USCA1 Opinion
United States Court of Appeals
For the First Circuit
____________________
Nos. 96-1788, 96-1789, 96-1790, 96-1791, 96-1792, 96-1793, 96-1794, 96-
1842
MILLIPORE CORPORATION,
Plaintiff, Appellant,
v.
THE TRAVELERS INDEMNITY COMPANY, HARTFORD ACCIDENT AND INDEMNITY COMPANY, and INSURANCE COMPANY OF NORTH AMERICA,
Defendants, Appellees.
____________________
THE TRAVELERS INDEMNITY COMPANY and INSURANCE COMPANY OF NORTH AMERICA,
Defendants, Appellants,
v.
MILLIPORE CORPORATION,
Plaintiff, Appellee.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, U.S. District Judge] ___________________
____________________
Before
Boudin, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Lynch, Circuit Judge. _____________
____________________
David A. Guberman, with whom Robert J. Muldoon, Jr., Nereyda ___________________ ________________________ _______
Garcia and Sherin & Lodgen LLP were on brief, for plaintiff-appellant ______ _____________________
and cross-appellee Millipore Corporation.
Paul Koepff, with whom Rosemary Boller, James Arbogast, O'Melveny ___________ _______________ ______________ _________
& Myers LLP, David Chaffin and Hare & Chaffin were on brief, for ____________ ______________ _______________
defendant-appellee and cross-appellant Century Indemnity Company, f.k.a.
Insurance Company of North America.
James L. Ackerman, with whom Maura D. Sullivan and Day, Berry & __________________ _________________ _____________
Howard were on brief, for defendant-appellee and cross-appellant The ______
Travelers Indemnity Company.
John P. Ryan, Robert G. Eaton and Sloane & Walsh were on brief, _____________ ________________ _______________
for defendant-appellee Hartford Accident and Indemnity Company.
____________________
May 30, 1997
____________________
LYNCH, Circuit Judge. The substantial costs of LYNCH, Circuit Judge. ______________
remediating environmental damage under the Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq., and other _________
environmental laws have pitted businesses against their
insurers in fierce disputes over who will bear these costs.
That is the case here.
Underlying this lawsuit is the cleanup of five
hazardous waste sites, three in Massachusetts and two in New
Jersey. Millipore Corporation was one of the sources of
waste at the sites, and was a defendant in several actions
alleging violations of federal and state environmental laws.
Millipore defended these suits and incurred liability as to
some of the sites. It may ultimately be responsible for
contributing to the remediation costs of the other sites as
well.
The primary issue here is whether the district
court erred in entering summary judgment for the insurers
(and then denying reconsideration) on the ground that none of
Millipore's CERCLA liability is covered under any of the
comprehensive general liability ("CGL") policies Millipore
carried during the relevant periods. In considering this
question, we must address, among other things, the "pollution
exclusion" provisions of the insurance policies, which
preclude coverage for pollution-related claims unless the
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release of pollutants was "sudden and accidental." Based on
recent developments in Massachusetts environmental insurance
law, we vacate in part the grant of summary judgment.
We also conclude that New Jersey law applies to
claims under policies issued to a New Jersey corporation
later acquired by Millipore, and that summary judgment was
properly entered in favor of one of Millipore's insurers,
Travelers Indemnity Company, because Millipore failed to
produce evidence of an occurrence within the Travelers policy
period. Finally, we hold that Millipore was entitled to
summary judgment on the insurers' counterclaims for
reimbursement for defense costs paid to Millipore.
I.
The insurance coverage issues involved in this case
are best understood in context. CERCLA, which was enacted in
1980, is the primary federal statutory scheme regulating
hazardous waste cleanups. Some states have enacted their own
regimes as well. CERCLA imposes liability for the costs of
cleaning up hazardous waste sites and for the loss of natural
resources due to pollution on three categories of potentially
responsible parties ("PRPs"): past and present owners and
operators of hazardous waste sites, some companies that
transported waste to these sites, and companies that
generated waste disposed of at these sites. 42 U.S.C.
9607(a). Suit may be brought against a PRP by the federal
-3- 3
government, a state, or a private party who bore cleanup
costs. Jerry, Understanding Insurance Law 65, at 459-60 ____________________________
(2d ed. 1996). See generally Ostrager & Newman, Insurance ______________ _________
Coverage Disputes, 10.01, 10.02 (8th ed. 1995). _________________
CERCLA creates novel forms of liability for
environmental harm. It is, in general, a strict liability
regime. St. Paul Fire & Marine Ins. Co. v. Warwick Dyeing ________________________________ ______________
Corp., 26 F.3d 1195, 1197-98 (1st Cir. 1994). The CERCLA _____
cost allocation scheme may operate retroactively as well: a
PRP may be held responsible for actions taken before CERCLA
was enacted and before the PRP was aware that its actions
might lead to environmental liability. Jerry, supra, 65, _____
at 459-60. CERCLA allows joint and several liability when
specific damage cannot be attributed to particular PRPs,
which is often the case at hazardous waste sites. Id. 65, ___
at 460.1
Faced with environmental liability, companies began
turning to their third-party liability insurance carriers for
coverage under CGL policies. Comment, The 1970 Pollution ___________________
Exclusion in Comprehensive General Liability Policies, 24 ________________________________________________________
Duq. L. Rev. 1083, 1083 (1996). See generally Ballard & _____________
Manus, Clearing Muddy Waters: Anatomy of the Comprehensive ______________________________________________________
General Liability Pollution Exclusion, 75 Cornell L. Rev. 610 _____________________________________
____________________
1. CERCLA does, however, create a right of contribution.
Id. ___
-4- 4
(1990). CGL policies are usually occurrence policies that
protect insureds against most types of risk and are available
for nearly all types of business ventures. Note, The "Sudden ___________
and Accidental" Exception to the Pollution Exclusion Clause _____________________________________________________________
in Comprehensive General Liability Insurance Policies, 45 ________________________________________________________
Vand. L. Rev. 161, 163-65 (1992).
Since 1970, the standard CGL policy has contained a
pollution exclusion clause barring coverage for pollution-
related damage which should reasonably have been foreseen.
Id. at 167; see also Greenlaw, The CGL Policy and the ___ ________ _________________________
Pollution Exclusion Clause, 23 Colum. J.L. & Soc. Probs. 233, __________________________
240-41 (1990). The provision in general use from 1970 until
1985 excludes coverage for:
bodily injury or property damage arising
out of the discharge, dispersal, release
or escape of smoke, vapors, soot, fumes,
acids, alkalis, toxic chemicals, liquids
or gases, waste materials or other
irritants, contaminants or pollutants
into or upon land, the atmosphere or any
water course or body of water . . . .
