Opinion
CIVIL ACTION NO. 99-30280-FHF.
February 7, 2002
MEMORANDUM AND ORDER
I. INTRODUCTION
This diversity action arises out of an accident that resulted in the deaths of Richard C. Parkhurst and Douglas F. Sigsbury, employees of Modern Aluminum Anodizing, Inc. ("Modern Aluminum"). The estates of the deceased filed separate wrongful death actions in Berkshire County Superior Court ("Superior Court") against Berkshire Environmental Consultants, Inc., as well as its President, Maura Hawkins, (collectively, "BECI"). BECI's insurer, Essex Insurance Company, Inc. ("Essex"), now seeks a declaration that it has no duty to defend BECI pursuant to exclusions in the Comprehensive General Liability Policy ("Liability Policy"). Now before the Court is Essex's motion for summary judgment.
II. BACKGROUND
Modern Aluminum, a company which treats metal surfaces with toxic chemicals, hired BECI to provide consultation services regarding the proper handling of chemicals. On September 28, 1996, Richard C. Parkhurst and Douglas F. Sigsbury, two employees of Modern Aluminum, suffered on-the-job injuries which led to their deaths. The estates of both decedents brought separate wrongful death actions against BECI in Superior Court, alleging only that the deaths resulted from exposure to hydrogen sulfide gas at their place of employment, Modern Aluminum. Essex, which insured BECI at the time of the deaths, undertook to defend BECI, but fully reserved its rights to assert any defenses it had pursuant to the Liability Policy. Under the express terms of the Liability Policy, coverage is precluded for injuries that fit within the following exclusions: pollution, professional services, hiring and/or supervision, products/completed operations hazard endorsement, and punitive or exemplary damage.
Essex filed this declaratory judgment action to ascertain whether it is obligated, under the pollution and professional services exclusions of the Liability Policy, to defend and indemnify BECI. In July 2001, this Court granted BECI's motion for a stay as to the indemnification claims. The Court now turns to BECI's motion for summary judgment with regard to its duty to defend Essex.
III. STANDARD OF REVIEW
In evaluating a motion for summary judgment, the Court reviews the record evidence "in the light most flattering to the nonmovant and indulge[s] all reasonable inferences in that party's favor." NASCO, Inc. v. Public Storage, Inc., 29 F.3d 28, 32 (1st Cir. 1994) (quotations and brackets omitted). Summary judgment is appropriate only "if the record shows that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Hardy v. Loon Mountain Recreation Corp., 276 F.3d 18, 20 (1st Cir. 2002).
IV. DISCUSSION
Essex moves for summary judgment on the ground that the injuries which gave rise to the underlying actions against BECI fall within the pollution and professional services exclusions of the Liability Policy. Under Massachusetts law, when construing the language of an insurance policy, the Court must "consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered."Western Alliance Ins. Co. v. Gill, 686 N.E.2d 997, 998 (Mass. 1997); see Atl. Mut. Ins. Co. v. McFadden, 595 N.E.2d 762, 764 (Mass. 1992). Moreover, the Court must "construe the words of the policy according to the fair meaning of the language used, as applied to the subject matter."United States Liability Ins. Co. v. Bourbeau, 49 F.3d 786, 788 (1st Cir. 1995). Where the words are free from ambiguity, they must be construed in their usual and ordinary sense. Id.
An insurer's duty to defend is generally determined "by matching the third-party complaint with the policy provisions." Town of Longmeadow v. Frontier Ins. Co., 2002 WL 21730, C.A. No. 99-P-1648, at *2 (Mass.App.Ct. Jan. 7, 2002). "[I]f the allegations of that 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."Sterilite Corp. v. Continental Cas. Co., 458 N.E.2d 338, 340 (Mass.App.Ct. 1983); see Medical Records Assocs., Inc. v. Am. Empire Surplus Lines Ins. Co., 142 F.3d 512, 514 (1st Cir. 1998). "The process is not one of looking at the legal theory enunciated by the pleader but of envisaging what kinds of losses may be proved as lying within the range of the allegations of the complaint, and then seeing whether any such loss fits the expectation of protective insurance reasonably generated by the terms of the policy." Boston Symphony Orchestra, Inc. v. Commercial Union Ins. Co., 545 N.E.2d 1156, 1159 (Mass. 1989).
