United States Court of Appeals
For the First Circuit
No. 93-1697
THE ALAN CORPORATION AND EAST SIDE OIL COMPANY,
Plaintiffs, Appellants,
v.
INTERNATIONAL SURPLUS LINES INSURANCE COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Torruella, Circuit Judge,
Aldrich, Senior Circuit Judge,
and Stahl, Circuit Judge.
Raymond J. Reed with whom Reed & Reed was on brief for
appellants.
Donald V. Jernberg, with whom Thaddeus Murphy, Oppenheimer Wolff
& Donnelly, Keith C. Long, Robert A. Whitney, and Warner & Stackpole,
were on brief for appellee.
April 22, 1994
STAHL, Circuit Judge. In this appeal, we must
determine whether a policy issued by defendant-appellee
International Surplus Lines Insurance Company (ISLIC) covers
clean-up costs which were imposed upon plaintiffs-appellants
Alan Corporation and East Side Oil Company, Inc. (hereinafter
"Alan Corp."). The district court found that the clean-up
costs were not covered by the policy, and entered summary
judgment in favor of ISLIC. We affirm.
I.
FACTUAL BACKGROUND AND PRIOR PROCEEDINGS
Alan Corp. sells fuel oil to retail customers in
central Massachusetts. As part of its business, it stores
oil in large tanks at several different locations. On August
28, 1986, Alan Corp. obtained a pollution liability policy
("the policy") from ISLIC in order to insure against
potential liability arising from storage tank leaks. The
policy covered two Alan Corp. storage sites located in the
Massachusetts towns of Leominster and Fitchburg.
The policy was a one-year "claims made" policy,1
1. The Supreme Court has explained that "[a]n `occurrence'
policy protects the policy holder from liability for any act
done while the policy is in effect, whereas a `claims made'
policy protects the holder only against claims made during
the life of the policy." St. Paul Fire & Marine Ins. Co. v.
Barry, 438 U.S. 531, 535 n.3 (1977). Thus, "`a doctor who
practiced for only one year, say 1972, would need only one
1972 "occurrence" policy to be fully covered, but he would
need several years of "claims made" policies to protect
himself from claims arising out of his acts in 1972.'" Id.
(quoting Barry v. St. Paul Fire & Marine Ins. Co., 555 F.2d
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in which ISLIC undertook, inter alia, to reimburse Alan Corp.
for clean-up costs incurred as a result of government agency
orders. In relevant part, the policy stated:
The company will reimburse the insured
for reasonable and necessary clean-up
costs incurred by the insured in the
discharge of a legal obligation validly
imposed through governmental action which
is initiated during the policy period . .
. .
(Emphasis supplied). The policy ran from August 28, 1986 to
August 28, 1987.
On or about August 25, 1987, just prior to the
expiration of the policy, Alan Corp. became aware of
potential contamination at its Fitchburg and Leominster
facilities. In apparent partial compliance with state fire
regulations,2 David White, an Alan Corp. employee, phoned
the Leominster Fire Department and notified it of the
potential contamination at the Leominster site. A Fire
Department employee told White to determine what
contamination, if any, existed and to report any such
contamination to the Massachusetts Department of
Environmental Quality Engineering, now known as the
3, 5 n.1 (1st Cir. 1977)).
2. The Massachusetts Board of Fire Prevention Regulations,
Mass. Regs. Code tit. 527, 9.19(1)(b) (1986) provided, in
relevant part, "In the event of a leak . . . the owner or
operator shall immediately notify the head of the local fire
department and [the Massachusetts Department of Environmental
Protection]."
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Massachusetts Department of Environmental Protection ("DEP").
No governmental agency was notified of the potential
contamination of the Fitchburg site at this time.
Alan Corp. also submitted "Loss Notice" forms to
ISLIC. These forms, dated August 28, 1987, stated that a
"[p]reliminary survey shows a pollution problem" at both the
Leominster and Fitchburg sites.
