Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Surety Co.

average juror to assess what a 03-13A, reasonable L71-03-03-13B, C74-03-18-02, municipal policymaker would have done 77-01-19-23, 77-01-19-23A, C77-01-19- the information in this 23B, ease.” 79-04-19-10, C80-02-19-09, C80-02-

19-09B, L80-02-09A, L80-02-19-09A, L80-02-19-09B, C83-02-19-09, L83-02- IV. 19-09A, L83-02-19-09B, L83-02-19-09C, sum, we draw no conclusion as to Anthony Robin Jackson, Gildart an Un whether the presented evidence sup- Beck Lloyds, derwriter at London, individu ports a determination that Pittsburgh policy- ally capacity and in representa his makers knew acquiesced about and in a cus- tive Lloyds, Underwriter at London for tom that tolerated use of excessive force certain subscribing Underwriters by officers of the Department. Police We do Lloyds, London who subscribed to cer conclude, however, presented that Beck suffi- liability tain policies issued cient evidence from which reasonable plaintiff Chemical Leaman Tank could have City inferred that of Pitts- Lines, Inc.; Accident Casualty burgh knew about acquiesced in a cus- Company Winterthur; Alba General tolerating tom the tacit use of excessive force Insurance Company Ltd.; Allianz Corn police officers. This evidence suffi- hill PLC, International Insurance For ciently precluded entry of judgment as a merly Known as Allianz International matter of law the district court. Company Insurance Ltd.; Anglo- French Accordingly, Company Ltd.; Insurance judgment Argo of the district naut court will be Northwest Company; reversed and Insurance the ease remanded Assicurazioni Spa; proceedings further Generali consistent with Baloise this Fire opinion. Company; Insurance Bellefonte Company Ltd.; Insurance British Na Costs against taxed City of Pittsburgh, tional Life Society Ltd.; Insurance appellee. CNA International Reinsurance Co. Ltd., Formerly Known as CNA Reinsur ance Ltd.; of London Lloyd Delta Non-Life Company; Insurance Domin ion Company Insurance Ltd.; Drake Company Insurance Ltd.; Edinburgh Company; Insurance Excess Insurance Company Ltd.; Fidelidade Insurance Company; Folksam International In (U.K.) Company surance Ltd.; Helvetia CHEMICAL LEAMAN TANK Accident Swiss Insurance Company; LINES, INC. Indemnity Marine Assurance Company, Ltd.; Lexington Company Insurance v. Ltd.; London & Overseas Insurance The AETNA CASUALTY AND SURETY Company, Ltd.; London Edinburgh & COMPANY; and Certain Underwriters Company, Ltd.; Insurance London & Lloyds, At London, subscribing to Insur Scottish Assurance Corporation, Ltd.; ance Policies Numbers WAR WAR Gan Minster Company, Insurance For 6772/A, 10-117, C62P 10-117, L62P merly 64P 3- Known As Minster Insurance 3-121A, L64P 3-121B, L64P C64P 3- Company Ltd.; Casualty National Com 121B, 5-119, C65P 5-119A, C65P L65P 5- pany; Casualty National Insurance of 119A, 5-119A, L66P 4-158, C67P L67P 4- America, Ltd.; New London Reinsur 2-116, C68P 2-116, L68P C68P 2- Company, Ltd.; ance North Atlantic 116A, 2-116B, C68P 2-116A, L68P L68P Company Ltd., Insurance Formerly 2-116B, C71-03-03-13, L71-03-03-13, Known as British National Insurance C71-03-03-13A, C71-03-03-13B, Ltd.; L71-03- Co. Orion Insurance Company Company Top Insurance Ltd.; Pine Compa Insurance

Ltd.; Thames River Com Lion Insurance Ltd.;

ny Scottish And General Sovereign Marine

pany; Ltd.; Sphere In Company,

Insurance Ltd.; Katherine Company St. surance Stronghold Ltd.; Company Insurance Ltd.; Union Swiss Company Insurance Ltd.; Company Insurance General Com Fire Insurance Marine & Taisho Formerly Known Ltd., (Europe) pany Fire Insurance & Marine Taisho

As (U.K.) & Ltd.; Marine Tokio Company (U.K.) Ltd.; Company Fire Insurance Ltd.; Company Un Turegum Insurance Company; Unit Insurance ionamerica Ltd.; Company Insurance ed Standard Company; Insurance Swiss

Winterthur Corporation Auxiliary Insurance World Company Insurance Ltd.; Yasuda collectively (hereinafter re

(U.K.) Ltd. Companies”), “Jackson & to as

ferred 93-5777, No.