Essex contends that this Court may look beyond the allegations in the complaint to ascertain whether it has a duty to defend "when extrinsic evidence demonstrates that . . . the plaintiff is actually claiming entitlement to damages outside of the policy's coverage." Memorandum of Law in Support of Motion for Summary Judgment at 4. This contention, however, is unavailing. See, e.g., Liberty Mut. Ins. Co. v. SCA Servs., Inc., 588 N.E.2d 1346, 1349 n. 4 (Mass. 1992) ("the pleading test for determination of the duty to defend is based exclusively on the facts alleged rather than the facts as they actually are."). It is true, as BECI observes, that extrinsic facts may be relevant where the insurer "knows or could readily ascertain facts that implicate such a duty," and "the complaint itself would not cast on the insurer a duty to defend."Sterilite Corp., 458 N.E.2d at 341 n. 5; see Terrio v. McDonough, 450 N.E.2d 190, 193 (Mass.App.Ct. 1983) (no duty to defend "unless facts alleged in the complaint, or known or readily knowable to the insurer, place liability within the coverage of the policy.") (Emphasis added). By contrast, Essex does not cite to any authority to support its contention that extrinsic evidence may be used to allow an insurer to escape its duty to defend. A. Pollution Exclusion
Essex relies primarily on Bagley v. Monticello Insurance Co., 720 N.E.2d 813 (Mass. 1999) in support of its argument. There, the court analyzed whether a provision in a liability insurance policy issued to a motel, excluding coverage for claims arising wholly or in part out of an illegal act, applied to a guest's claim against the motel for negligence in connection with rape. Bagley, 720 N.E.2d at 814-15. In concluding that coverage was barred under the illegal acts exclusion, the court determined that the exclusion should not apply although the plaintiff based her action on negligence. Id. at 815. Based on "[a] fair reading of the plaintiff's complaint in the underlying action," the court determined that her claim against the hotel arose from the illegal acts of its employee. Id. at 816. Thus, the court did not examine extrinsic evidence in determining the insurer's duty to defend. Essex, moreover, relies heavily on the court's statement that "the source from which the plaintiff's personal injury originates, rather than the specific theories of liability alleged in the complaint, which determine the insurer's duty to defend." Id. However, it is well established that "this concept . . . directs our inquiry to the conduct complained of in the underlying lawsuit," rather than to any extrinsic facts. County of Barnstable v. Am. Fin. Co., 744 N.E.2d 1107, 1111-12 (Mass.App.Ct. 2001).
The pollution exclusion states, in pertinent part, that the policy does not cover any claim, suit, cost, or expense arising out of bodily injury, personal injury, property damage or any other type of injury or expense:
As a result of actual, alleged, or threatened discharge, dispersal, release or escape of pollutants, or placement of pollutants, into or upon land, the atmosphere, or any water course or body of water, aquifer or ground water, whether sudden, accidental or gradual in nature or not. Pollutants means any solid, liquid, gaseous, thermal, acoustic, electric, magnetic, electromagnetic irritant or contaminant, including but not limited to smoke, vapor, soot, fumes, fibers, radiation, acid, alkalis, chemicals or materials, and waste . . . . All liability and expense arising out of or related to any form of pollution, caused intentionally or otherwise, and whether or not any resulting injury, damage, devaluation, cost or expense is expected by any Insured or any other person or entity is excluded.
Memorandum in Support of Motion for Summary Judgment ("Memorandum"), Exhibit A, at 2. The complaints filed by the estates of the decedents in this case allege that Sigsbury and Parkhurst were injured and died at Modern Aluminum, their place of employment, as the result of exposure to hydrogen sulfide gas. Id., Exhibit B at ¶ 8; Exhibit C at ¶ 7. This is, quite literally, the extent of the relevant facts alleged in the underlying complaint.
