Boston Gas Company v. Century Indemnity Company

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

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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,

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"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

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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.

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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

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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

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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

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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:

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 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

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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

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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

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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

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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

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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,

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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

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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").

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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

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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

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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

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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).

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 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

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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.

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 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.

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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

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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

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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.

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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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