Alan Corp. alleges that on an unspecified date
after the initial report to ISLIC of contamination at the
Leominster and Fitchburg sites, an unidentified ISLIC
employee told Alan Corp. to "lay low" with respect to those
two sites until the clean-up of a third Alan Corp. storage
site, located in Worcester, was completed. (It appears that
an entirely separate policy issued by ISLIC provided coverage
for the Worcester site, that there was contamination at the
Worcester site, and that during late August of 1987, ISLIC
was involved with clean-up at the Worcester site). That same
unidentified employee allegedly assured Alan Corp. that ISLIC
also would provide coverage for any necessary clean-up of the
Leominster and Fitchburg sites upon completion of the
Worcester site clean-up.3
3. Alan Corp.'s president, Joel Robbins, swore in an
affidavit that the "lay low" comment and the accompanying
promise to provide coverage occurred. He did not specify any
individual at ISLIC who may have made the comments, nor did
he specify any individual at Alan Corp. who may have heard
them, nor any time or date when the comments may have been
made. The district court characterized Alan Corp.'s claims
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In addition, ISLIC assigned an investigator to
assess the contamination at the Leominster and Fitchburg
sites. Toward that same end, Alan Corp. hired Lycott
Environmental Research Company, Inc. ("Lycott") to
investigate both sites.
About two months after these initial responses, the
Lycott investigation revealed contamination at both sites.
On July 12, 1988, approximately eight months after the date
of the Lycott report and nearly eleven months after the
expiration of the policy, Alan Corp. reported the
contamination of the Leominster site to DEP. On January 11,
1989, nearly eighteen months after the expiration of the
policy, DEP ordered the clean-up of the Leominster site. On
March 30, 1989, DEP issued a "notice of responsibility" to
Alan Corp. for the Leominster site. Thereafter, Alan Corp.
conducted remedial efforts as required by DEP. The record
does not reveal when Alan Corp. notified DEP of the
contamination at the Fitchburg site, but on August 13, 1991,
DEP ordered clean-up at that site and Alan Corp. complied.
with regard to these comments as "tenuous," Alan Corp. v.
International Surplus Lines Ins. Co., 823 F. Supp. 33, 42 (D.
Mass 1993), and we further note that these statements
probably do not satisfy Fed. R. Civ. P. 56(e)'s requirement
that affidavits "set forth such facts as would be admissible
in evidence." Nonetheless, like the district court, we
assume for the purposes of this opinion that the statements
were made.
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Based on the foregoing facts, Alan Corp. sought
reimbursement from ISLIC for clean-up costs incurred at the
Leominster and Fitchburg sites. ISLIC denied coverage and
Alan Corp. brought suit. ISLIC moved for summary judgment,
arguing that no governmental action had been initiated within
the policy period, as required by the terms of the policy.
The district court granted summary judgment, reasoning that
the call to the Leominster Fire Department, standing alone,
did not amount to "governmental action which is initiated
during the policy period" and that therefore coverage was not
afforded under the policy. See Alan Corp. v. International
Surplus Lines Ins. Co., 823 F. Supp. 33 (D. Mass. 1993).
II.
DISCUSSION
A. Standard of Review
Our review of a district court's grant of summary
judgment is plenary. Bird v. Centennial Ins. Co., 11 F.3d
228, 231 (1st Cir. 1993). We read the record indulging all
inferences in a light most favorable to the non-moving party.
Levy v. FDIC, 7 F.3d 1054, 1056 (1st Cir. 1993). Summary
judgment is appropriate only if there is no genuine issue as
to any material fact and the moving party is entitled to
judgment as a matter of law. Id.
Moreover, where, as here, the facts upon which
liability is claimed or denied under an insurance policy are
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undisputed and the existence or amount of liability depends
solely upon a construction of the policy, the question
presented is one of law. Atlas Pallet, Inc. v. Gallagher,
725 F.2d 131, 134 (1st Cir. 1984). As with other questions
of law, we owe no deference to the district court's
interpretation of the policy. Id. Finally, neither party
disputes that Massachusetts law applies.
