Regan Heating & Air Conditioning, Inc. v. Arbella Prot. Ins. Co.
| Decision Date | 27 January 2023 |
| Docket Number | 2020-170-Appeal.,PC 15-4811 |
| Citation | 287 A.3d 502 |
| Parties | REGAN HEATING AND AIR CONDITIONING, INC. v. ARBELLA PROTECTION INSURANCE COMPANY, INC., et al. |
| Court | Rhode Island Supreme Court |
Scott F. Bielecki, Esq., for Plaintiff.
John A. Caletri, Esq., for Defendant.
Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.
The plaintiff, Regan Heating and Air Conditioning, Inc., appeals from a Superior Court judgment in favor of the defendant, Arbella Protection Insurance Company, Inc., following the denial of its motion for summary judgment and the grant of the defendant's motion for summary judgment. On appeal, the plaintiff contends that the hearing justice committed multiple errors warranting reversal of the judgment. Accordingly, the plaintiff asks this Court to vacate the hearing justice's entry of summary judgment in favor of the defendant and remand the matter to the Superior Court for entry of summary judgment in favor of the plaintiff on several counts and for further proceedings. For the reasons set forth herein, we vacate the judgment of the Superior Court.
We glean the underlying facts of this case from plaintiff's complaint, the submissions of the parties, and the transcript.
The plaintiff is a company that sells and services residential heating and air-conditioning systems. The plaintiff is a long-standing customer of Christopher & Regan Insurance, Inc. (C&R),1 an independent insurance agency with whom plaintiff consulted prior to purchasing insurance to protect it from risks associated with its business. Based on the information provided by C&R, plaintiff purchased two policies from defendant; the one relevant to this matter is Arbella Commercial Package policy number 8500026770 (the policy). The policy provided coverage to plaintiff from December 1, 2014, to December 1, 2015.
On or about May 12, 2015, plaintiff was in the process of removing an older heating system and installing a new heating system for non-party Robert O'Donnell at O'Donnell’s home in Glocester, Rhode Island (the property). That evening, O'Donnell discovered 170 gallons of home heating oil in his basement; his complaint alleged that the oil leak resulted in property damage. O'Donnell filed suit against plaintiff alleging negligence and demanding remediation from the property damage.
The plaintiff thereafter demanded that defendant defend and indemnify plaintiff against O'Donnell’s claim. In a letter dated June 11, 2015, counsel for defendant notified plaintiff that O'Donnell’s claim was not covered under the policy. The letter stated that the loss was "not a covered occurrence" pursuant to the total endorsement because, according to defendant, it was "clear under Rhode Island law that ‘oil’ is a pollutant" defined in the policy and, therefore, the total endorsement excluded coverage.
The relevant policy provisions are as follows. First, contained in the policy is the definition of "pollutants." Under the policy,
The policy also includes a pollution exclusion. That section is "modifie[d]" by and, in effect, replaced by the "Total Pollution Exclusion Endorsement" (the total endorsement):
The first portion of the pollution exclusion—specifically, subparagraph (1)(a)—is also "modifie[d]" by the "Amendment of Pollution Exclusion – Exception for Building Heating Equipment" (the limited endorsement):
The parties dispute the effect of each of these modifications on the policy.
The plaintiff filed its complaint against defendant and C&R on November 3, 2015, alleging breach of contract, common law and statutory bad faith, and requesting specific performance and a declaratory judgment against defendant.2 The defendant filed motions for summary judgment in June 2016 and June 2018.3
The defendant argued that it was entitled to summary judgment on all counts "because the underlying loss is precluded from coverage by the unambiguous language of" the policy. Specifically, defendant submitted that the total endorsement precludes coverage because, defendant alleges, that endorsement states that the policy "does not apply to * * * ‘property damage’ which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, disbursal, seepage, migration, release or escape of ‘pollutants ’ at any time." (Emphasis added.) According to defendant, the home heating oil involved in the underlying incident was a pollutant because "[o]il, by its very nature, constitutes a liquid contaminant consistent with th[e] definition" of pollutant found in the policy.
In support of its motion, defendant highlighted the Legislature's definition of pollutant in G.L. 1956 chapter 12 of title 464 and the Supreme Judicial Court of Massachusetts's opinion in McGregor v. Allamerica Insurance Company , 449 Mass. 400, 868 N.E.2d 1225 (2007), which held that "spilled oil is a classic example of pollution, and a reasonable insured would understand oil leaking into the ground to be a pollutant." McGregor , 868 N.E.2d at 1228.
The defendant additionally contended, in anticipation of plaintiff's response, that the limited endorsement did not create an ambiguity. According to defendant, while the total exclusion "seeks to preclude all liability claims arising out of the release of pollutants[,]" the limited endorsement "only provides a very narrow, limited exception to the pollution exclusion" that "only applies to claims involving property that is owned, occupied by or rented or loaned to an insured." The defendant submitted that, because plaintiff's only relationship to the property was that it performed work there, the limited endorsement does not apply. Accordingly, defendant maintained its position that the limited endorsement and the total endorsement are consistent with one another. The defendant, however, suggested that, "even if the [hearing justice] were to fully accept [p]laintiff's contention that these two provisions are somehow inconsistent, where a contract contains two potentially inconsistent provisions, those provisions ‘should of course be construed as consistent with one another if that is reasonably possible[.]’ " Rice Growers Association of California v. F. Carrera & Hno., Inc. , 234 F.2d 843, 846 (1st Cir. 1956).
In February 2019, plaintiff filed an objection and a cross-motion for summary judgment, arguing that the policy was ambiguous. The plaintiff contended that the two endorsements are in direct conflict because the total endorsement and limited endorsement purport to replace the same language in the policy. The plaintiff argued that, under Rhode Island law, the conflict "must be resolved in favor of the insured." Therefore, plaintiff submitted, the total endorsement, "which under [defendant's] reading of the [p]olicy would purport to defeat coverage, must give way to the [l]imited [e]ndorsement, which does not defeat coverage."
The plaintiff additionally maintained that the definition of pollutants contained within the policy is ambiguous. The plaintiff cited to numerous state and federal courts, including the decision of the United States Court of Appeals for the First Circuit in Nautilus Insurance Company v. Jabar , 188 F.3d 27 (1st Cir. 1999), in support of this argument. The plaintiff noted that, in Nautilus , the First Circuit found the same definition of pollutant at issue here to be ambiguous. See Nautilus , 188 F.3d at 30-31. The plaintiff further submitted that, in the context of its industry, home heating oil is not a pollutant. Furthermore, plaintiff contended that it reasonably expected the policy to provide coverage based on defendant's prior claim payouts.
The hearing justice heard arguments on those motions on July 31, 2019. She issued a bench decision on September 30, 2019, granting defendant's motion for summary judgment and denying plaintiff's motion for summary judgment, and on November 13, 2019, an order to the same effect entered. Judgment entered in favor of defendant and against plaintiff on February 17, 2020. The plaintiff filed a timely notice of appeal on February 24, 2020.
"This Court will review the grant of a motion for summary judgment de novo , employing the same standards and rules used by the hearing justice."
Dulong v. Merrimack Mutual Fire Insurance Company , 272 A.3d 120, 125 (R.I. 2022) (quoting Bank of America, N.A. v. Fay , 242 A.3d 38, 42 (R.I. 2020) ). "We will affirm a summary judgment...
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