Lawrence D. Smith, J.s.c.
The primary issue raised in this case addresses the scope and meaning of the so-called "absolute pollution exclusion" which was recently incorporated in general liability policies of insurance. Does that exclusion preclude coverage for remediation expenses incurred to prevent the migration to neighboring properties of oil deposited on an insured's property by a trespasser? For the reasons which follow, I find coverage is excluded.
Plaintiffs, Rocklee, Inc., and Vantage Development Corp., Inc. (Vantage), seek to recover under two policies of insurance for remediation expenses incurred in connection with an oil spill which occurred on January 29, 1989, on property owned by Rocklee and located at 16 Paris Avenue, Rockleigh, New Jersey. Vantage, a successor in title to Rocklee, ostensibly has no interest under the policies. Rocklee attributes the spill to the acts of an unknown party. As a consequence of those acts, oil flowed into an adjoining waterway and eventually into the Sparkill Creek in Orange County, New York. On January 30, 1989, American Environment Technologies Corp. (AET) was retained to clean up and prevent the spread of oil to neighboring properties. AET proceeded with cleanup activities*fn1 which consisted of containing the oil spill, testing to determine the extent of contamination, excavating and removing contaminated soil.
Two policies of insurance are involved -- a standard fire insurance policy which also covers various additional enumerated risks and perils and a comprehensive general liability insurance policy -- both issued by Selective Insurance Co. (Selective). Rocklee theorizes that both policies provide coverage for costs incurred for containment, soil testing and soil removal. The
spill produced no damage to property other than damage to soil and a brook. Buildings were not damaged. Selective moves for summary judgment.
The comprehensive general liability policy provides coverage for:
all sums which the insured shall become legally obligated to pay as damages because of
to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto. . . .
Claims for damages resulting from the discharge of pollutants or contaminants are excluded by the following provision:
It is agreed that each and every exclusion and any exception(s) to such exclusion forming a part of this policy and relating to the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acid, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants are replaced in their entirety by the following exclusion:
The company shall have no obligation under this policy (1) to investigate, settle or defend any claim or suit against any insured alleging actual or threatened injury or damage of any nature or kind to persons or property which arises out of or would not have occurred but for the pollution hazard; (2) to pay any damages, judgments, settlements, losses, costs or expenses of any kind or nature that may be awarded or incurred by reason of any such claim or suit or any such actual or threatened injury or damage; or (3) for any losses, costs or expenses arising out of any obligation, order, direction or request of or upon any insured, including but not limited to any governmental obligation, order, direction or request, to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize irritants, contaminants or pollutants.
"Pollution hazard" means an actual exposure or threat of exposure to the corrosive, toxic or other harmful properties of any solid, liquid, gaseous, or thermal pollutants, contaminants, irritants or toxic substances, including smoke, vapors, soot, fumes, acids or alkalis, and waste materials consisting of or containing any of the foregoing arising out of the discharge, dispersal or release or escape of any of the aforementioned irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water. Waste material includes any materials which are intended to be or have been recycled, reconditioned or reclaimed.
The existence of a broad, comprehensive pollution exclusion was signalled by a separate notice provision which reads: