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Dryden Oil Co. of New England v. Travelers Indem. Co.

ELR Citation: 26 ELR 21623
Nos. 95-1608, 91 F.3d 278/(1st Cir., 08/05/1996)

The court holds that under Massachusetts law the insurers of an oil manufacturing company have no duty to defend and indemnify the company under their property damage and personal injury policies against a suit by the company's former landlord to recover damages for oil and hazardous material contamination at property it leased to the company. The court first holds that the property damage coverage in the policies imposed no duty on the insurers to defend the company. The court holds that a fair reading of the policies' absolute pollution-exclusion clause bars coverage for any form of pollution. Moreover, the absolute pollution-exclusion language in the policies would not have permitted an objectively reasonable policyholder to expect liability coverage for contamination resulting from spills or releases of oil, industrial lubricant, or hazardous material during the transfer, storing, mixing, and manufacturing process as alleged in the landlord's complaint. The court next holds that liability coverage for the landlord's nonpollution breach of contract claims that were filed after the company no longer leased the property is barred by an owned-or-leased premises exclusion. The liability policies explicitly restricted coverage to property damage occurrences during the policy period. The court next holds that personal injury liability coverage for wrongful entry, eviction, or other invasion of the right of private occupancy imposed no duty on the insurers to defend or indemnify the company against the former landlord's claims. The claims do not allege wrongful conduct by a landlord against its tenant. The court then holds that the insurer whose property insurance policy insured the company against "all risks" of direct or physical loss or damage assumed no duty to defend the company against the landlord's action. Although the policy affords the insurer the option to defend its insured it imposes no duty to defend. The court, however vacates and remands the district court decision that the insurer had no duty to indemnify the company under the all risks property insurance policy. No party identified policy language limiting the all risks coverage to damage caused by third parties, or excluding coverage for damages caused to the property by the company.

Counsel for Plaintiffs
Darragh K. Kasakoff
Seder & Chandler
Burnside Bldg.
339 Main St., Worcester MA 01608
(508) 757-7721

Counsel for Defendants
John A. Nadas
Choate, Hall & Stewart
Exchange Pl.
53 State St., Boston MA 02109
(617) 248-5000

Before CYR, Circuit Judge, BOWNES, Senior Circuit Judge, and BOUDIN, Circuit Judge.