Foley Hoag Obtains Win for Peabody Essex Museum in Oil Cleanup Dispute

October 6, 2011

Foley Hoag LLP has represented the Peabody Essex Museum of Salem, Mass., in an insurance coverage dispute with U.S. Fire Insurance Company over the costs to clean up oil contamination discovered under a portion of its property and that of a neighbor.

On Aug. 24, 2011, in one of her last written opinions before leaving the bench, U.S. District Court Judge Nancy Gertner awarded the museum double damages under Chapter 93A, the Massachusetts consumer protection statute, for U.S. Fire’s failure to defend the museum, an award that also entitles the museum to recover legal fees in the coverage action.
The decision also resolved the question of how the museum’s cleanup costs should be allocated. Under the Massachusetts Supreme Judicial Court’s recent decision in Boston Gas Co. v. Century Indem. Co., the default allocation method is “time-on-the-risk” proration, under which U.S. Fire’s indemnity obligation would be limited to 10 percent of the museum’s cleanup costs, with the museum paying the balance. Boston Gas favored “fact based” allocation where the evidence permits, however, and the court ruled that the museum had produced sufficient evidence to support a far more favorable “fact-based” allocation. The court’s ruling is expected to result in U.S. Fire paying the museum the entire $1 million policy limits in addition to the award of two times the museum’s unreimbursed defense costs.
Foley Hoag partner Martin Pentz and associate Jeremy Evans represented Peabody Essex Museum.

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