Filed: Jan. 18, 2013
Latest Update: Mar. 26, 2017
Summary: groundwater, and sediment contamination.2, Century further argues that the jury could not have, apportioned costs in the manner suggested by Boston Gas because the, owned property exclusion was submitted to the jury on an all or, nothing basis, a contention that Boston Gas necessarily rejects.
United States Court of Appeals
For the First Circuit
No. 11-1931
BOSTON GAS COMPANY, d/b/a National Grid,
Plaintiff, Appellant,
v.
CENTURY INDEMNITY COMPANY,
Defendant/Third-Party Plaintiff, Appellee.
CERTAIN UNDERWRITERS AT LLOYD'S LONDON;
CERTAIN LONDON MARKET INSURANCE COMPANIES;
TRAVELERS CASUALTY AND SURETY COMPANY,
f/k/a Aetna Casualty & Surety Company;
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED;
THE HARTFORD INSURANCE COMPANY,
Third-Party Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Torruella, Lipez and Howard,
Circuit Judges.
David L. Elkind, with whom John A. Gibbons and Dickstein
Shapiro LLP were on brief, for appellant.
Guy A. Cellucci, with whom Shane R. Heskin, David B. Chaffin
and White and Williams LLP were on brief, for appellees.
January 18, 2013
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
-3-
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. See Boston Gas Co. v. Century Indem. Co.,
910 N.E.2d 290,
312 (Mass. 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,
-4-
"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
-5-
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.
-6-
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 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,
587 F.3d 430, 436-37 (1st Cir.
2009) (sustainability of jury verdict); Boston Gas, 910 N.E.2d at
-7-
316 (election of pro rata allocation method); Rockwood v. SKF USA
Inc.,
687 F.3d 1 (1st Cir. 2012) (judicial estoppel); see also Guay
v. Burak,
677 F.3d 10, 16 (1st Cir. 2012) ("Under the abuse of
discretion standard, we will not lightly substitute our judgment
for that of the district court, and will reverse only if we are
left with a definite and firm conviction that the court below
committed a clear error of judgment." (alterations omitted)
(internal quotation marks omitted)).
As the district court observed, "[t]he core of the
[parties'] disagreement is over what the verdict question on
property damage from the 2007 trial actually asked." The special
verdict form asked: "Was the Commercial Point site exposed to
hazardous materials in one or more years during the policy period,
1951 to 1969, and did the release of these hazardous materials
result in liability from continuing contamination of soil,
groundwater, air and/or sediment on the site (property damage)?"
The jury answered "yes" for each of the eighteen years of coverage.
Boston Gas claims that the jury's response indicates a finding not
just that some property damage occurred during each of Century's
policy years, but that all property damage occurred exclusively
during the 1951-1969 period.
This proposed interpretation of the jury verdict is
revisionist. As the trial judge in the Everett litigation
explained in ruling that a substantially similar verdict could not
-8-
serve as a basis for a pro rata allocation on remand, "[t]his
verdict tried on one theory cannot, without some finesse, support
another, very different theory." Like the Everett litigation, the
Commercial Point litigation proceeded to trial under an "all sums"
theory of liability, pursuant to which Century was responsible for
Boston Gas's total cleanup costs as long as some property damage
resulting in liability occurred during the Century policy period.
The jury was therefore not asked to determine the quantum of
property damage occurring during each year of Century's policy
period or whether damage occurred in other years, as would be
required under either a fact-based or time-on-the-risk approach to
allocation. Even more critically, the jury was not asked to assess
the quantum of property damage occurring exclusively during
Century's policy period.
Nor did the verdict form's specification that damage had
to "result in liability" render the property damage question a
fact-based allocation, as Boston Gas posits. Rather, the role that
the inclusion of liability served in the question was as a trigger
for coverage. Based on the then-governing "all sums" theory,
Boston Gas had argued at trial that the jury should be asked only
whether property damage occurred at any point during Century's
policy period. Under the language of its policies, Century had no
duty to indemnify -- even under an "all sums" theory -- unless that
damage resulted in third party liability. Thus, while Century
-9-
agreed at trial that there was ongoing groundwater contamination at
the site, it argued that such contamination was mild and did not
require remediation under the governing regulatory scheme; damage
to the soils and sediments, meanwhile, was said by Century to have
occurred during plant operations only, which pre-dated the
inception of the Century policies. The property damage question
merely reflected the fact that Century's liability-based policy
would not have been triggered under such a scenario.
