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August 25, 1995

PITTSTON COMPANY, et al., Plaintiffs,

The opinion of the court was delivered by: WOLIN




1. The Summary Judgment Standard
2. The Travelers CGL Policies
A. Voluntary Assumption of an Obligation
B. Damages
C. The Continuous Trigger
D. "Expected nor Intended" as an Element of Coverage
E. Defenses to Coverage
(i) Late Notice and Defense Costs
(ii) Pollution Exclusion Clause
(iii) Owned Property Exclusion
F. The Fortuity, Known Loss and Loss in Progress Doctrines
G. Summary
3. The Other Insurers
A. CMLP Policies
B. The Protective Insurance Company's Motion
C. The Insurance Company of North America
("INA") Motions
(i) The Named Insured Issue
(ii) The Fortuity, Known Loss, and Loss in Progress Issue




 WOLIN, District Judge


 As our body politic has come to grips with the legacy of an earlier, less environmentally enlightened time, certain issues have been settled and become features of our legal landscape. There is now broad consensus that the users of industrial sites who profited by them in the past must now take responsibility for their remediation. See, e.g., Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq.; New Jersey Environmental Cleanup Responsibility Act ("ECRA"), N.J.S.A. 13:1K-6 et seq. As this primary issue has been resolved, secondary ones have taken their place.

 Such an issue is presented by this case; what is the liability of insurers who wrote traditional policies of liability and marine insurance over the years to industries now faced with the task of bringing these sites up to modern standards of environmental safety? As will be seen below, this issue is well on its way to joining the underlying questions of clean-up responsibility as a settled area of the law. Nonetheless this Court is regularly required to adjudicate coverage disputes between policyholders and insurers who are reluctant to ameliorate the wrongs of the past.

 This case involves a former oil transfer terminal on the western shore of upper New York Harbor in Jersey City, New Jersey. The involvement with the oil industry of this parcel of tideland dates to the dawn of the petroleum age. It was known as the Eagle Works Refinery when John D. Rockefeller acquired it in 1881. Ralph W. Hidy & Muriel E. Hidy, Pioneering in Big Business: History of Standard Oil (New Jersey) 1882-1911 50 (1955). It was listed as one of the initial assets of Standard Oil of New Jersey. Id. Eagle Works had itself been built around equipment brought from the Pennsylvania oil fields, the site of the first commercial exploitation of petroleum in history. Id. at 5.

 By 1911, Eagle Works was the largest manufacturer of petroleum-based lubricants on earth, id. at 713, processing over 11,000 barrels of crude oil a day. Id. at 414. By 1920, however, the rise of the Texas oil fields undermined the economic advantage of east coast refineries, and Eagle Work's production began to decline. George S. Gibb & Evelyn H. Knowlton, The Resurgent Years: History of Standard Oil Company (New Jersey) 1911-27 560-61 (1956). Thus, before the middle of this century, the site had begun to pass into obsolescence. Standard Oil abandoned Eagle Works as antiquated in the 1930's, dismantled the refining equipment, but left some of the tanks and pipelines. Kaulaikis Dep. at A1786; *fn1" B390.

 The western and southern ends of the Eagle Works site, see B1981, were purchased by Pittston for use as a marine oil terminal in 1954 and given the name Tankport. This area of the old refinery was dominated by large storage tanks, id., and it was for storage and transfer of fuel oil that Pittston intended to use the site. Some of the Eagle Works tanks remained and were put back into service by Pittston. Kaulakis Dep. at A1790. An oil/water separator that is the source of much controversy in this case appears on an old map of the Eagle Works plant, id., and the Court presumes that this was a pre-existing structure taken over by Pittston. The Court has appended a map, compiled from various exhibits submitted by the parties, for the guidance of the reader.

 That Tankport had suffered significant environmental degradation well before Pittston took it over may be readily imagined. The very large volume of oil processed and trans-shipped through the site under the rudimentary or non-existent environmental safeguards that characterized the industry early this century must necessarily have left its mark. See Kaulakis Dep. at A1830-32 (state of the art for oil refineries in the early days of the oil business caused leakage). The record shows that buried pipelines still filled with oil from the Eagle Works days lay forgotten in the ground. Stendardi Dep. at A2852. An expert retained by defendant Travelers Indemnity Company testifies that there was an oil sheen visible in the water surrounding Tankport in aerial photographs taken from the 1940's onward. Robertson Decla. Long-time employees report seeing oil stains on the ground in the 1940's. Shivey Dep. at A2672-73. This was the site that, in 1961, defendant Travelers Indemnity Company decided to insure.

 Travelers' policies in this case are what is known as Comprehensive General Liability ("CGL") policies. Each ran for a year and was renewed each year. From 1961 to 1967, the policies were "accident based," that is they obliged Travelers:

To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.

 C365-1764 (CGL Master Policy File). By endorsement, and in 1967 in the policy itself, the term "accident" was replaced with "occurrence," a term of art whose meaning will be explored infra. The policies contain typical notice and owned-property exclusions. Starting in 1971, the policies began to contain pollution exclusion clauses. The issue of whether there is an occurrence triggering coverage in this case, and whether the various exclusion clauses and requirements of the policies apply here are heatedly debated.

 From 1978 to 1984, Pittston purchased Comprehensive Marine Liability Package ("CMLP") policies from the defendant Marine Insurers. *fn2" The chief distinction between these and the CGL policies is that the CMLP policies cover a list of clearly marine risks, although there is dispute about whether there is coverage for other, non-marine risks and whether certain losses may be characterized as marine. These policies too have various exclusions and requirements that contribute to the substance of this dispute.