Note, supra, at 167. However, the pollution exclusion clause _____
generally "does not apply if such discharge, dispersal,
release or escape is sudden or accidental." Id.2 ___
____________________
2. Beginning in 1970, the pollution exclusion clause was
included in CGL policies as a mandatory endorsement, and in
1973, the clause was inserted into the body of the policy.
Id. In 1986, the insurance industry replaced the 1970 __
pollution exclusion clause with an "absolute pollution
exclusion." Jerry, supra, 65, at 468. _____
-5- 5
Based on the language of their CGL policies,
insurers developed a three-step process for determining
whether environmental liability was covered: "(1) did an
'occurrence' occur? . . . If so, (2) does the pollution
exclusion apply, i.e., was the injury or damage caused by one
of the named materials in connection with one of the four
events ('discharge,' etc.) in the exclusion? . . . If so, (3)
does the exception to the exclusion apply, i.e., was the
event 'sudden and accidental'?" Jerry, supra, 65, at 463- _____
64. The insurers often argued that claims based on CERCLA
liability were precluded from coverage due to the pollution
exclusion clause.3 As a result, the meaning of the exception
to the pollution clause, and particularly the definition of
the term "sudden and accidental," has been hotly contested.
II.
Against this backdrop, the facts are recited in the
light most favorable to Millipore, the party against whom
summary judgment was granted. Soileau v. Guilford of Maine, _______ __________________
Inc., 105 F.3d 12, 13 (1st Cir. 1997). ____
____________________
3. Commentators have suggested that insurers were ill-
equipped to deal with claims based on CERCLA liability. The
insurance industry did not foresee the enactment of CERCLA's
retroactive strict liability regime; accordingly, insurers
did not allocate financial resources for CERCLA claims.
Note, supra, at 174-75. The problem, however, was not merely _____
CERCLA's retroactivity. The risk of liability under CERCLA
is difficult to ascertain because environmental damage often
does not become evident until many years after the end of a
policy period. Id. at 175; cf. United States v. Charter ___ ___ _____________ _______
Int'l Oil Co., 83 F.3d 510, 516 (1st Cir. 1996). _____________
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Millipore is a Massachusetts corporation primarily
engaged in manufacturing products and providing services for
the analysis and purification of liquids. Millipore has its
corporate headquarters as well as a manufacturing facility in
Bedford, Massachusetts, with other Massachusetts
manufacturing facilities in Milford and Taunton. Millipore
disposed of its manufacturing wastes at several different
sites in Massachusetts, including the Silresim Waste
Reclamation and Disposal Facility in Lowell, the Charles
George Landfill in Tyngsboro, and the Re-Solve Waste
Reclamation and Disposal Facility in North Dartmouth.
Between December 1975 and March 1982, Millipore
owned the Worthington Biochemical Corporation, located in
Freehold, New Jersey, which produced research enzymes and
related chemicals. The Worthington manufacturing process
involved the use of substances defined as hazardous,
including trichloroethylene and freons. Worthington disposed
of much of its waste materials at the Lone Pine Landfill in
Freehold.
All four of these sites where Millipore and
Worthington disposed of their wastes have a history of
contaminating neighboring land and water. These troubled
sites share numerous similarities involving poor design and
sloppy operations. At the Silresim site, chemicals dumped
into the disposal pit regularly seeped through the concrete
-7- 7
lining of the pit into the ground. In 1973, the Commonwealth
of Massachusetts required the operators of the site to find a
solution to the problem of contaminated runoff. The landfill
operators failed to do so, and also committed numerous
violations of state regulations between 1973 and 1975. The
Commonwealth made continued operation of the facility
contingent upon regulatory compliance. The operators filed
for bankruptcy, leading to the revocation of their operating
permit in 1977. They abandoned the site later that year.
Raging chemical fires swept the site in October 1977, August
1978, and again in April 1983.
In 1983, Millipore received notification from the
EPA that it was a PRP with respect to the Silresim site.
Later that year, in December, Massachusetts initiated a legal
action in federal court under CERCLA and various state
environmental laws. See Commonwealth v. Pace, No. 83-3883-G ___ ____________ ____
(complaint filed in District of Massachusetts). It sought to
recover cleanup costs from more than 200 companies that had
used the Silresim site, including Millipore and Waters
Associates, which Millipore had purchased in 1980. In
December 1983, Millipore was also named as a defendant in a
similar case brought by the federal government. United ______
States v. General Chem. Corp., No. 92-10923-T (complaint _______________________________
filed in District of Massachusetts). Shortly thereafter,
-8- 8
Millipore and others paid the Commonwealth $2 million in
settlement,andenteredinto aconsentdecreeinthe federalaction.4
The operators of the Charles George Landfill also
committed numerous infractions of state environmental
regulations. During inspections of the landfill in 1971 and
1975, the Commonwealth discovered leachate5 emanating from
the landfill. By September 1976, leachate had contaminated
three of the four groundwater basins at the site, and the
surrounding wetlands were polluted by runoff from the
facility. The situation was exacerbated when, on June 12,
1980, a fire broke out and burned until July 9. Millions of
gallons of water were poured onto the landfill to extinguish
the fire, generating toxic leachate and causing the water
table to rise temporarily. In June 1983, the Commonwealth
filed suit in state court to bring landfill operations into
compliance with state law. The landfill was ultimately
closed by court order later in 1983.
The United States and the Commonwealth filed
separate suits in 1985 against the Charles George Trucking
Company, an owner-operator of the landfill, and others. The
____________________
4. Other parties have engaged in litigation involving this
site as well. Indeed, one of the two cases recently decided
by the Supreme Judicial Court clarifying the scope of the
pollution exclusion under Massachusetts law involved the
Silresim site. See Nashua Corp. v. First State Ins. Co., 648 ___ ____________ ____________________
N.E.2d 1272 (Mass. 1995). The case is discussed below.
5. Leachate consists of liquid byproducts of the natural
decomposition process of trash in a landfill environment.