B. The Call to the Fire Department
Alan Corp. argues that because its phone call to
the Leominster Fire Department took place within the policy's
claims period, the clean-up costs, which were incurred as a
result of the order by DEP some twenty months after the
expiration of the policy, were nonetheless "validly imposed
through governmental action which [was] initiated during the
policy period." In essence, Alan Corp. argues that the call
to the Leominster Fire Department was the first of many steps
that led to DEP's clean-up mandate, and that, because this
first step was taken within the policy period, timely
"governmental action" had therefore been "initiated." We
disagree.
We begin by noting that neither the phone call to
the Leominster Fire Department nor any information conveyed
during the phone call, imposed any obligation upon Alan Corp.
At best, David White was informed by the Leominster Fire
Department that Alan Corp. had a duty to determine if
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contamination existed and that it had a duty to report any
such contamination to DEP. These duties existed entirely
independently of the phone call. See Mass. Gen. L. ch. 21E,
7 (stating that an owner of an oil storage site, "as soon
as he has knowledge of a release or threat of release of oil
material, shall immediately notify [DEP] thereof"); Mass.
Regs. Code tit. 527, 9.19(1)(b) (1986) (stating that "[i]n
the event of a leak . . . the owner or operator shall
immediately notify the head of the local fire department and
[DEP]") (emphasis supplied). Thus, even under the most
generous reading of the policy, the Fire Department's
recitation to David White of Alan Corp.'s duty to report
contamination to DEP, without more, does not constitute the
imposition of any legal obligation.
Nor was any further governmental action "initiated"
through the phone call to the Leominster Fire Department.
The Fire Department made no record of the phone call; it sent
no representatives to the site; it made no attempt to
determine whether Alan Corp. had investigated the spill; it
made no attempt to determine whether Alan Corp. had reported
any contamination to DEP; and it never communicated with DEP,
directly or otherwise, about the spill in any manner.
Rather, all clean-up costs in this case were imposed solely
and independently by DEP, whose involvement, by Alan Corp.'s
own admission, began well after the policy had expired.
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In sum, the phone call to the Leominster Fire
Department neither amounted to, nor did it "initiate,"
governmental action for purposes of the policy. Rather, all
governmental action resulting in the imposition of clean-up
costs was initiated by and through DEP. Because DEP's
actions were initiated well after the expiration date of the
policy, Alan Corp. was afforded no coverage for its incurred
clean-up costs.
C. Other Issues
As noted above, an unidentified ISLIC employee
allegedly told Alan Corp. to "lay low" with regard to the
contamination and went on to assure Alan Corp. that expenses
for the clean-up of both the Leominster and Fitchburg sites
would be covered by ISLIC. Based on these statements, Alan
Corp. argues that the doctrines of waiver and estoppel bar
ISLIC from denying coverage.
In the context of insurance claims, waiver is the
voluntary and intentional relinquishment of a known right.
Merrimack Mut. Fire Ins. Co. v. Nonoka, 606 N.E.2d 904, 906
(Mass. 1993). It is well established that, whatever the
scope of waiver in insurance law, "it does not extend to the
broadening of coverage, so as to make the policy cover a risk
not within its terms." Palumbo v. Metropolitan Life Ins.
Co., 199 N.E. 335, 336 (Mass. 1935).
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The policy at issue here covers, inter alia, claims
made against the insured which are initiated by governmental
action during the policy period. As pointed out above, the
governmental action at issue here was initiated after the
expiration of the policy. In sum, the doctrine of waiver
does not operate in this case to lengthen the period of the
policy so as to include the clean-up costs assessed by DEP.
Accordingly, Alan Corp.'s waiver argument fails.
Alan Corp.'s estoppel argument is equally
unavailing. Estoppel in the insurance context necessarily
implies some reasonable, good-faith reliance by the insured
upon some act, conduct or inaction of the insurer, to the
detriment of the insured. See, e.g., O'Blenes v. Zoning Bd.
of Appeals, 492 N.E.2d 354, 356 (Mass. 1986). As a general
matter, estoppel, like waiver, does not extend, broaden or
enlarge coverage so as to include risks not covered within
the terms of the policy. Cf. Nieves v. Intercontinental Life
Ins. Co., 964 F.2d 60, 66 (1st Cir. 1992) (holding that,
under Puerto Rico law, an insurance policy cannot be extended
by waiver or estoppel).
