United States Court of Appeals For the First Circuit
No. 24-1660
FEDERATED MUTUAL INSURANCE COMPANY,
Plaintiff, Appellant,
v.
PETERSON'S OIL SERVICE, INC.; HOWARD WOOD PETERSON, JR.; KRISTEN PETERSON HALUS; SHEENA MARANDINO; SEAN MARANDINO; NANCY CARRIGAN; CLAIRE FREDA; KELLEY FREDA; ALICE HART; ROBERT F. HART; TORRE MASTROIANNI; and CONGREGATION BETH ISRAEL OF WORCESTER,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Montecalvo and Aframe, Circuit Judges, and Vélez-Rivé,* District Judge.
Charles E. Spevacek, with whom Alexander V. Tibor, Meagher & Geer, P.L.L.P., Eric B. Hermanson, Austin D. Moody, and White and Williams LLP, were on brief, for appellant.
Louis M. Ciavarra, with whom AiVi Nguyen, Jared A. Fiore, Brian J. Edmonds, and Prince Lobel Tye LLP, were on brief, for appellees Peterson's Oil Service, Inc., Howard Wood Peterson, Jr.,
* Of the District of Puerto Rico, sitting by designation. and Kristen Peterson Halus.
Jeffrey S. Strom, with whom John Regan, Regan Strom, P.C., Edward Foye, and Arrowood LLP, were on brief, for appellees Sheena Marandino, Sean Marandino, Nancy Carrigan, Claire Freda, Kelley Freda, Alice Hart, Robert F. Hart, Torre Mastroianni, and Congregation Beth Israel of Worcester.
September 8, 2025 MONTECALVO, Circuit Judge. Plaintiff-appellant
Federated Mutual Insurance Company ("Federated") appeals the
district court's adverse summary judgment rulings in this
declaratory judgment suit. Federated had sought a declaratory
judgment saying that it had no duty to defend or indemnify its
insured, defendant-appellee Peterson's Oil Service, Inc.
("Peterson's"), in an ongoing Massachusetts state court class
action brought by aggrieved Peterson's customers. Federated
asserted that coverage was foreclosed under the terms of Peterson's
insurance policy because Peterson's knew about the underlying
state court suit before coverage commenced. The district court
disagreed and denied summary judgment for Federated regarding its
duty to defend, then granted partial summary judgment to Peterson's
on the issue. It determined that, because Peterson's did not know
about all of the damage alleged in the state case before the
coverage period began, basic principles of insurance law required
Federated to defend the entire suit. We agree that Federated has
a duty to defend and, therefore, we affirm.
I. Factual and Procedural Background
This case arises from an ongoing Massachusetts state
class action. See Marandino v. Peterson’s Oil Serv., Inc., No.
1985-CV-0792 (Mass. Super. Ct.). In March 2019, customers of
Peterson's served the company with a demand letter and complaint
alleging that, beginning in 2012, Peterson's had added biodiesel
- 3 - fuel to the home heating oil it sold them in proportions that
exceeded industry standards and harmed their heating equipment.
The state plaintiffs alleged that Peterson's knew about the harm
caused by the high biodiesel content because the company's service
department had received multiple customer complaints about the
biodiesel-enriched oil and, in February 2019, Howard Peterson, Jr.
(Peterson's owner) had been confronted with allegations about the
defective oil on a local TV news program. The state court
eventually certified a class comprised of two subclasses: one of
customers who received heating oil containing more than five
percent biodiesel from 2012 to February 2019, and another of
customers who received such heating oil from March 2019 to the
"present."
Federated had not insured Peterson's in March 2019 when
Peterson's first received notice of the suit. Rather, Federated
first insured Peterson's under policies that went into effect on
July 5, 2019. The insurance policies relevant to this dispute
include a Commercial General Liability ("CGL") policy and an
umbrella policy. The CGL policy imposes on Federated a "duty to
defend the insured against any 'suit' seeking" "damages because of
. . . 'property damage' to which this insurance applies."
