution Date between the Port and King County, the
City of Seattle, and/or Seattle Iron & Metals Corp. Great American shall
have no obligation to fund any shares of the PRP recovery costs incurred or
paid by King County, the City of Seattle, Seattle Iron & Metals Corp. and/or
any other Person other than the Port with respect to the East Waterway
Claim.
(b) Beginning on the date that is the third anniversary after the
Execution Date, Great American may elect in its sole discretion whether to
continue or stop funding PRP recovery efforts on behalf of the Port with
respect to the East Waterway. If Great American elects to discontinue
funding the recovery efforts, and the Port proceeds with recovery efforts at
its own cost, the Port shall be entitled to repayment of its costs from any
PRP Recoveries in accordance with subparagraph 4.B(1) (b) above. Great
American shall retain whatever sums it has been reimbursed for PRP
recovery costs at the time it elects to discontinue funding PRP recovery
costs for the East Waterway.
(c) Subject to the other provisions of this Paragraph 4, the Port
agrees that any PRP Recoveries at the East Waterway will first be applied
to reimburse PRP recovery costs Great American and/or the Port have paid
or will pay for PRP Recoveries with respect to the East Waterway claim.
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(d) With respect to PRP Recoveries relating to the East
Waterway, the full amount of PRP recovery costs relating to the East
Waterway claim have been repaid, all amounts recovered subsequently shall
be retained by the Port.
(3) Lower Duwamish PRP Recovery Efforts
(a) Great American agrees to continue to fund (a) reasonable
and necessary PRP recovery costs incurred solely on the Port's behalf with
respect to the Lower Duwamish Superfund claim, and (b) the Port's share
of any reasonable and necessary PRP recovery costs incurred under
agreements as of the Execution Date between the Port and King County, the
City of Seattle, and/or Boeing. Great American shall have no obligation to
fund any shares of the PRP recovery costs incurred or paid by King County,
the City of Seattle, Boeing and/or any other Person other than the Port with
respect to the Lower Duwamish Claim.
(b) Beginning on the date that is the second anniversary after the
Execution Date, Great American may elect in its sole discretion whether to
continue or stop funding PRP Recovery efforts on behalf of the Port with
respect to the Lower Duwamish. If Great American elects to discontinue
funding the recovery efforts and the Port proceeds with recovery efforts at
its own cost, the Port shall be entitled to repayment of its costs from any
PRP Recoveries in accordance with subparagraph 4.B.(1)(b) above. Great
American shall retain whatever sums it has been reimbursed for PRP
recovery costs at the time it elects to discontinue funding PRP recovery
costs for the Lower Duwamish.
(c) Subject to the other provisions of this Paragraph 4, the Port
agrees that any PRP Recoveries at the Lower Duwamish will first be applied
to reimburse PRP recovery costs Great American or the Port have paid or
will pay for PRP Recoveries with respect to the Lower Duwamish claim.
(d) With respect to PRP Recoveries relating to the Lower
Duwamish, after the full amount of PRP recovery expenses relating to the
Lower Duwamish have been repaid, all amounts recovered subsequently
shall be retained by the Port.
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ARTICLE TWO T-91 COVERAGE IN PLACE AGREEMENT
(Please note that the Paragraphs in this Agreement are numbered consecutively.)
5. General Statement of Purpose
In summary, the Port and Great American hereby agree to resolve the Port's insurance
Claims against Great American for the Environmental Claims against the Port arising out
of the T-91 Occurrence by way of a coverage in place agreement. Great American is
agreeing, among other things, to pay indemnity costs after taking into consideration certain
deductions from the indemnity costs claimed by the Port, including sums recovered in T-
91 PRP Recoveries. The amount of indemnity to be paid by Great American with respect
to Environmental Claims arising out of the T-91 Occurrence is referred to in this
Agreement as the Net Port T-91 Indemnity Claim, which is defined in Paragraph 6.B. The
Port and Great American agree to continue the pursuit of T-91 PRP Recoveries, and agree
that money recovered from PRPs is to be allocated between the Port Entities and Great
American as provided in Paragraph 11. In addition, Great American agrees to continue
funding the defense of Environmental Claims arising out of the T-91 Occurrence until
Great American's indemnity payments exhaust the Policies' limits, as set forth in this
Agreement. Great American agrees to continue funding T-91 PRP recovery efforts until
at least two years after the Effective Date of this Agreement. The details of the coverage
in place agreement are set out in this Article Two.
6. Definitions
In addition to the definitions set out in Article One, the following definitions will also apply
to the listed terms wherever those terms appear in Article Two of this Agreement.
A. Net Port T-91 Indemnity Claim
The term "Net Port T-91 Indemnity Claim" shall mean the sum of the Port T-91
Indemnity Claim less the T-91 Deductions.
