September 1, 2011

Insurance Coverage Practice Group List







Peabody Essex Museum, Inc. v. United States Fire Ins. Co.

In a Memorandum and Order Re: Summary Judgment Motions issued August 24, 2011 in Peabody Essex Museum, Inc. v. United States Fire Ins. Co., Civil Action No. 06cv11209-NG (D. Mass. August 24, 2011), the United States Court for the District of Massachusetts declined to apply a “time-on-the-risk” allocation method requested by U.S. Fire Insurance Company (“U.S. Fire”) to the liability of U.S. Fire during the allocation period of December 1, 1983 to the present for remediation costs incurred in connection with a government-mandated cleanup of oil.  Under the “time-on-the-risk” method urged by U.S. Fire and described by the Massachusetts Supreme Judicial Court in Boston Gas v. Century Indemnity Co., 454 Mass. 337, 370 (2009) as the default allocation method, U.S. Fire would owe only ten percent of the remedial costs claimed by plaintiff, Peabody Essex Museum, Inc. (“the Museum”). 

The court, instead, allowed “fact-based” allocation under which courts “determine precisely what injury or damage took place during each contract period or uninsured period and allocate the loss accordingly.”  In so doing, the court cited the “fact-based” allocation approach as the “ideal method” for allocating coverage per the Massachusetts Supreme Judicial Court.  The court held that there was sufficient evidence in the case to permit the “fact-based” method of allocation and noted that the burden of proof in this particular case was on U.S. Fire, rather than the Museum, to demonstrate the accuracy of the allocation.  As such, the court found that U.S. Fire was responsible for 33% of the remediation based on the evidence, rather than the 10% they would have been responsible for under a straight “time-on-the-risk” allocation. 

On August 31, 2011, U.S. Fire asked the court to reconsider its August 24, 2011 partial summary judgment on the grounds that the court improperly accepted the Museum’s expert report as fact.  For a copy of the August 24, 2011 decision, click HERE.








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Because each client’s situation must be evaluated on its own merits, taking into account all relevant circumstances, this case review must be understood as intended for general informational purposes only and should not be considered legal advice. Moreover, this case review is not intended to create nor does it constitute an attorney-client relationship.




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