-9- 9
complaints alleged violation of CERCLA and other federal and
state laws, and sought, among other things, past and future
costs of cleaning up the landfill. In 1986, the EPA notified
Millipore that it was a PRP with respect to the Charles
George site, and in 1989 Millipore was added as a defendant
in two consolidated cases in the District of Massachusetts
entitled United States v. Charles George Trucking Co., No. ______________ ____________________________
85-2463-WD, and Commonwealth v. Charles George Trucking Co., ____________ ____________________________
No. 85-2714. A consent decree was ultimately entered into,
and was upheld in United States v. Charles George Trucking _____________ ________________________
Co., 34 F.3d 1081 (1st Cir. 1994).6 ___
The Re-Solve site operated as a waste reclamation
facility from 1956 to 1980 and handled a variety of hazardous
substances. In October 1958, an explosive blaze destroyed
much of the facility. It eventually re-opened, but from the
early 1970's on, the Massachusetts Department of
Environmental Quality Engineering (DEQE) (now the Department
of Environmental Protection) was actively involved in
monitoring the site. The EPA also eventually began an
investigation. The site was a significant source of
____________________
6. The Charles George site has been at the center of a great
deal of environmental litigation, both in federal and state
court. See, e.g., United States v. Charles George Trucking _________ _____________ _______________________
Co., 823 F.2d 685 (1st Cir. 1987); Hussey Plastics Co. v. ___ ____________________
Continental Cas. Co., No. 90-13104-WD (D. Mass. Jun. 17, _____________________
1993); Landauer Inc. v. Liberty Mut. Ins. Co., 628 N.E.2d _____________ _______________________
1300 (Mass. App. Ct. 1994); Roche Bros. Barrell & Drum Co. v. ______________________________
Employers Fire Ins. Co., No. 91-6120 (Mass. Super. Ct. Jan. ________________________
13, 1994).
-10- 10
pollution. The sides of the waste lagoons at the site were
not effectively sealed, which allowed pollutants to seep out.
In addition, rain routinely caused the lagoons to overflow
into the neighboring wetlands. Millipore was named a PRP,
and the United States filed a CERCLA action to recover the
costs of cleaning up the site, naming as defendants some 225
companies, including Millipore, which had sent waste to the
facility. In 1988, Millipore entered into a consent decree.7
At the Lone Pine Landfill in New Jersey, rain
regularly caused contaminated runoff to drain directly into
the nearby Marasquan River. Toxic waste was buried in
unlined pits, which allowed seepage into the surrounding
soil. In addition, decomposing garbage routinely caused
fires and even explosions. After a particularly harmful
chemical fire in 1978, New Jersey environmental officials
issued an administrative order to mitigate the damage. After
non-compliance with the order, the landfill was ordered
closed the following year. Millipore and Worthington were
each designated as a PRP, in 1985 and 1990 respectively. In
1989, Millipore and the EPA entered into a consent decree
____________________
7. Other litigation involving this site included Hazen Paper ___________
Co. v. United States Fidelity & Guaranty Co., 555 N.E.2d 576 ___ _____________________________________
(Mass. 1990) and General Chemical v. First State Ins. Co., ________________ _____________________
No. 90-5855 (Mass. Super. Ct. Sept. 18, 1992). In addition,
Highlands Insurance Co. v. Aerovox Inc., 676 N.E.2d 801 _________________________ _____________
(Mass. 1997), the second of the two recent SJC cases
explaining the scope of the pollution exclusion clause under
Massachusetts law, concerned the Re-Solve site. Aerovox is _______
discussed later in this opinion.
-11- 11
involving on-site remediation, and in 1991, Millipore and the
EPA entered into a second consent decree involving off-site
remediation.
There were also environmental problems at the
Worthington plant itself. In 1976 or 1977, a freeze drier
line at the plant ruptured, causing no more than 60 gallons
of trichloroethylene to be released into drains leading to an
on-site wastewater treatment facility. From there, the
trichloroethylene evidently made its way into the soil and
groundwater and migrated off site.
Millipore sold Worthington's assets in 1982 to Flow
General, which in 1983 sold the assets to Cooper BioMedical,
Inc. In 1986, Cooper performed an environmental assessment
which disclosed trichloroethylene contamination. Cooper took
remedial measures, and in 1990 instituted a CERCLA action
against Millipore, seeking reimbursement for costs associated
with the cleanup.
As to each of these sites, Millipore sought
coverage under its CGL policies and those of Worthington and
Waters, two potentially liable subsidiaries. Where, as here,
CERCLA liability arises out of a PRP's operations over the
course of many years, it often implicates general liability
policies issued by several different insurers. Ostrager &
Newman, supra, 10.01, at 404. A Travelers Indemnity _____
Company policy issued to Millipore covered damage occurring
-12- 12
between April 1975 and July 1976. A Hartford Accident and
Indemnity Company policy issued to Millipore covered damage
occurring between July 1976 and May 1977. Hartford also
issued a general liability policy covering the period between
August 1974 and May 1977 to Worthington Biochemical
Corporation; Millipore purchased Worthington in 1975. And
Hartford issued two one-year liability policies covering the
period between January 1975 and January 1977 to Waters
Associates, a Massachusetts company purchased by Millipore in
1980. Finally, Insurance Company of North America ("INA")8
issued eight general liability policies to Millipore covering
the period between May 1977 and January 1986.
The Hartford and INA policies contained the
standard pollution clause, quoted above, generally contained
in CGL policies between 1970 and 1985. The language of the
pollution exclusion provision in the Travelers policy is
somewhat different in ways we need not address at this
juncture.9
____________________
8. Century Indemnity is the successor to INA, but in this
opinion we refer to the company as INA.
9. The Travelers policy states that the insurance does not
apply:
to bodily injury or property damage arising out of _____________ _______________
any emission, discharge, seepage, release or escape
of any liquid, solid, gaseous or thermal waste or
pollutant
(i) if such emission, discharge, seepage,
release or escape is either expected or
-13- 13
Millipore sent notice to the insurers regarding the
Silresim site in 1983, the Re-Solve site in 1984, the Charles
George and Lone Pine sites in 1989, and the Cooper site in
1990. The insurers responded that they planned to
investigate whether Millipore's claims were covered under its
CGL policies. In September 1990, INA acknowledged receipt of
Millipore's notice of loss for the Cooper facility (formerly
the Worthington plant) and paid Millipore a share of the
defense costs in the underlying litigation, but expressly
reserved all rights under the policy.10 Millipore and its
insurers then disagreed about payment of the costs incurred
by Millipore in litigating the underlying action involving
the Charles George site. After lengthy negotiations, they
entered into an interim agreement in January 1993, under
which the insurers would pay the defense costs but reserved
the right to seek reimbursement if it was later determined
____________________
intended from the standpoint of any insured or _______
any person or organization for whose acts or
omissions any insured is liable, or _______
(ii) resulting from or contributed to by any
condition in violation of or non-compliance
with any governmental rule, regulation or law
applicable thereto . . . .
10. INA forwarded $3,682 to Millipore to pay for its share
of the cost of defending the suit involving the Cooper
facility; the payment was accompanied by a letter reserving
the right to reimbursement.
-14- 14
that they had no duty to defend or indemnify Millipore.11
Apparently, the insurers paid no defense costs relating to
the other three sites.
