Opinion
CIVIL ACTION NO. 96-10804-DPW
January 27, 2004
MEMORANDUM AND ORDER
In two pretrial submissions — a motion in limine concerning the burden of proof and an objection to proposed preliminary jury instructions — Liberty Mutual has sought to modify the definition of the term "accident" under the 1956-69 USM insurance policies I am employing under Massachusetts law for this case. In each submission, Liberty Mutual asserts that the Memorandum and Order of December 5, 2003 ("12/5/03 Memorandum"), in which the definition was explained, constitutes a misconstruction of the word "accident" under those policies.
In essence, Liberty Mutual argues that:
1. The 12/5/03 Memorandum Order improperly mixed analysis of the 1956 and 1957 policies (which did not define "accident"), the standard CGL policy jackets thereafter through 1969 (which did not define "accident" either), and the post-1971 occurrence policies (which did define "occurrence"). Rather, Liberty Mutual contends I should have focused on the 1958-69 manuscript policies, which elaborated upon the definition of "accident."
2. The "accident" inquiry must be "objectively-based," and not incorporate the insured's subjective intent or expectations.
3. The inquiry must "focus on the causative event or activity, rather than on the resulting damage."
4. Even if pollution damage arises from "continuous or repeated exposure to conditions," it must be "accidentally caused."
5. The 12/5/03 Memorandum's partial reliance on Preferred Mutual Ins. Co. v. Gamache, 426 Mass. 93 (1997) and Quincy Mut. Fire Ins. Co. v. Abernathy, 393 Mass. 81 (1984) is inappropriate because they were based on homeowner's policies with exclusions not at issue here. Liberty Mutual insists instead that New England Gas Elec. Ass'n v. Ocean Accident Guaranty Corp., 330 Mass. 640 (1953) and Dow v. United States Fidelity Guaranty Co., 297 Mass. 34 (1937) provide the appropriate standard for defining "accident" under Massachusetts law.
Because of the importance of the definition of "accident" to the parties' dispute, I will use this Memorandum to develop further the explanation of my conclusions regarding the proper definition and their derivation.
I
It is true that much of the 12/5/03 Memorandum's analysis focused on cases construing "occurrence" policies, that the 12/5/03 Memorandum did not cite the 1958-69 manuscript policies' purported definition of "accident" (which is in fact an elaboration, not a definition), and that broad groups of somewhat variant policies were included in the same discussion. However, this does not make much a difference in this setting.
The 1956-57 policies at issue cover "injury to or destruction of property, including the loss of use thereof, caused by accident." (E.g., 1956 USM Policy, Pl.'s Binder 1A, Tab 4, at 112, emphasis added.) The 1957-69 policies expand on this by explaining that "the word `accident' shall be deemed to include continuous or repeated exposure to conditions which results in injury during the policy period, provided such injury is accidentally caused and that all damages arising out of such exposure to substantially the same general conditions shall be considered as arising out of one accident." (E.g., Pl.'s Binder 1A, Tab 5, at 157, emphasis added.)
Liberty Mutual argues that the "caused by accident" language means that the jury must focus exclusively on whether the insured intended to commit the act, not whether it intended to cause the injury, and that all cases to the contrary were based on occurrence policies, or exclusions irrelevant here. But precisely this "caused by accident" language was held in earlier cases — including Dow and New England Gas Electric, the cases that Liberty Mutual relies on in its objection to the preliminary jury instructions — to require coverage for unintended consequences of intended acts.
In Dow, the insured (with an "accident insurance policy," the language of which was not recited by the SJC) had gotten into a bathtub to take a bath, but had set the water far too hot and burned himself quite severely. The SJC, affirming denial of the insurer's motion for directed verdict, explained:
Doubtless the insured intended to turn on the water and very likely he intended to get into the tub, but it is nevertheless highly improbable that he intended to immerse himself in scalding water. . . . [T]he jury could well find that the scalding resulted from unusual or unexpected heat in the water or from some slip, mistake or false judgment on the part of the insured as to the physical factors involved. This would be sufficient to characterize the occurrence, when viewed as a whole, as accidental rather than as intentional. We do not see how we could rule as matter of law that there was no accident in such a case as this without thereby withdrawing from the field of accident a large class of happenings which by the common understanding of men, and therefore by the true intent of the policy, would be deemed accidental.297 Mass, at 38.