Appellants at Company Surety Casualty and

Aetna Appellant

(“AETNA”), at No.

93-5794. 93-5777, 93-5794.

No. Appeals, Court of States

United Circuit.

Third Sept.

Argued 12, 1995. Oct.

Decided Rehearing Granted for Panel

Petition Vacated Judgment Opinion 15,1995.

Dec. Petition on Submitted 15,1995. Rehearing Dee.

Panel 20, 1996. June

Decided Rehearing and Denying Order 22,1996. July Bane

Rehearing In Jersey facility. trial, After a three week

jury found Chemical Leaman was entitled to partial policies. under several Thereafter Supreme Court Intern., decided Morton Inc. v. General Acc. Henry Lee (Argued), Gary Schulz, P. John Ins. 134 N.J. (1993), 629 A.2d 831 McAndrews, G. — O’Driscoll, Hannah M. denied, cert. -, U.S. 114 S.Ct. Mount, Mendes & City, New York William J. (1994), L.Ed.2d 878 which interprets Ronca, Hanley, Hanley, McDonald & Living- key provisions several comprehensive gen ston, Jersey, Appellants New at No. 93- eral liability policies in the context pollution. environmental Defendant in surers now appeal, contending district Coyle (Argued), Brian J. Mueller, Peter E. incorrectly instructed the on Lloyd, Hackensack, Harwood Jersey, whether Chemical “expected or in Jeffress, Jr., Miller, William H. Cassidy, Lar- tended” to cause environmental damage un Lewin, roca & Washington, DC, Edward M. der Morton. We believe requires Morton Dunham, Jr., Miller, Dunham & Doering, inquiry into the insured’s in Philadelphia, Pennsylvania, Appellant, tent to cause harm, environmental unless Aetna Casualty Surety and Company. “exceptional support circumstances” pre a Kevin B. (Argued), Clark Dean, John P. sumption of the insured’s intent. Smucker, Willkie, J. Conrad Farr & Galla- Therefore we conclude the district court’s gher, Washington, DC, Appellee, for Chemi- jury instructions were proper. cal Lines, Leaman Tank Inc. Defendant insurers raise several other is- Brunner, Thomas W. Wiley, Rein & Field- appeal. sues on They argue the district ing, Washington, DC, for Amicus Ap- Curiae mistakenly limited applicability the of pellant, Insurance Litigation Environmental policies’ the pollution clause, exclusion incor- Association. rectly adopted the trigger” “continuous theo- Jordan, ry Karen L. Jersey law, as New Office Attorney ignored of preju- and Gen- the eral Jersey, of New dicial effect of Department Chemical of Leaman’s Law & failure to Safety, Trenton, Public file its claims Jersey, New for coverage timely for in a Ami- man- cus Appellee, They Curiae ner. dispute State of also Jersey, New the district court’s Jersey New Department exclusion of of relating evidence Environmental to environmen- tal Protection & Energy. contamination at other Chemical Leaman facilities. We will affirm the district court’s SCIRICA, Before NYGAARD and holdings on clause, the exclusion McKEE, Judges. Circuit trigger” “continuous theory, timely and no-