 In June of 1980, the CMLP insurers added a clause to their policy excluding coverage for any damage for which indemnification was "payable" under any CGL policy. As of the beginning of 1981, Pittston canceled its Travelers CGL policy and replaced it with policies provided by the Protective Insurance Company. The CMLP insurers now contend that the Protective policies are CGL policies within the meaning of their CGL exclusion. Pittston argues that they are "fronting" insurance. Fronting insurance is a method of self-insurance by which the insured sets up a captive corporation that issues a policy to the parent. Pittston claims that the Protective policies are not true insurance at all, much less CGL insurance as designated under the CMLP policies.

 Throughout the time of its ownership of Tankport, Pittston used it as an oil storage and transfer facility. Oil arrived by barge at the attached pier, was stored in the tanks, and then pumped into tank trucks for delivery to consumers in New Jersey. Pittston's awareness of the environmental impact of its operations is a key fact in this litigation, and the pertinent details will be discussed below. Certain events took place in this regard however that will inform the reader at the outset.

 Pittston claims that the tanks were subject to routine maintenance and cleaning throughout its tenure at Tankport. A system of monitoring of the tanks was used to detect loss of product. In 1974, Pittston was required to apply to the Environmental Protection Agency ("EPA") for a National Pollutant Discharge Elimination System Permit ("NPDES") pursuant to the Clean Water Act. B709-10. No response was received from the EPA until 1980 when a draft permit was issued and no final permit was issued as of the last policy period at issue in this litigation. Coleman Dep. at A672.

 Pittston was also required in 1974 to file a Spill Prevention Control and Countermeasure ("SPCC") plan with the EPA. In 1979, this program was taken over by the State of New Jersey and Pittston filed a "Discharge Prevention Containment and Countermeasure ("DPCC") Plan and a Discharge Cleanup and Removal ("DCR") plan with the New Jersey Department of Environmental Protection and Energy ("NJDEPE"). B327-412.

 Pittston admits to three major spill incidents during its time at Tankport. *fn3" The first was in September of 1976 when a pipe coupling broke during the transfer of oil. Two hundred ninety-one thousand gallons spilled into a containment dike around a tank. Pittston notified the EPA, the Coast Guard and NJDEPE. Pittston officers testify that they cleaned up the spill and disposed of contaminated surface soils off site. Coleman Dep. at A598; Dalton Dep. at A1021-22; B177-78.

 In the winter of 1980, 200 gallons of fuel oil were spilled onto the ground. Pittston provides evidence that authorities were notified, and that it was cleaned up by an outside contractor. Coleman Dep at A603-04; B179.

 The last incident occurred sometime between 1981 and 1983. The daily inventory gauging of the tanks indicated that one tank was losing product. The loss was traced to a pipeline connected to the tank. Workers excavated the pipeline and discovered a small hole. Pittston officials testify that they dug trenches to collect the oil which was removed by vacuum trucks, absorbent pads and oil booms. Stendardi Dep. at A2846-51.

 During the excavation to find the leak, workers discovered pipes that had been abandoned by the Eagle Works refinery. These pipes were a contributing source to the oil found in the ground in that area. Stendardi Dep. at A2852. This was not the only time abandoned Eagle Works equipment had been discovered. In 1976, an old drainage trap was discovered in the same general area as the leak in the 1980's. Pittston was alerted to the drainage traps' existence by oil leaching in the vicinity. Coleman Dep. at A605-06, A608; B180.

 In approximately 1980, the Coast Guard detected leaching from the shoreline in the same area. It was determined that it was lubricating oil of a type that Pittston had never handled. Also in the early 1980's several tanks were removed from the site. In connection with this work and by digging in the area to locate unused pipelines, several pipeline were discovered that contained product foreign to the Pittston operation. Stendardi Dep. at A2772-74, A2889-91. In May 1983, investigation of a puddle of oil in the tank truck loading area led to the discovery of six more abandoned Eagle Works pipelines.

 In each case, Pittston maintains that it engaged in the appropriate remedial conduct. For example, it drained and removed the derelict pipelines. The drainage trap was filled with cement and the area excavated in 1983 was "skimmed on a regular basis 'to collect any oil in the soil.'" Plaintiff's 12G Statement P 269 (citing B183-84).

 Pittston contends that, although it was the subject of repeated inspection from regulatory authorities, it was never found to be in violation or subjected to any sanction for pollution. Defendants dispute this and likewise dispute Pittston's assertions as to the effectiveness of the spill clean up efforts. Defendants characterize Pittston's regulatory filings as an acknowledgment to governmental authorities that there was petroleum pollution and a promise to remediate the site. See Marine Insurers Brief on Known Loss at 14.

 Certainly by the mid to late 1970's there was concern at Pittston as to the future of Tankport, triggered at least in part by environmental problems there. In 1979, Pittston commissioned a pollution study from an environmental firm, Environics. The Environics report, B2286-2390, finds numerous examples of obvious oil contamination, including free floating oil in standing water, in soil samples and on vegetation in Caven Point Creek. Further tests were conducted. Through test wells and an analysis of exposed groundwater, Pittston learned that Tankport was substantially contaminated with oil in excess of regulatory allowances. B2325; B2332.

