685 F.3d 22
1st Cir.2012Background
- Travelers seeks declaratory judgment that PWIC must defend NE Container in the Emhart CERCLA contribution action.
- Emhart alleges NE Container caused site contamination and seeks recovery of response costs; NE Container insurers may be obligated to defend.
- PWIC contends it had no duty to defend based on policy timing and coverage requirements.
- The district court granted PWIC summary judgment, focusing on timing of NE Container's alleged pollution.
- The First Circuit reverses, holding the duty to defend can arise under the pleadings test even without overlap between policy period and polluting activity.
- Rhode Island law governs, applying the pleadings test and discovery-based triggering for environmental property damage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Emhart complaint trigger PWIC’s duty to defend under the pleadings test? | Travelers argues pleadings show potential latent damage during PWIC period. | PWIC argues no potential coverage during its policy period. | Yes, PWIC’s duty to defend is triggered. |
| Is overlap between policy period and polluting activity required for coverage? | Overlap not required; discovery trigger suffices. | Overlap should be required. | Overlap not necessary; discoverable damage within policy period suffices. |
| Does discovery or discoverability of latent environmental damage during policy period affect duty to defend? | Latent damage may be discoverable in the mid-1980s. | Unclear about discovery timing. | Yes; discoverability during the policy period can trigger coverage. |
| Do pollution exclusion or occurrence definitions defeat coverage here? | Allegations show accidental releases may fall within occurrence. | Pollution exclusion and intentionality negate coverage. | Not dispositive; allegations support potential covered occurrence. |
Key Cases Cited
- CPC Int'l, Inc. v. Northbrook Excess & Surplus Ins. Co., 668 A.2d 647 (R.I. 1995) (trigger where property damage manifests or is discoverable during policy period)
- Textron-Wheatfield, Inc. v. Aetna Cas. & Sur. Co., 754 A.2d 742 (R.I. 2000) (discovery/diligence trigger; both parts of CPC framework applicable)
- Textron-Gastonia, Inc. v. Aetna Cas. & Sur. Co., 723 A.2d 1138 (R.I. 1999) (independently triggers coverage; overlapping operations discussed)
- Beals v. Employers' Fire Ins. Co., 240 A.2d 397 (R.I. 1968) (duty to defend predicated on allegations, not proof of coverage)
- Flori v. Allstate Ins. Co., 388 A.2d 25 (R.I. 1978) (pleadings test governs duty to defend; extrinsic evidence barred)
- Truk-Away of R.I., Inc. v. Aetna Cas. & Sur. Co., 723 A.2d 309 (R.I. 1999) (duty to defend guided by pleadings when coverage uncertain)
- Emhart Indus., Inc. v. Century Indem. Co., 559 F.3d 57 (1st Cir. 2009) (environmental CERCLA context; pleadings-based coverage analysis)
- Sanzi v. Shetty, 864 A.2d 614 (R.I. 2005) (limits to insurer duty to defend when no potential coverage)