In re Acushnet River & New Bedford Harbor

• Decision Date: 27 October 1989
• Docket Number: Civ. A. No. 83-3882-Y.
• Citation: 725 F. Supp. 1264
• Court: U.S. District Court — District of Massachusetts
• Parties: In re ACUSHNET RIVER & NEW BEDFORD HARBOR: PROCEEDINGS Re ALLEGED PCB POLLUTION.

725 F. Supp. 1264

In re ACUSHNET RIVER & NEW BEDFORD HARBOR: PROCEEDINGS Re ALLEGED PCB POLLUTION.

Civ. A. No. 83-3882-Y.

United States District Court, D. Massachusetts.

October 27, 1989.

MEMORANDUM AND ORDER ON INSURANCE ISSUES

YOUNG, District Judge.

On December 10, 1983, the United States and the Commonwealth of Massachusetts (the "sovereigns") brought an action against several corporations including Belleville Industries, Inc. ("Belleville") and Aerovox Incorporated ("Aerovox"), a wholly owned subsidiary of RTE Corporation, alleging that the defendants are liable for damages under federal and state law for the polychlorinated biphenyl pollution of the New Bedford Harbor (the "pollution" or "underlying" litigation).¹ From January 1, 1973 through October 27, 1978, Belleville owned and operated a manufacturing plant (the "facility") which is bounded on the easterly side by the Acushnet River, an estuary leading directly into the New Bedford Harbor. Aerovox purchased the facility from Belleville on October 27, 1978. The facility was used by both Belleville and Aerovox to manufacture electrical capacitators. During the period of Belleville's ownership, such capacitators were impregnated or filled with polychlorinated biphenyls ("PCBs").

Lumbermens Mutual Casualty Company ("Lumbermens") and Fireman's Fund Insurance Company ("Fireman's Fund") brought this action to obtain a declaration of their obligations under insurance contracts they issued to Belleville and Aerovox respectively. Before the Court are several motions for summary judgment brought by the insurers.

I. GENERAL CONSIDERATIONS

Each of the several motions raises a separate aspect of the contractual relationship between the parties as an independent ground for summary judgment. Given the complexity of this case, it is appropriate first to set forth the analytic framework employed by the Court to address each of these motions. At the most general level, the parties are on common ground. Everyone agrees that the insurance contracts at issue are to be substantively interpreted according to state law, specifically the law of the Commonwealth of Massachusetts. Likewise, everyone agrees that federal law determines whether the insurers are entitled to summary judgment under Fed.R. Civ.P. 56.²

Rule 56(c) provides that summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." The Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) held that summary judgment ought be entered against a party when, after adequate time for discovery, that party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." A party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact. See Fed.R.Civ.P. 56(c).

Only genuine issues of material fact will prevent the entry of summary judgment and the issue of materiality is governed by the substantive law. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgement." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Further, such disputes must be "genuine." The Supreme Court has held that a dispute regarding a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. "The inquiry performed is the threshold inquiry of determining whether there is the need for a trial—whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. at 2511. "In essence, ... the inquiry under the summary judgment standard and the directed verdict standard is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2511-12.

If the movant makes out a prima facie case that, if uncontroverted, would entitle it to a directed verdict at trial, summary judgment will be granted unless the party opposing the motion offers some competent evidence that could be presented at trial showing that a genuine issue as to a material fact exists. In this way, the burden of producing evidence is shifted to the party opposing the motion. C. Wright, A. Miller & M. Kane, Federal Practice and Procedure, sec. 2727, at 143 (2d ed. 1983). "The burden on the nonmoving party is not a heavy one; she simply is required to show specific facts, as opposed to general allegations, that present a genuine issue worthy of trial." Id. at 148 (footnote omitted).

