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Spartan Oil Company v. New Jersey Property-Liability Insurance Guaranty Association

June 8, 2012

SPARTAN OIL COMPANY, PLAINTIFF-APPELLANT,
v.
NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANT-RESPONDENT, AND PLANET INSURANCE COMPANY AND RELIANCE INSURANCE COMPANY, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2487-10.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 27, 2012

Before Judges Sabatino, Ashrafi and Fasciale.

Plaintiff Spartan Oil Company appeals from a June 3, 2011 order granting summary judgment to defendant New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA) and dismissing plaintiff's coverage action for environmental contamination. We affirm.

I.

In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46-2(c) that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Viewed most favorably to plaintiff, the summary judgment record establishes the following facts.

Spartan Oil Company was in the business of delivering heating oil. In the early 1990s, while operating under the name Region Oil Company, it purchased and subsequently renewed a commercial motor vehicle liability policy from Planet Insurance Company for coverage for its fleet of delivery vehicles. Spartan*fn1 delivered heating oil to Plaza Cleaners in Morristown during the coverage period of the insurance policies, March 1992 through March 1994. Its drivers pumped heating oil from its vehicles into an external intake pipe located on the outside of Plaza Cleaners, and the fuel traveled through an internal feed line to an underground tank under the basement. Unbeknownst to Spartan, the fuel line was corroded and had developed holes. Over time, seepage from the fuel line caused serious environmental contamination, which the owner of the property, Morristown Associates, did not discover until 2003.

Morristown Associates filed suit against several oil delivery companies in 2006, and Spartan was added as a defendant in 2009. The amended complaint of Morristown Associates alleged liability of the heating oil companies under three theories: violations of the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.11z; violations of the Water Pollution Control Act, N.J.S.A. 58:10A-1 to -35; and common law negligence. Eventually, Spartan was successful in obtaining dismissal of the complaint by summary judgment because the statute of limitations had run.

In January 2010, Spartan notified defendant Reliance Insurance Company, as the successor to Planet Insurance Company, that it was seeking reimbursement of its defense costs based on the commercial motor vehicle liability policies it had purchased in 1992 and 1993. Because Reliance was insolvent at that time, defendant NJPLIGA was responsible for the policies pursuant to the New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 to -20.

NJPLIGA denied Spartan's claim of coverage based on subsection a(2) of the pollution exclusion provision of each policy, which stated in relevant part that the insurance coverage did not apply to:

POLLUTION EXCLUSION

a. "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:

1) Before the pollutants or any property in which the pollutants are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto" or

2) After the pollutants or any property in which the pollutants are contained are moved from the covered "auto" to place [sic] where they are finally delivered, disposed of or abandoned by the "insured". Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant . . . . [Emphasis added.]

In July 2010, Spartan filed the present action seeking a declaratory judgment that it is entitled to reimbursement of its defense expenses of $208,800 for the underlying action brought by Morristown Associates. NJPLIGA filed an answer denying liability for the defense costs. Both parties moved for summary judgment on the question of whether there was coverage under the policies in light of the pollution exclusion provisions.*fn2 In an oral decision, the trial court found that no genuine ...


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