Court Opinion

ID: 2963761
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:14:52.008257+00
Date Added: 2024-06-11T11:42:45.997640
License: Public Domain

USCA1 Opinion

	

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

                              _________________________

          No. 95-1435

                      UNITED STATES LIABILITY INSURANCE COMPANY,

                                Plaintiff, Appellant,

                                          v.

                            LIVINGSTONE R. SELMAN, ET AL.,

                                Defendants, Appellees.

                              _________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Joseph L. Tauro, U.S. District Judge]
                                            ___________________

                              _________________________

                                        Before

                                Selya, Circuit Judge,
                                       _____________

                            Bownes, Senior Circuit Judge,
                                    ____________________

                              and Boudin, Circuit Judge.
                                          _____________

                              _________________________

               Alice Olsen Mann,  with whom  Mark P.  Bailey and  Morrison,
               ________________              _______________      _________
          Mahoney & Miller were on brief, for appellant.
          ________________
               Kenneth H. Soble and Soble, Van Dam, Pearlman and Gittelsohn
               ________________     _______________________________________
          on brief for appellee Livingstone R. Selman.
               Clyde  D.  Bergstresser,  with  whom Angela  M.  Vieira  and
               _______________________              __________________
          Bergstresser  and Associates  were on  brief, for  appellee Robin
          ____________________________
          Razza.

                              _________________________

                                  November 28, 1995

                              _________________________

                    SELYA,  Circuit  Judge.   In  this  appeal,  plaintiff-
                    SELYA,  Circuit  Judge.
                            ______________

          appellant  United  States  Liability  Insurance  Company  (USLIC)

          strives to extricate itself from coverage obligations owed to its

          insured, Livingstone R. Selman, vis-a-vis personal  injury claims
                                          _________

          brought by  Robin Razza  on behalf  of her  minor daughter.   The

          district  court ruled that USLIC  had a duty  to indemnify Selman

          with respect to  those injuries that  occurred while the  subject

          policies were in force.   See USLIC v. Selman, 882 F.  Supp. 1163
                                    ___ _____    ______

          (D. Mass. 1995).  USLIC appeals.  We affirm.

          I.  BACKGROUND
          I.  BACKGROUND

                    The chronology  of events  is not  in dispute.   Selman

          owned an  apartment house situated  at 2  North Avenue,  Roxbury,

          Massachusetts.   In 1982, he rented apartment #3A to Robin Razza.

          On May 6, 1983, Robin gave birth to Carol Ann Razza.  In the fall

          of  1984, a  physician discovered  that Carol Ann  had contracted

          lead  poisoning.   On  February 5,  1985,  an inspector  from the

          Massachusetts  Child  Lead  Poisoning  Prevention   Program  (the

          Agency) found that both the  Razzas' apartment and the building's

          common areas contained lead paint.  The Agency informed Selman of

          its findings.  Shortly thereafter,  a fire damaged apartment #3A,

          and  Selman,  responding  to  his tenant's  expressed  desire  to

          relocate, moved the Razzas  to apartment #1A.  He  also requested

          that the Agency inspect the apartment.

                    The inspection occurred on March 7, 1985, and disclosed

          the  presence of lead  paint.  The Agency  notified Selman and he

          made  arrangements  to  purge  the  entire  building   (including

                                          2

          apartment #1A).1  Inspection reports reveal that by March 29 lead

          removal in apartment #1A  was "95% complete."  Beyond  that date,

          the pace of  lead removal  in the Razzas'  apartment is  unclear:

          all that we can tell from the record is that, by September of the

          following  year (when the  Razzas departed),  Selman had  rid the

          entire building of the residue of lead paint.

                    At   all  times   material  hereto,   Selman  purchased

          insurance  coverage  annually.   For  four  consecutive  one-year

          periods  commencing May  4,  1981, Selman  insured the  apartment

          house with  Mutual Fire  & Marine Insurance  Company.  In  May of

          1985, his  allegiance shifted.2   Coincident with  the expiration

          of the latest Mutual Fire policy, Selman bought a one-year policy

          from USLIC, effective May 4, 1985.  The next year, USLIC issued a

          renewal policy effective May 4, 1986.  Each policy covered claims

          for   bodily  injuries   arising  out   of  Selman's   ownership,

          maintenance,  and  use  of the  property.    The policies  define

          "bodily injury" as "bodily  injury, sickness or disease sustained

          by  any person which occurs during the policy period," and define

          an "occurrence" as "an accident, including continuous or repeated

          exposure  to  conditions,  which  results  in  bodily  injury  or

          property damage neither expected nor intended from the standpoint

                              
          ____________________

               1Selman eliminated  the hazard  by scraping lead  paint from
          the walls in some locations and covering over lead paint in other
          locations.  Since the  method of abstersion is not  important for
          present purposes, we refer to both processes as "removal."

               2The  record  contains  no  hint  either  that  Mutual  Fire
          canceled Selman's  coverage or  that the change  in carriers  was
          somehow connected to the discovery of lead paint on the premises.

                                          3

          of the insured."

                    Long after the second  of USLIC's two one-year policies

          lapsed, Robin  Razza asserted a  claim against  Selman for  Carol

          Ann's  lead paint poisoning.  Bent on exonerating itself from all

          responsibility under its policies in regard to  this claim, USLIC

          brought  a declaratory  judgment  action against  Selman and  the

          Razzas  in the United States  District Court for  the District of

          Massachusetts.3   See 28 U.S.C.    2201-2202 (1988); Fed. R. Civ.
                            ___

          P.  57.  It premised jurisdiction on diversity of citizenship and

          the existence of a controversy in  the requisite amount.  See  28
                                                                    ___

          U.S.C.   1332(a).

