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Rutgers Casualty Insurance Company v. New Jersey Property-Liability Insurance Guaranty Association

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 29, 2012

RUTGERS CASUALTY INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANT-RESPONDENT, AND EAGLE INSURANCE COMPANY IN LIQUIDATION AND/OR NEWARK INSURANCE COMPANY IN LIQUIDATION AND/OR GSA INSURANCE COMPANY IN LIQUIDATION AND/OR NATIONAL CONSUMER INSURANCE COMPANY IN LIQUIDATION,*FN1 DEFENDANTS.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2161-10.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 28, 2011

Before Judges Axelrad, Sapp-Peterson and Ostrer.

In this appeal, plaintiff, Rutgers Casualty Insurance Company (RCIC), seeks reversal of the two trial court orders denying its motion for summary judgment in which it sought a declaration that it was entitled to collect, from New Jersey Property Liability Insurance Guaranty Association (PLIGA),*fn2 its pro rata share of remediation costs RCIC incurred following the removal of two underground tanks from residential properties. The motion judge found that RCIC was subject to the 2004 amendment to the New Jersey Property-Liability Guaranty Insurance Association Act (the Act), N.J.S.A. 17:30A-1 to -20, requiring claimants to obtain the maximum limit from other co-liable solvent insurers before seeking compensation from PLIGA. The motion judge thereafter granted PLIGA's cross-motion for summary judgment. We affirm.

The two residential properties, the Fredericksen property and the VanBlarcom property, each had underground storage tanks used to store home heating oil. Both properties were covered under a $300,000 homeowners' insurance policy issued by RCIC. Both properties were also previously insured by Newark Insurance Company (Newark). When the underground tanks were removed, it was discovered that both tanks had been leaking not only during the time period the properties were covered by the RCIC policy, but also during a period of time when the properties were insured by Newark. Plaintiff paid $59,369.53 to remediate the Fredericksen property and incurred $107,564.50 in remediation costs in connection with the VanBlarcom property. RCIC notified Newark that it believed the losses from the claims should be divided pro rata based upon its investigations, from which it determined the discharges were also occurring during the period of Newark's coverage of the properties.

Newark was declared insolvent before it resolved plaintiff's contribution claims against it. RCIC then pursued its claims against Newark with PLIGA, which became authorized to administer claims filed against Newark. PLIGA denied the claims on the basis that under the Act, it was under no duty to pay subrogation claims. RCIC thereafter commenced its action in Superior Court, seeking to recover a judgment against PLIGA for a pro rata share of the cost of the tank removals and soil and ground water remediation.

RCIC moved for summary judgment and PLIGA cross-moved for summary judgment. RCIC urged that under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10--23.11 to --23.24 (Spill Act), PLIGA was obligated to pay its pro rata share of remediation costs incurred. RCIC additionally argued that the "new definition of exhaustion" under the Act's 2004 amendment could not be used to defeat PLIGA's obligation under the Spill Act to pay its pro rata share.

PLIGA, in its cross-motion, argued that the issue before the court was not "about contribution among joint tortfeasors or contribution among dischargers who sent waste to a landfill." PLIGA also noted that RCIC's settlement of the respective claims was well within the limits of each policy. Consequently, PLIGA urged that the issue before the court was one of statutory construction, namely, "whether or not there is a covered claim under Section 5 of the [Act]," that is, "allocation of insurance coverage, not contribution amongst people who contributed to an individual damage." Finally, in addressing the 2004 amendment, PLIGA argued that the intent of the legislation was to make PLIGA the "payer of last resort."

The motion judge, in an oral opinion rendered after argument, found the 2004 amendment applied and "the PLIGA policy does not come into play[.]" Therefore, the judge denied RCIC's motion and granted PLIGA's cross-motion. The present appeal followed.

On appeal, RCIC raises the following points for our consideration:

POINT I

RCIC HAS ASSERTED A 'COVERED CLAIM' PURSUANT TO THE ACT, N.J.S.A. 17:30A-1 ET SEQ.

POINT II

JUXTAPOSITION OF THE ACT AND THE SPILL ACT PRIOR TO THE 2004 AMENDMENTS.

POINT III

EFFECT OF 2004 AMENDMENTS TO THE ACT.

A. PROSPECTIVE APPLICATION AND ESTOPPEL.

B. A RULING IN FAVOR OF RCIC WILL NOT REPRESENT DUPLICATION OF RECOVERY.

C. CONFLICT AND AMBIGUITY . THE GUARANTY ACT.

THE SPILL ACT.

ANALYSIS.

POINT IV

THE COURT BELOW ERRED IN ITS DETERMINATION THAT NJPLIGA'S DUTY TO DEFEND IS SUBJECT TO THE EXHAUSTION CLAUSE.

The facts in the present appeal are not in dispute. We are called upon solely to render a legal interpretation of the applicable statutory language. Accordingly, we review the legal issues implicated in this appeal de novo and owe no special deference to the motion judge's "construction of the legal principles." Lombardo v. Hoag, 269 N.J. Super. 36, 47 (App. Div. 1993), certif. denied, 135 N.J. 469 (1994). "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

The Spill Act provides that "any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred." N.J.S.A. 58:10-23.11g(c)(1). It also states:

Whenever one or more dischargers or persons cleans up and removes a discharge of a hazardous substance, those dischargers and persons shall have a right of contribution against all other dischargers and persons in any way responsible for a discharged hazardous substance or other persons who are liable for the cost of the cleanup and removal of that discharge of a hazardous substance.

[N.J.S.A. 58:10-23.11f(a)(2).]

