Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

A few decades ago, an oil spill occurred on property in Salem, Massachusetts that was owned by Peabody Essex Museum. The pollution from the spill migrated to the land of a down gradient neighbor, Heritage Plaza. In 2003, Heritage Plaza discovered the subsurface contamination and notified the Museum. The Museum, in turn, gave prompt notice to state environmental authorities and to its insurer, United States Fire Insurance Company (U.S. Fire). The Museum filed a coverage suit against U.S. Fire and, in 2013, secured a judgment requiring U.S. Fire to pay the Museum over $1.5 million, including punitive damages under Mass. Gen. Laws ch. 93A. In this appeal, the parties challenged multiple district court rulings. The First Circuit affirmed the challenged rulings related to insurance coverage but reversed the finding of Chapter 93A liability and vacated the district court’s associated award of punitive damages, holding that U.S. Fire’s conduct under these circumstances was not the kind that the Massachusetts Supreme Judicial Court has condemned as egregious settlement misconduct that is actionable under Chapter 93A. View "Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co." on Justia Law

Creditor extended to Debtor a line of credit, and Debtor granted Creditor, pursuant to an agreement, a security interest in payments due to Debtor under an insurance policy. The agreement provided that Maine law governed all rights under the agreement. Insurer subsequently issued a commercial property insurance policy to Debtor. After a freight train owned by Debtor derailed, Creditor filed a claim under the policy, which Insurer denied. Debtor then filed for Chapter 11 bankruptcy. Creditor instituted an adversary proceeding seeking a declaration regarding the priority of its asserted security interest in any payments due under the policy. Insurer subsequently settled with Debtor and the trustee requiring Insurer to pay $3,800,000 to Debtor in satisfaction of all claims under the policy. Creditor objected to approval of the proposed settlement, arguing that the agreement granted it a first-priority security interest in the settlement. The bankruptcy court concluded that Debtor was entitled to the settlement proceeds free and clear of Creditor’s asserted interest because Creditor had failed to perfect its interest under Maine law. The bankruptcy appellate panel affirmed. The First Circuit affirmed, holding that the courts below did not err in concluding that Debtor was entitled to the proposed settlement payment free and clear of Creditor’s asserted security interest. View "Wheeling & Lake Erie Ry. v. Keach" on Justia Law

Homeowners hired Benchmark Construction Services, Inc. to renovate their Massachusetts home. The homeowners hired an architect to design the renovation plans, and the architect hired a decorative painter to apply decorative painting to the interior walls. The painter's employee, Meghan Bailey, was assigned to the task. While Bailey was applying the decorative paint, she fell from a ladder and was injured. Bailey sued Benchmark, alleging negligence. Benchmark sought a defense from its insurer, United States Liability Insurance Company’s (ULSIC). USLIC determined that Bailey’s claims were not covered under Benchmark’s insurance policy and, therefore, USLIC had no duty to defend or indemnify Benchmark against those claims. USLIC then filed a declaratory judgment action to establish that the insurance policy did not provide coverage for Bailey’s claims and that, consequently, USLIC had no duty to defend or indemnify Benchmark against those claims. The district court entered judgment for USLIC, holding that the policy excluded Bailey’s claims. The First Circuit reversed, holding that Bailey’s claims fell within the bounds of insurance coverage, and therefore, USLIC had a duty to defend and indemnify Benchmark in the underlying negligence suit. View "U.S. Liability Ins. Co. v. Benchmark Constr. Servs., Inc." on Justia Law

In Sprint Commc’ns, Inc. v. Jacobs, the Supreme Court revisited the doctrine of abstention enunciated in Younger v. Harris. That doctrine requires federal courts, in the absence of extraordinary circumstances, to refrain from interfering with certain state proceedings. In this case, David Knight, an employee of Sirva Relocation, LLC, filed a charge of discrimination with the Massachusetts Commission Against Discrimination (MCAD) alleging that Sirva and Aetna Life Insurance Company (together, Appellants) had discriminated against him on the basis of disability in violation of Mass. Gen. Laws ch. 151B and the Americans with Disabilities Act (ADA). Appellants filed a federal complaint against the Commonwealth of Massachusetts, the MCAD, its commissioners, and Knight, asking the court to enjoin the MCAD proceeding on the basis that ERISA preempted the chapter 151B claim. The MCAD and Knight moved to dismiss the complaint, entreating the district court to abstain. While the case was pending, the Supreme Court decided Sprint. The district court dismissed the federal court action, concluding that Younger abstention was appropriate in this case. The First Circuit affirmed the district court’s decision to abstain and further clarified its own case law concerning the exception to the Younger doctrine for facially conclusive claims of preemption. View "Sirva Relocation, LLC v. Golar Richie" on Justia Law

