The plaintiffs discovered heating oil had contaminated a residential property they had just purchased. They sued the sellers, alleging that they had concealed the spill. A default judgment entered. The plaintiffs then sued Arbella, the sellers’ homeowner’s insurer.
Arbella denied the claim, asserting that the source of the plaintiffs’ injury was the sellers’ concealment of the oil, which is not an occurrence under the policy. The Superior Court agreed with Arbella.
In Creamer v. Arbella Insurance Company, 95 Mass. App. Ct. 56 (2019), the Massachusetts Appeals Court remanded the case to the Superior Court for further analysis. The Appeals Court held that the spill itself was the occurrence with respect to a claim under Mass. Gen. Laws ch. 21E (which sets forth responsibility among various parties for environmental contamination), because ch. 21E imposes liability based on ownership status without regard to fault.
However, the Appeals Court held that there was a genuine issue of material fact as to whether the loss was excluded by an exclusion for property damage expected or intended by the insured. The court noted that for the exclusion to apply the sellers must have intended the damage itself, not just the act causing the damage. To have expected it, they must have known with substantial certainty that the damage would result.
The court held that once the sellers discovered the oil spill, they must have known with substantial certainty that property damage would result. From that point forward, any further property damage came within the exclusion. However, the record did not establish when the sellers discovered the spill or whether the period of concealment caused additional property damage. The court remanded the case for further proceedings on that issue.