B. Port T-91 Indemnity Claim
The term "Port T-91 Indemnity Claim" shall mean the amounts identified by the Port in
accordance with the historic practice between the Parties and agreed to by the Parties as T-
91 Indemnity Costs.
C. T-91 Indemnity Costs
The term "T-91 IndemnityCosts" shall mean all monies spent related to cleanup or
remediation due to Pollution or Contamination, including 50% of Feasibility Study ("FS")
Costs, and shall exclude defense costs, including T-91 Great American Defense Payments,
as well as T-91 Non-Tendered and Non-Covered Costs.
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D. Port T-91 Grant Reimbursements
The term "Port T-91 Grant Reimbursements" shall mean the amounts, if any, that the
Port is required to pay any governmental entity out of T-91 PRP Recoveries to reimburse
T-91 grant monies received, as provided for and described in Paragraph 6.B.
E. Remaining T-91 Occurrence Limit
The term "Remaining T-91 Occurrence Limit" shall mean the sum of $10,188,969 less
any sums paid by Great American for indemnity for the T-91 Occurrence after the
Execution Date.
F. T-91 Deductions
The term "T-91 Deductions" shall mean the following four deductions from the Port T-91
Indemnity Claim:
(1) Deductions for T-91 Unreimbursed Grant Recoveries: Monies the Port
receives in grants from the Department of Ecology or other governmental
agencies to pay costs included in the Port's T-91 Indemnity Claim less Port
T-91 Grant Reimbursements for T-91 Indemnity Costs (hereafter, "T-91
Unreimbursed Grant Recoveries");
(2) Deduction for T-91 Insurance Indemnity Recoveries: Monies paid to
the Port by Great American, Bedivere, or any other insurer for T-91
Indemnity Costs for the T-91 Occurrence (collectively "T-91 Insurance
Indemnity Recoveries");
(3) Deductions for T-91 Cost Sharing Recoveries: Any cost sharing
recoveries applicable to T-91 Indemnity Costs for the T-91 Occurrence
(hereafter, "T-91 Cost Sharing Recoveries"); and
(4) Deductions for T-91 Port PRP Recoveries for Port Indemnity Claim:
The sums reimbursed to the Port from the PRP recoveries for the Port
Indemnity Claim, defined as "T-91 Port Recoveries for the Port
Indemnity Claim" in Paragraph 11.C(1) below.
G. T-91 Great American Defense Payments
The term "T-91 Great American Defense Payments" shall mean the monies paid by
Great American in defending Environmental Claims relating to the T-91 Occurrence, and
which include attorney's fees and non-attorney's fees and costs (which shall include 50%
of FS costs).
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H. T-91 Non-Tendered and Non-Covered Costs
The term "T-91 Non-Tendered and Non-Covered Costs" shall mean any sums for costs
that the Port did not tender to Great American (e.g., certain costs related to Cruise
Terminal) or for claimed costs the Port has agreed are outside coverage under the Policies,
(e.g., certain costs relating to employees and overhead, which the Port is seeking to recover
in its T-91 PRP recovery efforts.)
I. T-91 PRP Recoveries
The term "T-91 PRP Recoveries" shall mean the sum of the monies collected in PRP
recovery efforts for defense or indemnity costs relating to an Environmental Claims arising
out of the T-91 Occurrence, and shall include recoveries for T-91 Indemnity Costs, Great
American Defense Payments, T-91 Non-Tendered and Non-Covered Costs, T-91 PRP
Recovery Costs, and any other costs agreed by the Parties pursuant to a written amendment
to Article Two of this Agreement.
J. T-91 PRP Recovery Costs
The term "T-91 PRP Recovery Costs" shall mean the monies spent to seek recovery of
the Port T-91 Indemnity Claim, the T-91 Great American Defense Payments, PRP
Recovery Costs, T-91 Non-Tendered and Non-Covered Costs, or any other costs the Parties
have agreed to recover from other PRP's relating to the T-91 Occurrence.
7. Great American Agreement to Pay Certain T-91 Indemnity Costs
A. Payment of Net Port T-91 Indemnity Claim after Completion of PRP
Recovery Efforts
Subject to paragraph 7.B. below, after PRP recovery efforts for T-91 as set out in this
Agreement have been completed and any T-91 PRP Recoveries have been distributed
pursuant to Paragraph 6, Great American will pay the Net Port T-91 Indemnity Claim to
the Port for the T-91 Occurrence, up to the Remaining T-91 Occurrence Limit. Great
American shall not be required to pay more than the Remaining T-91 Occurrence Limit as
indemnity for the T-91 Occurrence.
B. Potential Earlier Payment of Port Net Indemnity Claim by Great
American
By mutual agreement, the Parties can agree to accelerate the determination of the Net Port
T-91 Indemnity Claim for the T-91 Occurrence if the Parties agree to terminate PRP
recovery efforts. Further, notwithstanding anything set forth herein, and provided that all
T-91 Deductions have been appropriately calculated in the then-current T-91 accounting
described in paragraph 14.A. below, Great American has the right after January 1, 2022 to
pay to the Port the Net Port T-91 Indemnity Claim as calculated at that time. If Great
American's payment of the T-91 Indemnity Claim equals the amount of the then-current
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Remaining T-91 Occurrence Limit, then the Great American Primary Policies shall be
exhausted for the T-91 Occurrence.
