Travelers Ins. Co. v. Waltham Indus. Laboratories

• Decision Date: 26 September 1988
• Docket Number: Civ. A. No. 87-0760-MA.
• Citation: 722 F. Supp. 814
• Parties: TRAVELERS INSURANCE COMPANY, Plaintiff, v. WALTHAM INDUSTRIAL LABORATORIES CORP., Memory Lane, Inc., Melvin Rosenfeld and Phyllis Rosenfeld, Defendants.
• Court: U.S. District Court — District of Massachusetts

722 F. Supp. 814

TRAVELERS INSURANCE COMPANY, Plaintiff, v. WALTHAM INDUSTRIAL LABORATORIES CORP., Memory Lane, Inc., Melvin Rosenfeld and Phyllis Rosenfeld, Defendants.

Civ. A. No. 87-0760-MA.

United States District Court, D. Massachusetts.

September 26, 1988.

David O. Brink, Owen Gallagher, John P. Graceffa, Gallagher & Gallagher, P.C., Cassandra Warshowsky, Steven L. Schreckinger, Tamara S. Wolfson, Palmer & Dodge, Boston, Mass., for plaintiff.

Anton T. Moehrke, Thomas A. Mackie, Kim Maree Johannessen, Wright & Moehrke, P.C., Boston, Mass., for defendants.

MEMORANDUM AND ORDER

MAZZONE, District Judge.

This matter is presently before this Court on cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.¹ At issue here is the interpretation of a contract of insurance between Travelers Insurance Company ("Travelers") and Waltham Industrial Laboratories ("WIL") and Memory Lane, Inc. Melvin Rosenfeld was the founder and chief executive officer of WIL, a company involved in the electroplating business. It was located at 225 Crescent Street, Waltham, on a parcel of land leased from First Republic Corporation ("First Republic"). Also located at this site was Memory Lane, Incorporated ("Memory Lane"), a business involved in the preservation of baby shoes, which was solely owned and operated by Melvin Rosenfeld's wife, Phyllis.

In 1984, an action was filed against the present defendants by their landlord, First Republic, seeking redress for alleged damage to the leased premises arising from "the unlawful release by certain of the defendants of hazardous materials into the environment." On January 30, 1987, First Republic filed an amended complaint. In 1985, the Massachusetts Water Resources Authority ("MWRA"), the Commonwealth of Massachusetts, and the Attorney General also filed suit against WIL, Melvin Rosenfeld and First Republic, for alleged unlawful discharges of pollutants into the metropolitan sewer system, water and ground of the Commonwealth (hereinafter, the "MWRA suit"). Both of these suits were terminated, with WIL paying to each of the plaintiffs a substantial amount of money.

Travelers sued in this Court on March 27, 1987, for a declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, seeking a ruling that under the terms of its agreement with WIL, it had no duty to defend against the two suits mentioned above, nor had it a duty to indemnify WIL for the money expended in terminating those suits. The defendants answered, and filed counterclaims against Travelers on April 29, 1987. In their counterclaim, the defendants alleged that Travelers agreed, albeit originally under a reservation of rights, to undertake a defense in the MWRA suit, and later made a $10,000 payment toward its defense obligations. After making two additional, smaller payments, however, Travelers refused to make further contributions, asserting that it had no duty to defend in the suit, which had by this time been consolidated with the First Republic action, in which Travelers had previously refused to participate in the defense. The defendants seek a declaratory judgment pursuant to Chapter 231A of the Massachusetts General Laws that Travelers "having acknowledged and assumed its obligation to defend the defendants ... may not cease providing such defense until a final adjudication of its duty to defend and indemnify the defendants" has been made. The defendants also seek a preliminary injunction to require compliance with the defense agreement, and damages based on statutory and breach of contract grounds.

On March 15, 1988, Travelers moved for partial summary judgment on the issue of whether it had a duty to indemnify the defendants for either of the settlements reached with regard to the underlying actions. Travelers advanced four grounds in its motion in support of its argument that it had no duty to indemnify — three based on provisions of the policy itself and one based on a Massachusetts statute prohibiting insurance companies from insuring persons "against legal liability for causing injury, other than bodily injury, by his deliberate or intentional crime or wrongdoing." Mass.Gen.Laws Ann. c. 175, § 47(6)(b) (West 1987). Also on that date, the defendants moved for summary judgment on its counterclaims. Later, on April 15, Travelers filed a cross-motion for summary judgment on its petition for declaratory judgment on the issue of Travelers' duty to defend the defendants in the two underlying suits, and on the defendants' consumer protection claim brought pursuant to chapter 93A of the Massachusetts General Laws. Each side has opposed the other's motion.

