Passaic Valley Sewerage Commissioners v. St. Paul Fire & Marine Insurance
206 N.J. 596
| N.J. | 2011Background
- PVSC and Spectraserv settled, transferring assets and forbearance from PVSC to Spectraserv, with in-kind services and regulatory forbearance instead of cash payoffs.
- PVSC sought indemnification from Coregis for the settlement value, but Coregis denied coverage, arguing the policy only covers 'money damages'.
- The Coregis Policy defines 'loss' as 'Money Damages' and excludes non-monetary relief; it also requires pre-approval for settlements.
- The settlement included a $100,000 payment substitute for civil penalties, disposal of Westchester County sludge, and assignment of sludge rights to Spectraserv, with no stated monetary value for the non-cash components.
- Litigation related to Spectraserv’s NOVs and Spectraserv counterclaims against PVSC culminated in various declaratory actions and defense costs, culminating in a post-settlement dispute over indemnification and defense.
- The trial court and appellate courts held Coregis owed no indemnification for the Spectraserv settlement under the policy’s 'money damages' definition, and PVSC’s claim for fees was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 'loss' defined as 'money damages' includes non-monetary settlement value | PVSC: 'Money damages' includes value of in-kind settlement benefits. | Coregis: 'Money damages' is monetary compensation; settlement in kind is not covered. | No; 'money damages' narrowly interpreted excludes in-kind settlement value. |
| Whether Coregis breached its duty to defend Passaic II | PVSC contends Coregis failed to defend adequately and to timely resolve coverage. | Coregis: reserved rights, continued defense, and offered settlements; no breach. | No breach; reservation-of-rights defense and ongoing defense complied with policy. |
| Whether PVSC is entitled to indemnification of the Spectraserv settlement | PVSC seeks indemnification for non-cash settlement components. | Coregis: only 'money damages' are indemnifiable under the policy; non-monetary relief not covered. | No indemnification for non-monetary settlement components; policy language is controlling. |
| Whether PVSC is entitled to fees and costs for the declaratory judgment action | PVSC seeks Rule 4:42-9(a)(6) fees for the declaratory action. | Coregis opposes fee recovery; court discretion warranted. | Fees denied; court did not abuse discretion. |
Key Cases Cited
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (1992) (high court on policy conformity and fairness in insurance contracts)
- Nav-Its, Inc. v. Selective Ins. Co., 183 N.J. 110 (2005) (plain-meaning interpretation of policy terms)
- Kampf v. Franklin Life Ins. Co., 33 N.J. 36 (1960) (enforces insured-friendly interpretation when terms are unclear)
- Villa v. Short, 195 N.J. 15 (2008) (avoid writing a better policy than purchased; interpret terms as written)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (ambiguous policy terms construed against insurer)
- Doto v. Russo, 140 N.J. 544 (1995) (foundation for interpreting ambiguous insurance terms)
- Hurley v. Progressive Cas. Ins. Co., 166 N.J. 260 (2001) (ambiguity and policy interpretation guidance)
- Continental Insurance Co. v. Northern Pharmaceutical & Chemical Co., 842 F.2d 979 (8th Cir. 1988) (damages generally refers to legal damages, not equitable relief)
- Metropolitan St. Louis Sewer District v. International Insurance Co., 938 F. Supp. 568 (E.D. Mo. 1996) (damages as monetary relief; equitable relief not covered)