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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

UNIFIRST CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA et al

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Case Number: 
1:15-cv-11771 Search Pacer
ACE Group party(s): 
Opposing Party: 
UniFirst Corporation
Court Type: 
Federal
US District Court: 
Massachusetts District Court
Date Filed: 
May 4 2015

COMPLAINT FOR DECLARATORY RELIEF
AND DAMAGES: DEMAND FOR JURY TRIAL

INTRODUCTION

1.    Plaintiff UniFirst Corporation (“UniFirst”) brings this action for a declaration of
rights and award of damages relating to the failure of Defendants Insurance Company of North
America (“INA”), Indemnity Insurance Company of North America (“Indemnity Insurance”),
CIGNA Property & Casualty Insurance Company n/k/a ACE Property and Casualty Insurance
Company (“ACE Property and Casualty”), and Pacific Employers Insurance Company (“Pacific
Employers”) (collectively, the “ACE Companies”) to provide insurance coverage under
numerous business automobile policies for environmental liabilities faced by UniFirst
2.    UniFirst’s claim arises from alleged and actual groundwater and soil
contamination at and near a former dry cleaning supply and chemical distribution business on
Tufts Street in Somerville, Middlesex County, Massachusetts (the “Property”). This facility was
operated by a former subsidiary of UniFirst, Superior Products & Equipment, Inc. (“Superior”).

PARTIES

3.    Plaintiff UniFirst is a corporation organized under the laws    of the Commonwealth
of Massachusetts and maintains regular places of business in Boston, Suffolk County,
Massachusetts and in Wilmington, Middlesex County, Massachusetts.
4.    Defendant INA is a corporation organized under the laws of the Commonwealth
of Pennsylvania, with a principal place of business at 436 Walnut Street, Philadelphia, PA
19106.
5.    Defendant Indemnity Insurance is a corporation organized under the laws of
the Commonwealth of Pennsylvania, with a principal place of business at 436 Walnut Street,
Philadelphia, PA 19106
6.    Defendant ACE Property and Casualty is a corporation organized under the laws
of the Commonwealth of Pennsylvania, with a principal place of business at 436 Walnut Street,
Philadelphia, PA 19106.
7.    Defendant Pacific Employers is a corporation organized under the laws of the
Commonwealth of Pennsylvania, with a principal place of business at 436 Walnut Street,
Philadelphia, PA 19106.

JURISDICTION AND VENUE

2.    This Court has jurisdiction over the parties and claims in this declaratory
judgment action including under Mass. Gen. L. c. 223A, § 3 and c. 231 A, § 1, because each of
the Defendants transacts business and/or insures risks in the Commonwealth of Massachusetts
(including the Policies at issue in this case) and provided insurance coverage or claims handling
services specifically applicable to a loss occurring in Massachusetts.
3.    This Court is the appropriate venue for this declaratory judgment action pursuant
to Mass. Gen. L. c. 223, § 8, because UniFirst has a usual place of business in Middlesex
County.

FACTS

The ACE Policies

4.    For the period October 1, 1989 to October 1,1995, INA issued a series of
business automobile policies (the “INA Policies”) to UniFirst.
5.    For the period October 1, 1995 to October 1, 1996, Indemnity issued a business
automobile policy (the “Indemnity Insurance Policy”) to UniFirst.
6.    For the period October 1,1996 to October 1,1998, ACE Property and Casualty
(at the time doing business under the name CIGNA Property & Casualty Insurance Company)
issued two business automobile policies (the “ACE Property and Casualty Policies”) to UniFirst.
7.    For the period October 1, 1998 to October 1, 2003, Pacific Employers issued a
series of business automobile policies (the “Pacific Employers Policies”) to UniFirst, The INA
Policies, the Indemnity Insurance Business Policy, the ACE Property & Casualty Policies, and
the Pacific Employers Policies will be referred to herein collectively as the “ACE Policies.”
8.    UniFirst has paid all premiums due under all of the ACE Policies.
9.    The ACE Policies were in full force and effect during their entire respective
policy periods.
10.    The ACE Policies provide coverage for damages “caused by an ‘accident* and
resulting from the ownership, maintenance or use of a covered ‘auto.’”
11.    A “covered ‘auto’” is defined broadly mean to “Any Auto.”
12.    The ACE Policies define the term “accident” to “include^ continuous or repeated
exposure to the same conditions resulting in... ‘property damage’”.
13.    Each ACE Policy is triggered by property damage occurring during that policy’s
period of coverage.
14.    The ACE Policies contain certain limitations or exclusions concerning coverage
for pollution. However, none of these limitations or exclusions bar coverage for pollution
altogether. Indeed, the ACE Policies in effect as of October 1,1992 explicitly cover “pollution
cost or expense.” Ail of the liabilities and/or cleanup costs at issue in this case are “pollution
costs or expenses” or otherwise covered pollution-related liabilities or costs.
15.    The property damage liability limits of each ACE Policy are not exhausted.
16.    The ACE Policies in effect from, at least, October 1,1995 to October 1,2003,
obligate the issuing ACE Company to share in the cost of UniFirst’s defense of underlying
claims to the extent the “amount of the judgment or settlement exceeds the amount of the
Deductible Per Accident.”

