The opinion of the court was delivered by: O'hern, J.
On appeal from the Superior Court, Law Division, Middlesex County.
This case is a companion to Pfizer, Inc. v. Employers Insurance of Wausau, ___ N.J. ___ (1998), and HM Holdings, Inc. v. Aetna Casualty & Surety Insurance Co., ___ N.J. ___ (1998), also decided today. This is also a multistate, multisite environmental insurance coverage case. In this action involving cleanup sites in New Jersey, California, Michigan, and New York, the Law Division ruled that New York law will govern (1) whether the sudden and accidental pollution-exclusion clause contained in certain of the insurance policies bars coverage of the Unisys Corporation (Unisys) claims and (2) whether a late-notice defense applies to bar coverage for Unisys.
Unisys seeks coverage for environmental liabilities incurred by one of its predecessors, the Burroughs Corporation. As in Pfizer, supra, and HM Holdings, supra, we make no findings of fact. The liabilities at issue here arose from operations at twenty-one sites in New Jersey, California, Pennsylvania, Kentucky, Michigan, Wisconsin, and New York. Unisys initially sought coverage for environmental liabilities incurred by another predecessor, the Sperry Rand Corporation. In July 1994, Unisys added the Burroughs' claims against Employers Insurance of Wausau (Wausau), The Home Insurance Company (Home), and various London market insurers. (The term "London market insurers" refers to insurers who have entered into contracts of insurance providing indemnity for the plaintiffs and who are either underwriters and syndicates at Lloyd's of London or a company doing business in the London Insurance Market.) Unisys later joined Evanston Insurance Company (Evanston) and Travelers Indemnity Company (Travelers). After preliminary discovery, the parties selected the seven Phase I Burroughs sites for discovery and trial.
Unisys is a Delaware corporation with headquarters in Pennsylvania. Throughout the coverage periods, Burroughs operated in many states. Burroughs did maintain a substantial and continuous business presence in New Jersey for eighty-seven years. Between 1958 and 1983, Burroughs bought comprehensive general liability (CGL), umbrella, and excess policies of insurance from Wausau, Travelers, Evanston, and Home, none of which are headquartered in New York. Two Phase I sites are in New Jersey; two are in California; two are in Michigan; and one is in New York. Forty-three percent of the estimated Phase I cleanup cost is for New Jersey cleanup.
Anticipating choice-of-law issues, the trial court requested that the parties state their positions. Unisys argued that New Jersey law applies to the issues of late notice and the pollution-exclusion clause, maintaining that the insured risk was foreseeably multistate, the insurers did not include a choice-of-law provision in the policies, and that two substantial sites, representing forty-three percent of the total damages in Phase I, are in New Jersey. Wausau and Travelers countered that either the law of the site or, alternatively, the law of New York, where the contracts were entered into, applies.
In evaluating the significance of New Jersey interests, the court notes that although Unisys has a presence here, their commitment and resources, as compared to their overall national and international operations, is not of such magnitude as to constitute a compelling reason to invoke this jurisdiction's substantive law. . . . In view of the progress of ongoing clean-ups [of the waste sites] and the absence of any immediate danger to New Jersey residents, this suit is essentially for reimbursement and does not give rise to the important policy considerations requiring application of New Jersey's substantive law.
In 1971, New York statutory law began requiring insurers to include a pollution exclusion clause in liability policies. The rationale for this requirement was . . . to prohibit commercial or industrial enterprises from buying insurance to protect themselves against liabilities arising out of the pollution of the environment. Considering this strong public policy, this Court finds that New York's interest in this litigation is paramount.
Accordingly, the trial court found that the case "does not give rise to the important policy considerations requiring the application of New Jersey's substantive law." We granted Unisys' motion for leave to appeal that ruling. 150 N.J. 21 (1997).
What law governs the interpretation of the pollution-exclusion clause?
The analysis differs from Pfizer, supra, and HM Holdings, supra, in that two of the waste sites are located in New Jersey. It is therefore clear that factor one, derived from Restatement (Second) of Conflict of Laws section 6 (1971) (Restatement), the competing interests of the states, favors the application of New Jersey law, at least insofar as the New Jersey sites are involved. At issue is the extent of that interest because Unisys has either cleaned up or committed funds to clean up the sites. Because all of the cleanup costs are not yet fully determined, we hesitate to say that New Jersey no longer has an interest in providing funds to remediate the New Jersey sites. Moreover, to penalize a company that has advanced funds to expedite the cleanup of hazardous waste sites would counter the public policy that encourages rapid cleanup of environmental contaminants. As counsel put it, that would "turn public policy on its head." Finally, we ought not have a rule of law that distinguishes between the "mom-and-pop" businesses that need access to insurance funds to clean up hazardous materials and companies that appear to have more cash reserves. If the sums reserved prove to be insufficient to clean up the sites, New Jersey would retain an interest in the outcome of the action.
Concerning the interest of commerce among the states, it is clear that application of New York law to the issue of coverage under the pollution-exclusion clause at the New ...