Given the limitations of the original jury verdict, the
district court's conclusion that it could not serve as a predicate
for employing a fact-based allocation was not an abuse of its
discretion, and the court therefore did not improperly vacate the
jury's verdict. See Mayo v. Schooner Capital Corp.,
825 F.2d 566,
570 (1st Cir. 1987) (recognizing "trial court's duty to set aside
the verdict and grant a new trial if [it] is of the opinion that
the verdict is against the clear weight of the evidence, or is
based on false evidence, or will result in a clear miscarriage of
justice" (alteration omitted) (internal quotations omitted)).
In addition to properly assessing the impact of the
verdict, the district court also acted within its discretion in
determining that the trial evidence itself did not permit an
accurate fact-based allocation. The district judge carefully
reviewed the record and succinctly summarized the timing evidence
presented at trial as follows:
-10-
The two sides agreed only on one aspect of the timing
question, namely that the groundwater contamination had
been occurring continuously from the time that the MGP
was operative through the time of remediation. Century
did dispute that any remediation was necessary to address
this contamination.
All other timing issues were hotly contested. The
two experts disagreed about whether soil contamination
ceased in 1930, when the MGP shut down, or whether it
continued after that date. Boston Gas argued that the
timing of the soil, groundwater[,] and sediment
contamination was continuous from the beginning of plant
operations to the present.
Century's expert disagreed, opining that the
contamination at several areas of the site occurred
during plant operations only.
Other aspects of the timing question were
acknowledged to be uncertain by both sides. For example,
the disposal of several drums containing non-aqueous
phase liquid ("NAPL") contributed to contamination of the
site, and neither of the trial experts could say with any
specificity when the drums were buried.
Finally, the record is disputed about the timing of
contamination of the sediments area of the site, with
Century's experts arguing that it occurred during MGP
operation and Boston Gas' expert arguing that it occurred
continuously over time via underground leaching.
(Internal citations omitted.) The court reasoned that because
"almost every aspect of timing of contamination at the site is
subject to intense factual dispute or uncertainty, . . . the time
on the risk method is the most appropriate and justiciable means of
allocation."
The conclusion reached by the district court was
reasonable. No plausible interpretation of the evidence presented
at trial would permit a jury to pinpoint damages in time and degree
with any level of certainty; indeed, Boston Gas's own expert
expressly conceded at trial that he could not determine how much
-11-
property damage occurred during any given period. Moreover, at no
point during the more than a year and a half between the time of
remand in Everett and the ruling at issue here did Boston Gas
attempt to put forth new evidence that would permit such an
allocation, despite (or perhaps because of) an ultimately withdrawn
attempt to do so with respect to the Everett site. The Commercial
Point site, so it appears from the record, presents precisely the
sort of progressive environmental injury for which "it is both
scientifically and administratively impossible to allocate to each
policy the liability for injuries occurring only within its policy
period" and to which a time-on-the-risk calculation should
therefore apply. Boston Gas, 910 N.E.2d at 301 (quoting Comment,
Allocating Progressive Injury Liability Among Successive Insurance
Policies, 64 U. Chi. L. Rev. 257, 257-258 (1997)).
Turning to the application of the time-on-the-risk
method, the district court agreed with Century that Boston Gas
should be judicially estopped from contradicting its prior
statements at trial that contamination was continuous from the time
when plant operations began until the time of trial. The court
concluded that "[b]ased on the jury's finding of contamination
resulting in liability at the site in every policy year, . . .
Boston Gas was successful in its argument that contamination was
continuous, at least through the end of the policy period." The
court therefore ruled that "Boston Gas is bound by its argument
-12-
that soil, groundwater[,] and sediment contamination were
continuous from the beginning of plant operations through the time
of trial, and may not put forward any timing arguments contrary to
this position." Boston Gas objects to this ruling, claiming that
it was an abuse of discretion that "improperly relieved Century of
its burden of proving that other years were implicated by the
claim." The objection fails.
