Energynorth v . Associates CV-97-064-M 09/29/00 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

EnergyNorth Natural Gas, Inc., Plaintiff

v. Civil N o . 97-64-M Opinion N o .

Associated Electric & Gas Insurance Services Limited, et a l . , Defendants

O R D E R

Plaintiff EnergyNorth Natural Gas, Inc. (ENGI) brought this

action for declaratory judgment, breach of contract, and breach

of the implied obligation of good faith and fair dealing in every

New Hampshire contract, against eighteen named insurance

companies for their failure to defend and indemnify ENGI against

environmental liability associated with a site in Laconia, New

Hampshire. The only defendants against whom the action remains

pending are Certain Underwriters at Lloyd’s, London and Certain

London Market Insurance Companies (collectively, L M I ) . The

following dispositive or partially dispositive motions are now

before the court: (1) Motion of Defendants American Home

Assurance Company, Lexington Insurance Company, and National Union Fire Insurance Company of Pittsburgh, Pa., for Partial

Summary Judgment with respect to Plaintiff’s Costs to Investigate

and Remediate Contamination on its Own Property (document n o .

1 4 9 ) , in which LMI have joined; (2) Motion of Defendants American

Home Assurance Company, Lexington Insurance Company, and National

Union Fire Insurance Company of Pittsburgh, Pa., for Partial

Summary Judgment as to Costs Not Incurred as “Damages” (document

n o . 1 5 0 ) , in which LMI have joined; (3) ENGI’s Motion for Partial

Summary Judgment regarding Policies which Contain “Sudden and

Accidental” Pollution Exclusion Clauses (document n o . 1 5 1 ) ; (4)

Defendants S t . Paul Fire and Marine Insurance Company and LMI’s

Motion for Summary Judgment on the Absence of an Accident,

Occurrence, or Fortuity under the Policies at Issue (document n o .

1 5 2 ) ; (5) LMI’s Motion for Summary Judgment based on the Property

Damage Exclusion (document n o . 1 5 3 ) ; (6) LMI’s Motion for Summary

Judgment regarding Allocation (document n o . 1 5 4 ) ; (7) LMI’s

Motion for Summary Judgment regarding Trigger of Coverage

(document n o . 1 5 5 ) ; and (8) LMI’s Motion for Summary Judgment

based on the Pollution Exclusion (document n o . 1 5 6 ) .

2 Standard of Review

Summary judgment is appropriate when the record reveals “no

genuine issue as to any material fact and . . . the moving party

is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c). When ruling upon a party’s motion for summary judgment,

the court must “view the entire record in the light most

hospitable to the party opposing summary judgment, indulging all

reasonable inferences in that party’s favor.” Griggs-Ryan v .

Smith,

1 2 , 115 (1st Cir. 1990).

The moving party “bears the initial responsibility of

informing the district court of the basis for its motion, and

identifying those portions of [the record] which it believes

demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v . Catrett,

1 7 , 323 (1986). If the

moving party carries its burden, the burden shifts to the

nonmoving party to demonstrate, with regard to each issue on

which it has the burden of proof, that a trier of fact could

reasonably find in its favor. DeNovellis v . Shalala,

(1st Cir. 1997).

3 At this stage, the nonmoving party “may not rest upon mere

allegation or denials of [the movant’s] pleading, but must set

forth specific facts showing that there is a genuine issue” of

material fact as to each issue upon which he or she would bear

the ultimate burden of proof at trial.

(quoting Anderson v .

Liberty Lobby, Inc.,

4 2 , 256 (1986)). In this context,

“a fact is ‘material’ if it potentially affects the outcome of

the suit and a dispute over it is ‘genuine’ if the parties’

positions on the issue are supported by conflicting evidence.”

Intern’l Ass’n of Machinists and Aerospace Workers v . Winship

Green Nursing Center,

(1st Cir. 1996)

(citations omitted).

Background1

The environmental damage at issue arose out of the operation

of a manufactured gas plant at a site in Laconia, New Hampshire,

1 The following facts are taken primarily from the Joint Defendant Insurers’ Local Rule 7.2(b) Common Statement of Material Facts as to which there is no Genuine Issue to be Tried (document n o . 1 5 7 ) , in conjunction with ENGI’s Objection to the Defendants Statement of Material Facts as to which there is no Genuine Issue to be Tried (document n o . 2 0 5 ) . Unless otherwise noted, the facts recited herein are undisputed.

4 now known as the Messer Street Manufactured Gas Plant (MGP) Site

(the Site). 2 The Messer Street MGP began operating in 1894,

producing gas for heating, lighting, and cooking, using the

Kendall Oil Gas Process and later (from 1902 to 1952), the

Carburetted Water Gas Process. Both processes produced

byproducts, including tar, that constitute the alleged source of

the environmental contamination at issue.

