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In re Environmental Ins. Declaratory Judgment Actions

May 12, 1997

(A-28/29/30) IN RE ENVIRONMENTAL INSURANCE DECLARATORY JUDGMENT ACTIONS; CIBA-GEIGY CORPORATION, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
LIBERTY MUTUAL INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA ACCIDENT & CASUALTY INSURANCE COMPANY OF WINTERTHUR, ADMIRAL INSURANCE COMPANY, AETNA CASUALTY & SURETY COMPANY, AGRIPPINA VERSICHERUNGS-AKTIENGESELLSCHAFT, AIU INSURANCE COMPANY, ALBA GENERAL INSURANCE COMPANY LTD., ALLIANZ VERSICHERUNGS-AKTIENGESELLSCHAFT, AMERICAN HOME ASSURANCE COMPANY, AMERICAN RE-INSURANCE COMPANY, AMERICAN STAR INSURANCE COMPANY, ANDREW WEIR INSURANCE COMPANY LTD., ANGLO FRENCH INSURANCE COMPANY LTD., ANGLO SAXON INSURANCE COMPANY LTD., ARGONAUT NORTHWEST INSURANCE COMPANY, ASSICURAZIONI GENERALI DI TRIESTE E. VENEZIA S.P.A., BALOISE FIRE INSURANCE COMPANY, THE BALOISE INSURANCE COMPANY OF AMERICA, BELLEFONTE INSURANCE COMPANY, BERCANUS INSURANCE COMPANY LIMITED, BERMUDA FIRE AND MARINE INSURANCE COMPANY LTD., BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA, BISHOPSGATE INSURANCE COMPANY LTD., THE BRITISH COMMERCIAL INSURANCE COMPANY LTD., BRITISH NATIONAL LIFE INSURANCE SOCIETY LTD., BRITISH & OVERSEAS INSURANCE COMPANY LTD., BRITTANY INSURANCE COMPANY LTD., BRYANSTON INSURANCE COMPANY LIMITED, CALIFORNIA UNION INSURANCE COMPANY, THE CENTRAL NATIONAL INSURANCE COMPANY OF OMAHA, CIA AGRICOLA DE SEGUROS S.A., CITY GENERAL INSURANCE COMPANY LTD., CITIZENS CASUALTY COMPANY OF NEW YORK, CITY INSURANCE COMPANY, CNA REINSURANCE OF LONDON LIMITED, COLONIA VERSICHERUNG AKTIENGESELLSCHAFT, COLUMBIA CASUALTY COMPANY, COMPAGNIE BELGE D'ASSURANCES GENERALES INCENDIE ACCIDENTS ET RISQUES DIVERS, COMPAGNIE EUROPEENNE D'ASSURANCES INDUSTRIELLES S.A., CONTINENTAL CASUALTY COMPANY, DART AND KRAFT INSURANCE COMPANY LTD., DART INSURANCE COMPANY LIMITED, DELTA-LLOYD NON-LIFE INSURANCE COMPANY LTD., THE DOMINION INSURANCE COMPANY LTD., THE DRAKE INSURANCE COMPANY LTD., ECONOMIC INSURANCE COMPANY LTD., EDINBURGH ASSURANCE COMPANY LTD., EL PASO INSURANCE COMPANY LIMITED, EMPLOYERS MUTUAL CASUALTY INSURANCE COMPANY, ENGLISH AND AMERICAN INSURANCE COMPANY LTD., EURINCO ALLGEMEINE VERSICHERUNGS A.G., EUROPEAN GENERAL REINSURANCE COMPANY LTD., EUROPEAN GENERAL REINSURANCE COMPANY, LTD., OF ZURICH, EXCESS INSURANCE COMPANY LTD., EXCESS MUTUAL REINSURANCE COMPANY, FEDERAL INSURANCE COMPANY, FIDELIDADE INSURANCE COMPANY, THE FIDELITY AND CASUALTY COMPANY OF NEW YORK, FIREMAN'S FUND INSURANCE COMPANY, FIRST STATE INSURANCE COMPANY, GERLING-KONZERN ALLEGEMEINE VERSICHERUNGS-AKTIENGESELLSCHAFT GIBRALTER CASUALTY COMPANY, GRANITE STATE INSURANCE COMPANY, GREAT AMERICAN INSURANCE COMPANY, GUILDHALL INSURANCE COMPANY LTD., HAFTPFLICHTVERBAND DER DEUTSCHEN INDUSTRIE V.A.G., HARBOR INSURANCE COMPANY, HAWK INSURANCE COMPANY LTD., HELVETIA ACCIDENT SWISS INSURANCE COMPANY LTD., HELVETIA GENERAL INSURANCE COMPANY LTD., HIGHLANDS INSURANCE COMPANY, HOME & OVERSEAS INSURANCE COMPANY, LTD., THE HOME INSURANCE COMPANY, INSCO LTD., INSURANCE COMPANY OF STATE OF PENNSYLVANIA, INTERGRITY INSURANCE COMPANY, INTERSTATE FIRE & CASUALTY COMPANY, LEXINGTON INSURANCE COMPANY, LONDON AND EDINBURGH GENERAL INSURANCE COMPANY, LTD., LONDON AND EDINBURGH INSURANCE CO., LTD. - NOW MERCURY INSURANCE HOLDINGS LTD., THE LONDON & OVERSEAS INSURANCE COMPANY LTD., LOUISVILLE INSURANCE COMPANY LTD., LUDGATE INSURANCE COMPANY LTD., LUMBERMENS MUTUAL CASUALTY COMPANY, MEAD REINSURANCE CORPORATION, THE MERCANTILE AND GENERAL REINSURANCE COMPANY LTD., MIDLAND INSURANCE COMPANY, MINSTER