
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 94-1919                      UNITED STATES LIABILITY INSURANCE COMPANY,                                Plaintiff - Appellee,                                          v.                 LARRY BOURBEAU, d/b/a BOURBEAU PAINTING CONTRACTORS,                                Defendant - Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Michael Ponsor, U.S. Magistrate Judge]                                           _____________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                            Coffin, Senior Circuit Judge,                                    ____________________                              and Stahl, Circuit Judge.                                         _____________                                _____________________               Michael Pill for appellant.               ____________               Pamela S. Gilman,  with whom Taylor, Anderson &  Travers was               ________________             ___________________________          on brief for appellee.                                 ____________________                                    March 3, 1995                                 ____________________                    TORRUELLA, Chief Judge.   Defendants-appellants,  Larry                    TORRUELLA, Chief Judge.                               ___________          Bourbeau  and Bourbeau Painting  Contractors ("Bourbeau"), appeal          the district court's summary judgment ruling that no coverage was          provided  under  an  insurance   policy  issued  to  Bourbeau  by          plaintiff-appellee,  United  States  Liability Insurance  Company          ("U.S. Liability"),  for injury to property  caused by Bourbeau's          alleged  negligent removal of lead paint.  For the reasons stated          herein, we affirm.                                      BACKGROUND                                      BACKGROUND                                      __________                    The pertinent facts  are not  in dispute.   In July  of          1991,  Larry  Bourbeau,  doing  business  as   Bourbeau  Painting          Contractors, entered  into a contract  with the  Town of  Hadley,          Massachusetts, to  strip and paint two  town buildings, including          the North  Village  Hall.   Pursuant  to the  contract,  Bourbeau          purchased comprehensive  liability insurance from  U.S. Liability          for the period of July 2, 1991 to July 2, 1992.  The policy terms          covered property damage up to $300,000.                    Bourbeau began  work removing old paint  from the North          Village  Hall.   While this  work was  in progress,  however, the          Massachusetts  Department  of  Environmental  Protection  ("DEP")          notified Bourbeau  that paint chips  from the North  Village Hall          were  contaminating the  surrounding soil.   The  Town  of Hadley          incurred  costs   of  approximately   $50,000  cleaning   up  the          contaminated site.   Bourbeau  subsequently finished his  work on          the  two buildings  but the  Town of  Hadley, citing  its cleanup          costs, refused to pay him.                                           -2-                    In  March  of  1993, the  owner  of  a  parcel of  land          abutting  the  North  Village  Hall  filed  suit  against  Hadley          alleging that Hadley had caused lead to be  deposited on his land          during the  course of  restoring and  painting the North  Village          Hall.  Hadley then filed a third-party complaint against Bourbeau          seeking indemnification for any  judgment which might be rendered          against the town in favor of the abutter.                    On August 20, 1993, U.S. Liability filed this diversity          action  in the  United  States District  Court for  Massachusetts          seeking  a  declaration that  it is  not  obligated to  defend or          indemnify Bourbeau  for property  damage sustained by  Hadley, or          any abutting land owners, due to the alleged negligent release of          contaminated  paint chips  on the  North Village  Hall property.1          Upon  cross motions for summary judgment on the ultimate issue of          coverage, the  district court  held that the  "absolute pollution          exclusion"  clause contained  in the  insurance policy  precludes          coverage  for  property  damage  caused  by  alleged  lead  paint          contamination.   The  court therefore  granted  U.S.  Liability's          motion  for summary  judgment  and denied  Bourbeau's motion  for          summary judgment.                                        ____________________          1  Count II  sought  a declaration  that  U.S. Liability  is  not          obligated to  defend or  indemnify Bourbeau  with respect  to any          contractual  obligations he  might have  assumed in  his contract          with Hadley.  U.S. Liability did not move for summary judgment on          Count II  and the district court dismissed it as moot in light of          its grant of summary judgment for U.S. Liability on Count I.                                          -3-                                  STANDARD OF REVIEW                                  STANDARD OF REVIEW                                  __________________                    We review a district  court's grant of summary judgment          de novo.   LeBlanc v. Great  Am. Ins. Co.,  6 F.3d 836, 841  (1st          __ ____    _______    ___________________          Cir.  1993), cert.  denied,  __ U.S.  __,  114 S.  Ct.  1398, 128                       _____  ______          L.Ed.2d  72 (1994).   Because the facts  in this case  are not in          dispute,  our  decision  turns  on  the  interpretation  of  U.S.          Liability's  insurance policy, which is  a question of  law.  See                                                                        ___          Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63          ______    ______________________________________          (1st Cir. 1992).  The parties agree that this diversity action is          governed by the substantive law of Massachusetts.  See Klaxon Co.                                                             ___ __________          v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020,  85             ______________________          L.Ed.  1477 (1941);  American Title  Ins. Co.  v. East  West Fin.                               ________________________     _______________          Corp., 959 F.2d 345, 348 (1st Cir. 1992).              _____                                      DISCUSSION                                      DISCUSSION                                      __________                    The dispositive  question in  this case is  whether the          allegedly contaminating  lead paint was a  "pollutant" within the          meaning  of  the "Absolute  Pollution  Exclusion"  clause in  the          insurance policy.  We  agree with the district court  that, under          the undisputed facts of this case, the lead paint was a pollutant          within the meaning of the absolute  pollution  clause  and  that,          therefore, U.S. Liability is not obligated to indemnify or defend          Bourbeau in  any underlying lawsuit arising  from property damage          caused  by Bourbeau's  alleged  negligent release  of lead  paint          chips.    The "Absolute Pollution  Exclusion" clause provides, in          pertinent part:                      Notwithstanding the  terms and conditions                      of this policy which are or may be to the                                         -4-                      contrary,   it   is   agreed  that   this                      insurance does not apply:                      1.   to Bodily Injury, Personal Injury or                      Property Damage,                      2.   to  Damages for  the Devaluation  of                      Property . . .,                      3.    to  any   Loss,  Cost  or  Expense,                      including  but not  limited to  Fines and                      Penalties,    arising    out    of    any                      governmental direction or request, or any                      private party or  citizen action that the                      named  insured  test for,  monitor, clean                      up, remove, contain,  treat, detoxify  or                      neutralize pollutants,                      4.  to  any Litigation or  Administrative                      Procedure  in which  the  insured may  be                      involved as a party:                      arising   out   of  actual,   alleged  or                      threatened discharge,  dispersal, release                      or escape of pollutants into or upon land                      . . . whether or not such actual, alleged                            ______________                      or   threatened   discharge,   dispersal,                      release or escape  is sudden,  accidental                      or gradual in nature.                      Pollutants   means  any   solid,  liquid,                      _________________________________________                      gaseous    or    thermal   irritant    or                      _________________________________________                      contaminant, including but not limited to                      _________________________________________                      smoke,   vapor,   soot,   fumes,   acids,                      _________________________________________                      alkalis, toxic chemicals or materials and                      _________________________________________                      waste.   Waste  includes, in  addition to                      _____                      materials to be disposed of, materials to                      be recycled, reconditioned or reclaimed.                      This  exclusion  is  intended to  exclude                      from the coverage provided by this policy                      of  insurance  all liability  and expense                      arising out of or  related to any form of                                                    ___________                      pollution, whether or not  such pollution                      _________                      is  intentionally  caused and  whether or                      not   the   resulting   injury,   damage,                      devaluation, cost or expense  is expected                      or  intended from  the standpoint  of the                      insured.          (emphasis added).                                         -5-                                         -6-                    Under the  rules of statutory construction  followed by          the Massachusetts  Supreme Judicial  Court ("the SJC"),  we "must          construe the words of the policy according to the fair meaning of          the  language used, as applied to the subject matter."  Jacobs v.                                                                  ______          United  States Fidelity & Guar.  Co., 627 N.E.2d  463, 464 (Mass.          ____________________________________          1994)  (citing Johnson v. Hanover Ins. Co., 508 N.E.2d 845 (Mass.                         _______    ________________          1987)).   "Moreover, where the words of an insurance contract are          'plain  and free from ambiguity  they must be  construed in their          usual and ordinary  sense.'"   Id. (quoting Hanover  Ins. Co.  v.                                         __           _________________          Ramsey, 539  N.E.2d 537 (Mass. 1989))  (other citations omitted).          ______          In addition, the SJC has stated that, when construing language in          an  insurance  policy,  it  will "consider  what  an  objectively          reasonable insured, reading  the relevant policy  language, would          expect to be covered."  Hazen Paper Co. v. United States Fidelity                                  _______________    ______________________          & Guar. Co., 555 N.E.2d 576 (Mass. 1990).          ___________                    In  our view,  the language  of the  Absolute Pollution          Exclusion clause  is clear and  unambiguous on its  face.   It is          plainly intended  to be an absolute bar to coverage for "any form          of pollution."   The most notable aspect of the  exclusion is its          breadth -- it applies  to all releases of pollutants,  as opposed                                    ___          to  only  those  which are  not  "sudden  and  accidental."   Cf.                                                                        __          Lumberman's  Mutual Casualty  Co., 555  N.E.2d 568  (Mass. 1990).          ________________________________          Under the  Absolute Pollution  Exclusion clause, the  policy does          not  apply to  property damage  arising out of  actual discharge,          dispersal, release or escape of pollutants into or upon land.  In          this  case, it is alleged  that property damage  arose out of the                                         -7-          discharge, dispersal, release or escape of lead paint chips  into          or upon land.2   The  only question, therefore,  is whether  lead          paint  chips, as they were  disposed of in  this case, constitute          "pollutants."                     