Mottolo v. Fireman's Fund Ins. Co.

• Decision Date: 04 October 1994
• Docket Number: No. 94-1707,94-1707
• Citation: 43 F.3d 723
• Parties: Richard A. MOTTOLO and Service Pumping & Drain Co., Inc., Plaintiffs-Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, et al., Defendants-Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 723

43 F.3d 723

39 ERC 2031

Richard A. MOTTOLO and Service Pumping & Drain Co., Inc. Plaintiffs-Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, et al., Defendants-Appellees.

No. 94-1707.

United States Court of Appeals First Circuit.

Heard Oct. 4, 1994.

Decided Jan. 3, 1995.

James H. Gambrill, with whom Engel, Gearreald & Gardner, P.A., Exeter, NH, was on brief, for appellants.

Kevin C. Devine, with whom Devine & Nyquist, Manchester, NH, Joseph S. Crociata, Stuart L. Peacock, Gilberg & Kurent, Washington, DC, Stephen Dibble and Ouellette, Hallisey, Dibble & Tanguay, P.A., Dover, NH, were on brief, for appellees.

Thomas W. Brunner, Laura A. Foggan, Richard H. Gordin, Lon A. Berk, Dennis A. Tosh and Wiley, Rein & Fielding, Washington, DC, on brief for Ins. Environmental Litigation Ass'n, amicus curiae.

Before TORRUELLA, Chief Judge, BOUDIN, Circuit Judge, and BARBADORO, ^* District Judge.

TORRUELLA, Chief Judge.

Plaintiffs-appellants, Richard Mottolo ("Mottolo") and Service Pumping and Drain Co., Inc. ("Service"), appeal the district court's summary judgment ruling that no

coverage was provided under insurance policies issued to Mottolo by defendants-appellees, Fireman's Fund Insurance Company ("Fireman's Fund"), United States Fidelity & Guaranty Company ("USF & G") and Aetna Casualty and Surety Company ("Aetna"), for injury to property caused by the dumping of hazardous waste by Mottolo and Service. For the reasons set forth below, we affirm the district court's entry of summary judgment.

I. BACKGROUND

On September 8, 1983, and February 4, 1984, respectively, the United States and the State of New Hampshire (together, "the government") brought suits in the United States District Court for New Hampshire against Mottolo, Service, and others, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Secs. 9601-9675, amended by the Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, 100 Stat. 1613 (1986), and state law, to recover costs associated with the cleanup of a site used by Mottolo and Service to dump hazardous waste. The two cases were later consolidated. On August 28, 1988, the district court granted in part the government's motion for summary judgment, finding Mottolo and Service jointly and severally responsible for all cleanup costs incurred by the government at the dump site. United States v. Mottolo, 695 F.Supp. 615, 631 (D.N.H.1988).

Mottolo and Service then brought this action in the United States District Court for New Hampshire seeking a declaration that the defendant insurance companies are obligated to indemnify them for the costs of cleaning up the dump site. Upon cross motions for summary judgment, the district court found that because plaintiffs' damages did not arise from an "occurrence," as defined by defendants' insurance policies, defendants did not have a duty to indemnify the plaintiffs. Mottolo v. Fireman's Fund Ins. Co., 830 F.Supp. 658 (D.N.H.1993). The district court therefore granted defendants' motion for summary judgment and denied plaintiffs' cross motion for summary judgment. This appeal followed.

II. STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo and read the record in a light most favorable to the non-moving party, drawing all inferences in the non-moving party's favor. 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). Summary judgment is appropriate when "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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). A "material" fact is one "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

Essentially, Rule 56(c) mandates the entry of summary judgment "against a party who fails 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." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). As to issues on which the nonmovant has the burden of proof, the movant need do no more than aver "an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. at 2554. The burden of production then shifts to the nonmovant, who, to avoid summary judgment, must establish the existence of at least one question of fact that is both "genuine" and "material." See Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. The nonmovant, however, may not rest upon mere denial of the pleadings. Fed.R.Civ.P. 56.