                    In  due course, the parties tried the case to the court

          on stipulations  of fact,  documentary submissions, and  the live

          testimony of the  Razzas' expert  witness, Dr. John  Graef.   The

          district  judge determined  that USLIC  had no duty  to indemnify

          Selman  in  respect to  claims  for injuries  resulting  from the

          ingestion of lead paint prior to May 4, 1985  (the inception date

          of  its first policy), and  the defendants do  not challenge this

          determination on appeal.  The judge also concluded, however, that

          USLIC  had  a duty  to indemnify  Selman  with respect  to claims

          arising  out of Carol Ann's ingestion of lead paint while USLIC's

                              
          ____________________

               3While  pretrial  discovery  was ongoing,  Robin  Razza sued
          Selman to her daughter's  behoof in a Massachusetts  state court,
          seeking  damages for injuries allegedly sustained  as a result of
          Carol Ann's  exposure to  lead paint in  the apartment  building.
          That suit is still pending.

                                          4

          policies were  in force, that is,  from May 4, 1985  until May 3,

          1987.4  After  the district court entered  a declaratory judgment

          to this effect,5 USLIC appealed.

          II.  STANDARD OF REVIEW
          II.  STANDARD OF REVIEW

                    We  face a  preliminary  dispute as  to the  applicable

          standard  of review.  Citing  Pallet v. Gallagher,  725 F.2d 131,
                                        ______    _________

          134  (1st Cir. 1984), the appellant insists that, inasmuch as its

          claims  require construction of the terms of an insurance policy,

          appellate review is plenary.   This generalization oversimplifies

          the matter, and, in the end, is wide of the mark.

                    To  be sure, it is  for the court  to determine whether

          the  terms of an integrated agreement are unambiguous and, if so,

          to construe them according  to their plain meaning.  See Allen v.
                                                               ___ _____
                              
          ____________________

               4In reality, the cutoff date is probably September 27,  1986
          (when the Razzas moved from 2 North Avenue).

               5The  district  court's  holding,  while  obvious  from  its
          reasoning,  is not  explicitly  articulated in  the  text of  its
          opinion.  The  final judgment  cured this omission.   There,  the
          court declared that:

                    [I]n  regard  to  the  lawsuit  filed against
                    Livingstone  Selman by Robin Razza, as mother
                    and next friend of Carol Ann Razza . . .:

                         1.    The  plaintiff  has   no  duty  to
                    indemnify Livingstone Selman with  respect to
                    injuries  to Carol  Ann Razza  resulting from
                    ingestions  of lead  paint  prior  to May  4,
                    1985;

                         2.    The   plaintiff  has  a   duty  to
                    indemnify Livingstone Selman with  respect to
                    injuries  to Carol  Ann Razza  resulting from
                    ingestions of lead paint  on and after May 4,
                    1985, and;

                         3.  The case is closed.

                                          5

          Adage, Inc., 967  F.2d 695,  698 (1st Cir.  1992); RCI  Northeast
          ___________                                        ______________

          Servs. Div. v.  Boston Edison  Co., 822 F.2d  199, 202 (1st  Cir.
          ___________     __________________

          1987);  Robert Indus.,  Inc.  v. Spence,  291 N.E.2d  407, 409-10
                  ____________________     ______

          (Mass.  1973).   In this  sense, questions  about the  meaning of

          contractual  provisions are questions  of law, and  we review the

          district court's answers  to them de novo.  See  ITT Corp. v. LTX
                                                      ___  _________    ___

          Corp., 926  F.2d 1258, 1261 (1st  Cir. 1991).   However, when the
          _____

          district court's  answers  rest  not  on  plain  meaning  but  on

          differential  findings  by  the   trier  of  fact,  derived  from

          extrinsic  evidence as to the  parties' intent with  regard to an

          uncertain contract provision, appellate review proceeds under the

          "clearly erroneous"  standard.  See  RCI Northeast,  822 F.2d  at
                                          ___  _____________

          202.  The same standard pertains whenever the trial court decides

          factual matters  that are essential to  ascertaining the parties'

          rights  in a  particular situation  (though not dependent  on the

          meaning of contractual terms per se).  See, e.g., Reliance Steel,
                                                 ___  ____  ______________

          880 F.2d 575, 576-77 (1st  Cir. 1989).  In these types  of cases,

          the  issues  are  ordinarily  fact-dominated  rather   than  law-

          dominated, and,  to that extent, the  district court's resolution

          of  them is entitled  to deference.   See In re  Howard, 996 F.2d
                                                ___ _____________

          1320,  1328 (1st Cir. 1993) ("Many cases involve what courts term

          `mixed' questions   questions  which, if they are to  be properly

          resolved,  necessitate combining factfinding  with an elucidation

          of  the applicable  law.   The standard  of review  applicable to

          mixed questions usually  depends upon where  they fall along  the

          degree-of-deference  continuum:    the  more  fact-dominated  the

                                          6

          question, the more likely it is that the trier's resolution of it

          will be accepted unless shown  to be clearly erroneous."); Roland
                                                                     ______

