US Liability v. Bourbeau

• Court: Court of Appeals for the First Circuit
• Decided: March 3, 1995
• Docket: 94-1919
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

          No. 94-1919

                      UNITED STATES LIABILITY INSURANCE COMPANY,

                                Plaintiff - Appellee,

                                          v.

                 LARRY BOURBEAU, d/b/a BOURBEAU PAINTING CONTRACTORS,

                                Defendant - Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Michael Ponsor, U.S. Magistrate Judge]
                                           _____________________

                                 ____________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                              and Stahl, Circuit Judge.
                                         _____________

                                _____________________

               Michael Pill for appellant.
               ____________
               Pamela S. Gilman,  with whom Taylor, Anderson &  Travers was
               ________________             ___________________________
          on brief for appellee.

____________________

                                    March 3, 1995
                                 ____________________



TORRUELLA, Chief Judge.   Defendants-appellants,  Larry
                    TORRUELLA, Chief Judge.
                               ___________

          Bourbeau  and Bourbeau Painting  Contractors ("Bourbeau"), appeal

          the district court's summary judgment ruling that no coverage was

          provided  under  an  insurance   policy  issued  to  Bourbeau  by

          plaintiff-appellee,  United  States  Liability Insurance  Company

          ("U.S. Liability"),  for injury to property  caused by Bourbeau's

          alleged  negligent removal of lead paint.  For the reasons stated

          herein, we affirm.

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                    The pertinent facts  are not  in dispute.   In July  of

          1991,  Larry  Bourbeau,  doing  business  as   Bourbeau  Painting

          Contractors, entered  into a contract  with the  Town of  Hadley,

          Massachusetts, to  strip and paint two  town buildings, including

          the North  Village  Hall.   Pursuant  to the  contract,  Bourbeau

          purchased comprehensive  liability insurance from  U.S. Liability

          for the period of July 2, 1991 to July 2, 1992.  The policy terms

          covered property damage up to $300,000.

                    Bourbeau began  work removing old paint  from the North

          Village  Hall.   While this  work was  in progress,  however, the

          Massachusetts  Department  of  Environmental  Protection  ("DEP")

          notified Bourbeau  that paint chips  from the North  Village Hall

          were  contaminating the  surrounding soil.   The  Town  of Hadley

          incurred  costs   of  approximately   $50,000  cleaning   up  the

          contaminated site.   Bourbeau  subsequently finished his  work on

          the  two buildings  but the  Town of  Hadley, citing  its cleanup

          costs, refused to pay him.  

-2-



In  March  of  1993, the  owner  of  a  parcel of  land

          abutting  the  North  Village  Hall  filed  suit  against  Hadley

          alleging that Hadley had caused lead to be  deposited on his land

          during the  course of  restoring and  painting the North  Village

          Hall.  Hadley then filed a third-party complaint against Bourbeau

          seeking indemnification for any  judgment which might be rendered

          against the town in favor of the abutter.

                    On August 20, 1993, U.S. Liability filed this diversity

          action  in the  United  States District  Court for  Massachusetts

          seeking  a  declaration that  it is  not  obligated to  defend or

          indemnify Bourbeau  for property  damage sustained by  Hadley, or

          any abutting land owners, due to the alleged negligent release of

          contaminated  paint chips  on the  North Village  Hall property.1

          Upon  cross motions for summary judgment on the ultimate issue of

          coverage, the  district court  held that the  "absolute pollution

          exclusion"  clause contained  in the  insurance policy  precludes

          coverage  for  property  damage  caused  by  alleged  lead  paint

          contamination.   The  court therefore  granted  U.S.  Liability's

          motion  for summary  judgment  and denied  Bourbeau's motion  for

          summary judgment.

____________________

          1  Count II  sought  a declaration  that  U.S. Liability  is  not
          obligated to  defend or  indemnify Bourbeau  with respect  to any
          contractual  obligations he  might have  assumed in  his contract
          with Hadley.  U.S. Liability did not move for summary judgment on
          Count II  and the district court dismissed it as moot in light of
          its grant of summary judgment for U.S. Liability on Count I. 

