Boston Gas Company v. Century Indemnity Company

708 F.3d 254, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20017, 2013 WL 203578, 2013 U.S. App. LEXIS 1351
CourtCourt of Appeals for the First Circuit
DecidedJanuary 18, 2013
Docket11-1931
StatusPublished
Cited by10 cases

This text of 708 F.3d 254 (Boston Gas Company v. Century Indemnity Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Boston Gas Company v. Century Indemnity Company, 708 F.3d 254, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20017, 2013 WL 203578, 2013 U.S. App. LEXIS 1351 (1st Cir. 2013).

Opinion

HOWARD, Circuit Judge.

This appeal is the latest chapter in a long-running dispute between Boston Gas Company (“Boston Gas”) and one of its insurers, Century Indemnity Company (“Century”). What’s more, the insured’s activities giving rise to the dispute stretch back more than a century. During the latter part of the 19th and well into the 20th century, Boston Gas produced gas fuel at facilities known as manufactured gas plants (“MGPs”). Faced with liability under Massachusetts law for the costs of investigating and remediating environmental contamination discovered at a number of former MGP sites, see Mass. Gen. Laws ch. 21E (2006), Boston Gas filed this diversity action seeking a declaratory judgment as to Century’s obligations under general commercial insurance (“GCL”) policies issued to Boston Gas by Century’s predecessor and damages for breach thereof. As relevant to this appeal, jury trials have been held with respect to two of the sites included in the cleanup, the Everett and Commercial Point sites. Boston Gas operated MGPs at the Everett and Commercial Point sites during the periods 1908-1969 and 1886-1930, respectively, and insured both sites with Century from 1951-1969.

The Everett site litigation was the first to go to trial. The jury awarded Boston Gas over $6.1 million in past remediation expenses, and the district court issued a declaratory judgment obligating Century to pay all future costs associated with the cleanup of the site. On appeal, a central issue involved the proper method under Massachusetts law for allocating liability for long-term environmental contamination where the defendant GCL insurer had provided coverage for the risk for only a portion of the time during which the contamination took place. Based on an existing intermediate state court decision, the district court had applied an “all sums” or “joint and several” allocation method, whereby an insurer is responsible for an insured’s total remediation costs as long as some property damage for which the insured is liable occurs during the policy period. Noting that the Commonwealth’s highest court had not yet ruled on the issue, which was “determinative of the scope of Boston Gas’ claim,” a panel of this court certified the allocation question to the Supreme Judicial Court (“SJC”). Boston Gas Co. v. Century Indem. Co., 529 F.3d 8, 23-24 (1st Cir.2008).

The SJC rejected an “all sums” approach in favor of pro rata allocation, pursuant to which each insurer is obligated to pay only those costs associated with damage occurring during its policy period. *258 See Boston Gas Co. v. Century Indem. Co., 454 Mass. 337, 910 N.E.2d 290, 312 (2009). The court held that the preferred method for allocating damages on a pro rata basis is a “fact-based” determination of the losses occurring during each policy period, but in the event that the evidence does not permit such an allocation, losses should be allocated based on the insurer’s “time on the risk.” Id. at 316. Under the time-on-the-risk method, “each triggered policy bears a share of the total damages [up to its policy limit] proportionate to the number of years it was on the risk [the numerator], relative to the total number of years of triggered coverage [the denominator].” Id. at 313 (quoting 23 E.M. Holmes, Appleman on Insurance § 145.4[A][2][b], at 24 (2d ed.2003)). “Given the factual complexities of cases of this sort,” the SJC explained, “we defer to trial judges in the first instance to determine whether losses can be allocated based on the amount of property damage that in fact occurred during each policy period, or must instead be allocated on the basis of each insurer’s time on the risk.” Id. at 316.

Upon receipt of this guidance, we remanded to the district court to determine in the first instance “how far [the jury verdict] serve[d] as a predicate for employing the pro rata approach adopted by the SJC,” and for further proceedings as necessary. Boston Gas Co. v. Century Indem. Co., 588 F.3d 20, 23 (1st Cir.2009). The presiding trial judge found that the jury verdict could not support a pro rata allocation, thus necessitating a new trial. Pursuant to local rule, the global action was reassigned to a different judge. See D. Mass. R. 40.1(K)(1). Thereafter, the parties reached a settlement regarding the Everett site costs.

Meanwhile, the Commercial Point litigation, which is the subject of the present appeal, had proceeded to trial prior to the SJC’s ruling on allocation. At the conclusion of the nine-day trial, the jury returned a special verdict finding that property damage resulting in liability occurred during each of the eighteen years of the Century policies. The verdict form also required the jury to make findings regarding the applicability of two potential policy exclusions: the “expected/intended” exclusion, which excluded coverage for damage caused knowingly or intentionally, and the “owned property” exclusion, which barred coverage for costs incurred solely to remediate the insured’s own (as opposed to third party) property. The jury found that the owned property exclusion applied to one portion of the site (the “KeySpan upland” area), but found the expected/intended exclusion inapplicable. Asked to indicate “the amount Boston Gas Company ... has been legally obligated to pay for the investigation and/or remediation as a result of property damage at the Commercial Point site for which coverage was not excluded,” the jury responded with the amount of $1,699,145.79.

The trial judge deferred ruling on post-trial motions and entry of final judgment pending the outcome of the Everett appeal. Those motions now having been resolved, and entry of judgment in the Commercial Point litigation stipulated to, Boston Gas appeals on multiple grounds. For the reasons set forth below, we affirm in all respects.

Allocation

In the wake of the SJC ruling, Century moved for entry of judgment in its favor on the issue of allocation or, in the alternative, for a new trial on the timing and allocation of property damage. It argued that Boston Gas should be bound, under the doctrine of judicial estoppel, by its representations at trial that property damage had occurred continuously from the beginning of plant operations until the *259 date of remediation. Century accordingly requested that the district court allocate damages evenly from 1886 through 2007 based on the time-on-the-risk method announced by the SJC. Boston Gas rejoined that the jury verdict already reflected a fact-based allocation and that judgment should be entered on that basis, viz., that all covered damages at the site occurred during Century’s policy periods.

The district court rejected Boston Gas’s view of the verdict and, concluding that the evidence did not permit a fact-based allocation and that Boston Gas was judicially estopped from contradicting its prior statements that contamination was continuous, allocated damages evenly across the 121-year span. In light of Century’s time on the risk, this had the effect of reducing its share of damages from 100 percent to less than 15 percent. Our review of each of these rulings is for abuse of discretion. See Jennings v. Jones,

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Bluebook (online)
708 F.3d 254, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20017, 2013 WL 203578, 2013 U.S. App. LEXIS 1351, Counsel Stack Legal Research, https://law.counselstack.com/opinion/boston-gas-company-v-century-indemnity-company-ca1-2013.