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MCNEILAB, INC. v. NORTH RIVER INS. CO.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


September 17, 1986

McNEILAB, INC., Plaintiff
v.
NORTH RIVER INSURANCE CO., et al., Defendants

The opinion of the court was delivered by: BARRY

BARRY, District Judge

 Plaintiff in this action, McNeilab, Inc., is and has been since 1959 a wholly-owned subsidiary of Johnson & Johnson, *fn1" a multi-national, multi-billion dollar corporation involved primarily in the health care business. Since 1955, plaintiff has been engaged in the manufacture and sale of acetaminophen, an internal analgesic for temporary relief of pain and fever, which it has marketed under the trade name "Tylenol".

 The nation was stunned when, between September 29 and October 1, 1982, seven persons in the Chicago area died after ingesting Extra Strength Tylenol capsules laced with cyanide. Acting swiftly and efficiently to protect the public, to dissipate fear, and to clear the shelves of Tylenol so that it could quickly remarket a product in which the public would have confidence, Johnson & Johnson, between September 30 and October 7, 1982 and without consultation at any time with its insurers, undertook and funded a host of actions. Tylenol capsules and certain other McNeilab products were withdrawn from the market in the United States and seven foreign countries; the withdrawn Tylenol capsules were tested; the source of the tampering was investigated; non-tamper resistant packaged products were destroyed; tamper resistant packaging was developed; consumer studies and surveys were performed; an enormous number of reassurance messages were placed in print and on television and teleconferences were conducted; and a consumer research and exchange campaign as well as a campaign which enabled consumers to redeem coupons for tablet products issued during the crisis were launched. These actions were so successful that Tylenol not only regained but in short order exceeded its former share of the market. Without exception, those who have studied what took place during this period of time have concluded that, whatever the motive, no further deaths occurred *fn2" and Johnson & Johnson with its brilliant marketing strategy scored a major business coup.

 This action began as a two-count complaint in which plaintiff, a named insured under the policy issued to Johnson & Johnson, sued nine of its insurers to recover costs related to the recall. Those costs have at various times been estimated from $40,000,000 to $150,000,000 and it now appears that the appropriate figure is approximately $100,000,000, a figure which plaintiff proclaims, rather proudly, "spared" the insurers from having to assume the defense of additional liability actions with potential recoveries in untold millions of dollars. I note, albeit parenthetically at this juncture, that Johnson & Johnson spent this $100,000,000 to mitigate damages on a liability it has claimed from day one does not exist. Stated somewhat differently, not believing it was liable, Johnson & Johnson could not have believed it was mitigating damages.

 The first count of the complaint, the count before me now, seeks a determination that Johnson & Johnson's excess and umbrella liability insurers - defendants North River Insurance Company, Transit Casualty Company, Employers Insurance of Wausau, Aetna Casualty and Surety Company, American Centennial Insurance Company, Granite State Insurance Company, First State Insurance Company, and Northbrook Excess & Surplus Insurance Company (hereinafter "defendants") - are required to reimburse plaintiff for those recall-related costs to the extent of their respective layers of excess insurance coverage. *fn3" Defendants North River, Transit Casualty, Employers of Wausau and First State, denying coverage, have moved for summary judgment, in which motion the remaining defendants have joined.

 Plaintiff, arguing that coverage exists, has cross- moved for summary judgment as to liability *fn4" relying essentially on two theories. First, it argues that the language of the excess liability insurance policy at issue here, as construed by the courts, clearly and unambiguously covers recall and recall-related expenses even though neither recall nor anything akin to it is mentioned in the coverage provision of the policy. Second, it argues that if there be ambiguity in the policy, it must be resolved in favor of the insured without resort to extrinsic evidence.

 This aversion to extrinsic evidence may perhaps be explained by the fact that at no time until counsel became involved following the recall was there any thought, belief, or intent on the part of Johnson & Johnson or of any party that recall and expenses related thereto, which were neither sought nor paid for, were covered. Rather, in the years preceding the recall, Johnson & Johnson's Corporate Insurance Department, in Annual Reports to the Board of Directors, unequivocally stated that it maintained no recall coverage whatsoever. Johnson & Johnson, which at one time carried recall coverage, knew such coverage could be purchased, elected not to purchase it because the cost was prohibitive, and now claims that it enjoys recall coverage anyway. These and all other material facts are undisputed and it is similarly undisputed that the issue as to whether recall and recall-related expenses are within the scope of the policy is ripe for summary resolution on the cross motions of the parties.

 There are, no doubt, a host of reasons - legal, commercial, and moral - for the massive recall campaign and its various permutations. The question before the court, however, is whether Johnson & Johnson can quite literally "pass the buck" to its insurers and require them to compensate it, through plaintiff, for the actions which it took. To that question, which itself is proof positive of the adage "nothing ventured, nothing gained," the answer must be "No".

 I. THE INSURANCE CONTRACT

 In 1977, Johnson & Johnson signed on behalf of itself and its subsidiaries an excess insurance policy with representatives of defendant North River Insurance Company, policy number JU 1081. The terms of the policy with North River are identical to those of the other defendant excess and umbrella insurers, each of which subscribed to an additional layer of coverage. The policies were renewed annually, and the North River policy applicable here was executed on May 13, 1982. *fn5"

 The parties contend that the policy language clearly supports their respective positions. The relevant policy language provides as follows:

 

COVERAGE OR CONDITIONS UMBRELLA LIABILITY

 

* * * *

 

1. COVERAGE

 

The Company [North River] hereby agrees, subject to the limitations, terms and conditions hereinafter mentioned, to indemnify the insured [Johnson & Johnson and its subsidiaries] for all Sums which the insured shall be obliged to pay by reason of the liability

 

(a) imposed upon the insured by law, or

 

(b) assumed under contract or agreement by the Named Insured and/or any officer, director, stockholder, partner or employee of the Named Insured, while acting in his capacity as such. for damages on account of -

 

(i) Personal Injuries

 

(ii) Property Damage

 

(iii) Advertising Liability

 

caused by or arising out of each occurrence happening anywhere in the world.

 

* * * *

 

THIS POLICY IS SUBJECT TO THE FOLLOWING DEFINITIONS:

 

* * * *

 

5. OCCURRENCE

 

The term "Occurrence" where ever used herein shall mean an accident or happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in personal injury, property damage or advertising liability during the policy period. All such exposure to substantially the same general conditions existing at or emanating from one premises location shall be deemed one occurrence.

 

* * * *

 

THIS POLICY IS SUBJECT TO THE FOLLOWING EXCLUSIONS:

 

This Policy shall not apply: -

 

* * * *

 

(c) to claims made against the Insured:

 

* * * *

 

(iv) for the withdrawal, inspection, repair, replacement, or loss of use of the Insured's products or work completed by or for the Insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein.

 A. THE COVERAGE PROVISION

 1. The Impact of Precedent

 Plaintiff states that the coverage provision of the policy clearly covers first-party recall expenses or "first-party mitigation expenses", as plaintiff prefers to call them, presumably because that is the description used in the cases on which it relies. Defendants contend that the coverage provision only contemplates certain third party claims against the insured. Clearly the coverage provision by its terms does not include recall and recall-related expenses whether those expenses are denominated as "recall", "withdrawal", or "mitigation". Indeed, Exclusion (c)(iv) (the so-called "sistership" provision, discussed below), which specifically excludes coverage for third-party "withdrawal claims", is the only point in the policy at which any such language is used explicitly.

 Plaintiff contends, nonetheless, that certain cases construing similar coverage language have held liability insurers responsible for their insured's mitigation expenses, and suggests that those results apply to bind the parties here. *fn6" I note in passing that there has been little discussion by the parties in this case as to whether expenses for the recall itself much less the variety of expenses extraneous to recall and/or mitigation may be considered "mitigation" expenses within the meaning of the cases cited by plaintiff. It is, indeed, open to considerable doubt that the courts which developed the doctrine on which plaintiff relies even contemplated the question of whether "mitigation" expenses included product recall expenses. There is utterly no doubt, however, that those courts never contemplated such expenses in the context of a potential mass disaster. Indeed, the facts of the case plaintiff describes as "the leading case," Leebov v. United States Fidelity and Guar. Co., 401 Pa. 477, 165 A.2d 82 (1960), are light years away from the facts before me, presenting nothing more complicated than the claim of a small building contractor who was excavating along a hillside when land began to slide and the porch of a house collapsed. Leebov shored up the land so that further slides and further property damage would not occur.

 Plaintiff relies primarily upon Leebov for its construction of the coverage clause. The policy in Leebov read, "[The defendant insurance company agrees] to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by the loss of use thereof, caused by accident and arising out of the hazards hereinafter defined." 401 Pa. at 478-79 (brackets in original, italics added for emphasis). The court in Leebov distinguished the policy it was construing from that discussed in Desrochers v. New York Cas. Co., 99 N.H. 129, 106 A.2d 196 (1954), which stated that the insurer undertook, "to pay on behalf of the insured all sums which the insured shall become obligated legally to pay as damages. . . because of injury to or destruction of property, including the loss of use thereof." 106 A.2d at 198 (ellipsis in original, underlining added for emphasis). *fn7"

  Plaintiff urges that, following the distinction made in Leebov between "by reason of liability . . . for damages", the policy language at issue here, and "as damages", the language of the Desrochers ' policy, courts always allow mitigation expenses in the former case but not necessarily in the latter. Defendants, on the other hand, contend that this is distinctio absque differentia - a distinction without a difference. H. Fielding, Tom Jones, bk. VI, Ch. 13 (1747). *fn8" This question has never been directly discussed in the courts of New Jersey. *fn9" Were there authoritative New Jersey cases construing the language at issue here, it would, of course, be game, set, and match with reference to this case.