          M.  v. Concord Sch.  Comm., 910 F.2d 983,  990-91 (1st Cir. 1990)
          __     ___________________

          (similar), cert. denied, 499 U.S. 912 (1991).
                     _____ ______

                    These principles resonate here.  The appellant attempts

          to escape  from its contractual obligations  on three alternative

          grounds.    First, it  denies that  coverage was  ever triggered,

          taking  the  position that  Carol  Ann  sustained no  discernible

          injuries while its insurance policies were in force.  Second, the

          appellant says  that, because Carol Ann's injuries  were bound up

          with  her earlier  ingestion of  lead paint  (first diagnosed  in

          1984),  they fell outside the  scope of its  policies (which were

          written  in 1985 and 1986, respectively).  Both of these defenses

          have sizeable factual components, hinging, as they do, on whether

          the  evidence shows  that discrete  injuries occurred  during the

          relevant  coverage  periods.   Third,  the  appellant says  that,

          because  Selman knew about the looming liability on the inception

          date of the first  policy, the known loss doctrine  precludes him

          from  insuring against the Razzas'  claims.  The  potency of this

          defense likewise depends on the facts:  what Selman knew and when

          he  knew  it.   At bottom,  then,  USLIC's appeal  challenges the

          district court's factfinding;  Fed. R. Civ.  P. 52(a) applies  in

          full  flower;  and  appellate  review  is  circumscribed  by  the

          jurisprudence of clear error.

                    This  is of appreciable  importance because clear error

          review ordinarily heralds a  rocky road for an appellant.   Under

                                          7

          this standard, "appellate courts cannot presume to decide factual

          issues  anew."  Cumpiano v.  Banco Santander P.R.,  902 F.2d 148,
                          ________     ____________________

          152  (1st  Cir. 1990).   Rather,  "Rule  52(a) commands,  and our

          precedents  ordain,  that  deference   be  paid  to  the  trier's

          assessment of the evidence."   Id. (citing representative cases).
                                         ___

          Moreover, the  clearly erroneous  rule loses  none  of its  vigor

          "when the [lower]  court's findings  do not  rest on  credibility

          determinations, but are based  instead on physical or documentary

          evidence  or inferences from other  facts."  Anderson  v. City of
                                                       ________     _______

          Bessemer City, 470  U.S. 564, 574 (1985); accord In re Tully, 818
          _____________                             ______ ___________

          F.2d 106, 108-09 (1st Cir. 1987).

                    In the last analysis,  an appellate tribunal "ought not

          to upset findings  of fact or conclusions drawn therefrom unless,

          on  the  whole  of  the  record,  [the  judges]  form  a  strong,

          unyielding belief that a  mistake has been made."   Cumpiano, 902
                                                              ________

          F.2d at  152.  As long  as the district court's  rendition of the

          record is plausible, our inquiry is at an end.

          III.  ANALYSIS
          III.  ANALYSIS

                    We divide  our analysis  into four segments,  adding to

          the three grounds of  appeal just mentioned a matter  that speaks

          to the  interrelationship of the liability  ceilings contained in

          USLIC's two insurance policies.

                             A.  Was Coverage Triggered?
                             A.  Was Coverage Triggered?
                                 ______________________

                    Massachusetts law supplies  the basis  for decision  in

          this  diversity case.  See Erie R.  Co. v. Tompkins, 304 U.S. 64,
                                 ___ ____________    ________

          78  (1938).   Under  Massachusetts  law,  the  insured bears  the

                                          8

          initial burden  of proving  that  an injury  occurred within  the

          coverage ambit of the  insurance policy.  See, e.g.,  Trustees of
                                                    ___  ____   ___________

          Tufts  Univ.  v. Commercial  Union Ins.  Co.,  616 N.E.2d  68, 74
          ____________     ___________________________

          (Mass. 1993).   Once the insured establishes basic risk coverage,

          the devoir of persuasion shifts to the insurer to prove a defense

          to  coverage, say, the applicability of a policy exclusion or the

          insured's  failure  to comply  with  conditions  precedent.   See
                                                                        ___

          Gusson v.  Boston Mut. Life Ins.  Co., 95 N.E.2d 670,  672 (Mass.
          ______     __________________________

          1950).

                    The court below understood these rules and applied them

          appropriately.   After  reviewing the  documentary  evidence  and

          considering  Dr. Graef's erudite testimony on  the nature of lead

          poisoning  and its manifestations in  Carol Ann Razza's case, the

          court  found that  "at least  a portion"  of Carol  Ann's claimed

          damages  arose as  a  result of  exposure  to lead  paint  at the

          apartment  building  during  the   currency  of  the  appellant's

          policies.   USLIC, 882 F.  Supp. at 1164.   If  sustainable, this
                      _____

          finding evinces that the coverage trigger had been pulled: Selman

          had  met his entry-level burden  by making a  prima facie showing

          that  some part of the  injury claimed falls  within the coverage

          ambit of  the subject policies.   Although the  appellant attacks

          this finding  hammer  and  tongs, we  believe  it  is  adequately

          supported by the record.

                    The nisi prius roll  includes a summary of Carol  Ann's

          blood  toxicity levels  (which,  after lead  paint poisoning  was

          first diagnosed, remained abnormally  high throughout her stay at

                                          9

          2 North Avenue).  In explaining the significance of the data, Dr.

          Graef testified that the sharp increases which occurred from time

          to time  (sometimes called  "spikes") were directly  traceable to

          the child's sporadic  ingestion of  lead paint chips.   The  data

          showed   and  Dr. Graef  confirmed   that  several such  episodes

          occurred during  the interval when the  appellant's policies were

          in  force.   Judge  Tauro  queried Dr.  Graef  as to  whether  he

          regarded  the spikes as "a manifestation of lead that [Carol Ann]

          had in her  system" before May  4, 1985.   The witness  responded

          negatively,  indicating  that  such  levels  were  "spontaneously

          reportable."      Moreover,   in   the   doctor's   opinion   the

          roentgenographic  evidence demonstrated  that Carol  Ann consumed

          additional  chips  of lead  paint  during  the  currency  of  the

          appellant's policies.