tice. We also conclude that the exclusion of certain evidence was within the discre- sound OPINION OF THE COURT tion of the district court.1 SCIRICA, Judge. Circuit Chemical Lines, Leaman Tank Inc. Background I. brought this declaratory judgment action A. Contamination at the against Casualty Aetna Surety and Company Bridgeport Facility and Insurers, the London Market seeking a declaration that defendants’ poli- Lines, Chemical Inc., Leaman Tank a tank cies covered the cost of environmental clean- truck company specializes in the trans- up at Chemical Leaman’s Bridgeport, port New liquids, chemicals and operates other 1. The opinions district court's granting partial Our opinion initial in this case was vacated on summary judgment reported are at Chemical petition rehearing in banc. See Chemical Lines, Co., Leaman Tank Inc. v. Aetna Cas. & Sur. Lines, Leaman Tank Inc. v. Aetna Cas. and Sur. F.Supp. (D.N.J.1992), 788 846 and Lea Chemical (3d Cir.1995), 68 F.3d 658 F.3d vacated Lines, man Tank Inc. v. Aetna and Cas. Sur. (3d Cir.1995). F.Supp. (D.N.J.1993). arranged its wastewater Leaman facilities cleaning truck of tank a number to use the by Du and ceased Pont treated Bridge- including one in country, around Subsequently, lagoons. ponds system of and Bridgeport facili- Jersey. At the New port, la- ponds and Leaman drained Chemical disposed of rinsewater Leaman ty, Chemical them, them dredged and filled goons, during residue with chemical contaminated brickbat, and sand concrete. water treatment cleaning into process Elston, Harry Chemical designed system by the survey a routine Engi- Estate and Manager Real Leaman’s Environmental Protec- Department professional Harry Wagner, neering, and groundwater contamination tion discovered inception At sanitary engineer. Bridgeport site. Subse- at and around con- system Bridgeport water treatment investigations established quent connected ponds unlined primary of three source lagoons sisted and were ponds site, ponds were intended pipes.” on groundwater “tee contamination filtering out contami- the facili- rinsewater near purify private wells that several seeped into soil. threatened the water contaminated ty nants were either system believed Environ- The federal designers with contamination. Bridge- contami- separate Agency placed would gravity Protection forces mental rinsewater, natural and that National Priori- Superfund from the on the port site nates 1984, and, microbial anaerobic of aerobic List processes ties contam- order with down trace a consent break entered into would degradation EPA, admitted liabili- drained pipe An overflow inants. system into Comprehensive Environmental ty water treatment under pond of the final Act Liabilities Compensation water Response, to allow swamp order adjacent (“CERCLA”) agreed to remediate heavy rains. escape in the case remediation. pay to for its Bridgeport site or 1961, with the Inspector September In to of claims gave notice Leaman Chemical Wild- & of Fish Game Jersey Division London Mar- 1988, and to April Aetna its water Leaman informed Chemical life (“LMI”) in March 1989. Aetna insurers ket satisfactory.” In system was “not treatment indemnify refused defend the LMI two constructed Leaman Chemical response, in con- costs incurred Leaman for Chemical settling lagoons and a aeration additional Bridgeport clean-up of the nection with lagoons The bed. limestone lagoon with a filed this then suit. Chemical Leaman site. man- in the same designed to function were the over- ponds. But three the first ner as Policies B. The Insurance lagoon the last drained from pipe still flow comprehen- purchased Leaman Chemical swamp. neighboring into from Aetna Lability insurance general sive the New inspectors pollution Water 1, April years from covering successive dis- observed Department of Health Jersey excess 1, purchased 1985. It through April into the pipe the overflow charge from cov- Lability poLcies general comprehensive They found in November swamp The LMI. period from ering same and or- pollutional” “highly discharge to be interpreta- court’s challenge the district LMI plan to to submit Leaman Chemical dered pur- poLcies provisions tion several May In system. treatment its water improve Aet- Because Leaman. by Chemical chased plan, submitted 1969, Leaman Chemical appeal, we need this has withdrawn na to be unsatisfac- regulators found state but poLcies. not discuss and Chem- regulators state tory. Thereafter “oc- form standard poLcies were LMI The attempted to unsuccessfully ical they in- meaning