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Boston Gas Co. v. Century Indem. Co.

Supreme Judicial Court of Massachusetts

January 8, 2009, Argued; July 24, 2009, Decided

SJC-10246

Opinion

 [*338]  [**292]   CORDY, J. In connection with an appeal pending  [***2] before it, the United States Court of Appeals for the First Circuit has certified the following questions to this court, pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981):

"1. Where an insured protected by  [**293]  standard CGL 3 policy language incurs covered costs as a result of ongoing environmental contamination occurring over more than one year and the insurer provided coverage for less than the full period of years in which contamination occurred, should the direct liability of the sued insurer be pro rated in some manner among all insurers 'on the risk,' limiting the direct liability of the sued insurer to its share but leaving the insured free to seek the balance from other such insurers?

"2. If some form of pro rata liability is called for in such circumstances, what allocation method or formula should be used?

"3. If a single insurer in such circumstances is subject to  [*339]  liability under more than one policy and each policy has a separate deductible or self-insured retention, should the insured be able to collect covered losses from a single policy subject only to that policy's deductible or self-insured retention, or should liability be reduced by the sum of the applicable  [***3] self-insured retentions, effectively allocating total liability across the policies of that insurer in effect during the contamination period?"

Boston Gas Co. v. Century Indem. Co., 529 F.3d 8, 24 (1st Cir. 2008).

We answer the certified questions as follows with respect to the policies at issue. As to the first certified question, we respond that liability should be prorated. As to the second certified question, we respond by adopting the time-on-the-risk method of prorating liability in the absence of evidence more closely approximating the actual distribution of property damage. Our answers to the first two certified questions obviate the need to answer  [***4] the third certified question. 4

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454 Mass. 337 *; 910 N.E.2d 290 **; 2009 Mass. LEXIS 419 ***

BOSTON GAS COMPANY 1 vs. CENTURY INDEMNITY COMPANY; CERTAIN UNDERWRITERS AT LLOYD'S LONDON & others, 2 third-party defendants.

Prior History:  [***1] Suffolk. Certification of questions of law to the Supreme Judicial Court by the United States Court of Appeals for the First Circuit.

Boston Gas Co. v. Century Indem. Co., 2008 U.S. App. LEXIS 28259 (1st Cir. Mass., June 10, 2008)Boston Gas Co. v. Century Indem. Co., 529 F.3d 8, 2008 U.S. App. LEXIS 12344 (1st Cir. Mass., 2008)

Disposition: Certified questions from the United States Circuit Court of Appeals for the First Circuit answered.

CORE TERMS

insured, policy period, policies, triggered, property damage, occurrence, pro rata, coverage, allocate, losses, damages, policyholder, courts, joint and several, method of allocation, contamination, self-insured, prorated, occurring, site, insurance policy, retention, costs, take place, Environmental, policy language, limits, cases, ultimate net loss, environmental contamination

Insurance Law, Business Insurance, Commercial General Liability Insurance, General Overview, Types of Insurance, Excess Insurance, Obligations, Indemnification Obligations, Claim, Contract & Practice Issues, Deductibles, Alternative Risk Transfers, Self Insurance, Civil Procedure, Appeals, Appellate Jurisdiction, State Court Review, Coverage, Environmental Claims, Claims Made Policies, Occurrence Policies, Occurrences, Indemnification, Multiple Insurers, Standards of Review, Questions of Fact & Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Coverage Favored, Ordinary & Usual Meanings, Question of Law, Relationship Between Clauses