 It appears from internal correspondence that, from an operational standpoint, Tankport was no longer an optimum location for Pittston. Other Pittston terminals were more efficient and less troublesome. Additionally, there was a problem with the right of way to the pier. Finally, it appears that there was a growing management awareness, received both from its own employees and from outside sources, that something would have to be done about the petroleum contamination of the site if it were to be a viable base of future operations over the long term.

 For whatever reason, Pittston decided that Tankport was no longer worth the investment and, on April 30, 1983, the site was sold to plaintiff-intervenor Ultramar America. The transaction was effected by a purchase of all the stock of the subsidiary, Pittston Petroleum to Ultramar. The stock purchase agreement contained important provisions concerning the condition of the site. These appear to create an obligation in Pittston to indemnify Ultramar for damages caused by contamination of the site during Pittston's ownership of it. Because the interpretation of these terms are important to the question of whether Pittston had an insured loss, that interpretation is another focus of this litigation.

 In 1984-85, Ultramar commissioned a study by the Killam Company, an environmental consultant, to determine what it would take to put Tankport on an environmentally sound footing to operate as an oil terminal. The results of this study apparently led Ultramar to decide to close the site for good. In 1985, Ultramar filed an initial ECRA submission indicating its intent to decommission the site. B1849-1921.

 In November of 1988, Ultramar filed suit against Pittston under the stock purchase agreement's indemnification clause alleging that the site was contaminated with chromium. That suit has since settled and is not connected to this dispute. However, in August of 1989, Ultramar circulated a draft amended complaint in the chromium litigation alleging that Pittston was liable to it for costs associated with petroleum contamination. In December of that year, the NJDEPE notified Ultramar that closing the site would make it liable for clean up costs under ECRA. Declaration of Farber, Exhibit B. Ultramar proposed a final clean up plan in February of 1990. B2048-2142.

 Pittston gave notice to Travelers of Ultramar's claim by letter on April 4, 1990. The letter enclosed a proposed settlement agreement. The notice asked for a quick decision on coverage, because of impending motions in the Ultramar action. Five days later, on April 9, 1990, Ultramar and Pittston settled the question of liability for the clean up between them, with Pittston agreeing to pay 80% and Ultramar agreeing to pay 20% of the total cost. Travelers responded by letter dated April 12 which purports to waive objection to the settlement as a voluntary assumption of obligation, but reserves its other rights to dispute coverage. The letter stated that the insurer did not have enough time to take an definite position on coverage and that further investigation would be necessary.

 The current condition of this long-suffering piece of ground is obviously not good. It is undisputed that there is significant soil contamination at Tankport. Three underground pools of oil have been discovered floating on top of the groundwater. Roland Decla. P 25-28. Contaminated groundwater is migrating off-site. Id. P 20-22. Seepage related to the separator has contaminated the soil, and its discharge has fouled Caven Creek. According to the Environics report, oil has seeped into Caven Creek and into Upper New York Harbor.

 The insurers denied coverage, and Pittston brought suit for a declaration of coverage. Ultramar has joined as an intervenor-plaintiff and its insurers are in the suit as well. Sixteen motions have been filed. The insurers and the insureds all move for summary judgment against each other. Many issues are common to more than one defendant or plaintiff. Where the discussion below may be pertinent to more than one motion it will be noted.


 1. The Summary Judgment Standard

 Summary judgment shall be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986). In making this determination, a court must draw all reasonable inferences in favor of the non-movant. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert. dismissed, 465 U.S. 1091, 79 L. Ed. 2d 910, 104 S. Ct. 2144 (1984). Whether a fact is "material" is determined by the substantive law defining the claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); United States v. 225 Cartons, 871 F.2d 409, 419 (3d Cir. 1989).

 "At the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249. Summary judgment must be granted if no reasonable trier of fact could find for the non-moving party. Id. Further, when a non-moving party who bears the burden of proof at trial has failed, in opposition to a motion for summary judgment, to raise a disputed fact issue as to any essential element of his or her claim, summary judgment should be granted because "a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 When, the non-moving party will bear the burden of proof on a particular issue at trial, the moving party's burden can be "discharged by 'showing' -- that is, pointing out to the District Court -- that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325. If the moving party has carried its burden of establishing the absence of a genuine issue of material fact, the burden shifts to the non-moving party to "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).

 When the non-moving party's evidence in opposition to a properly-supported motion for summary judgment is merely "colorable" or "not significantly probative," the Court may grant summary judgment. Anderson, 477 U.S. 242 at 249-50, 91 L. Ed. 2d 202, 106 S. Ct. 2505. "The mere existence of a scintilla of evidence will be insufficient." Id. at 252. The inquiry is whether, "seen through the prism of the substantive evidentiary burden," a reasonable jury could render a verdict for the burdened non-movant. 477 U.S. at 254-55. Thus, in this case, plaintiff must make a showing sufficient for a reasonable jury to find that he is entitled to a verdict by a preponderance of the evidence. Id. at 252.

 The non-movant may not "rest upon mere allegations, general denials, or . . . vague statements." Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir.), cert. denied, 502 U.S. 940, 116 L. Ed. 2d 327, 112 S. Ct. 376 (1991); see Fed. R. Civ. P. 56(e). The "unsupported statements of counsel in memoranda submitted to the court are even less effective in meeting the requirements of Rule 56(e) than are unsupported allegations in the pleadings." Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). The summary judgment procedure enables a party "who believes there is no genuine issue as to a specific fact essential to the other side's case to demand at least one sworn averment of that fact before the lengthy process of litigation continues." Lujan v. National Wildlife Federation, 497 U.S. 871, 888-89, 111 L. Ed. 2d 695, 110 S. Ct. 3177 (1990).

