New England Insulation Co. v. Liberty Mutual Insurance
988 N.E.2d 450
Mass. App. Ct.2013Background
- NEIC sues Liberty to recover indemnity based on Boston Gas pro rata allocation for multiple insurers.
- NEIC claims Liberty breached by applying Boston Gas to future indemnity payments for periods with no asbestos coverage.
- Liberty had historically defense and indemnity obligations for NEIC from 1980 onward; Travelers and Kemper are involved in prior coverage.
- Boston Gas adopted pro rata allocation across triggered policies, including for periods without coverage, and rejected an unavailability exception.
- Liberty eventually notified NEIC it would apply Boston Gas pro rata allocation to future indemnity payments, challenging NEIC’s count I claim.
- The trial judge dismissed NEIC’s complaint for failure to state a claim, ruling Boston Gas applies; NEIC appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pro rata allocation from Boston Gas governs NYIC's indemnity | NEIC argues Boston Gas controls. | Liberty argues terms align with pro rata allocation. | Pro rata allocation applies; Boston Gas controls. |
| Whether NEIC must participate in allocation during periods without asbestos coverage | NEIC seeks an unavailability exception. | Liberty relies on Boston Gas rejection of unavailability exception. | No unavailability exception; NEIC must participate. |
| Whether remand or discovery is needed to resolve count I | NEIC seeks remand or discovery regarding drafting history/coverage availability. | Language is unambiguous; discovery unnecessary. | No remand; discovery not required; dismissal affirmed. |
Key Cases Cited
- Boston Gas Co. v. Century Indemn. Co., 454 Mass. 337 (2009) (adopts pro rata allocation for multiple insurers; requires insured participation for uncovered periods)
- A.W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 445 Mass. 502 (2005) (discusses trigger of coverage and allocation issues in asbestos contexts)
- Chicago Bridge & Iron Co. v. Certain Underwriters at Lloyd's, London, 59 Mass. App. Ct. 646 (2003) (noncumulation discussions and allocation considerations in insurance disputes)
- Hercules, Inc. v. AIU Ins. Co., 784 A.2d 481 (Del. 2001) (case cited regarding allocation and policy interpretations in progressive injury contexts)