                    The district  court's finding that these  new incidents

          caused further injury, see id. at 1165, is also supportable.  Dr.
                                 ___ ___

          Graef spelled out in considerable detail the effects of ingesting

          lead   on  neurological  development   in  early  childhood,  and

          testified  that Carol  Ann had  suffered brain  damage, including

          "significant gaps" in her auditory and verbal performance, as the

          direct  result of  ingesting lead  while USLIC  was on  the risk.
                                             _____________________________

          When  Judge Tauro pressed Dr.  Graef about whether  a tie existed

          between  the  spikes  in  Carol  Ann's  toxicity levels  and  her

          resulting injuries,  the doctor responded in the affirmative.  He

          testified,  among other things,  that the predictable consequence

          of  each major  ingestion of  lead paint  "probably is  that some

                                          10

          damage  is done  to the  brain," and  that increases  in toxicity

          levels measurable by standard tests "reflect[] injury."6

                    Given this  dialogue and  certain other insights    for

          example,  the appellant neither  impeached Dr.  Graef's testimony

          nor adduced any contradictory evidence    we cannot impute  clear

          error  to the judge's finding  that Carol Ann  Razza suffered new

          and  further  injuries  during  the  relevant  coverage  periods.

          Accordingly,  coverage  was  triggered  and  the  district  court

          correctly shifted the burden to the appellant to demonstrate that

          some  contractual  exclusion or  other policy  defense foreclosed

          indemnification.

                    The appellant claims to  have carried that burden twice

          over.  The  district court  disagreed.  It  is to those  disputed

          defenses that we now turn.

                         B.  The Post-Manifestation Doctrine.
                         B.  The Post-Manifestation Doctrine.
                             _______________________________

                    The  appellant raises  no  contractual  provision as  a

          defense  to coverage  here.   Instead, it  contends that  what it

          euphemistically terms  the "post-manifestation doctrine"  has the

          same inhibitory effect.  Under the guise of this euphemism, USLIC

          hypothesizes  that  when a  disease  process  of a  certain  type

          manifests itself  before an insurance policy  incepts, all future

          injury  of the same genre should be  deemed to relate back to the

          original condition  even if  the victim incurs  subsequent injury
                              
          ____________________

               6There is nothing unorthodox about these views.  Courts have
          found  in other (similar) cases that each ingestion of lead paint
          leads  to discrete  injury.   See,  e.g.,  USLIC v.  Farley,  626
                                        ___   ____   _____     ______
          N.Y.S.2d  238, 239-40 (App. Div. 1995); General Accident Ins. Co.
                                                  _________________________
          v. Idbar Realty Corp., 622 N.Y.S.2d 417, 419 (Sup. Ct. 1994).
             __________________

                                          11

          from continued exposure to the causative agent during the  policy

          period.   As applied in this case, the hypothesis holds that if a

          person contracts  lead poisoning prior  to the  inception of  the

          tortfeasor's insurance policy but continues to be exposed to lead

          paint and thereby suffers  further injury while the policy  is in

          force,  any claim that she may assert against the tortfeasor will

          not be covered because lead poisoning constitutes a single injury

          "occurring" before the policy incepted.

                    As doctrines go, this one has very little in the way of

          a pedigree.   The  appellant  cites no  reported case  discussing

          anything  that resembles  such a  doctrine,7 and  our independent

          research has  come up  equally dry.   In any  event, we  need not

          tarry over the  hypothesis.   As we have  already indicated,  see
                                                                        ___

          supra  Part III(A), the  district court had  before it compelling
          _____

          evidence  that Carol  Ann Razza  ingested several "big  meals" of

          lead paint chips  while the appellant's  policies were in  force,

          and Dr.  Graef  testified that  each  such ingestion  caused  (or

          potentially could  cause) discrete  injury.   On this  basis, the

          district court  warrantably found  a "clear nexus"  between Carol

          Ann's "big meals" and the spikes in her toxicity levels.   USLIC,
                                                                     _____

          882 F. Supp. at  1165.  Each exposure can,  therefore, reasonably

          be seen as a  separate, injury-producing occurrence.  No  more is

                              
          ____________________

               7The  appellant does direct us  to an opinion  of a Maryland
          state court, Hartford  Mut. Ins.  Co. v. Jacobson,  536 A.2d  120
                       ________________________    ________
          (Md. App. 1988), and two unpublished dispositions of trial judges
          (one  federal and one state), as  "authority" for the "doctrine."
          But  none of these cases involves comparable issues or facts, and
          none of them adverts by name to the elusive doctrine.

                                          12

          exigible.

