U.S. Liability Ins. Co. v. Bourbeau

• Decision Date: 06 December 1994
• Docket Number: No. 94-1919,94-1919
• Citation: 49 F.3d 786
• Parties: UNITED STATES LIABILITY INSURANCE COMPANY, Plaintiff-Appellee, v. Larry BOURBEAU, d/b/a Bourbeau Painting Contractors, Defendant-Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 786

49 F.3d 786

UNITED STATES LIABILITY INSURANCE COMPANY, Plaintiff-Appellee, v. Larry BOURBEAU, d/b/a Bourbeau Painting Contractors,

Defendant-Appellant.

No. 94-1919.

United States Court of Appeals, First Circuit.

Heard Dec. 6, 1994.

Decided March 3, 1995.

Michael Pill, Shutesbury, MA, for appellant.

Pamela S. Gilman, with whom Taylor, Anderson & Travers, Boston, MA, was on brief, for appellee.

Before TORRUELLA, Chief Judge, COFFIN, Senior Circuit Judge, and STAHL, Circuit Judge.

TORRUELLA, Chief Judge.

Defendants-appellants, Larry Bourbeau and Bourbeau Painting Contractors ("Bourbeau"), appeal the district court's summary judgment ruling that no coverage was provided under an insurance policy issued to Bourbeau by plaintiff-appellee, United States Liability Insurance Company ("U.S. Liability"), for injury to property caused by Bourbeau's alleged negligent removal of lead paint. For the reasons stated herein, we affirm.

BACKGROUND

The pertinent facts are not in dispute. In July of 1991, Larry Bourbeau, doing business as Bourbeau Painting Contractors, entered into a contract with the Town of Hadley, Massachusetts, to strip and paint two town buildings, including the North Village Hall.

Pursuant to the contract, Bourbeau purchased comprehensive liability insurance from U.S. Liability for the period of July 2, 1991 to July 2, 1992. The policy terms covered property damage up to $300,000.

Bourbeau began work removing old paint from the North Village Hall. While this work was in progress, however, the Massachusetts Department of Environmental Protection ("DEP") notified Bourbeau that paint chips from the North Village Hall were contaminating the surrounding soil. The Town of Hadley incurred costs of approximately $50,000 cleaning up the contaminated site. Bourbeau subsequently finished his work on the two buildings but the Town of Hadley, citing its cleanup costs, refused to pay him.

In March of 1993, the owner of a parcel of land abutting the North Village Hall filed suit against Hadley alleging that Hadley had caused lead to be deposited on his land during the course of restoring and painting the North Village Hall. Hadley then filed a third-party complaint against Bourbeau seeking indemnification for any judgment which might be rendered against the town in favor of the abutter.

On August 20, 1993, U.S. Liability filed this diversity action in the United States District Court for Massachusetts seeking a declaration that it is not obligated to defend or indemnify Bourbeau for property damage sustained by Hadley, or any abutting land owners, due to the alleged negligent release of contaminated paint chips on the North Village Hall property. ¹ Upon cross motions for summary judgment on the ultimate issue of coverage, the district court held that the "absolute pollution exclusion" clause contained in the insurance policy precludes coverage for property damage caused by alleged lead paint contamination. The court therefore granted U.S. Liability's motion for summary judgment and denied Bourbeau's motion for summary judgment.

STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo. LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1398, 128 L.Ed.2d 72 (1994). Because the facts in this case are not in dispute, our decision turns on the interpretation of U.S. Liability's insurance policy, which is a question of law. See Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63 (1st Cir.1992). The parties agree that this diversity action is governed by the substantive law of Massachusetts. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); American Title Ins. Co. v. East West Fin. Corp., 959 F.2d 345, 348 (1st Cir.1992).

DISCUSSION

The dispositive question in this case is whether the allegedly contaminating lead paint was a "pollutant" within the meaning of the "Absolute Pollution Exclusion" clause in the insurance policy. We agree with the district court that, under the undisputed facts of this case, the lead paint was a pollutant within the meaning of the absolute pollution clause and that, therefore, U.S. Liability is not obligated to indemnify or defend Bourbeau in any underlying lawsuit arising from property damage caused by Bourbeau's alleged negligent release of lead paint chips.