Millipore brought suit against the insurers in five
separate federal court actions, one for each site, seeking
the full costs of defending the underlying actions,
indemnification for its liability, and damages for unfair and
deceptive insurance practices. All three insurers were named
as defendants in the cases involving the Silresim and Charles
George sites. INA and Hartford were the named defendants in
the cases involving the Lone Pine and Cooper sites, while INA
was the only defendant named in the case involving the Re-
Solve site. Otherwise, the pleadings in all five cases are
substantially identical.12
The insurers responded that the pollution exclusion
provisions in the insurance policies defeated coverage and
counterclaimed for reimbursement of the defense costs already
paid to Millipore for the Charles George and Cooper sites.
____________________
11. Under this agreement, INA sent $115,192.10 to Millipore
for its share of Millipore's defense costs, along with a
letter reserving the right to reimbursement. INA had
previously sent $40,844.15 Travelers paid Millipore a total
of $97,922.42 for defense fees; accompanying each payment
were letters in which Travelers specifically reserved the
right to seek reimbursement.
12. In each complaint, Count I asks for declaratory
judgment, Count II asserts claims under Mass. Gen. Laws chs.
93A and 176D, and Count III alleges breach of contract.
-15- 15
The cases were consolidated before Judge Rya Zobel in the
District of Massachusetts.
In April 1994, following the close of extensive
discovery, the insurers moved for partial summary judgment,
seeking dismissal of Millipore's claims for declaratory
relief. Judge Zobel granted the insurers' motion in March
1995. She first rejected Millipore's argument that New
Jersey substantive law should apply to the sites in New
Jersey. She noted that "[t]he Massachusetts Supreme Judicial
Court has articulated a clear preference for the law of one
state to interpret multistate comprehensive general liability
policies," and reasoned that, "[a]s the place of plaintiff's
incorporation and its principal place of business,
Massachusetts has the most significant interest in this
lawsuit."
Judge Zobel also agreed with the insurers' argument
that the pollution exclusion clauses preclude coverage. She
stated that "a survey of the current caselaw suggests that it
is the initial release, not subsequent leakage or damage from _______
that release which determines the issue." She went on to
conclude that "the initial releases of pollutants into the
landfills . . . do not fall within the meaning of 'sudden and
accidental' as defined in the caselaw," because Millipore's
"waste disposal practices were a routine aspect of business
activity." The case subsequently was transferred to Judge
-16- 16
George O'Toole when Judge Zobel became head of the Federal
Judicial Center.
Millipore moved for reconsideration on May 5, 1995
in light of new Massachusetts caselaw. On May 2, 1995, the
Supreme Judicial Court handed down Nashua Corp. v. First _____________ _____
State Insurance Co., 648 N.E.2d 1272 (Mass. 1995), construing ___________________
a pollution exclusion clause in a case involving an insurance
dispute between another company that disposed of waste at the
Silresim facility and its liability insurer. Nashua Corp. ____________
held that, notwithstanding the history of routine polluting
activities by the operator of the Silresim site, the evidence
presented of a fire and subsequent explosion at Silresim
defeated the insurer's motion for summary judgment based on
the pollution exclusion. Id. at 1275-76. The court reasoned ___
that the fire and explosion caused the sudden and accidental
release of pollutants into the environment, thus placing the
resulting damage into the exception to the pollution
exclusion clause. Millipore argued that the same fire and
explosion at Silresim placed its resulting CERCLA liability
within the exception to the exclusion as well.
The district court denied the motion for
reconsideration in November 1995. Judge O'Toole held that
Nashua Corp. did not represent a change in Massachusetts _____________
substantive law and therefore that reconsideration was not
warranted.
-17- 17
The insurers then moved for summary judgment on
Millipore's remaining claims and on the counterclaims for
reimbursement for Millipore's defense costs. The district
court dismissed the breach of contract and bad faith
insurance practices claims.13
However, the district court ruled against the
insurers on their counterclaims, granting summary judgment in
favor of Millipore, on the theory that the insurers' duty to
defend is more expansive than their duty to indemnify. The
court reasoned that a finding that an insurer is not
contractually obligated to indemnify an insured does not
necessarily relieve the insurer of its duty to shoulder the
burden of defense, concluding that the insurers incurred the
defense costs in fulfilling their contractual obligations and
were thus not entitled to reimbursement.
Millipore now appeals, arguing that New Jersey law
governs the two New Jersey sites, and that under Nashua ______
Corp., the evidence that fires and other accidental events _____
caused the sudden and accidental release of pollutants
created a genuine issue of material fact, making a grant of
summary judgment inappropriate. INA and Travelers (but not
Hartford) cross-appeal from the district court's entry of
____________________
13. The bad faith insurance practices claims were dismissed
without prejudice to their reinstatement if the grant of
partial summary judgment for the insurers were to be
reversed; the court evidently viewed these claims as
derivative of the declaratory judgment action.
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judgment for Millipore on their counterclaims for
reimbursement for defense costs.
III.
Choice of Law _____________
The parties dispute which state's law applies as to
Counts I and II,14 so we turn to Massachusetts choice of law
principles. Spurlin v. Merchants Ins. Co., 57 F.3d 9, 10 _______ ___________________
(1st Cir. 1995) (forum choice of law rules govern federal
courts sitting in diversity). Millipore argues that the law
of New Jersey should govern the dispute involving the New
Jersey sites, while the insurers contend that the law of
Massachusetts should be applied to the entire case. Our
review of the district court's choice of law determination is
de novo. In re San Juan Dupont Plaza Hotel Fire Litig., 45 _______________________________________________
F.3d 569, 576 (1st Cir. 1995).
The first step in performing a choice of law
analysis is to determine whether there is a conflict between
the substantive laws of the interested jurisdictions. New
Jersey insurance law recognizes the doctrine of regulatory
estoppel, which in this context limits the applicability of
the pollution exclusion clause as a result of
____________________
14. Count II alleges unfair and deceptive insurance
practices under Mass. Gen. Laws chs. 93A and 176D, and
therefore the question is not which state's law applies, but
whether plaintiff has created a genuine issue of material
fact as to whether the Massachusetts statutes are applicable
here. Cf. Roche v. Royal Bank of Canada, 109 F.3d 820, 829- ___ _____ ____________________
32 (1st Cir. 1997).
-19- 19
misrepresentations allegedly made by the insurance industry
to insurance regulators about the purpose and scope of the
clause. Under New Jersey law, the meaning of the pollution
exclusion clause is limited by the insurance industry's
official explanation for its 1970 revisions to the standard
CGL policy. Consequently, the pollution exclusion clause is
construed to "provide coverage identical with that provided
under the prior occurrence-based policy, except that the
clause [is] interpreted to preclude coverage in cases in
which the insured intentionally discharges a known pollutant,
irrespective of whether the resulting property damage was
intended or expected." Morton Int'l, Inc. v. General ____________________ _______
Accident Ins. Co. of Am., 629 A.2d 831, 875 (N.J. 1993). __________________________
Within this legal framework, Millipore would be entitled to
coverage for its CERCLA liability if it could prove that it
never intentionally discharged a known pollutant.