However, the policy only covers "property damage" that "occurs
during the policy period" if, "[p]rior to the policy period, no
insured . . . knew that the . . . 'property damage' had occurred,
- 4 - in whole or in part" (the "known loss" provision). "Property
damage" under the policy is caused by an "occurrence," which is
defined as "an accident, including continuous or repeated exposure
to substantially the same general harmful conditions." If the
insured "knew, prior to the policy period, that the . . . 'property
damage' occurred, then any continuation, change or resumption of
such . . . 'property damage' during or after the policy period
will be deemed to have been known prior to the policy period" (the
"loss-in-progress" provision). In addition, the insured is
"deemed" to know that property damage occurred when the insured
"[r]eceives a written or verbal demand or claim for damages because
of the . . . 'property damage'" or "[b]ecomes aware by any other
means that . . . 'property damage' has occurred or has begun to
occur" (the "deemer" clause). The umbrella policy, for its part,
provides additional insurance limits for property damage that is
covered by the CGL policy.
In September 2021, Peterson's asked Federated to defend
it in the state class action. Federated refused, citing the known
loss and loss-in-progress provisions and the "deemer" clause.
Federated interpreted those provisions to relieve it of its
obligation to provide Peterson's with a defense because Peterson's
knew about the state case before coverage commenced.
In April 2022, Federated initiated this diversity action
in the federal district court in Massachusetts seeking a
- 5 - declaration that it had no duty to defend or indemnify Peterson's
in the state case. Federated also named some of the state
plaintiffs as defendants: Sheena Marandino; Sean Marandino; Nancy
Carrigan; Claire Freda; Kelley Freda; Alice Hart; Robert F. Hart;
Torre Mastroianni; and Congregation Beth Israel of Worcester
(collectively, "claimants").1
In November 2022, claimants filed a counterclaim in the
district court seeking a declaratory judgment "that [Federated] is
obligated to pay for all damages [claimants] and the Class are
awarded in the [state court action]," treble damages under
Massachusetts consumer protection law, and attorney's fees.
Federated moved for summary judgment. On September 21,
2023, the district court partially granted and partially denied
the motion. It determined that the plain language of the known
loss and loss-in-progress provisions meant that "if [Peterson's]
w[as] aware of property damage that began prior to July 5, 2019
. . . , there is no coverage for any continuation of that damage
during the policy period." It determined that Peterson's was aware
of damage suffered by the class of customers who received heating
oil prior to July 5, 2019 (the start of the policy period) by
virtue of the demand letter, class action complaint, and media
1 Howard Peterson, Jr. and Kristen Peterson Halus, who are principals of Peterson's, are also named as defendants in this action.
- 6 - coverage. But the district court declined to treat all class
members as a "monolith" and, instead, found that Peterson's did
not know about the damage incurred by members who received heating
oil for the first time after July 5, 2019. It noted that "Federated
has not cited any cases holding that similar known-loss provisions
allow the Court to deem the policyholder aware of damage to class
members which began after the insurance policy's inception, based
on knowledge of damage to other class members prior to inception."
To the contrary, it reasoned that the plain language of the known
loss provision could not apply to members who received heating oil
for the first time after the policy period began. The district
court concluded that, because Federated has a duty to defend the
claims of class members who received high-biodiesel oil for the
first time during the coverage period, the "in for one, in for
all" principle required it to defend the whole suit. The district
court accordingly denied Federated's summary judgment motion with
respect to its claim that it had no duty to defend Peterson's.2
It did not dispose of the case, however, as it found that
Federated's "motion as to its duty to indemnify is not yet ripe."
About two months later, Federated sought clarification
as to whether the summary judgment order required its immediate
2The district court also granted partial summary judgment to Federated on an issue about an auto policy and on counterclaims for unfair insurance claim settlement practices. Neither of these issues is before us.