Judicial estoppel is an equitable doctrine that "prevents
a litigant from pressing a claim that is inconsistent with a
position taken by that litigant either in a prior legal proceeding
or in an earlier phase of the same legal proceeding." InterGen
N.V. v. Grina,
344 F.3d 134, 144 (1st Cir. 2003) (citing Pegram v.
Hedrich,
530 U.S. 211, 227 n.9 (2000)). The doctrine's primary
purpose is "to protect the integrity of the judicial process." New
Hampshire v. Maine,
532 U.S. 742, 749 (2001); accord Alternative
Sys. Concepts, Inc. v. Synopsis, Inc.,
374 F.3d 23, 33 (1st Cir.
2004) ("The doctrine's primary utility is to safeguard the
integrity of the courts by preventing parties from improperly
manipulating the machinery of the justice system."). In line with
this purpose, we have recognized two conditions that must be
satisfied for judicial estoppel to attach. First, "the estopping
position and the estopped position must be directly inconsistent,
that is, mutually exclusive." Alternative Sys. Concepts, Inc., 374
F.3d at 33. Second, "the responsible party must have succeeded in
-13-
persuading a court to accept its prior position." Id. We have
explained that "[t]he presence of these elements creates the
appearance that either the first court has been misled or the
second court will be misled, thus raising the specter of
inconsistent determinations and endangering the integrity of the
judicial process." Id. (citing New Hampshire, 532 U.S. at 750-51.)
Boston Gas disputes that these elements are satisfied
here. It contends that any discussion at trial about continuous
contamination applied only to the groundwater under its owned
property, referred to as the Keyspan upland area of the Commercial
Point site, and that it "never offered testimony concerning the
timing of contamination at [the areas which Boston Gas did not
own]," specifically, the Old Colony Yacht Club ("OCYC") area of the
Commercial Point site and the sediments adjacent to the OCYC.
Because the jury found the owned property exclusion applicable, the
argument goes, Boston Gas cannot be said to have prevailed on its
argument urging coverage as a result of continuous groundwater
contamination.
The record does not support Boston Gas's characterization
of its evidence. To begin, trial testimony concerning continuous
groundwater contamination was not limited to the Keyspan upland
area. To the contrary, it included ample discussion of ongoing
damage to the distinct groundwater flow beneath the unowned area of
the site, as well. Furthermore, a full and fair reading of the
-14-
record leaves no doubt that the theory presented by Boston Gas at
trial was that once tars and oils entered the ground during plant
operations, they caused site-wide, continuous contamination of not
only groundwater but also soil and sediments. Boston Gas's expert
expressly testified, for example, that "[t]he timing of the
contamination is -- was and is basically from the beginning of the
plant to present day. The kind of contamination is both soil,
groundwater, and sediment contamination." This argument had been
previewed during Boston Gas's opening statement, in which it
asserted that "releases of tars and oils into soil and groundwater
and sediment" had resulted in "indivisible property damage and
cumulatively [sic]." It was also echoed at closing, when Boston
Gas argued that its remedial efforts were designed to remedy a
"continuing process" by "remov[ing] contaminants to soil that have
leached into groundwater, into sediments, and into air."
Indeed, absent Boston Gas's argument that contamination
at the OCYC and sediment areas was continuous from the time of
plant operations, there would have been no factual basis to support
the jury's finding that property damage occurred in one or both of
those areas during each year of the 1951-1969 Century policy
period. See generally Millipore Corp. v. Travelers Indem. Co.,
115
F.3d 21, 32 & n.17 (1st Cir. 1997) (highlighting the "well settled"
rule of Massachusetts law that the insured bears the burden of
proving that damage occurred during the policy period). Boston Gas
-15-
suggests otherwise, stating that "The jury heard evidence of
contamination caused by 'decommissioning' (demolition) activities
at the site during the 1950s and 1960s that could have damaged the
OCYC and sediment through subsurface migration." The limited
testimony concerning the decommissioning activities, however,
indicated that those activities occurred either during or shortly
after plant operations -- meaning that any covered property damage
resulting from those activities would have been ongoing in the
1920s or 1930s -- or, taking the most appellant-friendly view, at
unspecified times in the 1950s or 1960s -- in which case the
evidence of these activities would alone be insufficient to support
the jury's finding of damage occurring during each of the policy
years. See generally Boston Gas, 529 F.3d at 23 (noting that a
jury verdict will not stand if "unsupported by any rational view of
the evidence"). The district court therefore properly concluded
that Boston Gas advanced and prevailed at trial on a theory of
continuous contamination.
Boston Gas says, however, that even assuming satisfaction
of the two requisite elements for the application of judicial
estoppel, applying the doctrine in this case would be inequitable.
Specifically, it contends that judicial estoppel is inappropriate
because it was not playing "fast and loose" with the court, but
merely responding to a change in the law. These considerations,
though relevant to the analysis, e.g., Thore v. Howe,
466 F.3d 173,
-16-
184 (1st Cir. 2006) ("Judicial estoppel is, after all, a doctrine
of equity."), are insufficient to tip the scales of equity in
Boston Gas's favor.