 Leebov states, without revealing its reasoning or relying on any authority, that the phrase, "as damages", is a limited one, while the statement "by reason of liability" is not limited, eliminating insurer responsibility for mitigation expenses under the former phraseology and including such expenses under the latter phraseology. 165 A.2d at 84. The court thereafter justifies its decision on grounds entirely indifferent to any distinction between "limited" and "not limited" coverage clauses - that the insurer would have been liable for further actual damage barring mitigation, that there was evidence that the insured had asked for "complete coverage", and that there was evidence that the insurer had previously paid a similar claim to the insured. Thus, it would appear that the difference between "as damages" and "by reason of liability for damages" was not essential or even important to the Leebov court's holding. Indeed, it appears that if, indeed, there is a distinction, the distinction was a mere makeweight to other circumstances which enabled the court to find coverage.

 Leebov, "the leading case," certainly has not been frequently relied upon. Since it appeared twenty-six years ago, only thirteen published cases have cited it and only one slip opinion citing Leebov was available in the computer-aided legal research databases. Of these fourteen cases, none was decided by a New Jersey court, and only two discuss the distinction made in Leebov between "by reason of liability for damages" and "as damages". Slay Warehousing Co. v. Reliance Ins. Co., 471 F.2d 1364 (8th Cir. 1973); Aronson Associates, Inc. v. Pennsylvania National Mut. Cas. Ins. Co., 14 Pa. D & C.3d 1 (Com. Pl. 1977), aff'd mem. 272 Pa. Super. 606, 422 A.2d 689 (1979).

 In fact, it appears that the plurality of subsequent citations to Leebov stand for the proposition that extrinsic evidence is admissible to aid in ascertaining the parties' intent in the interpretation of a contract generally or an insurance policy in particular, *fn10" a determination which plaintiff seeks to avoid. Several cases cite Leebov generally for the proposition that, in certain circumstances, mitigation expenses may be recoverable against an insurer, but do not refer to specific coverage language. *fn11" Other cases distinguish Leebov's mitigation expenses holding on various grounds. *fn12" Yet other cases cite Leebov for various propositions having nothing to do with the coverage provision. *fn13"

 Slay Warehousing Co. v. Reliance Ins. Co., 471 F.2d 1364, relied upon Leebov in its discussion of a different mitigation reimbursement situation. The policy in question in Slay Warehousing contained "by reason of liability" language. In reference to this language, the Slay Warehousing court, at 1366, stated, "The Supreme Court of Pennsylvania has construed similar language within a liability insurance policy to require reimbursement of [mitigation] expenses . . .," and went on to quote verbatim the articulation of the distinction in Leebov without further discussion of the merits of that distinction. It is obvious, however, that the court in Slay Warehousing did not rest on the use of "by reason of liability" language in finding mitigation expenses reimbursable by the insurer.

 The Slay Warehousing court pointed to another court which had found the insurer liable for mitigation expenses based upon an exclusion, not a coverage, clause ( Harper v. Pelican Trucking Co., 176 So.2d 767 (La. App. 1965)) and went on to state: "Obviously, each case must be examined in light of the specific agreement and the law of the particular jurisdiction." 471 F.2d at 1367. Further discussion in Slay Warehousing reveals that the decision requiring reimbursement of mitigation expenses was based not at all upon the use of the phrase "by reason of liability" in the coverage clause, but upon the court's reading of the cooperation clause involved in that case. There is no such cooperation clause here.

 Slay Warehousing has been cited even less frequently than Leebov and not one of those citations discusses any distinction between the phraseology "as damages" and "by reason of liability." *fn14" On the other hand, Aronson Associates, Inc. v. Pennsylvania National Mut. Cas. Ins. Co., 14 Pa. D. & C. 3d.1, discussed the distinction and, deciding that it was unimportant, found Leebov controlling and awarded mitigation reimbursement expenses against the insurer where there was an "as damages" coverage clause. The Aronson court stated, 14 Pa. D. & C. 3d at 6-7, "Justice Musmanno appeared to distinguish a New Hampshire case, which went in favor of the insurer, where the policy language was similar to the within policy. However, a full reading of the decision in Leebov, 401 Pa. 477, 165 A.2d 82, reveals that what the court held was that preventive measures can be recovered where they are required to protect against a third person being harmed." (emphasis added) The court thereafter made clear that the logic behind Leebov would apply irrespective of the language employed. It would thus appear that Aronson, an opinion by a lower court in the state in which Leebov was decided and, therefore, presumably more closely acquainted with the interpretation of Pennsylvania Supreme Court rulings than the Slay Warehousing court, directly contradicts the off-hand assertion in Slay Warehousing that the Leebov court construed the "by reason of liability" phrase to require reimbursement of mitigation expenses.

 Aronson's refusal to recognize a distinction between the two coverage phrases is eminently more reasonable than Slay Warehousing's recognition of that distinction and is strengthened by three factors. First, the court in Aronson was obviously aware of Slay Warehousing, as it cited it, 14 Pa. D & C. 3d at 7, apparently for the general proposition that mitigation expenses are recoverable by the insured. Second, Aronson was affirmed by the Pennsylvania Superior Court, which adopted the opinion below. *fn15" Third, a Pennsylvania Court of Common Pleas case, Lehigh Electric & Engineering Co. v. Selected Risks Ins. Co., 30 Pa. D & C 3d 120, relied on Aronson's interpretation of Leebov with reference to a policy which also used the "as damages" phraseology. Without explicitly discussing the distinction between the "as damages" and the "by reason of liability for damages" language, the Lehigh Electric court stated, "The language contained in the instant policy is strikingly similar to that . . . in Aronson Associates, Inc. . . .," and found Aronson Associates both persuasive and controlling.

 In spite of its heavy reliance on the argument that the "by reason of liability" coverage language in the present policy should be construed to include and require reimbursement of mitigation expenses by the insurer to the insured, plaintiff has offered only Leebov and Slay Warehousing and there appear to be no other cases so construing similar coverage language. *fn16" Cases cited by plaintiff, other than those two, tend to show that, as far as reimbursement for mitigation expenses is concerned, the use of "as damages" or "by reason of liability" simply makes no difference. Goodyear Rubber & Supply, Inc. v. Great American Ins. Co., 545 F.2d 95 (9th Cir. 1976)("as damages" used in underlying policy, "by reason of liability" used in umbrella policy, insurers required to reimburse based on definition of "property damage"); American Economy Ins. Co. v. Commons, 26 Or.App. 153, 552 P.2d 612, 613 (1976)(in property damage policy, not liability policy, phraseology used both "by reason of" and "as damages because of bodily injury or property damage"; court rested liability for mitigation damages on the latter phrase).

 Thus, the argument that case law requires this court to construe a coverage clause using the phrase "by reason of liability" as mandating the coverage of recall and recall-related expenses, an argument which plaintiff believes to be the jewel in its crown, is wholly unavailing. Only Leebov appears to have attached independent significance to the phrase "by reason of liability" as mandating first-party mitigation coverage in a liability insurance policy and the distinction made there is entirely unconvincing. Moreover, an analysis of Leebov, especially in light of its interpretation by the lower courts of Pennsylvania, makes clear that that conclusion was merely obiter dictum. Finally, the cases and learned commentary that have referred to Leebov have criticized that aspect of the court's decision. Under the standard set forth in Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 170 A.2d 800, discussed supra at note 6, plaintiff's argument fails.

 2. Significance of the Phrase "by reason of "

 As there is no construction of the relevant terms of the coverage provision binding on me, or, indeed, persuasive to me, I turn to an analysis of whether the language of the coverage provision in the policy at issue here provides for the reimbursement of recall and recall-related expenses. LeFelt v. Nasarow, 71 N.J. Super. 538, 177 A.2d 315.

 The majority of those cases which discuss the meaning of the phrase "by reason of" indicate that its meaning, in a legal context, while somewhat wider than the categories of coverage which follow that phrase in a particular policy - in this case, liability for damages imposed upon plaintiff by law and liability assumed by plaintiff under a contract or agreement - cannot widen liability significantly beyond the scope and nature of those categories.

 Coverage "by reason of" liability simply does not cover all damages related in some way to liability; rather, there must be a causal connection between the object of the prepositional phrase "by reason of" and the damage claimed. General Acc. Fire & Life Assur. Corp. v. Continental Cas. Co., 287 F.2d 464, 467 (9th Cir. 1961) (insured entitled to recover with "by reason of" phraseology only when the accident was directly caused by the object of the phrase; recovery "by reason of" something requires causation); Chrysler Motors Co. v. Royal Indem. Co., 76 Cal.App.2d 785, 174 P.2d 318 (1946) (injuries caused by insured's employee's negligence resulting in a flash electric fire were not injuries "by reason of" work let or sublet, but were due to insured's direct negligence and, thus, not covered; object of prepositional phrase "by reason of" must be direct cause of injury in order for insured to recover); Retherford v. Kama, 52 Hawaii 91, 470 P.2d 517 (1970) ("by reason of" narrower than "with respect to", the former requiring a causative connection while the latter does not); Michigan Stamping Co. v. Michigan Employers' Cas. Co., 235 Mich. 4, 209 N.W. 104 (1926) (liability "by reason of work . . . let to independent contractors" does not equal "in performance of work of independent contractors" and requires a causal connection; the language clearly implies coverage only for third party injuries and not injuries to workers).

