STATE OF NEW JERSEY VS. J.R.T., JR.  (91-11-1280 AND 10-02-0149, PASSAIC COUNTY AND STATEWIDE)(RECORD IMPOUNDED)
A-5156-13T1
N.J. Super. Ct. App. Div.Jun 16, 2017Background
- Spartan Oil (formerly Region Oil) delivered heating oil to Plaza Cleaners from 1992–1994; oil was pumped into an external intake and flowed through a corroded feed line to an underground tank, causing seepage and contamination discovered in 2003.
- Morristown Associates sued oil delivery companies in 2006 and added Spartan in 2009 alleging statutory environmental claims and negligence; Spartan was later dismissed from that suit on statute-of-limitations grounds.
- Spartan sought reimbursement of $208,800 in defense costs under commercial auto liability policies issued by Planet/ Reliance (1992–1994); NJPLIGA, as successor guarantor for the insolvent carrier, denied coverage under a pollution-exclusion clause.
- The policies excluded coverage for property damage "after the pollutants . . . are moved from the covered 'auto' to [the] place where they are finally delivered, disposed of or abandoned by the 'insured.'"
- Trial court granted NJPLIGA summary judgment, finding the contamination occurred after Spartan had delivered the oil into Plaza Cleaners’ heating system (i.e., the oil had been transferred out of Spartan’s possession), and therefore the pollution exclusion applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NJPLIGA owes a duty to defend Spartan for contamination claims under the auto policies | Spartan: duty-to-defend is determined by the four corners of the underlying complaint; complaint alleged negligence "during" delivery, so pollution exclusion (which applies after final delivery) does not apply | NJPLIGA: the complaint and facts show contamination occurred after oil was delivered into customer’s system, triggering the pollution exclusion and relieving insurer of duty to defend | Court: No duty to defend; "delivered"/"finally delivered" occurred when oil entered customer’s intake/heating system, so exclusion applies |
| Whether the court could consider facts outside the underlying complaint to decide coverage | Spartan: court must look only to the complaint; extrinsic facts are irrelevant | NJPLIGA: where coverage depends on a factual issue not resolved in the underlying suit, court may consider extrinsic facts | Court: Permitted to look beyond pleadings here because the timing/possession issue (when delivery occurred) was not resolved in the underlying suit and is dispositive of coverage |
| Meaning of "delivered" / "finally delivered" in the pollution exclusion | Spartan: ambiguous; could encompass ongoing delivery so coverage should apply | NJPLIGA: plain meaning is transfer of possession to the customer; contamination after transfer excluded | Court: Term is unambiguous in context; delivery means transfer into customer’s possession/heating system; exclusion applies |
| Whether any policy exception (accidental discharge from vehicle) covers the contamination | Spartan: argued delivery-related spill could be accidental and covered | NJPLIGA: exception applies only if pollutants were discharged from the vehicle before transfer caused by upset/overturn/damage | Court: Exception covers accidental spills from vehicle while in insured’s possession but record and complaint show contamination occurred after oil entered customer system, so exception not applicable |
Key Cases Cited
- Liberty Surplus Ins. Corp. v. Nowell Amoroso, 189 N.J. 436 (2007) (summary judgment standard applied to insurer duty questions)
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (1995) (summary-judgment evidence viewed in favor of nonmovant)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (duty to defend distinct from duty to indemnify; analyze complaint vs. policy)
- Abouzaid v. Mansard Gardens Assocs., LLC, 207 N.J. 67 (2011) (compare complaint and policy; resolve doubts for insured)
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (1992) (four-corners rule for duty to defend)
- Burd v. Sussex Mut. Ins. Co., 56 N.J. 383 (1970) (court may examine extrinsic facts when coverage depends on factual issue not resolved in underlying suit)
- Harleysville Ins. Cos. v. Garitta, 170 N.J. 223 (2001) (look beyond pleadings in unique circumstances where intent or single course of conduct is dispositive)
- SL Indus., Inc. v. Am. Motorists Ins. Co., 128 N.J. 188 (1992) (extrinsic discovery can trigger duty to defend)
- Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18 (1984) (extrinsic evidence may be necessary when critical coverage fact isn’t in the pleadings)
- Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241 (App. Div. 2008) (duty to defend may require examining facts beyond complaint when occurrence timing is determinative)
- A & S Fuel Oil Co., Inc. v. Royal Indem. Co., Inc., 279 N.J. Super. 367 (App. Div. 1995) (accidental discharge from vehicle may fall within coverage exception)