The "Absolute Pollution Exclusion" clause provides, in pertinent part:

Notwithstanding the terms and conditions of this policy which are or may be to the contrary, it is agreed that this insurance does not apply:

1. to Bodily Injury, Personal Injury or Property Damage,

2. to Damages for the Devaluation of Property ...,

3. to any Loss, Cost or Expense, including but not limited to Fines and Penalties, arising out of any governmental direction or request, or any private party or citizen action that the named insured test for monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants,

4. to any Litigation or Administrative Procedure in which the insured may be involved as a party:

arising out of actual, alleged or threatened discharge, dispersal, release or escape of pollutants into or upon land ... whether or not such actual, alleged or threatened discharge, dispersal, release or escape is sudden, accidental or gradual in nature.

Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to smoke, vapor, soot, fumes, acids, alkalis, toxic chemicals or materials and waste. Waste includes, in addition to materials to be disposed of, materials to be recycled, reconditioned or reclaimed.

This exclusion is intended to exclude from the coverage provided by this policy of insurance all liability and expense arising out of or related to any form of pollution, whether or not such pollution is intentionally caused and whether or not the resulting injury, damage, devaluation, cost or expense is expected or intended from the standpoint of the insured.

(emphasis added).

Under the rules of statutory construction followed by the Massachusetts Supreme Judicial Court ("the SJC"), we "must construe the words of the policy according to the fair meaning of the language used, as applied to the subject matter." Jacobs v. United States Fidelity & Guar. Co., 417 Mass. 75, 627 N.E.2d 463, 464 (1994) (citing Johnson v. Hanover Ins. Co., 400 Mass. 259, 508 N.E.2d 845 (1987)). "Moreover, where the words of an insurance contract are 'plain and free from ambiguity they must be construed in their usual and ordinary sense.' " Id. (quoting Hanover Ins. Co. v. Ramsey, 405 Mass. 1101, 539 N.E.2d 537 (1989)) (other citations omitted). In addition, the SJC has stated that, when construing language in an insurance policy, it will "consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered." Hazen Paper Co. v. United States Fidelity & Guar. Co., 407 Mass. 689, 555 N.E.2d 576 (1990).

In our view, the language of the Absolute Pollution Exclusion clause is clear and unambiguous on its face. It is plainly intended to be an absolute bar to coverage for "any form of pollution." The most notable aspect of the exclusion is its breadth--it applies to all releases of pollutants, as opposed to only those which are not "sudden and accidental." Cf. Lumbermens Mutual Casualty Co. v. Belleville Ind., Inc., 407 Mass. 675, 555 N.E.2d 568 (1990). Under the Absolute Pollution Exclusion clause, the policy does not apply to property damage arising out of actual discharge, dispersal, release or escape of pollutants into or upon land. In this case, it is alleged that property damage arose out of the discharge, dispersal, release or escape of lead paint chips into or upon land. ² The only question, therefore, is whether lead paint chips, as they were disposed of in this case, constitute "pollutants."

Under the Absolute Pollution Exclusion clause, "pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to smoke, vapor, soot, fumes, acids, alkalis, toxic chemicals or materials and waste. Waste includes, in addition to materials to be disposed of, materials to be recycled, reconditioned or reclaimed." (emphasis added). After reading this definition of pollutant, we do not see how an objectively reasonable insured would expect to be covered for contamination of property caused by the removal and discharge of lead paint chips. In our view, an objectively reasonable person reading the Absolute Pollution Exclusion clause would consider lead paint both a "solid ... contaminant" and a "toxic chemical." An objectively reasonable person would also consider lead paint chips "materials to be disposed of" or "waste." A reading of the specifically listed pollutants would only buttress this interpretation. The non-exclusive list of irritants and contaminants provides the insured a potpourri of pollutants to consider, from smoke to toxic chemicals. We fail to see how an objectively reasonable insured could possibly believe that "smoke, vapor, soot, [and] fumes" would be considered pollutants while lead paint would not.

This should end the inquiry. The best way to interpret an insurance policy is to read the policy. Bourbeau, however, points to a recent case decided by the SJC which he contends supports his position that lead paint is not...