- 7 - participation in the defense of the underlying case. Federated
stated that, in its view, the order had "rejected the arguments
[it] made against a defense obligation . . . [but] did not compel
[it] to participate immediately in Peterson's defense." To do so,
per Federated, "some further explicit order would be required by
the [district court]." On June 17, 2024, the district court
entered a "clarif[ying]" electronic order. Noting Federated's
position, the district court, sua sponte, granted summary judgment
to Peterson's as to Federated's duty to defend.
On July 12, 2024, the district court entered another
electronic order reading, "[g]iven the parties' agreement that the
indemnification issue is not ripe, that portion of Federated's
complaint is DISMISSED without prejudice." Further, the district
court declined to enter "piecemeal" judgment regarding Federated's
duty to defend. On January 24, 2025, the district court entered
another electronic order explaining, in relevant part, that it had
"declined to enter 'piecemeal' judgment . . . as to the 'duty to
defend' matter, understanding that the 'duty to indemnify' issue,
which is not currently ripe, might be re-asserted by the insurers
after the resolution of the Underlying Action." The January order
further explained that:
Although this Court understands that its use of "dismissed without prejudice" in addressing the indemnification issue may have caused confusion, the Court purposefully did not enter final judgment . . . as it contemplated that [this case] would effectively be
- 8 - stayed until the completion of the trial in the [state court action] occurred and the indemnification matter would be ripe. To that end, the Court has sought and continues to seek and receive updates on the progress of the [state court action].
. . .
Accordingly, . . . if [the case was] remanded now, the Court would retain jurisdiction, stay matters pending resolution of the [state court action] and entertain the claim regarding indemnification when it becomes ripe and enter final judgment after the matters are resolved.
(Citations omitted).
Federated appeals the district court's summary judgment
rulings from this unusual posture.
II. Standard of Review
We review a district court's determination of summary
judgment de novo, "construing the record in the light most
favorable to the nonmovant and resolving all reasonable inferences
in that party's favor." Clarendon Nat'l Ins. Co. v. Phila. Indem.
Ins. Co., 954 F.3d 397, 403–04 (1st Cir. 2020). Summary judgment
is merited "if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law." Fed. R. Civ. P. 56(a).
III. Discussion
A. Jurisdiction
We first address our jurisdiction to decide this case.
"Federal courts, as courts of limited jurisdiction, may not presume
the existence of subject matter jurisdiction, but, rather, must
- 9 - appraise their own authority to hear and determine particular
cases." Watchtower Bible & Tract Soc. of N.Y., Inc. v. Colombani,
712 F.3d 6, 10 (1st Cir. 2013) (quoting Cusumano v. Microsoft
Corp., 162 F.3d 708, 712 (1st Cir. 1998)). In this case, it is
not clear whether Congress has vested us with jurisdiction to
review the district court's summary judgment determinations.
Federated posits that we have jurisdiction pursuant to either 28
U.S.C. § 1291 (conferring appellate jurisdiction over "all final
decisions of the district courts of the United States") or
§ 1292(a)(1) (conferring appellate jurisdiction over
"[i]nterlocutory orders of the district courts . . . granting,
continuing, modifying, refusing or dissolving injunctions, or
refusing to dissolve or modify injunctions"). Peterson's
disagrees on both counts.
Whether either statute confers us with jurisdiction to
decide this case is not immediately apparent. It is not obvious
that any of the district court's orders constitute a "final
decision[]" for the purposes of § 1291. The district court made
clear that it did not intend to enter a final judgment and that it
continues to actively supervise the case. See Watchtower Bible,
712 F.3d at 11 (noting the offense to "basic tenets of judicial
administration" caused by "the unseemly spectacle of two courts
competing simultaneously for the parties' attention").