The SJC in Dow then cited, id. at 38-39, several cases illustrating this "large class of happenings," starting with a venerable United States Supreme Court case where three men had jumped off a four foot platform, and the last had sustained internal injuries and died:
It is further urged that there was no evidence to support the verdict because no accident was shown. We do not concur in this view. The two companions of the deceased jumped from the same platform, at the same time and place, and alighted safely. It must be presumed not only that the deceased intended to alight safely, but thought that he would. The jury were, on all the evidence, at liberty to say that it was an accident that he did not. The court properly instructed them that the jumping off the platform was the means by which the injury, if any was sustained, was caused; that the question was, whether there was anything accidental, unforeseen, involuntary, unexpected, in the act of jumping, from the time the deceased left the platform until he alighted on the ground; that the term "accidental" was used in the policy in its ordinary, popular sense, as meaning "happening by chance; unexpectedly taking place; not according to the usual course of things; or not as expected;" that, if a result is such as follows from ordinary means, voluntarily employed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means; but that if, in the act which precedes the injury, something unforeseen, unexpected, unusual occurs which produces the injury, then the injury has resulted through accidental means.United States Mut. Accident Assoc. v. Barry, 131 U.S. 100, 121 (1889) (emphasis added).
Sixteen years after Dow, the SJC decided New England Gas Electric, the primary case that Liberty Mutual relies on for its definition of accident as "an unexpected, undesigned, and unintended happening or a mishap . . . including an event which, according to the common understanding of people in general, would rightly be considered as an accident." 330 Mass, at 652-53. However, the facts of New England Gas Electric are that a contractor's employees had incorrectly installed a condenser, resulting in a complex chain of events leading to a crack in the spindle of a turbine. It was undisputed that the cause of the crack was the incorrect installation of the condenser, which was itself intentionally done — that is, the employees had intended to install it where they in fact installed it. The insured had a machinery and boiler policy with a definition of "accident" more restrictive than the policies here. The SJC held:
Under the New England Gas Electric policy, "`Accident' shall mean a sudden and accidental breaking, deforming, burning out or rupturing of the Object or any part thereof, which immediately impairs the functions of the Object and necessitates repair or replacement before its functions can be restored.'" 330 Mass. at 644.
The coverage was not limited to accidental means as distinguished from accidental results. . . . Although the setting of the springs was done voluntarily and knowingly by those who set them, they did not do so with any deliberate purpose or intent to damage the turbine. The fact is that they did not know that they had improperly set the springs, much less that the turbine might be damaged. The plaintiffs were ignorant of any error in the adjustment of the springs until after the damage to the spindle. . . . In view of the categorical finding `that no cause for the cracking of the shaft [spindle] occurred other than the incorrect setting of the condenser springs,' it is difficult to see how the damage to the spindle could be reasonably anticipated. We draw an inference to the contrary. . . .
The term accident, unlimited except by the word sudden, should be given its ordinary meaning as denoting an unexpected, undesigned, and unintended happening or a mishap and as including an event which, according to the common understanding of people in general, would rightly be considered as an accident. We think that the cracking of the spindle was just as much an accident as was the breaking of the chassis of a loaded truck (at a place where it had been previously broken a number of times) as it was being driven over a road pitted with holes, or the misthreading of an oil supply pipe in cleaning the heater in a dwelling which caused the destruction of the house, or the application of a solution containing hydrofluoric acid used in cleaning the outside of a building where some of the solution spattered against the windows and etched and damaged them.330 Mass. at 651-53 (internal citations omitted).
In short, the very cases that Liberty Mutual cites for the definition of accident — New England Gas Electric andDow — involved unintended results of intended acts, held that such conduct falls within the definition of "accident," and spoke in terms of the insured's subjective intent.
It is worth noting that my preliminary jury instructions quoted the exact language from New England Gas Electric that, according to Liberty Mutual, provides the correct definition of "accident." The preliminary instructions also quoted additional language from Dow.
