Previous owners of a dwelling, adjacent to property of homeowners insureds, removed an oil heating storage tank from their basement and installed an underground storage tank in their yard. Oil seeped out of the basement, contaminating the insureds' well and doing other underground damage to their property, when 500 gallons of fuel oil were inadvertently pumped into the basement of the neighboring house through the disconnected fuel line.

The insureds and their homeowners policy insurer filed cross motions for summary judgment, seeking judicial determination regarding application of the policy to the damages for which claim was made. It was not disputed that the damages resulted from negligence on the part of either: The previous owners of the adjoining property for failure to seal the disconnected fuel line; the current owners for failure to direct delivery of the oil into the correct line, or; failure of the oil company to determine the proper line for delivery.

The insureds claimed that their damages were caused by the negligence of others, for which coverage was provided by their policy. The insurer contended that coverage was not applicable by virtue of a policy exclusion (common to dwelling coverage and other structures coverage in "special form" homeowners policies) for "loss .... caused by .... release, discharge or dispersal of contaminants or pollutants." Trial court judgment for the insureds was appealed by the insurer.

The Supreme Judicial Court of Massachusetts based its decision on a test that it has applied over a long period of time in chain causation cases. It said: "That test seeks to determine the efficient proximate cause of the loss. If that cause is an insured risk, there will be coverage even though the final form of the property damage, produced by a series of related events, appears to take the loss outside of the terms of the policy."

The court concluded that the circumstances under review met the test. The judgment of the trial court was affirmed in favor of the insureds and against the insurer.

(JUSSIM ET AL., Plaintiffs v. MASSACHUSETTS BAY INSURANCE COMPANY, Defendant. Supreme Judicial Court of Massachusetts, Hampton. April 15, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4485.)