In contrast, the pollution exclusion clause is
interpreted much more expansively under Massachusetts law.
The SJC has never recognized New Jersey's doctrine of
regulatory estoppel in this context, and there is no
indication that Massachusetts would adopt the doctrine.
Indeed, in Lumbermens Mutual Casualty Co. v. Belleville ________________________________ __________
Industries, Inc., 555 N.E.2d 568 (Mass. 1990) ("Belleville _________________ __________
I"), the SJC refused to consider the drafting history of the _
pollution exclusion clause in determining the meaning of the
-20- 20
term 'sudden' in the clause. The court reasoned that the
term is unambiguous and therefore that no extrinsic evidence
is necessary to understand its meaning. Belleville I, 555 _____________
N.E.2d at 573; see also Polaroid Corp. v. Travelers Indem. ________ _______________ _________________
Co., 610 N.E.2d 912, 916 n.7 (Mass. 1993) (striking amici ___
curiae briefs solely devoted to discussing the drafting and
regulatory history of the pollution exclusion clause). Under
the Massachusetts interpretation of the pollution exclusion
clause, Millipore would need to make a stronger showing to
survive a motion for summary judgment. There is a conflict
between New Jersey and Massachusetts law over the
interpretation of the pollution exclusion clause.
The question becomes whether the district court
correctly applied Massachusetts law to the disputes involving
the New Jersey sites. This determination involves two
distinct analyses, one for the policies issued by Hartford
and INA to Millipore and the other for the policy issued by
Hartford to Worthington before it was acquired by
Millipore.15
____________________
15. All of Millipore's potential CERCLA liability for the
New Jersey sites arises out of the actions of Worthington, a
wholly owned subsidiary. A Hartford policy issued to
Worthington covers these two sites. INA policies issued to
Millipore also provide coverage to the New Jersey sites,
because these policies by their terms extended to Millipore
subsidiaries. Hartford also issued a policy directly to
Millipore during the relevant period. It is unclear,
however, whether Millipore sought coverage for liability at
the New Jersey sites under this policy as well as under the
policy issued to Worthington. No Travelers policies were
-21- 21
Massachusetts courts take a flexible interest-based
approach to conflict of laws issues and will consider a wide
variety of factors in choosing the applicable law. Cosme v. _____
Whitin Mach. Works, Inc., 632 N.E.2d 832, 834 (Mass. 1994). _________________________
These factors include those listed in the Restatement ___________
(Second) Conflict of Laws: (1) the needs of the interstate __________________________
and international system, (2) the policies of the forum, (3)
the policies of other interested jurisdictions, (4) the
protection of justified expectations, (5) the basic policies
underlying the particular field of law, (6) certainty,
predictability and uniformity of result, and (7) ease of
applicability. Bushkin Assocs., Inc. v. Raytheon Co., 473 ______________________ _____________
N.E.2d 662, 669 (Mass. 1985) (citing Restatement (Second) _____________________
Conflict of Laws 6 (1971)). They also include factors _________________
proposed by conflict of laws commentators: (1)
predictability, (2) maintaining interstate and international
order, (3) simplifying the judicial task, (4) advancing the
interests of the forum, and (5) applying the better legal
rule. Bushkin Assocs., 473 N.E.2d at 670 n.7 (citing Leflar, _______________
American Conflicts Law 109, at 195 (3d ed. 1977)). The SJC ______________________
has indicated that it "feel[s] free . . . to borrow from any
of the various lists to help focus . . . attention on the
considerations particularly relevant to the case . . . ."
Bushkin Assocs., 473 N.E.2d at 670. _______________
____________________
involved in the suits involving the New Jersey sites.
-22- 22
The polices issued by Hartford and INA to Millipore
are multistate CGL policies. In addressing the choice of law
issue with respect to such policies, the SJC has articulated
a clear preference for looking to the law of one state to
govern the interpretation of such multistate policies.
United Techs. Corp. v. Liberty Mut. Ins. Co., 555 N.E.2d 224, ___________________ _____________________
227 (Mass. 1990); W.R. Grace & Co. v. Hartford Accident & _________________ ____________________
Indem. Co., 555 N.E.2d 214, 221 (Mass. 1990). The SJC ___________
reasoned that the expectations of the parties as well as
commercial realities require that the language in a single
set of insurance policies should mean the same thing in every
state. United Techs., 555 N.E.2d at 227 & n.10. _____________
Under Massachusetts law, one jurisdiction's rules
of decision must be applied to all of the sites covered under
multistate CGL policies. Here, the state with the strongest
interest in seeing its substantive law applied to all of the
sites is Massachusetts. Massachusetts is Millipore's state
of incorporation and its principal place of business. Most
of the policies were negotiated and administered in and
around Boston. Three of the five sites are in Massachusetts.
We affirm the district court's decision to apply
Massachusetts law to the disputes involving coverage under
multistate CGL policies issued directly to Millipore of
liability at the New Jersey as well as at the Massachusetts
sites.
-23- 23
The policy Hartford issued to Worthington before it
was acquired by Millipore is not, however, a multistate CGL
policy and so is not necessarily governed by the choice of
law rules set forth by the SJC for such policies. Instead,
we look again to Massachusetts choice of law rules for
guidance on the issue of what law should apply to the
insurance disputes involving this policy.
An important consideration is the expectation of
the parties at the time the policy was issued. It is
significant that Millipore only acquired Worthington after
Hartford had issued the policy under which coverage is
disputed. At the time the policy was issued, Worthington's
principal place of business was in New Jersey, as are the
covered sites. Both Worthington and Hartford would
reasonably have expected New Jersey law to govern the policy.
In addition, New Jersey has a strong interest in
the integrity of its insurance regulatory process. In
Morton, the highest court of New Jersey evinced its belief ______
that limiting the scope of the pollution exclusion clause
advances that interest. Morton, 629 A.2d at 875. Morton ______ ______
also indicates that New Jersey public policy favors the
protection of New Jersey insureds, id.; Worthington was such ___
an insured at the time the Hartford policy was issued. New
Jersey thus has a strong interest in seeing its law applied
to this controversy.