8. Port's Agreement to Tender T-91Indemnity Costs and any Claimed T-91
Defense Costs
The Port agrees to identify to Great American all claimed T-91 Indemnity Costs, as well
as any claimed T-91 defense costs, in accordance with the historic practice between the
Parties for any tendered claim arising out of the T-91 Occurrence.
9. Defense and Claims Processing
A. Great American's Continued Acceptance of the Duty to Defend for
Environmental Claims arising out of the T-91 Occurrence
With respect to work performed after December 31, 2019, and subject to Paragraph 12.A
below, Great American shall continue to provide a defense to the Port with respect to
Environmental Claims arising out of the T-91 Occurrence under the Great American
Primary Polices, except for Policy No, SLP 9456178 for the policy period January 1, 1978
through January 1, 1980, and Policy No. SLP 9438815 for the policy period January 1,
1983 through January 1, 1984. Great American shall have no duty to defend under Policy
Nos. SLP 9456178 and SLP 9438815 because the aggregate limits of those Policies are or
will be exhausted. The defense provided for Environmental Claims arising out of the T-
91 Occurrence shall be subject to Great American's reservation of rights as set out in prior
correspondence and shall be subject to the following agreements:
(1) The 1997 Agreement, except as modified by Section III, IV, V and
VI of the 2018 Agreement, and the 1998 Agreement;
(2) The Port's right to claim any costs for work performed after
December 31, 2019 for the defense of the Environmental Claims, subject to the
provision of Paragraph 9.A.(3) below;
(3) That with respect to the T-91 claims, costs incurred by the Port, its
vendors and government agencies relating to work performed after the December
15, 2010 (the date that the Washington Department of Ecology formally accepted
the cleanup Action Plan relating to T-91 TFAA) are presumptively not defense
costs. The Port reserves the right to identify specific costs for work performed after
December 15, 2010 that the Port considers to be non-attorneys' fees defense costs
for areas outside of the TFAA. If the Port exercises this right, the Port shall
specifically request that Great American review such costs under Paragraph 9.D
below;
(4) Section IV of the 2018 Agreement; and
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(5) Great American's reservation of rights with respect to the Port's
claims for costs incurred for work performed after December 31, 2019 for defense
of Environmental Claims.
The defense provided in Article Two of this Agreement is without reservation of any right
of Great American to recoup such defense costs from the Port, except to the extent PRP
Recovery Costs may be considered defense costs, Great American is entitled to
reimbursement of PRP Recovery Costs as provided in this Agreement.
B. Defense Counsel
Great American agrees to the Port's retention of the K&L Gates firm as defense counsel
who shall continue to defend the Port for the current Environmental Claims arising out of
the T-91 Occurrence. Fees and costs incurred by K&L Gates for defense related activities
at billing rates approved by Great American will be presumed reasonable and necessary,
although the presumption is rebuttable. The Port and Great American reserve their rights
with respect to the billing rates charged by defense counsel.
C. Reservation of Rights
Great American reserves the right to challenge the reasonableness and necessity of the
costs claimed by the Port for defense of the Environmental Claims arising out of the T-91
Occurrence. Great American also reserves the right to characterize such costs as defense
costs, T-91 Indemnity Costs or neither. Great American shall also be provided with
reasonable documentation of future claimed defense costs, including a list of future defense
costs, proof of payment, unredacted legal fee invoices, invoices from consultants and other
reasonable documentation requested by Great American. Great American and the Port
shall continue to recognize such documentation as protected by the attorney-client, work
product, and joint defense privileges, and shall not disclose such documentation to third
parties where such privileges are applicable.
D. Review of Claimed Defense Costs
(1) As long as Great American has not paid the full amount of the
Remaining T-91 Occurrence Limit, and subject to Paragraph 9.A.(3) above, Great
American agrees to continue to review the alleged non-attorneys' fees defense costs
incurred by the Port and identified by the Port after January 1, 2020 in accordance
with the historic practice between the Parties to make a determination as to what
costs, if any, are defense related. This review will continue to be done in biannual
installments consisting of: (1) the costs identified from January through June of
each year; and (2) the costs identified from July through December of each year,
pursuant the Parties' prior agreements and practices. Great American also will
continue to remit payments to the Port for those costs that it determines to be
remedial investigation defense costs within 90 days after the Port has notified Great
American that it has completed identifying costs in accordance with the historic
practice between the Parties for the pertinent 6 month period. The Port reserves its
right to dispute Great American's determination. For each calendar year, Great
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American agrees to categorize the unpaid costs identified in accordance with the
historic practice between the Parties (generally referred to as Part A and Part B
costs). The Parties will then use their best efforts to resolve any differences
concerning such future Part A and Part B costs, including whether any of such costs
constitute T-91 Indemnity Costs or are defense related.
