Opinion ID: 203772
Heading Depth: 2
Heading Rank: 1

Heading: Allegation of a permeating odor

Text: The Massachusetts Supreme Judicial Court has not determined whether the presence of a permeating odor may constitute physical injury. Accordingly, we make an informed prophecy of what the court would do if confronted with the question. Trans-Spec Truck Serv. v. Caterpillar Inc., 524 F.3d 315, 323 (1st Cir.), cert. denied, ___ U.S. ___, 129 S.Ct. 500, 172 L.Ed.2d 359 (2008). In making such a prophecy, we look to analogous cases decided by other courts in the forum state, persuasive reasoning in cases from other states, and learned treatises. Id.; see also Andrew Robinson Int'l, Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 51-52 (1st Cir.2008). The parties have identified two cases, albeit unpublished, from Massachusetts lower courts that support a finding that the presence of odor in a building can constitute physical injury to the building. In Matzner v. Seaco Ins. Co., 1998 WL 566658 (Mass.Super.Ct. Aug. 12, 1998), the insureds claimed that carbon-monoxide contaminated their apartment building, entitling them to coverage under an insurance policy that protected against direct physical loss or damage to property. The court first noted that the phrase direct physical loss was ambiguous [2] and that it should therefore be interpreted in the manner most favorable to the insured. Id. at . Accordingly, the court ruled that carbon monoxide contamination constitutes a `direct physical loss of or damage to' property. Id. at  13. It is important to note that Matzner was a first-party claim, and thus the duty to defend was not at issue. Given that the salient question before us involves the lesser burden of determining whether the underlying complaint is reasonably susceptible of stating a covered claim, Mt. Airy Ins. Co., 127 F.3d at 19, we need not resolve the ambiguity issue to conclude that the complaint can be so read. In Arbeiter v. Cambridge Mut. Fire Ins. Co., 1996 WL 1250616 (Mass.Super.Ct. March 15, 1996), the insureds claimed that the presence of oil fumes in their home constituted a physical loss to the building triggering insurance coverage. The court, in partially denying summary judgment for the insurer, was persuaded by the plaintiffs' argument that fumes are a physical loss which attach to the property. Id. at  3. The two Massachusetts cases, Arbeiter and Matzner, relied on cases from other jurisdictions to support their conclusions. In Farmers Ins. Co. of Or. v. Trutanich, 123 Or.App. 6, 858 P.2d 1332 (1993), upon which Arbeiter relied without further discussion, the Oregon Court of Appeals held for an insured who claimed that methamphetamine odors had physically injured his home. The court found that the pervasive odors were physical because they infiltrated the house and that such damage qualified as a physical loss under the terms of his insurance policy. Id. at 1335-36. Similarly, in W. Fire Ins. Co. v. First Presbyterian Church, 165 Colo. 34, 437 P.2d 52 (1968), the Supreme Court of Colorado upheld coverage where an insured argued that gasoline vapors physically damaged the property because they contaminated the foundation, halls, and rooms of a building. The court dismissed the concept that physical damage could only occur if some tangible injury to the physical structure itself could be detected, noting, [c]ommon sense requires that a policy should not be so interpreted in the absence of a provision specifically limiting coverage in this manner. Id. at 56 (citation omitted). Essex makes three arguments in response. First, it argues that the underlying claim does not reference injury to tangible property, but instead alleges that the odors injured the air. Second, Essex asserts that an odor cannot constitute physical injury to property. Finally, Essex says that, even if there is an allegation of injury to tangible property, and even if odors can constitute physical injury to property, the complaint still would not trigger the duty to defend because the cases suggest that the odor must have persisted in and permeated the structural components of the properties after their original source was removed to be considered physical injury to property. Essex claims that the odor here does not qualify because once the carpet was removed there was no persistent odor remaining. We reject each argument. First, Essex reads too much into Suffolk's complaint when it states that Suffolk alleged and BFDS claimedthat odors only permeated the building's air. Suffolk in fact alleged that an unwanted odor permeated the building  (emphasis added). Such an allegation may be reasonably construed as claiming damage to property. Second, Essex does not provide any authority in support of its contention that odor cannot constitute physical injury to property. Given Arbeiter, Matzner, and the cases upon which they rely, the appellant has met its initial burden on this issue. Third and finally, although Essex may be correct that odor can only constitute physical injury to property if it is permeating or pervasive, nothing in the complaint (the controlling document in the duty to defend inquiry) indicates that the odor was not pervasive or permeating. On the contrary, the underlying complaint explicitly asserts that the odor permeated the building and that Suffolk expended funds to remediate the alleged odor. Essex claims that the odor was not pervasive or permeating because, when the carpet was removed, the smell went out with the [carpet]. That claim, however, impermissibly relies on extrinsic evidence, which Massachusetts law proscribes. [3] See Sterilite Corp., 458 N.E.2d at 344 (What is not permitted is that an insurer shall escape its duty to defend the insured against a liability arising on the face of the complaint and policy, by dint of its own assertion that there is no coverage in fact....); Nashua Corp. v. Liberty Mut. Ins. Co., 1997 WL 89163, at  (Mass.Super.Ct. Feb. 18, 1997) ([W]here a complaint is susceptible on its face of a reading that brings the claim within the policy, the insurer cannot rely on facts outside the complaint to justify a unilateral refusal to defend). Against this legal and factual backdrop, we are persuaded both that odor can constitute physical injury to property under Massachusetts law, and also that allegations that an unwanted odor permeated the building and resulted in a loss of use of the building are reasonably susceptible to an interpretation that physical injury to property has been claimed. Further, since nothing in Essex's policies suggests that odor cannot constitute physical injury to property, Suffolk's claim is colorable under the policies. See W. Fire Ins. Co., 437 P.2d at 56.