Casella Waste Systems, Inc., et al. v. Steadfast Insurance Company (Lawyers Weekly No. 09-008-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2016-2521 BLS 1
CASELLA WASTE SYSTEMS, INC. et al1
vs.
STEADFAST INSURANCE COMPANY
MEMORANDUM AND ORDER ON STEADFAST INSURANCE COMPANY’S
MOTION FOR SUMMARY JUDGMENT
This is an insurance coverage dispute between a company engaged in the landfill business
and its insurer. The insurer, defendant Steadfast Insurance Company, issued a policy called Z
Choice Pollution Liability (the “Policy”) to plaintiff, Casella Waste Systems, Inc., naming
Casella and its subsidiary, Southbridge Recycling & Disposal Park, Inc. (“SRDP”), as insureds.
The Policy covers claims made against the insureds during the Policy period of April 30, 2015 to
June 15, 2016. Following notification by Casella in October 2015 to the Massachusetts
Department of Environmental Protection (“DEP”) of the detection of pollution flowing from
Casella’s property to neighboring property, a claim by DEP, as defined in the Policy, arose.
Casella sought insurance coverage for the claim. Steadfast denied coverage. Casella sued for
breach of contract, violation of G.L. c. 93A and for a declaration of coverage. Steadfast now
moves for a summary judgment declaring there is no coverage under the Policy. For the reasons
described below, summary judgment must be denied because there are material issues of fact that
1 Southbridge Recycling & Disposal Park, Inc.
1
are genuinely in dispute.
BACKGROUND
The following facts are taken from the parties’ Statement of Undisputed Material Facts
and Responses Thereto (“SUMF”), supplemented by documents and affidavits in the summary
judgment record.
The coverage at issue under the Policy is what was provided under Coverage C: Cleanup
Costs – New Pollution Event. Under Coverage C, Steadfast is obligated to pay “cleanup costs” to
the extent resulting from a “new pollution event” that migrates beyond the boundaries of a
“covered location” if that “new pollution event” is first “discovered” during the policy period.
The obligation to pay includes “cleanup costs” that the insured is legally obligated to pay
resulting from a third-party “claim.” The Policy also contains an exclusion from coverage for a
“known pollution event.” The words in quotes are defined terms in the Policy.
Casella seeks to be reimbursed and indemnified by Steadfast for all past and future
cleanup costs incurred on account of a claim by DEP. There is no dispute that (i) Casella incurred
cleanup costs, as defined, (ii) arising from migration of pollution from a covered property, as
defined, and (iii) Casella received and reported to Steadfast a claim, as defined, coming from
DEP. The dispute between the parties that is the crux of this lawsuit is whether the DEP claim
resulted from a “new pollution event” that first commenced in the Policy period and was not
known by Casella prior to the commencement of the Policy
The DEP claim concerns a landfill in the Town of Southbridge, Massachusetts operated
by plaintiff/insured SRDP. Beginning in 2002, the landfill began an annual residential well
monitoring program under which residents within ½ mile of a portion of the landfill could
2
request testing of their potable wells. On October 23, 2015, Casella, by its consultant, gave notice
to DEP that SRDP’s well testing in September 2015 had detected certain contaminants above
applicable standards in the wells of three residences. The three residence were along a road called
H. Foote Road and the addresses were 65, 74 and 81 H. Foote Road. Of the three residences, it
was only at 65 where two contaminants – – trichloroethene (“TCE”) and 1,1-dichloroethene
(“DCE”) were detected in the well water at concentrations greater than the Massachusetts
Maximum Contaminant Level (“MMCL”). In fact, the detection of TCE and DCE at 65 H. Foote
Road was nearly double the applicable MMCLs. This was the first time since the well testing
program had begun that TCE and DCE were detected at concentrations above the MMCLs in any
residential well that participated in the program. The residence at 65 H. Foote Road had not
participated in the well testing program until December 2014, and its drinking water was not
tested until September 24, 2015.
The notice to DEP also referenced that another contaminant, 1,4 dioxane (“Dioxane”),
was detected in the well water of all three residence at 65, 74 and 81 H. Foote Road. The
concentration levels were all above the Massachusetts Drinking Water Guideline. Also, TCE and
DCE were found in the water of 81 H. Foote Road at levels below MMCL.
