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Gilbert Spruance Co. v. Pennsylvania Manufacturers'' Association Insurance Co.

Decided: February 14, 1992.

THE GILBERT SPRUANCE COMPANY, PLAINTIFF-APPELLANT,
v.
PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND INSURANCE COMPANY OF NORTH AMERICA, DEFENDANT



On appeal from the Superior Court, Law Division, Camden County.

Petrella, R.s. Cohen and Kestin. The opinion of the court was delivered by Cohen, R.s., J.A.D.

Cohen

The opinion of the court was delivered by

COHEN, R.S., J.A.D.

Plaintiff The Gilbert Spruance Company is a Pennsylvania corporation which manufactures paint in Philadelphia. Defendant Pennsylvania Manufacturers' Association Insurance Company

("PMA") is a Pennsylvania insurer which is licensed to do business in New Jersey. From 1971 through 1988, PMA issued plaintiff comprehensive general liability policies. Each of them*fn1 contained a pollution exclusion clause in these words:

This insurance does not apply:

(f) to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental. . . . [emphasis added]

Plaintiff faces many toxic tort claims for personal injury and property damage, and actions for remediation, damages and penalties by the Environmental Protection Agency and the New Jersey Department of Environmental Protection (now the Department of Environmental Protection and Energy). They all allege that plaintiff is responsible for generating hazardous waste products in Pennsylvania that were deposited in landfills in New Jersey and created environmental dangers there.

Plaintiff sought defense and coverage from PMA, which disclaimed on the strength of the pollution exclusion. Plaintiff then sued for a declaratory judgment.*fn2 Plaintiff moved for summary judgment on PMA's duty to defend, and PMA was permitted to make an oral cross-motion.*fn3 The Law Division Judge held that the meaning and consequence of the pollution exclusion was to be determined under Pennsylvania law, and that the exclusion supported PMA's disclaimer, because in

Pennsylvania the "discharge, dispersal, release or escape" of the waste materials was not considered to be "sudden and accidental." Lower Paxton Tp. v. United States Fidelity & Guar. Co., 383 Pa.Super. 558, 557 A.2d 393, 399 (1989). Under New Jersey law, sudden and accidental discharges can include the gradual release of pollutants. Broadwell Realty ...


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