Court Opinion

ID: 2964960
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:33:28.984321+00
Date Added: 2024-06-11T15:00:42.270822
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                                 ____________________

        No. 97-1553

                         PREFERRED MUTUAL INSURANCE COMPANY,

                                Plaintiff, Appellant,

                                          v.

                               THE TRAVELERS COMPANIES,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                    [Hon. Michael A. Ponsor, U.S. District Judge]
                                             ___________________
                      [Hon. Nancy Gertner, U.S. District Judge]
                                           ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________

                            Aldrich, Senior Circuit Judge,
                                     ____________________

                              and Lynch, Circuit Judge.
                                         _____________

                                 ____________________

            Marie Cheung-Truslow  with whom Roger  A. Emanuelson  and Lecomte,
            ____________________            ____________________      ________
        Emanuelson, Motejunas & Doyle were on brief for appellant.
        _____________________________
            Michael J.  Eisele with whom  David C.  Boch and  Bingham, Dana  &
            __________________            ______________      ________________
        Gould were on brief for appellee.
        _____

                                 ____________________

                                   October 3, 1997
                                 ____________________

                      ALDRICH,  Senior Circuit  Judge.    On January  20,
                                _____________________

            1995, an oil fire broke out in the boiler room of the Kimball

            Towers condominium in Springfield, Massachusetts, that caused

            extensive damage from  smoke, soot and heat.   Kimball Towers

            Condominium Association  (Kimball) was  insured by  Preferred

            Mutual Insurance  Company (Preferred) under a Business Owners

            Special Property  Policy that  covered its  property broadly,

            with a limit of $11,340,000 and an annual premium of $40,484.

            With some exceptions,  the policy did not cover  steam or hot

            water  boilers and their equipment.  Kimball was also insured

            by Travelers Company (Travelers) under a Boiler and Machinery

            Policy.    Boiler provisions  complementary  with Preferred's

            have been noted.  Travelers' policy had no dollar limitation;

            the annual "Provisional  Premium"1 was $875.   Preferred paid

            this loss,2 in the amount of $357,279, and now sues Travelers

            for this amount as the "primary insurer," or, at least, for a

            share.   A condition precedent  is that Travelers  would have

            been liable for the loss.  The district court held that there

            was  no  such  coverage,  so  that  neither  alternative  was

            correct,  and granted  summary judgment  to  Travelers in  an

            extensive opinion.  See Preferred Mut. Ins. Co. v.  Travelers
                                ___ _______________________     _________

            Cos., 955 F. Supp.  9 (D. Mass. 1997).  Without  deciding, it
            ____

                                
            ____________________

            1.  The  elasticity   related  to   offered  extensions   not
            subscribed to by Kimball, and not here relevant.

            2.  No point  has been  made by it  of any loss  to Kimball's
            boiler and accessory equipment.

                                         -2-

            assumed that  Travelers' policy's general  provisions covered

            the loss -- an assumption not contested, and that we adopt --

            but concluded that it fell  within the stated exclusions.  On

            this basis we affirm.

                                      The Facts
                                      _________

                      On summary  judgment we  of course  take the  facts

            most favorably to plaintiff Preferred, but review the court's

            legal conclusions de novo.   See, e.g., Dominique v. Weld, 73
                                         _________  _________    ____

            F.3d 1156, 1158 (1st Cir. 1996); E.E.O.C. v. Steamship Clerks
                                             ________    ________________

            Union,  Local 1066,  48 F.3d  594,  602-03 (1st  Cir.), cert.
            __________________                                      _____

            denied,  116 S.  Ct. 65  (1995).   Construction of  insurance
            ______

            contracts and application of their terms to established facts

            are matters of law, ultimately  for us.  See Commercial Union
                                                     ___ ________________

            Ins.  Co. v. Walbrook  Ins. Co., 7 F.3d  1047, 1050 (1st Cir.
            _________    __________________

            1993); Falmouth Nat'l Bank v.  Ticor Title Ins. Co., 920 F.2d
                   ___________________     ____________________

            1058, 1061 (1st Cir. 1990).

                      The  fire, according to  Preferred, occurred in the

            following  manner.   A  leaky  seal in  the  fuel pump,  that

            supplied  oil to the  burner that heated  the boiler, allowed

            oil to be propelled, with air, into the burner tube.  Here it

            caught fire.  This fire caused a melt, allowing the burner to

            fall,  damaging the  oil line.    This released  oil, fed  by

            gravity from the storage supply, that caught fire  and burned

            until ultimately extinguished by the fire department.

                                         -3-

                      The relevant  Travelers' policy  provisions (quoted

            out of order) are these.

                      A.  COVERAGE

                           We  will  pay  for  direct  damage  to Covered
                           Property caused by a Covered Cause of Loss.

                           1.  Covered Property
                               ________________

                                 Covered  Property,   as  used   in  this
                                 Coverage Part, means any property that:

                                 a.  You own;

                                      . . . . .