poLcies, currence-based” 28, January Finally, on agreement. reach defined “occurrences” against sured 1974, in the LMI insuring clause The poLcies. en- Protection Environmental Department agreed: LMI that the typically stated poLcies in which Chemi- decree into a consent tered limitations, and con- terms [s]ubject approved agreed to construct cal Leaman indemnify the poLcy] [of 1975, ditions facility. treatment water all Assured for sums which the Assured der the 1971 policies to 1985 because Chemi- shall obligated pay by reason of the cal discharges Leaman’s pollutants were liability ... imposed upon the Assured sudden, unintended, unexpected. law, damages ... ... on account of: Finally, policies require LMI in- (ii) Property Damage ... caused provide sured to written notice “as soon as ’ arising out of each occurrence.2 practicable” following an occurrence. The policies LMI defined “occurrence” as argue LMI that Chemical Leaman’s failure “[a]n happening accident or a or event or a comply provision with this bars coverage. repeated continuous or exposure to condi- tions unexpectedly which and unintentional- II. History Procedural ly property results in ... damage ... during Chemical Leaman declaratory filed this added). period” the policy (emphasis judgment action in 1989 after the insurers’ effect of insuring combined clause and costs, to indemnify refusal it for the of envi- definition preclude “occurrence” is to clean-up ronmental Bridgeport at the facility. coverage for property damage that is expect- Following discovery, parties extensive ed or intended the insured. On appeal, filed summary cross-motions for judgment on the LMI the district contend court incorrect- grounds. various granted district court ly instructed the legal on the standard partial summary judgment in favor of Chemi- by which to evaluate Chemical ex- Leaman’s Leaman, cal holding that New Jersey law pectation or property intention to cause dam- applied, and that the “owned exclu- age. sion” did not bar for the costs of LMI policy Each in effect from 1971 to remediation of onsite soil contamination de- 1985 also contained a exclusion signed to correct to surrounding prop- clause. policies The LMI in effect from erties. Lines, See Chemical Leaman Tank April 1, 1974, 1971 April April and from Inc. v. Aetna Cas. & Sur. F.Supp. April 1977 to 1985 contained the stan- (D.N.J.1992). dard form exclusion known as NMA 1685. subsequent After cross-motions for sum NMA 1685 does personal not cover injury or mary judgment, the district court held property damage, by seepage, pollu- Chemical Leaman bore the burden of prov tion, or contamination “such seepage, unless ing it did not subjectively expect or intend pollution or contamination is damage the to groundwater the soil and for sudden, unexpected unintended and happen- which it sought coverage. See Chemical ing during period the of [the] insurance.” Lines, Leaman Tank Inc. v. Aetna Cas. & The policies LMI 1, effect April from 1974 Co., Sur. 1136, (D.N.J. 817 F.Supp. 1146 1, to April 1977 contained the standard in- 1993). It also found Chemical Leaman’s ac dustry pollution clause, exclusion the so- tions “reprehensible” were not so objec as to pollution exclusion, called “ISO” which pre- tively establish expected that it or intended coverage pollution cludes for and contamina- to damage. cause Id. court The then de tion, unless “discharge, the dispersal, release nied the cross-motions summary for judg escape is sudden and accidental.” Both ment because there genuine remained issues pollution the ISO exclusion clause and the of fact about Chemical Leaman’s pollution NMA 1685 exclusion clause on focus intent. Id. at 1152. the insured’s expectation intention and to discharge pollutants, not on the insured’s The district court also as a held matter expectation intention or to property cause law damage to the soil and groundwater damage. appeal, On the argue LMI the during 1, occurred April the 1, 1960 April to pollution exclusion coverage clauses bar un- 1961 policy year because Chemical Leaman policies The LMI's against earlier "ac- Leaman bore proof the same burden of under opposed cidents” as to "occurrences.” Jer- New types policies. both See Chemical Leaman sey law defines an "accident” in the same man- Lines, Co., Tank Inc. v. Aetna Cas. & Sur. 817 “occurrence;” ner as an namely, as an event 1136, F.Supp. (D.N.J.1993). 1148 do LMI expected neither nor intended the insured. challenge not holding appeal. this on The district court therefore held that Chemical