(2) Notwithstanding that the Port has reserved its right to make certain
indemnity claims to Great American in the future relating to or arising from
Environmental Claims arising out of the T-91 Occurrence, the Port agrees not to
submit any indemnity claim to Great American for amounts that the Port previously
claimed as defense costs and for which the Port provided Great American with a
release as to such Claims either in this Agreement or in any prior agreement
between the Port and Great American.
(3) If, at any time subsequent to notifying Great American that is has
completed the identification of costs, including claimed defense costs, for each six
month calendar period in accordance with the historic practice between the Parties,
the Port modifies, adds, or subtracts information or sums relative to such costs, it
must promptly notify Great American it has made a change and provide the details
regarding each such change.
10. T-91 PRP Recovery Agreement
Subject to the terms set forth in Article Two of this Agreement, including paragraphs 11,
12, 13, and 14, the Port and Great American will continue to pursue T-91 PRP Recoveries
from other PRPs relating to the T-91 claims. Great American agrees to continue to fund
reasonable and necessary T-91 PRP Recovery Costs incurred solely on the Port's behalf
with respect to the T-91 claims.
Great American agrees to the Port's retention of the Foster Garvey PC firm as counsel for
PRP cost recovery efforts. Fees and costs incurred by Foster Garvey PC for activities
approved by the Port in connection with PRP cost recovery efforts at billing rates approved
by Great American will be presumed reasonable and necessary, although the presumption
is rebuttable. The Port and Great American reserve their rights in connection with the rates
counsel charge in connection with PRP recovery efforts. The Port and Great American
agree to cooperate with one another in the pursuit of recoveries from other PRPs and the
conduct of litigation with PRPs, recognizing that the Port ultimately will make final
decisions relating to the PRP recovery efforts.
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11. Allocation of PRP Recoveries
T-91 PRP Recoveries shall be allocated as provided for and in the order set forth below:
A. Reimbursement of T-91 PRP Recoveries to Great American for T-91
PRP Recovery Costs
Subject to Paragraph 13 below, Great American shall be entitled to receive from T-91 PRP
Recoveries, before any of the reimbursements set forth in Paragraph 11.B, C, D, and E
below are made, a reimbursement of the sum of the T-91 PRP Recovery Costs paid by
Great American to obtain the T-91 PRP Recoveries. The monies paid to Great American
to reimburse the T-91 PRP Recovery Costs shall be referred to as "Great American T-91
PRP Recovery Reimbursement." Subject to paragraph 13 below, to the extent there are T-
91 PRP Recoveries, and to the extent Great American has outstanding T-91 PRP Recovery
Costs that it has paid but not been reimbursed for, the Port shall pay out of T-91 PRP
Recoveries any sums due to Great American on an annual basis, commencing on March
31 of each year after the Effective Date.
B. Reimbursement of Port T-91 Grant Reimbursements
If, as a result of successful T-91 PRP Recoveries, the Port is required by law to reimburse
any governmental entity for any T-91 Unreimbursed Grant Recoveries, then, after all T-91
PRP Recovery Costs have been paid as provided for herein, the Port shall make such
reimbursements to such governmental entity for the proportional share of those recoveries
as required under law before making any reimbursement in Paragraph 10.C, D, and E
C. Reimbursement of Port for T-91 Indemnity Claims and T-91 Non-
Tendered and Non-Covered Costs
After payment of the sums set out in Paragraphs 11.A and B above, the remaining sum of
T-91 PRP Recoveries shall be allocated and paid to the Port as follows:
(1) 65% of T-91 PRP Recoveries, shall be paid to the Port as
reimbursement of the Port T-91 Indemnity Claim ("T-91 Port Recoveries for the
Port Indemnity Claim") untilrecovered in full (net of the deductions for T-91
Unreimbursed Grant Recoveries, T-91 Insurance Indemnity Recoveries, and T-91
Cost Sharing Recoveries) after which 100% of the such recoveries shall be paid as
reimbursement of the T-91 Non-Tendered and Non-Covered Costs until paid in full,
which amount shall not exceed the remaining amount of T-91 Port Indemnity
Claim; and
(2) 35% of T-91 PRP Recoveries shall be paid to the Port as
reimbursement of T-91 Non-Tendered Costs and Non-Covered Costs ("T-91 Port
PRP Recoveries for Non-Tendered and Non-Covered Costs") until recovered in full
(net of any deductions for grants) after which 100% of the such recoveries shall be
paid as reimbursement of the T-91 Port Indemnity Claim until paid in full, which
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amount shall not exceed the amount of T-91 Non-Tendered and Non-Covered
Costs.