Alan Corp. argues that it would have contacted DEP
within the claims period (and thus, presumably, timely
governmental action would have been initiated), but for
ISLIC's advice to "lay low." Alan Corp.'s argument leaves us
to conclude that it was aware, or reasonably should have been
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aware, of its statutory and regulatory obligation to report
potential contamination to DEP. See Mass. Gen. L. ch. 21E,
7; Mass. Regs. Code tit. 527, 9.19(1)(b) (1986). Moreover,
according to Alan Corp.'s own evidence, the Leominster Fire
Department instructed Alan Corp. to report contamination to
DEP. We agree with the district court that reliance upon an
insurance company's advice not to report contamination, in
the face of both a statutory and regulatory duty to report
such contamination and advice from a local fire department to
do so, can be neither reasonable nor in good faith. In the
absence of good faith or reasonable reliance, Alan Corp.'s
estoppel argument fails.
Finally, Alan Corp. argues that ISLIC was unfairly
dilatory in making its determination that it would not
provide coverage and that this delay amounted to an unfair
trade practice under Mass. Gen. L. ch. 93A 2, 11 and Mass.
Gen. L. ch. 176D, 3(9)(a-f) and (n). In order to make out
a claim under these statutes, however, a claimant must
establish both that an unfair trade practice occurred and
that the unfair practice resulted in a loss to the claimant.
See, e.g., Kerlinsky v. Fidelity & Dep. Co., 690 F. Supp.
1112, 1120 (D. Mass. 1987). In arguing that it suffered a
loss due to delay, Alan Corp. focuses almost exclusively on
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the costs of meeting DEP's clean-up orders.4 We note,
moreover, that regardless of any delay by ISLIC, Alan Corp.
bore the initial liability for the clean-up costs assessed by
DEP. Moreover, Alan Corp. has not argued, nor could it on
the record before us, that ISLIC's alleged delay had any
effect on the cost of the clean-up ordered by DEP. Thus,
even assuming that there was undue delay, Alan Corp. has
failed to offer proof that it was harmed by this delay.
To the extent that Alan Corp. challenges other
aspects of the district court's ruling, it does so in a
perfunctory manner, without any attempt at developed
argumentation.5 Such arguments may be deemed waived. See,
e.g., Romero Lama v. Borras, 16 F.3d 473, 481 n.12 (1st Cir.
4. In its brief, Alan Corp. adverts in a perfunctory manner
to the fact that the cost of remedial work increased while
ISLIC delayed its decision. We have often warned parties
that issues raised in a perfunctory manner, unaccompanied by
some effort at developed argumentation, may be deemed waived.
See, e.g., FDIC v. World Univ. Inc., 978 F.2d 10, 15 (1st
Cir. 1992). Moreover, Alan Corp. made no offer of proof to
support this line of argument.
5. For example, Alan Corp. argues without elaboration that
Section I.A., the "property damage" provision of the policy,
applies in this case. It also argues that a policy extension
which it purchased applies to lengthen the relevant reporting
period. The district court offered a thorough, well-reasoned
discussion which concluded: 1) that Section I.A. does not
apply to the claims at issue in this case and 2) that the
extension purchased by Alan Corp. only lengthens the
reporting period for claims under Section I.A. See Alan
Corp., 823 F. Supp. at 40-41; see also, Wolf Bros. Oil Co.,
Inc. v. International Surplus Lines Ins. Co., 718 F. Supp.
839, 43-45 (W.D. Wa. 1989) (interpreting same insurance
contract in a similar manner). Even were we to reach these
issues, we find no error in the district court's reasoning.
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1994); FDIC v. World Univ. Inc., 978 F.2d 10, 15 (1st Cir.
1992).
III.
CONCLUSION
For the foregoing reasons, the order of the
district court granting summary judgment in favor of ISLIC is
Affirmed. Costs to appellees.
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