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Passaic Valley Sewerage Commissioners v. St. Paul Fire and Marine Insurance Co.

March 8, 2010

PASSAIC VALLEY SEWERAGE COMMISSIONERS, IRENE G. ALMEIDA, JAMES KRONE, FRANK J. CALANDRIELLO, JR., DOMINIC W. CUCCINIELLO, CARL S. CZAPLICKI, JR., PETER A. MURPHY, ANGELINA M. PASHERCIA, THOMAS J. POWELL, DONALD TUCKER, ROBERT J. DAVENPORT, FRANK D'ASCENSIO, DANIEL CARDELLICHIO, SHELDON LIPKE, RAYMOND LUCHKO, DANIEL BECHT, AND RONALD W. GIACONIA, PLAINTIFFS-APPELLANTS/ CROSS-RESPONDENTS,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, DEFENDANT-RESPONDENT/ CROSS-RESPONDENT, AND GE COMMERCIAL INSURANCE, F/K/A COREGIS INSURANCE COMPANY, DEFENDANT-RESPONDENT/CROSS-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, General Equity, Essex County, Docket No. C-320-02.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 25, 2010

Before Judges Rodríguez, Reisner and Chambers.

This is a dispute over insurance coverage involving two insurers, Coregis Insurance Co. (Coregis) and St. Paul Fire and Marine Insurance, Co. (St. Paul), each of which insured plaintiff Passaic Valley Sewerage Commission (PVSC) during a different time period.

PVSC appeals from a March 24, 2008 order granting summary judgment, dismissing its claims against Coregis for indemnification in connection with the settlement of a 2000 counterclaim filed against PVSC by Spectraserv, Inc. (the Spectraserv litigation). Coregis cross-appeals from a December 19, 2005 order, granting summary judgment in favor of St. Paul on the grounds that the St. Paul policy did not cover the Spectraserv litigation.*fn1 Concluding that both orders were legally correct, for reasons thoroughly and cogently explained by the trial judges who entered them, we affirm.

I.

We begin by addressing the claim against St. Paul. The following factual background is needed to put the claim in context. PVSC was created by the State to manage and regulate the collection and disposal of wastewater generated in a four- county area along the Passaic Valley River basin. Its function is to protect the waterways of the basin from pollution. As part of this function, PVSC maintains an extensive sewer system and operates a wastewater treatment plant in Newark.

In order to ensure compliance with federal and state law, PVSC has adopted rules and regulations for the users of the system, and issues sewer use permits to its significant industrial users. The permits establish monitoring and reporting requirements, set effluent limits, establish complaint schedules and identify penalties for violations and other special conditions applicable to the users.

In addition, PVSC bids on contracts advertised by other public entities. In doing so, PVSC competes with the industrial users it regulates. One such industrial user is Spectraserv, a private business that constructs wastewater facilities and hauls and treats wastewater. It owns and operates a facility within PVSC's statutorily-defined district, and is required to maintain a permit with PVSC to discharge its filtrate into the PVSC system.

In 1997, when PVSC was covered by a policy issued by Coregis, Spectraserv sued PVSC, claiming that PVSC was abusing its regulatory authority over Spectraserv and unfairly competing with Spectraserv for customers. The 1997 lawsuit was dismissed without prejudice pending settlement efforts. When there was no settlement, Spectraserv revived its earlier claims in a 2000 counterclaim, which reiterated the same essential claims first asserted in the 1997 lawsuit. In fact, the 2000 counterclaim, and later amendments, specifically referenced the 1997 lawsuit and characterized PVSC's alleged wrongs as a continuation of the conduct that gave rise to the 1997 lawsuit.

When the 2000 lawsuit was filed, PVSC was covered by a policy issued by St. Paul. However, the St. Paul policy only covered claims "first made" during the policy period and excluded claims "arising" from earlier litigation. The pertinent portions of the St. Paul policy address claims "first made" as follows:

When This Agreement Covers

During this agreement or the limited reporting period. We'll apply this agreement to claims or suits for covered loss only when they're first made or brought:

* while this agreement is in effect; or

* during the limited reporting period if ...


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