The Court will not at this time, at this early stage in this case, decide the substantive issue of whether the policies provide stand-alone pollution coverage. The Court finds, however, that it can decide some apsects of the choice-of-law issue.
According to Comment a to Restatement § 193, the law of the state where risks are located determines "what risks are covered by the policy." Because there is an issue as to "what risks are covered by" the policies, and the risks for which it is contended coverage exists are indisputably located in New Jersey, the Court concludes under § 193 that New Jersey law will govern issues of interpretation of coverage and exclusion provisions, and presumptively govern other issues raised in connection with the CMLP policies. The Court disagrees with the marine insurers' contention that disputed fact issues preclude this determination. Only one fact is material to whether, under § 193, New Jersey law governs the interpretation of coverage provisions in the policies: the location of the risk. That fact is not in dispute. Tankport is located in New Jersey.
The Court agrees with the CMLP Insurers that any further declaration would be premature. Therefore, until the marine insurers or plaintiffs identify and place a true conflict of law before the Court as to any issue other than interpretation of the coverage provisions of the policies, the parties are to proceed under the rebuttable presumption that New Jersey law governs those other issues.
The Court recognizes that this conclusion is not without its flaws, and acknowledges that § 193 refers to the location of the "insured risk", and not merely the risk for which a party contends insurance is provided.
Nevertheless, the Court finds that no other resolution of the issue provides a more compelling analytical framework for resolving the merits of this case.
The alternative to the presumptive application of New Jersey law is to give § 193 no effect in the absence of clear evidence of stand-alone coverage. This would result in a weighing of all of the contacts between the parties during the negotiation, execution and performance of the policies, and could result in a choice of New York law. New York, however, has no presumptively greater interest than New Jersey does in determining whether the contested coverage is part of the policies, because the coverage, if it exists, protects New Jersey risks. Aside from the New Jersey's interest in the availability of funds to pay to cleanup Tankport, an interest which the Court prefers not to weigh at this point, New Jersey's interest extends to the protection of the reasonable expectations of the insured. Plaintiffs clearly purchased coverage for some risks -- the wharfinger and bailee warehousemen coverage -- located in New Jersey. Their claim that they purchased additional insurance coverage for property located in New Jersey -- the stand-alone pollution coverage -- is not frivolous. This claim, however, is too closely entwined with the choice-of-law issue to be completely separated from it, because the propriety of application of New Jersey law is dependent on the existence of stand-alone pollution coverage. Given this stalemate, the Court believes it must resolve the issue in favor of application of the law of the state that would have the greatest interest in the issue, and whose law would accordingly govern, in the event coverage is found. Unless the insured's claim was clearly without merit, there seems no compelling reason to do otherwise.
Consistent with the Restatement, the Court's conclusion that § 193 dictates interpretation of coverage provisions, and presumptively dictates application of New Jersey law to other issues, does not preclude the application of another state's law to issues other than interpretation of coverage, such as issues related to formation and validity, in the event that a concrete conflict of law arises, and a party convinces the Court that another state has a more significant relationship to a particular issue. See Restatement § 193, Comment d. This finding also does not preclude any party from raising a concrete conflict between New Jersey law and an established policy of maritime law, which may lead to the application of maritime law. As with the Court's determination with respect to the CGL policies, the Court decides only which state's law controls the interpretation of coverage provisions, and otherwise applies in the absence of a conflict. No true conflict has yet been presented to the Court. Again, the Court reiterates that, with the exception of interpretation of coverage and exclusion language, the net result of its declaration is to allocate, in the event conflicts of law arise, the burden to establish the state with the most significant relationship to a particular issue: The party contending for application of the law of a state other than New Jersey on any issue bears the burden to demonstrate that that state has a more significant relationship to the issue than does New Jersey.
For the reasons stated above, defendants' cross-motions for declarations of law will be denied. Plaintiffs' motion for a declaration of law will be granted only to the extent that the Court will declare that New Jersey law controls the interpretation of coverage and exclusion language in the policies, and that New Jersey law will presumptively govern all other issues, subject to rebuttal by proof that another jurisdiction has a more significant relationship to a particular issue that is found to conflict with New Jersey law.
EDITOR'S NOTE: The following court-provided text does not appear at this cite in 795 F. Supp. 678.
An appropriate order is attached.
Dated: May 26, 1992
ALFRED M. WOLIN, U.S.D.J.
For the reasons expressed in the Court's Opinion filed herewith,
It is on this 26th day of May, 1991,
ORDERED that defendants' cross-motions for declarations of law will be denied; and it is further
ORDERED that plaintiffs' motion for a declaration of law will be granted in part, in that it is further
ORDERED and DECLARED that New Jersey law controls the interpretation of coverage and exclusion language in the policies, and that New Jersey law presumptively governs all other issues, subject to rebuttal by proof that another jurisdiction has a more significant relationship to a particular issue that is found to conflict with New Jersey law.
ALFRED M. WOLIN, U.S.D.J.