OneBeacon America Insurance Co. v. Narragansett Electric Co. American Home Assurance Co.
87 Mass. App. Ct. 417
Mass. App. Ct.2015Background
- Narragansett Electric Company (NEC), successor to earlier gas/electric companies, faced contamination at multiple former manufactured-gas-plant and disposal sites; discovery and governmental demands spanned the 1980s–2000s.
- OneBeacon issued primary CGL policies (1972–1985); other insurers (Century, American Home, London, etc.) issued primary and excess policies covering various earlier periods.
- NEC sought defense and indemnity for governmental orders and cleanup costs; insurers issued reservations of rights, disclaimers, or delayed coverage decisions at different times.
- OneBeacon sued for declaratory relief in Massachusetts (2005); NEC counterclaimed and later added other insurers (amended counterclaims through 2009).
- Multiple summary-judgment rulings dismissed many NEC claims as time‑barred (Massachusetts 6-year statute applied), and several claims proceeded to jury trials with mixed outcomes; NEC appealed several adverse summary-judgment and dismissal rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for statute of limitations | Rhode Island 10‑year rule should apply | Massachusetts conflict rules apply; forum may use its shorter statute when no exceptional circumstances | Massachusetts 6‑year statute governs (Restatement §142(1)); applying RI would be unreasonable absent exceptional circumstances |
| When breach/accrual occurs for insurer's duty to defend | Accrual should await resolution of underlying litigation (majority rule) or insurer's cure | Accrual occurs when insurer refuses/declines to defend and insured incurs defense costs | Accrual occurs on insurer's refusal/disclaimer or unreasonable delay once insured incurs defense costs; Massachusetts rejects waiting for underlying judgment |
| When breach/accrual occurs for insurer's duty to indemnify | Accrual should await judgment/settlement establishing legal obligation | Accrual occurs when governmental agency imposes mandatory remedial obligations (letters/orders) that make insured legally obligated | Accrual can be triggered by mandatory administrative demands (LORs, consent orders); formal litigation not required to create legal obligation |
| Dismissal with prejudice of unripe (no agency action) site claims | NEC argued dismissal should be without prejudice for lack of justiciable controversy | Insurers sought fees; trial court conditioned dismissal on fee payment and later dismissed with prejudice when parties did not agree | Dismissal with prejudice improper where court lacked subject‑matter jurisdiction; claims converted to dismissal without prejudice and fee condition was improper |
Key Cases Cited
- Berkshire Mut. Ins. Co. v. Burbank, 422 Mass. 659 (accrual for breach of insurance contract runs from insurer's breach)
- Siebe, Inc. v. Louis M. Gerson Co., 74 Mass. App. Ct. 544 (duty to defend accrual when insurer refuses to defend and insured incurs costs)
- Hazen Paper Co. v. United States Fid. & Guar. Co., 407 Mass. 689 (administrative agency demand can be treated as equivalent of a lawsuit for duty‑to‑defend/indemnify purposes)
- Employers' Liab. Assur. Corp. v. Hoechst Celanese Corp., 43 Mass. App. Ct. 465 (environmental agency demands can trigger excess insurers' duty to indemnify without formal litigation)
- Ratner v. Canadian Universal Ins. Co., 359 Mass. 375 (insurer that wrongfully refuses to defend cannot insist on insured carrying case to judgment)
- Department of Rev. v. Ryan R., 62 Mass. App. Ct. 380 (dismissal for lack of subject‑matter jurisdiction does not bar subsequent action; dismissal with prejudice ineffective to preclude refiling)