III. DISCUSSION

A. Duty to Indemnify

Under New Hampshire law, an insurer's duty to indemnify an insured may be determined by an analysis of the underlying allegations against the insured and the express terms of the policy. Great Lakes Container v. National Union Fire Ins., 727 F.2d 30, 32 (1st Cir.1984) (citing Aetna Ins. Co. v. State Motors, Inc., 109 N.H. 120, 244 A.2d 64 (1968)). If the complaint in the underlying action does not on its face establish lack of coverage, however, inquiry may proceed into independent evidence. M. Mooney Corp. v. United States Fidelity & Guar. Co., Inc., 136 N.H. 463, 469, 618 A.2d 793 (1992). When interpreting the policy in light of these facts, a reviewing court employs an objective standard, inquiring whether a reasonable person in the insured's position would have expected indemnity for the claims asserted against him. See Merchants Ins. Group v. Warchol, 132 N.H. 23, 27, 560 A.2d 1162 (1989).

B. The "Occurrence" Policy Provision

Mottolo seeks a declaration of coverage from Fireman's Fund, USF & G and Aetna under insurance policies which provide coverage for claims brought against an insured because of property damage caused by an "occurrence." The phrase "occurrence," is defined in each policy as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." The threshold, and dispositive, question in this case is whether Mottolo's contamination of property was an "accident," and therefore an "occurrence" covered by the relevant insurance policies. ¹

The New Hampshire Supreme Court has addressed "occurrence" policy provisions virtually identical to the one at bar in a line of cases beginning with Vermont Mutual Ins. Co. v. Malcolm, 128 N.H. 521, 517 A.2d 800 (1986) and ending most recently in Providence Mutual Fire Ins. Co. v. Scanlon, 138 N.H. 301, 638 A.2d 1246 (1994) and Green Mountain Ins. Co. v. Foreman, 138 N.H. 440, 641 A.2d 230 (1994). ² In between, the Court decided Jespersen v. U.S. Fidelity & Guaranty Co., 131 N.H. 257, 260, 551 A.2d 530 (1988) and Fisher v. Fitchburg Mut. Ins. Co., 131 N.H. 769, 560 A.2d 630 (1989). In those cases, the Court construed the term "accident" in the context of "occurrence" coverage to mean " 'an undesigned contingency, ... a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected.' " Jespersen, 131 N.H. at 260, 551 A.2d 530 (quoting Vermont Mutual, 128 N.H. at 523, 517 A.2d 800) (other citations omitted). The Jespersen Court explained that the question of whether the causal event was "fortuitous" is answered by considering not " 'the character of the act viewed in isolation, but ... the character of the act viewed, with reference to the insured, as a cause of injury.' " Id. (quoting Vermont Mutual, 128 N.H. at 524, 517 A.2d 800).

In Scanlon, the New Hampshire Supreme Court reiterated the test formulated in Vermont Mutual for determining whether there is an accident:

"If the insured did not intend to inflict the injury on the victim by his intentional act, and the act was not so inherently injurious that the injury was certain to follow from it, the act as a contributing cause of injury would be regarded as accidental and an 'occurrence.' "

Scanlon, 638 A.2d at 1249 (quoting Vermont Mutual, 128 N.H. at 524, 517 A.2d 800). An intentional act is "inherently injurious if it is certain to result in some injury, although not necessarily the particular alleged injury." Id.

Mottolo's actions in dumping materials at the site were, of course, intentional. Therefore, his actions were not "accidental" if either 1) he intended to cause the injury or 2) his actions were "inherently injurious." Mottolo has sworn by affidavit that he did not intend to injure property by dumping the waste. The question, therefore, is whether Mottolo's intentional acts of dumping hazardous waste were so "inherently injurious" that they could not be performed without a certainty that some degree of injury to property would result. This is an objective inquiry for which Mottolo's "intent" to injure is irrelevant. See Jespersen, 131 N.H. at 261, 551 A.2d 530 ("Because their intentional act was inherently injurious, it is of no consequence that the Jespersens have sworn, without contradiction, that they did not intend to cause the alleged injuries."); see also Fisher, 131 N.H. at 773, 560 A.2d 630.

C. Underlying Allegations

The United States Environmental Protection Agency ("EPA") made the following allegations of pollution in paragraphs 10 and 11 of its Complaint in the underlying action:

10. Between at least 1975 and 1978 Richard Mottolo buried more than 1650 drums and other smaller containers containing waste, including hazardous substances, in the southwest portion of the Mottolo site. These wastes were...