Mottolo v. U.S. Fidelity & Guar. Co.

• Decision Date: 16 August 1985
• Docket Number: No. 84-603,84-603
• Citation: 498 A.2d 760,127 N.H. 279
• Parties: Richard A. MOTTOLO v. UNITED STATES FIDELITY & GUARANTY CO. et al.
• Court: New Hampshire Supreme Court

Page 760

498 A.2d 760

127 N.H. 279

Richard A. MOTTOLO v. UNITED STATES FIDELITY & GUARANTY CO. et al.

No. 84-603.

Supreme Court of New Hampshire.

Aug. 16, 1985.

Stark & Peltonen P.A., Manchester (Rodney L. Stark on brief, and John Peltonen orally), for intervenor K.J. Quinn & Co., Inc.

Wadleigh, Starr, Peters, Dunn & Chiesa P.A., Manchester (Theodore Wadleigh on brief and orally), for defendant U.S. Fidelity & Guar. Co.

Ouellette, Hallisey, Dibble & Tanguay P.A., Dover (Stephen H. Roberts on brief and orally), for defendant The Aetna Cas. & Sur. Co.

KING, Chief Justice.

This case comes before this court on appeal from a ruling by the Superior Court (Gray, J.) granting the defendants' motion to dismiss a petition for declaratory judgment filed by the plaintiff, Richard Mottolo. Intervenor K.J. Quinn & Co., Inc. (Quinn) has taken the appeal. We affirm.

Richard Mottolo, d/b/a Service Pumping and Drain Co. of Wakefield, Massachusetts, carried, from 1970 to 1979, insurance with liability coverage of $100,000 with defendant United States Fidelity & Guaranty Co. (USF & G) and excess coverage of $1,000,000 from 1977-79 with defendant Aetna Casualty & Surety Co. (Aetna). The USF & G policies were issued in Massachusetts with the coverage designated for Mottolo's Wakefield operation. No other locations were indicated. Where the Aetna policy was issued or what it contained is unknown. Both companies' policies included specific "pollution exclusions" and excluded coverage for damage to property in the care, custody or control of the insured.

In addition to his sewage pumping service, Mottolo ran a chemical disposal and storage operation. He buried some 1,500 barrels of chemical and residue waste produced both by Quinn and by Lewis Chemical Corporation. The dumping operation took place on property Mottolo owned in Raymond, New Hampshire, between 1975 and the end of 1978.

In April, 1979, the chemical dump was brought to the attention of the New Hampshire Water Supply and Pollution Control Commission, which investigated and took water samples. It was subsequently determined that toxic wastes were leaking from the site and that these wastes had contaminated the surface waters which drained through the property into a tributary of the Exeter River, which serves as the water supply for the town of Exeter. In May, Mottolo met with State officials, who informed him that the existence of the waste on his property constituted a nuisance and health hazard, and that he would bear both the responsibility and the costs for the removal of the barrels, and for the clean-up of the site. Mottolo took no action.

Subsequently, by writ returnable the first Tuesday of July, 1979, the State brought suit in superior court against Mottolo and Quinn, seeking both temporary and permanent injunctions and authority to enter upon Mottolo's land in Raymond in order to abate the nuisance.

In June, 1979, Mottolo through counsel made a demand upon Aetna to enter the litigation and defend to the limits of the policy coverage. No similar demand was made upon USF & G. Instead, in September, 1979, Mottolo visited his insurance agent in Massachusetts and added, by endorsement, liability coverage through USF & G for the land located in Raymond. At that time he did not reveal to the insurer that he was being sued by the State for his activities on the Raymond property.

In April, 1982, by writ returnable on the first Tuesday of that month, Quinn, a co-defendant with Mottolo in the State's equity suit, initiated an indemnity action against Mottolo. (By writ returnable on July 1, 1983, the Lewis Chemical Corporation, since joined as a co-defendant with Mottolo in the July, 1979, State action, also began a similar indemnity action against Mottolo.)

On July 16, 1982, Mottolo brought a petition for declaratory judgment alleging inter alia that both USF & G and Aetna were bound to defend and indemnify him as to those claims brought against him by the State and Quinn. Both USF & G and Aetna filed motions to dismiss on the ground that Mottolo had not complied with the provisions of RSA 491:22 which requires that a petition for declaratory judgment be brought within six months of the filing of the writ that gives rise to the question, referring to the 1979 State action against the petitioner.

In September, 1983, the United States brought an action against Mottolo in the United States District Court for the District of New Hampshire on claims made pursuant to section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42 U.S.C.A. § 9607 (West 1983)). The federal government sought reimbursement under the aforementioned statute for the sum of approximately $744,000 spent between 1980 and 1982 in cleaning up the dump site on Mottolo's New Hampshire land.

In February, 1984, the State filed suit against Mottolo in the same federal court, seeking approximately $40,000 in response costs under the same federal statute, and asserting pendent State law claims of the same or a similar nature to those already pending in the superior court.

In August, 1984, both USF & G and Aetna renewed their motions to dismiss the petition for declaratory judgment. The petitioner Mottolo again objected, and the State joined with him in opposing the motion. After a hearing on the motion held in November, 1984, the Superior Court (Gray, J.), in December of the same year, granted the insurance companies' motions to dismiss. Mottolo did not contest this ruling. Quinn, an intervening party in the declaratory judgment petition since 1982, filed a motion for clarification. The court granted the motion in January, 1985, and indicated that the motions to dismiss had been granted based upon Mottolo's failure to petition for a declaratory judgment in accordance with the provisions of RSA 491:22. In response, intervenor Quinn appeals the December, 1984, ruling of the superior court.

Quinn claims that Mottolo's 1982 petition for a declaratory judgment, though filed after the six-month period allowed by RSA 491:22, should nonetheless not be dismissed on that ground because the delay was the result of a good faith mistake of law reasonably relied upon. RSA 491:22 provides that the six-month statute of limitations shall not apply in two sets of circumstances: (1) "where the facts giving rise to such coverage dispute are not known to, or reasonably discoverable by, the insurer until after expiration of such 6-month period;" and (2) where there is a court finding that the failure to file the petition was "the result of accident, mistake or misfortune and not due to neglect." This court has made these exceptions available to insureds as well as insurers, National Grange Mut. Ins. Co. v. Watterson, 120 N.H. 141, 145, 412 A.2d 1007, 1009 (1980), and has applied the exception concerning mistakes to those of law as well as of fact, Guarantee Mut. Assurance Co. v. Middlesex Mut. Ins. Co., 115 N.H. 261, 264, 339 A.2d 6, 9 (1975).

Quinn's first argument is that Mottolo made a good faith mistake of law in relying upon Aetna's refusal to cover any liability for the storage of chemical waste on his Raymond land, which mistake was his reliance on his insurance policies' pollution exclusion clauses and his late discovery of a press release on September 28, 1970, from the New Hampshire Insurance Department to the effect that the department would in the future disapprove insurance policies containing such clauses.

The superior court's order granting Quinn's motion for clarification specifies that the granting of the motion of the insurers for dismissal was based upon a finding that the petitioner had not timely filed in accordance with RSA 491:22, and not upon the pollution exclusion clauses in the aforementioned policies. The trial court made no findings that either of the exceptions to the six-month statute of limitations contained in RSA 491:22 applied. Quinn raises this issue again on appeal, but we discern no mistake of law or fact on review of the record before us. This same argument was recently put before the United States Court of Appeals for the First Circuit. In a decision by Bownes, J., the court held, regarding the press release of the New Hampshire Insurance Commissioner,...