The Messer Street MGP passed through a succession of owners

between 1894 and 1945, consisting of the Laconia Gas Light

Company from April 1894 to March 1897; the Winnipesaukee Gas &

Electric Company from March 1897 to April 1910; the Laconia Gas &

Electric Company from April 1910 to August 1926; and Public

Service Company of New Hampshire (PSNH) from August 1926 to

October 1945. In October 1945, the plant was acquired by ENGI’s

2 The Messer Street site actually consists of two parcels, only one of which was owned by ENGI’s predecessor-in-interest. For purposes of this order, however, distinction between the site and its subparcels is unnecessary, and the term “Site” will be used to refer to the either the entire Messer Street site or the subparcel owned by ENGI’s predecessor-in-interest, as the context requires.

5 predecessor-in-interest, Gas Service, Inc.,3 which owned the Site

until 1981. Gas Service, Inc. continued using the Carburetted

Water Gas Process to produce gas at the plant until March 4 ,

1952, when an explosion destroyed the plant’s gas generator

house. After that date, Gas Service, Inc. demolished the old MGP

and installed a propane air gas system that utilized propane gas

brought to the site by railroad; gas was never again manufactured

at the Site using the Carburetted Water Gas Process.

In 1993, the New Hampshire Department of Environmental

Services (NHDES) inspected the Winnipesaukee River adjacent to

the Site and discovered globules of coal tar on the river bottom.

DES notified ENGI and PSNH that they were potentially responsible

parties with respect to the contamination. Pursuant to a NHDES

directive, ENGI and PSNH conducted a site investigation of the

Site and river and prepared a Site Investigation Report and a

Remedial Action Plan. ENGI alleges that it has spent over

$180,000 on its investigation at the Site and that it expects to

3 Plaintiff’s complaint alleges that “[o]n or about October 1 , 1988 the Concord Natural Gas Corporation and the Manchester Gas Company merged with Gas Service, Inc., which changed its name to EnergyNorth Natural Gas, Inc.” (Compl. ¶ 48.)

6 incur significant expenses for further investigation and

remediation. It further alleges that the defendant insurers,

including the remaining defendants L M I , are obligated under their

applicable insurance contracts with ENGI to defend it against the

NHDES directive, and indemnify it for expenses incurred and to be

incurred in conducting response actions at or near the Site.

ENGI finally alleges that the insurers have failed to provide

such defense and indemnity.

Discussion

The court will first address LMI’s Motion for Summary

Judgment regarding Trigger of Coverage (document n o . 1 5 5 ) . LMI

argue that they are entitled to summary judgment because their

policies were not issued until after gas manufacturing operations

at the Site were discontinued. LMI argue that their policies

cover only damages “caused by accident” during the policy period

or arising out of a “causative event” during the policy period,

and that there could be no accident or causative event to trigger

coverage after the pollution-causing operations at the plant

ceased. ENGI counters that the policies cover the continuing

7 contamination o f , or damage t o , the property that occurred during

the policy periods.

LMI issued policies to Gas Service, Inc. covering periods

between 1958 and 1979. The coverage grant in each of these

policies was one of two types. The first, appearing in policies

covering periods between 1958 and 1960 reads as follows:

WE THE UNDERWRITERS hereby agree, subject to the terms, conditions and limitations hereinafter mentioned, to indemnify the Assured in respect of accidents occurring during the policy period commencing [policy commencement date] and ending [policy end date] for any and all sums which the Assured shall by law become liable to pay and shall pay or by final judgment be adjudged to pay to any person or persons (excepting employees of the Assured injured during the course of their employment) as damages

(a) for bodily injuries, including death at any time resulting therefrom caused by accident, hereinafter referred to as “Bodily Injury”, and

(b) for damage to or destruction of property of others (excluding property under the Assured’s care, custody or control) caused by accident, hereinafter referred to as “Property Damage”,

arising out of the hazards covered by and as defined in the underlying policy/ies specified in the Schedule herein and issued by the [Primary Insurers’ Names], hereinafter called the “Primary Insurers”, . . . .

8 1 . ACCIDENT. The word “accident” shall be understood to mean an accident or series of accidents arising out of one event or occurrence.

