THE HANOVER INSURANCE GROUP, INC.
RAW SEAFOODS, INC.
Heard: September 16, 2016.
action commenced in the Superior Court Department on
September 21, 2012.
case was heard by Christine M. Roach, J., on motions for
Michael J. Daly (Samuel P. Blatchley also present) for the
Jeffrey E. Dolan (Anthony M. Campo also present) for the
Present: Agnes, Neyman, & Henry, JJ.
case we analyze whether damage to scallops at a seafood
processing facility, where the precise cause of damage is
unknown, constituted an "occurrence" within the
meaning of a commercial general liability (CGL) policy. A
Superior Court judge concluded that the defendant-insured,
Raw Seafoods, Inc. (RSI), has no reasonable expectation of
proving that its claimed loss was caused by an occurrence,
and granted summary judgment in favor of the
plaintiff-insurer, Hanover Insurance Group, Inc. RSI appeals
therefrom. We reverse.
RSI and the damaged scallops.
a seafood processing facility in Fall River. One of RSI's
customers, Atlantic Capes Fisheries, Inc. (Atlantic), sells
scallops and other types of seafood around the world.
Atlantic purchases fresh scallops from fishing vessels, then
transports the scallops to RSI for processing, portioning,
packaging, and freezing. RSI's staff inspects the
scallops for quality upon arrival, reports the results to
Atlantic, and receives processing instructions from Atlantic.
After processing, the scallops are transported to Arctic Cold
Storage (Arctic), a third-party cold storage facility.
Atlantic then ships its customers' orders directly from
Arctic's facility. RSI handles approximately 4 million to
6 million pounds of scallops for Atlantic per year.
July, 2011, RSI-processed scallops were making their way
through customs in Denmark, heading to an Atlantic customer.
Upon inspection, the 37, 102 pounds of scallops were found to
be decomposed, exhibited a strong ammonia smell, and were
deemed unacceptable for human consumption. By all accounts,
something was rotten in the state of Denmark. The United States
Food and Drug Administration tested the scallops and
confirmed that they were spoiled. The scallops were then
returned to Arctic's facility, where representatives from
Atlantic and RSI jointly inspected the shipment and confirmed
the damage. They also inspected another batch of scallops,
processed by RSI for Atlantic around the same time as the
rejected batch, and discovered approximately 20, 000
additional pounds of damaged product.
The underlying litigation.
2012, Atlantic brought an action against RSI in the United
States District Court for the District of Massachusetts (the
"underlying litigation"), which included a count
for negligence for the damage to the scallops. At that time,
Hanover insured RSI pursuant to a CGL policy (policy), and
agreed to defend RSI in the underlying litigation (with
counsel selected by RSI), while reserving its right to deny
coverage under the policy.
discovery in the underlying litigation, RSI's president,
Jason Hutchens, acknowledged that the scallops were delivered
to RSI in good condition, but that "somewhere in
[RSI's] system, the product got messed up." It is
undisputed that the damage occurred while the scallops were
in RSI's possession, but the precise cause of the damage
at RSI's facility remains unknown. Hutchens stated that
"we've never seen anything like this before ... we
beat our heads against the wall for, it seemed like months,
trying to figure this out. We've never seen anything like
it and haven't seen anything after this problem. But we
can't put our hands around it, how it happened and why it
happened -- we don't know." Nonetheless, he agreed
that, to his understanding, "[t]he damage occurred in
[RSI's] custody" and "was the result of some,
as yet, unknown failure on the part of [RSI's] processing
people or handling people within [RSI's] plant." He
further agreed that the damage to the scallops could have
occurred because someone failed to "maintain
temperatures carefully enough." Atlantic's chief
operating officer, Jeffrey Bolton, agreed with Hutchens's
statements and added that his "assumption is that
somewhere along the line during the process of the scallops
that [Atlantic] shipped to [RSI], there was temperature
abuse, and that's why they were deemed decomposed."
moved for summary judgment in the underlying litigation under
the doctrine of res ipsa loquitur, arguing that it was
undisputed that Atlantic had delivered the scallops to RSI in
good condition; RSI had exclusive control over the scallops
until they were delivered to Arctic in a frozen state; the
scallops were not damaged after they were delivered to
Arctic; although the precise cause of the damage was unknown,
RSI accepted responsibility for damaging the scallops; and
the damage could only have been caused by RSI's negligent
handling of the product. Atlantic further contended that
while it could not conclusively establish precisely where in
RSI's handling the scallops were damaged, the most likely
cause was "temperature abuse" caused by
"RSI's personnel's failure to monitor the
temperature in some vats of scallops." A Federal
District Court judge granted Atlantic's motion for
summary judgment "for the reasons stated therein, "
and issued a judgment against RSI and in favor of Atlantic in
the amount of $599, 790.08 with postjudgment interest.
relevant times Hanover insured RSI. RSI's policy with
Hanover provides in relevant part that Hanover "will pay
those sums that the insured becomes legally obligated to pay
as damages because of 'bodily injury' or
'property damage' to which this insurance
applies." By its terms, the policy applies to
"property damage" that is caused by an
"occurrence." The policy defines
"occurrence" as "an accident, including
continuous or repeated exposure to substantially the same
general harmful conditions." The policy also contains
several exclusions limiting the application of the policy, as
well as a "special broadening
endorsement." However, where the judge decided the
motion for summary judgment solely on her determination ...