                             C.  The Known Loss Doctrine.
                             C.  The Known Loss Doctrine.
                                 _______________________

                    The  appellant  next asseverates  that  the  known loss

          doctrine  renders  the  risk  of  further  injury  to  Carol  Ann

          uninsurable  because Selman knew  prior to the  inception date of

          the  initial policy  that his  apartment building  contained lead

          paint and  that Carol Ann was suffering from lead poisoning.  The

          argument takes the following  form.  The purpose of  insurance is

          to  protect against misfortune by permitting an actor to whom the

          law assigns  the risk of a  particular kind of loss  to shift the

          burden of it to  an institution better able to assume  and manage

          the   particular  risk   through   diversification  across   risk

          categories.  See Group Life & Health Ins. Co. v.  Royal Drug Co.,
                       ___ ____________________________     ______________

          440 U.S. 205, 211 (1979); see also 1 Ronald A. Anderson & Mark S.
                                    ___ ____

          Rhodes,  Couch on  Insurance (Second)     1:3,  2:7 (rev.  2d ed.
                   ____________________________

          1984).  Thus, the presence of risk runs to the very essence of an

          insurance contract.  Where there is no risk  of loss   as where a

          loss  has  already  occurred  before  a  policy  takes  effect   

          insurance  ceases to  serve its socially  utile purpose  of risk-

          spreading.   Hence, the law, embodied in the known loss doctrine,

          precludes  coverage when  the  insured knows  in  advance of  the

          policy's effective date that a specific loss has already happened

          or is substantially certain to happen. 

                    There are  two iterations  of the known  loss doctrine.

          The  doctrine exists both as  a function of  the standard general

          liability insurance contract and  at common law.  We  discuss the

                                          13

          first iteration briefly, mainly for the sake of completeness.

                    Since  1966,  the  insurance industry  has  defined  an

          "occurrence"  as  that  word  is  used  in  the standard  general

          liability policy to  include only accidents that result in bodily

          injury or property damage that is "neither  expected nor intended

          from the  standpoint of the  insured."  See  Barry R.  Ostrager &
                                                  ___

          Thomas  R.  Newman, Handbook  on  Insurance  Coverage Disputes   
                              __________________________________________

          8.03[a] (7th  ed. 1994); 11 Couch,  supra,   44:289.   Under this
                                              _____

          policy provision (which graces the policies in question here), it

          has been held  that if an insured  "knew . .  . that there was  a

          substantial  probability that certain  consequences" would result

          from his acts or  omissions, there is no "occurrence"  within the

          meaning  of a general liability  policy, and, hence, no coverage.

          City of  Carter Lake v.  Aetna Cas.  & Sur. Co.,  604 F.2d  1052,
          ____________________     ______________________

          1058-59 (8th  Cir. 1979).   In this case,  the appellant did  not

          brief a contract-based  coverage defense on  appeal, and at  oral

          argument appellant's counsel expressly disclaimed any reliance on

          such a  defense.  Accordingly, we do not pursue this iteration of

          the known loss doctrine.

                    The common  law version of  the known loss  doctrine is

          part of the  warp and woof of  Massachusetts insurance law.   The

          Massachusetts Supreme Judicial Court (SJC) recently inspected its

          composition in SCA Servs., Inc.  v. Transportation Ins. Co.,  646
                         ________________     _______________________

          N.E.2d 394, 397-98 (Mass.  1995).  There, the insured  operated a

          chemical  waste  site in  Illinois.   Local  residents  brought a

          nuisance  action, alleging that  its activities on  the site were

                                          14

          contaminating the local water supply, causing subsidence, filling

          the air with dust,  and permitting the escape of  noxious gasses.

          See Village of Wilsonville  v. SCA Servs., Inc., 426  N.E.2d 824,
          ___ ______________________     ________________

          828-30 (Ill.  1981).  The trial  court declared the site  to be a

          public nuisance and closed the plant.  The Illinois Supreme Court

          affirmed.  See id. at 827.
                     ___ ___

                    Subsequently,  SCA  purchased   an  insurance   policy.

          Several of the same residents then brought a class action seeking

          damages for personal injuries suffered  as the result of exposure

          to the conditions  limned in  the initial nuisance  action.   SCA

          sought a declaration  that its insurer had  a duty to defend  and

          indemnify with respect to  the class action.  The  SJC determined

          that,  because  the prior  adjudication  in Illinois  put  SCA on

          actual notice that the class members had suffered injuries as the

          result  of  the  same conduct  and  conditions  that  led to  the

          shutdown of the  site, it  had "full knowledge"  of its  probable

          liability  for their  damages prior  to purchasing  the insurance

          policy.  SCA,  646 N.E.2d at 398.  Thus,  the known loss doctrine
                   ___

          barred coverage inasmuch as the concept of insurable risk becomes

          a  fiction  "where  an  insured  knows  there  is  a  substantial

          probability  that it will suffer or has already suffered a loss."

          Id. at 397.
          ___

                    Before we  can  measure the  case  at bar  against  the

          specifications of the common  law doctrine as elucidated in  SCA,
                                                                       ___

          we  must address two threshold questions.  The first concerns the

          standard   objective or subjective   by which the insured's state

                                          15

          of  mind  is  to be  gauged.   Though  Massachusetts  law  is not

          explicit  on the point, there is spoor  for the cognoscenti.  SCA
                                                                        ___

          strongly  suggests the use of a  subjective standard to determine

          whether  a given  loss  was  "known."    See  id.  (stating  that
                                                   ___  ___

          "insurance risk is eliminated . .  . where an insured knows, when

          it purchases  a policy, that  there is a  substantial probability

          that it will suffer or has already suffered a loss").  The quoted

          language is  almost  identical  to  that  used  (and  more  fully

          explicated) in Quincy Mut. Fire Ins. Co. v. Abernathy, 469 N.E.2d
                         _________________________    _________

          797  (Mass.  1984).    There,  dealing  with  the  contract-based

          iteration of the known loss  doctrine, the SJC explicitly adopted

          a  subjective test.  See id.  at 800.  Moreover,  SCA and all the
                               ___ ___                      ___

          cases  relied  on  in SCA  deal  with  insureds  that had  actual
                                ___

          knowledge of a probable  loss prior to securing coverage.8   See,
                                                                       ___

          e.g., Bartholomew v. Appalachian  Ins. Co., 655 F.2d 27,  28 (1st
          ____  ___________    _____________________

