Superior Court of Massachusetts, Suffolk, Business Litigation Session
The Hanover Insurance Group, Inc.
Raw Seafoods, Inc.
Date: January 23, 2018
Judge (with first initial, no space for Sullivan, Dorsey, and
Walsh): Sanders, Janet L., J.
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTâS
MOTION FOR PARTIAL SUMMARY JUDGMENT
L. Sanders Justice
case concerns a dispute over coverage between an insured and
its insurer. Defendant Raw Seafoods, Inc. (RSI) is a seafood
processor. In 2012, an RSI customer, Atlantic Capes
Fisheries, Inc. (Atlantic), filed an action in federal court
alleging that RSIâs negligent processing of its scallops
resulted in their premature spoilage. RSIâs insurer,
plaintiff Hanover Insurance Group, Inc. (Hanover), agreed to
defend RSI under a reservation of rights and then filed the
present action, seeking a declaration that it had no duty to
indemnify RSI for any judgment Atlantic obtained. After the
federal court judge granted summary judgment in favor of
Atlantic and entered judgment against RSI, the parties filed
cross motions for partial summary judgment in the instant
action. This Court (Roach, J.) granted summary judgment in
favor of Hanover but the Appeals Court reversed. 91
Mass.App.Ct. 401 (2017). RSI now renews its Motion for
Partial Summary Judgment. For the reasons that follow, the
Motion is Allowed.
a seafood processing facility in Fall River. Atlantic, a
seafood company that sells scallops and other seafood,
regularly uses RSI to apportion, pack, and freeze the fresh
scallops that it purchases from fishing vessels. Upon
delivery of Atlanticâs scallops, RSI staff inspects the
scallops for quality, reports the results to Atlantic, and
receives processing instructions. After processing, the
scallops are transported to a third-party cold storage
facility, Arctic Cold Storage (Arctic), from which Atlantic
ships its customersâ orders.
2011, a batch of scallops that RSI had processed made their
way through customs in Denmark where it was observed that the
scallops were decomposed and emitting a strong smell of
ammonia. They were deemed unacceptable for human consumption
and sent back to the United States. Once in the United
States, the Food and Drug Administration tested the batch and
confirmed that it was spoiled. The batch of scallops was then
returned to Arcticâs facility, where representatives from
Atlantic and RSI jointly inspected the shipment and again
confirmed the damage. They also inspected another batch of
scallops processed by RSI around the same time as the
rejected batch, and discovered more damaged scallops.
time, Hanover insured RSI through a Commercial General
Liability (CGL) policy. The Policy provides in relevant part
that Hanover " will pay those sums that the insured
becomes legally obligated to pay as damages because of
âbodily injuryâ or âproperty damageâ to which this insurance
applies." The Policy applies to " property
damage" that is caused by an " occurrence, "
which is defined as " an accident, including continuous
or repeated exposure to substantially the same general
harmful conditions." The Policy contains several
exclusions as well as a " special broadening
endorsement, " which modifies the scope of certain
2012, Atlantic sued RSI in the United States District Court
for the District of Massachusetts, alleging that the damage
to the scallops was caused by RSIâs negligence. Hanover
agreed to defend RSI under a reservation of rights. Shortly
thereafter, Hanover filed the present lawsuit, seeking a
declaratory judgment that either the damage to the scallops
was not caused by an " occurrence" within the
meaning of the Policy, or that certain Policy exclusions
applied, such that it had no duty to indemnify RSI for any
judgment Atlantic obtained. RSI asserted counterclaims for
breach of contract and violations of G.L.c. 93A and 176D, and
further alleged that it was entitled to a declaration that
the damage was covered. Upon motion by RSI, the Court stayed
discovery pending resolution of the federal litigation.
the stay was in place, discovery proceeded in the federal
action. In deposition testimony, the president of RSI, Jason
Hutchens, conceded that the scallops were delivered to RSI in
good condition, but that " somewhere in [RSIâs] system,
the product got messed up."
testified: " [I]n almost the seventeen years weâve been
doing this, weâve never seen anything like this before ... we
beat our heads against the wall for, it seemed like months,
trying to figure this out. We have never seen anything like
it and have not seen anything after this problem. But we
canât put our hands around it, how it happened and why it
happened ... we donât know." Hutchens agreed, however,
that the damage occurred while the scallops were in RSIâs
custody and was " the result of some, as yet, unknown
failure on the part of [RSIâs] processing people or handling
people within [RSIâs] plant." The precise cause of the
damage remains unknown.
2014, Atlantic moved for summary judgment in the federal
action, relying on the doctrine of res ipsa loquitur
. Atlantic argued that the undisputed facts showed that it
had delivered the scallops to RSI in good condition, that RSI
had exclusive control over the scallops until they were
delivered to Arctic in a frozen state, and that nothing
occurred after that delivery that would have caused the
damage. Agreeing with this reasoning, the federal court
allowed Atlanticâs motion.
judgment entered against RSI, the parties in the instant case
filed cross motions for partial summary judgment on the issue
of coverage. Judge Roach granted summary judgment in favor of
Hanover, concluding that RSI could not meet its burden of
proving that the loss was caused by an "
occurrence" because " there was no demonstrated
accident distinct from [RSIâs] performance of its work."
In reaching that conclusion, Judge Roach relied on
Pacific Indemnity Co. v. Lampro (Lampro), 86
Mass.App.Ct. 60, 65 (2014), reasoning that the possibility
that raw seafood could be spoiled or damaged during handling
is a " normal, foreseeable and expected incident"
of the seafood processing business and is therefore not an
appealed and in April 2017, the Appeals Court set aside the
Judgment in Hanoverâs favor and remanded the case. In doing
so, the Court made several observations relevant to the
renewed motion presently before this Court. First,
the Appeals Court noted that, in allowing Atlanticâs motion
for summary judgment in the federal action, the court had
necessarily determined that the only explanation for the
damage to the scallops was that RSI was negligent in handling
the product. Hanover could not relitigate this factual issue.
In other words, Hanover could not take the position in this
litigation that the damage could have been the result of
intentional conduct. 91 Mass.App.Ct. at 407. Second,
the Appeals Court concluded that Lampro was
distinguishable, and that the instant case was instead
similar to Beacon Textiles Corp. v. Employers Mut. Liab.
Ins. Co.,355 Mass. 643 (1969), which supported RSIâs
position. 91 Mass.App.Ct. at 409-10. The Court remanded the