-24- 24
It is true that applying New Jersey law in this
instance would not advance the interest in uniformity. At
first blush it may seem somewhat anomalous to have the laws
of different states govern very similar CGL policies
providing coverage to the same sites. However, Worthington
and Millipore were unrelated entities at the time the
Hartford policy was issued; the expectations of the parties
and the legitimate interests of New Jersey should not be
defeated by the fortuity of the subsequent purchase. We
reverse the district court's decision to apply Massachusetts
law to the disputes involving the policy Hartford issued to
Worthington, and we hold that New Jersey law applies to that
policy. Thus, as to the New Jersey sites covered under the
policy Hartford issued to Worthington, we remand, without
further discussion of the facts concerning the releases or
the policy language, for consideration of liability on Counts
I and III under New Jersey law.
Travelers' Coverage Argument ____________________________
Travelers' primary argument in support of its
motion for summary judgment is distinct from that of the
other two insurers. This argument involves the first step in
determining whether CERCLA liability is covered under a CGL
policy, that is, whether there was an "occurrence" within the
meaning of the policy. That determination is distinct from
the determination of whether there was a sudden and
-25- 25
accidental event within the meaning of the pollution
exclusion clause: the focus in the former inquiry is on
whether there was property damage during the policy period,
while in the latter it is on the circumstances of the
release. Belleville I, 555 N.E.2d at 571 (noting that ____________
failure to appreciate this distinction has led to analytical
confusion).
The language of the policy states that coverage is
provided for damages as a result of "bodily injury or . . .
property damage to which this insurance applies, caused by an
occurrence." The policy limits property damage to damage
occurring within the policy period. Travelers argues that
there was no property damage during its policy period.
The Travelers policy only insured the Silresim and
Charles George sites, and only for the period lasting from
April 1975 until July 1976. Travelers points out that
Millipore seeks coverage for damages arising out of events
taking place at the Silresim site between 1977 and 1983, and
at the Charles George site in 1980. These occurrences
postdated the end of the Travelers policy period, and
Travelers argues that there could have been no damage during
the policy period.
The issue is complicated somewhat by the fact that
Massachusetts has not yet ruled on the proper approach to
take in determining whether there has been actual property
-26- 26
damage during the policy period. This was one of the
questions certified to the SJC in Belleville I, but that ____________
court declined to answer the question due to an insufficient
factual record, and the issue remains open. Belleville I, _____________
555 N.E.2d at 575 & n.9. The Belleville I court did note ____________
that there are five viable approaches: the release theory,
the injury-in-fact theory, the manifestation theory, the
first discovery theory, and the continuous trigger theory.
Id. at 575-76. Here, we need not predict which approach ___
Massachusetts would adopt, as Millipore has not demonstrated
that there were any occurrences during the Travelers policy
period under any of the possible approaches.
The insured bears the burden of proving coverage,
see, e.g., United States Liab. Ins. Co. v. Selman, 70 F.3d __________ _____________________________ ______
684, 688 (1st Cir. 1995), and Millipore essentially conceded
at oral argument that it had not met its burden of proving
that any damage occurred during the Travelers policy period.
Instead, Millipore argued that it should be allowed on remand
to put in additional evidence of abrupt and unexpected
events, such as fires, that occurred before or during the
policy period and that could have caused harm during the
policy period.16 Millipore, however, had ample opportunity
____________________
16. Due to the retroactive strict liability nature of the
CERCLA regime, a company may be responsible for damages
occurring before it began shipping waste to a site. As the
SJC explained in Aerovox: _______
-27- 27
to create a record, and there has been no intervening
clarification of the governing law. Travelers first raised
the "occurrence" argument in its answer to the complaint,
putting Millipore on notice that it was contesting whether
there was harm during the policy period.17 Accordingly, we
affirm the grant of summary judgment in favor of Travelers.
The Pollution Exclusion Clauses Under Massachusetts Law _______________________________________________________
To analyze INA and Hartford's argument, we turn to
the pollution exclusion clause under Massachusetts law,
particularly in light of the recently decided cases of Nashua ______
Corp. v. First State Insurance Co., 648 N.E.2d 1272 (Mass. _____ __________________________
1995) and Highlands Insurance Co. v. Aerovox Inc., 676 N.E.2d _______________________ ____________
801 (Mass. 1997). Nashua Corp. was decided after Judge Zobel ____________
granted summary judgment against Millipore; Aerovox while _______
this appeal was pending. Prior to Nashua Corp. and Aerovox, ____________ _______
____________________
[Under CERCLA,] the allocation of damages
is not differentiated by the time when a
particular PRP sent contaminated waste to
the site or by the waste of a particular
PRP. Thus, the fact that [the insured]
did not ship waste to [the site] before
1973, fifteen years after the fire, does
not preclude the possibility that some
fraction of the damages [the insured] was
asked to pay resulted from the 1958 fire.
Aerovox, 676 N.E.2d at 806. _______
17. While it is true that Travelers erroneously termed this
argument an affirmative defense, suggesting that it bore the
burden of proof on the issue, this area of the law is
sufficiently well settled that Millipore should have known
that it would have to bear the burden of proving that damage
occurred during the policy period.
-28- 28
the SJC had issued several decisions construing pollution
exclusion clauses in insurance contracts, establishing
general principles. However, it was unclear under what
circumstances damage due to the release of pollutants on
particular occasions would be covered under the sudden and
accidental exception to the pollution exclusion clause if the
insured had also engaged in pollution-generating activities
not subject to the exception over a longer period.
The SJC had ruled that "[t]he sudden event to which
the exception in the pollution exclusion clause applies
concerns neither the cause of the release of a pollutant nor
the damage caused by the release. It is the release of
pollutants itself that must have occurred suddenly, if the
exception is to apply . . . ." Belleville I, 555 N.E.2d at ____________
571.18 The focus is therefore on the circumstances of the
release. Id. ___
As to the meaning of the term "sudden" the word has
a temporal element, and so the release of pollutants must be
abrupt (as well as accidental) for there to be coverage. Id. ___
____________________
18. The SJC later clarified that the circumstances
surrounding the event causing the release may be informative
in determining whether the release itself was sudden and
accidental. Goodman v. Aetna Cas. & Sur. Co., 593 N.E.2d _______ _______________________
233, 235 (Mass. 1992). This court later held that, when
waste is poured directly into the ground (as opposed to first
being placed in a container), "the relevant discharge from
which the damage arose is clearly the disposal of waste
containing hazardous substances into the landfill." Warwick _______
Dyeing, 26 F.3d at 1204; cf. Patz v. St. Paul Fire & Marine ______ ___ ____ _______________________
Ins. Co., 15 F.3d 699, 703-03 (7th Cir. 1994). ________
-29- 29
at 572. The SJC further explained that a discharge
continuing over an extended period of time would likely cease
to be sudden. Liberty Mut. Ins. Co. v. SCA Servs., Inc., 588 _____________________ ________________
N.E.2d 1346, 1350 (Mass. 1992).
