Insurers don't have to pay for Highway 99 tunnel delays, WA Supreme Court rules
Seattle Times (WA)
Sep. 15—Insurance companies don't have to reimburse Washington state for the two years drivers couldn't use the new Highway 99 tunnel, as a result of the boring machine Bertha's stall during construction, the Washington State Supreme Court has ruled.
In a unanimous decision released Thursday morning, the justices rejected the state's argument that delays in the tunnel project were a type of physical damage that fell under the insurance policy. Justices sent the case back to lower courts for insurers, contractors and the state to argue further over other kinds of damage.
For the people of Washington state, who funded the Highway 99 tunnel project mainly through gas taxes, the results aren't clear. But so far, the state has prevailed in a separate case in which contractors sought hundreds of millions of dollars.
The world's biggest tunnel drill, named after former Seattle Mayor Bertha Knight Landes (1926 to 1928), overheated next to Pier 48 on Dec. 6, 2013, and didn't resume digging until 2016 after a massive repair effort. It then broke through next to Seattle Center in April 2017. The two-mile, double-decker tunnel opened to traffic Feb. 4, 2019.
The contracting team, Seattle Tunnel Partners, sued the Washington State Department of Transportation, claiming losses as high as $600 million, and blaming the damage on a vertical steel pipe the state installed in the ground years earlier, to measure groundwater. A Thurston County Superior Court jury sided with the state, and an appeals court ruling upheld that decision. So far, taxpayers aren't on the hook for overruns.
That's where the insurance dispute figured in.
On a parallel legal track, a consortium of eight insurers refused to pay for tunnel cost overruns. They denied coverage to both STP and WSDOT, both policyholders turned adversaries. Insurers argued in 2017 that Bertha, whose rotating cutter head measured 57 feet, 3 inches diameter, was "underdimensioned" from the outset, to handle such tremendous volumes of muck. Insurers further accused STP of inventing a theory that Bertha was wrecked by a steel groundwater-monitoring pipe.
Executives for the machine's maker, Hitachi Zosen of Osaka, Japan, vehemently denied the slams at Bertha's fitness for duty, in a Seattle Times interview, while emphasizing their commitment to spend money and thousands of worker hours to finish the job. Direct parts and labor costs, to include new bearing seals, a main circular gear and tons of reinforcing steel, were estimated at around $143 million for the repairs.