Nevertheless, Federated asserts that we have jurisdiction under
- 10 - the theory that the district court's orders, collectively, finally
disposed of all pending claims before it. See WM Cap. Partners
53, 975 F.3d at 83 (explaining that a "final decision" is one that
"end[s] the litigation on the merits and leave[s] nothing for the
court to do but execute the judgment" (quoting Catlin v. United
States, 324 U.S. 229, 233 (1945)). It argues that the district
court did dismiss the duty-to-indemnify claims, despite its
ensuing order backtracking from that dismissal, which left nothing
for the district court to decide.
The exercise of jurisdiction pursuant to § 1292(a)(1) is
also murky. Federated asserts that the district court has
"compel[led]" it to defend Peterson's in the state court case, and
thus that the summary judgment determination is appealable as an
injunction; Peterson's retorts that the court has not issued an
injunction or any other order commanding Federated to do anything.
See Zurn Indus., LLC v. Allstate Ins. Co., 75 F.4th 321, 328-29
(3d Cir. 2023) (wrestling with a similar appeal and finding no
jurisdiction under § 1292(a)(1) when the district court's orders
did not require the insurer to take any particular act and were
not enforceable by contempt).
In short, it would take some untangling to assess whether
we have statutory jurisdiction to hear this case and, if so, under
which statute. However, when a case "poses a question of
statutory, not Article III, jurisdiction" and when the "decision
- 11 - on the merits will favor the party challenging the court's
jurisdiction," we may sidestep the jurisdictional determination
altogether and resolve the case by asserting "hypothetical"
jurisdiction. In re Fin. Oversight & Mgmt. Bd. for P.R., 91 F.4th
501, 508 (1st Cir. 2024) (quoting Doe v. Town of Lisbon, 78 F.4th
38, 44-45 (1st Cir. 2023)). Although we do not prefer to rely on
hypothetical jurisdiction and do not do so lightly, the
"jurisdictional riddle" posed by the unusual procedural posture of
this case persuades us it is prudent to do so here. See Akebia
Therapeutics, Inc. v. Azar, 976 F.3d 86, 91 (1st Cir. 2020)
("[C]ourts should not rush to decide unsettled issues when the
exigencies of a particular case do not require such definitive
measures." (quoting Privitera v. Curran (In re Curran), 855 F.3d
19, 22 (1st Cir. 2017)). As we describe below, we determine that
Peterson's -- the party challenging jurisdiction -- prevails on
the merits. We therefore assume, without deciding, that we have
jurisdiction to avoid "sort[ing] out [the] thorny jurisdictional
tangles" presented by the case. In re Fin. Oversight & Mgmt. Bd.,
91 F.4th at 509 (alterations in original) (quoting Nisselson v.
Lernout, 469 F.3d 143, 151 (1st Cir. 2006)); see also Johansen v.
Liberty Mut. Grp. Inc., 118 F.4th 142, 148 (1st Cir. 2024) (taking
the same approach).
- 12 - B. Merits
With that, we turn to the single merits issue before us
on appeal: whether, as a matter of Massachusetts law, the insurance
policy's known loss and loss-in-progress provisions absolve
Federated of its duty to defend the state action. For the reasons
that follow, we affirm the district court's determination that
they do not.
We begin with principles that are not in dispute. Under
Massachusetts law, "[a]n insurer has a duty to defend an insured
when the allegations in a complaint are reasonably susceptible of
an interpretation that states or roughly sketches a claim covered
by the policy terms." Metro. Prop. & Cas. Ins. Co. v. Morrison,
951 N.E.2d 662, 667 (Mass. 2011) (quoting Billings v. Com. Ins.
Co., 936 N.E.2d 408, 414 (Mass. 2010)). "[W]here an insurer is
obligated to defend an insured on one of the counts alleged against
it, the insurer must defend the insured on all counts, including
those that are not covered" (commonly referred to as the "in for
one, in for all" principle). Mount Vernon Fire Ins. Co. v.