The Underlying Claims

17.    During the 1970s and 1980s, Superior operated a dry cleaning supply and
chemical distribution business on the Property, located at 50 Tufts Street, Somerville,
Massachusetts.
18.    Perchloroethylene (also known as perc or PCE) and Neu-Tri, the brand name for a
degreasing solvent containing trichloroethylene (TCE), were two of the industrial chemical
products delivered to, stored at and delivered from the Property during Superior’s operations.
19.    UniFirst received a Notice of Responsibility from the Massachusetts Department
of Environmental Protection (“DEP”), dated November 9,2005 (the “November 9, 2005 NOR”),
asserting UniFirst’s obligation to undertake certain investigatory and other response actions in
connection with the Property pursuant to Mass. Gen. L. c. 21E (“Chapter 2IE”). The November
9,2005 NOR is attached hereto as Exh. A.
20.    UniFirst received a second Notice of Responsibility from the DEP concerning the
Property, dated January 27, 2009 (the “January 27,2009 NOR”), asserting UniFirst’s obligation
to undertake certain additional investigatory and other response actions in connection with the
Property pursuant to Chapter 2 IE. The January 27,2009 NOR is attached hereto as Exh, B,
21.    On or about July 25,2008, and January 28,2009, respectively, UniFirst tendered
the November 9, 2005 NOR and January 27,2009 NOR to the ACE Companies and requested
that the ACE Companies agree to defend and indemnify UniFirst.
22.    UniFirst has received other demands relating to the environmental conditions at
the Property, including a lawsuit captioned Somerville Two. LLC v, Unifirst Coro, [ric], Civ.
No. 08-3075 (Mass. Super. Ct,, Middlesex Cty.) (the “Somerville Two Action”). See Exh. C (the
“Somerville Two Complaint”). The Somerville Two Action was commenced by the then current
owner of the Property, pursuant to Chapter 21E and 42 U.S.C. §9607(a) (CERCLA), seeking,
among other things, monetary damages and/or response costs.
23.    The Somerville Two Complaint alleged, upon information and belief, that
Superior operated a dry cleaning supply and chemical supply distribution business at the
Property from 1976 through 1985. See Exh. C at 3. The Somerville Two Complaint further
alleged, upon information and belief, that these supplies “were delivered to the Property in bulk
by rail and by truck and were repackaged for distribution elsewhere.” Id. at f 6.
24.    The Somerville Two Complaint further alleged, upon information and belief, that
an undefined quantity of dry cleaning and laundry supplies escaped into the environment in
various ways, including as a result of a “large leak of chemicals from a truck offloading at the
Property in 1980.” Id. at 9.
25.    On or about July 25,2008, UniFirst notified the ACE Companies of the claims
involved in the Somerville Two Action and requested that they agree to defend and indemnify
UniFirst.
26.    UniFirst defended against the allegations of the Somerville Two Complaint up
until March 9, 2009, at which time the parties settled the case.
27.    UniFirst kept the Defendants apprised throughout the settlement negotiations in
the Somerville Two Action, and provided the ACE Companies with an opportunity to
participate. On or about March 13,2009, UniFirst notified the Defendants of the settlement of
the Somerville Two Action.
28.    Pursuant to the settlement agreement with Somerville Two, UniFirst agreed to
reacquire the Property and pay Somerville Two a sum certain above and beyond the purchase
price and/or market value of the Property.
29.    UniFirst also has forwarded to the ACE Companies other claims and demands
concerning the Property, including claims from the Massachusetts Bay Transportation Authority
(“MBTA”) alleging that UniFirst is liable for damage to drainage systems and soil and
groundwater on MBTA property as a result of contamination allegedly migrating from the
Property. UniFirst has demanded that the ACE Companies defend and indemnify against these
other claims and demands.
30.    All of the claims received by UniFirst, including without limitation the NORs
from the Commonwealth of Massachusetts, the Somerville Two Complaint, private party claims
and claims by the MBTA, shall be referred to hereafter as the “Underlying Claims.”
Defendants’ Denial of Coverage
31.    By letter dated March 30,2009, on behalf of the ACE Companies, Resolute
denied coverage for, and advised that the ACE Companies would neither defend nor indemnify
UniFirst against the November 9, 2005 NOR, the January 27,2009 NOR, and/or the Somerville
Two Complaint. See Exh. D.
32.    Prior to the Defendants issuing their coverage position letter, on or about
February 6,2009, UniFirst had provided the Defendants copies of all of the ACE Policies.
33.    Prior to the Defendants issuing their coverage position letter, on or about
February 6, 2009, UniFirst had also provided Defendants with detailed information and
numerous documents concerning the circumstances surrounding the Underlying Claims.
28.    The pleadings and additional information made available to the Defendants as of
early February 2009 (two months prior to their March 2009 denial letter) contain explicit
references to accidental releases of PCE (a chemical involved in each of the Underlying Claims)
in connection with the ownership, maintenance or use of motor vehicles and created the potential
of coverage under one or more of the ACE Policies.
29.    Notwithstanding this information demonstrating the potential for coverage, the
ACE Companies, on March 29, 2009, denied coverage and refused to participate in the defense
of UniFirst against the various Underlying Claims.
Settlement with Liberty Mutual
30.    UniFirst also tendered the Underlying Claims to Liberty Mutual Insurance
Company (“Liberty Mutual”) for defense and indemnity under various general, automobile and
umbrella/excess liability policies Liberty Mutual issued to UniFirst and in effect for a period that
included, but is not necessarily limited to, January 1,1976, to October 1,1989 (the “Liberty
Mutual Policies”).
31.    UniFirst and Liberty Mutual have resolved any and all disputes they have, and
entered into a confidential settlement agreement, concerning UniFirst’s demand for defense and
indemnity for the Underlying Claims under the Liberty Mutual Policies.
32.    Pursuant to the settlement agreement and a certain agreement referenced therein,
Liberty Mutual has paid UniFirst a sum certain for a portion of the defense costs and indemnity
costs UniFirst has incurred in defending and resolving (at least in part) the Underlying Claims.
33.    As part of the settlement agreement, Liberty Mutual assigned to UniFirst any and
all claims that Liberty Mutual may have for subrogation, indemnity or contribution against any
third party (other than a reinsurer of Liberty Mutual) concerning the amounts Liberty Mutual has
paid to UniFirst pursuant to the settlement agreement or any agreement referenced therein.
Consequence of Defendants* Denial of Coverage
28.    The amount of unpaid defense costs and damages is growing monthly.
29.    The ACE Policies obligate the ACE Companies to indemnify UniFirst with
respect to the Underlying Claims, up to the ACE Policies’ respective limits of liability.
30.    The costs or expenses UniFirst has incurred to date in responding to the
Underlying Claims have exhausted the applicable deductible(s) in one or more of the ACE
Policies, to the extent any such deductible(s) are even applicable at this time.
31.    UniFirst has complied with all terms and conditions of the ACE Policies.
32.    To the extent UniFirst has not complied with any of the terms or conditions of any
of the ACE Policies, none of the ACE Companies has suffered prejudice from such lack of
compliance.
33.    The defense and indemnity costs and damages incurred by UniFirst have been
reasonable.
34.    The allegations of the Underlying Claims against UniFirst state or reasonably
sketch out claims that potentially or actually fall within the coverage of the ACE Policies.
35.    UniFirst has been damaged by the ACE Companies’ unjustified refusal to
participate in the defense of, and indemnify UniFirst against, Underlying Claims.
Document 4-1 Filed 05/04/15 Page 14 of 63

