he held that "the state where the toxic waste comes to rest is the state whose law will apply, provided that it was reasonably foreseeable that the waste would come to rest there." Id. at 1336.
In National Starch and Chemical Corp. v. Great American Insurance Cos., 743 F. Supp. 318, 323 (D.N.J. 1990), Judge Ackerman was faced with a case in which toxic waste sites were located in many states. In deference to the notion that the reasonable expectations of parties should control, he rejected the site-specific approach and followed Westinghouse's dictum, holding that only one body of law should be applied in interpreting the insurance contracts. See id. at 322-23. In deciding whether the law of New Jersey, where, among other things, the manufacturing facility of the insured and where some of the waste sites were located, or the law of New York, the place of contracting, should be applied, Judge Ackerman decided in favor of New Jersey law. He did so by weighing the "significant relationship" factors of State Farm, noting that the insurer was in business in New Jersey; the insured had substantial contacts with New Jersey; and more of the relevant sites were located in New Jersey than in any other state, and only one was situated in New York. See id. at 326. Judge Ackerman thus concluded that the evidence suggested that the parties expectations pointed towards New Jersey, and, furthermore, following Leksi, that New Jersey's clean-up interests were paramount. See id. See also NL Industries, Inc. v. Commercial Union Insurance Co., Civ. Nos. 90-2124, 90-2125, slip op. at 12-13 (D.N.J. July 11, 1991) (Sarokin, J.) (applying New Jersey law in deference to state's clean-up interests where there was no evidence of parties' expectations).
In Armotek Industries v. Employers Insurance of Wausau, 952 F.2d 756 (3d Cir. 1991), there was a Pennsylvania insurance contract; an insured Pennsylvania corporation operating out of New Jersey; and a clean-up site in Connecticut. In deciding between the application of New Jersey and Pennsylvania law -- neither the parties nor the court considered applying Connecticut law -- the court affirmed the district court's decision that New Jersey's choice of law rule dictated that Pennsylvania law should apply, based largely upon the lex locus contractus. See id. at 760-762. In reaching this conclusion the court predicted that New Jersey's site-specific approach might not be followed when the site is located out of state. See id. at 759 n. 4.
D. Choice of Law in the Instant Matter
We must "predict what the Supreme Court of New Jersey would decide if confronted by the same set of circumstances" as we face here. Aetna Cas. & Sur. Co. v. Farrell, 855 F.2d 146, 148 (3d Cir. 1988). See also Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 209, 100 L. Ed. 199, 76 S. Ct. 273 (1956) (Frankfurter, J., concurring). Of course, we look for guidance to opinions of intermediate state appellate courts and to our sister district courts. See Threadgill v. Armstrong World Industries, Inc., 928 F.2d 1366, 1371 (3d Cir. 1991); White v. Johnson & Johnson Prod., Inc., 712 F. Supp. 33, 37 (D.N.J. 1989).
Although there are disputes about some of the underlying facts, it appears to us that the lex locus contractus in this case is Pennsylvania. Enough transpired between the Pennsylvania offices of both parties to support this conclusion. Also, the competing interests of other involved states -- such as Delaware or Massachusetts, where the parties maintain their principal places of business -- in the contracts seem negligible by comparison. Additionally, although we believe that Delaware and Massachusetts have an interest in the controversy, New Jersey's interest appears paramount, primarily on the strength of the fact that the hazardous waste disposal sites in question are located there. Accordingly, following State Farm, we presume that Pennsylvania law should govern our determination "unless the dominant and significant relationship of [New Jersey] to the parties and the underlying issue dictates that this basic rule should yield." State Farm Mutual Auto Ins. Co. v. Estate of Simmons, 84 N.J. 28, 34-37, 417 A.2d 488, 491-93 (1980).
We believe that the conflict of laws before us reflects fundamental policy differences between New Jersey and Pennsylvania. The extent to which courts in New Jersey have interpreted pollution exclusion clauses to ensure insurance company liability in environmental clean-ups, to us, reflects policy differences that move beyond State Farm's admonition that where "the public policy of each state nevertheless seeks to achieve the same fundamental goals and objectives," the fact that one of the states has adopted more or less restrictive rules, regulations, or interpretations of its laws would not ordinarily indicate a legitimate preference for the application of that state's law. Id. at 42, 417 A.2d at 495. Although we recognize the problems associated with concluding that a legislative scheme reveals an intent to apply state law
to out-of-state insurance contracts whenever a New Jersey hazardous waste site is involved, at least a judge-made choice of law rule so concluding appears reasonable and consistent with New Jersey's comprehensive environmental laws.