          Cir. 1981) (insured had  actual knowledge of probable  loss based

          on its  own intentional misuse  of a  machine that  had on  prior

          occasions caused injury); Gloucester v. Maryland Cas. Co., 668 F.
                                    __________    _________________

          Supp.  394, 403  (D.N.J. 1987) (insured  had actual  knowledge of

          probable  loss due  to environmental  contamination based  on the

          closure of  its landfill  by state authorities);  Outboard Marine
                                                            _______________

          Corp.  v. Liberty Mut. Ins.  Co., 607 N.E.2d  1204, 1209-11 (Ill.
          _____     ______________________

          1992) (insured  had  actual knowledge  of  probable loss  due  to

                              
          ____________________

               8The  SJC  repeatedly  emphasized  the  presence  of  actual
          knowledge both in the case before it and in its discussion of the
          precedents on  which it relied.   See, e.g.,  SCA, 646 N.E.2d  at
                                            ___  ____   ___
          397, 398.

                                          16

          environmental   contamination  based   on  receipt   of  an   EPA

          administrative   order   citing  it   as   the   source  of   the

          contamination).

                    Guided by these clearly visible signposts, we hold that

          the  applicability vel  non of  the known  loss doctrine,  in its
                             ___  ___

          common law form, depends on the insured's actual knowledge of the

          looming loss.  The test, therefore, is subjective, not objective.

                    The remaining threshold issue  relates to the devoir of

          persuasion.  The  SJC apparently  placed the burden  of proof  on

          this  issue on  the  insurance company  in  a suit  invoking  the

          contract-based interaction of the known loss doctrine, see, e.g.,
                                                                 ___  ____

          City  of Newton  v.  Krasnigor, 536  N.E.2d 1078,  1081-82 (Mass.
          _______________      _________

          1989), and we see no reason why the court would  take a different

          tack in allocating the  burden of proof on the  counterpart issue

          in  the  common  law  setting.   Moreover,  Massachusetts  courts

          generally  place  the burden  of proof  on  the party  seeking to

          invalidate  or avoid the  application of a  contract on analogous

          grounds, such as when an  insurer raises the defense of  fraud in

          the procurement of insurance.  See, e.g., Roger Williams  Grocery
                                         ___  ____  _______________________

          Co. v. Sykes, 258 N.E.2d 553, 555 (Mass. 1970).  Finally, the SJC
          ___    _____

          appears to have treated the known loss doctrine as an affirmative

          defense  in SCA, mimicking a majority of other courts, see, e.g.,
                      ___                                        ___  ____

          Gloucester, 668 F. Supp.  at 402-03, and the usual  rule, honored
          __________

          by Massachusetts as by most jurisdictions, is to place the burden

          of proving affirmative defenses on the  party asserting them, see
                                                                        ___

          19  Couch,  supra,     79:368  (discussing  various   affirmative
              _____   _____

                                          17

          defenses and assigning burden of proof to insurer).

                    For these  reasons, we  hold that,  under Massachusetts

          law,  the  common law  version of  the  known loss  doctrine only

          applies  when  the  insured  actually  knows  on  or  before  the

          effective date of  the policy either that a loss  has occurred or

          that one is substantially  certain to occur.  Relatedly,  we hold

          that the  common law  version of  the known loss  doctrine is  an

          affirmative  defense  to  a   suit  on  a  Massachusetts  policy.

          Accordingly,  the  insurer  bears   the  burden  of  proving  the

          insured's actual knowledge.

                    The district  court  seems to  have  anticipated  these

          rulings.   It treated the  known loss doctrine  as an affirmative

          defense.   After reviewing the evidence, it found the defense not

          proven.   See USLIC, 882 F.  Supp. at 1164.   The court concluded
                    ___ _____

          that a "significant portion" of the injuries asserted arose after

          May 4, 1985, and therefore could  not be classified as "known" on

          that date.  Extrapolating from this finding, the court held that,

          to the  extent Carol  Ann's injuries  stemmed from  ingestions of

          lead paint occurring after May 4, 1985, but before the expiration

          of appellant's second (and last) policy, Selman had not sought to

          insure against a known loss.  See id.  While there was ample room
                                        ___ ___

          for  the court  to come  down the  other way,  we think  that its

          crucial finding withstands scrutiny.

                    To be sure, the  matter is not open  and shut.   Selman

          knew  by  the spring  of 1985  that  his building  contained lead

          paint.  He also knew that Carol Ann Razza was suffering from lead

                                          18

          poisoning.   But  these two  facts, naked  and unadorned,  do not

          necessarily  prove  that Selman  insured  against  a known  loss.

          Three  critical elements are lacking.  First, there is nothing in

          the record to show  definitively that the lead paint  in Selman's

          building  constituted the  source of  Carol Ann's  lead poisoning

          (and, more to  the point,  that Selman knew  of the  connection).

          Without such a showing,  the known loss doctrine does  not apply.

          Second, nothing  in the  record establishes that  Selman actually

          knew that  Carol Ann would  suffer further injury  from continued

          exposure to lead paint, and the trial court found in essence that

          he lacked any such appreciation of the  disease process.  See id.
                                                                    ___ ___

          Third, by late March of 1985   six weeks before  the first of the

          USLIC  policies became effective    the Razzas were  living in an

          apartment  in  which  lead  removal was  at  least  95% complete.