We acknowledge the difficult position in which Boston Gas
finds itself. In the words of the district court,
The fundamental change in the insurance law
underlying this case has the potential to spur each party
to adopt a position inconsistent with its earlier
position. Because pro rata allocation is now the rule,
Century now has an incentive to argue that the
contamination was continuous over as long a period as
possible (to reduce its pro rata share), and Boston Gas
has an incentive to argue that the contamination was
cabined in as narrow a period as possible (to maximize
its recovery from Century).
Be that as it may, this case nevertheless is not of a
kind thought to merit an exception to judicial estoppel. This is
not, for example, an instance in which "a party's prior position
was based on inadvertence or mistake." New Hampshire, 532 U.S. at
753; accord Alternative Sys. Concepts, Inc., 374 F.3d at 35
(recognizing that an exception may be available "if . . . the new,
inconsistent position is the product of information neither known
nor readily available to [a party] at the time the initial position
was taken"); InterGen N.V., 344 F.3d at 144 (declining "to
institute a rule that unduly inhibits a plaintiff from
appropriately adjusting its complaint either to correct errors or
to accommodate facts learned during pretrial discovery"). To the
extent that the timing of contamination at the Commercial Point
site was knowable at all (as we have seen, the record suggests
-17-
otherwise), that information would have been discoverable by Boston
Gas prior to trial. Boston Gas deliberately opted, however, to
present a factual scenario under which contamination was
continuous. Good faith notwithstanding, Boston Gas may not now
"assert a contradictory position simply because its interests have
changed." Guay, 677 F.3d at 16; see also id. ("Although we have
characterized the archetypal judicial estoppel case as one in which
a litigant is playing fast and loose with the courts, such tactics
are not a prerequisite for application of the doctrine. A party is
not automatically excused from judicial estoppel if the earlier
statement was made in good faith.").
Boston Gas's additional argument that the subsequent
change in governing law precludes application of the judicial
estoppel doctrine is similarly unavailing. Without exception, the
cases that Boston Gas cites in support of this contention entail
changes in parties' legal positions, not their factual positions.
See Longaberger Co. v. Kolt,
586 F.3d 459, 469-71 (6th Cir. 2009)
(permitting party to alter legal theory of recovery in response to
change in law); Biomedical Patent Mgmt. Corp. v. Cal. Dep't of
Health Servs.,
2006 WL 1530177, at *5-6 (N.D. Cal. June 5, 2006),
aff'd,
505 F.3d 1328 (Fed. Cir. 2007) (permitting party to change
legal claim of jurisdiction); Eagle-Picher Indus., Inc. v. Am.
Employer's Ins. Co.,
678 F. Supp. 15, 16-19 (D. Mass. 1988)
(allowing insured to argue different legal theory of "trigger").
-18-
While we have acknowledged that the application of judicial
estoppel to changes in legal theories presents "complicated
issues," such concerns do not arise where judicial estoppel is
applied to prevent a party from asserting inconsistent "historical
facts," as Boston Gas attempts to do here. See Thore, 466 F.3d at
182 & n.3. Rather, a party's "directly conflicting statements
about purely factual matters, such as 'The light was red/green,'"
present precisely the sort of threat to judicial integrity that the
doctrine of judicial estoppel was designed to prevent. Cleveland
v. Policy Mgmt. Sys. Corp.,
526 U.S. 795, 802 (1999).
Discerning no abuse of discretion in the district court's
application of judicial estoppel, we affirm its entry of judgment
allocating damages evenly across the 121-year span from the time of
plant operations to trial. Consequently, Century is, as was found
below, liable for 14.9% of the sum total of Boston Gas's
recoverable costs. We next address the district court's rulings on
issues that implicate that sum.
Owned Property
Boston Gas challenges the district court's denial of its
post-trial motion seeking judgment as a matter of law on the owned
property exclusion. Before the district court, Boston Gas argued
that, in light of uncontested evidence that a driving purpose
behind the remediation of the KeySpan upland area was to remedy the
impact to the air above the site, the owned property exclusion
-19-
could not apply because Boston Gas does not own the air. The
district court denied the motion, concluding that the relevant
factor for purposes of the owned property exclusion was whether
contamination posed a risk to third party property and citing
testimony from which the jury could have found that any air
contamination at the site posed no such risk. The court stated,
"It is true that Boston Gas does not own the air over its property;
however, no third party does either, so if the risk does not extend
beyond Boston Gas's own borders, there is no danger of third party
liability." Here, too, the district court's ruling must be
affirmed.