The question before the Court is whether the pollution exclusion applies to liability for bodily injury and death caused by exposure to hydrogen sulfide gas in the workplace. Essex contends that it applies because the injuries and deaths alleged in the underlying complaints resulted from the release of a pollutant, hydrogen sulfide gas, into the atmosphere. BECI counters that the exclusion was intended to relieve insurers of liability for large scale environmental contamination cleanup costs. Therefore, BECI argues, an objectively reasonable insured would not expect an exclusion from coverage for the incidents described in the underlying complaints.
Here, the Court is persuaded by BECI's argument. Of particular significance to the Court's analysis is the language of the Pollution Exclusion, which insulates Essex from a duty to defend against lawsuits arising from the "discharge, dispersal, release or escape of pollutants . . . ." Id., Exhibit A, at 2. It is true, as Essex contends, that the alleged injuries resulted from the release of hydrogen sulfide, which may be considered to be a toxic substance, and therefore a pollutant. See,e.g., 42 U.S.C. § 11001 (classifying hydrogen sulfide gas as a hazardous substance pursuant to Community Right to Know Act). However, several of the other contract terms resist the interpretation urged by Essex. For instance, the words "discharge," "dispersal," "release," and "escape," are "terms of art in environmental law which generally are used with reference to damage or injury caused by improper disposal or containment of hazardous waste." Atlantic Mut. Ins. Co., 595 N.E.2d at 764, citing West Am. Ins. Co. v. Tufco Flooring East, Inc., 409 S.E.2d 692, 699-700 (N.C.App.Ct. 1991), rev'd on other grounds, Gaston County Dyeing Machine Co. v. Northfield Ins. Co., 524 S.E.2d 558, 564-65 (N.C. 2000). In Tufco, the court noted:
"Discharge" is defined in the federal regulations interpreting the Resource, Conservation and Recovery Act . . . as the "accidental or intentional spilling, leaking, pumping, pouring, emitting, emptying, or dumping of hazardous waste into or on any land or water . . . . "Release" is defined in § 101(22) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1990 . . . as "any spilling, leaking, pumping, pouring, emitting, emptying, discharging . . . into the environment."Tufco, 409 S.E.2d at 699-700 (emphasis added). The court also observed that the terms "discharge" and "release" signify "escape by definition and dispersal by concept." Id.; see Lumbermens Mut. Cas. Co. v. S-W Indus., Inc., 39 F.3d 1324, 1336 (6th Cir. 1994) (defining "disperse" as "to cause to be spread widely."). Thus, an objectively reasonable insured would expect the pollution exclusion to excuse Essex from its duty to defend against suits alleging injury and death resulting from the discharge of hazardous substances that are dispersed beyond the area of its intended use, and into the environment. Id. at 699. Here, by contrast, the underlying complaints allege injury and death resulting from exposure to gas that is not widely dispersed, but rather limited to or confined within the original area of its intended use, i.e., the workplace. An objectively reasonable person would not expect such a claim to be covered by the terms of this pollution exclusion. See Lumbermens Mut. Cas. Co., 39 F.3d at 1336 (concluding that pollution exclusion applies to "liabilities of the insured to outsiders, either neighboring landowners or governmental entities enforcing environmental laws, rather than injuries caused by toxic substances that are still confined within the area of their intended use.").
This interpretation of the relevant contract language is supported by the case of Western Alliance Insurance Company v. Gill. There, the Massachusetts Supreme Judicial Court found that a pollution exclusion did not excuse the insurer's duty to defend local restaurateurs who were sued by diners following exposure to carbon monoxide fumes in the restaurant.Gill, 686 N.E.2d at 999. The court considered the significance of the pollution exclusion in light of its original purpose, and cautioned that it "should not reflexively be applied to accidents arising during the course of normal business activities simply because they involve a discharge, dispersal, release, or escape of an irritant or contaminant."Id. Citing to American States Insurance Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997), the court observed,
the history of the pollution exclusion indicates that the provision was drafted to avoid the enormous expense of environmental litigation. . . . [W]e would be remiss, therefore, if we were simply to look to the bare words of the exclusion, ignore its raison d'etre, and apply it to situations which do not remotely resemble traditional environmental litigation.Gill, 686 N.E.2d at 999. Turning to the injuries alleged by the diners, the court acknowledged that they resulted from a "discharge" or "release" of "irritants" or "contaminants." Id. at 1000. Nevertheless, in light of the historical purpose of the pollution exclusion, the court concluded that it did not apply, as the restaurateurs would not have expected the pollution exclusion to abrogate coverage for claims arising "during the course of normal business activities." Id.
