On appeal from the Superior Court of New Jersey, New Division Sussex County.
Before Judges Brody, Stern and Keefe.
The opinion of the court was delivered by
Plaintiffs Alan Nunn, Georgia Nunn and Georgia Gilman appeal from the entry of summary judgment in favor of defendant Franklin Mutual Insurance Company (Franklin). The issue presented is whether the pollution exclusion endorsement contained in a policy of insurance issued to plaintiffs is unenforceable because it is ambiguous and/or violative of public policy. We conclude that the exclusion is neither ambiguous nor violative of public policy and affirm the judgment in favor of Franklin.
The following facts were conceded for the purpose of the summary judgment motion, and, thus, for this appeal. Plaintiffs are the owners of a building which was apparently used by them as their residence. However, a portion of the building is also utilized as a rural United States Post Office. The building is oil heated. The fuel oil was stored in an above ground oil tank located on plaintiffs' property near the boundary line of property owned by the Loedes.
On February 14, 1991, the oil tank ruptured for an unknown reason, and the majority of its contents escaped onto plaintiffs' property and the Loedes' property. Upon learning of the discharge, plaintiffs notified the Department of Environmental Protection and Energy (DEPE), and defendant Franklin. The firm of Atlantic Environmental Engineering was engaged to perform test excavations and estimate the cost of clean-up. Atlantic estimated the cost to be approximately $50,000.
At the time of the spill, plaintiffs were insured by Franklin under a Special Multi-Peril Policy. Plaintiffs' claim under the policy was denied by Franklin on March 27, 1991. Franklin, through its attorneys, denied the claim essentially on the ground that the policy contained a pollution exclusion endorsement.
The policy appears to have been issued on or about October 25, 1988 for the period of December 1, 1988 to December 1, 1991. It was a renewal policy and was accompanied with the following notice:
ATTENTION IMPORTANT NOTICE
Re: Pollution Liability Exclusion
This policy contains an absolute Pollution Liability Exclusion (Form GL10 04 86). This means that there is no coverage, under this policy, for any liability which you or any insured may have for damages arising out of pollution.
Clean-up and defense costs arising out of pollution are also not ...