March 16, 2011
SUSSEX COUNTY PLUMBING, INC., PLAINTIFF-RESPONDENT,
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANT-APPELLANT, AND PENN NATIONAL INSURANCE COMPANY, INC., DEFENDANT-RESPONDENT, AND SUNALLIANCE-ROYAL INSURANCE COMPANY, FRANKLIN MUTUAL INSURANCE COMPANY, TRAVELERS INSURANCE COMPANY, AND GREAT AMERICAN INSURANCE COMPANY, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-248-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 7, 2011
Before Judges Grall, LeWinn and Coburn.
Plaintiff, Sussex County Plumbing, Inc. ("Sussex"), filed a declaratory judgment action for insurance coverage. Defendants New Jersey Manufacturers Insurance Company ("NJM") and Penn National Insurance Company ("Penn") filed cross-claims against each other. The other insurance company defendants were dismissed from the action.
The underlying actions sought personal injury damages for asbestosis on behalf of Allen Wood and Alfred Notaro, who alleged that they were exposed to asbestos contained in products sold by Sussex and delivered by Sussex to work sites where they were employed. Penn settled the personal injury claims and sought contribution from NJM. Cross-motions for summary judgment were denied, and the case was then submitted to another judge on what the parties describe as a stipulation of facts.
Penn was awarded judgment in the amount of $80,540.56 plus interest.
NJM appeals, arguing that the second judge erred by completely ignoring the "products hazard/completed operations exclusions in the policies it issued to Sussex." NJM also contends that based on the stipulated facts concerning the underlying actions and the exclusions, it was entitled to judgment.
Penn does not contend that NJM's policy exclusion is ambiguous. NJM did not provide the full range of products liability insurance. Consequently, there is, to quote one of the policies, no coverage "if the accident occur[ed] after possession of [Sussex's] goods or products ha[d] been relinquished to others."
Resolution of this case should have turned on the question of whether there was relinquishment before Wood and Notaro were exposed to asbestos contained in any products sold by Sussex. Although the first judge understood the issue, he determined that as to it there were issues of fact requiring resolution at trial. The second judge treated the exclusion as irrelevant and made no findings respecting relinquishment and exposure. Instead, he assumed that the triggering event for insurance coverage in this case is exposure to asbestos, regardless of whether that exposure occurred within the four-walls of Plaintiff's place of business or at the job sites where Allen Wood and Alfred Notaro worked and received asbestos-laden goods from Plaintiff.
For his assumption, the judge cited Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994). But in that asbestos case the Court was concerned with the allocation of responsibility among companies that had issued comprehensive general liability ("CGL")policies covering general and products liability:
To recapitulate, we hold that when progressive indivisible injury or damage results from exposure to injurious conditions for which civil liability may be imposed, courts may reasonably treat the progressive injury or damage as an occurrence within each of the years of a CGL policy. That is the continuous-trigger theory for activating the insurers' obligation to respond under the policies. [Id. at 478-79.]
The opinion does not say or imply that a relevant exclusion should be ignored.
Penn suggests that support for the judge's ruling may be found in Continental Cas. Co. v. Employers Ins. Co. of Wassau, 839 N.Y.S. 2d 403 (Sup. Ct. 2007), rev'd, 871 N.Y.S. 2d 48 (App. Div. 2008). But we find nothing in either opinion that advances Penn's claim, implicitly adopted by the second judge, that the exclusion clause is irrelevant in asbestos cases.
Because of the approach taken by the second judge, we have no findings of fact respecting the central issue, which is whether the underlying plaintiffs were exposed to asbestos in products sold and delivered by Sussex before Sussex had relinquished control of those products. Of course, it would not be enough for the products merely to contain asbestos; rather, exposure to asbestos fibers would be required for liability to follow. Therefore, we will remand the case for trial.
We should note that at argument, the attorneys said that the same facts were submitted to the second judge as were submitted to the judge who ruled on summary judgment. However, in denying summary judgment, the judge recounted testimony given by Woods. That testimony is not referred to by either party on appeal, possibly because it was not within the scope of the so-called stipulation of facts. In pertinent part, the stipulation merely incorporated depositions from a number of witnesses, perhaps excluding Woods by implication. In any event, since the case will now be resolved by trial, the determinations made on summary judgment are no longer relevant.
This may be what the Supreme Court has referred to as the "rare case . . . in which the ultimate resolution . . . depends on which party bears the burden of proof." Carter-Wallace, Inc. v. Admiral Ins. Co., 154 N.J. 312, 333 (1998). However, the appellate briefs did not address the questions of burden of production and burden of persuasion respecting the exclusion. Consequently, we will not attempt to resolve those questions now. Nonetheless, the following cases, which are not intended to be an exhaustive list, may be useful to the court and parties. Id. at 328-33; Harrow Prods., Inc., v. Liberty Mut. Ins. Co., 64 F. 3d 1015, 1019-20 (6 Cir. 1995); Aeroquip Corp. v. Aetna Cas. and Surety Co., 26 F. 3d 893, 894-95 (9 Cir. 1993); New Castle Cty. v. Hartford Accident and Indem. Co., 933 F. 2d 1162, 1181-82 (3 Cir. 1991); Frontier Insulation Contractors, Inc. v. Merchants Mut. Ins. Co., 690 N.E. 2d 866, 868-69 (N.Y. 1997). Our reference to these cases is not intended to suggest any view of ours respecting where the burdens of proof and production should be placed in this case. Rather, we note their conflicting views to emphasize the possible importance of the placement of the burdens.
Reversed and remanded for further proceedings not inconsistent with this opinion.
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