Prior to the September, 2015 detection of TCE and DCE at levels above MMCL at 65 H.
Foote Road, there had been detections, as part of the well testing program, of TCE and DCE
below MMCL, as well as detections above reportable conditions of Dioxane in the drinking
water supply of some of the residences on H. Foote Road. None of these detections, however,
caused Casella to be assigned a release tracking number under the 21-E Program or to be
designated as a potentially responsible party. No claim was asserted by DEP and no remedial
3
action was required because of these earlier detections.
As a result of the notice to DEP in October 2015, the DEP for the first time assigned a
Release Tracking Number pursuant to its 21-E Program and identified SRDP as a potentially
responsible party for cleanup costs. Casella prepared, as required by DEP, an Immediate
Response Action Plan which was subsequently approved by DEP. In March 2017, Casella
reached an agreement in principle with the Town of Southbridge, the Town of Charlton and the
DEP to resolve the DEP claim. The agreement in principle was later finalized by way of an
Administrative Consent Order in May 2017, providing, among other things, for the sharing of
costs between DEP and SRDP of up to $ 10 million to install a municipal waterline in the Town
of Charlton. Casella became legally obligated to pay cleanup costs and take other remedial
action. Casella incurred more than $ 2.5 million in cleanup costs in connection with the DEP
claim and expects to incur additional costs.
On December 15, 2015, Casella provided notice to Steadfast of an occurrence or claim by
attaching a letter from Casella’s consultant to DEP. By letter dated April 8, 2016, Casella
notified Steadfast of the DEP claim. Steadfast denied coverage for the DEP claim, by letter dated
April 27, 2016, based on the “known pollution event” exclusion. This lawsuit followed.
DISCUSSION
A claim cannot be resolved on a motion for summary judgment where “a reasonable jury
could return a verdict for the nonmoving party.” Dennis v. Kaskel, 79 Mass. App. Ct. 736, 741
(2011), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For this reason, in
evaluating the motion for summary judgment the court “must . . . draw all reasonable
inferences” from the evidence presented “in favor of the nonmoving party,” as a jury would be
4
free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). A request
for summary judgment must be denied where a claim turns on disputed issues of fact or on
disputed inferences from admitted facts. See Molly A. v. Commissioner of Dept. of Mental
Retardation, 69 Mass. App. Ct. 267, 284 (2007)(“summary judgment cannot be granted if the
evidence properly before the motion judge reveals a genuine issue of disputed material fact”);
Flesner v. Technical Communications Corp., 410 Mass. 805, 811-812 (1991) (“Where a jury can
draw opposite inferences from the evidence, summary judgment is improper.”).
Here, there are at least two major disputes of fact that are material to the legal issue of
whether insurance coverage exists under the Policy. Those disputes are (1) whether a relevant
“pollution event” was known to a “responsible insured” prior to the commencement of the
Policy, and (2) whether the “claim” submitted by Casella to Steadfast resulted from a “new
pollution event.” The disputes coalesce around the events at 65 Foote Road.
(1) Knowledge of Pollution Event
In SUMF Nos. 19, 20 and 45, Steadfast asserts that a 2006 collection of samples of water
at 65 H. Foote Road showed some level of TCE and DCE. Steadfast claims that the samples were
part of the residential well program of testing by SRDP. Casella denies these facts, based on
affidavits stating that the 2006 detections were not part of its well program. The affidavits aver
that the 2006 results were not known by Casella until late 2015. In SUMF No. 85, a statement of
fact submitted by Casella, Steadfast then admits that Casella was not aware of the 2006 report of
TCE and DCE at 65 H. Foote Road before April 2015 (the commencement of the Policy). This
contradiction suggests an unresolved issue of fact. Moreover, Steadfast contends in response to
SUMF No. 85 that detection by Casella’s well testing program prior to 2015 at other residences
5
on H. Foote Road revealed at least some level of TCE and DCE in the water migrating to the
residences along H. Foote Road. While not stated with precision, Steadfast appears to argue that
the known pollution along H. Foote Road may be sufficient to ascribe knowledge of pollution at
65 H. Foote Road to Casella.
Thus, the facts of what did Casella know and when did it know it, are at issue. The
insurance provided by the Policy does not apply to a “pollution event” that was known to Casella
before the commencement of the Policy. A “pollution event” is defined in the Policy to mean
“the discharge, release, or escape of any solid, liquid, gaseous or thermal irritant, contaminant or
pollutant . . . into or upon land . . . or any watercourse or body of water including groundwater.”