Visionaid, Inc., 76 N.E.3d 204, 210 (Mass. 2017). On the other
hand, "when the allegations in the underlying complaint lie
expressly outside the policy coverage and its purpose, the insurer
is relieved of the duty to . . . defend." Metro. Prop. & Cas.
Ins. Co., 951 N.E.2d at 667 (quoting Billings, 936 N.E.2d at 414).
"Any uncertainty as to whether the pleadings include or are
- 13 - reasonably susceptible to an interpretation that they include a
claim covered by the policy terms is resolved in favor of the
insured." Holyoke Mut. Ins. Co. in Salem v. Vibram USA, Inc., 106
N.E.3d 572, 577 (Mass. 2018) (quoting Deutsche Bank Nat'l Ass'n v.
First Am. Title Ins. Co., 991 N.E.2d 638, 642 (Mass. 2013)). Here,
then, Federated must defend Peterson's in the state action unless
all of the allegations in that action "lie expressly outside the
policy coverage." Metro. Prop. & Cas. Ins. Co., 951 N.E.2d at 667
(quoting Billings, 936 N.E.2d at 414).
As we previewed, the district court found that some, but
not all, of the allegations in the state action lie outside of the
policy's coverage. It determined that the allegations by class
members who first received heating oil before July 5, 2019 (the
date that the policy period commenced) were indeed excluded from
coverage by the known loss and loss-in-progress provisions. But
the district court saw no reason to extend that exclusion to class
members who received heating oil for the first time after coverage
began, reasoning that Peterson's did not know about damage that
had not yet occurred. Federated specifically appeals this
determination, arguing that the known loss and loss-in-progress
provisions also foreclose coverage for the post-July 5, 2019 class
members. If correct, Federated would have no duty to defend the
suit as a whole because the claims of the post-July 5, 2019 class
- 14 - members are the only remaining claims that may be covered by the
policy.
Background in place, we turn to the linchpin of the
appeal: whether claims by class members who first incurred damage
after coverage began are excluded from coverage by the known loss
and loss-in-progress provisions because Peterson's knew about the
same type of damage experienced by earlier class members. In
essence, Federated asks us to view the entire class action as a
single unit such that Peterson's knowledge of the action as a whole
precludes coverage for all claims of all class members.
Peterson's, on the other hand, counters that each member of the
class is unique and "experienced separate and distinct incidents
of property damage." Consequently, knowledge of earlier class
members' damage cannot serve as the basis for excluding later class
members' claims.
To assess which of these views is correct, we begin with
the policy language. "Interpretation of an insurance contract is
a pure question of law." Zurich Am. Ins. Co. v. Med. Props. Tr.,
Inc., 237 N.E.3d 733, 737 (Mass. 2024) (citing Ken's Foods, Inc.
v. Steadfast Ins. Co., 199 N.E.3d 1286, 1289 (Mass. 2023)). "If
the language of an insurance policy is unambiguous, then we
construe the words in their usual and ordinary sense." Id.
(quoting Vt. Mut. Ins. Co. v. Poirier, 189 N.E.3d 306, 310 (Mass.
- 15 - 2022)). We resolve ambiguous policy language in favor of the
insured. Id.
By its terms, the policy at issue covers "property
damage" that is caused by an "occurrence." "Property damage" is
defined as "[p]hysical injury to tangible property, including all
resulting loss of use of that property." An "occurrence" is
defined as "an accident, including continuous or repeated exposure
to substantially the same general harmful conditions." Putting
those together, coverage centers around individual "occurrences"
causing injury to property.