Summary judgment is appropriate when "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R. Civ.P. 56(c). This Court is thus required to examine the relevant facts in the light most favorable to the non-movant, Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976), indulging that party all appropriate inferences, Voutour v. Vitale, 761 F.2d 812, 817 (1st Cir.1985), cert. denied sub. nom. Saugus v. Voutour, 474 U.S. 1100, 106 S.Ct. 879, 88 L.Ed.2d 916 (1986), and determine if there exists a genuine issue of material fact that must be reserved for the factfinder, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) ("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"). This standard requires a non-movant to offer "concrete evidence from which a reasonable juror could return a verdict in his favor," id. at 256, 106 S.Ct. at 2514; "there is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. at 2511.

I.

Briefly stated, the relevant facts are as follows.

In 1959, Melvin Rosenfeld, a chemical engineer, established WIL, and began operating an electroplating business in buildings and on land leased from First Republic. Initially, WIL occupied Building 16 and part of Building 17, later expanding into the rest of Building 17 as well as Buildings 18 and 19.

Several types of corrosive chemicals are used in the electroplating process. It is the effect and the disposal of these materials that is at issue in this litigation. First Republic contends that these chemicals caused serious damage to the metal surfaces in the buildings leased to the defendants as well as other damages; indeed, as early as 1967, First Republic expressed this concern to WIL. The Commonwealth asserts that these chemicals were the source of damage to the environment.

Travelers recites a long history of warnings and complaints issued to WIL from various governmental bodies regarding WIL's disposal of wastes. In 1971, the Director of the Water Resources Commission informed Rosenfeld and the Superintendent of the Waltham Public Works Department that WIL's daily discharge of 35,500 gallons of untreated electroplating wastes into the sewer would damage the sewer lines. Later in 1971, the Massachusetts Division of Water Pollution Control notified WIL that some of its electroplating wastes were running into the Charles River, and ordered WIL to abate this pollution.

In September of 1973, the Metropolitan District Commission ("MDC") notified WIL of several violations of MDC regulations governing discharges of chemicals and toxic heavy metals into the sewer system. For instance, the MDC alleged in its report that WIL had made illegal cross-connections between its rinse and plating tanks and the public water supply without proper safety devices, that seepage from plating and rinse tanks was drained through holes in the floor of the building into the basement, that illegal discharges were being made into the sewer system, including the discharge of sludge, and that these discharges were wearing away the sewer pipe and pumping equipment at the facility. As a result of its investigation, the MDC recommended that the city of Waltham disconnect WIL's sewer line to prevent further pollution. On October 2, 1973, Rosenfeld acknowledged that WIL was discharging 35,500 gallons of untreated waste into the sewers daily, and that these discharges contained such contaminants as cyanide, acids, nickel, cadmium and zinc. He indicated, however, that he would undertake measures to correct this problem, and would hire a company to dispose of toxic heavy metals generated by the plant. Rosenfeld eventually hired a consultant, who indicated that a system of pretreatment was planned for WIL, and that the sludge generated would be disposed of by a private firm, the name of which would be submitted to the MDC. No name was ever submitted.

In 1974, WIL submitted to MDC a "Preliminary Engineering Report for Industrial Waste Treatment" prepared by a second consultant describing a comprehensive pretreatment plan that Mr. Rosenfeld planned on implementing. On September 30, 1974, Rosenfeld wrote to the Environmental Protection Agency, informing them that although he felt implementation of the recommendations of the second consultant were "an absolute necessity," he needed financial and technical assistance to achieve it. The system was never installed. WIL asserts, however, that a device designed to moderate the pH of discharges from the plant was installed after 1977, but admitted that it did not always function correctly, and was not used between 1959 and 1977.

In March of 1984, WIL ceased operations. An inspection of the premises in June, 1985 revealed sludge in the crawl spaces beneath two of the buildings leased by WIL, Buildings 18 and 19.

On November...