 This case presents the situation of multiple parties all cross-moving for summary judgment against each other. It bears noting, therefore, that just because both sides claim that there is no genuine issue of material fact in a case, it does not mean that either is entitled to a summary judgment ruling. As the Third Circuit has explained:

The making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist.

 Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968). Thus, cross-motions for summary judgment do not necessarily require a "sudden death" scenario. Despite the fact intensive nature of a Rule 56 motion, the ultimate determination is one of law, and the Court may find that neither party is correct in their belief that there is no genuine issue. Similarly, rejection of a party's application for summary judgment cannot be read as a preview of the Court's disposition towards the merits of that party's case, or a prediction of how it will fare at trial. All a denial of summary judgment signifies is that, at that moment in the procedural history of the case, the record did not preclude a reasonable jury from finding for the opposition. Certainly as the case unfolds, the fortunes of either party may change.

 2. The Travelers CGL Policies

 A. Voluntary Assumption of an Obligation

 Travelers argues that Pittston's loss under the CGL policies is not covered, because Pittston was not "obligated to pay" Ultramar for clean up costs. Travelers contends that there was no bona fide basis for Ultramar to assert liability against Pittston, that Pittston's settlement with Ultramar was a sham, and that Pittston is not entitled to reimbursement for money paid to Ultramar because the payment would be a voluntary payment not covered by the CGL policy. Furthermore, Travelers claims that it did not have a meaningful opportunity to object to the settlement. Thus, Travelers claims, its right to contest the liability of its insured was taken away.

 This issue might be better categorized as a defense to coverage. However, in terms of the chronology of events, it is a threshold issue that is independent of the other, pollution-specific, insurance law doctrines in the case. Moreover, it is intertwined with another key issue in the case: whether the settlement between Pittston and Ultramar was reasonable. Thus, if the settlement was reasonable, the insured was not prejudiced by the alleged "voluntary assumption," and the issue becomes moot. Therefore, both will be discussed before reaching the more basic issues of coverage.

 The Court finds the insurer's arguments on both these issues unconvincing. First, under the stock purchase agreement, it appears that Pittston simply retained whatever liability it would have had absent a sale of the site. Second, Travelers has not shown that the settlement was unreasonable. Finally, and conclusively, Travelers waived this argument in its letter of April 12, 1990, in which it informed Pittston that it would not object to the settlement on the voluntary payment grounds, reserved other defenses to payment, and instructed Pittston to conduct itself as a prudent insured.

 As outlined generally above, when Pittston found itself faced with the prospect of an expensive upgrade of a redundant facility that no longer served their needs, the company decided to rid itself of Tankport. Apparently, the buyer that they found, Ultramar, was unwilling to assume the risk of liability for past pollution at the site, and this unwillingness was reflected in the stock purchase agreement.

 At section 11 (a) the agreement reads:

 B1477-78. Schedule 4.4 to the agreement lists among "Undisclosed or Unrecorded Material Liabilities,": "Liability for environmental damage, if any, in connection with the Company's oil terminal at Tankport, Jersey City, New Jersey." B1530.

 Travelers argues that the foregoing clauses are trumped by section 9.11. Subsection (a) provides that Pittston will pay one-half of the cost of upgrading the facility, up to $ 200,000, to bring into legal compliance any defect that existed before the closing date. Subsection (a) is made inapplicable to the present situation by subsection (b) This latter section says that if Ultramar notifies Pittston that "it intends to abandon Tankport as a result of its inability or unwillingness to comply with any Authorization or Law with respect to which Tankport is not in compliance on [the closing date]," then Pittston would make a payment to Ultramar based on the difference between the closing price and the net price Ultramar received when it disposed of the site. B1471-72. Again the payment was capped at $ 200,000. B1472.

 Ultramar did decide to abandon Tankport rather than make the substantial expenditures necessary to bring the site into compliance with the NJDEPE requirements. Mannion Dep. at A2390. This triggered ECRA which requires that the owner of an industrial site who decides to cease operations must file and implement a plan of environmental remediation with the NJDEPE. N.J.S.A. 13:1K-9. The Court declines to find that a clean up pursuant to a plan to retire the site from industrial use is an "upgrade" within the plain meaning of section 9.11(a). Moreover, the language of the agreement shows that the notification of Pittston by Ultramar that it would abandon the site triggered subsection (b), not subsection (a). Accordingly, subsection (a) is irrelevant to Pittston's liability to Ultramar.

 As to subsection (b), it is clear that its purpose was to compensate Ultramar for any loss in value of the site due to unknown, pre-existing conditions. This subsection does not address liability to third parties, including governmental entities. There is no apparent reason to conclude that the indemnity provision of section 11 was not intended to be supplemental to rather than exclusive of the liability of Pittston to Ultramar under section 9.11(b).

 If sections 9.11 and 11 were truly in conflict, it is facially arguable that 9.11 should control under the maxim of contract interpretation that the specific should control the general. See Restatement (Second) of Contracts § 203(c). However, interpreting the language in this way would make section 11 surplusage. The $ 200,000 cap of section 9.11 would apply before the $ 1,000,000 floor of section 11 was reached. Such an interpretation would run afoul of a more basic principle of interpretation that, where possible, a court should read provisions of a contract so that each has meaning. J.E. Faltin Motor Transp. v. Eazor Express, 273 F.2d 444, 445 (3d Cir. 1960).