INSURANCE COMPANY LTD., MUTUAL REINSURANCE COMPANY LTD., NATIONAL CASUALTY COMPANY, NATIONAL CASUALTY COMPANY, LTD., NATIONAL CASUALTY COMPANY, (OF DETROIT), NATIONAL CASUALTY COMPANY OF AMERICA LTD., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, NEW ENGLAND INSURANCE COMPANY, NEW LONDON REINSURANCE COMPANY LIMITED, NORTH ATLANTIC INSURANCE COMPANY LIMITED, ORION INSURANCE COMPANY LTD., PACIFIC INSURANCE COMPANY, PINE TOP INSURANCE COMPANY, PRUDENTIAL REINSURANCE COMPANY, PURITAN INSURANCE COMPANY, FOR ITSELF AND AS SUCCESSOR TO THE MANHATTAN FIRE AND MARINE INSURANCE COMPANY BY CHANGE OF NAME, RIVER THAMES INSURANCE COMPANY LTD., REPUBLIC INSURANCE COMPANY, ROYAL INSURANCE COMPANY OF AMERICA, ROYAL SCOTTISH INSURANCE COMPANY LTD., SAFETY MUTUAL CASUALTY CORPORATION, SCOTTISH LION INSURANCE COMPANY LTD., SOUTHERN AMERICAN INSURANCE COMPANY, SOVEREIGN MARINE AND GENERAL INSURANCE COMPANY LTD., THE SPHERE INSURANCE COMPANY LTD., ST. HELEN'S INSURANCE COMPANY LTD., ST. KATHERINE INSURANCE COMPANY LTD., ST. PAUL FIRE AND MARINE INSURANCE COMPANY, STRONGHOLD INSURANCE COMPANY LIMITED, SWISS REINSURANCE COMPANY, SWISS UNION GENERAL INSURANCE COMPANY LTD., SWITZERLAND GENERAL INSURANCE COMPANY LIMITED, TERRA NOVA INSURANCE COMPANY LTD., TRENT INSURANCE COMPANY LTD., TUREGUM INSURANCE COMPANY, TWIN CITY FIRE INSURANCE COMPANY, UNDERWRITERS AT LLOYD'S LONDON, UNIGARD MUTUAL INSURANCE COMPANY, UNIONAMERICA INSURANCE COMPANY LTD., UNITED STANDARD INSURANCE COMPANY LTD., THE VICTORY INSURANCE COMPANY LTD., WALBROOK INSURANCE COMPANY LTD., "WINTETHUR" SWISS INSURANCE COMPANY, WORLD AUXILIARY INSURANCE CORPORATION, LTD., YASUDA FIRE & MARINE INSURANCE COMPANY (U.K.) LIMITED, YUVAL INSURANCE COMPANY LTD., ZURICH INSURANCE COMPANY, DEFENDANTS, AND (A-28/29/30) COMMERCIAL UNION INSURANCE COMPANY, AS SUCCESSOR TO THE OCEAN ACCIDENT & GUARANTEE CORPORATION, LTD., AMERICAN EMPLOYERS' INSURANCE COMPANY, THE EMPLOYERS' LIABILITY ASSURANCE CORPORATION, LTD., EMPLOYERS' SURPLUS LINES INSURANCE COMPANY, GENERAL REINSURANCE CORPORATION, ALLSTATE INSURANCE COMPANY, AS SUCCESSOR-IN-INTEREST TO NORTHBROOK EXCESS AND SURPLUS INSURANCE COMPANY, FORMERLY NORTHBROOK INSURANCE COMPANY, NORTH STAR REINSURANCE CORPORATION, AND ZURICH INTERNATIONAL LIMITED, DEFENDANTS-RESPONDENTS. AND CROSS-APPELLANTS, AND CENTURY INDEMNITY COMPANY (AS SUCCESSOR TO CCI INSURANCE COMPANY, WHICH ITSELF IS THE SUCCESSOR TO THE INSURANCE COMPANY OF NORTH AMERICA), DEFENDANT-RESPONDENT. GEI INTERNATIONAL INCORPORATED, A NEW JERSEY CORPORATION, (FORMERLY KNOWN AS ANDREW DENHOLM, INC.), AND ANDREW DENHOLM, INC., PLAINTIFFS-APPELLANTS, V. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, ATLANTIC MUTUAL INSURANCE COMPANY, NORTHWESTERN NATIONAL INSURANCE COMPANY, MIDLAND INSURANCE COMPANY, CHUBB GROUP OF INSURANCE COMPANIES, FIREMAN'S FUND INSURANCE CO., INC., IDEAL MUTUAL INSURANCE CO., INC., ORB HOLDING CO., JOHN BLACK, ROBERT DEDERER, FRANK VANDERHOOF, METRAMATIC CORPORATION, HIGH SPEED CHECKWEIGHER INC., SUCCESSOR IN INTEREST TO METRAMATIC CORPORATION, AG FUR PRAZISIONSINSTRUMENTE AND NEW JERSEY PROPERTY/LIABILITY GUARANTY ASSOCIATION, DEFENDANTS, AND (A-31) JOHN BLACK, ROBERT DEDERER AND FRANK VANDERHOOF, INDIVIDUALLY AND AS FORMER CORPORATE OFFICERS, DIRECTORS AND SHAREHOLDERS OF NGR DESIGN AND MANUFACTURING CO., INC. AND METAL DETECTORS, INC., METRAMATIC CORPORATION AND ORB HOLDING CO., DEFENDANTS AND THIRD PARTY PLAINTIFFS, V. FIREMAN'S FUND INSURANCE CO., INC., ST. PAUL MERCURY INSURANCE COMPANY, NORTHWESTERN NATIONAL INSURANCE CO., AND NEW JERSEY PROPERTY/LIABILITY GUARANTY ASSOCIATION, THIRD-PARTY DEFENDANTS.