983 1, 1, April 1971 1960 April to under ponds in the rinsewater depositing began damage coverage to and to policies, court district period.3 during that time 1, April April 1960 to under groundwater 1975, Lea- Chemical 1960 from noted that verdict, the reaching its policies.4 1981 20,000 10,000 gallons disposed man interrogatories on detailed answered did day, but each ponds into the rinsewater expectation to Leaman’s Chemical dur- damage occurred property not find pol- discharge damage and to property cause Id. of law. a matter as period ing that oral year. during policy After each lutants Jersey follows Rather, New ruled that Court, Lea- Chemical argument before this factual theory and that trigger” “continuous from arising all claims settled man and Aetna Lea- Chemical to whether as remained issues appeals the LMI now dispute.5 this continuous, property indivisible man suffered legal determinations district court’s to 1985. from 1961 damage jury’s verdict. pollution interpreted The district court final to review the jurisdiction We have pol- post-1971 in the LMI’s clauses exclusion 28 under court of the district judgment in- coverage “when precluding icies as court held § district 1291. The U.S.C. contami- discharge of has caused sured parties not do governs, which Jersey law discharge was unless pollutants, nants or Lines, Tank Leaman dispute. Chemical nor intended expected neither F.Supp. at Cas. & Sur. Inc. v. Aetna at 1157. On Id. insured.” standpoint of the diversity, sitting court a federal 851. As clauses, exclusion the basis law of New apply the substantive we must summary partial granted court the district Inc., Shop, v. Piece Goods Jersey. Borse to soil of defendants in favor judgment Cir.1992). (3d review of Our F.2d denied policies. It post-1971 on the of New Jer interpretation court’s district ground- respect judgment summary Farm Wiley v. State plenary. sey law is address contamination, not and did water (3d Cir. F.2d Fire & Cas. surrounding wetlands. contamination 1993). held Chemical court Finally, the district timely notice of give failure Leaman’s Policies Insurance III. Occurrence-Based insurance not preclude did claims “Expected or Intended” prejudiced delay had because “occur purchased 1157-58. Id. at insurers. defendant liability general comprehensive rence-based” a mo- filed trial, Before cover provided LMI that from the relating to exclude evidence tion limine happening aor accident age “[a]n Bridgeport. than other sites disposal waste exposure repeated a continuous event or motion, hold- granted The district unin unexpectedly which to conditions prejudicial more evidence other-site ing the damage.” tentionally results consuming. unduly time and probative than Chemical that contend because The LMI to cause “intended” “expected” trial, Leaman found the week a three After site, the Bridgeport the damage at property cover- to entitled was that Chemical coverage.6 provide policies do wetlands soil and to the damage age for although from it is unclear policies, the 1981-85 suffers the which insured The date on why this occurred. when the record important determines because is place under taken has an "occurrence” whether argu- incorporated the each the LMI and 5. Aetna policies. See applicable insurance the Hartford Ins. so, other, according- by the ments advanced Co., & Cas. Aetna v. & Indent. Co. Acc. Life raised issues address ly, we must still 402, (1984). 18, The dis- 409 483 A.2d 98 N.J. they to the LMI. relate Aetna as summary judg- insurers granted the trict court 1, 1, policy, April 1960 April 1959 to law, prove on the ment must Jersey an insured New 6. Under evidence produced no because Diamond has occurred. loss coverable that a period. Co., during that time damage occurred that & Sur. Cas. Co. v. Aetna Chem. Shamrock 440, 167, (App.Div. 464 A.2d N.J.Super. 609 258 denied, A.2d 528 1992), N.J. Lea- agree appear that parties 4. The certif. correctly (1993). Accordingly, the district on against the LMI its claims dismissed man has Jersey New upon courts have been called inherently injurious” “so that an intent to repeatedly interpret “expected/intend injure presumed. can be Id. ed” clause in pol occurrence-based insurance Industries, In SL the court confronted the They sought icies. have to balance the need question any injure “whether intent to will compensate against public poli victims render resulting injury intentional [and cy deterring intentional wrongdoing by preclude coverage], wrongdoer whether the denying coverage consequences. for its In specific must intend injury results, cases, companion Voorhees v. Mut. Preferred or whether there is ground some middle Co., (1992), Ins. 128 N.J. 607 A.2d 1255 approaches.” between two SL Indus Industries, and SL Inc. v. American Motorists tries, Co., Inc. v. American Motorists Ins. I ns. 128 N.J. 607 A.2d. 1266 (emphasis A.2d original). Af (1992), Jersey the New Supreme Court ad ter evaluating theories, alternative the court “expected/intended” dressed how clause adopted ground,” the “middle which it sum interpreted should be order strike the marized as follows: correct balance. Assuming wrongdoer subjectively in- Voorhees, Jersey Supreme expects tends or injury, some sort of Court held the accidental nature of an occur- n intent generally will preclude coverage. If rence is determined analyzing whether there is evidence that the extent of the subjectively expected intended or injuries improbable, however, then the injury. to cause an Voorhees v. Preferred inquire court must as to whether the in- Mut. Ins. 607 A.2d at 1264. The court sured subjectively expected intended or explained: injury. cause that Lacking intent, That interpretation prevents those who in- injury was “accidental” coverage will tentionally cause harm unjustly bene- provided. be fitting from insurance coverage pro- while viding injured victims greatest with the Id. at 1278. SL Industries an alle- involved compensation chance of consistent with the gation of intentional fraud that “presupposes need to deter wrong-doing. It also ac- general subjective injure.” intent to Ac- cords objeetively-reason- with insured’s cordingly Jersey Supreme Court expectation able for uninten- remanded the cases a determination of tionally-caused harm. whether suffered the victim Id. at 1264. The court emphasized, improbable, so, “[e]ven was and if whether in- when the question actions in seem foolhardy sured intended expected the victim’s actu- reckless, the courts have injuries. mandated an al Id. at 1279. The court noted inquiry into actor’s subjective intent to approach this “conforms to an insured’s ob- injury.” cause Id. jectively-reasonable expectations pro- vides the greatest victim the possibility