Here, as in Gill, the underlying complaints allege that injuries and death resulted from the release or discharge of harmful chemicals. Following the logic of the Gill decision, this Court concludes that the pollution exclusion does not apply because the underlying complaints do not allege that the injuries and deaths resulted from traditional environmental pollution, i.e. hazards discharged onto land, the atmosphere, or a body of water. Indeed, "[t]he policy contains a pollution exclusion, not an exclusion for all damages that may result" from the use of chemicals by BECI's clients. Tufco, 409 S.E.2d at 700. In addition, it appears from the underlying complaints that the alleged injuries occurred during the course of normal business activities at Modern Aluminum, and Essex does not argue to the contrary. Accordingly, the Court concludes that a reasonable insured would not have interpreted the pollution exclusion to excuse Essex from its duty to defend in this case. B. Professional Services Exclusion
Essex's citations to Essex Ins. Co. v. Tri-Town Corp., 863 F. Supp. 38 (D.Mass. 1994), and League of Minnesota Cities Ins. Trust v. City of Coon Rapids, 446 N.W.2d 419 (Minn.Ct.App. 1989), are unavailing. The Supreme Judicial Court ("SJC") strongly implied that Essex is of dubious precedential value, as it did not take into account that court's decision in McFadden. Gill, 686 N.E.2d at 1001 n. 6. Moreover, the SJC expressly stated that it was "not persuaded by the reasoning" of the League of Minnesota Cities decision. Gill, 686 N.E.2d at 1000 n. 5. Finally, the citations to cases applying the law of Texas and Mississippi are unpersuasive because the law in those states conflicts with the relevant law in Massachusetts. See, e.g., Certain Underwriters at Lloyd's London v. C.A. Turner Constr. Co., 112 F.3d 184, 187 n. 3 (5th Cir. 1997) (distinguishing McFadden because in Massachusetts, unlike Texas, pollution exclusion clauses are ambiguous "when applied outside the context of environmental pollution.").
The Liability Policy also expressly excludes coverage for bodily injury arising out of the rendering or failure to render any professional services. The applicable contract provision reads, in pertinent part:
This insurance does not apply to any claim, suit, cost, or expense arising out of . . . [a]ny type error, omission, act, rendering of or failure to render any type professional service, unless specifically endorsed onto this policy.
Memorandum, Exhibit A, at 3. Generally, the definition of "professional services" focuses upon "whether an occupation requires specialized knowledge and calls for mental rather than physical skills." Camp Dresser McKee, 568 N.E.2d at 635; see Roe v. Federal Ins. Co., 587 N.E.2d 214, 217 (Mass. 1992) (professional act or service "exacts the use or application of special learning or attainments of some kind.").
Here, the complaints filed by the decedents' estates broadly allege that the injuries and deaths were caused by BECI's negligent performance of both professional and non-professional services. For instance, the Parkhurst complaint alleges that:
The services which [BECI] undertook to perform for Modern Aluminum Anodizing, Inc. and its employees included, without limitation, administrative, business, clerical, consulting, design, inspection, management, oversight, reporting and training services related to safety, environmental and governmental compliance matters in connection with Modern Aluminum Anodizing, Inc.'s business.
