
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 97-1553                         PREFERRED MUTUAL INSURANCE COMPANY,                                Plaintiff, Appellant,                                          v.                               THE TRAVELERS COMPANIES,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                    [Hon. Michael A. Ponsor, U.S. District Judge]                                             ___________________                      [Hon. Nancy Gertner, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Lynch, Circuit Judge.                                         _____________                                 ____________________            Marie Cheung-Truslow  with whom Roger  A. Emanuelson  and Lecomte,            ____________________            ____________________      ________        Emanuelson, Motejunas & Doyle were on brief for appellant.        _____________________________            Michael J.  Eisele with whom  David C.  Boch and  Bingham, Dana  &            __________________            ______________      ________________        Gould were on brief for appellee.        _____                                 ____________________                                   October 3, 1997                                 ____________________                      ALDRICH,  Senior Circuit  Judge.    On January  20,                                _____________________            1995, an oil fire broke out in the boiler room of the Kimball            Towers condominium in Springfield, Massachusetts, that caused            extensive damage from  smoke, soot and heat.   Kimball Towers            Condominium Association  (Kimball) was  insured by  Preferred            Mutual Insurance  Company (Preferred) under a Business Owners            Special Property  Policy that  covered its  property broadly,            with a limit of $11,340,000 and an annual premium of $40,484.            With some exceptions,  the policy did not cover  steam or hot            water  boilers and their equipment.  Kimball was also insured            by Travelers Company (Travelers) under a Boiler and Machinery            Policy.    Boiler provisions  complementary  with Preferred's            have been noted.  Travelers' policy had no dollar limitation;            the annual "Provisional  Premium"1 was $875.   Preferred paid            this loss,2 in the amount of $357,279, and now sues Travelers            for this amount as the "primary insurer," or, at least, for a            share.   A condition precedent  is that Travelers  would have            been liable for the loss.  The district court held that there            was  no  such  coverage,  so  that  neither  alternative  was            correct,  and granted  summary judgment  to  Travelers in  an            extensive opinion.  See Preferred Mut. Ins. Co. v.  Travelers                                ___ _______________________     _________            Cos., 955 F. Supp.  9 (D. Mass. 1997).  Without  deciding, it            ____                                            ____________________            1.  The  elasticity   related  to   offered  extensions   not            subscribed to by Kimball, and not here relevant.            2.  No point  has been  made by it  of any loss  to Kimball's            boiler and accessory equipment.                                         -2-            assumed that  Travelers' policy's general  provisions covered            the loss -- an assumption not contested, and that we adopt --            but concluded that it fell  within the stated exclusions.  On            this basis we affirm.                                      The Facts                                      _________                      On summary  judgment we  of course  take the  facts            most favorably to plaintiff Preferred, but review the court's            legal conclusions de novo.   See, e.g., Dominique v. Weld, 73                                         _________  _________    ____            F.3d 1156, 1158 (1st Cir. 1996); E.E.O.C. v. Steamship Clerks                                             ________    ________________            Union,  Local 1066,  48 F.3d  594,  602-03 (1st  Cir.), cert.            __________________                                      _____            denied,  116 S.  Ct. 65  (1995).   Construction of  insurance            ______            contracts and application of their terms to established facts            are matters of law, ultimately  for us.  See Commercial Union                                                     ___ ________________            Ins.  Co. v. Walbrook  Ins. Co., 7 F.3d  1047, 1050 (1st Cir.            _________    __________________            1993); Falmouth Nat'l Bank v.  Ticor Title Ins. Co., 920 F.2d                   ___________________     ____________________            1058, 1061 (1st Cir. 1990).                      The  fire, according to  Preferred, occurred in the            following  manner.   A  leaky  seal in  the  fuel pump,  that            supplied  oil to the  burner that heated  the boiler, allowed            oil to be propelled, with air, into the burner tube.  Here it            caught fire.  This fire caused a melt, allowing the burner to            fall,  damaging the  oil line.    This released  oil, fed  by            gravity from the storage supply, that caught fire  and burned            until ultimately extinguished by the fire department.                                         -3-                      The relevant  Travelers' policy  provisions (quoted            out of order) are these.                      A.  COVERAGE                           We  will  pay  for  direct  damage  to Covered                           Property caused by a Covered Cause of Loss.                           1.  Covered Property                               ________________                                 Covered  Property,   as  used   in  this                                 Coverage Part, means any property that:                                 a.  You own;                                      . . . . .                           2.  Covered Cause of Loss                               _____________________                                 A Covered Cause of Loss is an "accident"                                 to an "object."                                      . . . . .                      G.  DEFINITIONS                           1.    "Accident" means a sudden and accidental                                 breakdown of the "object" or part of the                                 "object."                                      . . . . .                           5.    "Object" means:                                 a.   Unless     excluded      in     the                                      Declarations,     the     following                                      equipment:                                      (1)    Any  boiler,  including  its                                      piping and accessory equipment.                      Interrupting,  we  read  the  policy  to  say  that            Travelers  will pay (subject to exclusions) for direct damage            to Kimball's property due to  the breakdown of the boiler and            its accessory equipment.  We consider the  burner, the burner                                         -4-            tube, the mechanical  fuel pump, and the electric  motor that            operates  it,  to be  accessory  equipment.   Leaking  was  a            breakdown, or "accident."                      B.  EXCLUSIONS                                 We will  not  pay  for  loss  or  damage                           caused directly or  indirectly by  any of  the                           following.   Such loss  or damage is  excluded                           regardless  of any other  cause or  event that                           contributes concurrently or in any sequence to                           the loss.                                      . . . . .                           4.  Other Exclusions                           Loss caused by or resulting from:                                 a.   Fire  or combustion  explosion that                                 occurs at the same time as an "accident"                                 or that ensues from an "accident."  With                                 respect  to  any   electrical  equipment                                 forming  a  part  of  an "object,"  this                                 exclusion is changed to read:                                      Fire  or   explosion  outside   the                                 "object" that occurs at the same time as                                 an   "accident"   or  ensues   from   an                                 "accident."                                      . . . . .                      The initial  paragraph unambiguously means  what it            says.  If the fire fell within the  provisions of section B4a            it  is  not  covered  even  though it  also  met  some  other            definitions.  Cf. Jussim  v. Massachusetts Bay Ins. Co.,  415                          ___ ______     __________________________            Mass. 24, 27-28, 610  N.E.2d 954, 955-56 (1993)  (noting that            if the  proximate cause  "is an insured  risk, there  will be            coverage even though  the final form of  the property damage,            produced by a  series of related events, appears  to take the                                         -5-            loss outside the  terms of the policy").   Preferred says the            present  issue lies in provision 4a's second sentence because            the  loss was caused  by the breakdown of  the fuel pump that            was  "electrical equipment"  because it  was  operated by  an            electric   motor.     Although  there  was   some  struggling            vocalizing  by Preferred's expert, we can not possibly agree.            We do  not rely on the much mentioned  fact that the pump and            the  motor were  by different  manufacturers,  but they  were            independent articles, connected only by the power shaft, with            no electricity reaching  the pump.  Manifestly there  must be            some purpose for the alternative clause in provision 4a, and,            equally  manifestly, electricity must play a meaningful part.            To characterize the pump as electrical is nonsense.                      Turning,   therefore,  to   4a's  first   sentence,            concededly the leak in the pump was an accident to an object.            Whether or  not  the broken  supply line  also be  considered            accessory   equipment,  the  burning   of  the   fuel  supply            unquestionably "ensue[d] from an 'accident.'"  It was plainly            excluded.                      In  this  posture  Preferred  complains  that  this            conclusion "result[s] in  coverage to the insured  which [i]s            unrealistically limited."  Support is offered by an affidavit            of  Kimball's  "property  manager,"  who   had  obtained  the            policies:                           It    has    been    my    continued                      understanding and  expectation that  fire                                         -6-                      originating  from   the  boiler   or  its                      accessory  equipment  would   be  covered                      under  Travelers'  Boiler  and  Machinery                      Policy.                      Thus we have an insurer that had received a premium            of $40,484, claiming it  was unreasonable for an  insurer who            had received a  premium of $875  not to  pay it $357,279,  in            part, if not in whole.  The lion would lie down with the lamb            -- for dinner.                      The Boiler  and Machinery policy  covered accidents            to  the  boiler  and  accessory  equipment,  and,  in  terms,            excluded "fire . . .  that ensues from an 'accident.'"  There            was  an accident, and fire ensued.   Plaintiff, who is in the            business  of writing  and  interpreting insurance  contracts,            sues therefor.  We give notice that if it wishes to object to            our assessing double costs it do so, with grounds, within ten            days of  the date hereof.  See Fed. R.  App. P. 38; Cronin v.                                       ___                      ______            Town  of Amesbury,  81 F.3d  257, 261  (1st Cir.  1996); E.H.            _________________                                        ____            Ashley & Co. v. Wells Fargo Alarm Servs., 907 F.2d 1274, 1280            ____________    ________________________            (1st Cir. 1990).                      Affirmed.                      ________                                         -7-