D. Reimbursement of Great American Defense Payments and Great
American Payments for T-91 Indemnity Costs
After the sums in Paragraph 11.C immediately above are paid, and subject to paragraph
12.B. below, the remaining sum of T-91 PRP Recoveries shall be paid to Great American
first for reimbursement of the T-91 Great American Defense Payments and, if any amount
of T-91 PRP Recoveries remains after Great American has been fully reimbursed for T-91
Great American Defense Payments, then the remaining sum shall be paid to reimburse
Great American for T-91 Indemnity Costs it paid pertaining to T-91.
E. Remaining Sums
After the sums set out in Paragraph 11.A, B, C, D, and E immediately above are paid, any
remaining monies from T-91 PRP Recoveries shall be paid to the Port.
12. Effect of Payment of Remaining T-91 Occurrence Limit and Allocation of PRP
Recoveries after Payment of the Remaining T-91 Occurrence Limit
A. Exhaustion of the Remaining T-91 Occurrence Limit
Upon the payment of the Remaining T-91 Occurrence Limit by Great American, all of the
Great American Primary Policies shall be exhausted for the T-91 Occurrence. The Port
agrees not to tender any Environmental Claims arising from the T-91 Occurrence to Great
American, and further agrees that upon such payment it will expressly withdraw any claims
previously tendered to Great American pertaining to the T-91 Occurrence. Great American
will have no further obligation to defend, reimburse defense costs or indemnify the Port
for any costs for any Environmental Claim arising out of the T-91 Occurrence, and will
have no further obligation to fund PRP recovery efforts relating to the T-91 Occurrence
once it has paid the Remaining T-91 Occurrence Limit. Once Great American has paid the
Remaining T-91 Occurrence Limit, Great American shall have no further liability or any
obligation to pay any defense, indemnity, or other costs relating to or arising from any
portion of any Environmental Claim for any damages, costs or expenses arising out of the
T-91 Occurrence.
B. Allocation of PRP Recoveries after Exhaustion
Whatever sums Great American has been reimbursed for PRP recovery costs at the time it
pays the Remaining T-91 Occurrence Limit shall be retained by Great American. If Great
American ceases funding the recovery efforts due to exhaustion of the Remaining T-91
Occurrence Limit, and the Port proceeds with recovery efforts at its own cost, any monies
from PRP recovery efforts once the Port starts funding such efforts shall first be allocated
as follows: The Port and Great American shall be entitled to repayment of their respective
T-91 PRP Recovery Costs from any T-91 PRP Recoveries in proportion to the
unreimbursed T-91 PRP Recovery Costs paid by Great American and the Port. After Great
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American has exhausted the Remaining T-91 Occurrence Limit, and after the T-91 PRP
Recovery Costs have been fully repaid to Great American and/or the Port, and
notwithstanding any other provision set forth in Article Two, T-91 PRP Recoveries shall
be paid exclusively to the Port.
13. Right of Great American to Cease Funding PRP Recovery Efforts
Beginning on the date that is the second anniversary after the Execution Date, Great
American may elect in its sole discretion, even if the Remaining T-91 Occurrence Limit
has not been exhausted, to stop funding PRP recovery efforts on behalf of the Port with
respect to T-91. If Great American elects to discontinue funding the recovery efforts and
the Port proceeds with recovery efforts at its own cost under this Paragraph, the Port shall
be entitled to repayment of its costs first from any additional PRP Recoveries until the Port
has been fully reimbursed for its T-91 PRP Recovery Costs. Great American shall retain
whatever sums it has been reimbursed for its T-91 PRP Recovery Costs at the time it elects
to discontinue funding such PRP recovery costs for T-91, and shall be entitled to
reimbursement of any remaining Great American T-91 PRP Recovery Costs after the Port's
T-91 PRP Recovery Costs have been fully reimbursed. After Great American has been
fully reimbursed for T-91 PRP Recovery Costs it has paid and will pay, T-91 PRP
Recoveries shall be distributed as provided for in Paragraph 11.A, B, C, D, and E, until
such time as Great American has paid the Remaining T-91 Occurrence Limit, in which
event any additional PRP Recoveries shall be exclusively paid to the Port.
14. Accounting
A. T-91 Accounting
On or before the Effective Date, Great American and the Port agree to use their best efforts
to come to an agreement on providing an accounting of the various items in the
reimbursement formula provided under Article Two of this Agreement.
B. PRP Recovery Accounting
Once Great American has paid the full amount of the Remaining T-91 Occurrence Limit,
and unless otherwise agreed in writing, the Port agrees to continue to update an accounting
of PRP Recoveries within 3 months of the anniversary of the Effective Date each year until
Great American has been reimbursed for its T-91 PRP Recovery Costs for the T-91
Occurrence.
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ARTICLE THREE GENERAL PROVISIONS
(Please note that the Paragraphs in this Agreement are numbered consecutively.)