(ENGI’s Insurance Policy Tome at 1 (internal quotation marks

omitted).) The court will adopt ENGI’s terminology in referring

to these policies as the “accident-based” policies.4

The second type of coverage grant, appearing in policies

covering periods between 1962 and 1979, reads as follows:

EXCESS PUBLIC LIABILITY AND PROPERTY DAMAGE

1. The Underwriters agree to indemnify the Insured named herein and/or any associated, affiliated or subsidiary companies or corporations or interests . . . for any and all sums which the Insured shall by law become liable to pay and shall pay or by final judgment be adjudged to pay, or which by agreement between the Insureds and the Underwriters or their representatives shall be paid to any person, firm, corporation, association, government, governmental division or governmental instrumentality, . . . as damages . . . to property (excluding damage to property owned by the Insured) by reason of an occurrence resulting from or because of the Insured’s business, ownership, maintenance, operation, use of or liability for properties of all kinds and nature, or any act or omission of the Insured’s agents or employees or contractors or sub-contractors it being understood and

4 LMI uses the name “caused by accident” policies.

9 agreed that the term “occurrence” shall mean one happening or series of happenings arising out of or due to one event.

4. This policy covers the Liability of the Insured under agreements with any person, firm, corporation, association, government, governmental division, or governmental instrumentality, whether incorporated or not, whereby the Insured has agreed to assume responsibility or liability for personal injuries or damage to property (whether such agreements are now in effect or become effective while this Policy is in force) notwithstanding that claims may be made or suits commenced against such other person, firm, corporation, association, government, governmental division, or governmental instrumentality, whether incorporated or not, provided always, however, that no liability shall attach to the Underwriters by virtue of this paragraph, in respect of any event which occurred prior to the attaching date of this policy,

This policy commences at 12.01 a.m. Standard Time [commencement date] and ends at 12.01 a.m. Standard Time [termination date] and shall apply to occurrences happening during the currency hereof.

10 (ENGI’s Insurance Policy Tome at 2 (internal quotation marks

omitted).) 5 The court will adopt ENGI’s terminology in referring

to these policies as the “occurrence-based” policies.6

In determining whether these provisions afford coverage to

ENGI under the circumstances of this case, the court applies the

rules governing the interpretation of insurance policies under

New Hampshire law. See LaSorsa v . UNUM Life Ins. Co.,

(1st Cir. 1992). Under New Hampshire law, the

interpretation of insurance policy language is a question of law

to be decided by the court. See, e.g., High Country Assoc. v .

New Hampshire Ins. Co.,

9 , 41 (1994). “In general, the

rules governing the construction and interpretation of written

contracts apply with equal force to insurance policies. Thus, in

interpreting contracts, the fundamental inquiry centers on

determining the intent of the parties at the time of agreement.”

Trombly v . Blue Cross/Blue Shield of New Hampshire - Vermont,

6 4 , 770 (1980)(citation omitted).

5 Later quotation in this opinion of portions of these policy excerpts will be made without further attribution. 6 LMI uses the name “causative event” policies.

11 In interpreting an insurance policy, “the court must

consider the policy as a whole.” Trombly, 120 N.H. at 768. The

court first determines whether the disputed policy language is

ambiguous, State Farm Mut. Auto. Ins. C o . v . Cookinham,

(1992), that i s , whether “the contracting parties could

reasonably disagree about its meaning or application,” Whitcomb

v . Peerless Ins. Co.,

(1996).

Where disputed terms are not defined in the policy or by State judicial precedent, [the court] construe[s] them in context and in the light of what a more than casual reading of the policy would reveal to an ordinarily intelligent insured. This is an objective standard. Where the terms of a policy are clear and unambiguous, we accord the language its natural and ordinary meaning.

Concord Hosp. v . New Hampshire Med. Mal. Joint Underwriting

Ass’n,

8 0 , 682-83 (1993)(citations and internal

quotation marks omitted).

Where the language is ambiguous, it will be presumptively

construed in favor of the insured. See Trombly, 120 N.H. at 771-

7 2 ; Town of Epping v . S t . Paul Fire and Marine Ins. Co.,

(1982). The presumption may be rebutted, however, and

“will not be applied so as to create coverage where it is clear

12 that none is intended.” Town of Epping,

(internal quotation marks omitted). Finally, by statute, the

insurer bears the burden of proof in any declaratory judgment

action brought under N.H. Revised Statutes Ann. § 491:22 to

determine coverage under a liability insurance policy, regardless

of whether the insurer or the insured brought the action.7 N.H.

Revised Statutes Ann. § 491:22-a (1997).

With respect to the accident-based policies, LMI argue that

they require both the causative event and the resulting damage to

occur during the policy period. ENGI, on the other hand, argues

that the accident-based policies are triggered when damage occurs

during the policy period, even if the causative event occurred

outside the policy period. The dispute focuses on the meaning of

the term “accident,” as the accident-based policies obligate LMI

“to indemnify the Assured in respect of accidents occurring

during the policy period.” (Emphasis added.) The court must

therefore first decide whether the term “accident” as used in the

7 ENGI’s complaint seeks declaratory judgment under both the state and federal declaratory judgment statutes. See generally EnergyNorth Natural Gas, Inc. v . Associated Electric & Gas Ins. Servs., Ltd.,

(D.N.H. 1998) (discussing use of the state declaratory judgment statute in a similar case).