The court recognized also an “exceptional additional compensation exception circumstances” consistent subjective goal of deterring inquiry. intent intentional wrongdoing.” When the actions are particularly repre- hensible, the injure intent to can pre- The New Supreme Court addressed sumed from the act without an inquiry into expected/intended clause of comprehen the actor’s injure. general sive liability policies in the environ That objective approach focuses on the pollution mental Intern., context Morton injury that an likelihood will result from an Inc. v. Co., General Acc. Ins. 134 N.J. 629 actor’s behavior rather on wrong- than the — (1993), denied, A.2d 831 U.S.-, cert. subjective doer’s state of mind. (1994). S.Ct. 129 L.Ed.2d 878 It

Id. at 1265. The court cited to sexual attempted assault apply to principles the established against children as an example of an act that Industries, Voorhees and SL but was required prove Chemical Leaman to it did policies. not Chemical Leaman Tank expect Lines, or intend property damage to cause Inc. v. Aetna Cas. & F.Supp. Sur. order coverage to applicable establish under at 1144. they cause environ- company knew would of impracticality “acknowledge the to forced complaints Despite repeated harm. “we will mental general rule that to adherence engaged in agencies, Morton by regulatory subjective intent to de- insured’s look ” Id., ‘stonewalling’ ... characterized pattern at of 629 A.2d “a injure.’ to intent termine consistently compliance by promises of that upon Voo- elaborated The court then basis of these unfulfilled.” Id. On the exception, were “exceptional circumstances” rhees’ held, facts, ignored it have pre- “would injure to be an intent allows which predeces- reality [Morton’s] conclude that actor’s sub- inquiry into the without sumed mercury and its not know that the sors did jective intent. the land over harmful to [sic] effluents was in environmental-cover- hold that [W]e into which it and the waters which it coursed analysis is case-by-case litigation a age Therefore, it held as at 884. fell.” Id. whether, in con- required to determine damage property law that the matter of evidence, “excep- available of all the text within the caused an “occurrence” not objectively that exist circumstances tional policies. meaning applicable insurance of the injure.” intent the insured’s establish Voorhees, Those circum- at 1265. 607 A.2d sub- presumption of insured’s Morton’s dis- of the the duration include property stances jective intent to cause discharges occurred charges, hinge whether on not egregious circumstances does innocently, intentionally, negligently, or expected or insured should have whether the knowledge con- insured’s quality of the injury. would be akin cause This intended to propensities cerning the harmful negligent acts negligence standard. If to a regulatory authorities pollutants, whether of a covered within the definition did.not fall discourage prevent attempted occurrence, point be no then there would conduct, of and the existence liability general insured’s comprehensive purchasing possi- concerning subjective knowledge Ins. Pittston Co. v. Allianz insurance. (D.N.J.1995). of harm. bility or likelihood While F.Supp. acknowledges courts pragmatically Morton cautioned, Id., The court at 879-80. 629 A.2d exceptional reality” “ignore should when of responsible for remediation held “insureds subjec- the insured’s establish circumstances vary significantly pollution environmental injure, the insured’s tive intent harm culpability for degree of their relevant to cause remains intent Therefore, discharges.” by pollutant language. occurrence inquiry under environmental-pollution rule in general “[a] permit that would coverage litigation Morton, Jersey Supreme simply on the basis injure presumed to be of SL applicability addressed Court also discharge pollutants would knowing of of a in environmen- improbability rule Industries’ unjustified.” at 879. It ex- litigation. tal plained: applied Jersey Supreme Court The New envi- question whether Turning to the of to determine outlined the factors had expect- injury was intended sup- ronmental “exceptional circumstances”