 The causal connection implied by the phrase "by reason of" is normally that of proximate causation. Currier v. McKee, 99 Me. 364, 59 A. 442 (1904) (to show injury "by reason of . . . intoxication" it was not necessary to show that the furnishing of the liquor was the proximate cause of the injury, but that the intoxication - the object of the prepositional phrase - was the proximate cause of the injury); Houston & T.C.R. Co. v. Anglin, 45 Tex. Civ. App. 41, 99 S.W. 897 (1907), writ of error denied 99 S.W. 897, 45 Tex. Civ. App. 41 (1907) ("by reason of" being the equivalent of "as the direct and proximate result of"). But see Dolph v. Maryland Cas. Co., 303 Mo. 534, 261 S.W. 330 (1924), with which compare the subsequent case Avery v. American Automobile Ins. Co., 350 Mo. 395, 166 S.W. 2d 471 (1942). The court in Alabama Great So. R. Co. v. Louisville & Nashville R. Co., 127 F. Supp. 363 (N.D. Ala. 1955) aff'd in relevant part, reversed on other grounds, 224 F.2d 1 (5th Cir. 1955), discussed this question at length. While it agreed that in general "by reason of" was the equivalent of "proximately caused by", citing a large number of cases, 127 F. Supp. at 369 nn.3-4, the court concluded that the wording of each agreement must be construed from context and found in that case that the ordinarily causal quality of the phrase "by reason of" was vitiated by the addition of the phrase "in whatever manner the same may be caused," and that "by reason of" in that specific instance meant only that the object of the preposition need have some part in, although not necessarily be a proximate cause of, the ultimate loss. In the present instance, of course, there is no such modifying language.

 It is clear that the use of the phrase "by reason of liability" in the present case does not include recall and recall-related expenses as covered items but, to the contrary, excludes them. As explained above, "by reason of" requires at least some causal connection between the allegedly covered expense and liability and in most cases would appear to require proximate causation. The recall in the present case was not caused by liability for the seven deaths; it was at best merely related to the seven deaths in that they served as notice to plaintiff that the Tylenol remaining on the shelves was potentially harmful. The recall was thus prompted, if for any related reason, by the possibility of future liability for possible future poisonings and not, as the policy requires, by liability " imposed by law" - which can refer only to previously completed torts - or "assumed under contract" - which refers to settlements and is not applicable here. See Dreis & Krump Mfg. Co. v. Phoenix Ins. Co., 548 F.2d 681 (7th Cir. 1977). Indeed, given the deposition testimony of James E. Burke, Chief Executive Officer of Johnson & Johnson, that the Tylenol recall was motivated by both moral and business considerations, it came as no surprise when any possibility of the required causal connection between the recall and legal liability was disclaimed by counsel at the December 24, 1985 oral argument before Judge Lacey.

 

THE COURT: Well, what catastrophe were you stopping here?

 

[COUNSEL FOR PLAINTIFF]: Stopping the death of the additional unknown numbers of people.

 

THE COURT: And that's why you did it?

 

[COUNSEL]: That is a principal motivating factor for why we did it. That is -

 

THE COURT: But that doesn't emerge from the submissions, that this was the principal, - are you saying it was the principal factor?

 

[COUNSEL]: I think it was the principal factor.

 (emphasis added) Transcript at 31.

 Contrary to plaintiff's assertion that intent in the withdrawal of Tylenol was unimportant, I find that intent, as it relates to the cause for the recall, is crucial. As plaintiff concedes that its withdrawal of Tylenol from the market was caused not by its liability but by its desire to prevent further deaths, to alleviate fear and, less altruistically, to restore Tylenol to its preeminent position, the present coverage language cannot include recall and recall-related expenses. It is not, therefore, necessary to inquire into the much harder case that would have been posed had plaintiff's recall been motivated by a desire to avoid liability in future potential suits although, for reasons stated more fully below, even such a motivation would not have been within the coverage of the policy.

 3. Scope of Coverage

 Plaintiff asserts next that even if there is no specific language in the coverage provision affording coverage for recall and recall-related expenses, the general language of the policy so provides. Defendants, resting in large part upon the reasoning expressed in Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788 (1979), assert that the policy in question covers only third party claims. As it applies in the present case, Weedo emphasizes the traditional principle of insurance law that ambiguities will not be forced into an insurance policy nor will the words of an insurance policy be artfully construed to include a type of coverage outside the scope and nature of the policy in question. *fn17"

 The parties agree that the policy is a liability policy, and frame their arguments in terms of liability only on account of personal injury. Defendants assert, and I agree, that an entirely different type of insurance coverage, recall insurance, was available. It is sufficient to note at this juncture that at one time Johnson & Johnson purchased such coverage from defendant Aetna and let this coverage expire, that Johnson & Johnson's domestic insurance broker attempted to interest Johnson & Johnson in the purchase of such insurance, and that in internal memoranda Johnson & Johnson reported itself as self-insured as to recall because, although such coverage was available, the cost was prohibitive. Weedo, 81 N.J. at 247, makes quite clear that a contrived construction cannot be used which "affords indemnity in an area of insurance completely distinct from that to which the policy applies in the first instance. To use an extreme example, no amount of semantical ingenuity can be brought to bear on a fire insurance policy so as to afford coverage for an intersection collision." The construction urged by plaintiff, while not quite so extreme, would certainly provide coverage for "an area of insurance completely distinct from" the intent and purpose of liability insurance coverage, not to mention first party coverage on what is nothing other than a third party policy.

 Black's Law Dictionary, at 824 (5th ed. 1979), defines "liability insurance" as

 

[A] contract by which one party promises on consideration to compensate or reimburse [the] other if he shall suffer loss from specified cause or to guaranty or indemnify or secure him against loss from that cause. Fidelity General Ins. Co. v. Nelsen Steel & Wire Co., 132 Ill. App. 2d 635, 270 N.E.2d 616, 620 [1971]. That type of insurance protection which indemnifies one from liability to third persons as contrasted with insurance coverage from losses sustained by the insured.

  (emphasis added). *fn18" Thus, liability insurance, and the traditional interpretation thereof, applies only to damages claimed of the insured by third parties (and attorney's fees incurred in defense thereof) and not to first party losses of the insured itself. See, e.g., Alcorn Bank & Trust Co. v. United States Fid. & Guar. Co., 705 F.2d 128, in which the court stated:

 

This distinction between first party losses and third party damage claims is generally recognized . . . Coverage on liability policy does not extend to damages for injuries to the insured personally since "liability insurance . . ., as concerns the assured, is third party coverage" . . ..

 

The district court concluded that the insurance contract 'only encompasses losses sustained by third parties for which the bank is ultimately liable.' We agree. This liability insurance policy does not extend first party protection to [the] bank. That type protection may be purchased . . . but it was not part of the comprehensive general liability insurance policy . . . .

 (citations omitted). See also Twin City Fire Ins. Co. v. Wilkerson, 247 F. Supp. 766, (construing "liability insurance" for removal purposes in accord with 28 U.S.C. § 1332(c) and defining such insurance as "an indemnity agreement which protects the insured against his liability to others"); *fn19" Maxon v. Security Ins. Co., 214 Cal. App.2d 603, 29 Cal. Rptr. 586 (1963) ("the policy in question did not purport to insure the [insured] for an accident happening to him but to a third person"); Lou-Con, Inc. v. Gulf Building Services, Inc., 287 So.2d 192, (death, damage, and destruction policy being construed was for first party liability and was therefore not a liability policy which "is written for the benefit of third parties who suffer injury or damage because of the actions of the insured."). See also Southern California Edison Co. v. Harbor Ins. Co., 83 Cal. App. 3d 747, 148 Cal. Rptr. 106, 112 (1978) (difference between liability insurance and builder's risk insurance is third-party nature of the former); Rafeiro v. American Employers Ins. Co., 5 Cal. App. 3d 799, 85 Cal. Rptr. 701, 708 (1970) (similar).

 Numerous cases have dealt with the issue of whether liability insurance covers replacement or repair by a building contractor due to defective construction. The almost unanimous conclusion is that mere replacement or repair is not covered, but damage caused by the defective construction to persons and to property not built by the contractor is covered. The cases deny coverage to the insured, even for third party claims, where the damage to the third party is consequential and there is no direct tangible damage. Many of these cases address themselves specifically to exclusionary clauses typical of building contractors' liability insurance. See, e.g., Weedo v. Stone-E- Brick, Inc., 81 N.J. at 237-38 n.2 (1979). Other cases, however, have specifically reached the general coverage provisions and denied coverage on those grounds. *fn20"

 It is clear, as defendants contend, that "liability insurance," as it is traditionally understood, does not cover first party expenses. In construing a contract, a court must look to the ordinary and popular sense of the terms and give them a reasonable and natural construction. 13 Appleman § 7386 at 138-167 (1976 & 1986 Supp.); 2 Couch 15:16-18 at 166-94 (1984 & 1985 Supp.). Thus, unless there be persuasive authority for finding otherwise, which there is not, it would appear that coverage for recall and recall-related expenses is outside the scope of coverage of liability insurance and, therefore, not cognizable in the instant policy under the reasoning of Weedo.21

  Even if recall and recall-related expenses could be within the scope of coverage of liability policies generally, there is grave doubt that such expenses would be covered under the instant policy. The premium paid is apparent from the face of the policy, and it is clear that the amount of the premium can be used in establishing the extent of coverage when the extent of coverage is in doubt. This proposition was succinctly stated in a New Jersey case and has been followed in other jurisdictions. Prather v. American Motorists Ins. Co., 2 N.J. 496, 67 A.2d 135 (1949). See Pan American World Airways, Inc. v. Aetna Cas. & Sur. Co., 505 F.2d 989, 1001 & n.10 (2d Cir. 1974); Close-Smith v. Conley, 230 F. Supp. 411 (D. Or. 1964); 13 Appleman § 7389 at 192-96 (1976 & 1986 Supp.); 2 Couch § 15:52 at 291 (1984 & 1985 Supp.); 11 Couch § 44.261 at 405-06 & n.11 (1982 & 1985 Supp.) ("There is no coverage with respect to a type of claim which falls directly within a particular coverage clause which was not purchased by the insured."). Here, there is no dispute that the premium amount was substantially less than it would have been had recall and recall-related expenses been included. We again return to one rock hard fact: Johnson & Johnson knew it could purchase recall insurance and elected not to do so.