13 policies is ambiguous. See, e.g., Cookinham,

(“In interpreting the policy, we first determine whether the

language at issue is ambiguous”).

Although the policies purport to define “accident” to “mean

an accident or series of accidents arising out of one event or

occurrence,”

the definition is unenlightening. The court

therefore looks to whether the term is defined in New Hampshire

law. See Coakley v . Maine Bonding and Cas. Co.,

0 2 ,

409-10 (1992) (“An insurance contract is interpreted according to

state law, and where judicial precedent clearly defines a term at

issue, we need look no further than that definition.”). The New

Hampshire Supreme Court has defined the term “accident,” as used

in occurrence-based policies, as “an undesigned contingency, . .

. a happening by chance, something out of the usual course of

things, unusual, fortuitous, not anticipated, and not naturally

to be expected.” Vermont Mut. Ins. C o . v . Malcolm,

2 1 ,

523 (1986)(internal quotation marks omitted). That definition is

also not particularly helpful, however, because the question at

hand is not so much what an accident i s , but when it has

occurred.

14 ENGI urges the court to follow the decision in EnergyNorth

Natural Gas, Inc. v . Associated Electric & Gas Insurance

Services, Ltd., (“Associated Electric”) C-95-591-B (D.N.H. Sept.

3 0 , 1998). There, citing Peerless Ins. C o . v . Clough,

(1963), the court found it “certainly plausible to follow the

general rule and construe the policies to provide that an

accident occurs when the injury occurs rather than when the

insured commits the act that later produces the injury.”

Associated Electric, slip o p . at 23 (D.N.H. Sept. 3 0 , 1998).

Since this interpretation favored the insured, the court rejected

the insurer’s contrary construction and held that the policy’s

accident-based language “embodies the theory proposed by

EnergyNorth - that where damage occurs in multiple policy

periods, coverage is triggered under each active policy when the

damage occurs, as long as damage occurs.”

As noted, the Associated Electric decision was based on

Peerless Ins. C o . v . Clough,

(1963). There, the

insurer claimed that it was not required to defend or indemnify

the insured against claims arising out of fires caused by his

negligent construction of fireplaces. The insurer relied on a

15 policy exclusion as to “property in the ‘care custody or control

of the insured or property as to which the insured for any

purpose is exercising physical control.’”

at 7 8 . The

properties in question were in the custody or control of the

insured at the time he negligently constructed the fireplaces but

not at the time the fires occurred. In holding that the

exclusion did not apply, the court stated that “the majority -

and we believe the better rule - is that the time of the

occurrence resulting in the loss or damage, and not the time of

the negligence, determines whether there is coverage under the

policy.”

The court does not read Clough to hold categorically that

the time injury or damage occurs is the time of the occurrence

under an occurrence-based policy,8 o r , a step even further

removed, the time of the accident in an accident-based policy.9

8 The policy at issue in Clough insured against “‘destruction of property’” and “‘applie[d] only to occurrences during the policy period.’”

9 It may be noted that although caselaw cited by the Clough court stated more explicitly that “[t]he general rule is that the time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed, but the time when the complaining party was actually damaged,”

16 To illustrate, there are number of actions or events that may

occur, either simultaneously or separated by some span of time,

that bring about an insured loss. There may be a negligent act,

an injury-producing event, and injury or damage. In Clough, the

negligent act (construction of the fireplaces) occurred first

and, some time later, the injury-producing event (the fire) and

the resulting damage occurred relatively simultaneously. The

Clough court held that the injury-producing event, and not the

prior - and separate - negligent act, triggered coverage. The

court did not explicitly differentiate between the fire and the

resulting damage, presumably because of their contemporaneous occurrence.10

Remmer v . Glens Falls Indem. Co.,

9 , 21 (Cal. Dist. C t . App. 1956), Clough itself held that “the time of the occurrence resulting in the loss or damage . . . determines whether there is coverage under the policy.” Clough,

(emphasis added). 10 The court did, however, contrast both with the negligent act: “Furthermore, in the case before us the event insured against is ‘destruction of property’ and not negligence, and it is expressly stated under the heading ‘Policy Period’ that “This policy applies only to occurrences during the policy period.”