COUNT I
/Declaratory Relief - Duty to Pay Defend and/or Pay Defense Costs’)

28.    UniFirst herein repeats the allegations set forth above.
29.    Each of the ACE Companies had and (to the extent they have not been resolved)
continues to have a duty to participate in the defense of the Underlying Claims.
30.    Each of the ACE Companies contends differently. An actual controversy exists
among the parties.
31.    A declaration of the parties’ respective rights and obligations under the ACE
Policies is necessary and appropriate with respect to each of the ACE Companies’ obligation to
participate in the defense of each of the unresolved Underlying Claims.
32.    WHEREFORE, UniFirst requests separate declarations that each of the ACE
Companies is required to participate in the defense of each Underlying Claim, according to the
terms of each particular ACE Policy.

COUNTn
(Declaratory Relief — Duty to Indemnify!

33.    UniFirst herein repeats the allegations set forth above.
28.    Each of the ACE Companies has a duty to indemnify UniFirst against the
Underlying Claims.
29.    Each of the ACE Companies contends differently. Therefore, an actual
controversy exists between the parties.
30.    A declaration of the parties’ respective rights and duties under the ACE Policies is
necessary and appropriate with respect to each of the ACE Companies’ duty to indemnify
UniFirst against Underlying Claims.
28.    WHEREFORE, UniFirst requests separate declarations that each of the ACE
Companies is required to participate in the indemnification of each Underlying Claim, according
to the terms of each particular ACE Policy.