15. Reasonably Equivalent Value
The Parties acknowledge and agree that: (i) this Agreement was bargained for and entered
into in good faith and as the result of arms-length negotiations; (ii) based on their respective
independent assessments, with the assistance and advice of counsel, of the probability of
success in prevailing on the Parties' respective positions, the complexity of the issues; (iii)
the payment and other consideration to be received by the Port Entities pursuant to this
Agreement constitutes a fair and reasonable settlement of its Claims against the Great
American Entities which are released in this Agreement; (iv) the payments and other
benefits to be made under this Agreement constitute reasonably equivalent value for the
release, indemnity, and other benefits received by the Great American Entities under this
Agreement; and (v) this Agreement fully and finally resolves all issues between the Parties
relating to or arising from Environmental Claims relating to or arising out of the Three
Occurrences, except as expressly provided with respect to the T-91 coverage in place
agreement provided in Article Two of this Agreement.
16. Representations and Warranties
A. Solvency
The Port represents and warrants that as of the date of this Agreement it is solvent, in that
at fair value, its assets exceed its liabilities and it has the liquidity to pay its debts. The
Port further represents and warrants that it has not filed for bankruptcy protection and that
no bankruptcy action is pending in which the Port seeks relief under bankruptcy law.
B. Ownership of Claims and No Assignment
The Port represents and warrants that as of the date of this Agreement, it has ownership of
the right to claim insurance benefits under the Policies and that it has not made or purported
to make any assignment to any Person of any rights it may have under any of the Policies.
C. Efforts to Locate Policies
The Port and Great American represent and warrant that they have both made diligent
searches for primary or excess liability policies issued to the Port and are unaware of any
liability policies issued to the Port by Great American other than the Great American
Primary Policies and the Alleged Policies.
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D. Authorization
Each Party represents and warrants that it is authorized to act on behalf of all Persons
described in the definition of that Party contained respectively in Paragraphs 1.G. and 1.K.
of this Agreement, concerning all matters agreed upon in this Agreement.
E. Arm's Length, Good Faith Negotiations
Each Party acknowledges and represents that it:
(1) has participated in the negotiation of the Agreement, and has fully
and carefully read this Agreement prior to execution;
(2) has been fully apprised by its counsel of the legal effect and meaning
of this document and all terms and conditions of this document;
(3) has had the opportunity to make whatever investigation or inquiry it
deems necessary and appropriate in connection with the subject matter of this
Agreement; and
(4) is executing this Agreement voluntarily; however, the Parties agree
that in making payment, pursuant to this Agreement, Great American is not acting
as a volunteer.
17. No Assignment
No Party shall assign any rights under this Agreement without first obtaining the written
consent of all other Parties to the Agreement, provided, however, that this Paragraph 17
shall not prohibit any assignment by a Party made in a merger, consolidation or by
operation of law or to a Person who succeeds to all or substantially all of such Party's
assets. Subject to the foregoing, this Agreement shall extend to and be binding upon the
Parties hereto and their successors and assigns.
18. Use of Proceeds
All money paid to the Port pursuant to this Agreement is in satisfaction, defense or
settlement of Environmental Claims, including reimbursement of remediation costs
expended by the Port.
19. Confidentiality
A. Confidentiality and Limited Disclosure Rights
The Port Entities and the Great American Entities agree that all matters relating to the
terms, negotiation, and implementation of this Agreement and the prior agreements (which
are set forth in Paragraph 28.A.) shall be confidential and are not to be disclosed except by
order of court or by agreement of the Parties, in writing; except that executed copies of this
Agreement and the prior agreements may be disclosed: (i) as compelled by law, including
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but not limited to the provisions of the State of Washington Public Records Act, Rev. Code
Wash. 42.56, et seq. ("Public Records Act"), (ii) to reinsurers of Great American and their
retrocessionaires, directly or through intermediaries; or (iii) to outside counsel, auditors or
accountants of any Party. This Agreement and the prior agreements may also be disclosed,
as required, to the Internal Revenue Service or other U.S. governmental authority that
properly requires disclosure by one of the Parties hereto.
B. Cooperation if Third Party Seeks Discovery
In the event a private litigant, by way of document request, interrogatory, subpoena, or
questioning at deposition or trial, or a Person under the Public Records Act attempts to
compel disclosure of anything protected by this paragraph, other than the final, executed
copy of this Agreement, or the final, executed copies of the prior agreements, the Party
from whom disclosure is sought shall decline to provide the requested information on the
ground that this Agreement prevents such disclosure. In the event such private litigant
seeks an order from any court or governmental body to compel such disclosure, or in the
event that a court, government official, or governmental body (other than the Internal
Revenue Service) requests or requires disclosure of anything protected by this Paragraph,
other than the final, executed copy of this Agreement, or the final, executed copy of prior
agreements, the Party from whom disclosure is sought shall immediately give written
notice by email or hand-delivery to the other Party, and shall immediately provide copies
of all notice papers, orders, requests or other documents in order to allow each Party to take
such protective steps as may be appropriate. Notice shall be made under this Paragraph to
the persons identified in Paragraph 26 of this Agreement. Material protected by this
paragraph shall be deemed to fall within the protection afforded compromises and offers
to compromise by Rule 408 of the Federal Rules of Evidence, and similar provisions of
state law or state rules of court.
