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July 6, 1988

TOWNSHIP OF GLOUCESTER, A Municipal Corporation of the State of New Jersey, Plaintiff,

The opinion of the court was delivered by: BROTMAN


 Presently before the court are the motions of Home Insurance Company ("Home"), Mutual Fire, Marine and Inland Insurance Company ("Mutual"), and Chicago Insurance Company ("Chicago") for summary judgment. Opposition to these motions has been filed by the Township of Gloucester (the "Township"), Maryland Casualty Company ("Maryland"), and American Reliance Insurance Company (formerly Farmer's Reliance Insurance Company) ("American"). This opposition was joined in by Insurance Company of North America ("INA") during oral argument.

 Maryland and American had also originally filed motions for leave to file cross-claims against Home and Mutual and third-party claims against City Insurance Company ("City"). However, as will be explained in the following opinion, these motions were subsequently withdrawn by Maryland and American at oral argument.


 The procedural and factual history of this matter as it relates to the moving parties was discussed in some detail in this court's August 19, 1987 opinion (the "August 19 opinion"), 668 F. Supp. 394, and need not be repeated in full here. It is sufficient, for the purposes of resolving the present motion, to state that this action commenced as a declaratory judgment suit, filed by the Township, to determine the existence and extent of defendant insurance companies' obligation to defend and indemnify plaintiff for expenses related to the closure and clean-up of the Gloucester Landfill. This landfill was ordered closed by the Superior Court of New Jersey, in November of 1980.

 Plaintiff's original complaint was filed on April 22, 1982, in New Jersey state court, and named, inter alia, Maryland and American as defendants. Thereafter, in November, 1982, the Township was named by the New Jersey State Department of Environmental Protection ("DEP") as a direct defendant in NJDEP v. Gloucester Environmental Management Services, No. 84-152 (the "Enforcement Action"). The complaint was amended on October 7, 1982, to include Home and Chicago as defendants. Plaintiff then filed a second amended complaint on October 18, 1983, naming the United States Environmental Protection Agency ("EPA") and Mutual as defendants. The case was subsequently removed to this court. After July 2, 1982, numerous civil actions were commenced by residents who live around the Gloucester Landfill ("private party actions").

 In the August 19 opinion, this court addressed motions for partial summary judgment made on behalf of four defendants: Maryland, American, Insurance Company of North America ("INA"), and Home. In support of these motions, defendants asserted four theories under which they argued that they had no duty to indemnify plaintiff, pursuant to the comprehensive general liability policies ("CGLs"), which each defendant had issued to the Township: (1) that clean up and closure costs did not constitute "damages" within the meaning of the insurance contracts; (2) that such costs were not indemnifiable under the "ownership" exclusion of the contracts; (3) that closure was a certainty and not a risk; and (4) that fines and penalties were not "damages" as contemplated by the insurance contracts and that to indemnify such costs would violate public policy. The court, after construing the relevant policy language and applicable New Jersey law, denied defendants' motions as to the first three theories, but granted defendants' motion in so far as it sought a declaration that defendants were not obligated to indemnify plaintiff for fines and penalties. The court also considered an additional argument for partial summary judgment asserted by Home, i.e. that the "occurrence" alleged in the underlying Enforcement Action did not take place within the period of coverage of the Home policy at issue, CGL Policy No 8-772373, which commenced July 2, 1982. The court granted Home's motion on this ground, stating:

The underlying DEP complaint does not allege damage during the term of the Home policy. Continental Insurance Companies v. Northeastern Pharmaceutical Co., 24 ERC (BNA) 1868, 15 ELR 20756 (W.D. Mo. 1985). It is clear, based on the record before the court, that the Township had actual knowledge of the occurrence prior to the Home policy period. In the case of the Home policy, this is not a situation where the Township could have reasonably expected that it "was free of the risk of becoming liable for injuries of which it could not have been aware prior to its purchase of insurance." Keene [Corp. v. Insurance Company of North America] 667 F.2d [1034] at 1046 [D.C. Cir. 1981] (citation omitted). One cannot obtain insurance for a risk that the insured knows has already transpired. . . .

 668 F. Supp. 394, 402-03 (D.N.J. 1987).

 Home now moves for summary judgment on the remaining claims against it in plaintiff's complaint. These allegations are as follows:

 (a) that defendant has shown bad faith in not defending or indemnifying the plaintiff, Amended Complaint at Count 18, subparagraph 125(f);

 (b) that defendant violated N.J.S.A. 56:8-1 et seq, the Consumer Fraud Act, id. at Count 18, subparagraph 125(g); and

 (c) that defendant violated N.J.S.A. 17(b) 30-1 et seq., the Trade Practices and Discrimination Act, id. at Count 18, subparagraph 125(h).

 Mutual and Chicago also seek summary judgment for the same reasons that the court granted summary judgment to Home in the August 19 opinion. Mutual issued a CGL policy to the Township, the term of coverage of which was July 2, 1983, through July 2, 1984. Chicago issued an excess ...

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