The denial of a motion for judgment as a matter of law
engenders de novo review. Rodríguez-García v. Miranda-Marín,
610
F.3d 756, 765 (1st Cir. 2010). In examining questions of
Massachusetts law, our task is to apply the prior pronouncements of
the SJC and, in the absence of precedent directly on point, make an
informed prediction as to what the SJC would decide if presented
with the question. See Andrew Robinson Int'l, Inc. v. Hartford
Fire Ins. Co.,
547 F.3d 48, 51-52 (1st Cir. 2008). "As to matters
of fact, we view the evidence in the light most favorable to the
verdict, making no determinations of our own as to the credibility
of witnesses or the weight of the evidence, reversing only if a
reasonable person could not have reached the conclusion of the
-20-
jury." Rodríguez-García, 610 F.3d at 765 (citation omitted)
(internal quotation marks omitted).
Arguing on appeal against application of the owned
property exclusion, Boston Gas posits that the air is owned by the
Commonwealth and thus any impact to the air constitutes third-party
property damage. It protests that the district court's
determination that "no third party" owns the air would appear to
require that privately owned property be affected for the owned
property exclusion not to apply. In its view, such a principle
would contravene those cases that permit recovery for remediation
of surface water contamination notwithstanding that "no private
third party owns the surface water."
According to Century, Boston Gas's analogy to groundwater
ownership is both inaccurate and inapposite. In an argument that
finds support in contemporary case law, Century asserts that the
Commonwealth's regulatory interest in ground and surface waters is
not the equivalent of ownership, which remains with private
landowners. See Gamer v. Town of Milton,
195 N.E.2d 65, 67 (Mass.
1964) ("It [] is, of course, settled in this Commonwealth that a
landowner has absolute ownership in the subsurface percolating
water in his land."); Walsh v. Hingham Mut. Fire Ins. Co.,
24 Mass.
L. Rptr. 51,
2008 WL 2097384, at *6 (Mass. Super. Feb. 29, 2008)
("The Commonwealth's extensive regulatory powers over groundwater
are nevertheless not the legal equivalent of separate legal
-21-
ownership by the Commonwealth of all groundwater on private
property. Private landowners still retain separate ownership
rights . . . ." (citing In re Opinion of the Justices,
14 N.E.2d
468, 471 (Mass. 1938))). In any event, Century says, the relevant
issue is not who owns the air, but whether releases to the air
"infringe upon the public's use or enjoyment of the air or create
tangible injury to another's use of its property" -- evidence of
which is lacking here.
In Hakim v. Massachusetts Insurers' Insolvency Fund,
675
N.E.2d 1161 (Mass. 1997), the leading Massachusetts case on the
owned property exclusion in environmental spill cases, the SJC
considered whether the owned property exclusion in the plaintiff's
liability policy barred coverage for costs incurred for the cleanup
of on-site soils following an oil spill on its property. See id.
at 1163. As we have previously explained, "the court held that
when pollutants have migrated from the insured's property to an
adjacent property -- or perhaps even when the threat of such
migration is imminent -- 'coverage [to remediate the insured's
property] is not barred if the [on-site] cleanup is designed to
remediate, to prevent or to abate further migration of contaminants
to the off-site property.'" Boston Gas, 529 F.3d at 16 (quoting
Hakim, 675 N.E.2d at 1164 & n.8) (emphasis omitted); accord
Rubenstein v. Royal Ins. Co. of America,
694 N.E.2d 381, 389 (Mass.
App. Ct. 1998) (construing Hakim).
-22-
Courts applying Hakim in cases involving groundwater
contamination have uniformly done so in a manner contrary to Boston
Gas's position here, rejecting the notion that an insurer's duty to
indemnify could be triggered by contamination of groundwater that
is located solely on the insured's property and poses no threat of
off-site migration. See, e.g., Fitchburg Gas & Elec. Light Co. v.