          Selman could easily  have assumed  that Carol Ann  was no  longer

          exposed  to  any  significant  dose  of  lead  paint,  and  would

          therefore suffer  no  further  injury.    These  are  not  merely

          theoretical possibilities.

                    The   deposition  testimony  contained  in  the  record

          strongly suggests that Selman had not drawn any connection in his

          mind between the  ongoing removal of lead paint at 2 North Avenue

          and the future medical  risks that the condition of  the premises

          portended to  Carol Ann Razza.  The court had the right to credit

          that  testimony, see Anthony v.  Sundlun, 952 F.2d  603, 606 (1st
                           ___ _______     _______

          Cir. 1991) (explaining that in a bench trial, credibility choices

          are  for the trier); FDIC  v. La Rambla  Shopping Ctr., Inc., 791
                               ____     ______________________________

                                          19

          F.2d 215, 222  (1st Cir. 1986)  (similar), especially since  many

          familiar  diseases, once  contracted    measles,  mumps, the  HIV

          virus,  to name a few   do not  result in further injury based on

          repeated  exposure to the causative  agent.  There  is nothing in

          the  record to show that Selman knew that, unlike these diseases,

          lead poisoning was a cumulative disease.

                    The  district court's  finding is  strengthened  by the

          utter  lack of any evidence  that Selman attempted  to conceal or

          misrepresent the  presence of lead  paint in his  apartment house

          when   he  applied  for  insurance.    To  the  extent  that  the

          appellant's  application form did  not request  such information,

          the appellant was the author of  its own misfortune.  See Vappi &
                                                                ___ _______

          Co.  v. Aetna Cas. & Sur. Co.,  204 N.E.2d 273, 276 (Mass. 1965).
          ___     _____________________

          It   does  not  seem   unfair  to  hold   an  insurance  company,

          knowledgeable  about  the  prevalence  of  lead  paint  in  older

          buildings  and hardened by the  rough and tumble  of the business

          world, to the consequences of which King Solomon long ago warned.

          See Proverbs 11:15 ("He that is surety for a stranger shall smart
          ___

          for it.").

                    The short of it is that the appellant had the burden to

          prove that its  insured knew of a probable loss, and the district

          court's finding that  he did not, viewed  in light of the  record

          evidence, is not clearly erroneous.

                    The  appellant  attempts to  steer  the  appeal into  a

          different channel by way of two expedients.  First, it asks us to

          treat this case  and SCA as a matched pair of ponies.  But SCA is
                               ___                                   ___

                                          20

          a  horse  of  a  much  different  hue.    The  Agency's  informal

          notification  that  Selman's  apartment  building  contained lead

          paint  is at  a considerable  remove from  the adjudication  of a

          nuisance.    The  agency action  here  at  issue  lacks both  the

          finality  and   the  preclusive  effect  of   a  court  judgment.

          Moreover,  the nature and causes  of the injuries  alleged in the

          class action against SCA  were identical to those alleged  in the

          prior nuisance suit.   As the SJC observed, the  insured actually

          knew on the basis of the earlier litigation that the class action

          plaintiffs claimed to have been injured    and it also knew  that

          those claims  had already  been adjudicated (unfavorably  to it).

          The scenario here is not the same.  The Agency  in this case only

          informed Selman that his apartment building contained lead paint;

          it did not conclude that any particular injuries, much less Carol

          Ann's injuries, had been caused by the lead in Selman's building.

                    In a nutshell, accepting  the appellant's view that, as
                                                                         __

          a matter  of  law,  the  known  loss  doctrine  encompasses  this
          _________________

          situation  would take us several steps beyond the holding in SCA.
                                                                       ___

          We  are unwilling to take those steps.  The appellant, presumably

          to  suit  its  own  convenience,  selected  a  federal  forum  in

          preference to  an available  state forum.   It  has  no right  to

          grouse  if a  federal court,  sitting in  diversity jurisdiction,

          declines to push state law past previously established frontiers.

          See  Martel v.  Stafford, 992  F.2d 1244,  1247 (1st  Cir. 1993);
          ___  ______     ________

          Porter  v. Nutter, 913 F.2d 37, 41  (1st Cir. 1990).  The organic
          ______     ______

          growth of state law is best left to state courts, particularly in

                                          21

          areas that  traditionally have  been committed to,  and regulated

          by, the states.  Insurance is such a field.

                    The  appellant's  second effort  to skirt  the district

          court's  factfinding  involves  its  contention  that  the  court

          applied the  wrong legal  standard in determining  whether Selman

          knew  of his  likely liability  to Carol  Ann Razza  for injuries

          related  to  future ingestions  of lead  paint.   This  gambit is

          conceptually   sound  in  the  sense  that  a  "finding  of  fact

          predicated  upon, or  induced  by, a  misapprehension  of law  is

          robbed  of its customary vitality."   RCI Northeast,  822 F.2d at
                                                _____________

          203.   The concept is inoperative, however, when a party attempts

          to  play the  artful  Dodger, cf.  Charles Dickens,  Oliver Twist
                                        ___                    ____________

          (1838), recasting its objections to the district court's findings

          of fact as disputes about the governing law.  See Reliance Steel,
                                                        ___ ______________

          880  F.2d at  577 (declaring  that litigants  may not  "profit by

          dressing factual disputes in `legal' costumery").  So it is here.

