On appeal from the Superior Court, Law Division, Morris County.
Before Judges Gaulkin, Baime and Kestin
The opinion of the court was delivered by GAULKIN, P.J.A.D.
While transporting a load of heating oil along Route 44 in Netcong, a fuel truck owned and operated by plaintiff A&S Fuel Oil Company, Inc. (A&S) developed a leak that ultimately spilled some 600 gallons of oil into the Musconetcong River. A&S was required to contain and remediate the spill, which it did at a cost of approximately $75,000. A&S submitted a claim for indemnification to defendant Royal Indemnity Company, Inc., which insured A&S under a commercial automobile liability policy. Royal Indemnity disclaimed coverage and A&S filed this action. On cross-motions for summary judgment, a Law Division Judge held that the policy covered the spill. He subsequently entered judgment against Royal Indemnity for $95,411.75, including prejudgment interest, and dismissed A&S's remaining claims. Royal Indemnity appeals from the judgment against it; A&S cross-appeals from the denial of its demand for counsel fees and from the dismissal of its claim for bad-faith denial of coverage.
The policy provided insurance for "property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." However, it excluded certain damage that Royal Insurance "will not cover," including:
9. Bodily injury or property damage caused by the dumping, discharge or escape of irritants, pollutants or contaminants. This exclusion does not apply if the discharge is sudden and accidental.
Royal Indemnity acknowledges that the loss resulted from a "sudden and accidental" discharge of a "pollutant." Under the quoted language, then, Royal Indemnity would be liable. But the policy incorporated a three-page endorsement, CA 00 25, bearing the following heading in large capital letters:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
CHANGES IN BUSINESS AUTO AND TRUCKERS POLICIES--MOBILE EQUIPMENT, CONTRACTUAL LIABILITY AND POLLUTION.
Among the provisions of the endorsement is the following:
B. CHANGES IN LIABILITY INSURANCE WE WILL NOT COVER -- EXCLUSIONS is changed as follows:
5. The exclusion relating to the dumping, discharge or escape of irritants, pollutants or contaminants is changed to read:
This insurance does not apply to:
a. Bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, ...