One Beacon Am. Ins. Co.,
27 Mass. L. Rptr. 567,
2010 WL 5490148, at
*2 (Mass. Super. Nov. 26, 2010); Walsh,
2008 WL 2097384, at *5-6;
Mass. Elec. Co. v. Commercial Union Ins.,
29 Mass. L. Rptr. 148,
2005 WL 3489896, at *1-2 (Mass. Super. Oct. 18, 2005); Preferred
Mut. Ins. Co. v. Gordon,
2003 WL 21077026, at *13-14 (Mass. Super.
May 13, 2003). They have done so, moreover, irrespective of their
views of groundwater ownership. Compare Walsh,
2008 WL 2097384, at
*6 ("Because the Commonwealth's extensive regulatory interest in
groundwater on private property is not the equivalent of ownership,
liability coverage for pollution damage to groundwater on the
insured's property is excluded by the exclusion for damage to
property owned by the insured."), with Massachusetts Elec. Co.,
2005 WL 21077026, at *1 ("This court rejects the defendants'
argument that groundwater is the insured's property for purposes of
the owned property exclusion, given the current understanding of
groundwater as a shared public resource and the complexities of
environmental contamination and cleanup."). One court, in fact,
has expressly "decline[d] to base [its] decision on real property
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ownership issues with respect to groundwater." Preferred Mut. Ins.
Co.,
2003 WL 21077026, at *14. After careful analysis of the
governing law, the court concluded that "[a]s long as there is a
significant threat of the contaminated groundwater's migrating off
the [insured's] Property, then [the insurer's] duty to indemnify
[the insured] is triggered." Id. at *14.
These cases evince a concern not with ownership of the
vehicle by which the migration of contaminants occurs, but whether
such migration poses a significant risk to the public or to private
third parties' use and enjoyment of their property. This approach,
in our view, is consistent with both Hakim and the nature of
liability coverage, which is "designed to indemnify the insured
when a claim by another party (including a claim by the
Commonwealth) requires the insured to incur costs to reduce the
damage to another person's property or to compensate the other
person for . . . damage to his or her property." Walsh,
2008 WL
2097384, at *5. We therefore find it unnecessary to delve deeper
into property law and land use issues concerning air rights above
Boston Gas's property. Rather, we conclude that Boston Gas is
entitled to judgment as a matter of law on the owned property
exclusion only if the evidence indubitably established a
significant risk of migration.
A reasonable jury could be persuaded that no such
evidence existed here. While Boston Gas contends that there was
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uncontested evidence of impact to the air at the site, there was
also ample evidence from which a jury could find that any such
impact posed no risk beyond Boston Gas's borders. When asked
whether "the air over the Boston Gas land might have been a danger
to human health," Century's expert explained:
No, I don't think so, that's the case at all. The
inhalation risk is a confined space issue, and if you
send a worker into an excavation, there's all sorts of
training requirements. That would be what the risk is.
It would be a worker in a confined space who may breathe
this, not somebody who is walking on the surface of the
site.
Boston Gas's own risk assessment report for the Commercial Point
site similarly indicated that the "inhalation risks" of which
Boston Gas complains derived solely from direct releases from soil
caused by Boston Gas's own use of its property, specifically
"inhalation of soil-derived dust (at ground surface and in an
excavation)" and "inhalation of COPCs [Constituents of Potential
Concern] volatized from soil into an excavation." That report
further concluded, "The Massachusetts Air Quality Standards related
to ambient concentrations of so-called 'criteria pollutants'
(sulfer oxides, particulate, carbon monoxide, nitrogen dioxide and
lead), which are not among the COPC for the Site."
A reasonable jury could determine from this evidence that
inhalation risks related solely to Boston Gas's use of its own
property and presented no potential for third party impact. Absent
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such potential, Boston Gas's motion for judgment as a matter of law
on the owned property exclusion was properly denied.
Damages
Boston Gas's next claim of error pertains to the district
court's disposition of Century's post-trial motion to correct the
verdict. In that motion, Century asserted that the jury mistakenly
awarded Boston Gas the sum of the stipulated costs of investigating
the entire site ($297,085.46) and investigating and remediating the
KeySpan upland area (Boston Gas owned property that should have
been excluded from coverage) ($1,402,060.33) instead of subtracting
that amount (totaling $1,699,145.79) from the total costs
($2,717,693.44) to arrive at what Century argues would have been
the correct final covered damages amount ($1,018,547.65).
The damages question on the verdict form asked: "What is
the amount Boston Gas Company (or KeySpan) 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?" Century posited that the jury
overlooked the word "not" and thus inadvertently entered the amount
that it found was excluded under the owned property exclusion.
This "clerical mistake," Century argued, was "mathematically
certain to a penny" and subject to correction under Federal Rule of
Civil Procedure 60(a). See Fed. R. Civ. P. 60(a) ("The court may
correct a clerical mistake or a mistake arising from oversight or
-26-
omission whenever one is found in a judgment, order, or other part
of the record.").
The district agreed that it was "highly probable that a
mistake was made" in recording the verdict but concluded that "the
mistake appears to have been substantive rather than clerical."
See generally Bowen Inv., Inc. v. Carneiro Donuts, Inc.,
490 F.3d
27, 29 (1st Cir. 2007) ("The relevant test for the applicability of
Rule 60(a) is whether the change affects substantive rights of the
parties . . . or is instead a clerical, or a copying or
computational mistake, which is correctable under the Rule."
(quoting In re Tex. Marktg. Corp.,
12 F.3d 497, 504 (5th Cir.
1994))). The court reasoned that even if Century was correct that
the jury misread the verdict question as requesting the amount of
Boston Gas's liability that was subject to exclusion, its
explanation failed to account for the jury's inclusion in that
amount the entire $297,085.46 in general site investigation costs.
The court observed that the jury was unlikely to have found all of
the general site investigation costs excludable.
The court likewise rejected Boston Gas's defense of the
verdict, deeming Boston Gas's proffered scenario highly unlikely:
that "the jury worked through each invoice for the KeySpan area,
determined what amounts were spent to remediate Boston Gas's owned
property, and derived an amount that [coincidentally] corresponded
exactly to the difference between the stipulated total cost and the
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stipulated costs at the KeySpan area plus the general site
investigation costs." Finding it improbable that four years after
trial "any of the jurors would recall their deliberations, let
alone the trial evidence, with sufficient precision to clarify the
verdict," the court vacated the damages award as against the weight
of the evidence and ordered a new trial on the limited issue of
which of the costs are subject to the owned property exclusion.
A trial court is authorized to grant a new trial if it
determines that "the verdict is against the weight of the
evidence . . . ." Jennings, 587 F.3d at 438. Our review of the
district court's grant of a new trial is for abuse of discretion.
Id. Despite Boston Gas's protestations to the contrary, there was
no such abuse here.1
1
Boston Gas also argues that Century forfeited its right to
challenge the jury verdict by failing to raise its objections while
the jury was still empaneled. This argument conflates the
standards applicable to challenges to substantive inconsistencies
in a jury verdict and those complaining of clerical error only.
Compare Howard v. Antilla,
294 F.3d 244, 250 (1st Cir. 2002)
("[T]he only efficient time to cure . . . possible problems of
inconsistency would be after the jury announced the results of its
deliberations and before it was excused . . ."), with Bowen Inv.,
Inc. v. Carneiro Donuts, Inc.,
490 F.3d 27, 29 (1st Cir. 2007)
(noting that a motion for request for relief under Fed. R. Civ. P.
60(a) can be filed "at any time after judgment enters"). Here,
Century claimed clerical error and therefore was not required to
mount its challenge prior to the jury's release. And while the
district court rejected Century's suggestion of clerical error, it
did not treat the issue as one of internal inconsistency, which
would have required a more speedy response from Century, see
Howard, 294 F.3d at 250. Instead, the district court invoked the
"against the weight of the evidence" language associated with Fed.
R. Civ. P. 59(a)(1)(A). Jennings v. Jones,
587 F.3d 430, 436 (1st
Cir. 2009). We therefore find no forfeiture of the issue.
-28-
The district court carefully evaluated the parties'
arguments and reasonably concluded that neither was adequate to
support the jury's damages calculation. It is true, as Boston Gas
asserts and the district court acknowledged, that in addition to
receiving a summary of stipulated costs per area, "[t]he jury had
access to specific invoices that could have allowed it to determine
with particularity what costs were spent on soil remediation [at
the KeySpan upland area] as opposed to addressing third party
property." But the likelihood that a jury's review of those
invoices would have resulted in a covered damages amount precisely
corresponding to the sum of general site costs and excluded costs
entered into evidence is infinitesimal. The improbability of
Boston Gas's scenario would appear to lend credence to Century's
argument that the jury simply reversed the recoverable and
unrecoverable amounts.2
Century's proposed interpretation of events is not,
however, without its own shortcomings. In a ruling that is not
2
Century further argues that the jury could not have
apportioned costs in the manner suggested by Boston Gas because the
owned property exclusion was submitted to the jury on an "all or
nothing" basis, a contention that Boston Gas necessarily rejects.