Memorandum, Exhibit B, at 2. Similarly, the Sigsbury complaint contends that:
At all relevant times prior to and including September 28, 1996, [BECI] and/or through its agents . . . were negligent, in general, and/or with respect to the services undertaken to be provided to Modern Aluminum . . . including, without limitation, the following services: consulting; business; administrative; managerial; clerical; advisory; design; inspection; oversight; reporting; training and/or the failure to warn of known and/or reasonably foreseeable hazards; and as a direct and proximate result thereof, the decedent suffered severe pain of body and anguish of mind prior to his death and while in a conscious condition.Id., Exhibit C, at 5. Although several of the actions alleged in the complaints would likely fall within the professional services exclusion, certain others may not. For example, both pleadings allege that BECI negligently performed "administrative" and "clerical" actions or services, neither of which qualify as professional services. See, e.g.,Jefferson Ins. Co. v. National Union Fire Ins. Co., 677 N.E.2d 225, 230-31 (Mass.App.Ct. 1997) (services of medical dispatcher, i.e., receiving messages from police and relaying the information to ambulances and emergency medical technicians, did not constitute professional services, but rather was "nonspecialized, clerical or administrative activity requiring neither . . . intellectual skill nor professional judgment."). In addition, BECI is alleged to have negligently performed "management" and "oversight" functions, which might be treated as alleging supervision of both professional and non-professional activities. Cf. Camp Dresser McKee, 568 N.E.2d at 635 (insurer obligated to defend where underlying complaint alleged negligent management or control, and language of professional services exclusion susceptible to construction of managing both professional and non-professional actions). Therefore, because several allegations in the underlying complaints may not fall within the professional services exclusion, Essex is obligated to defend "notwithstanding the possibility that certain other claims might be found to be excluded." GRE Ins. Group, 61 F.3d at 85; citing Aetna Cas. Sur. Co. v. Cont'l Cas. Co., 604 N.E.2d 30, 32 n. 1 (Mass. 1992) (noting that "the weight of authority places the duty to defend all counts on an insurer which has a duty to defend at least one count of a complaint").
Essex contends that the services provided by BECI were of a professional nature because BECI is an environmental consulting firm, the essence of which "is reliant upon its employees' education, training and intellectual skill." Memorandum at 14. This asseveration, however, is without merit. "In determining whether a particular act is of a professional nature or a professional service we must look not to the title or character of the party performing the act, but to the act itself." Roe, 587 N.E.2d at 217. Thus, the fact that BECI's contracts with Essex may have been performed by employees with professional credentials "does not compel the conclusion that the contracts, in all respects, called for professional services." Camp Dresser McKee, 568 N.E.2d at 634 (holding professional services exclusion inapplicable to supervision of nonprofessional tasks rendered by engineering consulting company).
In addition, Essex contends that this Court's July 2, 2001 Memorandum and Order "implicitly determined that [BECI] would be engaged in a professional service if [it] advised Modern Aluminum about chemical processes." Memorandum at 14. However, because an insurer's duty to defend is determined by matching the third-party complaint with the policy provisions, the language of the Court's order is not relevant to this analysis. See Sterilite Corp., 458 N.E.2d at 340.
Finally, Essex's reliance upon Alpha Therapeutic Corp. v. St. Paul Fire and Marine Insurance Co., 890 F.2d 368 (11th Cir. 1989), is unavailing. There, the plaintiff contracted with Hunter Blood Center ("Hunter") for the purchase of human plasma, and Hunter agreed to test the plasma for the presence of the hepatitis B surface antigen ("HBsAg"). Id. at 369. Due to the transcription error of a medical technician, Hunter shipped HBsAg-positive plasma to the plaintiff, resulting in the contamination of its plasma products. Id. The court recognized that the transposing of figures by the technician was clerical in nature, but essential to the accuracy of the blood test. Id. Accordingly, the court found that the transcription error qualified as a professional service because it constituted "an intricate part of testing plasma for hepatitis, which is a professional service." Id. at 371.
This case is distinguishable from Alpha Therapeutic Corp. for two reasons. First, the Massachusetts courts have never held that a clerical action constitutes a professional service if it forms an "intricate part" of a professional service. See, e.g., Jefferson Ins. Co., 677 N.E.2d at 230 (holding that clerical error committed by medical dispatcher, who merely relayed address to ambulance attendants, was not professional service, even though error caused delay in responding to emergency that resulted in death). Second, even if the Massachusetts courts did employ the "intricate part" test, Essex does not even argue that the negligent clerical or managerial actions alleged in the complaint may constitute an "intricate part" of any professional service rendered by BECI.
V. CONCLUSION
Accordingly, the Court DENIES the plaintiff's motion for summary judgment.
It is So Ordered.