                                         -3-



STANDARD OF REVIEW
                                  STANDARD OF REVIEW
                                  __________________

                    We review a district  court's grant of summary judgment

          de novo.   LeBlanc v. Great  Am. Ins. Co.,  6 F.3d 836, 841  (1st
          __ ____    _______    ___________________

          Cir.  1993), cert.  denied,  __ U.S.  __,  114 S.  Ct.  1398, 128
                       _____  ______

          L.Ed.2d  72 (1994).   Because the facts  in this case  are not in

          dispute,  our  decision  turns  on  the  interpretation  of  U.S.

          Liability's  insurance policy, which is  a question of  law.  See
                                                                        ___

          Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63
          ______    ______________________________________

          (1st Cir. 1992).  The parties agree that this diversity action is

          governed by the substantive law of Massachusetts.  See Klaxon Co.
                                                             ___ __________

          v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020,  85
             ______________________

          L.Ed.  1477 (1941);  American Title  Ins. Co.  v. East  West Fin.
                               ________________________     _______________

          Corp., 959 F.2d 345, 348 (1st Cir. 1992).    
          _____

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                    The dispositive  question in  this case is  whether the

          allegedly contaminating  lead paint was a  "pollutant" within the

          meaning  of  the "Absolute  Pollution  Exclusion"  clause in  the

          insurance policy.  We  agree with the district court  that, under

          the undisputed facts of this case, the lead paint was a pollutant

          within the meaning of the absolute  pollution  clause  and  that,

          therefore, U.S. Liability is not obligated to indemnify or defend

          Bourbeau in  any underlying lawsuit arising  from property damage

          caused  by Bourbeau's  alleged  negligent release  of lead  paint

          chips.    The "Absolute Pollution  Exclusion" clause provides, in

          pertinent part:

                      Notwithstanding the  terms and conditions
                      of this policy which are or may be to the

                                         -4-



contrary,   it   is   agreed  that   this
                      insurance does not apply:

                      1.   to Bodily Injury, Personal Injury or
                      Property Damage,

                      2.   to  Damages for  the Devaluation  of
                      Property . . .,

                      3.    to  any   Loss,  Cost  or  Expense,
                      including  but not  limited to  Fines and
                      Penalties,    arising    out    of    any
                      governmental direction or request, or any
                      private party or  citizen action that the
                      named  insured  test for,  monitor, clean
                      up, remove, contain,  treat, detoxify  or
                      neutralize pollutants,

                      4.  to  any Litigation or  Administrative
                      Procedure  in which  the  insured may  be
                      involved as a party:

                      arising   out   of  actual,   alleged  or
                      threatened discharge,  dispersal, release
                      or escape of pollutants into or upon land
                      . . . whether or not such actual, alleged
                            ______________
                      or   threatened   discharge,   dispersal,
                      release or escape  is sudden,  accidental
                      or gradual in nature.

                      Pollutants   means  any   solid,  liquid,
                      _________________________________________
                      gaseous    or    thermal   irritant    or
                      _________________________________________
                      contaminant, including but not limited to
                      _________________________________________
                      smoke,   vapor,   soot,   fumes,   acids,
                      _________________________________________
                      alkalis, toxic chemicals or materials and
                      _________________________________________
                      waste.   Waste  includes, in  addition to
                      _____
                      materials to be disposed of, materials to
                      be recycled, reconditioned or reclaimed.

                      This  exclusion  is  intended to  exclude
                      from the coverage provided by this policy
                      of  insurance  all liability  and expense
                      arising out of or  related to any form of
                                                    ___________
                      pollution, whether or not  such pollution
                      _________
                      is  intentionally  caused and  whether or
                      not   the   resulting   injury,   damage,
                      devaluation, cost or expense  is expected
                      or  intended from  the standpoint  of the
                      insured.

          (emphasis added).

