Shell Oil Co. v. National Union Fire Insurance

Defendant National Union Fire Insurance Company of Pittsburgh, Pa. (National) appeals from a judgment after court trial, awarding plaintiff Shell Oil Company (Shell) damages for breach of a liability insurance policy. National raises numerous issues, the primary ones being whether National provided coverage for an accident that resulted from Shell’s sole negligence, and if so whether National yet fulfilled its contractual duties by paying its policy limit in settlement for a coinsured. Shell cross-appeals from the judgment insofar as it did not award attorney fees for this action, which Shell claimed under Washington state law. We affirm the judgment in all respects.

I. Statement

In September 1985, Shell entered into “Contract 169” (the contract) with S.I.P. Engineering, Inc. (S.I.P.), for performance of engineering work on Shell’s oil refinery in Anacortes, Washington. Paragraph 6.2 of the contract obligated S.I.P. to defend and indemnify Shell, up to $5 million, for any claims, liabilities or expenses on account of personal injury or property loss arising out of S.I.P.’s or its subcontractors’ work, “but excepting when the injury ... or damage is caused by the sole…