 This principle is founded on the proposition that the duty of the Court is to determine the intent of the parties in forming their agreement. It would be most unreasonable to assume that Ultramar would have negated so substantial a right as indemnification for clean-up costs of Tankport with a $ 200,000 cap. Id. ("It would not be good interpretation to disregard language of the parties as meaningless or absurd if that can be avoided."). It is far more likely, and equally consistent with the language of the agreement, that section 9.11 was intended as a limited remedy for the loss of value to Ultramar of the property if they were to decide that it must be abandoned, whereas section 11 deals with liability to third parties and governmental entities.

 Secondly, there has been no showing that the settlement was unreasonable, or that Travelers could have done better. Pittston's liability for substantial sums for remediation appears plain in the terms of its agreement with Ultramar. Generally, where an insured settles a claim against it without the permission of the insurer, the insurer must, nonetheless, demonstrate prejudice before being relieved of its policy obligations. Mitchell L. Lathrop, Insurance Coverage for Environmental Claims, § 2.02[2] at 8-21 (1995); Barry R. Ostrager & Thomas R. Newman, Handbook on Insurance Coverage Disputes, § 5.06[a] at 177 (6th ed. 1993). It is true that many of the cases that subscribe to this proposition arise in the context of an insurer's refusal to defend. See, e.g., Bunge Corp. v. London & Overseas Ins. Co., 394 F.2d 496, 497-98 (2d Cir.), cert. denied, 393 U.S. 952, 21 L. Ed. 2d 363, 89 S. Ct. 376 (1968). However, as the New Jersey Supreme Court discussed in Griggs v. Bertram, 88 N.J. 347, 366, 443 A.2d 163 (1982), this area of insurance law is concerned with fairness. See 88 N.J. at 367-68 (where insurer wrongfully refused to announce coverage position, it has burden to show settlement unreasonable or reached in bad faith). Where there is no genuine question that the settlement reached by the insured is what the insured legitimately owes, it is equitable to require the insurer to respond.

 Here, the Court is satisfied that the language of the stock purchase agreement quoted above establishes Pittston's liability to Ultramar beyond any reasonable dispute. Therefore, the Court finds that the settlement was reasonable and Travelers' interests were not prejudiced by it. Consequently, the insurer may not assert the voluntarily assumed obligation condition to avoid liability to its insured.

 Despite the insurer's vigorous attack on this aspect of Pittston's case, none of its arguments are persuasive. Travelers's numerous arguments all founder on one important truth. The Court is satisfied that the 80%/20% split of cleanup costs that Pittston agreed with Ultramar was an excellent result in light of the comparatively insignificant amount of time Ultramar had spent in possession of the site, the fact that many of the Pittston years of ownership occurred when the industry was less environmentally aware, and that, as discussed above, the stock purchase agreement clearly obligated Pittston to pay for 100% of the pre-1983 contamination. Thus, Travelers accusations of a collusive settlement, or that it represented a compromise of other, non-covered claims against Pittston, are unpersuasive.

 The Court will not burden this lengthy opinion with a point by point refutation of Travelers' arguments on this score, with one exception. Travelers points to an amendment of the stock purchase agreement section 11(a)(iv) claiming that it gave Pittston a clear defense to any claim Ultramar might assert. The Court finds that the fact of the amendment had no effect on the reasonableness of the settlement.

 The amendment added the qualification that the discharge creating liability had to have come from a vessel, tank, pipeline, etc., that was owned by Pittston during the discharging event. Because the insured has owned Tankport since 1954, including all of the left over Eagle Works facilities, this limitation would only exclude indemnification for pollution that escaped prior to 1954, and that remains on the site to this day. Given the length of time, and the documented groundwater flow across the site, see B2331, it would have been reasonable for Pittston's attorney's to conclude that the pollution excluded thereby would represent an economically insignificant portion of the clean up costs, particularly because a massive clean up effort must be undertaken for post-1954 contamination in any event.

 Travelers has submitted the affidavit of Curtis Meanor, formerly a judge in this district. It is in the form of an expert's certification, and purports to find that there was no legal basis for Ultramar's claim against Pittston for petroleum contamination. No cases are cited; its conclusions rest on statements of the law whose authority appears to be Judge Meanor's own learning.

 It is no reflection on Judge Meanor's jurisprudence to note that this document has no more force than any other attorney's legal argument. Indeed, the Court finds that this submission is most properly characterized as an additional brief in opposition to Pittston's motion for summary judgment. Traveler's argues that this is an expert's affidavit. However, the Court finds unpersuasive Traveler's premise, that the underlying liability of Pittston to Ultramar is an independent question of fact and thus a proper subject for an expert's affidavit. On the contrary the Court believes that the submission is a legal memorandum submitted in violation of the rules of this Court.

  Pittston moves the Court to strike the Meanor certification. This motion will be granted. The Court, with humility, reminds the parties that the only authoritative expert on the law of this case is the Court itself. Moreover, on review of Judge Meanor's brief, the Court finds that the argument presented with regard to the interpretation of the stock purchase agreement has been dispensed with above.

  Finally, the Court finds that Travelers waived the assumed liability condition. In response to a letter of April 3, 1990, Travelers' Assistant Account Manager Christopher Strapp wrote to Arthur Wheatley, Pittston's Vice President and Director of Risk Management on April 12, 1990. Strapp stated that "If Pittston should reach a settlement with Ultramar as outlined in the Settlement Agreement, The Travelers will not consider such action a violation of the policy conditions prohibiting voluntary payment or assumption of obligations." B2449. The letter goes on to reserve other defenses including the right to contest the reasonableness of the settlement. Id. The letter provides that "If the Settlement Agreement has already been executed, please forward a copy of the final terms and conditions." Id.