whether mag- ed, although the we first observe cause an intent to presumption of ported the Berry’s and the damage to Creek pre- nitude Morton damage. It noted any inten- may surrounding areas exceed to such Berry’s Creek polluted had decessors to Morton’s expectation attributable tion or of several a stretch “[f]or extent consider differ- we do not mercury predecessors, feet, concentration thousand severity of envi- relating to harm ences in water found in fresh highest ... [was] finding damage give to a ronmental rise This Id. at 834. in the world.” sediments invokes the harm “improbability” of discharge pol- damage was caused subjective intent. SL need evidence plant over mercury-processing from a lutants Industries, holding of SL supra. perhaps as eighteen, and period least Appellate Di- based on the was Industries at 882. More- forty-five, years. Id. many as coverage action ruling ... that discharg- vision’s years the over, eighteen for at least young two fight from a between intentional, though arising the even es had been teenagers in which one Jury sustained broken A. Expected/Intended Instruction on hip, presented a factual issue was because The district jury court instructed the of the inherent improbability that the skir- it should find for Chemical Leaman if Chemi- mish hip would result fracture. No cal Leaman subjectively not expect did or “improbability” such inherent can be as- damage soil, intend groundwater, or cribed to the damage environmental attrib- wetlands at Bridgeport the Midway site. predecessors. utable to Morton’s through trial, the the court instructed the Intern., Morton Inc. v. General Acc. Ins. jury: (citations omitted). at A.2d There- There are three damage kinds of at issue fore the court concluded it did not have to ease&emdash;soil contamination, groundwa- in this contamination, ter inquire into Morton’s swamp and contamina- ... tion specific cause the damage environmental at You mustevaluateChemicalLea- man issue. actual,subjective you what expectations believe itswere case, In this the interpreted district court regard with or intentions Jersey New “expected/intended” law on the soil, damage causing groundwater swamp and clause before Jersey Supreme the At Court’s Nevertheless, decision Morton. trial, again end of jury instructed the to determine instructed whether district jury: determining Chemical subjectively expected Leaman or intended to property cause damage at the Bridgeport trial, At the site. end of INTENDED"- FOCUSON on the 50(a) LMI’s Rule judgement motion for DAMAGE"EXPECTED OR aas law, matter of the district court found that pectations ex- Leamaris the harm to the environment caused coverage, in the contextof basic intentions Bridgeport water system treatment was im- you to focus on whether are instructed probable as a matter of law. The district specific property damage expected court also held Chemical Leaman’s actions or Youare not to considerwhether intended. reprehensible were not so justify as to property acts whichcausedthat presumption of an intent property to cause damage acts. I were intentional damage under the “exceptional circum- give you becauseit is New this instruction exception. stances” It concluded Chemical Jerseylaw unintended resultsof intentional Leaman was “throwing not toxic waste out may acts de- insurance covered fendants’ into the meadow-lands” as Morton and its policies. Thus, though Chemical even predecessors done; rather, had it had “de- may ingly have know- signed facility built the to prevent [harm ultimately intentionally committed acts to the environment].” Chemical Leaman led the environmental Lines, Tank v. Inc. Aetna & Sur. Cas. Bridgeport site, may be still there F.Supp. at 1146. long as you find On appeal, expect the LMI argue the dis ChemicalLeamandid not intend specific trict jury property court’s instructions expect on damage that subject issue were litigation, namely ed/intended erroneous and incon the matter this sistent They soil, groundwater, law. also contamination assert the harm at Bridgeport site was I further wetlands. improbable as a matter of law. Finally, they contend “exceptional circumstances” ob INTENDED"- SPECIFICDAMAGE jectively establish Chemical Leaman’s intent property to cause damage. review of Our STANDARD plenary. instructions is See Hook v. you that, (3d Ernst & Young, 28 F.3d Cir. instruct decidingwhether 1994). subjectively juryA charge, whole, taken as a must ex- pected “fairly you adequately” submit the issues to cause dam- age, intended the case to jury. whetherChemical "EXPECTEDOR must consider possesses a LMI’s-argument Although the subjectively expected Leaman or intended Jersey the New we believe appeal, certain very damage subject that is the matter reject An it. would Supreme Court Thus, of this case. it is not sufficient for pollu- a known intentionally discharges who you expect- to find that Chemical Leaman harm,” sort of