17 In the instant case, the allegedly negligent act (the

release of contaminating waste into the environment) occurred

sometime prior to the cessation of manufacturing operations in

1952. The injury is allegedly of a continuing nature and the

court will assume, for purposes of this motion, that it occurred

throughout the policy periods at issue here. Although the court

has analyzed the issue somewhat differently than the parties,

LMI’s position essentially comports with an argument that the

injury-producing event is the same as the negligent act (i.e.,

the initial release of waste) and ENGI’s position essentially

contemplates that the injury-producing event can be the

continuous leaking or leaching of the toxic waste, and is thus

indistinguishable from the injury itself.

New Hampshire law supports LMI’s position. In United States

Fidelity & Guar. Co., Inc. v . Johnson Shoes, Inc.,

4 8 ,

151 (1983), the New Hampshire Supreme Court addressed a case in

which an insurer denied coverage for environmental contamination,

claiming that no occurrence had happened during its policy

period. The insurer, United States Fidelity & Guaranty Company,

Inc. (USF&G), provided coverage to Johnson Shoes, Inc. during the

18 approximately twenty year period Johnson Shoes was in business, a

period that ended in November, 1972. “In August 1973, after a

period of heavy rains, oil which had apparently escaped from an

underground storage tank located on . . .premises [leased by

Johnson Shoes], spilled over onto neighboring property up to one-

half mile away.”

. Evidence showed that the tank had

been leaking as early as 1971, when a maintenance man for Johnson

Shoes reported a suspected leak to his superiors. USF&G argued

that “the ‘occurrence’ which gave rise to the underlying claims

took place in August 1973, after the policy issued to Johnson

Shoes, Inc. had been cancelled [sic].” Id. at 153. The court,

however, affirmed the trial court’s ruling that “the ‘occurrence’

took place no later than November 1971, during the coverage

period.” Id.11

Citing Johnson Shoes, this court (Devine, J.) held that “in

cases involving the delayed manifestation of environmental

contamination, New Hampshire follows the rule that the time of

11 The policy at issue defined “occurrence” as “‘an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.’” Id.

19 the occurrence is the time of the wrongful act which caused the

ultimate damage.” Town of Peterborough v . The Hartford Fire Ins.

Co.,

(D.N.H. 1993). The court

therefore granted summary judgment to the insurers with respect

to a policy providing coverage from February 1 , 1971, to February

1 , 1974, where the insured “d[id] not allege that hazardous

substances were deposited at the site . . . after 1970.”

.

The court follows Town of Peterborough rather than

Associated Electric and holds that under New Hampshire law, the

term “accident” as used in the policies refers to the initial

release of hazardous material at the Site rather than to later

continuing damage or migration of the hazardous wastes.

Therefore, LMI are entitled to summary judgment with respect to

the accident-based policies.

The occurrence-based policies provide, after specifying the

policy period, that they “shall apply to occurrences happening

during the currency hereof.” They further provide that the

underwriters will indemnify the insured against liability for

damages to property “by reason of an occurrence . . . it being

20 understood and agreed that the term ‘occurrence’ shall mean one

happening or series of happenings arising out of or due to one

event.”12

LMI argue that this language requires that the causative

event occur during the policy period. In other words, LMI

contend that coverage under the policies is not triggered by

damage occurring during the policy period that is caused by an

event that happened outside the policy period. ENGI, on the

12 ENGI argues “it appears from LMI’s filing that only the first layer London policies from 1962 to 1972 contained this occurrence definition. It is unclear how many, if any, higher layer policies contained this ‘occurrence’ definition.” (ENGI’s Mem. of Law in support of O b j . to Mot. for Summ. J. (document n o . 203) at 4 (citation omitted).) ENGI also contends that some of the policies contained no definition of the term “occurrence.”

The court notes, however, that ENGI’s own Insurance Policy Tome lists 34 LMI policies, with dates from 1962 through 1979, that purportedly contain this language. Furthermore, LMI counters that “each higher excess LMI policy at issue in this case ‘follows form’ to the term[s] and conditions of the first layer LMI policy it sits above, all of which first layer policies contain the same ‘causative event’ definition of occurrence.” LMI’s Mem. of Law in Resp. to ENGI’s Mem. of Law in Support of its Mot. For Summ. J. (document n o . 212) at 3 . As ENGI did not contest this representation in its further objection to LMI’s motion, the court will accept LMI’s assertion that “every LMI policy at issue in this action insuring ENGI during the period 1962 to 1979 contains or follows form to the same ‘causative event’ occurrence definition that is delineated in LMI’s Trigger Memorandum.” Id.; see also Aff. of Allen R. McKay, Esq.

21 other hand, argues that this language provides coverage whenever

an occurrence results in property damage, and therefore employs a

continuous trigger of coverage.

LMI cite a number of cases in support of their “causative

event” argument, including Babcock & Wilcox C o . v . Arkwright-

Boston Mfg. Mut. Ins. Co.,

(6th Cir. 1995); Indiana

Gas Co., Inc. v . Aetna Cas. & Sur. Co.,

(N.D.

