USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1919
UNITED STATES LIABILITY INSURANCE COMPANY,
Plaintiff - Appellee,
v.
LARRY BOURBEAU, d/b/a BOURBEAU PAINTING CONTRACTORS,
Defendant - Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael Ponsor, U.S. Magistrate Judge]
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Before
Torruella, Chief Judge,
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Coffin, Senior Circuit Judge,
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and Stahl, Circuit Judge.
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Michael Pill for appellant.
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Pamela S. Gilman, with whom Taylor, Anderson & Travers was
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on brief for appellee.
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March 3, 1995
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TORRUELLA, Chief Judge. Defendants-appellants, Larry
TORRUELLA, Chief Judge.
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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
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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.
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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.
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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.
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STANDARD OF REVIEW
STANDARD OF REVIEW
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We review a district court's grant of summary judgment
de novo. LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st
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Cir. 1993), cert. denied, __ U.S. __, 114 S. Ct. 1398, 128
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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
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Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63
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(1st Cir. 1992). The parties agree that this diversity action is
governed by the substantive law of Massachusetts. See Klaxon Co.
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v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 85
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L.Ed. 1477 (1941); American Title Ins. Co. v. East West Fin.
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Corp., 959 F.2d 345, 348 (1st Cir. 1992).
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DISCUSSION
DISCUSSION
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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
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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
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or threatened discharge, dispersal,
release or escape is sudden, accidental
or gradual in nature.
Pollutants means any solid, liquid,
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gaseous or thermal irritant or
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contaminant, including but not limited to
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smoke, vapor, soot, fumes, acids,
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alkalis, toxic chemicals or materials and
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waste. Waste includes, in addition to
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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
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pollution, whether or not such pollution
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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).
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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.
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United States Fidelity & Guar. Co., 627 N.E.2d 463, 464 (Mass.
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1994) (citing Johnson v. Hanover Ins. Co., 508 N.E.2d 845 (Mass.
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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.
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Ramsey, 539 N.E.2d 537 (Mass. 1989)) (other citations omitted).
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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
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& Guar. Co., 555 N.E.2d 576 (Mass. 1990).
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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
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to only those which are not "sudden and accidental." Cf.
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Lumberman's Mutual Casualty Co., 555 N.E.2d 568 (Mass. 1990).
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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
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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,
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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
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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."
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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
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(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.
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Bourbeau maintains that the following statement in
McFadden indicates the SJC's position that lead paint is not a
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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
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support Bourbeau's position. But aside from that bit of dictum,
there is nothing in the express holding of McFadden or its facts
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that bears any relation to his case.
Most importantly, McFadden was not an environmental
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pollution case. McFadden concerned personal injury caused by the
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presence of lead paint in a household. This case concerns injury
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to property caused by the alleged negligent discharge of lead
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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
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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.
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The express holding of McFadden further demonstrates
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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
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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
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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
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N.E.2d 11 (Mass. 1973) and Standard Elec. Supply Co., 307 N.E.2d
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11, 12 (Mass.App.Ct. 1973), is unfounded. In those cases, the
negligence of third parties caused oil (Jussim) and water
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(Standard Electric) to spill on adjacent property and migrate
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onto and damage the insured's property. In Jussim, the SJC,
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relying on the reasoning of Standard Electric, held that the
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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
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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
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Electric in at least two respects. First of all, the insurance
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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
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("[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
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Jussim, 610 N.E.2d at 955. In contrast, the fortuitous nature of
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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
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or threatened discharge, dispersal,
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release or escape is sudden, accidental
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or gradual in nature.
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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
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pollution, whether or not such pollution
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is intentionally caused and whether or
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not the resulting injury, damage,
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devaluation, cost or expense is expected
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or intended from the standpoint of the
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insured.
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In addition, the damage in both Jussim and Standard
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Electric was caused by the alleged negligence of third parties,
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not, as in this case, the insured himself. See Standard
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Electric, 307 N.E.2d at 12 ("Nor is it a loss which the insured
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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
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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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