 It is, of course, possible in construing a policy for a court to consider that alternative language explicitly placing the asserted coverage clearly outside the policy could have been used, such as the language of the Insurance Services Office ("ISO") policy to which plaintiff points which clearly excepts first party recall claims. Nevertheless, it is quite clear under New Jersey law that that fact is merely an aid to construction, and not conclusive. Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 7, 170 A.2d 800, 803 (1961); Ellmex Const. Co. v. Republic Ins. Co., 202 N.J. Super. 195, 204, 494 A.2d 339, 344 (App. Div. 1985); Aetna Ins. Co. v. Weiss, 174 N.J. Super 292, 416 A.2d 426 (App. Div. 1980); American Legion Tri-County Mem. Hosp. v. St. Paul Fire & Marine Ins. Co., 106 N.J. Super. 393, 397, 256 A.2d 57, 59 (App. Div. 1969); American Policyholders Ins. Co. v. Portale, 88 N.J. Super. 429, 439-40, 212 A.2d 668, 674 (App. Div. 1965); Kook v. American Sur. Co., 88 N.J. Super. 43, 51-52, 210 A.2d 633, 638 (App. Div. 1965).

 Moreover, if an alternative type of coverage is available and known to the insured, as here first-party recall insurance was both available and known, such coverage will not be imputed to the policy in question. "We cannot rewrite the policy or create a better contract than that which the insured purchased." Boonton Handbag Co. v. Home Ins. Co., 125 N.J. Super. 287, 310 A.2d 510. See Transamerica Ins. Co. v. Keown, 451 F. Supp. 397, 400 (D.N.J. 1978); Last v. West American Ins. Co., 139 N.J. Super. 456, 354 A.2d 364 (App. Div. 1976); American Mercury Ins. Co. v. Bifulco, 74 N.J. Super. 191, 181 A.2d 20; American Nurses Ass'n v. Passaic Gen'l Hosp., 184 N.J. Super. 170, 181, 445 A.2d 448, 454 (L. Div. 1981), rev'd on other grounds 192 N.J. Super. 486, 471 A.2d 66 (App. Div. 1984), aff'd in part, rev'd in part on other grounds, 98 N.J. 83, 484 A.2d 670 (1984); Deodato v. Hartford Ins. Co., 143 N.J. Super. 396, 401, 363 A.2d 361, 365 (L. Div. 1976), aff'd mem. 154 N.J. Super. 263, 381 A.2d 354 (App. Div. 1977); 13 Appleman § 7402 at 270-301 (1976 & 1986 Supp.); 2 Couch § 15:10 at 146-54 (1984 & 1985 Supp.).

 B. OTHER POLICY PROVISIONS

 The parties make several arguments in terms of policy provisions other than the basic coverage provision, in particular the sistership provision, a provision designed to exclude coverage for recall which in the present policy specifically excludes only third-party recall claims, and the definition of "occurrence.". It is obvious that these provisions, as well as the rest of the policy in question, were written entirely with the view that only third-party claims were covered. It simply makes no sense to suggest, as plaintiff suggests, that the parties explicitly agreed to exclude third-party recall claims on a primarily third-party policy, yet implicitly agreed to include first-party claims when first-party coverage was at best a residual and remediary category of coverage of the policy. Stated somewhat differently, there must be first-party coverage before one can even argue that a type of first-party coverage was not excluded.

 Certainly, the policy behind the sistership provision - to avoid ambiguity and qualify the breadth of coverage - would be violated if recovery were allowed here. The Insurance Services Office ("ISO") issued the following statement in 1966, a statement which remains the position of the insurance industry today:

 

If the named insured's product causes injury or damage and identical products are withdrawn from the market or from use because of a known or suspected defect (one airplane crashes and others are withdrawn from use), the cost of withdrawing or replacing products or completed work may be either a direct expense to the insured or liability to others. Such cost, whether damages or expenses, are not intended to be covered. Sistership liability or products recall insurance is the subject of a special form of coverage.

 Moreover, even if first-party recall expenses were recoverable on the present policy, because the sistership provision specifically excludes third-party claims for recall plaintiff may well have had a duty to its insurer to carry out the recall in a manner such that as much of the recall expense as possible fell within the exclusion. For the development of and reasoning behind the sistership provision, see 7A Appleman § 4508.01 at 355 & n.24, § 4508.02 at 371-72 & n.26-29, 38-81 & n.45 (1970 & 1986 Supp.); 12 Couch § 4A:62 at 100-01 (1981 & 1985 Supp.).

 With reference to the definition of "occurrence," defendants claim that the recall was an event which was neither unexpected nor unintended by plaintiff and is, therefore, not covered. Plaintiff claims that the failure of defendants to modify the words "unexpectedly and unintentionally" with the phrase "from the point of view of the insured," means that "unexpectedly and unintentionally" refers to the point of view of potential victims, and therefore recall would still be covered. In essence, the reasoning behind similar clauses in earlier insurance policies had been to exclude from coverage intentional acts by the insured as well as to narrow the definition of coverage to events somewhat approximating accidents as opposed to planned events. See Annot., Construction and Application of Provision of Liability Insurance Policy Expressly Excluding Injuries Intended or Expected by Insured, 31 A.L.R.4th 957 (1984 & 1985 Supp.) (hereinafter referred to as " Provision of Liability Insurance Policy "); Annot., Liability Insurance: Specific Exclusion of Liability for Injury Intentionally Caused by Insured, 2 A.L.R.3d 1238 (1965 & 1985 Supp.). Over the years, many courts, looking for ways to compensate innocent victims of intentional torts, construed the term "expected" without qualification to refer to the point of view of the victim and not the tortfeasor. See 7A Appleman § 4492.02 at 27 (1970 & 1986 Supp.); Provision of Liability Insurance Policy, supra. Until the new "occurrence" policies, all such efforts construed the definition of "accident" in "accident" policies, which policies included only the exclusion of "expected" events in this particular context. The majority of the new "occurrence" policies, which exclude both "intended" and "expected" events under the standard American ISO language, have included the modification "from the point of view of the insured" and, therefore, there has been little construction of "occurrence" policies that does not include such a modification.

 The only case directly on point, Ashland Oil, Inc. v. Miller Oil Purchasing Co., 678 F.2d 1293 (5th Cir. 1982), held rather cursorily that based upon the construction of "expected" in "accident" policies as referring to the point of view of the victim, "unexpectedly and unintentionally" as unmodified also referred to the point of view of the victim. This holding has not been followed, and I have some difficulty with it. If the term "unexpectedly" were used alone, there would be no question that under New Jersey law "from the point of view of the victim" would be implied. See Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Estate of Miller, 185 N.J. Super. 183, 447 A.2d 1344 (App. Div. 1982). While some courts have held that "intended" and "expected" mean the same thing, other courts have held differently in other contexts, and I would agree with them in this context. As to this disagreement, see Provision of Liability Policy, supra at 981-83. In discussing the meaning of "intended", the cases do not deal with whose standpoint is to be inferred. See Provision of Liability Policy, supra. However, in context, "intended" cannot mean from the point of view of the victim, as it makes no sense. If someone acted intentionally and caused himself harm, there would be no way for an insured to be implicated, for there would be no one for the victim to sue but himself. Therefore, "intended" must imply "from the point of view of the insured", which in the present case would exclude coverage for the recall as that was an act intended by the insured.

 The fact that no policy provision afforded coverage is confirmed by the manner in which the policy was viewed by the parties. Not one employee or agent of Johnson & Johnson who testified, save Hubert Seiffert, its Assistant Treasurer, stated that he believed, expected, or intended at any time that recall expenses would be covered under the policy and plaintiff describes Mr. Seiffert's assumption to the contrary as "uninformed." Somewhat confusingly, in another submission plaintiff describes the understanding of Frederick B. Molineux, Johnson & Johnson's highly experienced Director of Corporate Insurance, (and, presumably, would describe the understanding of everyone else) that there was no recall coverage as "erroneous" but then only because of the "plain language of the policy." This language, I note, was so "plain" that it and the coverage it purports to afford were not discovered for years.

 Prior to the recall, Annual Reports to the Board of Directors unequivocally stated that Johnson & Johnson maintained no recall insurance whatsoever. Indeed, it appears that insurance for recall expenses was never even discussed with H. S. Weavers, North River's principal reinsurers. Coincidentially, one month before the recall, Johnson & Johnson's domestic insurance broker, Johnson & Higgins, offered Johnson & Johnson a form of cover known as product integrity/impairment insurance. Johnson & Higgins' representatives testified that no such offer would have been made had it been thought that any Johnson & Johnson policy would indemnify Johnson & Johnson were it to incur recall expenses.

 The reason why there was no insurance for recall and recall-related expenses is clear - it was simply too expensive. As Judge Lacey found in the Affiliated FM aspect of this litigation, findings which plaintiff does not here dispute and which, in any event, it is estopped from disputing:

 

In performing his duties as a risk manager, Mr. Molineux had identified the risk of a product recall and the potential catastrophic financial impact it could have on plaintiff or one of its family of companies. In 1979 he advised the plaintiff's executive committee that losses involving the recall or withdrawal of any of plaintiff's products from the marketplace were insurable but at a prohibitive cost - Findings of Fact No. 44.

 

. . . Mr. Molineux knew that the risk existed of someone in the public tampering with a packaged product of plaintiff's once it had been unconditionally sold and delivered to third parties, and he made a conscious decision not to insure the interruption of plaintiff's operation flowing from a recall. Findings of Fact No. 45.

 He similarly made a conscious decision not to insure product recall expenses. This decision was fully consistent with the philosophy of the Corporate Insurance Department of Johnson & Johnson whereby the transfer of risk to an insurer was the last step in the risk management process. See Findings of Fact No. 20.

