What you need to know:
Under a commercial general liability policy, an insurer can be obliged to defend an underlying trespass action where the trespass began before the policy period and continued throughout the policy period and afterwards.
What you need to do:
Insurers should be aware that trespass can be construed as a continuing tort throughout several policy periods, under Massachusetts law.
The Massachusetts Appeals Court ruled that insurers were obliged to defend their insured against a continuing trespass action, where their insured built structures on abutting land before the policy periods, and was sued after the policy periods ended, concluding that the trespass continued during the insurer’s policy periods. See Porter v. Clarendon Nat’l Ins. Co., No. 09-P-964, 2010 WL 1633458 (Mass. App. Ct. Apr. 26, 2010).
The 1915 Beacon Street Condominium Trust was sued for trespass arising out of a retaining wall and parking spaces it constructed on a third party’s abutting property. The wall and parking spaces were built before 2000, and the abutter filed suit in 2004 alleging that the Trust’s “continuing trespass and refusal to remove” the wall caused damages, including the cost of removal and the wrongful use of the parking spaces without just compensation. The Trust’s general liability insurers for the periods 2000 – 2001 and 2001 – 2003 (Greater New York Mutual Insurance Company and Clarendon National Insurance Company, respectively) refused to defend.
The Court of Appeals’ rulings
The Appeals Court held that Greater New York and Clarendon were obliged to defend. The Court held that:
- Property damage occurred during the policy periods of Greater New York and Clarendon because the underlying complaint alleged continuing trespass: “Here, the trust built a retaining wall and paved two parking spaces on an abutter’s property some time before 2000. The retaining wall and parking spaces remained on the abutter's property until the abutter sued in 2004. The trespass, therefore, occurred continuously, for the duration of all three policies.”
- The exclusion for “property you own, rent, or occupy” did not bar coverage because it is intended to exclude damages to the property of the insured: “The exclusion is clearly not applicable to this case. Its purpose is to prevent liability insurance from operating as casualty insurance for damage to the insured’s own property. We read it to exclude from coverage only damage to property lawfully occupied by the insured.”
- The exclusion for “your work” did not apply because it “operates to exclude repair or replacement costs for faulty workmanship by the insured that it has been contracted or otherwise hired to perform.” The underlying action sought damages for trespass, not faulty workmanship, so the exclusion did not apply.
The Massachusetts Appeals Court ruled that insurers had a duty to defend an underlying action for continuing trespass that commenced before those insurers’ policy periods, even though the suit was filed after those policy periods ended.