Under   the   Absolute   Pollution  Exclusion   clause,          "pollutants means any solid,  liquid, gaseous or thermal irritant          or contaminant, including but not limited  to smoke, vapor, soot,                          _____________________________          fumes, acids,  alkalis, toxic  chemicals or materials  and waste.          Waste  includes, in  addition  to materials  to  be disposed  of,          materials to be recycled, reconditioned or reclaimed."  (emphasis          added).   After reading this  definition of pollutant,  we do not          see  how an  objectively  reasonable insured  would expect  to be          covered  for contamination of property  caused by the removal and          discharge of lead paint chips.  In   our  view,   an  objectively          reasonable person reading the Absolute Pollution Exclusion clause          would consider lead paint both a "solid . . .  contaminant" and a          "toxic chemical."   An  objectively reasonable person  would also          consider  lead  paint chips  "materials  to  be disposed  of"  or          "waste."   A reading of the specifically  listed pollutants would          only  buttress this  interpretation.   The non-exclusive  list of          irritants and  contaminants provides  the insured a  potpourri of          pollutants to consider, from  smoke to toxic chemicals.   We fail          to  see  how an  objectively  reasonable  insured could  possibly          believe  that   "smoke,  vapor,  soot,  [and]   fumes"  would  be                                        ____________________          2  In its third-party complaint, the Town of Hadley  alleges that          Bourbeau  "caused lead-based paint to be discharged upon the land          of the Town."                                         -8-          considered pollutants while lead paint would not.                    This should end the inquiry.  The best way to interpret          an  insurance policy is to  read the policy.   Bourbeau, however,          points  to a  recent case  decided by the  SJC which  he contends          supports his  position that lead  paint is  not a pollutant.   Of          course, if the SJC interprets the term "pollutant" inconsistently          with our  understanding of the term,  we are bound  to follow the          SJC's construction in this case.                      In Atlantic Mut.  Ins. Co. v. McFadden,  595 N.E.2d 762                       _______________________    ________          (Mass.  1992), the  SJC held that  the Atlantic  Mutual Insurance          Company  was obligated to defend its insured in an action arising          out of the lead  poisoning of two  children in property owned  by          the insured.   In doing  so, the SJC  concluded that a  pollution          exclusion  clause in  the insurance  policy did  not apply.   For          reasons similar  to those  expressed by  the  district court,  we          conclude that McFadden is inapposite.                          ________                    Bourbeau  maintains  that  the  following  statement in          McFadden  indicates the SJC's position  that lead paint  is not a          ________          pollutant.                        There  simply  is  no  language   in  the                      exclusion provision from  which to  infer                      that  the provision  was  drafted with  a                      view toward limiting  liability for  lead                      paint-related injury.  The  definition of                      "pollutant"  in  the   policy  does   not                      indicate   that  leaded   materials  fall                      within its scope.          Id. at 764.  The second  sentence quoted above certainly seems to          __          support  Bourbeau's position.  But aside from that bit of dictum,          there is nothing  in the express holding of McFadden or its facts                                                      ________                                         -9-          that bears any relation to his case.                      Most importantly,  McFadden  was not  an  environmental                                       ________          pollution case.  McFadden concerned personal injury caused by the                           ________          presence of lead paint in a household.  This case concerns injury          ________          to  property caused by  the alleged  negligent discharge  of lead                                                         _________          paint  onto property.    The  latter  is  a  classic  example  of          "pollution" -- the discharging of a harmful substance onto land -          -  while the  former is  most demonstrably  not.   An objectively          reasonable person  simply would not ascribe  the word "pollution"          to the presence of lead paint in a house.  This, we think, is the          point of  McFadden.  This  interpretation is consistent  with the                    ________          SJC's  observation in  that  case that  "the  terms used  in  the          pollution exclusion, such as '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."  Id.                                                                     __                    The  express holding  of McFadden  further demonstrates                                             ________          its inapplicability to this case.                      We   conclude   that  an   insured  could                      reasonably have  understood the provision                      at  issue to exclude  coverage for injury                      caused  by  certain  types of  industrial                      pollution,  but  not coverage  for injury                      allegedly  caused  by  the   presence  of                      leaded materials in a private residence.          Id.  The  court in McFadden quite simply  held that the pollution          __                 ________          exclusion  clause in that case  was not intended  to exclude from          coverage  injuries  caused by  the presence  of  lead paint  in a          household.  As such, it has no impact on this case, involving the                                         -10-          discharge of lead paint onto adjacent property.                      Bourbeau also  argues that  he is entitled  to coverage          even if lead paint is considered a "pollutant" within the meaning          of  the policy.   He maintains  that the  cause of  the damage to          property  was a  covered risk  -- his  alleged negligence  in the          normal course  of performing the  painting contract --  and that,          therefore,  the  policy  applies,  even  if  the  result  of  his          negligence was pollution.                      