Ind. 1996), vacated for lack of diversity jurisdiction,

(7th Cir. 1998), cert. denied sub nom. Certain Underwriters

at Lloyd’s London v . Indiana Gas Co., Inc.,

(1998);

and Public Services Electric and Gas C o . v . Certain Underwriters

at Lloyd’s of London, Civ. Action N o . 88-4811(JCL) (D.N.J. Sept.

3 0 , 1994). Each of the cases interpreted a definition of

“occurrence” in an occurrence-based policy as requiring that “the

event, not the happening, must occur during the term of the

contract.” Babcock & Wilcox,

(internal quotation

marks omitted). Thus, as applied to potential coverage for

environmental consequences of gas manufacturing operations in

Indiana Gas Co., this interpretation compelled granting summary

judgment in favor of LMI with respect to policies that were not

22 in effect at the time the gas plant operated. Indiana Gas Co.,

; see also Public Services Electric and Gas

C o . v . Certain Underwriters at Lloyd’s of London, Civ. Action N o .

88-4811(JCL), slip o p . at 13 (D.N.J. Sept. 3 0 , 1994) (granting

summary judgment to LMI with respect to policies that came into

effect after the insured had ceased its gas manufacturing

operations).

LMI argue in favor of the same result here. The court

notes, however, that the definitions of “occurrence” construed in

the cases cited by LMI differ materially from that at issue here.

In Public Services Electric and Gas Co., for instance, the policy

provided that “The word ‘occurrence’ shall be understood to mean

‘one happening or series of happenings arising out of or caused

by one event taking place during the term of this contract.’”

Public Services Electric and Gas Co., Civ. Action N o . 88-

4811(JCL), slip o p . at 11 (D.N.J. Sept. 3 0 , 1994) (internal

quotation marks omitted). Although the definitions in the other

cases differ slightly, each contains the phrase “taking place

23 during the term of this contract” following the word event.13

That limiting phrase does not appear in the policy definition at

issue here. C f . In the Matter of the Liquidation of Midland Ins.

Co.,

(N.Y. Sup. C t . 1994) (noting, although

construing different policy language, that the insured “has not

convinced this Court that the presence of the ‘during the policy

period’ language outside of the definitions of ‘bodily injury’ or

‘occurrence’ is a trivial matter of punctuation, since the entire

meaning of the term ‘occurrence’ is changed thereby”).

The policies here provide that “the term ‘occurrence’ shall

mean one happening or series of happenings arising out of or due

to one event.” The court finds that this definition, read in

conjunction with the provision that the policies “shall apply to

occurrences happening during the currency hereof,” is ambiguous.

It is not clear whether both the “happening or series of

13 See Babcock & Wilcox,

(“The term ‘Occurrence’ whenever used herein, shall mean any happening or series of happenings, arising out of or due to one event taking place during the term of this contract in respect to all the Assured’s operations.’”); Indiana Gas Co.,

(“The term ‘occurrence’ whenever used herein shall mean one happening or series of happenings, arising out of or due to one event taking place during the term of this contract.”).

24 happenings” and the “event” must take place during the policy

period or whether only the “happening or series of happenings”

must take place during the policy period regardless of when the

“event” occurs. C f . Midland Ins. Co.,

(noting, in reading the definition of occurrence into the

coverage grant, that “[i]f there is any ambiguity in this

language, it is as to whether only the event (or continuous

exposure) need happen during the policy period, or whether both

exposure and injury need be present during the policy period”).

The definition could reasonably be read either way.

Moreover, cases cited by LMI indicate that the latter possible

interpretation may provide coverage. The Public Services

Electric and Gas C o . court found:

[T]he “event” alluded to in the policy definition refers to the contamination itself, such as a leak or a spill, and not to any subsequent leaching or migration of contaminants. Rather, under the definition leaching or migration would qualify as the “happening or series of happenings arising out of . . . [the] event.”

Public Services Electric and Gas Co., Civ. Action N o . 88-

4811(JCL), slip o p . at 12-13 (D.N.J. Sept. 3 0 , 1994). S o , the

definition of occurrence in the policies is ambiguous under New

25 Hampshire law. See Green M t . Ins. C o . v . George,

0 , 14

(1993) (“If . . . the policy language is reasonably susceptible

of at least two different interpretations, one of which favors

coverage, the language is ambiguous.”)

