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Spaulding Composites Co., Inc. v. Liberty Mutual Insurance Co.

December 26, 2001

SPAULDING COMPOSITES COMPANY, INC., PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
LIBERTY MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT/ CROSS-RESPONDENT, AND EMPLOYERS INSURANCE OF WAUSAU, ALLSTATE INSURANCE COMPANY, CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, LONDON MARKET COMPANY, CERTAIN LONDON MARKET COMPANIES, AMERICAN HOME INSURANCE COMPANY, LEXINGTON INSURANCE COMPANY, NATIONAL UNION FIRE CONTINENTAL INSURANCE COMPANY, INDUSTRIAL UNDERWRITERS INSURANCE, DEFENDANTS-APPELLANTS, AND AETNA CASUALTY AND SURETY COMPANY, (SUCCESSOR TO NORTHBROOK INSURANCE COMPANY), AMERICAN CENTENNIAL INSURANCE COMPANY, GREENWICH INSURANCE COMPANY (SUCCESSOR TO HARBOR INSURANCE COMPANY), NEW ENGLAND REINSURANCE CORPORATION, NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-8623-95.

Before Judges Skillman, Wallace Jr. and Wells.

The opinion of the court was delivered by: Wallace, Jr., J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: October 10, 2001

Plaintiff Spaulding Composites Company sought a declaration that the non-cumulation clause in the insurance policies of Liberty Mutual and certain other defendants did not apply to its claims resulting from environmental property damage. The trial judge granted plaintiff's motion for partial summary judgment, and issued an order declaring that "the non-cumulation" clause is inapplicable as a matter of law. We granted leave to appeal from this order. We conclude the contract language of the non-cumulation clause is clear and should be enforced.

We glean the following facts from the limited record on appeal. Spaulding allegedly sent lead-containing waste to a site in Fairfield Township from 1958 to 1973. Spaulding received notice of its potential liability in 1990, and filed bankruptcy in 1993. Subsequently, the bankruptcy court modified the automatic stay to permit the Caldwell Trucking PRP Group (Caldwell Group) and the United States Environmental Protection Agency (EPA) to maintain an action in the United States District Court of New Jersey for a declaratory judgment, and to recover insurance proceeds from Spaulding's insurers. The Caldwell Group filed such an action in July 1994. See Caldwell Trucking PRP Group v. Spaulding Composites Co., 890 F. Supp. 1247, 1250 (D.N.J. 1995).

The insurers' moved to dismiss the Caldwell Group's direct action against them, and that motion was granted. Ibid. The district court found Spaulding could maintain its own action against its insurers. In July 1995, Spaulding filed a complaint in the Law Division against defendants who had issued primary or excess liability policies to Spaulding or its predecessors during the relevant period. Spaulding sought a judgment declaring that the insurers were obligated to undertake its defense in the Caldwell Group action, and to reimburse Spaulding for its costs in defending that action.

Spaulding eventually filed a motion for partial summary judgment against Liberty Mutual Insurance Company for a declaration that the non-cumulation clause in Liberty's insurance policies was inapplicable. One of Spaulding's attorneys, Robert Chesler, certified that Spaulding had purchased nine consecutive policies of primary insurance from Liberty covering the years 1975 to 1984. The first policy had a limit of $500,000, and the other eight policies each had a limit of $1 million. Each of the policies had a version of the clause commonly known as a non-cumulation clause. Further, Chesler certified that during this same period, Spaulding purchased between $23 million and $100 million of excess coverage each year.

Liberty opposed Spaulding's motion and included copies of its insurance policies issued during the nine-year period. Each of the policies issued by Liberty contained a non-cumulation clause entitled "Limits of Liability." The pertinent portion of each policy provided:

LIMITS OF LIABILITY

It is agreed that Section IV of the policy jacket, LIMITS OF LIABILITY, is deleted and replaced by the following:

LIMITS OF LIABILITY

Regardless of the number of (1) insureds under this policy, (2) persons or organizations who sustain personal injury or property damage, (3) claims made or suits brought on account of personal injury or property damage to which this ...


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