120 A.3d 959
N.J. Super. Ct. App. Div.2015Background
- Givaudan Fragrances Corporation (Fragrances) seeks coverage under liability policies issued to its predecessor, Givaudan Corporation, for hazardous contamination at a Clifton, NJ site occurring during policy periods from 1964–1986.
- In 1998 Flavors (successor-by-merger to Givaudan Corporation) retained environmental liabilities but did not transfer the historic insurance policies when it transferred assets; Fragrances later became successor to the fragrances business.
- In 2010 Flavors assigned to Fragrances its rights under specified policies (identified by insurer, policy number, and dates) for occurrences before January 1, 1998.
- Defendants (insurers) refused coverage, arguing: (1) the policies prohibit assignment without insurer consent, (2) the assignment broadly transferred more than a chose in action and improperly increased insurer risk, and (3) Fragrances is not an insured under the policies' affiliate language.
- The trial court granted summary judgment to insurers, holding the assignment invalid as a global transfer of policies and interpreting affiliate language narrowly; the Appellate Division reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of post-loss assignment of rights under occurrence policies | Assignment of accrued coverage rights after the loss is valid without insurer consent | Policies bar assignments without insurer consent, so assignment invalid | Assignment valid: occurrence policies fix insurer liability at time of loss; post-loss assignment transfers a chose in action and does not require consent |
| Effect of anti-assignment clause on transferred rights | Anti-assignment protects insurer pre-loss; after loss insurer's obligation is fixed so clause cannot bar assignment of claim | Clause bars any assignment of policy rights regardless of timing | Anti-assignment clause does not prevent assignment of accrued claims after loss; it protects against increased pre-loss risk only |
| Whether assignment increases insurer's risk or improperly transfers policy obligations | Assignment only transfers Flavors' rights to recover for pre-1998 occurrences; insurer risk unchanged because losses occurred during policy periods | Assignment would obligate insurers to cover both Flavors and Fragrances and increases exposure | Assignment does not increase insurer risk because insurer liability was fixed at the occurrence date; change in claimant identity does not alter insurer's exposure |
| Requirement of judgment/payment before insurer duty is triggered | Liability (not indemnity) policies give rise to insurer duty when insured becomes liable for covered occurrences; judgment not required | Insurer duty not triggered until insured pays or judgment is entered | For liability policies at issue, insurer obligations arise with insured liability for covered occurrences; proof of payment/judgment is not a prerequisite to assignability of the claim |
Key Cases Cited
- Zuckerman v. Nat'l Union Fire Ins. Co., 100 N.J. 304 (describing operation of occurrence policies)
- Flint Frozen Foods v. Firemen's Ins. Co., 12 N.J. Super. 396 (assignment of accrued insurance claims after loss does not require insurer consent)
- Elat, Inc. v. Aetna Cas. and Sur. Co., 280 N.J. Super. 62 (assignment of right to collect under liability policy is transfer of a chose in action and does not alter insurer's obligations)
- Kase v. Hartford Fire Ins. Co., 58 N.J.L. 34 (general rule that policies cannot be transferred without insurer consent)
- First Indem. of Am. Ins. Co. v. Kemenash, 328 N.J. Super. 64 (distinguishing indemnity policies from liability policies regarding timing of insurer obligation)