Ordinarily, an ambiguity such as that presented here would

be construed in favor of the insured to provide coverage. See,

e.g., Trombly, 120 N.H. at 771-72. L M I , however, raise an

additional argument that must be addressed before determining

whether the Trombly presumption applies. Specifically, LMI

contend that the definition of occurrence must be read in light

of paragraph four of the coverage grant, which provides that the

policy covers liability that the insured assumes under an

agreement taking effect before or during the policy period,

“provided always, however, that no liability shall attach to the

Underwriters by virtue of this paragraph, in respect of any event

which occurred prior to the attaching date of this policy.” LMI

argue that “[b]ecause a single coverage grant can only have one

trigger of coverage, this language in the . . . coverage grant

confirms that the policy is triggered by causative events taking

26 place during the term of the contract.” (LMI’s Mem. of Law in

support of Mot. for Summ. J. (document n o . 155) at 8.)

Under New Hampshire law, a court interpreting an insurance

policy “must consider the policy as a whole,” Trombly, 120 N.H.

at 7 6 8 , and “constru[e] all parts of the policy together in

accordance with the rule of construction of contracts,”

Lumbermen’s Mut. Cas. C o . v . McCarthy,

2 0 , 323 (1939).

Paragraph four appears to clarify the grant of coverage in

paragraph one by stating that the policy covers liability assumed

by the insured under pre-existing agreements or agreements

entered into while the policy is in force. The “provided always,

however” clause, in turn, appears designed to confirm that

paragraph four does not expand the coverage grant of paragraph

one to liability for pre-policy period events otherwise

contractually assumed by the insured. Thus, LMI argue, paragraph

four also confirms that coverage under paragraph one is triggered

only by events occurring during the policy period, thereby

clearing up the ambiguity in the definition of occurrence.

Paragraph four certainly makes LMI’s interpretation more

plausible. ENGI neither contests nor even addresses the point.

27 Thus, while the language of paragraph four is not a model of

clarity, no alternative construction has been suggested that

could reasonably be read in favor of coverage. “It is true that

the insurer bears the burden of proving lack of coverage, . . .

[and] that ambiguities are generally construed against the

insurer . . . . Ambiguity, however, serves to aid the

policyholder only if one of the possible meanings of the clause

at issue favors coverage.” International Surplus Lines Ins. C o .

v . Manufacturers & Merchants Mut. Ins. Co.,

5 , 19-20

(1995) (citations omitted); see also Titan Holdings Syndicate,

Inc. v . City of Keene, N.H.,

(1st Cir. 1990)

(“Just because the parties dispute the scope of a policy’s

coverage does not mean it is ambiguous; the meaning of the

language must be unclear, and the parties’ dispute based upon

reasonable differences about the language’s interpretation.”)

(applying New Hampshire l a w ) . The court therefore holds that the

definition of “occurrence” at issue unambiguously requires that a

causative event take place during the policy period.

ENGI next contends that the term “event” in the definition

of occurrence does not mean a sudden and discrete event, but

28 rather an unintentional act, implying that ongoing environmental

contamination or damage can be the event triggering coverage.

ENGI again urges the court to follow the decision in Associated

Electric, C-95-591-B (D.N.H. Sept. 3 0 , 1998), which found the

term “event” to be ambiguous. The Associated Electric court

noted that neither the policy at issue nor New Hampshire law

defined “event,” and looked to the differing interpretations the

term has received in other jurisdictions, as well as the

alternative dictionary definitions for the term, in deciding that

the term is ambiguous. Associated Electric, C-95-591-B, slip o p .

at 30-32 (D.N.H. Sept. 3 0 , 1998).

ENGI cites the same cases referred to in Associated Electric

to support its position that the term “event” can be interpreted

to cover ongoing environmental contamination: Cessna Aircraft C o .

v . Hartford Accident & Indem. Co.,

(D. Kan.

1995); Outboard Marine Corp. v . Liberty Mut. Ins. Co.,

(Ill. App. C t . 1996); Pittsburgh Corning Corp. v . The

Travelers Indem. Co.,

(E.D. P a . Jan 2 1 , 1988). 14

14 As ENGI does not make an argument based on alternative dictionary definitions here, the court will not address that point. In any case, the court finds that the correct meaning of

29 While the term has been so construed, those cases do not support

finding an ambiguity in the term “event” that would favor

coverage under the circumstances of this case.

In Cessna Aircraft Co.,

, the court

interpreted a policy that defined “occurrence” similarly to the

policy at issue here.15 The court found that coverage under the

policy could be triggered according to the theory advanced by

plaintiff, namely, “that exposure of groundwater to contamination

is an ‘event’ within the occurrence definition of the policy.”

Although the opinion does not explicitly make the

distinction, however, the “exposure” referred t o , while ongoing,

appears to have been initial exposure rather than continuous

damage caused by migrating or leaching chemicals. In other

words, the policies at issue were effective between 1959 and

1972,

(specifically referring to the Smith and

Companies’ policies), during which time Cessna appears to have

the term “event” here can be determined by the context in which it is used. 15 The policy defined “occurrence” as “one happening or series of happenings, arising out of or due to one event taking place during the term of this policy.” Cessna Aircraft Co.,

.