                           2.  Covered Cause of Loss
                               _____________________

                                 A Covered Cause of Loss is an "accident"
                                 to an "object."

                                      . . . . .

                      G.  DEFINITIONS

                           1.    "Accident" means a sudden and accidental
                                 breakdown of the "object" or part of the
                                 "object."

                                      . . . . .

                           5.    "Object" means:

                                 a.   Unless     excluded      in     the
                                      Declarations,     the     following
                                      equipment:

                                      (1)    Any  boiler,  including  its
                                      piping and accessory equipment.

                      Interrupting,  we  read  the  policy  to  say  that

            Travelers  will pay (subject to exclusions) for direct damage

            to Kimball's property due to  the breakdown of the boiler and

            its accessory equipment.  We consider the  burner, the burner

                                         -4-

            tube, the mechanical  fuel pump, and the electric  motor that

            operates  it,  to be  accessory  equipment.   Leaking  was  a

            breakdown, or "accident."

                      B.  EXCLUSIONS

                                 We will  not  pay  for  loss  or  damage
                           caused directly or  indirectly by  any of  the
                           following.   Such loss  or damage is  excluded
                           regardless  of any other  cause or  event that
                           contributes concurrently or in any sequence to
                           the loss.

                                      . . . . .

                           4.  Other Exclusions

                           Loss caused by or resulting from:

                                 a.   Fire  or combustion  explosion that
                                 occurs at the same time as an "accident"
                                 or that ensues from an "accident."  With
                                 respect  to  any   electrical  equipment
                                 forming  a  part  of  an "object,"  this
                                 exclusion is changed to read:

                                      Fire  or   explosion  outside   the
                                 "object" that occurs at the same time as
                                 an   "accident"   or  ensues   from   an
                                 "accident."

                                      . . . . .

                      The initial  paragraph unambiguously means  what it

            says.  If the fire fell within the  provisions of section B4a

            it  is  not  covered  even  though it  also  met  some  other

            definitions.  Cf. Jussim  v. Massachusetts Bay Ins. Co.,  415
                          ___ ______     __________________________

            Mass. 24, 27-28, 610  N.E.2d 954, 955-56 (1993)  (noting that

            if the  proximate cause  "is an insured  risk, there  will be

            coverage even though  the final form of  the property damage,

            produced by a  series of related events, appears  to take the

                                         -5-

            loss outside the  terms of the policy").   Preferred says the

            present  issue lies in provision 4a's second sentence because

            the  loss was caused  by the breakdown of  the fuel pump that

            was  "electrical equipment"  because it  was  operated by  an

            electric   motor.     Although  there  was   some  struggling

            vocalizing  by Preferred's expert, we can not possibly agree.

            We do  not rely on the much mentioned  fact that the pump and

            the  motor were  by different  manufacturers,  but they  were

            independent articles, connected only by the power shaft, with

            no electricity reaching  the pump.  Manifestly there  must be

            some purpose for the alternative clause in provision 4a, and,

            equally  manifestly, electricity must play a meaningful part.

            To characterize the pump as electrical is nonsense.

                      Turning,   therefore,  to   4a's  first   sentence,

            concededly the leak in the pump was an accident to an object.

            Whether or  not  the broken  supply line  also be  considered

            accessory   equipment,  the  burning   of  the   fuel  supply

            unquestionably "ensue[d] from an 'accident.'"  It was plainly

            excluded.

                      In  this  posture  Preferred  complains  that  this

            conclusion "result[s] in  coverage to the insured  which [i]s

            unrealistically limited."  Support is offered by an affidavit

            of  Kimball's  "property  manager,"  who   had  obtained  the

            policies:

                           It    has    been    my    continued
                      understanding and  expectation that  fire

                                         -6-

                      originating  from   the  boiler   or  its
                      accessory  equipment  would   be  covered
                      under  Travelers'  Boiler  and  Machinery
                      Policy.

                      Thus we have an insurer that had received a premium

            of $40,484, claiming it  was unreasonable for an  insurer who

            had received a  premium of $875  not to  pay it $357,279,  in

            part, if not in whole.  The lion would lie down with the lamb

            -- for dinner.

                      The Boiler  and Machinery policy  covered accidents

            to  the  boiler  and  accessory  equipment,  and,  in  terms,

            excluded "fire . . .  that ensues from an 'accident.'"  There

            was  an accident, and fire ensued.   Plaintiff, who is in the

            business  of writing  and  interpreting insurance  contracts,

            sues therefor.  We give notice that if it wishes to object to

            our assessing double costs it do so, with grounds, within ten

            days of  the date hereof.  See Fed. R.  App. P. 38; Cronin v.
                                       ___                      ______

            Town  of Amesbury,  81 F.3d  257, 261  (1st Cir.  1996); E.H.
            _________________                                        ____

            Ashley & Co. v. Wells Fargo Alarm Servs., 907 F.2d 1274, 1280
            ____________    ________________________

            (1st Cir. 1990).

                      Affirmed.
                      ________

                                         -7-