includes "bond" and "insurer," or creates a third, wholly independent category of persons subject to suit under the Spill Act. If the latter interpretation, promoted by the Plaintiff, is correct, then any "insurer" of a person or entity responsible for an illegal discharge of hazardous substances could be subject to a direct suit for damages. See N.J.S.A. § 58:10-23.11g(c) (Supp. 1995).
Contrary to Plaintiff's interpretation, the statutory language suggests that "evidence of financial responsibility" does not apply to any person or insurer but rather, is a term of art. The legislature's use of the definite article "the" in connection with "bond" and "insurer," as opposed to the indefinite article "a" or "an," suggests that these terms can only be properly understood by reference to other sections of the Act.
Along these lines, Defendants argue that § 58:10-23.11s should be read in para materia with N.J.S.A. § 58:10-23.11d5 (1992), the only other section of the Spill Act that refers to "financial responsibility." Section 23.11d5 requires owners and operators of "major facilities" to provide the NJDEP with evidence of financial responsibility for cleaning up discharges of hazardous substances.
If the direct action provision, section 23.11s, is interpreted in conjunction with section 23.11d5, the Spill Act authorizes direct actions only against insurers of major facilities that are required to provide "evidence of financial responsibility." See N.J.S.A. §§ 58:10-23.11d5, 58:10-11s. Since the parties concede that Spaulding is not a "major facility" a defined under the Spill Act, and its insurers have not provided "evidence of financial responsibility," Defendants' interpretation would preclude the PRP Group from maintaining this direct action. See N.J.S.A. § 58:10-23.11b(1).
To date, the New Jersey courts have not issued any published opinions interpreting N.J.S.A. § 58:10-23.11s. See Kessler v. Tarrats, 191 N.J. Super. 273, 311, 466 A.2d 581 (Ch. Div. 1983), aff'd, 194 N.J. Super. 136, 476 A.2d 326 (App. Div. 1984) (mentioning N.J.S.A. § 58:10.23-11s in passing). The parties have identified eleven unpublished decisions of the New Jersey Superior Court, Law Division. The parties concede that New Jersey Court Rule 1:36-3 provides that "no unpublished opinion shall constitute precedent or be binding upon any court."
The Court has reviewed the unpublished decisions and notes that eight of those cases have found that N.J.S.A. § 58:10-23.11s does not confer a direct right of action against insurers, like the Defendants, that have not provided evidence of financial responsibility. See Bergknoff, No. L-10144-94 (Law Div., April 3, 1995); James Stanko et al. v. John Osmun et al., No. L-00425-94 (Law Div., Oct. 4, 1994); Connells Fuel Oil Co. v. Pennsylvania National Mutual Casualty Ins. Group, No. L-003803-93 (Law Div., July 15, 1994); GEI Int'l Corp. v. St. Paul Fire and Marine Ins. Co., No. 1-221-92 (Law Div., March 18, 1994); Creighton v. Robinson, 922 F.2d 443, No. 1-001687-93 (Law Div., Dec. 17, 1993); Silverton Investors v. Sea Coast Oil, No. L-2867-92 (Law Div., Nov. 19, 1993); Keating v. ABC Detachable Container, No. L-12152-90 (Law Div., Dec. 1, 1992); Selecto-Flash Inc. v. Murray Biddleman, No. L-1289-90 (Law Div., July 18, 1990).
Three of these unpublished cases, however, have permitted a direct action against an insurer. Bresnick, No. L-4113-93 (Law Div., Feb. 4, 1994); Rechler Partnership v. Aircomo, No. W-054839-88 (Law Div., March 9, 1992); Kwiatowski v. Texaco, No. C-6322-86 (Ch. Div., July 5, 1989).
Rather than discuss those unpublished decisions at length and effectively treat them as precedent in violation of New Jersey Rule 1:36-3, the Court conducts its own independent analysis.
As a general rule, changes in the common law must be evidenced by a clear expression of legislative intent and must be narrowly construed. See Carlo v. Okonite Calendar Cable Co., 3 N.J. 253, 265, 69 A.2d 734 (1949). Since the direct action provision, § 58:10-23.11s, is ambiguous, it does not clearly evidence a legislative intent to change the common law prohibition of third party actions against insurers. See e.g., Manukas, 98 N.J. Super. at 524.
In order to avoid dismissal, Plaintiff argues that the New Jersey Department of Environmental Protection ("NJDEP")
has interpreted section 58:10-23.11s of the Spill Act to authorize a direct action against any insurer where a spill has occurred. As evidence of the NJDEP's position, Plaintiff has submitted a copy of an affidavit by Dennis Hart, dated July 3, 1991, and apparently submitted in Keating v. ABC Detachable Container, No. L-12152-90 (Law Div.).
In the affidavit, Mr. Hart, then Acting Assistant Director of the Responsible Party Cleanup Element, Division of Hazardous Waste Management, Department of Environmental Protection, stated that New Jersey "routinely issues notices to Insurers in complex multiparty cases regardless of whether the insured party is a major facility" required to provide evidence of financial responsibility under N.J.S.A. § 58:10-23.11d5. See Pl. Br. Exh. 5 PP 1-2. Plaintiff argues that the NJDEP's interpretation of the direct action provision "is entitled to prevail, so long as it is not plainly unreasonable". See Metromedia Inc. v. Director Div. of Taxation, 97 N.J. 313, 327, 478 A.2d 742 (1984).