Moreover, the case law forcefully asserts New Jersey's "most significant relationship" and paramount government interests when the clean-up site is located within the state. Although there is merit to the objection that New Jersey's interest should be limited to ensuring that the site is cleaned up and does not extend to who pays the bill, we are persuaded that the nexus between the two is substantial enough to warrant this extension, and that the Supreme Court of New Jersey would also so conclude.
With respect to foreseeability and the expectations of the parties, we agree about the foreseeability of hazardous waste products generated in an abutting state landing in New Jersey. However, considering the fact that the insurance contracts at issue were executed long before the unthinkable liability invented by statutes such as CERCLA, the notion of honoring the expectations of the parties in these cases is a legal fiction. In any case, there is nothing in the record before us to indicate the expectations of the parties with respect to the insurance contracts at issue here.
Unfortunately, we do not find the Restatement helpful in evaluating these questions. The Restatement's laundry list of relevant factors appears to us to be intrinsically malleable and therefore overly susceptible to a result oriented approach. We believe that there are substantial relationships and significant government interests on both sides of the river. When a New Jersey clean-up site is involved, however, there is a resounding consensus among courts that New Jersey's interests predominate, and we predict that the New Jersey Supreme Court will likewise come to this conclusion. Perhaps when the environment itself is at stake, even when the only contact with a state is the disposal of hazardous wastes within its borders, it is fair to conclude that the relationship with that state is the most significant and predominates. Accordingly, we agree with those courts that have held that the basic rule in favor of the lex locus contractus must yield.
We recognize that our approach, as well as the approach of essentially every other New Jersey court that has squarely faced this question, has emphasized the governmental interests involved and subordinated lex locus contractus interests, such as protecting the expectations of the parties. As Liberty Mutual has suggested, this might be interpreted as adopting the approach of the dissent in State Farm.13 See State Farm Mutual Auto Ins. Co. v. Estate of Simmons, 84 N.J. 28, 44-58, 417 A.2d 488, 496-505 (1980) (Pashman, J., dissenting). Based upon the strength of New Jersey's interests with respect to landfills located within the state, and the negligible expectations of the parties involved, we believe application of either the majority or dissenting approach in State Farm produces the same result.
In any case, we predict that if faced with the precise question before us here, the Supreme Court of New Jersey would adopt the approach of the State Farm dissent and abandon the presumption in favor of the lex locus contractus.15
Finally, we decline to accept plaintiff's invitation to rule that, in the interest of judicial economy, New Jersey law shall govern all issues in this matter. Considering the course we have predicted that the Supreme Court of New Jersey will follow in cases such as this, the governmental interests of involved sovereigns must be analyzed "on an issue-by issue basis." Veazey v. Doremus, 103 N.J. 244, 248, 510 A.2d 1187, 1189 (1986). See also Johnson Matthey, 250 N.J. Super. at 65, 593 A.2d at 374 ("Conflicts principles do not dictate that all legal issues presented by a single case should be decided under the laws of a single state. Indeed, the evaluation of significant relationships and governmental interests takes place issue by issue and can lead to the application of different bodies of law."); Mueller v. Parke Davis, 252 N.J. Super. 347, 351, 599 A.2d 950, 952 (App. Div. 1991); R. Leflar, American Conflicts Law § 92, at 185 (3d ed. 1977); R. Weintraub, Commentary on the Conflict of Laws § 6.9, at 285 (2d ed. 1980). Thus, our decision will be limited to the law to be applied to the pollution exclusion clause of the insurance contracts at issue here.
JOHN F. GERRY, CHIEF JUDGE
DATED: June 26th, 1992
ORDER - June 26, 1992, Filed
This matter having come before the court on plaintiff's motion filed pursuant to 28 U.S.C. § 2201 for a declaratory judgment that the court will apply New Jersey law to interpret the pollution exclusion clause of the insurance contracts at issue; and the court having considered the submissions of the parties, and heard oral argument; and for good cause shown;
It is, on this 26th day of June, 1992, hereby ORDERED that plaintiff's motion is GRANTED and New Jersey law shall so be applied.
JOHN F. GERRY, CHIEF JUDGE