SCA Services, Inc. v. Transportation Ins. Co.

• Decision Date: 17 February 1995
• Citation: 646 N.E.2d 394,419 Mass. 528
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: SCA SERVICES, INC. v. TRANSPORTATION INSURANCE COMPANY.

Page 394

646 N.E.2d 394

419 Mass. 528

SCA SERVICES, INC. v. TRANSPORTATION INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 7, 1994.

Decided Feb. 17, 1995.

David M. Jones, Boston, Matthew L. Jacobs, District of Columbia, with him, for plaintiff.

Michael F. Aylward, Laurie J. Condos, with him, Boston, for defendant.

Thomas W. Brunner, James M. Johnstone and Jennifer L. Radner, District of Columbia, and Peter G. Hermes and Kevin J. O'Connor, Boston, for Ins. Environmental Litigation Ass'n, amicus curiae, submitted a brief.

Before LIACOS, C.J., and ABRAMS, LYNCH and O'CONNOR, JJ.

LYNCH, Justice.

This action raises the question whether the defendant, Transportation Insurance Company, had a duty to defend and to indemnify SCA Services, Inc. (SCA), in an underlying class action suit arising from SCA's operation of a hazardous waste landfill in Wilsonville, Illinois. SCA alleged that the defendant had a duty to defend, pursuant to its comprehensive general liability coverage for bodily injury, property damage and personal injury (coverage parts A, B, and P, respectively). ¹ The defendant moved for summary judgment on the ground that the claims against SCA in the underlying action were not within part P of the insurance policy and, in the alternative, even if SCA was entitled to coverage under part P, it was not covered in this case because the damages from the operation of its landfill were a "known loss" and therefore uninsurable at the time the policy was issued. The motion judge granted summary judgment for the defendant on the ground that the damages were uninsurable because they were known prior to the purchasing of the policy. SCA filed a timely notice of appeal and we transferred the case here on our own motion. We now affirm.

SCA filed this action on June 19, 1986, seeking a declaration of its right to a defense and indemnification in the Illinois action, Chappell vs. SCA Servs., Inc. (Ill.Cir.Ct. No. 82-L-12) (1982) (Chappell suit). SCA alleged that it was entitled to a defense pursuant to the coverage afforded in parts A and B of its policies (covering bodily injury and property damage). SCA also alleged claims under G.L. c. 93A (1992 ed.), the Consumer Protection Act, and under the common law for breach of duty of good faith and fair dealing. In May, 1991, SCA amended its complaint to allege that it was entitled to coverage pursuant to the personal injury liability portion of its policy (part P).

The complaint in the Chappell suit was filed in the Circuit Court for the Seventh Judicial Circuit, Macoupin County, Illinois, on February 2, 1982. The plaintiffs in that action were residents of the village of Wilsonville, Illinois, who claimed to have suffered personal injuries and property damages as a result of the insured's operation of a hazardous waste disposal site in Wilsonville. The insured, its subsidiary (which has since been merged into the insured), and two of its executives were the defendants in that action.

In 1977, prior to the commencement of the class action, the Wilsonville residents brought an action to enjoin the insured's operation of the site on grounds that it was hazardous and a nuisance. In 1978, following a lengthy trial, the Macoupin County Court declared that the landfill was a present and prospective public nuisance and ordered the landfill operations to cease. In 1981, the Illinois Supreme Court affirmed the lower court's judgment and ruled that the injunctive relief was proper. See Wilsonville v. SCA Servs., Inc., 86 Ill.2d 1, 55 Ill.Dec. 499, 426 N.E.2d 824 (1981).

The plaintiffs in the Chappell suit asserted that the insured was liable for trespass, nuisance, conscious disregard for public safety, and conspiracy to create and to maintain a nuisance. In support of these allegations, the plaintiffs asserted that the insured's operation of the site caused noxious odors, health hazards, great amounts of dust in the area, contamination of the local water supply, emissions of poisonous gases, and the increased risk of explosions and fires. In 1988, the insured settled the Chappell suit for approximately $2,500,000 in exchange for a release of all plaintiffs' claims for personal injury and other damages, excepting personal injury manifested for the first time after settlement and not discoverable prior to settlement. Citing its standard form pollution exclusion, the defendant declined to defend or to indemnify the insured in the Chappell suit.