On appeal from the Superior Court, Appellate Division, whose opinion in GEI International Incorporated v. St. Paul Fire and Marine Insurance Co. is reported at: 287 N.J. Super. 385, 671 A.2d 171 (1996).

The opinion of the Court was delivered by Pollock, J. Chief Justice Poritz and Justices Handler, Garibaldi and Coleman join in Justice POLLOCK's opinion. Justice O'hern filed a separate Dissenting opinion in which Justice Stein joins. O'Hern, J., Dissenting.

The opinion of the court was delivered by: Pollock

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

In re Environmental Insurance Declaratory Judgment Actions

Ciba-Geigy Corporation v. Liberty Mutual Insurance Company, et al. (A-28/29/30/31-96)

Argued September 9, 1996 -- Decided May 12, 1997

POLLOCK, J., writing for a majority of the Court.

The issue in these multiple party appeals is whether a constitutional right to a jury trial exists in an action for declaratory judgment concerning claims against insurers for breach of contract and the recovery of future remediation costs.

In Ciba-Geigy v. Liberty Mutual Insurance Co., plaintiff, Ciba-Geigy, sued its insurers seeking a judgment declaring that the insurers are obligated to defend and indemnify it for future costs of environmental remediation. Ciba-Geigy also seeks compensatory damages for remediation costs that it has already incurred. The Law Division granted Ciba-Geigy's motion for a jury trial.

Thereafter, defendant, Century Indemnity Company, which had initially joined in Ciba-Geigy's motion for trial by jury, moved for a trial by the court without a jury. Several other defendant insurers opposed the motion. The Law Division granted Century's motion.