With respect to the word "accidental," the SJC
ruled that, even if the insured did not intend the discharge _______
of pollutants, releases of pollutants are not sudden and
accidental when the insured turned the waste over to a waste
processor who intentionally discharged the pollutants.
Polaroid Corp., 610 N.E.2d at 915-16. This court held that, _______________
under Massachusetts law, events "not clearly beyond . . .
long-range reasonable expectation[s]" cannot be considered
accidental. Lumbermens Mut. Cas. Co. v. Belleville Indus., ________________________ __________________
Inc., 938 F.2d 1423, 1427 (1st Cir. 1991) (Belleville II). ____ _____________
The Belleville II court raised but declined to answer the ______________
question at the heart of this case: "When, in the case of an
insured whose operations involve a likelihood of continuing
polluting releases, a court might properly identify a sudden
release so beyond the pale of reasonable expectability as to
be considered 'accidental,' we need not decide." Id. ___
Relying on this body of caselaw, Judge Zobel
sensibly concluded that the exception to the pollution
exclusion clause is not applicable if the harm is caused by
waste intentionally sent to a landfill. However, Nashua ______
Corp. and Aerovox, decided after her decision, make clear _____ _______
-30- 30
that the exception to the pollution exclusion clause may have
some force even in the context of a "pollution-prone
industry." Aerovox, 676 N.E.2d at 806 n.10. _______
In Nashua Corp., the SJC ruled that, ______________
notwithstanding a company's history of routinely delivering
hazardous waste to a landfill, evidence of a subsequent
unexpected and abrupt release of a significant amount of
pollutants into the environment may sometimes defeat the
insurer's motion for summary judgment based on the pollution
exclusion clause. Nashua Corp., 648 N.E.2d at 1276. The ____________
test set forth in Nashua Corp. draws on the reasoning in _____________
Belleville II and focuses on the whether the triggering event _____________
is common or uncommon. Id. Specifically, the Nashua Corp. ___ ____________
court found that evidence of a burst tank seal at one site
and a fire and subsequent explosion at another site
(Silresim) created a genuine issue of material fact as to
whether the relevant releases were sudden and accidental.
Id. ___
The court in Aerovox reaffirmed the principles set _______
forth in Nashua Corp., explaining that the test is whether ____________
the triggering event is "so beyond the pale of reasonable
expectability as to be considered 'accidental.'" Aerovox, _______
676 N.E.2d at 806 n.10. Aerovox further held that "the _______
insured must bear the burden of proving that the
-31- 31
contamination was caused by a sudden and accidental release."
Id. at 805.19 ___
Aerovox focused on whether the damage resulting _______
from a release which might meet Nashua Corp.'s sudden and ____________
accidental test in fact led to any identifiable damages that
were more than de minimis. After Aerovox, an insured, to _______
survive a motion for summary judgment, must "raise a factual
issue as to whether the sudden and accidental release caused
an appreciable amount of the damage for which it is being
held liable." Aerovox, 676 N.E.2d at 806. _______
In light of these intervening cases, we think there
was error in the denial of the motion for reconsideration.
Nashua Corp. and Aerovox are significant decisions, raising ____________ _______
the possibility of at least partial insurance recovery where
many thought, based on prior law, that no such possibility
existed. Aerovox arguably requires a new level of precision _______
in proving a causal connection between a particular event and
particular damages. The parties are entitled to have their
arguments viewed in this new light.
____________________
19. Judge O'Toole apparently denied the motion for
reconsideration on the premise that Judge Zobel had applied
the correct legal standard but had concluded that the
plaintiff's factual showing had been insufficient to defeat a
motion for summary judgment. However, we understand the
Zobel opinion differently, as having been issued before, and
without the assistance of, Nashua Corp. and Aerovox. Judge ____________ _______
O'Toole did not have the assistance of Aerovox. _______
-32- 32
The insurers ask that we nevertheless affirm the
grant of summary judgment based on the factual record which
was submitted to Judge Zobel before the clarification of the
law occasioned by Nashua Corp. and Aerovox. The insurers ____________ _______
rely on the fact that in Aerovox, the SJC, as a matter of _______
state law, granted summary judgment against the insured, even
though the record was compiled before that parties had the
benefit of the Nashua Corp. decision. The insurers argue _____________
with some merit that the affidavits submitted by Millipore
relating to the three Massachusetts sites are no more precise
than those found wanting by the SJC in Aerovox; they argue _______
with less merit that affidavits Millipore submitted as to the
New Jersey sites suffer from similar weaknesses.
We decline the insurers' invitation for two
reasons. The first is that these initial judgments as to the
adequacy of a record on summary judgment are better made by
the trial court in the first instance. See, e.g., Vicknair __________ ________
v. Formosa Plastics Corp., 98 F.3d 837, 839 (5th Cir. 1996) ______________________
(vacating and remanding for prudential reasons in light of
changed law to afford the trial court the first opportunity
to apply new law to the facts of the case); Satcher v. Honda _______ _____
Motor Co., Ltd., 993 F.2d 56, 57 (5th Cir. 1993) ("The ________________
district court, with its extensive knowledge of the facts and
proceedings in this case, is in a far better position than
are we to address and to first apply" new caselaw.); cf. ___
-33- 33
Thomas v. American Home Prods., Inc., 117 S. Ct. 282 (1996) ______ ___________________________
(mem.) (explaining the Court's practice of vacating and
remanding in light of changed state law). The second reason
for remand is that we think the better, fairer outcome is to
permit the parties to make new submissions, if they wish, in
light of the significant intervening clarification of the
law. See, e.g., Naturist Society, Inc. v. Fillyaw, 958 F.2d _________ ______________________ _______
1515, 1524 (11th Cir. 1992) (finding it "inapproriate" to
consider parties claims' without further factfinding in light
of newly amended state regulations); Brinley v. Commissioner, _______ ____________
782 F.2d 1326 (5th Cir. 1986) ("justice requires" remand to
allow submission of additional evidence in light of newly
announced legal standard). The district court may wish to
keep the parties on a short leash as to the timing of any
further submissions. We do not suggest that the parties are
entitled to any more discovery: after almost six years of
litigation, they should know their cases and be prepared to
make their best showings.