-5-



-6-



Under the  rules of statutory construction  followed by

          the Massachusetts  Supreme Judicial  Court ("the SJC"),  we "must

          construe the words of the policy according to the fair meaning of

          the  language used, as applied to the subject matter."  Jacobs v.
                                                                  ______

          United  States Fidelity & Guar.  Co., 627 N.E.2d  463, 464 (Mass.
          ____________________________________

          1994)  (citing Johnson v. Hanover Ins. Co., 508 N.E.2d 845 (Mass.
                         _______    ________________

          1987)).   "Moreover, where the words of an insurance contract are

          'plain  and free from ambiguity  they must be  construed in their

          usual and ordinary  sense.'"   Id. (quoting Hanover  Ins. Co.  v.
                                         __           _________________

          Ramsey, 539  N.E.2d 537 (Mass. 1989))  (other citations omitted).
          ______

          In addition, the SJC has stated that, when construing language in

          an  insurance  policy,  it  will "consider  what  an  objectively

          reasonable insured, reading  the relevant policy  language, would

          expect to be covered."  Hazen Paper Co. v. United States Fidelity
                                  _______________    ______________________

          & Guar. Co., 555 N.E.2d 576 (Mass. 1990).
          ___________

                    In  our view,  the language  of the  Absolute Pollution

          Exclusion clause  is clear and  unambiguous on its  face.   It is

          plainly intended  to be an absolute bar to coverage for "any form

          of pollution."   The most notable aspect of the  exclusion is its

          breadth -- it applies  to all releases of pollutants,  as opposed
                                    ___

          to  only  those  which are  not  "sudden  and  accidental."   Cf.
                                                                        __

          Lumberman's  Mutual Casualty  Co., 555  N.E.2d 568  (Mass. 1990).
          ________________________________

          Under the  Absolute Pollution  Exclusion clause, the  policy does

          not  apply to  property damage  arising out of  actual discharge,

          dispersal, release or escape of pollutants into or upon land.  In

          this  case, it is alleged  that property damage  arose out of the

-7-



discharge, dispersal, release or escape of lead paint chips  into

          or upon land.2   The  only question, therefore,  is whether  lead

          paint  chips, as they were  disposed of in  this case, constitute

          "pollutants." 

                    Under   the   Absolute   Pollution  Exclusion   clause,

          "pollutants means any solid,  liquid, gaseous or thermal irritant

          or contaminant, including but not limited  to smoke, vapor, soot,
                          _____________________________

          fumes, acids,  alkalis, toxic  chemicals or materials  and waste.

          Waste  includes, in  addition  to materials  to  be disposed  of,

          materials to be recycled, reconditioned or reclaimed."  (emphasis

          added).   After reading this  definition of pollutant,  we do not

          see  how an  objectively  reasonable insured  would expect  to be

          covered  for contamination of property  caused by the removal and

          discharge of lead paint chips.  In   our  view,   an  objectively

          reasonable person reading the Absolute Pollution Exclusion clause

          would consider lead paint both a "solid . . .  contaminant" and a

          "toxic chemical."   An  objectively reasonable person  would also

          consider  lead  paint chips  "materials  to  be disposed  of"  or

          "waste."   A reading of the specifically  listed pollutants would

          only  buttress this  interpretation.   The non-exclusive  list of

          irritants and  contaminants provides  the insured a  potpourri of

          pollutants to consider, from  smoke to toxic chemicals.   We fail

          to  see  how an  objectively  reasonable  insured could  possibly

          believe  that   "smoke,  vapor,  soot,  [and]   fumes"  would  be
                              
          ____________________

          2  In its third-party complaint, the Town of Hadley  alleges that
          Bourbeau  "caused lead-based paint to be discharged upon the land
          of the Town."

                                         -8-



considered pollutants while lead paint would not.

                    This should end the inquiry.  The best way to interpret

          an  insurance policy is to  read the policy.   Bourbeau, however,

          points  to a  recent case  decided by the  SJC which  he contends

          supports his  position that lead  paint is  not a pollutant.   Of

          course, if the SJC interprets the term "pollutant" inconsistently

          with our  understanding of the term,  we are bound  to follow the

          SJC's construction in this case.  