We need not  linger long on this  argument.  Bourbeau's          reliance on  Jussim v.  Massachusetts Bay Insurance  Company, 307                       ______     ____________________________________          N.E.2d  11 (Mass. 1973) and Standard Elec. Supply Co., 307 N.E.2d                                      _________________________          11,  12 (Mass.App.Ct. 1973), is  unfounded.  In  those cases, the          negligence  of  third  parties  caused  oil  (Jussim)  and  water                                                        ______          (Standard  Electric) to  spill on  adjacent property  and migrate           __________________          onto  and damage  the insured's  property.   In Jussim,  the SJC,                                                          ______          relying  on  the reasoning  of Standard  Electric, held  that the                                         __________________          pertinent insurance policy covered the  damage, notwithstanding a          policy provision  excluding from coverage "loss . . . caused by .          .  .   release,  discharge   or  dispersal  of   contaminants  or          pollutants."    Both  the  Jussim and  Standard  Electric  courts                                     ______      __________________          reasoned  that the proximate cause of the pollution was a covered          event  -- the negligence of the neighbors -- and that, therefore,          the insured could recover.  Bourbeau argues  that, similarly, the          proximate cause of the pollution in this case was a covered event          -- his own negligence in removing the paint.                    This case  is distinguishable from  Jussim and Standard                                                        ______     ________                                         -11-          Electric in at  least two respects.  First  of all, the insurance          ________          policies at issue  in those cases were  "all-risk" or first-party          policies.    Such  policies   are  typically  intended  to  cover          fortuitous  losses.   See  Standard  Electric, 307  N.E.2d  at 12                                ___  __________________          ("[l]oss from the  bursting of a pipe on the  premises of another          would seem  to be the  kind of  'fortuitous loss'  which is  'not          usually covered under other insurance' and  against which an 'all          risk'  policy  is  designed  to extend  protection"),  quoted  in                                                                 __________          Jussim, 610 N.E.2d at 955.  In contrast, the fortuitous nature of          ______          the loss is immaterial under the third-party insurance policy  at          issue in  this case.  The exclusion, by its terms, is targeted at          pollution regardless  of fault, responsibility or  causation.  We          cannot articulate  the policy  in any  plainer language than  its          own, which provides that it does not apply to any litigation                      arising   out   of  actual,   alleged  or                      threatened discharge,  dispersal, release                      or escape of pollutants into or upon land                      . . . whether or not such actual, alleged                            ___________________________________                      or   threatened   discharge,   dispersal,                      _________________________________________                      release or escape  is sudden,  accidental                      _________________________________________                      or gradual in nature.                      ____________________          The policy continues:                      This  exclusion  is  intended to  exclude                      from the coverage provided by this policy                      of  insurance  all liability  and expense                      arising out of or  related to any form of                      _________________________________________                      pollution, whether or not  such pollution                      _________                      is  intentionally  caused and  whether or                                                     __________                      not   the   resulting   injury,   damage,                      _________________________________________                      devaluation, cost or expense  is expected                      _________________________________________                      or  intended from  the standpoint  of the                      _________________________________________                      insured.                      _______                    In  addition, the  damage in  both Jussim  and Standard                                                       ______      ________          Electric  was caused by the  alleged negligence of third parties,          ________                                         -12-          not,  as in  this  case,  the  insured  himself.    See  Standard                                                              ___  ________          Electric, 307 N.E.2d at 12  ("Nor is it a loss which  the insured          ________          brings about by  his own act, for then he  has not merely exposed          the goods to the chance of injury, he has injured them himself.")          (citations omitted).   It would be ironic indeed to  hold that an          insured  is  not covered  for damage  to  property caused  by his          discharge  of pollutants  unless  it happens  that the  proximate          cause of  the pollution was his  own negligent conduct.   This is          particularly   so  because   one  could   plausibly  argue   that          discharging  pollutants onto  land  is,  by  its very  nature,  a          negligent act.  Appellant's  reasoning would eviscerate the plain          language and explicit purpose of the Absolute Pollution Exclusion          clause.                           We need go no further.  See, e.g., Pritzker v. Yari, 42                                            ___  ____  ________    ____          F.3d 53,  73 (1st Cir.  1994) (Selya, J.).   The language  of the          policy is plain and unambiguous, and Appellant has directed us to          no  persuasive authority to the  contrary.  We  conclude that the          Absolute Pollution Exclusion clause in  this case is exactly what          it purports to be: absolute.  We see no reason why U.S. Liability          should be denied  the benefit  of its bargain  with Bourbeau,  as          reflected in the terms of the insurance contract.                    Accordingly,  the decision  of  the  district court  is          affirmed.          ________                                         -13-
