On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket Nos. L-0619-09 and L-1004-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad, R. B. Coleman and J. N. Harris.
In these consolidated appeals, we consider whether the New Jersey Property-Liability Insurance Guaranty Association (PLIGA) should indemnify solvent insurer, Farmers Mutual Fire Insurance Company of Salem (Farmers Mutual), for environmental cleanup costs where, according to the allocation method developed in Owens-Illinois, Inc., v. United Insurance Co., 138 N.J. 437 (1994), an insolvent insurance carrier is also partially responsible for the cleanup costs. We conclude that the issue is controlled by the 2004 amendment to the New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 to -20 (PLIGA Act) and that the policy behind the PLIGA Act requires the exhaustion of all insurance benefits from solvent insurers on the risk before PLIGA, standing in the shoes of an insolvent insurer, must pay statutory benefits.
The consolidated appeals involve disputes that arise out of the attempts by Farmers Mutual to recover cleanup costs it expended to remediate contamination at two residential sites, each of which was covered by an insurance policy issued by the insolvent carrier, Newark Insurance Company (Newark).
On August 19, 2003, environmental contamination was discovered on property owned by Ramnath and Ashmin Sookoo in Asbury Park. Farmers Mutual had issued Policy No. HOP20004540 to the Sookoo family for the period of December 13, 2002 to December 13, 2003 with $500,000 liability coverage limits. Previously, Newark had issued the following policies of insurance covering the same Sookoo property:
NKG 2383BZ, 12/13/98 to 12/13/99, $300,000 Personal Liability Coverage;
NKG 2383BZ, 12/13/99 to 12/13/00, $300,000 Personal Liability Coverage;
NKG 2383BZ, 12/13/00 to 12/13/01, $300,000 Personal Liability Coverage;
NKG 2383BZ, 12/13/01 to 12/13/02, $300,000 Personal Liability Coverage.
In accordance with its policy's coverage, Farmers Mutual paid $25,958.39 in remediation costs associated with the environmental contamination. Although the contamination was found at the time that Farmers Mutual was insuring the property, it is undisputed that the contamination began at some point in time when Newark was the sole insurer of the property.
The second site involved in this appeal is located in Linden. On March, 19, 2009, environmental contamination was discovered at the property owned by Edward and Carolyn O'Brien. Farmers Mutual had issued the O'Brien family Policy Number HOP20001889 for the period August 29, 2002 to July 29, 2003 with $500,000 liability coverage limits. Newark had previously issued the following policies of insurance to the O'Briens covering the same property:
NKG KV1959, 8/29/99 to 8/29/00, $300,000 Personal Liability Coverage;
NKG KV1959, 8/29/00 to 8/29/01, $300,000 Personal Liability Coverage;
NKG KV1959, 8/29/01 to 8/29/02, $300,000 Personal ...