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United Mobile Homes, Inc. v. Foremost Ins. Co.

July 22, 1996


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

Approved for Publication July 22, 1996.

Before Judges Shebell, Stern and Newman. The opinion of the court was delivered by Shebell, P.j.a.d. Judge Stern concurs for the reasons expressed in his Concurring opinion in Reliance v. Armstrong, N.j. Super. (App. Div. 1996).

The opinion of the court was delivered by: Shebell

The opinion of the court was delivered by


Plaintiffs United Mobile Homes, Inc. ("United"), Cedarcrest, Inc. ("Cedarcrest"), and Cedarcrest Mobile Home Village Associates ("Cedarcrest Village") (collectively "plaintiffs"), filed this action against defendant Foremost Insurance Company ("Foremost" or "defendant") on March 4, 1992, seeking a declaration of coverage under numerous policies for environmental cleanup costs. On October 29, 1993, the Law Division Judge heard cross-motions for summary judgment, and concluded that both the "owned property" and "pollution" exclusions applied to bar coverage. Plaintiffs appeal.

In 1977, Cedarcrest Mobile Home Park was constructed near Vineland, consisting of 284 mobile homes on individual lots. The mobile homes were to a large extent heated by oil from individual underground tanks holding 250 to 275 gallons each. In 1979 Cedarcrest Village acquired ownership of the park, from which United Mobile purchased it in 1986. United Mobile owned the lots, the oil companies evidently owned the underground tanks, and the tenants owned the trailers and the oil in the tanks.

In June 1990 United Mobile discovered possible oil contamination from an inactive tank it removed, and notified DEP. Following its investigation, DEP served United Mobile with a notice of violation for discharging hazardous substances, and instructed it to remediate the contamination, submit a plan, and remove two other underground tanks in the park. In July 1990, United Mobile began removing all of the remaining 133 underground oil tanks at the park, converting to natural gas because of concern for the penalties applicable to oil leaks or discharges.

United Mobile hired Aguilar Associates & Consultants, Inc. ("Aguilar") to supervise the conversion and conduct environmental assessments as the project progressed. Aguilar's tank removal and testing revealed that only two of the 133 tanks had holes. At forty-six sites, however, Aguilar noted odors or "staining" of the subsoil. Of these forty-six excavations, approximately thirty tested showed contamination at levels below 300 ppm, the upper allowable contamination limit for the project according to Aguilar. Fourteen sites with contamination above that level were re-excavated and back-filled until all but two had contamination levels of less than 300 ppm. Based on the softness of the soil at these two sites, Aguilar was unsure whether additional excavation would be possible.

United Mobile submitted Aguilar's report to DEP. DEP initially disagreed with Aguilar's 300 ppm-standard and wanted United Mobile to comply with the DEP's usual 100 ppm-stricture. Following a meeting with United Mobile, Aguilar and DEP in March 1991, Aguilar submitted a plan for installing groundwater monitoring wells after soil removal was completed. On April 5, 1991, DEP approved, subject to several amendments, United Mobile's plan to test groundwater. Four monitoring wells were subsequently installed, one of which indicated contamination. Xylene was detected at 376 ppb, Benzene at 14 ppb, and Toulene and Ethylbenzene were detected at "low parts per billion." In the opinion of Aguilar's geologist, that contamination was caused by the on-site oil spills. An additional groundwater sample was collected from the one well at an undetermined date.

In July 1993, Anderson, Mulholland & Associates, Inc. ("Anderson") reviewed the information regarding contamination at the park. In Anderson's opinion, it was unlikely that off-site groundwater had been impacted from the storage tank releases. According to DEP, the final groundwater sample "did not indicate a problem at the site," and it eventually closed its investigation of the matter.

United Mobile claims to have spent over $229,000 in completing the tank removal, cleanup and monitoring at the park. As to possible causes of contaminated areas where leaking tanks were not found, plaintiffs' investigation revealed several tenants who remembered particular incidents of oil being spilled on the ground over the years by different fuel oil delivery services the tenants used. Although the tenants had difficulty remembering particular dates of spills, the record indicates that they generally believed such spills to have taken place in the mid or latter 1980s. In addition, one tenant recalled that around 1981 he replaced his tank because of a "pin hole" in it.

Between December 1985 and December 1990, defendant issued United Mobile a series of commercial policies, evidently including comprehensive general liability (CGL) coverage. Each policy promised to pay "all sums which the insured shall become legally obligated to pay as damages because of . . . property damage to which this insurance policy applies, caused by an occurrence... ." An "occurrence" was an "accident, including continuous or repeated exposure to ...

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