Jenkins Starr, LLC v. Continental Ins. Co., Inc.

Citations: 601 F. Supp. 2d 344; 2009 U.S. Dist. LEXIS 20322; 2009 WL 605838Docket: Civil Action 06-11757-NMG

Court: District Court, D. Massachusetts; February 26, 2009; Federal District Court

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The case concerns a dispute between Jenkins Starr, LLC, Ruth Jenkins, and Continental Insurance Company regarding insurance coverage for defense costs related to contamination at a property in Belmont, Massachusetts. Ruth Jenkins inherited the property in 1982, which was previously used for a dry cleaning business, Tops Cleaners, that caused contamination through spills of perchloroethylene (PCE) in the 1970s. In 2001, contamination was found at an adjacent property, leading to the discovery of chlorinated volatile organic compounds (CVOCs) migrating from the Belmont Property. Subsequent claims were asserted against Jenkins Starr and Tops, culminating in a Notice of Responsibility from the Massachusetts Department of Environmental Protection in 2003. 

The plaintiffs hired environmental consultants, and a related lawsuit was filed against them in 2006. Continental Insurance previously insured the Belmont Property under "Business Owner Xtra" policies with a liability coverage of $1 million, which included provisions for defense cost coverage. However, the plaintiffs did not notify Continental of the claims until July 2005, despite being aware of them since 2002. Continental provided a defense subject to a reservation of rights and agreed to pay a percentage of the defense costs under a cost-sharing arrangement with other insurers. The reimbursement agreement specified that Continental would cover 30% of costs incurred before December 2007, 50% from December 2007 to January 18, 2008, and 100% thereafter. The plaintiffs now allege that Continental has failed to reimburse over $200,000 in defense expenses as agreed.

In September 2006, Jenkins Starr and Ruth Jenkins filed a lawsuit against Continental and three other insurance carriers, seeking a declaratory judgment, breach of contract, and violations of Massachusetts General Laws (M.G.L. c. 93A and c. 176D). In early 2007, Royal-Globe Insurance Company moved for summary judgment, contesting the plaintiffs' status as insureds under the policies. The plaintiffs opposed this motion and filed a cross motion for summary judgment to confirm their insured status. They later sought partial summary judgment on breach of contract and unfair settlement practices claims. On July 31, 2007, Judge Morris E. Lasker denied all summary judgment motions due to unresolved factual disputes regarding the plaintiffs' insured status and the breach of contract or Chapter 93A claims. Judge Lasker noted that some of the claimed defense costs might be considered unreasonable or related to remediation, which could justify the defendants withholding payment. Following this ruling, three insurance defendants settled, leaving Continental as the only remaining defendant. The plaintiffs then sought a declaratory judgment from the court, claiming unreimbursed defense costs totaling $280,268.70, while Continental provided a revised total of $271,348.64 and noted an additional payment of $21,173.47 made to the plaintiffs. The court is treating the plaintiffs' motion as a partial summary judgment request regarding Continental's liability for these costs, emphasizing that the moving party must demonstrate no genuine issue of material fact exists for a judgment as a matter of law.

Factual disputes deemed irrelevant will not be considered. A genuine issue of material fact arises when evidence suggests a reasonable jury could favor the non-moving party. After the moving party meets its burden, the non-moving party must present specific facts indicating a genuine, triable issue. The court evaluates the entire record favorably for the non-moving party and makes all reasonable inferences in that party's favor. If the court finds no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate.

In this case, plaintiffs' motion for declaratory judgment fails due to genuine issues of material fact that prevent entry of such judgment. Judge Lasker denied the plaintiffs' motion for partial summary judgment on their breach of contract claim, stating that the defendants could justify their failure to pay for plaintiffs' defense costs if they were pre-tender costs, related to remediation, or deemed unreasonable. 

Plaintiffs, seeking a declaration that Continental is liable for all costs labeled "defense costs," failed to demonstrate that the disputed costs were justified under the law. Continental agrees to pay reasonable post-tender defense costs but disputes the reimbursement of the costs claimed by the plaintiffs. Since Judge Lasker found genuine factual disputes, Continental argues that the plaintiffs' motion for declaratory judgment should be denied. The plaintiffs did not provide new evidence to resolve the identified factual disputes or address Judge Lasker's ruling effectively, focusing instead on their dissatisfaction with Continental's discovery responses. This dissatisfaction does not justify a declaration of liability for all defense costs. Consequently, the court sees no reason to overturn Judge Lasker's findings, reinforcing that genuine issues of material fact bar the plaintiffs from obtaining the declaratory relief sought. 

As a result, the plaintiffs' motion for declaratory judgment is denied.