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Lonza, Inc. v. Hartford Accident and Indemnity Company

April 07, 2003

LONZA, INC., PLAINTIFF-APPELLANT,
v.
THE HARTFORD ACCIDENT AND INDEMNITY COMPANY, AMERICAN REINSURANCE COMPANY, FEDERAL INSURANCE COMPANY, CONTINENTAL INSURANCE COMPANY AS SUCCESSOR TO HARBOR INSURANCE COMPANY, ASSOCIATED INTERNATIONAL INSURANCE COMPANY, GIBRALTAR CASUALTY COMPANY, EMPLOYERS MUTUAL CASUALTY COMPANY, AND BUSINESS INSURANCE COMPANY AS SUCCESSOR TO LONDON GUARANTEE & ACCIDENT COMPANY OF NEW YORK, DEFENDANTS, AND ZURICH INSURANCE COMPANY, LEXINGTON INSURANCE COMPANY, NEW HAMPSHIRE INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, EVEREST REINSURANCE COMPANY, GRANITE STATE INSURANCE COMPANY, AND AMERICAN EMPIRE SURPLUS LINES INSURANCE COMPANY AS SUCCESSOR TO TRANSPORT INDEMNITY COMPANY, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1037-97.

Before Judges Stern, Coburn and Collester.

The opinion of the court was delivered by: Stern, P.J.A.D.

As amended May 2, 2003

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 16, 2002

Following the entry of final judgment on May 23, 2001, plaintiff Lonza, Inc., appeals from a series of orders relating to the trigger and allocation of its coverage claims regarding the cleanup of the site of its manufacturing plant in Rhode Island. The trial judge concluded that the law of Rhode Island applied with respect to the primary policy issued by defendant Zurich Insurance Company ("Zurich"), because it was issued to plaintiff's parent corporation in New York, but that the law of New Jersey governed the excess policies issued by the other defendants because they were issued to plaintiff in New Jersey. It is undisputed that Zurich would provide no coverage under Rhode Island law because, in that state, carriers are liable only if they provide coverage in the year that the "manifestation" occurred, and that, for purposes of Rhode Island law, the "manifestation" occurred in 1979. Zurich did not provide coverage until 1983. The Hartford Accident and Indemnity Company ("Hartford"), which was the primary carrier in 1979, settled with plaintiff, and the claims against Hartford were dismissed. Under the trial court's holding, the remaining defendants are exculpated under New Jersey law because they are excess carriers and would not be reached under the "continuous trigger" doctrine.

Plaintiff argues that "the trial court's application of conflicting legal standards to the trigger and allocation of insurance policies covering the same risk at the same site violates the fundamental purpose of allocation law to distribute loss fairly and rationally among the policies which cover the risk," and that the "March 31, 2000 order applying New Jersey allocation law to the excess carriers alone should be reversed because New Jersey's interest in applying its law of allocation does not overcome the presumption that the law of the insured site should govern." We are told that the excess carrier that covered the risk at the time of "manifestation" in Rhode Island would provide more coverage than under the Zurich policy. Hence, plaintiff asserts that Rhode Island law should govern the issue before us with respect to all policies, and that, alternatively, New Jersey law should govern.

We have been cited to no case law, and have found none, that applies choice-of-law principles to multiple primary and excess policies that cover sites in various states when the dispute relates to the clean-up of a single location. Under the facts before us, we conclude that, for purposes of the forum conflict-of-law principles, the law of the same state must govern resolution of the trigger and allocation issues.

I. Plaintiff, a chemical manufacturer whose corporate headquarters and principal place of business are in New Jersey, made claims under its primary and excess comprehensive general liability ("CGL") policies for expenses it incurred in cleaning up its production site, the Peterson-Puritan Superfund Site in Rhode Island. All of the policies at issue, except those issued after 1983 by Zurich, were procured in New Jersey. Zurich's policies were procured by plaintiff's parent corporation, Alusuisse of America, Inc. ("ALA"), in New York.

Hartford Accident and Zurich were plaintiff's primary insurance carriers. Lexington Insurance Company ("Lexington"), New Hampshire Insurance Company ("New Hampshire"), National Union Fire Insurance Company of Pittsburgh ("National Union"), and Granite State Insurance Company ("Granite State") (collectively, the AIG defendants) were plaintiff's principal excess insurers. Of the remaining defendants, who were also excess insurers, only two, Everest Reinsurance Company ("Everest") and American Empire Surplus Lines Insurance Company ("American Empire"), are participating in this appeal. American Empire provided excess coverage only in 1977. Everest provided "'high level' excess coverage" in 1978 and 1979, the year of "manifestation." We are told that "Everest's coverage was excess to the AIG defendants' excess coverage."

Plaintiff's suit sought coverage for all costs it incurred in the course of complying with a government-mandated environ-mental cleanup at eleven sites in eight states. However, only the orders relating to the Peterson Site in Rhode Island remains unresolved. The coverage for cleanup of the Rhode Island site, therefore, provides the exclusive focus of this appeal.

The Zurich policies were issued to plaintiff's parent ALA. Plaintiff and other ALA subsidiaries of ALA were named insureds. Following the hearing of various motions, on October 8, 1999, the trial judge concluded that the "'law of the site' will be applied to all policies in the action with respect to the issue of trigger and allocation for all sites in the action." He also concluded that the "'law of the site' will [] appl[y] to the Zurich policies with respect to the pollution exclusion and notice provisions for Lonza's sites in Illinois and Rhode Island," but that New Jersey law would apply with respect to these issues for all other policies. Thereafter, on March 31, 2000, "[c]onsistent with" his "prior choice of law rulings," the trial judge held that "New Jersey law shall apply to the issues of trigger and allocation with respect to all policies issued directly to Lonza by defendants, other than Zurich." After motions for reconsideration were denied and other issues were resolved, on July 21, 2000, the judge granted Zurich's motion for partial summary judgment on the triggering issue for the Rhode Island site and dismissed with prejudice all of plaintiff's claims against Zurich for coverage at that site. He also granted the other carriers' motions for summary judgment. On May 23, 2001, plaintiff entered into a "consent order" with Zurich, dismissing all of its claims against that insurer relating to the remaining sites in states other than Rhode Island, thereby rendering a final judgment. Plaintiff now appeals the determination of the trial judge, which precludes any coverage from the remaining defendants.

II.

Plaintiff is a New York corporation (incorporated in 1970), whose corporate headquarters and principal place of business are in New Jersey. Plaintiff manufacturers chemicals at production facilities throughout the world. In 1982 plaintiff's parent ALA was acquired by Swiss ...


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