We wish to be clear. To survive the motions for
summary judgment, Millipore must present specific evidence
creating a genuine issue as to whether the incidents at the
sites were sudden and accidental and caused more than a de
minimis release of pollutants into the environment. See ___
Aerovox, 676 N.E.2d at 806. To the extent that Millipore _______
chooses to rely on expert opinions, they must be more than
-34- 34
"conclusory assertion[s] about ultimate legal issues." Hayes _____
v. Douglas Dynamics, Inc., 8 F.3d 88, 92 (1st Cir. 1993). We ______________________
are "not willing to allow the reliance on a bare ultimate
expert conclusion to become a free pass to trial." Id. ___
Whether this partial victory proves Pyrrhic for
Millipore remains to be seen -- the costs of insurance
coverage litigation may sometimes outstrip the small amount
of damages that an insured may be able to prove lie outside
the pollution exclusion clause. The parties may wish to
consider whether their best interests lie in a solution by
agreement.
Reimbursement for Defense Costs _______________________________
Finally, there are the insurers' counterclaims for
reimbursement for money paid to Millipore for its defense
costs in the underlying Charles George and Cooper suits. INA
and Travelers contend that the district court's decision to
enter judgment in favor of Millipore on the counterclaims was
based on the erroneous assumption that the insurers had a
duty to defend Millipore until the district court issued its
opinion stating that the pollution exclusion clause precluded
coverage here. The insurers argue that, since they never had
a duty to defend or indemnify Millipore, and since they
reserved the right to reimbursement for any defense costs
paid to Millipore, they are entitled to recover in full the
sums they paid to Millipore.
-35- 35
Under Massachusetts law, an insurer's duty to
defend an insured is more expansive than its duty to
indemnify. Boston Symphony Orchestra v. Commercial Union ___________________________ ________________
Ins. Co., 545 N.E.2d 1156, 1158 (Mass. 1989). The duty to ________
defend is antecedent to, and independent of, the duty to
indemnify; the obligation of the insurer to defend is not
determined "by reference to the facts proven at trial.
Rather, the duty to defend is based on the facts alleged in
the complaint . . . ." Id. ___
The test for determining whether an insurer has a
duty to defend is well-established. Whether there is such a
duty is decided by:
matching the third-party complaint with
the policy provisions: if the allegations
of the complaint are 'reasonably
susceptible' of an interpretation that
they state or adumbrate a claim covered
by the policy terms, the insurer must
undertake the defense . . . .
Liberty Mut. Ins. Co. v. SCA Servs., 588 N.E.2d 1346, 1347 ______________________ __________
(1992) (quoting Sterlite Corp. v. Continental Cas. Corp., 458 ______________ ______________________
N.E.2d 338, 340 (Mass. App. Ct. 1983)). Another way of
putting the point is that there is no duty to defend if, at
the time the claims were advanced, the insurer "could
reasonably have concluded that no aspect of the . . . claims"
fell within the scope of coverage. Polaroid Corp., 610 ______________
N.E.2d at 916.
-36- 36
We agree with the district court that the
complaints against Millipore involving the Charles George and
Cooper sites are reasonably interpreted as stating claims
covered under the INA policies. The complaints allege claims
pursuant to CERCLA and other federal and state statutes
arising out of Millipore's generation of hazardous wastes
disposed of at the Charles George site and the spillage of
trichloroethylene at the Cooper site. These events are
clearly occurrences under the INA policies, and while the
resulting damage is pollution related, it at least arguably
falls under the exception to the pollution exclusion clause.
This conclusion is a corollary of our decision to vacate the
grant of summary judgment and remand to the district court.
The possibility of coverage is sufficient to trigger the duty
to defend. Sterlite Corp., 458 N.E.2d at 341. ______________
Travelers' counterclaim presents a more difficult
question, but on balance we agree with the district court's
finding that Travelers had a duty to defend Millipore in the
underlying Charles George action. The amended complaints
filed by the United States and the Commonwealth in the
underlying Charles George action allege that between, at
least 1971 and 1983, a landfill was operated at the Charles
George site, and that, between at least 1973 and 1976,
hazardous wastes were disposed of there. Millipore, among
-37- 37
others, is alleged to have generated hazardous substances
that were disposed of at the site.
The Travelers policy provides coverage for the
period between April 1975 and July 1976, and thus, according
to the complaints of the United States and the Commonwealth,
covers part of the time during which hazardous wastes were
shipped to the landfill. The facts alleged in the complaint
raised the possibility that some of the property damage at
the Charles George site occurred within the policy period.
The later determination that Millipore has not met its burden
of showing an occurrence during the policy period does not
negate the duty to defend, which grows out of the allegations
in the complaint against the insured. Boston Symphony ________________
Orchestra, 545 N.E.2d at 1158; Nashua Corp. v. Liberty Mut. _________ ____________ ____________
Ins. Co., 1997 WL 89163 (Mass. Super. Ct. Feb. 18, 1997) _________
("[W]here a complaint is susceptible on its face of a reading
that brings the claim within the polciy, the insurer cannot
rely on facts outside the complaint to justify a unilateral
refusal to defend."). And the complaints are reasonably
susceptible to an interpretation under which the releases of
pollutants were not, in the language of the Travelers policy,
"either expected or intended from the standpoint of any
insured, or any person or organization for whose acts or
omissions any insured is liable."
-38- 38
It is true that the Travelers pollution exclusion
clause also precludes coverage for damage "resulting from or
contributed to by any condition in violation of or non-
compliance with any governmental rule, regulation, or law
applicable thereto." The government complaints refer to the
Commonwealth's action against the operators of the Charles
George Landfill for violations of state environmental laws
and regulations, and to improper disposal of waste at the
site. This raises the distinct possibility that some of the
claims would be precluded from coverage on this basis.
However, although the question is a close one, we do not
believe that the complaints could reasonably have led
Travelers to conclude that no aspect of the claims fell
within the scope of coverage. See Polaroid Corp., 610 N.E.2d ___ ______________
at 916.
IV.
The decision of the district court is affirmed in ___________
part, reversed in part and remanded for proceedings ____ ___________________ ________
consistent with this opinion. We affirm the district court's
ruling that Massachusetts law applies to all claims under the
multistate CGL policies issued directly to Millipore.
However, we hold that New Jersey law applies to claims
brought under the policy Hartford issued to Worthington, and
-39- 39
remand for consideration of those claims under New Jersey
law.
With respect to the claims brought under the
multistate CGL policies issued directly to Millipore --
claims which involve all five sites and which are governed by
Massachusetts law -- we affirm the district court's grant of
summary judgment in favor of Travelers but we reverse the
grant of summary judgment in favor of INA and Hartford on all
three counts.20 We remand to allow the parties to submit
renewed affidavits in light of the standards articulated by
the SJC in Aerovox and Nashua Corp. And we affirm the _______ _____________
district court's grant of summary judgment in Millipore's
favor on the insurers' counterclaims for reimbursement of
defense costs.
____________________
20. We also reverse with respect to the claims based on the
Hartford policies issued by Hartford to Waters Associates, a
Massachusetts company acquired by Millipore in 1980.
-40- 40