For several reasons, the Court is reluctant to defer to the NJDEP's interpretation of the direct action provision as set forth in the Hart affidavit. As a threshold matter, the affidavit is not an original and has not been authenticated as a copy of an official public record. Therefore, it is not properly before the Court. Even if the Hart affidavit were admissible, the affidavit is not current but reflects NJDEP policy in effect four years ago, as of July, 1991. Furthermore, the Court is particularly reluctant to treat the Hart affidavit as an accurate representation of the NJDEP's current interpretation of the Spill Act because the affidavit predates the New Jersey legislature's 1990 amendments, which added section 58:10-23.11d5. N.J. Laws c. 78, § 5.
The parties contest the significance of the 1990 amendments to the Spill Act. In 1990, the legislature did nothing to amend the direct action provision, § 58:10-23.11s. Plaintiff contends that the legislature's failure to amend the direct action provision to override the NJDEP's interpretation gives rise to an "inference . . . that the Legislature approved of the DEP's interpretation . . . " GATX Terminals Corp. v. DEP, 86 N.J. 46, 53, 429 A.2d 355 (1981).
As part of the 1990 amendments, the legislature added section 58:10-23.11d5, which requires owners and operators of "major facilities" to provide "evidence of financial responsibility" to the NJDEP. Additionally, section 58:10-23.11d5 directs the NJDEP to adopt regulations to establish the "amount, nature, terms and conditions" by which major facilities are to provide evidence of financial responsibility.
Pursuant to section 58:10-23.11d5, the NJDEP promulgated regulations which recognized several methods of providing the required evidencing financial responsibility, including: "(1) Financial test of self-insurance; (2) Guarantee; (3) Insurance or risk retention group coverage; (4) Surety bond; or (5) Letter of Credit." N.J.A.C. § 7:1E4.5d (1991). Moreover, "to demonstrate evidence of financial responsibility through liability insurance," the NJDEP requires that the policy must contain a specific endorsement by the insurer, stating that the policy is intended to cover the cost of corrective action to remedy a spill at a particular "major facility." N.J.A.C. § 7:1E4.51(2) (1991).
Rather than suggesting that the Spill Act authorizes a direct action against any insurer of an alleged polluter, the 1990 amendments support Defendants' contention that the terms "bond" and "insurer" in section 58:10-23.11s are categories of "evidence of financial responsibility." Under the NJDEP regulations, both bonds and insurance are acceptable methods for demonstrating financial responsibility as required under the Spill Act. N.J.A.C. § 7:1E4.5d.
Additionally, the general principle of statutory construction, that courts should interpret statutes so that no terms constitute surplusage, weighs in favor of interpreting section 58:10-23.11s to authorize direct actions only against insurers of major facilities that have provided evidence of financial responsibility. See Peper v. Princeton Univ. Bd. of Trustees, 77 N.J. 55, 389 A.2d 465 (N.J. 1978). Under Plaintiff's interpretation, § 58:10-23.11s would authorize a direct action against a bond, an insurer, or any person providing evidence of financial responsibility. This interpretation ignores the statute's use of the definitive article "the," which precedes "bond" and "insurer." Furthermore, Plaintiff's interpretation renders the word "other," which refers to a "person providing evidence of financial responsibility," superfluous. In contrast, if "insurer" and "bond" are interpreted as examples of how "evidence of financial responsibility" may be produced, all words in the statute are accorded meaning.
Moreover, the regulations indicate that not all insurance policies are sufficient to demonstrate financial responsibility under the Spill Act. Only those policies that are specifically endorsed by the insurer as providing evidence of financial responsibility under the Spill Act satisfy the statutory requirement. N.J.A.C. § 7:1E4.51(2); N.J.S.A. § 58:10-23.11d5. In contrast to the specifically endorsed insurance policies required to evidence financial responsibility under the Spill Act, the Defendant insurers issued general comprehensive liability policies to Spaulding. See N.J.A.C. § 7:1E.4-51(2).
These administrative regulations undermine Plaintiff's contention that in order to effect the remedial purpose of the Spill Act, it should be "liberally construed" to authorize a direct action against any insurer of an alleged polluter. N.J.S.A. § 58:10-23.11x. Instead, the administrative regulations suggest that an insurer is only "responsible" for pollution by an insured if the insurer has explicitly undertaken this obligation by endorsing its policy to provide Spill Act coverage. N.J.A.C. § 7:1E.4-51(2). In other words, the regulations suggest that unless the insured is a "major facility" that has obtained a policy containing the requisite endorsement, the Spill Act does not authorize a direct action against the insurer by an injured third party.
In conclusion, the Court refuses to accord the NJDEP's interpretation of the direct action provision, as represented by the Hart affidavit, any deference because the language of the statute and the implementing regulations do not support it. Having reviewed the conflicting interpretations of 58:10-23.11s offered by the parties, the Court concludes that the Spill Act does not authorize this direct action by the PRP Group against the Defendant insurers. Accordingly, the Court dismisses count six of Plaintiff's Complaint.
2. Spaulding's Rights Under Its Insurance Policies and the Alleged Assignment of Those Rights to the PRP Group