                    The appellant derides the district court's finding that

          Selman  did not know Carol  Ann Razza would  sustain new injuries

          after May 4, 1985.   Embedded in this finding,  appellant claims,

          is  the legal benchmark by which the district court evaluated the

          evidence  in  determining  Selman's  state of  knowledge.    This

          benchmark is wrong, appellant postulates, because the substantive

          law that  governs  Selman's putative  liability is  based not  on

          knowledge  but on strict liability.  See Bencosme v. Kokoras, 507
                                               ___ ________    _______

          N.E.2d 748, 749 (Mass. 1987).

                    This  is  a red  herring.    Whether Massachusetts  law

                                          22

          renders  Selman  strictly  liable  for  Carol  Ann's  damages  is

          irrelevant to  whether Selman  knew he  was virtually  certain to

          experience a  loss  as  the  inevitable result  of  his  tenant's

          continued exposure to lead  paint during the policy periods.   It

          is  the  answer  to  this pivotal  question  that  determines the

          applicability of the known loss doctrine to this case    and that

          question, as we have said, is predominantly a question of fact.

                    To  say  more would  be  supererogatory.   Because  the

          district court's findings of fact  are not clearly erroneous, its

          rejection of the appellant's known loss defense must be upheld.

                         D.  Applicability of Policy Limits.
                         D.  Applicability of Policy Limits.
                             ______________________________

                    In this instance, the appellant issued two  consecutive

          one-year policies to  Selman.  Each policy contains a stipulation

          limiting the  insurer's liability  to $300,000 "per  occurrence,"

          and each policy states  that "continuous or repeated exposure  to

          conditions" is  to be treated as  a single "occurrence."   In its

          complaint for  declaratory relief, the appellant  prayed that, if

          it were found to have  any obligation at all to  indemnify Selman

          vis-a-vis the Razza  claims, then  in such event,  the limits  of
          _________

          liability contained in its two  policies should be interpreted so

          as to  cap the insurer's  total potential liability  at $300,000.

          The district court did not entertain this prayer for relief.  The

          appellant now invites us to do so.  We decline the invitation.

                    In general, declaratory relief is  discretionary.  See,
                                                                       ___

          e.g., Ernst & Young  v. Depositors Economic Protection  Corp., 45
          ____  _____________     _____________________________________

          F.3d 530, 534 (1st  Cir. 1995); El Dia, Inc.  v. Hernandez Colon,
                                          ____________     _______________

                                          23

          963 F.2d 488, 493-94 (1st Cir. 1992).  Thus, we view the district

          court's withholding of a declaration in regard to the appellant's

          "policy  limit" question  through  a deferential  glass.   In the

          process, we focus our  inquiry on the whole of  the circumstances

          confronting the district court.  See El Dia, 963 F.2d at 492.
                                           ___ ______

                    The  trial judge  did  not spell  out  his reasons  for

          declining to declare the  parties' rights in this regard.   While

          courts should  articulate grounds for their  actions, see Pearson
                                                                ___ _______

          v. Fair 808  F.2d 163, 165-66  (1st Cir. 1986) (per  curiam), the
             ____

          district court's failure to do so here is not fatal, as the basis

          for  the  declination  seems  evident.   The  insurance  policies

          contain no definition of the operative terms (e.g., "continuous,"

          "repeated," "conditions");  and the  record  suggests that  there

          were many conditions  to which  Carol Ann Razza  might have  been

          exposed and  which could  have been  sources  of her  deleterious

          ingestion of lead paint.   Consequently, the lack  of development

          in the record concerning  the possible sources of the  lead paint

          ingested by  Carol Ann  placed  the lower  court  at so  great  a

          disadvantage  that it reasonably could conclude that it was in no

          position to  rule  intelligently  on  the  appellant's  request.9
                              
          ____________________

               9Furthermore, the appellant made no compelling demonstration
          of a need for the declaration.  For instance, there is no showing
          that  Carol  Ann's claim  against  Selman  for the  injuries  she
          sustained within the coverage period could support  a recovery of
          more than $300,000,  and, thus,  insofar as the  trial court  was
          concerned, the  policy limit  question may  have  appeared to  be
          academic.  The Declaratory  Judgment Act notwithstanding,  courts
          have no obligation to answer hypothetical questions.  See El Dia,
                                                                ___ ______
          963  F.2d  at  494  (cautioning  that  courts  should  not  issue
          declaratory judgments  when the  need is remote  or speculative);
          Washington  Pub. Power Supply Sys. v. Pacific N.W. Power Co., 332
          __________________________________    ______________________

                                          24

          Accordingly, the  court acted within the realm  of its discretion

          in refusing the declaration.   See, e.g., Askew v.  Hargrave, 401
                                         ___  ____  _____     ________

          U.S. 476, 478-79 (1971)  (cautioning against grant of declaratory

          judgment on the  basis of sparse  and inadequate record);  Public
                                                                     ______

          Affairs  Assocs., Inc. v. Rickover, 369 U.S. 111, 112 (1962) (per
          ______________________    ________

          curiam)  (similar); A.  L. Mechling  Barge Lines, Inc.  v. United
                              __________________________________     ______

          States, 368 U.S. 324, 330-31 (1961) (similar).
          ______

          IV.  CONCLUSION
          IV.  CONCLUSION

                    We need go no further.  This case pivots on  the facts,

          not on the  law   and factual issues that are resolved in a bench

          trial may not  freely be  relitigated on appeal.   Discerning  no

          error, we hold the appellant to its contractual duty.

          Affirmed.
          Affirmed.
          ________

                              
          ____________________

          F.2d 87, 88 (9th Cir. 1964) (similar).

                                          25