Although the parties do not dispute that there was an
"occurrence" here, they do not agree on what, precisely, that
occurrence was. Was there, as Peterson's suggests, an "occurrence"
every time Peterson's delivered biodiesel-enriched oil that
allegedly damaged a customer's heating equipment? Or, as Federated
would have it, was Peterson's entire course of conduct in
delivering allegedly defective oil to its customers a single
"occurrence?" Defining the "occurrence" here matters because (1)
the known loss provision forecloses coverage for "property damage"
that the insured knew about before the policy period began and (2)
"property damage" is itself defined by reference to an
"occurrence." If, for example, the provision of enriched oil to
each customer was a separate "occurrence," then providing oil to
each new customer would constitute new "property damage" under the
- 16 - policy. Under that view, Peterson's knowledge of earlier
customers' "property damage" could not, by the policy's language,
be knowledge of "property damage" to a different customer's heating
equipment that had not yet occurred.
The usual and ordinary sense of the word "occurrence"
leads us to conclude that, here, the provision of heating oil to
each new customer constituted a separate occurrence. An
"occurrence" is "something that happens; [an] event; [an]
incident." Occurrence, Dictionary.com, https://www.dictionary.
com/browse/occurrence [https://perma.cc/Z5VJ-HEXN]. Similarly,
an "accident" (which the policy defines an "occurrence" to be)
"means an unexpected happening without intention or
design." Quincy Mut. Fire Ins. Co. v. Abernathy, 469 N.E.2d 797,
799 (Mass. 1984) (quoting Beacon Textiles Corp. v. Emps. Mut. Liab.
Ins. Co., 246 N.E.2d 671, 673 (Mass. 1969)). Thus, an "occurrence"
is an "event," "incident," or "happening." Each of these terms
connotes a relatively concrete, time-bound quality. We
accordingly think the "occurrence" here is not naturally
understood as referring to the provision of oil to multiple
customers across multiple years. And to the degree that the
meaning of an "occurrence" here could instead be deemed ambiguous,
our conclusion is bolstered by the requirement that we construe
policy ambiguities in favor of the insured. See Zurich Am. Ins.
Co., 237 N.E.3d at 737.
- 17 - Armed with this understanding, we conclude that the
plain language of the known loss and loss-in-progress provisions
does not impute Peterson's prior knowledge of "property damage"
caused by one "occurrence" to another, separate "occurrence."
Recall that the policy covers "property damage" caused by an
"occurrence." Because the alleged damage to different customers
reflects distinct "occurrences," each customer experienced
distinct "property damage." Knowledge of one class of customers'
alleged property damage, then, is not knowledge of a different
class of different customers' alleged property damage. This is
true regardless of whether the different occurrences were caused,
in a general sense, by the same decision to sell biodiesel-enriched
oil.
We have focused thus far on the language of the policy
rather than applicable case law because Massachusetts courts have
not yet had occasion to decide this specific issue. However, some
cases provide tangential support for our conclusion. We review
those cases and then describe why the cases cited by Federated do
not require a different result.
In Liberty Mutual Insurance Co. v. Black & Decker Corp.,
a Massachusetts district court distinguished between "damage . . .
caused by continuous exposure from the same injury" and damage
caused by repeated instances of the same injury, such as "where
property damage occurred during every year that dumping took
- 18 - place." 383 F. Supp. 2d 200, 212 (D. Mass. 2004) (citation
omitted). "In such cases, there is not one accident, but many,"
meaning that a deemer clause does not "deem" those accidents to
have happened prior to the policy period in which they actually
occurred. Id. The court reasoned that "each injurious incident
is caused by a physically and temporally distinct cause, even if
there is a high degree of repetition [between the causes], and a
legally discrete injury occurs each time." Id. at 213. Such
reasoning supports the view that deliveries of oil to different
class members are best considered to be their own, individual
occurrences.
Similarly, in Stonewall Insurance Co. v. Asbestos Claims
Management Corp., the Second Circuit found that the common law
known loss doctrine did not preclude coverage of later claims
caused by asbestos even when a company knew about the risks posed
by asbestos before the policy period began. 73 F.3d 1178, 1215-16
(2d Cir. 1995). The court reasoned that the company did not know
the identity of later claimants or the type and extent of their
damages, so was "fully entitled to replace the uncertainty of its
exposure with the precision of insurance premiums." Id. at 1215.