C. Inadmissibility of the Agreement
Any evidence of the existence, terms or negotiations of this Agreement or the prior
agreements shall be inadmissible in any litigation or proceeding, provided, however, that
the Agreement alone may be offered in (a) any proceeding seeking solely to enforce the
terms of this Agreement, (b) any action to obtain a bar order or to enforce or apply judgment
reduction pursuant to Paragraph 3.E, or (c) any action involving Great American defending
against action brought by the Port's other insurers, including the assertion of a good faith
settlement defense or judgment reduction pursuant to paragraph 3.E. This Agreement and
the prior agreements have been entered into in reliance upon the provisions of Rule 408 of
the Federal Rules of Evidence and similar state law provisions which preclude the
introduction of evidence regarding settlement negotiations or agreements.
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20. Cooperation
A. Cooperation with Reinsurance Inquiries
The Port shall undertake all reasonable actions to co-operate with Great American in
connection with its reinsurers, including providing assistance as requested to respond to
reasonable requests for information.
B. No Cooperation with Others
Great American and the Port agree that they will not commence, maintain, initiate, or
prosecute any Claim against each other, or voluntarily cooperate with any other Person not
a Party to this Agreement with respect to any Claim against the other Party, relating to any
of the matters released under this Agreement.
21. Each Party Bears its Own Fees and Costs
Each Party agrees to bear its own attorneys' fees and costs with respect to the presentation
of and response to the Port's claims against Great American released in this Agreement or
any prior agreement between the Parties relating to the Port's environmental liabilities, and
with respect to the negotiation and drafting of this Agreement.
22. Non-Prejudice and Construction of Agreement
This Agreement is intended to be and is a compromise between the Parties and shall not be
construed as an admission of coverage or liability under the Policies, nor shall this
Agreement or any provision hereof be construed to reflect, waive, modify, or retract the
positions of the Parties with respect to the interpretation and application of the Policies.
This Agreement is the product of informed negotiations and involves compromises of the
Parties' previously stated legal positions. Accordingly, this Agreement does not reflect
upon the Parties' views as to rights and obligationswith respect to matters or Persons
outside the scope of this Agreement. This Agreement is without prejudice to positions
taken by Great American with regard to other insureds, and without prejudice with regard
to positions taken by the Port with regard to other insurers. The Parties disavow any
intention to create rights in third parties under or in relation to this Agreement.
This Agreement is the jointly drafted product of arms-length negotiations between the
Parties with the benefit of advice from counsel, and the Parties agree that it shall be so
construed. As such, neither Party will claim that any ambiguity in this agreement shall be
construed against the other Party. This Agreement shall not be construed as a contract of
insurance.
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23. No Modification
No change or modification of this Agreement shall be valid unless it is made in writing and
signed by the Parties.
24. Execution
Each Party shall execute two original signature pages of this Agreement, and this
Agreement shall not be effective unless and until Great American and the Port each execute
both original signature pages. Counterparts of the signature pages may be combined to
create a document binding on all of the Parties and together shall constitute one and the
same instrument. Upon execution, each Party shall provide each other Party a signature
page containing the Party's original signature. In the event an original of this Agreement
cannot later be located or produced for any reason, a legible photocopy of the Agreement
shall be admissible for all intents and purposes.
25. Governing Law
This Agreement shall be governed by and shall be construed in accordance with the laws
of the State of Washington, without reference to the State of Washington's choice of law
principles.
26. Notices
Unless another person is designated, in writing, for receipt of notices hereunder, notices to
the respective Parties shall be sent to the following persons:
For Great American:
Office of the General Counsel
Great American Insurance Group
Great American Insurance Group Tower
301 E Fourth Street
Cincinnati, OH 45202
and
Aaron B. Latto/Emmet M. Murphy
Great American Insurance Company
Great American Insurance Group Tower, 19th Floor
301 E Fourth Street
Cincinnati, OH 45202
Email: alatto@GAIG.com
emurphy@GAIG.com
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With a copy to:
Philip R. Matthews, Esq.
William J. Baron, Esq.
Duane Morris LLP
One Market Street, Spear Tower
Suite 2200
San Francisco, CA 94105
Email: prmatthews@duanemorris.com
wjbaron@duanemorris.com
For the Port:
Elizabeth C. Black
Senior Port Counsel
Port of Seattle
2711 Alaskan Way
P.O. Box 1209
Seattle, WA 98121
Email: black.e@portseattle.org
With a copy to:
K. Michael Fandel, Esq.
Graham & Dunn P.C.