Other cases that Liberty Mutual seeks to distinguish as inapplicable are not. Liberty Mutual objects to reliance on Quincy Mutual, because that case construed a policy with an exclusion for "expected or intended" damage. However, the SJC explained that this exclusion simply excluded damage not caused by accident:
To the extent the exclusion clause disclaimed coverage for bodily injuries "intended from the standpoint of the Insured," it appears the insurer sought to exclude from coverage, intentional harm resulting from an insured's actions, or phrased another way, an occurrence caused by the insured which is not an "accident". . . . This court consistently has stated that the resulting injury which ensues from the volitional act of an insured is still an "accident" within the meaning of an insurance policy if the insured does not specifically intend to cause the resulting harm or is not substantially certain that such harm will occur.Quincy Mutual, 393 Mass, at 84 (internal citations omitted, emphasis added).
Liberty Mutual also objects to citation of Preferred Mutual, because the policy there had an "intentional acts" exclusion. But in that case, the SJC rejected the insurer's broad construction of that exclusion:
[T]he broad interpretation urged by Preferred — to the effect that the exclusion bars any accident resulting from a volitional act of the insured irrespective of the insured's intent to cause injury — lacks any limiting principle and would logically tend to negate coverage in a substantial number of, if not all, accidents.426 Mass. at 94. The SJC described the exclusion as, if broadly construed, applying to "any accident resulting from a volitional act of the insured irrespective of the insured's intent to cause injury" and negating coverage for "a substantial number of, if not all, accidents." In other words, before even construing the intentional acts exclusion, the SJC viewed "accident" as including situations resulting from a volitional act of the insured where the insured did not intend to cause injury. If "accident" did not include those situations, then the intentional acts exclusion would have been superfluous. This may be contrasted with Quincy Mutual, where the policy excluded intended damage, and the SJC decided that the exclusion was superfluous. In other words, the narrower exclusion in Quincy Mutual (excluding intended damage) was held to be co-extensive with "accident," and not adding anything, and the broader exclusion in Preferred Mutual (excluding intentional acts) was held to be, if literally applied, so broad as to exclude most or all accidents, so the court judicially narrowed it.
Liberty Mutual also objects to application of Sheehan v. Goriansky, 321 Mass. 200 (1947), because it involved an automobile policy. First, this "distinction" — the import of which is unexplained — is not recognized as relevant by the SJC, which cited Sheehan in New England Gas Electric as support for the very definition of "accident" that Liberty Mutual urges. Second, the policy in Sheehan limited coverage to injuries "caused by accident," 321 Mass, at 201, the same language at issue here.
330 Mass, at 652-53 ("The term accident, unlimited except by t he word sudden, should be given its ordinary meaning as denoting an unexpected, undesigned, and unintended happening or a mishap and as including an event which, according to the common understanding of people in general, would rightly be considered as an accident. Dow v. United States Fidelity Guaranty Co. [,] 297 Mass. 34, 38. Sheehan v. Goriansky, 321 Mass. 200, 205.")
See also J. D'Amico Inc. v. Boston, 345 Mass. 218 (1962), which involved a "caused by accident" policy. There, a contractor for the City of Boston had cut down trees that it thought were on city property, but in fact were privately owned. It was sued for trespass, and the SJC agreed that the insurer had a duty to defend because the cutting of the trees was an "accident."
Finally, Liberty Mutual objects to reliance on cases discussing the "expected or intended from the standpoint of the insured" test under the "occurrence" policies as relevant to the accident policies. However, the SJC and other courts have held that the "occurrence" definition simply codified how courts had already construed "accident." In Lane v. Worcester Mutual Insurance Co., 13 Mass. App. Ct. 923 (1982), the court construed an "occurrence" policy but focused exclusively on the definition of "accident." The 12/5/03 Memorandum cited CPC International, Inc., v. Northbrook Excess Surplus Insurance Co. for an extended analysis of how, "[i]n acknowledgment of the prevailing case law," the insurance industry had switched from "accident" to "occurrence" without a significant change in coverage. 962 F.2d 77, 94 n. 45 (1st Cir. 1992).
II
I conclude that the preliminary jury instructions do not improperly import the subjectivity element of the "occurrence" definition into the "accident" definition, because the cases had already established a subjective intent standard before the "occurrence" definition appeared. The damage must indeed be "caused by accident," but simply quoting this language does not explain what it means. Since any definition of "accident" has to involve some lack of intent, the phrase could either mean "caused by an action that the insured performed unintentionally," or "caused unintentionally by an action that the insured performed intentionally." The SJC has chosen the latter definition. I am obligated to follow that court's direction.