The Appellate Division denied Ciba-Geigy's motion for leave to appeal and to stay the trial. The Supreme Court granted leave to appeal and further granted leave for Commercial and General Reinsurance to participate in the appeal.

In GEI International Corp. v. St. Paul Fire and Marine Insurance Co., GEI seeks a judgment declaring that its insurers are obligated to indemnify it for all future environmental remediation costs and expenses. In addition, however, GEI seeks money damages for breach of the policy because of the insurers' failure to reimburse it for the clean-up costs it has incurred to date. The Law Division bifurcated the claims for environmental coverage and liability. In both the liability and the coverage actions, GEI and two insurers demanded a jury trial. Two other insureds, moved to strike GEI's demand for a jury trial in the liability action. The Law Division struck all demands for a jury trial and the Appellate Division affirmed.

The Supreme Court granted GEI's motion for leave to appeal that part of the Appellate Division's order holding that the parties have no right to a jury trial on the environmental coverage claim.

HELD: An action by an insured against an insurer for a declaratory judgment to compel indemnification for future environmental clean-up costs is substantially an action for specific performance, to which a right to trial by jury does not attach; when an insured's claim to recover damages for past environmental remediation costs is ancillary to the insured's claim for specific performance, the entire matter should be resolved in a non-jury trial.

1. Traditionally, the right to a jury trial attached in legal, but not equitable, actions. (pp. 13-14)

2. The filing of a declaratory judgment action for insurance coverage does not necessarily engender the right to a jury trial. Rather, that right depends on whether the action is the counterpart to one in equity or law. (pp. 14-15)

3. In determining whether a declaratory judgment action is primarily legal or equitable, courts look to the historical basis for the cause of action and focus on the requested relief. (pp. 15-16)

4. Although a declaratory judgment action may ultimately result in the payment of money, it is not necessarily an action of law. A complaint seeking judgments mandating that insurers defend and indemnify insureds for the future costs of environmental remediation is sufficiently like an action for specific performance to withstand a demand for a jury trial. (pp. 16-17)

5. Although the essential nature of an action as legal or equitable may not be clear, specific performance is appropriate if it will do more perfect and complete Justice and where money damages would provide inadequate compensation for the breach of an agreement. (pp. 17-18)

6. If an action is primarily equitable, a court of equity may assume jurisdiction over ancillary legal issues. (pp. 18-19)

7. Specific performance is particularly appropriate when a claim involves a continuing right to future benefits that cannot be satisfied by a one-time monetary payment or when a court cannot reasonably ascertain the amount of damages. (pp. 19-20)

8. The predominance of equitable issues and complexity of declaratory judgment actions for insurance coverage for the recovery of future environmental remediation costs distinguishes those actions from coverage actions under other kinds of insurance policies. (pp. 20-22)

9. Without statutory authorization, the right to trial by jury does not attach to a claim if the claim did not exist at common law. (pp. 22-24)

10. Remediation is a form of equitable relief that can require continuing supervision and one that is not subject to trial by jury. (pp. 24-25)

11. Because the plaintiffs primarily seek specific performance of the insurers' duties under their policies, the Court need not decide whether the right to trial by jury would attach to a claim limited to compensation for already-incurred costs. (pp. 25-26)

12. Although budgetary constraints and concerns about efficiency cannot impinge on the right to a jury trial, the unnecessary expansion of the right to trial by jury solely to enable litigants to obtain a tactical advantage cannot be permitted in an era of fiscal constraint. (p. 26)

13. The mere existence of factual issues does not automatically entitle a party to a jury trial. (p. 27)

Judgment of the Appellate Division in GEI and that of the Law Division in Ciba-Geigy are AFFIRMED.

Justice O'HERN filed a separate Dissenting opinion in which JUSTICE STEIN joins. Justice O'Hern disagreed that the policyholders surrendered their right to a jury trial when they initiated their declaratory judgment action, viewing the declaratory actions for coverage as merely actions at law for breach of the insurance contract. He further considered the Court's decision to represent an abrupt departure from longstanding New Jersey law.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, GARIBALDI and COLEMAN join in JUSTICE POLLOCK's opinion. JUSTICE O'HERN filed a separate Dissenting opinion in which JUSTICE STEIN joins.

The opinion of the Court was delivered by

POLLOCK, J.

These appeals pose the issue whether a constitutional right to a jury trial exists in an action for a declaratory judgment concerning claims against insurers for breach of contract and the recovery of future remediation costs. Resolution of the issue depends on whether such an action is more ...


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