  Travelers now contends that this waiver is ineffective because it was obtained by a misrepresentation. Travelers cites a March 27 letter from Pittston's attorney Timothy Vanderver to Diane Naylor of Johnson & Higgins, Pittston's insurance broker, that was then appended to the April 3 letter to Travelers. Strapp Decla., Exhibit J. In this letter Vanderver states that "Since motions in the litigation between Ultramar and Pittston and others are scheduled for hearing on Monday, April 9, 1990, we must have any responses no later than close of business on Wednesday, April 4, 1990."

  Travelers claims that plaintiff has now admitted that there was no time pressure, but that the statement that an answer was needed quickly was a misrepresentation intended to induce Travelers improvidently to agree to the settlement. Assuming that there is such an admission in the record, and Travelers provides no citation for it, the Court finds that this argument is without merit.

  First, there is no showing that by stating that there was a time pressure, Pittston intended to induce Travelers to agree to the settlement improvidently. Second, the Court does not believe that such a representation as to a time pressure would be material to Travelers' decision to waive the voluntary payment condition. If it were, surely Travelers was free to withhold its waiver on the grounds that it was not given enough time. Moreover, as quoted above, the waiver letter itself provides for the fact that the settlement might already have been signed before the waiver letter was received by the insured, which in any event was dated after the supposed April 9 date of the motions. Thus, it appears that, whatever it may claim now, then Travelers felt no particular time pressure. Finally, it is not even established that the contents of the Vanderver letter constitute representations to Travelers. They were originally sent from the Pittston attorney to Ms. Naylor, and only then transmitted, for whatever reason, to Travelers.

  For all of these reasons, the Court finds that there is no genuine issue whether Travelers' waived the voluntary payment condition on the policies and that the settlement was reasonable. Therefore, and for the other reasons discussed above, the Court will grant summary judgment to plaintiff that coverage for liability to Ultramar under the Settlement Agreement between Ultramar and Pittston settlement is not barred by the voluntary payment or assumption of obligations conditions on the policies.

  B. Damages

  Pittston argues that sums it is obligated to pay to a third party as a result of environmental damage are "damages" under the law construing CGL policies. Citing Morton Int'l Inc. v. General Accident Ins. Co., 134 N.J. 1, 25, 629 A.2d 831 (1993), cert. denied, 129 L. Ed. 2d 878, 114 S. Ct. 2764 (1994); Hatco Corp. v. W.R. Grace & Co., 801 F. Supp. 1334, 1364 (D.N.J. 1992). This is settled law, and not disputed by Travelers. It will be important to the discussion that follows to pinpoint exactly what type of physical damage is at issue here.

  There is no dispute that the soil at Tankport is severely contaminated with oil. Significantly, ground-water contamination is also a key issue in this case. Its prominence is due not only to the expense of remediating ground water contamination, but remains an issue of importance due to the "owned property" exclusion in the CGL policies. First Pittston argues that the ground water is the property of the state, and thus not "owned property." Second, Pittston contends that there is evidence that the contaminated ground water is migrating off site. As will be discussed more fully below, the law teaches that where there is some evidence of migration off site, measures necessary to stop that migration, including cleaning up "owned property," are also covered. The issue of ground water contamination is also dominant because Pittston argues that it was unaware of groundwater contamination for purposes of the "expected nor intended" clause in the policies.

  Other off-site property damage may include contamination associated with the oil/water separator. Further, there is damage to the banks of Caven Creek that, as far as may be determined from the record at present, may be completely off the site.

  C. The Continuous Trigger

  Pittston maintains that the continuous trigger theory should be applied here. Of course this theory is the law of this state. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 455-56, 650 A.2d 974 (1994); Hatco, 801 F. Supp. at 1346. *fn4" It holds that an occurrence triggering coverage under a CGL policy continues over a span of time, beginning from the first exposure to injurious conditions, continuing through any period of latency or while the resulting damage remains undiscovered, and ending at the time the injury manifests itself to the insured.

  Pittston maintains that the contamination of the site is the product of an indivisible process of "property damage" that was in progress in 1954 when it took over the site, and continued until the day it sold the site to Ultramar. This property damage included that caused by the abandoned and leaking Eagle Works equipment hidden around the site. Pittston also argues that the occasional spills and leaks incidental to their own operations contributed to the continuous damage. Despite their maintenance and clean-up efforts, which Pittston maintains were adequate for the time and the circumstances, some oil seeped into the ground and thence into the groundwater.

  Any Eagle Works contamination is also within the scope of the continuous trigger theory. Obviously the date of the first exposure to injurious conditions attributable to Eagle Works is outside the policy period. However, the record establishes that oil from Eagle Works has been slowly seeping into the groundwater, Caven Creek, and the harbor from the abandoned pipelines, junction boxes, etc. Therefore, the damage was ongoing, and continued to trigger each successive policy. The Court is aware of no condition in the policy that the damage must be a result of the insured's activities, so long as the insured is truly liable for that damage. Thus, to the extent that the Eagle Works pollution was neither expected or intended by Pittston, as will be discussed below, the environmental damage that occurred during the policy period caused by discharges that occurred during the Eagle Works era triggers the policies.

