Pollution Exclusion / NJ

Pollution exclusions inapplicable because no intent by policyholder or its predecessors to contaminate Passaic River

The EPA oversees remediation of the Lower Passaic River Restoration Project, a Superfund Site.  In 2010, the EPA named Cooper Industries, LLC (“Cooper”) a potentially responsible party (“PRP”).  Cooper’s potential liability arose from its 1985 acquisition of companies that had historical operations at or near the site.  The predecessor facilities allegedly contaminated the area from 1901-1910 and 1912 to 1970.

Cooper sued the insurers who issued coverage to the predecessors from the 1950s to the 1980s seeking coverage for Cooper’s costs associated with the EPA proceedings.  The insurers issued standard CGL policies at various levels during the relevant timeframe.

Cooper filed a motion for summary judgment seeking a declaration that, if Cooper were held liable for pollution of the Lower Passaic River, such liability would fall within the scope of coverage provided by the policies.  In particular, Cooper argued:  (1) the PRP constitutes a “suit” within the meaning of the policies; and (2) the PRP alleges property damage during the relevant policy periods.

The insurers argued that Cooper could not establish that property damage occurred during the relevant policy periods, particularly without expert testimony regarding when the pollution occurred.  The insurers also argued that questions of fact exist regarding the application of the pollution exclusion in the policies, thereby precluding a grant of summary judgment.

First, the trial court held that a PRP is a “suit” within the meaning of a standard CGL policy.  Second, the trial court held that Cooper had established that property damage allegedly occurred during the relevant policy periods.  Even though Cooper did not have an expert, the trial court found the testimony of the insurers’ experts supported the conclusion that property damage occurred during the relevant policy periods.  In addition, given the predecessors’ alleged years of operation, any property damage must have occurred during the relevant policy periods.

Finally, with regard to the pollution exclusion, the trial court looked to New Jersey Supreme Court precedent interpreting CGL policies to cover statutory environmental claims:  “[E]nvironmental actions will be treated as alleging a covered occurrence pursuant to a commercial general liability policy, unless the insurer can prove that the insured intended or expected to cause environmental harm comparable both as to the severity and type with that for which indemnification is sought.”  “Here, there appears to be no evidence that Cooper’s predecessors intended to cause environmental harm for which Cooper is currently being held liable….”  Thus, the trial court granted Cooper’s motion for summary judgment. Cooper Industries, LLC v. Employers Ins. Of Wausau, A mutual Company, No. L-9284-11 (N.J. Super. Ct. Oct. 16, 2017).