After denial of the SCA's motion for summary judgment in the instant action, a judge of the Superior Court granted summary judgment to the defendant ruling that, "even if personal injury coverage extends to the type of injuries and damages alleged in the Chappell suit, the alleged offending conditions existed prior to the effective date of the insurance policy and, therefore, [the defendant] need not defend or indemnify SCA."

On appeal, SCA argues that coverage exists and that the claim was not a "known loss" at the inception of the policy. We conclude that SCA's liability in the underlying suit was a certainty, a "known loss," and was an uninsurable risk. Based on this reasoning the motion judge was correct in allowing summary judgment. ²

1. Summary judgment. Summary judgment shall be granted where there is no material fact in dispute, and the moving party is entitled to judgment as a matter of law. Cassesso v. Commissioner of Correction, 390 Mass. 419, 422, 456 N.E.2d 1123 (1983). See Community Nat'l Bank v. Dawes, 369 Mass. 550, 553, 340 N.E.2d 877 (1976); Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue. Pederson v. Time, Inc., 404 Mass. 14, 16-17, 532 N.E.2d 1211 (1989). Where the party moving for summary judgment does not have the burden of proof at trial, this burden may be met by either submitting affirmative evidence that negates an essential element of the opponent's case or "by demonstrating that proof of that element is unlikely to be forthcoming at trial." Flesner v. Technical Communications Corp., 410 Mass. 805, 809, 575 N.E.2d 1107 (1991). Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716, 575 N.E.2d 734 (1991). Once the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts establishing the existence of a material fact in order to defeat the motion. Pederson v. Time, Inc., supra 404 Mass. at 17, 532 N.E.2d 1211.

It is also well settled "that the question of the initial duty of a liability insurer to defend third-party actions against the insured is decided by matching the third-party complaint with the policy provisions: if the allegations of the complaint are 'reasonably susceptible' of an interpretation that they state or adumbrate a claim covered by the policy terms, the insurer must undertake the defense." Sterilite Corp. v. Continental Casualty Co., 17 Mass.App.Ct. 316, 318, 458 N.E.2d 338 (1983). See Continental Casualty Co. v. Gilbane Bldg. Co., 391 Mass. 143, 146-147, 461 N.E.2d 209 (1984); Boston Symphony Orchestra, Inc. v. Commercial Union Ins. Co., 406 Mass. 7, 12-13, 545 N.E.2d 1156 (1989); Vappi & Co. v. Aetna Casualty & Sur. Co., 348 Mass. 427, 431, 204 N.E.2d 273 (1965). We note that "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 the facts alleged in the complaint specifically and unequivocally make out a claim within the coverage." Sterilite Corp. v. Continental Casualty Co., supra 17 Mass.App.Ct. at 319, 458 N.E.2d 338, quoting Union Mut. Fire Ins. Co. v. Topsham, 441 A.2d 1012, 1015 (Me.1982). Additionally, when the scope of coverage provided by a clause is unclear, the policy should be read so as to provide coverage to the insured. Goshen v. Grange Mut. Ins. Co., 120 N.H. 915, 917-918, 424 A.2d 822 (1980). Any ambiguity in the policy will be construed against the insurer. Vappi & Co. v. Aetna Casualty & Sur. Co., supra 348 Mass. at 431, 204 N.E.2d 273.

2. Known loss. The defendant's policy became effective on January 1, 1980. By its very nature insurance is based on contingent risks which may or may not occur. Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 103-104, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992). Stated differently, the basic purpose of insurance is to protect against fortuitous events and not against known certainties. Parties wager against the occurrence or nonoccurrence of a specified event; the carrier insures against a risk, not a certainty. Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 29 (1st Cir.1981). It follows from this general principle that an insured cannot insure against the consequences of an...