 Following the Tylenol poisonings and while renegotiating the policy, Mr. Molineux supposedly represented to H. S. Weavers that, aside from the seven death cases, no further claims would be presented in connection therewith, a representation defendants suggest was made for the purpose of obtaining a premium reduction. While plaintiff denies that Mr. Molineux promised that there would be no further claims, it is undisputed that a premium reduction was, in fact obtained; that no mention was made of product recall insurance; and that Johnson & Johnson's attorneys had not yet begun to examine the liability policy seeking a basis for recall coverage.

 Indeed, no claim has yet been presented; rather this lawsuit was filed. As Judge Lacey found in the Affiliated FM case:

  

Plaintiff's conduct in presenting its insurance claim at issue here suggests it knew after the loss occurred that it had no explicit coverage to cover the losses involved herein. Under normal circumstances, plaintiff's Corporate Insurance Department would have submitted any potential claims to the insurance carrier involved. In this particular case the department never submitted a claim to Affiliated, but rather a lawsuit was started. Findings of Fact No. 69.

  C. INTERPRETATION OF AMBIGUITIES

  The importance of the manner in which the parties viewed the policy is borne out in those cases dealing with ambiguities in the insurance contract. Weedo v. Stone-E-Brick, 81 N.J. at 247, defined an ambiguity as follows: "We conceive a genuine ambiguity to arise where the phrasing of the policy is so confusing that the average policy holder cannot make out the boundaries of coverage." There can be no ambiguity here as there are not two possible interpretations and the policy at issue would not be at all confusing to the average policy holder. It is the interpretation that the ordinary public purchasing similar insurance policies would apply that the courts must ascertain. Entron, Inc. v. Affiliated FM Ins. Co., 749 F.2d 127; DiOrio v. New Jersey Mfrs. Ins. Co., 79 N.J. 257, 398 A.2d 1274 (1979); Linden Motor Freight Co. v. Travelers Ins. Co., 40 N.J. 511, 193 A.2d 217; Petronzio v. Brayda, 138 N.J. Super. 70, 350 A.2d 256 (App. Div. 1975) ("We recognize that the doctrine of reasonable expectations of the average policyholder has been employed in order to expand coverage in favor of the assured rather than to limit it in favor of the carrier. Nevertheless there is no reason apparent to us why this test of construction should be disregarded because the result thereof would benefit the carrier instead of the assured."); Tomaiuoli v. United States Fid. & Guar. Co., 75 N.J. Super. 192, 182 A.2d 582. It is relevant, although as an argument ex nihilo it is not conclusive, that defendants have sold numerous similar policies and not a single claim for recall expenses has been made on them.

  Any confusion read into the policy is read only by plaintiff both from the absence of language negating terms foreign to the policy and imputing into that policy, which is entirely third-party in context and effect, a first-party coverage which was not intended. Courts will not strain the language of the policy to find an ambiguity where there is none in order to grant coverage that does not exist. Weedo v. Stone- E-Brick, Inc., 81 N.J. at 247; 13 Appleman § 7402 at 270-301 (1976 & 1986 Supp.). I note that in Commercial Union Ins. Co. v. Pittsburgh Corning Corp., 789 F.2d 214 (3d Cir. 1986), the Court of Appeals chastised the insured for attempting to create an ambiguity long after the fact of contracting. The present case is that much the worse in that plaintiff, having failed to convince this court that the explicit wording of the policy affords it the coverage it claims, seeks not only to force an ambiguity into the contract after the fact, but seeks to interpret the purported ambiguity contrary to its own admitted intent.

  But even were the policy ambiguous, defendants would prevail. Plaintiff argues that if an ambiguity be found, the rule of contra proferentem should be strictly applied and that extrinsic evidence, which here goes one way and one way only and which plaintiff seeks to avoid like the plague, should not be allowed to demonstrate the actual intent of the parties. Plaintiff reads New Jersey law to be that the strict rules of insurance construction should apply even when the insured is a large corporation which had the aid of counsel in choosing and bargaining over the policy. Plaintiff is wrong.

  Weedo states that as to policies which are ambiguous, "the 'doctrine of ambiguity' works to effectuate the consumer's expectation that the policy purchased extended greater coverage in the particular underwriting area." 81 N.J. at 247. "The construction placed on a policy by the parties thereto should ordinarily be adopted by the courts as controlling, if the policy is susceptible of such construction." 6B Appleman § 4254 at 27- 28 & n.27 (1979 & 1986 Supp.)

  All rules as to the interpretation of ambiguities must be subordinated to the common intent of the parties which governs. *fn22" If the intent of the parties is unclear from the contract, extrinsic evidence can be brought in to elucidate their intent. 11 Couch § 44:261 at Supp. 19-20 (1982 & 1985 Supp.) This aspect of the Leebov decision and its general acceptance have been discussed above. But plaintiff reminds me that the Court of Appeals for the Third Circuit, in applying Pennsylvania law, disagrees. ACandS, Inc. v. The Aetna Casualty & Surety Co., 764 F.2d 968 (3d Cir. 1985); Daburlos v. Commercial Ins. Co., 521 F.2d 18, 26 (3d Cir. 1975). See Vale Chemical Co. v. Hartford Acc. & Indem. Co., 340 Pa. Super. 510, 490 A.2d 896 (1985), appeal granted 508 Pa. 603, 499 A.2d 576 (1985); Hionis v. Northern Mut. Ins. Co., 230 Pa. Super. 511, 327 A.2d 363 (1974). It should be noted, however, that AC & S was based on Vale, and this aspect of Vale was based on out-of-state precedent, failed to refer to the previous Pennsylvania cases allowing admission of extrinsic evidence (i.e., Leebov and its progeny), and is currently pending appeal. Daburlos is based upon Hionis, a case explicitly disapproved on other grounds as too pro-insured by the Pennsylvania Supreme Court in Standard Venetian Blind v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563 (1983). No case subsequent to Daburlos has cited it for the proposition that extrinsic evidence is not to be admitted in insurance cases. See, e.g., St. Paul Fire & Marine Ins. Co. v. United States Fire Ins. Co., 655 F.2d 521, 524 (3d Cir. 1581); Compagnie de Bauxites de Guinee v. Insurance Co., 551 F. Supp. 1239, 1242 (E.D. Pa. 1982), aff'd 721 F.2d 109 (3d Cir. 1983). Moreover, Hionis was not decided on the basis that extrinsic evidence should not be entertained to explain an ambiguity but, rather, on the basis that the insurer had not bothered to introduce such evidence while the insured had done so. This is made clear by the only Pennsylvania case to cite Daburlos on the question of extrinsic evidence. Klischer v. Nationwide Life Ins., 281 Pa. Super. 292, 422 A.2d 175, 177 & n.2 (1980) ("Because the insurer offered no evidence to contradict or detract from the version offered by the insured, we affirmed the order of the lower court directing a verdict for the insured.").

  Stating, "The courts have disregarded the insured's own opinion that he was not covered," plaintiff also relies incorrectly upon City of Newark v. Hartford Acc. & Indem. Co., 134 N.J. Super. 537, 342 A.2d 513 (App. Div. 1975). In City of Newark, the court held that an inter-office memorandum of the insured which indicated that the insured did not carry a specific coverage was not conclusive as to intent. Clearly, the insured's intent was important. In the present case, there is no evidence at all that any employee of plaintiff believed that it was insured for recall and there is a multitude of uncontradicted evidence that plaintiff's employees and officers believed that there was no coverage for recall at the time of the policy was executed or at anytime thereafter until counsel entered the picture following the recall.

  In Mahon v. American Cas. Co., 65 N.J. Super. 148, the Appellate Division remanded a jury decision in favor of an insured on the ground that the court had submitted the case to the jury without guiding the jury in construing an ambiguity in the policy. The parties had not submitted extrinsic evidence as to their interpretations of the ambiguous phrase, and the appellate court expressed dismay that the trial court had allowed the jury to decide the meaning of that phrase with no evidence having been adduced and without any direction by the court as to the possible proper constructions of the phrase. The court made clear that where ambiguous contract language was susceptible of resolution by disputed parole evidence admitted in aid of interpretation, such evidence should be considered by the jury. In stating this proposition, it relied upon Michaels v. Brookchester, Inc., 26 N.J. 379, 140 A. 2d 199 (1958), a common law contract case in which parole evidence was admitted to aid in interpreting an ambiguous provision of a contract.

  Based upon the citation in Mahon to general contract construction principles, the strong emphasis in New Jersey insurance cases on ascertaining the intent of the parties, and the emphasis in Weedo on the insured's expectations, it is quite clear that New Jersey courts would admit extrinsic evidence to aid in the interpretation of insurance policies.

  Cases urged on me by plaintiff for the contrary proposition are miscited, are relied upon for much more than they stand for, or are out-of-state cases that conflict with New Jersey law. Notably, plaintiff's reliance upon AC & S, Inc. v. Aetna Cas. & Sur. Co. and Daburlos v. Commercial Ins. Co. is misplaced in light of even Leebov and its progeny. See Bakery & Confectionary Workers Int'l Union v. Great Atlantic & Pacific Tea Co., 357 F. Supp. 1322; In re Spectrum Arena, Inc., 340 F. Supp. 786; Celley v. Mutual Ben. Health & Acc. Assn., 229 Pa. Super. 475, 324 A.2d 430, (Hoffman, J. concurring); GRC Coal Co. v. Commonwealth, 63 Pa. Commw. 10, 437 A.2d 512; Cooke v. Metlab Co., 49 Pa. D. & C. 2d 704. See also Plowman, supra note 16; Reed, supra note 16. Thus, were this policy ambiguous, I would accept the unequivocal evidence that the parties did not envision recall and recall-related expenses as within its coverage, thereby rejecting plaintiff's characterization of its actual intent as "irrelevant."