While keeping perishable foodstuffs at Economy International Systems, Inc., a cold-storage facility, Appellants lost more than one million dollars when the walk-in freezers at Economy malfunctioned. Appellants sought recovery under Economy’s insurance policy issued by Triple-S Propiedad, Inc. (“Triple-S”). The parties agreed that the policy provided coverage in this case, but the parties disagreed as to the amount of coverage. Appellant believed it was entitled to $500,000, and Triple-S stated that Appellant was only entitled to $25,000. Invoking diversity jurisdiction, Appellant filed suit against Triple-S seeking a ruling that it may recover $500,000 under the policy. The magistrate judge concluded that the policy’s coverage for losses caused by equipment breakdown was limited to $25,000. The First Circuit affirmed, holding that the most Appellant could recover for Economy’s loss of Appellant’s perishable goods was $25,000. View "AJC Logistics, LLC v. Triple-S Propiedad" on Justia Law

An employee of Progression, Inc. suffered a serious work-related injury. Progression, a corporation headquartered in Massachusetts, had two insurance policies from two different insurers that covered this work-related injury, one with Insurance Company of the State of Pennsylvania (ISOP) and one with Great Northern Insurance Company. Progression tendered the claim only to ISOP. ISOP made payments pursuant to the policy and defended the claim. When ISOP learned of Progression’s policy with Great Northern, ISOP filed suit in federal district court declaring that the Massachusetts doctrine of equitable contribution required Great Northern to share equitably in covering the loss. The district court granted summary judgment to Great Northern, concluding that Progression’s decision to have only ISOP cover the entire loss defeated ISOP’s action for equitable contribution. Because the Massachusetts Supreme Judicial Court (SJC) had not spoken on the issue, the First Circuit certified to the SJC the question of whether, under the circumstances presented in this case, the insured may opt to have one insurer cover the entire loss or whether either insurer may insist that both share equitably in covering the loss. View "Ins. Co. of the State of Penn. v. Great Northern Ins. Co." on Justia Law

In 2013, Plaintiff, a private middle school in Canaan, New Hampshire, received a demand letter asserting a claim concerning events that allegedly occurred during the 1967-1968 academic year. In response, Plaintiff asked Defendant, an insurance company, to defend against the claim under an insurance policy that Defendant allegedly issued to Plaintiff nearly fifty years ago. Defendant rejected the request on the grounds that it had not been able to locate any policy covering the school for the relevant time period. Plaintiff filed suit seeking a judgment adjudicating and decreeing the existence of, and Plaintiff’s rights under, the policy issued by Defendant. The case was removed to federal district court. The district court granted Defendant’s motion to dismiss the suit for failure to state claim, concluding that the school’s complaint did not plausibly show the existence of the policy. The First Circuit reversed, holding that Plaintiff’s complaint proved a plausible basis, beyond a mere possibility, for believing Defendant issued the policy in question. Remanded. View "Cardigan Mountain Sch. v. N.H. Ins. Co." on Justia Law

Plaintiff obtained an Standard Flood Insurance Policy from Middlesex Mutual Assurance Company that afforded flood coverage for Plaintiff’s home. The Policy excluded coverage for damage occurring in a “basement.” After a flood caused damaged to the lower level of his home, Plaintiff filed two flood claims claims to the adjuster retained by Middlesex Mutual. Middlesex Mutual paid the smaller claim but rejected the larger claim, concluding that the lower level of Plaintiff’s home was a “basement” under the Policy. Plaintiff appealed. The district court granted summary judgment for Middlesex Mutual. The First Circuit affirmed, holding that the lower level of Plaintiff’s home qualified as a “basement” under the Policy, and thus Middlesex Mutual appropriately denied his claim of loss for damages sustained during the flood. View "Matusevich v. Middlesex Mut. Assurance Co." on Justia Law

First State Insurance Company and New England Reinsurance Corporation (collectively, First State) entered into several reinsurance and retrocession agreements with a reinsurer, National Casualty Company (National). First State demanded arbitration under eight of these agreements to resolve disputes about billing disputes and the interpretation of certain contract provisions relating to payment of claims. The arbitrators handed down a contract interpretation award that established a payment protocol under the agreements. First State filed a petition pursuant to the Federal Arbitration Act to confirm the contract interpretation award, and National filed a cross-petition to vacate the award. A federal district court summarily confirmed both the contract interpretation award and the final arbitration award. After noting that “a federal court’s authority to defenestrate an arbitration award is extremely limited,” the First Circuit affirmed, holding that the arbitrators “even arguably” construed the underlying agreements and, thus, acted within the scope of their contractually delineated powers in confirming the contract interpretation award. View "First State Ins. Co. v. Nat’l Cas. Co." on Justia Law

A tractor-trailer was involved in an auto collision that caused serious bodily injury. The owner of the tractor (Owner) obtained primary insurance for the tractor through Old Republic Insurance Company (Old Republic). The operator of the tractor (Operator) obtained separate insurance through Stratford Insurance Company (Stratford). Old Republic filed suit against Stratford seeking a determination as to Stratford’s insurance obligations. The First Circuit (1) affirmed the district court’s conclusion that the Operator and Stratford never intended Stratford to provide primary coverage to the tractor, leaving Old Republic as the primary insurer and Stratford as the excess insurer; and (2) as to the question regarding Stratford’s duty to defend as an excess insurer of the tractor, the best course of action is to certify this question of New Hampshire law to the New Hampshire Supreme Court. View "Old Republic Ins. Co. v. Stratford Ins. Co." on Justia Law