                    In Atlantic Mut.  Ins. Co. v. McFadden,  595 N.E.2d 762
                       _______________________    ________

          (Mass.  1992), the  SJC held that  the Atlantic  Mutual Insurance

          Company  was obligated to defend its insured in an action arising

          out of the lead  poisoning of two  children in property owned  by

          the insured.   In doing  so, the SJC  concluded that a  pollution

          exclusion  clause in  the insurance  policy did  not apply.   For

          reasons similar  to those  expressed by  the  district court,  we

          conclude that McFadden is inapposite.  
                        ________

                    Bourbeau  maintains  that  the  following  statement in

          McFadden  indicates the SJC's position  that lead paint  is not a
          ________

          pollutant.  

                      There  simply  is  no  language   in  the
                      exclusion provision from  which to  infer
                      that  the provision  was  drafted with  a
                      view toward limiting  liability for  lead
                      paint-related injury.  The  definition of
                      "pollutant"  in  the   policy  does   not
                      indicate   that  leaded   materials  fall
                      within its scope.

          Id. at 764.  The second  sentence quoted above certainly seems to
          __

          support  Bourbeau's position.  But aside from that bit of dictum,

          there is nothing  in the express holding of McFadden or its facts
                                                      ________

                                         -9-



that bears any relation to his case.  

                    Most importantly,  McFadden  was not  an  environmental
                                       ________

          pollution case.  McFadden concerned personal injury caused by the
                           ________

          presence of lead paint in a household.  This case concerns injury
          ________

          to  property caused by  the alleged  negligent discharge  of lead
                                                         _________

          paint  onto property.    The  latter  is  a  classic  example  of

          "pollution" -- the discharging of a harmful substance onto land -

          -  while the  former is  most demonstrably  not.   An objectively

          reasonable person  simply would not ascribe  the word "pollution"

          to the presence of lead paint in a house.  This, we think, is the

          point of  McFadden.  This  interpretation is consistent  with the
                    ________

          SJC's  observation in  that  case that  "the  terms used  in  the

          pollution exclusion, such as 'discharge,' 'dispersal,' 'release,'

          and  'escape,'  are  terms  of  art  in environmental  law  which

          generally are used with  reference to damage or injury  caused by

          improper disposal or containment of hazardous waste."  Id.    
                                                                 __

                    The  express holding  of McFadden  further demonstrates
                                             ________

          its inapplicability to this case.

                      We   conclude   that  an   insured  could
                      reasonably have  understood the provision
                      at  issue to exclude  coverage for injury
                      caused  by  certain  types of  industrial
                      pollution,  but  not coverage  for injury
                      allegedly  caused  by  the   presence  of
                      leaded materials in a private residence.

          Id.  The  court in McFadden quite simply  held that the pollution
          __                 ________

          exclusion  clause in that case  was not intended  to exclude from

          coverage  injuries  caused by  the presence  of  lead paint  in a

          household.  As such, it has no impact on this case, involving the

-10-



discharge of lead paint onto adjacent property.  

                    Bourbeau also  argues that  he is entitled  to coverage

          even if lead paint is considered a "pollutant" within the meaning

          of  the policy.   He maintains  that the  cause of  the damage to

          property  was a  covered risk  -- his  alleged negligence  in the

          normal course  of performing the  painting contract --  and that,

          therefore,  the  policy  applies,  even  if  the  result  of  his

          negligence was pollution.  

                    We need not  linger long on this  argument.  Bourbeau's

          reliance on  Jussim v.  Massachusetts Bay Insurance  Company, 307
                       ______     ____________________________________

          N.E.2d  11 (Mass. 1973) and Standard Elec. Supply Co., 307 N.E.2d
                                      _________________________

          11,  12 (Mass.App.Ct. 1973), is  unfounded.  In  those cases, the

          negligence  of  third  parties  caused  oil  (Jussim)  and  water
                                                        ______

          (Standard  Electric) to  spill on  adjacent property  and migrate
           __________________

          onto  and damage  the insured's  property.   In Jussim,  the SJC,
                                                          ______

          relying  on  the reasoning  of Standard  Electric, held  that the
                                         __________________

          pertinent insurance policy covered the  damage, notwithstanding a

          policy provision  excluding from coverage "loss . . . caused by .