  It has been held that in disputes as to policies between a large corporation and a large insurance company, both of which were advised by competent counsel at the time of the agreement, ordinary rules of contract construction apply. Eastern Associated Coal Corp. v. Aetna Cas. & Sur. Co., 632 F.2d 1068, 1075 (3d Cir. 1980) (construing Pennsylvania law), cert. denied, 451 U.S. 986, 68 L. Ed. 2d 843, 101 S. Ct. 2320 (1981); Nationwide Mut. Ins. Co. v. United States Fid. & Guar. Co., 529 F. Supp. 194, 197 (E.D. Pa. 1981); Eastcoast Equip. Co. v. Maryland Cas. Co., 207 Pa. Super 383, 218 A.2d 91 (Com. Pl. 1965), aff'd mem. 207 Pa. Super. 383, 218 A.2d 91 (1966); 13 Appleman § 7402 at 301 & n.32.35 (1976 & 1986 Supp.).

  The Court of Appeals for the Third Circuit has recently held to the contrary in a case decided under Pennsylvania law. ACandS, Inc. v. Aetna Cas. & Sur. Co., 764 F.2d 968, a holding plaintiff presses on me. This aspect of AC&S, Inc., based upon Standard Venetian Blind v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, states, "The Supreme Court of Pennsylvania has applied the rule of strict construction in cases in which the insured was a commercial entity." However, in Standard Venetian Blind the court decided in favor of the insurer, and stated only in dictum, "Although on this record we reject Hionis [v. Northern Mut. Ins. Co., 230 Pa. Super. 511, 327 A.2d 363], we note that in light of the manifest inequality of bargaining power between an insurance company and a purchaser of insurance, a court may on occasion be justified in deviating from the plain language of a contract of insurance." 469 A.2d at 567. Strict construction, at least in Pennsylvania, would thus be explicitly prefaced on unequal bargaining power. It bears mention that more recently than AC & S, the Third Circuit made the following observation in another case in which Pennsylvania law was applied: "While it is true that many of the provisions in the policy before us were from standard INA forms, CBG is a large company with the ability to negotiate with INA. Therefore, the first rationale for the . . . rule, that an insurance policy is often a contract of adhesion, does not necessarily apply . . . ." Compagnie des Bauxites de Guinea v. Insurance Company of North America, 794 F.2d 871, 875 (3d Cir. 1986).

  Although there are no New Jersey cases directly on point, it would seem that the New Jersey courts would decide that insurance policies of large, skilled corporations - and here, I venture to suggest, Johnson & Johnson is larger than its insurers - would be treated as ordinary contracts. See Fenwick Machinery, Inc. v. A. Tomae & Sons, Inc., 79 N.J. 590, 401 A.2d 1087 (1979) (insurance brokers, charged with superior knowledge, "cannot take advantage of whatever deficiencies might be uncovered in the policy language when viewed from the perspective of an unschooled and unwary policyholder."). Such a position would dovetail with the New Jersey policy that insurance policies are generally strictly construed because they are contracts of adhesion, i.e., they are products of unequal bargaining power. Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 170 A.2d 800; Griggs v. Bertram, 163 N.J. Super. 87, 394 A.2d 174 (L. Div. 1978), aff'd 175 N.J. Super. 501, 420 A.2d 364 (App. Div. 1980), aff'd in part, rev'd in part on other grounds 88 N.J. 347, 443 A.2d 163 (1982). *fn23"

  In the present case, there is no question but that the parties were of equal bargaining power and that all that preceded and all that followed the execution of the policy at issue here is reminiscent of the entry into and the living under a treaty between two great nations. Plaintiff's protestations about the size and competitiveness of the liability insurance market and the "adhesion contract" prepared without its input, in a phrase, fall flat. This latter protest, I note, cannot have been other than tongue in cheek for the evidence belies any suggestion other than that the policy itself was negotiated, as were almost all of the fifteen addenda to the policy, most of which added or subtracted specific form coverages over the years. If the policy reflected few if any changes from the "London form", none were requested, not because Johnson & Johnson lacked the opportunity or the capacity to make such requests, but because the language accomplished what was intended. I also note that while denying negotiation, plaintiff describes Mr. Molineux, Johnson & Johnson's Director of Corporate Insurance and an attorney, as its "principal negotiator".

  Johnson & Johnson, which ranks fifty-ninth in the Fortune 500, generates annual insurance premiums of approximately $20,000,000 and maintains a Corporate Insurance Department consisting of an expert insurance staff with a legal staff at its disposal. Judge Lacey found in the Affiliated FM aspect of this litigation not only that Johnson & Johnson was a "favored customer" (Findings of Fact Nos. 40, 41), but that "the significance of plaintiff's having its own expert insurance staff to represent it in determining its insurance program, in implementing that program, and thereafter in its negotiations with [Affiliated] cannot be overstressed. This was not the usual insured-insurer relationship." Findings of Fact No. 21; see also No. 41.

  Concededly a sophisticated insured, Johnson & Johnson cannot seek refuge in the doctrine of contra proferentem by pretending it is the corporate equivalent of "Mike" Leebov. Cessante ratione legis, cessat et ipsa lex -- "where the reason stops, there stops the rule." United States v. Criden, 633 F.2d 346, 357 & n.6 (3d Cir. 1980); United States v. Schreiber, 599 F.2d 534, 537 & n.2 (3d Cir. 1979); K. Llewellyn, The Bramble Bush 157-58 (1960).

  Thus, even if there were some ambiguity in the instant policy, which there is not, I would be compelled to find in favor of defendants.

  II. QUASI-CONTRACT AND AGENCY

  There can, therefore, be no basis of recovery in the present case for expenses, however denominated, based on contractual principles, as it is clear that such expenses are outside the provisions of the policy. Certain commentators have suggested, however, that based on a theory akin to unjust enrichment, recovery for such expenses might be had outside the explicit provisions of the policy assuming, of course, that there be coverage for the potential damage averted. See Levmore, supra note 16; Allocation of Costs, supra note 16. For instance, a theory of implied agency suggests itself, the insured acting as agent for the insurer in mitigating damages at the scene of rapidly occurring damage with immediate decisions required and with the insured best able to judge which measures to take, a scenario unlike the scenario here. There is, of course, no express agency by virtue of any provision in the policy which explicitly required the insured to mitigate or which stated that such actions will be considered as taken at the request of the insurer. See Harper v. Pelican Trucking Co., 176 So.2d 767.

  A noted commentator on insurance law has observed that the relationship between insurer and insured is analogous to that of debtor and creditor and not to that of a trustee and a cestui que trust, which latter fiduciary relationship would be more similar to one of agency. 2A Couch § 23:11 at 784 (1984 & 1985 Supp.). "Ordinarily, an insurance company stands in no fiduciary relationship to a legally competent applicant for . . . [an] insurance contract." Id. at 787. In fact, an insurance agent is not allowed to issue insurance for himself without his principal's consent for the reason that one simultaneously an agent and an insured would be serving conflicting interests. 4 Couch § 26A:193 at 369-70 (1984 & 1985 Supp.) When, as in this case, "liability is based upon a theory of unjust enrichment, the case properly falls within the principles of restitution and not agency principles." H. Reuschlein & W. Gregory, The Law of Agency & Partnership 82 n.46 (1979).

  Two commentators have suggested that recovery on claims for mitigation expenses based on general liability policies might be based upon grounds of quasi-contract. Levmore, supra note 16, at 117-20; Allocation of Costs, supra note 16, at 1316. *fn24" Levmore would allow recovery for mitigation in Leebov-type situations based on his theories of wealth-dependency and lack of market encouragement problems. However, the wealth-dependency theory applies primarily in a world of unequal bargaining power, a situation which, as discussed above, is not the situation here. As discussed below, Levmore too easily dismisses market encouragement problems, i.e., the distortion of free market bargaining caused when restitution is invariably awarded.

  Allocation of Costs, supra note 16, takes a quantum leap in analogizing from the long line of cases allowing mitigation expense coverage in maritime insurance, where there is an explicit sue and labor clause authorizing such expenses, to require such expenses to be paid under a general liability policy with no such explicit provision. Allocation of Costs would allow recovery based upon an unjust enrichment theory grounded on a constructive contract -- a contract the parties would have made had they foreseen the future event when they negotiated the contract. See generally A Theory of Hypothetical Contract, supra note 24. It argues that a reasonable insurer, faced with an accident in which it would have to pay the entire eventual damage costs, would agree to reimburse the insured for mitigation expenses. In essence, Allocation of Costs urges that to conclude otherwise would place the insured in an unfair position in that it would be forced to mitigate based upon external exigencies and would, therefore, be in a poor bargaining position at that time to urge coverage for mitigation expenses.

  Such reasoning is faulty on two grounds. First, it presupposes that the insured has other reasons for mitigating, thus vitiating the force of any public policy argument requiring recovery in such cases in order to encourage mitigation, an argument discussed below. Second, the time frame is ex post in that coverable damage has already occurred and is increasing. The insurer would be in a poor bargaining position to do other than accede to the insured's requests to cover mitigation expenses.

  But the parties should be viewed at the time of the making of the contract. At that time, an insurer and insured who foresaw the possibility of an accident requiring mitigative efforts could well have decided on one of two alternatives -- liability insurance with mitigation expense recovery for a higher premium or liability insurance without such added coverage at a lower premium. Based on the variety of possible ex ante scenarios, it is impossible to predict on a hypothetical contract basis what decision as to coverage the parties in this case would have made although clearly the amount of the premium would have been considered, a consideration of critical importance to plaintiff.