Whether there was a pollution event known to Casella prior to the commencement of the policy
at 65 H. Foote Road or at any other relevant residences presents factual issues that must be
determined by a jury.
(2) What Caused the Claim
The question of what caused DEP’s claim brings the focus to 65 H. Foote Road. That is
because Steadfast’s obligation to pay under the Policy is triggered when Casella is legally
obligated to pay “as a result of” a “claim.”
The Policy defines “claim” as a “written demand or written notice received by the
‘insured’ alleging liability or responsibility on the part of the ‘insured.’” There does not appear to
be any dispute that the “claim” in this case is the assertion of liability of SRDP and Casella by
DEP.2 It is the position of Casella that the claim by DEP “resulted from” (quoting the language of
2 On March 9, 2016, Casella provided Steadfast with notice of a letter from legal counsel
to residents in the surrounding area of H. Foote Road. That letter threatened a lawsuit under
federal law for the alleged contamination of drinking water. By letter dated April 5, 2016,
6
the Policy) the discovery in September 2015, of TCE and DCE at levels in excess of MMCL at
65 H. Foote Road. Stated another way, Casella contends that but for the discovery of high levels
of TCE and DCE at 65 H. Foote Road, there would not have been a DEP enforcement proceeding
or a claim at all. In SUMF No. 79, Casella states “[i]t was not until the detection in the drinking
water of TCE and 1,1 DCE above the MMCLs – – which had never occurred previously as part of
the Well Program – – that Casella was faced with a Claim in connection with the Well Program
identifying SRDP as a PRP under M.G.L. c. 21E and mandating that Casella incur extensive
‘cleanup costs’ in the form of a submission of an Immediate Response Action plan and the
performance of extensive remediation in accordance with M.G.L. c. 21E.” Steadfast disputes
SUMF No. 79. In addition, in response to Steadfast’s SUMF Nos. 18 to 44, wherein Steadfast
described detections on dates prior to the inception of the Policy of some level of TCE and DCE
and Dioxin at residences on H. Foote Road, other than number 65, Casella responded that “the
Mass DEP Claim was not as a result of those detections.”
In sum, Casella asserts that (1) it had no knowledge prior to September 2015 of pollution
migrating to 65 H. Foote Road, and (2) the “claim” occurred as a result of what was discovered
in September 2015 at 65 H. Foote Road, and absent the discovery at 65 H. Foote Road there
would have been no claim. The latter assertion will, ultimately, depend on Casella’s ability to
prove what would have occurred in a hypothetical situation: i.e., if only the Dioxane test results
for 74 and 81 H. Foote Road had been reported rather than in combination with the severe
readings of TCE and DCE from 65 H. Foote Road. I find that the facts asserted by Casella, as to
Steadfast denied coverage under the Policy for this potential claim based upon the “known
pollution event” exclusion. While these events are recited at ¶¶ 35 to 37 of the Complaint,
Casella asserts no claim in this lawsuit arising from this correspondence.
7
the lack of any enforcement by DEP prior to the October 2015 report of findings at 65 H. Foote
Road, and the immediate assertion of a claim arising after the October 2015 report, give rise to a
reasonable inference that the claim by DEP resulted from a “new pollution event” at 65 H. Foote
Road.3 The reasonable inference may be rebutted by evidence in the correspondence and
otherwise indicating that DEP required remedial action with respect to 74 and 81 H. Foote Road,
but a triable issue is presented. Moreover, it may be that some of the “claim” asserted by DEP
resulted from pollution at locations other than 65 H. Foote Road as to which Casella was aware
prior to 2015. In that case, a question of allocation of cleanup costs to a covered claim (65 H.
Foote Road) and other locations that may not be covered because of the “known pollution event”
exclusion, may have to be determined. Summary judgment is not available to decide those fact
issues.
CONCLUSION
For the reasons stated above, Steadfast’s Motion for Summary Judgment is DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: September 7, 2017
3 A “new pollution event” is defined in the Policy to mean “a ‘pollution event’ that first
commences after the ‘delimitation date.’” The delimitation date is April 30, 2015.
8

Full-text Opinions