  In response, Travelers makes the following arguments. First they contend that the damage at Tankport is divisible. For example, they say that certain tanks were taken out of service at different times during Pittston's ownership. Travelers believes that policies issued after the date a tank was retired should not be triggered for clean up costs associated with that particular tank. Travelers points out that the contamination of the site is not uniform, but that there are "hot spots" and areas of less contamination.

  The record does not show that the overall groundwater contamination may be traced to any particular tank. Nor does it appear that the Eagle Works contamination may be limited to any particular policy period. The oil/water separator serves a number of tanks, and there has been no showing as to which, if any, of these tanks were taken from service during the relevant times. As the Court reads the submissions of the parties, these three areas of environmental damage constitute the majority of the harm for which coverage is sought, and they appear clearly within the compass of the continuous trigger theory.

  If the amount of damage traceable to various areas within Tankport may be apportioned at some later date, it is conceivable that the insurers may reduce some part of the liability otherwise assessed. Pre-trial summary judgment is not the stage in the proceedings at which such an apportionment should be undertaken. It suffices now to observe that there is no genuine issue of fact that a significant proportion of the environmental damage in this case is amenable to the continuous trigger theory, and the case will proceed on that basis.

  Second, Travelers attempts to distinguish its policies in effect after 1972 from the policy in Hatco, 801 F. Supp. at 1334, where this Court applied a continuous trigger. Pre-1973 policies defined occurrence as "an accident, including injurious exposure to conditions, which results, during the policy period, in . . . property damage. . . ." Strapp Decla. P 8. This is similar to the Hatco language. See 801 F. Supp. at 1344. After 1972, the "during the policy period" time limitation was moved from the occurrence definition to the property damage definition. This provision now defined property damage as "physical injury to or destruction of tangible property which occurs during the policy period." Strapp Decla. P 9. Travelers argues that this change of language means that the continuous trigger theory does not apply to the post-1972 policies.

  The Court disagrees that these policies are outside of the broad run of CGL policies that have been held subject to the continuous trigger. First, although the re-wording of the policy does effect a subtle shift in meaning between the pre- and post-1972 policies, it does not change the meaning sufficiently to render the continuous trigger theory inapplicable. The change is that, where previously it was the exposure to conditions that was to have taken place during the policy periods, subsequently it was the property damage that must have occurred during the relevant period.

  Unfortunately for the insurers, the heart of the continuous trigger theory is that damage is ongoing. When the damage becomes apparent does not dictate when it occurs. In the asbestos cases it was recognized that "some injury to body tissues occurs on the inhalation of asbestos fibers" even though no diagnosable illness may result for many years. Owens Illinois, 138 N.J. at 454. In property cases, "the injury to property caused by asbestos is both continuous and progressive." Lac D'Amiante, 613 F. Supp. 1549 at 1561. As with the release of asbestos fibers by a process of "slow continuous degradation," id., so too the gradual seeping of oil from abandoned Eagle Works pipes, the accumulation in the groundwater of oil from uncounted routine mishaps, the percolation of oil-laden rainwater through the overburden, all constitute ongoing and progressive physical injury to property that "occurred" during the policy period. Therefore, moving the phrase "within the policy period" from one part of the policy to another has only semantic significance with regard to the application of the continuous trigger theory.

  Finally, Travelers argues that, even if the continuous trigger applies, the law provides that the trigger is cut off upon the manifestation of the injury. Again, Travelers relies on language from Hatco, 801 F. Supp. at 1345 n.3. The cited language refers to "general principles of insurance law" to hold that the date of manifestation of the injury is the cut-off date for triggering multiple policies.

  Traveler's formulation of the manifestation cut-off is simply another way of stating that the cut-off is the same as the "expected nor intended" condition of coverage. Township of Gloucester v. Maryland Casualty Co., 668 F. Supp. 394, 402-03 (D.N.J. 1987), relied on in Hatco for the proposition just cited, supports this view. There the court found that there was no occurrence within the policy period because the insured had actual knowledge of the occurrence before the period began. Recognition that two concepts with such different nomenclature and pedigrees as manifestation and "expected nor intended" are identical in practice is counter-intuitive. The Court notes, however, that other important concepts in pollution coverage jurisprudence also merge more or less seamlessly, *fn5" and there is no objective reason why these two should not function in parallel.

  Pittston maintains that the manifestation date is either the date Ultramar discovered the extent of the contamination or the date that it served Pittston with its amended complaint. Pittston cites Liberty Mut. Ins. Co. v. Triangle Indus., Inc., 765 F. Supp. 881, 885 (D.W. Va. 1991) aff'd, 957 F.2d 1153 (4th Cir.), cert. denied, 121 L. Ed. 2d 42, 113 S. Ct. 78 (1992). There it was held that the injury was manifested when the insured received a letter from the EPA stating that, pursuant to CERCLA, the insured was a "potentially responsible party" ("PRP"). This case is distinguishable in that it dealt with a manufacturer's off-site disposal of toxic waste. Unlike the facts here, the opinion does not disclose whether Triangle Industries had any idea that there was environmental contamination before it received the PRP letter. It may be that Triangle's knowledge of the actual damage and its legal liability for it were acquired simultaneously. Consequently, that case will not support the proposition that only manifestation of legal consequences will cut off the trigger.