          .  .   release,  discharge   or  dispersal  of   contaminants  or

          pollutants."    Both  the  Jussim and  Standard  Electric  courts
                                     ______      __________________

          reasoned  that the proximate cause of the pollution was a covered

          event  -- the negligence of the neighbors -- and that, therefore,

          the insured could recover.  Bourbeau argues  that, similarly, the

          proximate cause of the pollution in this case was a covered event

          -- his own negligence in removing the paint.

                    This case  is distinguishable from  Jussim and Standard
                                                        ______     ________

-11-



Electric in at  least two respects.  First  of all, the insurance
          ________

          policies at issue  in those cases were  "all-risk" or first-party

          policies.    Such  policies   are  typically  intended  to  cover

          fortuitous  losses.   See  Standard  Electric, 307  N.E.2d  at 12
                                ___  __________________

          ("[l]oss from the  bursting of a pipe on the  premises of another

          would seem  to be the  kind of  'fortuitous loss'  which is  'not

          usually covered under other insurance' and  against which an 'all

          risk'  policy  is  designed  to extend  protection"),  quoted  in
                                                                 __________

          Jussim, 610 N.E.2d at 955.  In contrast, the fortuitous nature of
          ______

          the loss is immaterial under the third-party insurance policy  at

          issue in  this case.  The exclusion, by its terms, is targeted at

          pollution regardless  of fault, responsibility or  causation.  We

          cannot articulate  the policy  in any  plainer language than  its

          own, which provides that it does not apply to any litigation

                      arising   out   of  actual,   alleged  or
                      threatened discharge,  dispersal, release
                      or escape of pollutants into or upon land
                      . . . whether or not such actual, alleged
                            ___________________________________
                      or   threatened   discharge,   dispersal,
                      _________________________________________
                      release or escape  is sudden,  accidental
                      _________________________________________
                      or gradual in nature.
                      ____________________

          The policy continues:

                      This  exclusion  is  intended to  exclude
                      from the coverage provided by this policy
                      of  insurance  all liability  and expense
                      arising out of or  related to any form of
                      _________________________________________
                      pollution, whether or not  such pollution
                      _________
                      is  intentionally  caused and  whether or
                                                     __________
                      not   the   resulting   injury,   damage,
                      _________________________________________
                      devaluation, cost or expense  is expected
                      _________________________________________
                      or  intended from  the standpoint  of the
                      _________________________________________
                      insured.
                      _______

                    In  addition, the  damage in  both Jussim  and Standard
                                                       ______      ________

          Electric  was caused by the  alleged negligence of third parties,
          ________

                                         -12-



not,  as in  this  case,  the  insured  himself.    See  Standard
                                                              ___  ________

          Electric, 307 N.E.2d at 12  ("Nor is it a loss which  the insured
          ________

          brings about by  his own act, for then he  has not merely exposed

          the goods to the chance of injury, he has injured them himself.")

          (citations omitted).   It would be ironic indeed to  hold that an

          insured  is  not covered  for damage  to  property caused  by his

          discharge  of pollutants  unless  it happens  that the  proximate

          cause of  the pollution was his  own negligent conduct.   This is

          particularly   so  because   one  could   plausibly  argue   that

          discharging  pollutants onto  land  is,  by  its very  nature,  a

          negligent act.  Appellant's  reasoning would eviscerate the plain

          language and explicit purpose of the Absolute Pollution Exclusion

          clause.       

                    We need go no further.  See, e.g., Pritzker v. Yari, 42
                                            ___  ____  ________    ____

          F.3d 53,  73 (1st Cir.  1994) (Selya, J.).   The language  of the

          policy is plain and unambiguous, and Appellant has directed us to

          no  persuasive authority to the  contrary.  We  conclude that the

          Absolute Pollution Exclusion clause in  this case is exactly what

          it purports to be: absolute.  We see no reason why U.S. Liability

          should be denied  the benefit  of its bargain  with Bourbeau,  as

          reflected in the terms of the insurance contract.

                    Accordingly,  the decision  of  the  district court  is

          affirmed.
          ________

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