Finding independent grounds to support the grant of a new trial, we
need not resolve this dispute here. We emphasize, however, that we
have previously held that an "all or nothing" approach to the owned
property exclusion is improper, see Boston Gas, 529 F.3d at 16-17;
see also discussion of investigation costs, infra, and that, as
such, the jury on remand should be permitted to determine whether
and to what extent costs associated with the owned property were
incurred to assess and prevent off-site damage.
-29-
challenged on appeal, the district court rejected Century's
contention that investigation costs amount to defense costs for
which it is not obligated to pay under the language of its
policies. The court reasoned that "[b]ecause . . . assessment [of
the environmental damage at the site] was an indispensable step in
the ultimate remediation process, the 'investigation costs'
actually at issue here are a subcategory of remediation costs."
See Martignetti v. Haigh-Farr Inc.,
680 N.E.2d 1131, 1140 n.22
(Mass. 1997) (noting that under Mass. Gen. Laws ch. 21E,
"'[r]esponse' is defined . . . as including assessment,
containment, and removal" (emphasis added)); 42 U.S.C. § 9601(23)
(defining the term "removal" under the analogous federal statute as
including "such actions as may be necessary to monitor, assess, and
evaluate the release or threat of release of hazardous
substances"). Pursuant to this ruling, general site investigation
costs are compensable to the extent that they were necessary to
assess threats to third party property. Cf. Boston Gas, 529 F.3d
at 17 (stating that under the owned property exclusion, "only that
remediation necessary to protect against off-site contamination is
compensable; further costs, however useful to mitigate on-site
contamination, are not"). As Boston Gas points out, the jury heard
testimony and had access to environmental reports from which a
rational fact-finder could infer that the general site
investigation costs were incurred at least in part for that
-30-
purpose. "Therefore," as the district court concluded, "the theory
that the jury found all of the [general] site investigation costs
excluded under the owned property exclusion is similarly unlikely."
Unable to reconcile the damages award with the arguments
and evidence presented at trial, the district court properly
vacated the verdict as being against the clear weight of the
evidence. While Boston Gas accuses the district court of
improperly invading the province of the jury, we view its decision
to grant a new trial as designed to avoid just that. In short,
there was no abuse of discretion.
Newly Discovered Contamination
Boston Gas lastly complains of the district court's
ruling that newly discovered contamination at the Commercial Point
site should be addressed by way of a separate legal action.
Shortly before the issuance of the memorandum and order on which
the judgment in this case is based, Boston Gas filed a "Motion to
Adjourn the Trial Date in favor of a Status Conference to Address
New Areas of Contamination." In that motion, Boston Gas informed
the court that it had recently discovered "substantial additional
contamination at Commercial Point that will require further
investigation and remediation at areas that are different from the
areas of contamination that were tried in 2007." It requested that
the district court permit further discovery, expert opinions, and
a trial on the timing of the new area of contamination. Boston Gas
-31-
contends that the court's refusal to do so amounts to reversible
error because it "promotes improper claim splitting, and could
subject the later action to principles of res judicata." In
response, Century argues that Boston Gas waived any right to
contest this ruling by stipulating to a declaratory judgment
entitling it to "14.9 percent of reasonable and necessary future
investigation and/or remediation costs relating to offsite property
damage at or around the Commercial Point site for which Boston Gas
is liable, up to the Century insurance policy limits." (Emphasis
added.)
We need not tarry. The district court enjoys broad
discretion in determining whether to hold separate trials in the
same case. Associacion De Periodistas De P.R. v. Mueller,
680 F.3d
70, 77 (1st Cir. 2012). Similarly, district courts enjoy broad
discretion in managing their dockets, and we will reverse the
denial of a continuance only for abuse of that discretion. Delgado
v. Pawtucket Police Dep't,
668 F.3d 42, 50 (1st Cir. 2012). The
district court's decisions here, based on the need for closure of
this decade-long action, fell well within the encincture of that
discretion. Whether and to what extent litigation concerning
newly discovered contamination is barred by the doctrine of res
judicata or by the reach of the declaratory judgment is a matter
for the district court to determine in the first instance if and
when the issue arises.
-32-
Conclusion
For the reasons set forth above, we affirm the district
court in all respects and remand for further proceedings in
accordance with this opinion. We do so noting, once again, that
"[t]his litigation, plainly unusually complicated, has been well-
handled by the district court," and urge "the parties . . . to
consider whether a settlement between them is feasible before more
time and expense is devoted to further litigation." Boston Gas,
588 F.3d at 23-24.
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