  Moreover, it might well be argued that even if recovery on a restitutionary theory were colorable in the present case, several of the traditional defenses to such recovery would apply. For instance, plaintiff does not appear to meet the strict test of exigency required for recovery of expenses undertaken in an emergency situation. See Restatement of Restitution 2d, Tentative Draft No. 1, § 3 Comment b, (April 5, 1983). Moreover, under plaintiff's theory that its recall saved defendants possible future damage obligations, that recall was, as towards defendants, the act of an officious intermeddler or volunteer. "A person who receives a benefit through conduct officious as to him does not owe restitution to the person so acting. A person acts officiously when he intervenes in the affairs of another without adequate justification, such as to that which may be afforded by a request or a mistake." Restatement of Restitution 2d, Tentative Draft No. 1 § 2 (April 5, 1983). See Restatement of Restitution §§ 2, 112 (1937). The rationale underlying this principle is that the common law supports the right to decide on and undertake one's own obligations and prevents one from thrusting an obligation upon another. Restatement of Restitution 2d, Tentative Draft No. 1, § 2 Comments a & d (April 5, 1983).

  It is, indeed, a narrow line that must be walked in order to recover under a restitutionary theory. The actor must be motivated in part by an interest in reward, or his actions will be altruistic, gratuitous, and uncompensible. Plaintiff's recall was not at all motivated by an interest in a reward from its insurers. On the other hand, in most cases there can be no recovery if the actor's deeds are undertaken in self-interest (as opposed to interest in a reward recovery) for the actor has suffered no loss, i.e., he would have done the same thing even had the beneficiary possessed no interest in the object of the actor's efforts. This self-interest is evident here.

  Allocation of Costs argues that an insured cannot be an officious intermeddler in the business of the insurer when he acts to mitigate damages to himself. This contention, too, can be disputed on two grounds. First, according to a noted expert in the field of restitution, courts have consistently denied attempts of all persons but lawyers who, simultaneously serving their own interests, seek to recover on a restitutionary theory from another whose interest was also served by their endeavors. Dawson, The Self-Serving Intermeddler, 87 Har. L. Rev. 1409, 1444-50, 1457-58 (1974). See Restatement of Restitution 2d, Tentative Draft No. 1, § 21 Comment c (April 5, 1983). This conclusion is in line with the civil law precept denying recovery on negotiorum gestio when the benefactor's acts also benefit himself. Second, at least one recent case has held that an insured was an intermeddler vis-a-vis the insurer when he acted to mitigate damages for which the insurer might ultimately have been liable. See J. L. Simmons Co. v. Lumbermens Mut. Ins. Co., 84 Ill. App. 2d 98, 228 N.E.2d 227. *fn25"

   Thus, under quasi-contract and agency and the various permutations of those theories, plaintiff cannot prevail.

  III. LEEBOV AND ITS PROGENY - REDUX

  All else having failed, plaintiff turns again to a handful of out-of-state liability insurance cases which allow coverage for mitigation expenses, cases both poorly decided and only indirectly pertinent. Those cases all anticipate that the hypothetical damage ultimately prevented would have been covered. Goodyear Rubber & Supply, Inc. v. Great American Ins. Co., 545 F.2d 95; Slay Warehousing Co. v. Reliance Ins. Co., 471 F.2d 1364; Bankers Trust Co. v. Hartford Acc. & Indem. Co., 518 F. Supp. 371 (S.D.N.Y. 1981), vacated 621 F. Supp. 685 (S.D.N.Y. 1981); Leebov v. United States Fidelity & Guar. Co., 401 Pa. 477, 165 A.2d 82. Various other factors, as well, distinguish those cases from this.

  A. COVERAGE FOR HYPOTHETICAL INJURY

  There is some question as to whether defendants will be liable to plaintiff or Johnson & Johnson if damages are assessed against the latter in the seven Chicago death cases, let alone whether defendants would have been liable had there been further deaths. In the first place, at least one of the defendants, Northbrook Excess & Surplus Ins. Co., asserts that coverage for the seven deaths is excluded under the completed products exclusion, c(i). *fn26" In the second place, Johnson & Johnson has been and is now vigorously contesting its liability in the pending death cases. It is ludicrous to argue, under the very cases upon which plaintiff relies, that there is coverage for recall and recall-related expenses when plaintiff and its parent deny any responsibility for the deaths. Indeed, they have said from day one and to this day that Tylenol was not tampered with while in their possession and control and utterly nothing has surfaced to suggest that that conclusion was untrue. Leebov, it bears mention, was a case in which liability was absolute.

  Moreover, I strongly disagree with plaintiff's assumption that there would have been coverage had additional deaths occurred absent the recall. Plaintiff itself admits, both in its complaint and in its briefs, that it would have been negligent or grossly negligent were any subsequent deaths caused by its retention of Tylenol on the market. It is a well settled proposition of law that an actor who has negligently imperiled the life of another has a duty to aid that person and save him or her if at all possible. See Butler v. Acme Markets, 89 N.J. 270, 445 A.2d 1141 (1982), aff'g 177 N.J. Super. 279, 426 A.2d 521 (App. Div. 1981); Restatement of Torts § 321 (1934); Restatement Second of Torts § 321 (1965 & 1986 Supp.); W. Prosser & W. Keaton, The Law of Torts 377 & n.43 (5th Ed. 1984) ("It also is recognized that if the defendant's own negligence has been responsible for the plaintiff's situation, a relation has arisen which imposes a duty to make a reasonable effort to give assistance, and avoid any further harm."). In relation to a contractual obligation in an insurance case, "A person who becomes aware of a situation potentially capable of producing damages and who is able to prevent them and minimize loss is under a duty to do so." 7A Appleman § 4492.02 at 37 (1979 & 1986 Supp.). See Industrial Sugars, Inc. v. Standard Acc. Ins. Co., 338 F.2d 673 (7th Cir. 1964) ("We think an insured who is able to prevent damages entirely should be under a duty to do so.").

  With reference to a fire insurance policy, the Supreme Court stated, "Generally speaking, insurances against fire are made in the confidence that the assured will use all the precautions to avoid the calamity insured against, which would be suggested by his interest. The extent of this interest must always influence the underwriter in taking or rejecting the risk, and in estimating the premium." Columbian Ins. Co. v. Lawrence, 27 U.S. (2 Pet.) 25, 49, 7 L. Ed. 335 (1829). Such reasoning is equally convincing with reference to liability policies. See 15A Couch § 56:9 at 15 (1983 & 1985 Supp.) ("The duty [to mitigate] extends to preventing further bodily injury or property damage and to correct the fault but it does not require that the insured repair damage that has already occurred.") (emphasis added).

  Thus, although an insured has a duty to mitigate damage once some damage has occurred of which it has knowledge, the insured has no duty to lessen damage that occurred before it was informed and able to mitigate. Therefore, in cases where an insured takes steps to minimize the harm already incurred, the insured is lessening an already vested damage recovery right and is, therefore, entitled to reimbursement for its reasonable expenses from its insurer. Chemical Applications Co. v. Home Indem. Co., 425 F. Supp. 777 (D. Mass. 1977). In this context, I note that Couch interprets Leebov as a case not of recovery for mitigation expenses, but one in which the harm (i.e., the landslide) had already occurred and the insured's expenses decreased his previously vested damage recovery right. 11 Couch § 44:263 at 410 & n.1 (1982 & 1985 Supp.). See also Comment Note, "Duty to Mitigate Damages," 81 ALR 282 (1932 & 1985 Supp.).

  Failure so to act may entail not only civil, but criminal liability. N.J.S.A. 2C:2-1.b(2) (liability for omissions when duty to perform imposed by law); Model Penal Code § 2.01(3)(b) (similar; note 30 adds, "The 'duty imposed by law' may be a statutory duty, a contractual duty, or a duty arising from tort law."); 4 W. Blackstone, Commentaries on the Laws of England 25-26 (1769); W. LaFave & A. Scott, Criminal Law 186 (1972) (questioning criminal liability for failure to act after innocent acts, inapplicable here as plaintiff has admitted it would be negligent); R. Perkins & R. Boyce, Criminal Law 666 (3d Ed. 1982). See State v. Reitze, 86 N.J.L. 407, 92 A. 576 (Sup. Ct. 1914) ("Where death is the result of an occurrence unanticipated by the defendant, but which arose from his negligence or inattention, his criminal responsibility depends on whether or not the injury which caused the death was the regular, natural and likely consequence of defendant's conduct. If it was, then the defendant is subject to indictment." In Reitze, the indictment of an innkeeper, charged with manslaughter when a patron died after becoming intoxicated, was dismissed, as the innkeeper could not have foreseen the possibility of the freakish accident. Here, of course, plaintiff and its parent admit that they foresaw further poisoning incidents if they failed to act.

  Public policy strongly condemns, and thus disallows, any insurance against a criminal act or omission. Ruvolo v. American Cas. Co., 39 N.J. 490, 189 A.2d 204 (1963). Most states also disallow insurance for intentional, reckless, and grossly negligent acts or omissions on similar public policy grounds, regardless of whether there is a specific exclusion or not. See Annot., Liability Insurance as Covering Accident, Damage, or Injury due to Wanton or Wilful Misconduct or Gross Negligence, 20 ALR 3d 320 (1968 & 1985 Supp.); 6B Appleman § 4252 at 4-7, § 4255 at 45-46 & n.53 (1979 & 1986 Supp.); 11 Couch § 44:275 at 426-29 (1982 & 1985 Supp.). For instance, in Industrial Sugars, Inc. v. Standard Acc. Ins. Co., 338 F.2d 673, the court, on public policy grounds, denied coverage to an insured sugar manufacturer for damages that ensued when it failed to notify or recall from one of its customers sugar contaminated with chlorine after it was notified by other customers of the contamination. The court stated, "To allow [the insured], with the knowledge that it had of contamination in the batch of sugar from which the [customer's] shipment was taken, to take a chance that the contamination would not be discovered and then impose the loss upon the insurer would be to countenance insurance against one's deliberate misconduct." 338 F.2d at 675-76. Had plaintiff failed to recall its possibly damaged Tylenol, it would have stood in a position very similar to that of the plaintiff in Industrial Sugars, Inc. See General Ins. Co. v. Town Pump, Inc., 214 Mont. 27, 692 P.2d 427 (1984), where negligent failure to investigate and therefore to mitigate a gasoline leakage was considered covered. The court there stated, "There have been no allegations that [the insured] acted wilfully in disregarding the indications of gasoline leakage." Had the widely publicized poisoning incidents here been disregarded with no effort made to prevent possible further fatalities, it most certainly would have been wilful conduct. *fn27"

  The leading recent case on this point in New Jersey, Ambassador Ins. Co. v. Montes, 76 N.J. 477, 388 A.2d 603 (1978), held that construction of a liability insurance policy to allow the insured to obviate, on public policy grounds, its obligation to pay for harm caused because of its intentional act would unduly deny a well merited recovery to the injured party.