COUNT in
(Breach of Contract — Failure to Defend and/or Pay Defense Costs)

29.    UniFirst herein repeats the allegations set forth above.
30.    By failing to participate in the defense of the Underlying Claims as required under
the ACE Policies, each of the ACE Companies has breached its contracts of insurance.
31.    As a result of this breach, UniFirst has incurred, and will continue to incur,
substantial damages.
32.    WHEREFORE, UniFirst requests judgment for its damages incurred in
connection with the failure by each of the ACE Companies to participate in the defense of the
Underlying Claims as required under the ACE Policies, including defense costs, damages
(including without limitation cleanup costs, settlement costs and other damages, even if all such
damages exceed the ACE Companies’ policy limits), interest, attorney's fees and costs in
bringing this action, and all other forms of damages.

COUNT IV
(Breach of Contract — Failure to Indemnify)

33.    UniFirst herein repeats the allegations set forth above.
34.    By failing to participate in the indemnification of damages incurred by UniFirst in
connection with the Underlying Claims as required under the ACE Policies, each of the ACE
Companies has breached its contracts of insurance
28.    As a result of this breach, UniFirst has incurred (and will continue to incur)
substantial damages.
29.    WHEREFORE, UniFirst requests j udgment for damages incurred by UniFirst in
connection with failure by each of the ACE Companies to indemnify UniFirst, including without
limitation cleanup costs, settlement costs and other damages (even if all such damages exceed
the ACE Companies’ policy limits), interest, attorney's fees and costs incurred in bringing this
action, and all other forms of damages.

COUNTV
(Contribution and/or Indemnity)

30.    UniFirst herein repeats the allegations set forth above.
31.    The ACE Policies were in effect during the time period immediately following the
time period during which the Liberty Mutual Policies were in effect.
32.    The property damage resulting from the accidental auto-related releases at issue in
this case occurred continuously beginning in or around the mid-to-late 1970s or early 1980s,
during certain of the Liberty Mutual policy periods, and continuing into the policy periods of
some or all of the ACE Policies.
33.    Having reimbursed UniFirst for a portion of the defense and indemnity costs
UniFirst has incurred in defending and resolving (in part) the Underlying Claims, under some or
all of the Liberty Mutual Policies, Liberty Mutual has a direct claim against each of the ACE
Companies for their fair share of the amounts already paid by Liberty Mutual to UniFirst in
defense and indemnity costs.
28.    Pursuant to the confidential settlement agreement between UniFirst and Liberty
Mutual, see 42-45, supra, UniFirst, as Liberty Mutual’s assignee, has the right to assert such
claims for contribution and/or indemnity against each of the ACE Companies.
29.    WHEREFORE, in its capacity as assignee, UniFirst hereby seeks contribution
and/or indemnity from each of the ACE Companies for their respective pro rata share of the
defense costs and indemnity costs Liberty Mutual has paid UniFirst in connection with the
Underlying Claims.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff UniFirst respectfully requests that this Court:
(A)    Enter one or more declarations against Defendants Insurance Company of North
America, Indemnity Insurance Company of North America, ACE Property and Casualty
Insurance Company, and Pacific Employers Insurance Company, and in favor of Plaintiff
UniFirst Corporation, establishing each of these insurance companies’ respective obligations
under the pertinent ACE Policies to participate in the defense of and to indemnify UniFirst with
respect to the Underlying Claims;
(B)    Enter one or more judgments against Defendants Insurance Company of North
America, Indemnity Insurance Company of North America, ACE Property and Casualty
Insurance Company, and Pacific Employers Insurance Company, and in favor of Plaintiff
UniFirst Corporation, in an amount sufficient to cover all outstanding sums past due, now due
and to come due under the pertinent ACE Policies, respectively, with respect to each of these
companies’ obligations to pay defense and indemnity costs incurred by UniFirst in connection
with the Underlying Claims and awarding UniFirst its damages of every kind, its reasonable
attorney's fees and costs, as well as pre-suit, prejudgment and post-judgment interest arising from
the date of the wrongful conduct of these entities;
(A)    Enter one or more judgments against Defendants Insurance Company of North
America, Indemnity Insurance Company of North America, ACE Property and Casualty
Insurance Company, and Pacific Employers Insurance Company, and in favor of Plaintiff
UniFirst Corporation, as assignee of Liberty Mutual, establishing each of these companies’
respective obligations in contribution and/or indemnity under the pertinent ACE Policies for their
appropriate share of the defense and indemnity costs paid by Liberty Mutual to UniFirst in
connection with the Underlying Claims; and
(F) Award UniFirst such other and additional relief (legal, equitable or otherwise) as
this Court deems just and proper.

JURY DEMAND

Plaintiff UniFirst Corporation demands a jury trial on all issues and counts so triable.
 

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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