Intertwined with the summary judgement standard is the law of Massachusetts as stated in Sterilite Corp. v. Continental Casualty Co., 17 Mass.App.Ct. 316, 458 N.E.2d 338 (1983) (Kaplan, J.), rev. denied, 391 Mass. 1102, 459 N.E.2d 826 (1984) ("Sterilite"). Sterilite provides the most thorough and current analysis of the issues posed by these motions for summary judgment, namely whether the insurers have a duty to defend and indemnify the insureds in the pollution case. See also Travelers Inc. Co. v. Waltham Industrial Laboratories Corp., 883 F.2d 1092 (1st Cir.1989) (discussing certain of these issues under Massachusetts law and citing Sterilite favorably) ("Travelers").³

Under Sterilite, the insurers are obligated to defend their insureds if there is "a possibility that the liability claim falls within the insurance coverage." Id. 17 Mass. App.Ct. at 319, 458 N.E.2d 338 (quoting Union Mutual Fire Ins. Co. v. Inhabitants of the Town of Topsham, 441 A.2d 1012, 1015 Me.1982). The allegations in the complaint need only be "`reasonably susceptible' of an interpretation that they state or adumbrate a claim covered by the policy terms" to implicate the defense coverage. Continental Casualty Co. v. Gilbane Bldg. Co., 391 Mass 143, 146, 461 N.E.2d 209 (1984). See also Travelers, at 1095 (and cases cited). To call upon the insurers to defend, the Court need not find that the injury complained of in the underlying litigation unquestionably comes within the policy terms; rather, regardless of the ultimate success of the underlying litigation or the viability of the theory of liability advanced therein, the insurers must defend if the injury of which the plaintiffs in the underlying action complain could reasonably be said to come within the terms of the insurance. See Gilbane, 391 Mass. at 146, 461 N.E.2d 209; Sterilite, 17 Mass.App.Ct. at 319-320, 458 N.E.2d 338 ("In order for the duty of defense to arise, the underlying complaint need only show, through general allegations, a possibility that the liability claim falls within the insurance coverage. There is no requirement that facts alleged in the complaint specifically and unequivocally make out a claim with coverage."), quoting Union Mutual Fire Ins. Co., 441 A.2d 1015; Wolov v. Michaud Bus Lines, Inc., 21 Mass.App.Ct. 60, 63, 484 N.E.2d 644 (1985).

What can an insurer do to bring the duty to defend to an end once that duty is imposed? In Sterilite, the court held that the insurer "can, by certain steps, get clear of the duty from and after the time when it demonstrates with conclusive effect on the third party that as matter of fact — as distinguished from the appearances of the complaint and policy — the third party cannot establish a claim within the insurance." 17 Mass.App.Ct. at 323, 458 N.E.2d 338 (emphasis added).

II. POLLUTION EXCLUSION

The first of the motions for summary judgment deals with the contention by Lumbermens and Fireman's Fund that they do not have an obligation either to defend or to indemnify the insureds in the underlying litigation in light of the pollution exclusion clauses contained in the insurance contracts.⁴

Lumbermens issued Belleville general liability insurance policies which covered the period from January 2, 1973 to January 1, 1977 and excess liability insurance policies covering the period from December 26, 1972 to January 2, 1976. Fireman's Fund issued RTE Corporation comprehensive general liability insurance policies, naming Aerovox as an insured, which covered the period from March 1, 1981 to March 1, 1986, and excess liability insurance policies covering the period from March 1, 1981 to March 1, 1983. Under these policies, Lumbermens and Fireman's Fund are obligated to pay:

all sums which the insured shall become legally obligated to pay as damages because of (a) bodily injury or (b) property damage to which this insurance applies, caused by an occurrence, and the insurer shall have the right and duty to defend any suit against the insured seeking damages, on account of such bodily injury or property damage, even if any of the allegations of the suit are false or fraudulent....

The policies also contain an exclusion from coverage for damage relating to the release of pollutants into the environment. This so-called "pollution exclusion" provides that the insurance policy does not apply:

to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course

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