  

Were a person able to insure himself against the economic consequences of his intentional wrongdoing, the deterrence attributable to financial responsibility would be missing. Further, as a matter of moral principle no person should be permitted to allege his own turpitude as a ground for recovery. Accordingly, we have accepted the general principle that an insurer may not contract to indemnify an insured against the civil consequences of his own wilful criminal act.

  

However, this principle is not to be applied under all circumstances. Certainly it should not come into play when the wrongdoer is not benefited and an innocent third party receives the protection afforded by the insurance.

  76 N.J. at 483. Importantly, Ambassador Ins. specifically granted to the insurer the right to proceed as a subrogee against the insured to recover the amount paid out to the victim. It is clear, therefore, that even under that case, plaintiff cannot recover against its insurers for recall and recall-related expenses where it would have been itself ultimately liable for the damages for future deaths. Thus, plaintiff's premise that by its recall it saved defendants potential recoveries against them fails, and the cases which support that premise are unavailing for even if defendants would have had to pay damages to hypothetical victims, such sums would have had to have been reimbursed by plaintiff.

  B. OTHER DISTINCTIONS

  There are various other factors that distinguish the present case from that of Leebov and its related cases. First, those cases were all based upon liability for a swift, single, and continuing occurrence of property damage, while the present case is bottomed on liability for personal injury in a potential mass disaster. *fn28" Second, the mitigation efforts that were considered covered in those cases were specifically designed to limit damage to a particular third party who had already been injured and not to more general damage prevention. Thus, the closer parallel in the present case might be whether the insurer was obligated to pay for hospital expenses the insured incurred in treating a victim of a poisoning incident. *fn29" Third, in each case, there was a genuine emergency requiring instantaneous action, which precluded setting up any significant plan with the insurer. In the present case, also, of course, an emergency situation, plaintiff had sufficient time during the week-long recall period and thereafter to consult with defendants, or at least to notify them, as to what actions it would take, yet failed to do so until the commencement of this lawsuit. *fn30" This failure, plaintiff explains, occurred because the recall took place prior to anyone thinking about insurance much less discussing the question of coverage, an explanation that is hardly surprising given the fact that no one believed there was coverage. Fourth, in each case, in spite of its emergent nature, there was a representative of the insurer on the scene who, at least implicitly, acceded to the emergency measures of the insured. *fn31"

  At argument on these motions, Judge Lacey observed: ". . . without Leebov you don't have anything." (Tr., Dec. 24, 1985 at 79). Once again, Leebov and cases related to it have not taken plaintiff where it wishes to be.

  IV. PUBLIC POLICY

  Even if the parallels with Leebov and its related cases were stronger, I would disagree with the policy implications of those decisions, at least as far as plaintiff would have them applied in the present case. What the Leebov court did was to state that, in a liability policy which it found to be ambiguous as to coverage for mitigation expenses, such expenses were covered. The public policy invoked was the encouragement of mitigation. If mitigation expenses are considered covered in such cases, so the argument goes, insureds would be encouraged to mitigate while if the courts disallow such expenses under general liability policies, insureds would be encouraged to permit damages to mount, knowing that direct damages would be covered. This argument, while superficially appealing, must be rejected.

  In the first place, to apply this doctrine properly, coverage for mitigation expenses would have to be mandatory in all liability policies. If mitigation coverage were not mandatory, insurers could develop (as they have) specific mitigation insurance, in addition to liability insurance, for which former coverage they would charge substantial premiums. Ordinary liability policies, available at the lower premium rate paid in the present case, would therefore not encompass any mitigation coverage. Thus, any time an insured under an ordinary liability policy found to be insufficiently clear recovered mitigation expenses, it will have received a windfall in that it attained coverage that was available but that it did not bargain for, while other insureds will have paid substantially higher premiums for the same coverage. Such a windfall would not, and could not, be a form of encouragement to undertake mitigation efforts but, to the contrary, a reward for having made such efforts. *fn32"

  Eventually, then, a sharply divided market with two types of liability policies (one including coverage for mitigation expenses and one specifically excluding such coverage) and no potentially ambiguous policies would evolve. An unscrupulous insured would in that circumstance have a greater incentive to purchase the non-mitigation insurance (as it would be lower in price) and quietly let damages mount in order to be reimbursed. With mandatory coverage for mitigation expenses there would then be no element of windfall in a recovery of such expenses, as all policies would have premiums set so high as to cover both ordinary liability and mitigation recoveries, and the unscrupulous insured (concern over whom is the main factor behind allowing mitigation expenses) would not be tempted to buy lower priced insurance in hopes of receiving a higher priced recovery. Making such coverage mandatory would, of course, compromise the important public policies of freedom of contractual choice in the marketplace and the reduction of premium costs to the consumer. *fn33"

  In the second place, as discussed above, there are important alternative reasons that encourage mitigation in cases such as the present one, if here "mitigation" it even be, without strained judicial construction and the necessity of judicial intervention to create additional grounds for mitigation. See, Allocation of Costs, supra note 16, at 1324-26. It is sound judicial practice not to develop, on public policy grounds, additional bases for legal liability when preexisting reasons suffice to encourage the desired activity. Here, plaintiff has made no secret of the fact that the primary reason for the recall was moral and that that reason alone was sufficient for the actions that were taken. Plaintiff, moreover, indicates that it believes that others in similar positions would similarly do what it did out of a moral duty - a feeling that "mitigation" was the right thing to do. This proposition vitiates any public policy ground for allowing coverage of expenses, however denominated, as an encouragement to mitigation. "It is virtually a precept that the merit of emergency salvage efforts is, and should be, its own reward." Restatement of Restitution 2d, Tentative Draft No. 1, § 3 Comment a (April 5, 1983), describing the common law's aversion to awarding restitution for benefits altruistically conferred.

  Moreover, here, in addition to the strong moral reasons for undertaking the recall, there were strong business reasons as well. Plaintiff stood to lose a large portion of its share of the analgesic market if it did not act promptly to dispel worries about the safety of its product, and did not promptly remarket that product in tamper resistant packaging. Additionally, mitigation of covered damages is an implicit contractual obligation of all insurance contracts, as discussed above, and failure to mitigate after knowledge of ongoing damage will reduce insurance coverage and implicate direct liability for negligence on the part of the insured. See Ambassador Ins. Co. v. Montes, 76 N.J. 477, 388 A.2d 603.

  Yet another independent ground for mitigation by the insured in the real world, as discussed above, are the policies of underinsurance, caps on liability, and large deductibles. Finally, here, criminal liability might well have attached had further deaths occurred after plaintiff had knowledge of the connection between its product and the poisoning deaths. In light of these manifold additional reasons for an insured to mitigate damages, it would be contrary to the public policy against unnecessarily increasing uncertainty in the marketplace (in this case the likelihood of recovery against insurers for mitigation expenses) and, thereby, increasing the price of liability insurance, in order to give a windfall recovery to plaintiff.

  The so-called discovery problem, an additional reason advanced by some for the recovery of mitigation expenses, must similarly be rejected. The advocates of this concept argue that, even given other reasons for mitigation, an unscrupulous insured would have no reason to mitigate at its own expense if it felt it would not be caught allowing damages to mount and, therefore, the additional encouragement of allowing mitigation expenses on an ordinary liability policy would be necessary. *fn34"

  In addition to being circular, the discovery argument is weak in that it fails to allow for the ease of discovery of the failure to mitigate in today's complex and interrelated world where, as here, large numbers of people might well be involved in such a decision and failure to mitigate when it was possible would surely become public knowledge. In addition, the fear of the possibility of the disclosure of a failure to mitigate, even if remote, would act as a powerful additional stimulus to mitigation. Moreover, I am not so quick to impugn the character of individual and commercial insureds by imputing to them the qualities the discovery argument would require me to believe they possessed. Aside from the fact that plaintiff admits that even it, a part of a huge corporate enterprise, was motivated by ethical concerns more than greed in its recall of Tylenol, plaintiff urges, and I accept, that such an upright response would typify most American insureds.

  Finally, the argument for mitigation expenses is unsound at its very core as, even under plaintiff's construction, the standard liability policy language and the problems with proximate causation discussed above would require some damage before subsequent mitigation expenses could be reimbursable if there were no mandatory mitigation coverage. Therefore, by allowing mitigation expenses at all, unscrupulous insureds are in effect encouraged not to mitigate at the initial signs of trouble, but to await some damage -- which might well run out of control -- before they mitigate. *fn35"

  Far from indicating that coverage for mitigation expenses as a result of the construction of inexplicit liability policies encourages mitigation, the above observations demonstrate that at most such an interpretation rewards mitigators who need no additional encouragement after the fact, and that at worst such a policy discourages mitigation and encourages carelessness.

  On public policy grounds, as well, plaintiff's claim must fail.

  CONCLUSION

  On all grounds, therefore, plaintiff's claim fails. Defendants' motions for summary judgment are granted and plaintiff's cross-motion is denied.


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