  Pittston also cites Gottlieb v. Newark Ins. Co., 238 N.J. Super. 531, 537, 570 A.2d 443 (App. Div. 1990). There the court adopted the continuous trigger in a toxic tort case concerning the application of chemical pesticides in a home basement. The Appellate Division suggested that evidence of when "all of the damage from migrating pesticide was capable of being known or predicted" would mark the ending point of the occurrence. Id. On one hand, this case actually undermines Pittston's theory, because the court appears to have focused on the manifestation of physical contamination as opposed to the certainty of legal liability for it to determine when the injury was manifested. On the other hand, this may be explained by the fact that Gottlieb concerned first-party property coverage, and not a third-party liability policy. By analogy, Gottlieb could be read to say that, where legal liability is the insured risk, the possibility of legal liability must rise to a given level of certainty for the injury to be manifested and the trigger cut off.

  The New Jersey Supreme Court has reserved on the issue of when the injurious process ends. Owens-Illinois, 138 N.J. at 456. The Court takes guidance from the asbestos cases in which the continuous trigger theory arose. Keene Corp. v. Insurance Co. of N. Am., 215 U.S. App. D.C. 156, 667 F.2d 1034 (D.C. Cir. 1981), cert. denied, 455 U.S. 1007, 71 L. Ed. 2d 875, 102 S. Ct. 1644, 102 S. Ct. 1645 (1982), is the progenitor. Lathrop, supra § 6.05[1] at 6-23. Keene found that loss in a manufacturer's CGL policy was manifested for purposes of the continuous trigger theory when it became known that the third party suffered from an asbestos-related disease. Keene, 667 F.2d at 1045. The Keene court focused on the point at which "an ordinary person would characterize a fully developed disease as an 'injury'" in contrasting manifestation from pre-manifestation injury. Id. at 1043. Also, in Lac D'Amiante du Quebec L'tee v. American Home Assurance Co., 613 F. Supp. 1549 (D.N.J. 1985), Judge Barry focused on the manifestation of bodily injury caused by asbestos as a relevant consideration for the continuous trigger theory. Id. at 1558-59.

  These asbestos cases suggest that it is the date that the physical injury is manifested rather than the date when legal liability for the injury was fixed that constitutes "manifestation" under the law of CGL policies. On the other hand, where a lesser injury is manifested, it will not cut off the trigger for the purposes of some more egregious harm from the same source. For example, where an insured discovers that an asbestos victim has been diagnosed with asbestosis, that discovery will not cut off coverage if the victim later develops asbestos-related lung cancer. The reasonable expectation of the insured requires that "manifestation" has not fully occurred until the insured has knowledge, at least in general terms, of the extent of the damage or loss.

  The New Jersey Supreme Court has stated that "Property-damage cases are analogous to the contraction of disease from exposure to toxic substances like asbestos." Owens-Illinois, 138 N.J. at 455. Thus, injury from the invisible seeping of contaminants into the groundwater may be analyzed in the same way as in the asbestos cases. The announcement by NJDEPE that the site would have to be cleaned up is analogous to a verdict in favor of an asbestos victim that the manufacturer is liable for his injury. It does not constitute manifestation of the injury, the diagnosis of the disease is the manifestation. Accordingly, the Court will define the manifestation of the injury as when the insured was aware, at least in general terms and to a reasonable degree of certainty, of the existence and the extent of the off-site and ground water contamination. This determination of this issue will turn on the same evidence as the "expected nor intended" issue discussed immediately below.

  D. "Expected nor Intended" as an Element of Coverage

  The Travelers policies are "occurrence based," that is coverage is triggered by an occurrence as defined by the policy. Strapp 1st Decla. at P 8. In general, all of these policies defined "occurrence" in the same way. Id. P 6. Under the terms of the 1967-80 policies, an occurrence is "an accident, including continuous or repeated exposure to conditions, which results . . . in bodily injury or property damage neither expected nor intended from the standpoint of the insured." *fn6" Strapp 1st Decla., Exhibit C.

  It is the insured's burden to prove a loss covered by the terms of the policy. Diamond Shamrock Chem. Co. v. Aetna Casualty & Sur. Co., 258 N.J. Super. 167, 216, 609 A.2d 440 (App. Div. 1992), certif. denied, 134 N.J. 481 (1993). Because the existence of an occurrence is an element of coverage, it is the insured's burden to demonstrate the loss was within the definition of an occurrence, "including the expected/intended clause." Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Sur. Co., 817 F. Supp. 1136, 1143-44 (D.N.J. 1993); see New Castle County v. Hartford Accident & Indemnity Co., 933 F.2d 1162 (3d Cir. 1991) (Delaware law).

  It is plain from the language of the occurrence definition that whether damage is expected or intended is a question of the subjective intent of the insured. New Jersey case law has applied the language thusly, and the law in this state is well settled on the issue. S.L. Indus., Inc. v. American Motorists Ins. Co., 128 N.J. 188, 212, 607 A.2d 1266 (1992); Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 184, 607 A.2d 1255 (1992).

  The New Jersey Supreme Court has recognized the difficulty in applying a subjective intent standard to environmental insurance claims. Morton Int'l Inc. v. General Accident Ins. Co. of Am., 134 N.J. 1, 85-86, 629 A.2d 831 (1993). In other types of cases, intent may be presumed where conduct has been particularly reprehensible. Id. at 86. For example, in Atlantic Employers v. Tots & Toddlers Pre-School Day Care Center, Inc., 239 N.J. Super. 276, 282-83, 571 A.2d 300 (App. Div.), certif. denied, 122 N.J. 147 (1990), the inherent injuriousness of an act of child abuse was sufficient to serve as the basis for an inference that the insured expected or intended the injury. In contrast, the ...

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