This, too, supports limiting the applicability of the known loss
provision to the individual damages about which the company knew
before coverage commenced. By the Second Circuit's reasoning,
Federated could have charged whatever insurance premiums it
- 19 - thought fair to assume the risk that unknown future claimants might
also claim damages based on the same theory of harm asserted in
the already-filed class action.
The cases cited by Federated do not direct a different
result. Federated first cites Bartholomew v. Appalachian
Insurance Co., 655 F.2d 27 (1st Cir. 1981). There, a car wash
sued the manufacturer of its car washing machine for damages that
it incurred after learning that the machine was defective. Id. at
28. This court found that coverage was precluded because, under
principles of manufacturer liability, the covered "occurrence"
happened when the car wash discovered the defect, which was before
the policy period began. Id. at 28-29. Because the occurrence
happened before the policy period began, it was not covered by the
policy. This does not inform our analysis of what constituted an
"occurrence" here.
Clarendon National Insurance Co. v. Philadelphia
Indemnity Insurance Co. is similarly inapplicable. 954 F.3d at
405-06. There, we affirmed that there was no duty to defend where
continuous water and mold damage occurred due to a leak that
manifested three years before the policy period in question began.
Id. We took pains to explain that there were no allegations of
new leaks emerging for the first time during the policy period and
that the old leak had not been fixed before the policy period.
Id. Likewise, in Arch Specialty Insurance Co. v. Colony Insurance
- 20 - Co., the district court concluded that there was no duty to defend
where leaks that occurred during the policy period had first begun
before the policy period. 590 F. Supp. 3d 395, 421-23 (D. Mass.
2022). Both of those situations, then, differ from this case -- in
which new damage allegedly occurred to new customers during the
policy period -- and accordingly do not direct the outcome here.
Finally, we address what we perceive to be a slightly
different iteration of Federated's argument on appeal: that
Peterson's receipt of the class action complaint and demand letter
in March 2019 actually served as notice of the claims of the
post-July 5, 2019 class members even though the damage giving rise
to those claims had not yet occurred. Federated reasons that
notice of the class action served as notice of damages from class
members "past, present, and future." In conjunction with the
deemer clause -- which "deem[s]" Peterson's to know of property
damage when it receives a "claim for damages" -- this would bring
the entire action within the policy's known loss provision.
We are not persuaded by this novel argument. The known
loss provision in the policy excludes only "property damage" that
occurs during the policy period if, prior to the policy period, no
insured "knew that the . . . 'property damage' had occurred, in
whole or in part." As we have discussed, each customer's "property
damage" is distinct. Service of the class complaint before the
policy period began, then, could not have led Peterson's to "know"
- 21 - about not-yet-existent "property damage" to different equipment
owned by different customers. While Federated is correct that the
same class action eventually grew to include customers who first
received biodiesel-enriched oil during the policy period (because
the class stretched to the "present," a time period that expanded
as time passed), it does not follow that those customers were
already included when Peterson's received the demand letter and
complaint. They were not. And while Federated is also correct
that later customers' claims relied on the same theory of damages
about which the initial class complained, this is immaterial under
the policy, which excludes only earlier-known "property damage"
itself from coverage.
We conclude that the district court correctly treated
occurrences of property damage that began after the coverage period
commenced as distinct from occurrences that began before the
coverage period commenced. This correctly resulted in the
determination that the known loss and loss-in-progress provisions
did not foreclose coverage for the post-July 5, 2019 claimants.
And because not all of the claims asserted in the underlying action
lie expressly outside of the policy's coverage, the district court
rightly determined that Federated has a duty to defend the state
action.
- 22 - IV. Conclusion
For the foregoing reasons, the district court's summary
judgment rulings regarding Federated's duty to defend are
affirmed.
- 23 -