30 been actively using the hazardous material that was allegedly

disposed of improperly, see

(Cessna began using

trichloroethylene at the subject Fluid Power plant in 1952 and

sold the plant in 1988). Moreover, Cessna admitted “that it had

transported waste materials, including barrelled [sic] waste

solvent to the municipal landfill located in the area [of the

superfund site] from 1953 through 1968 when the landfill closed.”

. Thus, Cessna does not appear to support the

contention that an “event” can take place under the definition of

occurrence at issue years after the disposal o f , or initial

“exposure” t o , hazardous wastes has ceased.

Neither Outboard Marine Corp. nor Pittsburgh Corning Corp.,

, directly supports an alternate interpretation of

the term “event,” as neither case expressly defined or

interpreted that term. Moreover, the reasoning in these cases is

unpersuasive. The Outboard Marine and Pittsburgh Corning courts

found continuous triggers of coverage under the policies at

issue; in other words, the courts found that coverage was

triggered whenever injury-in-fact occurred. See Outboard Marine

Corp.,

(finding persuasive the reasoning that a

31 continuous trigger theory is appropriately used “where injury-in-

fact occurs continuously over a period covered by different

insurers or policies,” and affirming trial court’s finding that

environmental contamination occurring between 1953 and 1976

“amounted to a single continuing occurrence” that triggered all

of the policies at issue (internal quotation marks omitted));

Pittsburgh Corning Corp.,

at *8 (finding that “[t]he

policy language is ambiguous as to when an injury occurs, thereby

triggering coverage”). Under the occurrence-based language at

issue, however, coverage is not triggered by property damage

alone. Rather, as noted previously, these policies requires a

causative event to take place during the policy period. Cf.

Cessna Aircraft Co.,

(interpreting similar

policy language to “conclude[] that the policies unambiguously

require an occurrence, as opposed to property damage, during the

policy period”).

Furthermore, none of the cases cited by ENGI interprets the

term “event” in context, that i s , in relation to other terms and

phrases - e.g., “happening,” “series of happenings,” and “arising

out of or due to” - in the definition of occurrence. See High

32 Country Assoc., 139 N.H. at 41 (court “take[s] the plain and

ordinary meaning of the policy’s words in context”.) In

contrast, courts construing the term in context have found it to

plainly and unambiguously preclude coverage in situations like

the instant one. See Public Services Electric and Gas Co.,

supra, at 12-13 (finding that “the ‘event’ alluded to in the

policy definition refers to the contamination itself, such as a

leak or a spill, and not to any subsequent leaching or migration

of contaminants,” which instead “would qualify as the ‘happening

or series of happenings arising out of . . . [the] event.’”);

Indiana Gas Co.,

(“Interpreting the

‘occurrence’ language to provide coverage for ‘any happening . .

. taking place during the term of this contract would . . .

ignore the plain meaning of the sentence by ignoring the

restrictive ‘arising out of or due to one event’ language.”); c f .

Associated Electric, C-95-591-B, slip o p . at 17 (D.N.H. July 1 ,

1999) (although holding that the term “event” is ambiguous,

finding that the surrounding language in the definition of

occurrence - i.e., “‘one happening or series of happenings,

arising or due to one event’” - “suggest[s] the definition’s

33 focus on the occurrence of discrete incidents” and makes a broad

construction of the term “to include gradual property damage . .

. far less likely” than the insurer’s construction of the term as

a discrete incident).

Accordingly, this court departs somewhat from the decision

in Associated Electric and holds that the term “event,” as used

in context in the definition of occurrence in the policy at issue

and as applied to the circumstances of this case, is unambiguous,

and does not cover ongoing damage by, or migration o f , hazardous

wastes years after those wastes were produced and released at the

site. Thus, LMI are entitled to summary judgment on the trigger

of coverage and, as that issue is dispositive, the remaining

motions for summary judgment are denied as moot.

Conclusion

For the foregoing reasons, LMI’s Motion for Summary Judgment

regarding Trigger of Coverage (document n o . 155) is granted. The

remaining motions for summary judgment (documents n o . 149, 1 5 0 ,

151, 1 5 2 , 153, 154 and 156) are denied as moot.

34 SO ORDERED.

Steven J. McAuliffe United States District Judge

September 2 9 , 2000

cc: Bruce W . Felmly, Esq. Emily G. Rice, Esq. Paul A . Leodori, Esq. Doreen F. Connor, Esq. John A . Guarascio, Esq. Michael F. Aylward, Esq. Kimball A . Lane, Esq.

35