Pier 70
2801 Alaskan Way, Suite 300
Seattle, WA 98121-1128
Email: michael.fandel@millernash.com
27. Disputes
If the Parties have a dispute under this Agreement, which they are unable to resolve on
their own, the Parties shall participate in non-binding mediation concerning such dispute.
Such mediation shall take place within 90 days of either Party requesting mediation before
a mutually agreed mediator. If the Parties do not reach an agreement in such mediation,
the Parties shall resolve such dispute through arbitration using the commercial rules of the
American Arbitration Association, or such other protocols to which the Parties agree, and
in that event, either Party may initiate such arbitration.
28. Integration
Unless otherwise expressly stated in this Agreement, this Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof, and supersedes all
discussions, agreements, and understandings, both written and oral, among the Parties with
respect thereto. Specifically, this Agreement supersedes all prior agreements between the
Port and Great American concerning the defense or indemnification of Environmental
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Claims arising out of the Three Occurrences, including the agreements identified in subparagraph
A. of this Paragraph 28, subject to the exceptions set out in sub-paragraph B of
this Paragraph 28, Paragraph 9 of this Agreement, or elsewhere in this Agreement:
A. Prior Agreements
Subject to the express exceptions set out in Paragraphs 9, 28.B., and elsewhere in
this Agreement, this Agreement supersedes the following prior agreements solely as
between the Port and Great American:
(1) the 1986 Agreement;
(2) the 1997 Agreement;
(3) the 1998 Agreement;
(4) the interim agreement between the Port and Great American
regarding offsets for certain reimbursements from other potentially
responsible parties, dated October 1, 2012;
(5) the December 5, 2014 Letter Agreement;
(6) the December 14, 2012 Letter Agreement;
(7) the April 30, 2013 Letter Agreement;
(8) the October 24, 2014 Letter Agreement;
(9) the 2014 Agreement;
(10) the Addendum to the 2014 Agreement entered between the Port and
Great American on or about October 30, 2015;
(11) the Addendum to the 2014 Agreement entered between the Port and
Great American on or about November 2, 2016;
(12) the Addendum to the 2014 Agreement entered between the Port and
Great American on or about September 13, 2017;
(13) the Addendum to the 2014 Agreement entered between the Port and
Great American on or about December 11, 2018; and
(14) the 2018 Agreement
B. Exceptions
Notwithstanding the above provisions of this Paragraph 28, the Parties specifically
agree that nothing in this Agreement shall impair, release, or affect in any way:
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(1) All terms in the 1986 Agreement that relate to agreements between
the Port or Great American and other parties to the 1986 Agreement;
(2) All terms in the 1998 Agreement relating to the Tulalip Site and
Paragraph 2.17 in the 1998 Agreement;
(3) Section VI.B. in the 2014 Agreement; and
(4) To the extent that the release provisions in Paragraph 3 of this
Agreement do not encompass a Claim that has been released under
any prior agreement involving the Port and Great American, those
release provisions in such prior agreements shall remain in full force
and effect; and
(5) Section 2.7 of the 1998 Agreement.
29. Severability
If any provision of this Agreement is held invalid, it shall be severed from the remainder
of this Agreement, and the remaining provisions shall be given full force and effect,
provided the payment provisions in Paragraph 2, the insurer protection provisions in
Paragraph 3.E and release provisions in Paragraph 3 remain intact.
30. Allocation of Payments by Great American
Great American may allocate indemnity payments made by it under either this Agreement
or any prior agreement for Environmental Claims to the Great American Primary Policies
in its sole discretion, except that allocation of future indemnity payments pursuant to
Article Two herein shall only be allocated to policies issued prior to December 31, 1977.
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives.
Signed:__________________________________ Dated: August __, 2020
For the Port Entities
Signed:__________________________________ Dated: August __, 2020
For the Great American Entities
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STATE OF WASHINGTON
) ss.
COUNTY OF KING )
On this _____ day of ______________, 2020, before me personally appeared
___________________________________________, to me known to be the
______________ of PORT ENTITIES, the company that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and voluntary act
and deed of said party, for the uses and purposes therein mentioned, and on oath stated that
he/she was authorized to execute said instrument.
Given under my hand and official seal this _____ day of ____________, 2020.
(Signature)
(Name legibly printed or stamped)
Notary Public in and for the State of Washington,
residing at _________________.
My appointment expires _____________.
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August 5, 2020
) ss.
COUNTY OF HAMILTON )
On this _____ day of ______________, 2020, before me personally appeared
___________________________________________, to me known to be the
______________ of GREAT AMERICAN INSURANCE COMPANY and GREAT
AMERICAN INSURANCE COMPANY OF NEW YORK, formerly known as
AMERICAN NATIONAL FIRE INSURANCE COMPANY, the company that executed
the within and foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein mentioned,
and on oath stated that he/she was authorized to execute said instrument.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year first above written.
(Signature)
(Name legibly printed or stamped)
Notary Public in and for the State of _________,
residing at _________________.
My appointment expires _____________.
35
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