There is no dispute that PLIGA is neither a discharger nor a "person[] in any way responsible for a discharged hazardous substance." Thus, we find no merit to RCIC's contention that the Act and Spill Act are in conflict, requiring the conclusion that the Spill Act supersedes the Act.

Turning our attention to the Act, RCIC maintains that it has asserted a covered claim within the meaning of the Act. The motion judge did not specifically address this issue, confining the grant of PLIGA's motion to the applicability of the Act's 2004 amendment. Moreover, PLIGA does not address this contention in its responding papers, instead focusing solely upon the applicability of the 2004 amendment. We are satisfied that even assuming RCIC presented a covered claim, the exhaustion provision contained in the 2004 amendment is applicable. Therefore, we need not resolve the question of whether RCIC presented a covered claim under the Act.

In 2004, the Legislature amended the definition of "exhaust" under the Act to mean: with respect to other insurance, the application of a credit for the maximum limit under the policy, except that in any case in which continuous indivisible injury or property damage occurs over a period of years as a result of exposure to injurious conditions, exhaustion shall be deemed to have occurred only after a credit for the maximum limits under all other coverages, primary and excess, if applicable, issued in all other years has been applied. [N.J.S.A. 17:30A-5 (emphasis added).]

When interpreting a statute, courts should presume the legislative intent is expressed by the ordinary meaning of the text. State v. Mortimer, 135 N.J. 517, 532, cert. denied, 513 U.S. 970, 115 S. Ct. 440, 130 L. Ed. 2d 351 (1994). "In deciphering the Legislature's intent, '[w]e apply to the statutory terms the generally accepted meaning of the words used by the Legislature.'" State v. O'Brien, 418 N.J. Super. 428, 435 (App. Div. 2011) (quoting Patel v. N.J. Motor Vehicle Comm'n, 200 N.J. 413, 418 (2009)). "'A clear and unambiguous statute is not open to construction or interpretation.'" Carlson v. City of Hackensack, 410 N.J. Super. 491, 495 (App. Div. 2009) (quoting Watt v. Mayor & Council of Franklin, 21 N.J. 274, 277 (1956)).

With these legal principles informing our discussion, we focus upon RCIC's argument that the 2004 amendment to the definition of "exhaust" is to be applied prospectively, see Thomsen v. Mercer-Charles, 187 N.J. 197, 205 n.3 (2006). Therefore, RCIC argues the new definition is inapplicable here where the demand for contribution from Newark pre-dated its insolvency and the effective date of the amendment. To support this contention, RCIC notes the discharge on the Fredericksen property occurred between September 1999 and June 2004, while discharge on the VanBlarcom property occurred between December 1998 and September 2002.

Prior to the 2004 amendment, liability among insurers was apportioned according to the Owens-Illinois*fn3 method. In Owens-Illinois, the Court held, in the context of work-related asbestos exposure, 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 [comprehensive general liability] policy.

That is the continuous-trigger theory for activating the insurers' obligation to respond under the policies. [138 N.J. at 478-79.]

The continuous-trigger theory has since been adopted in other contexts including property damage resulting from environmental contamination. Carter-Wallace, Inc. v. Admiral Ins. Co., 154 N.J. 312, 321 (1998). In Carter-Wallace, the Court approved an extension of the Owens-Illinois-allocation to hold that both primary and excess insurers during the contamination period were liable for clean-up costs. Id. at 325.

Those principles were also applied to the New Jersey Surplus Lines Guaranty Fund (the Fund), in Sayre v. Insurance Co. of North America, 305 N.J. Super. 209 (App. Div. 1997). In Sayre, we upheld the trial court order denying summary judgment to the Fund, which argued that allocation of insurance coverage for environmental contamination should proceed in accordance with the allocation method outlined in Owens-Illinois because of the progressive, indivisible environmental injury in that case. Id. at 211. The Fund, which was patterned after PLIGA, urged that all other insurance coverage provided by the insolvent insurers should first be exhausted and any recovery against the Fund must be reduced by the amount recovered from other insurance carriers. Id. at 213. We noted the statutory language under the New Jersey Surplus Lines Guaranty Fund Act, N.J.S.A. 17:22-6.74a(2), deeming the Fund as having all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent, was identical to language contained in the Act and concluded that it would be unfair to burden solvent insurers "who were not on the risk during the [now insolvent insurer's] period of coverage. Id. at 215.

The 2004 amendment to the Act directly conflicted with our earlier decision in Sayre. As amended, the Act provides: "exhaustion shall be deemed to have occurred only after a credit for the maximum limits under all other coverages, primary and excess, if applicable, issued in all other years has been applied." N.J.S.A. 17:30A-5. Thus, Sayre has been superseded by the amendment. Consequently, before seeking relief from PLIGA, a claimant must pursue remedies against all other insurers providing coverage, during the period of the progressive environmental injury, to their maximum limit.

We are satisfied the 2004 amendment is applicable to both claims. The amendment provides: "This act shall take effect immediately and shall apply to covered claims resulting from insolvencies occurring on or after that date." L. 2004, c. 175, § 9. The amendment was signed into law on December 22, 2004. Ibid. An order of liquidation for Newark was entered on August 2, 2007. The language of the statute is clear and unambiguous that the operative time when a covered claim arises is when the insurance company becomes insolvent -- not when the facts giving rise to the claim arose. Cf. Thomsen, supra, 187 N.J. at 205 n.3 (deciding the claim under the pre-amendment statute because the time period when insolvency occurred was in 2003).*fn4

The remediation costs incurred by RCIC were well-within the policy limits for which it contracted with each insured. Because its remediation costs did not reach the maximum limits under its policies, exhaustion cannot be deemed to have occurred under the Act.

RCIC's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.


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