generally intends “some tant any injury-such injury ed or intended as minimis, ac- harm that and the however de generally. Rather, you to the environment must determine whether ChemicalLeaman of usually probable result tually results LMI’s read- Accordingly, the discharge. expected or intended the actual in a gener- result would ing of SL Industries required clean-up. that it is now on the coverage based precluding rule al sub- interrogatories were addition, special In pollutant. But discharge of knowing Leaman’s jury Chemical on mitted to Intern., Acc. Ins. Inc. v. General Morton damage to to cause and intention expectation 879-80, Jersey Supreme A.2d at soil, and wetlands. groundwater, [precluding general “a rule held Court knowing aof simply on the basis coverage] The LMI contend the district court's unjustified.” be pollutants would discharge of jury final instruction was erroneous because Industries’ “some reading of SL LMI’s jury it instructed the "to focus on whether Mor- with injury” language conflicts sort of specific property damage"-namely con ton. soil, groundwater, tamination to the or wet- expected They Iands-"was or intended." Industries, Moreover, Jer- the New in SL argue the district should have instructed the problem confronted sey Supreme Court "expected that if Chemical Leaman injury caused coverage for of injury intended" to cause some to the envi conduct, namely inten- intentional, tortious generally, coverage pre ronment then was tort are intentional cases But tional fraud. injury cluded unless the extent of the of envi- analogy in context imperfect improbable. rely The LMI on SL Indus com- insured who pollution. The ronmental tries, Jersey Supreme in which the New possesses fraud tort like an intentional mits Court stated: the harm of knowledge of the nature some such subjectively in- to cause and intends wrongdoer likely to Assuming the result com- Also, torts are injury, that intentional of most sort harm. expects some tends discrete, temporally coverage. If and single, in a preclude mitted generally will of context environ- In the the extent limited incident. is evidence there knowledge however, then the insured’s pollution, improbable, mental injuries was pollu- propensities the in- concerning harmful inquire as to whether must envi- harm to the expected likelihood of subjectively intended tants and the sured intent, vary may complete Lacking that less injury. may be ronment cause example, it is coverage will time. For significantly over “accidental” injury was insureds, many fact that matter historical provided. industry standard acting in accordance Industries, Motorists American Inc. v. SL pollutants discharged intentionally practices, contend LMI A.2d Ins. in- or other ponds containment into unlined some to cause intended Leaman Chemical systems, were but treatment adequate waste knew the Leaman Chemical because damage would groundwater unaware contaminants, knew contained rinsewater eventually result. the soil seep into would the contaminants Supreme Morton, ponds. containment deposited when unsuitability prior acknowledged the Court knew dis- also They assert provision expected/intended law on case drain pipe would the overflow charges from litiga- coverage pollution Therefore, in environmental they argue, swamp. into the (“In Morton, applying A.2d at tion. sort “some intended seeking to claims holding in Voorhees our law, coverage was injury” a matter of by en- property-damage injury was extent precluded unless the occurrence- under vironmental improbable. acknowledge policies, based CGL we the im- LMI’s contention that some intent to cause practicality general any of adherence to the pre- rule sort of environmental harm will coverage that Ve will look to the insured’s clude insurance for all environmen- ”). injure.’ Jersey intent to tal harm under New determine intent to We law. Rather we Jersey Jersey believe the New Supreme Supreme believe the New Court Court inquire similarly reject into the application would a wooden would insured’s intent or expectation to of cause environmental harm injury” SL Industries’ “some sort of lan- of sort, particular guage, example, general and would instead look to whether the soil, damage insured intended principles to the underlying interpretation of groundwater, or wetlands. Where the in- insurance-policy provisions involving inten- harm, expects sured intends or such cover- tional conduct. As stated the New unless, age course, precluded, inju- of Supreme Court: ry improbable. hand, On the other an goal interpret Our pro- is to the insurance insured’s intent to cause environmental light objectively visions in of the insured’s harm preclude of one sort will not coverage expectations.... reasonable [W]e must for other unexpect- kinds of unintended and attempt goals: to reconcile two that of ed environmental example, harm. For deterring wrongdoing by intentional pre- insured’s intent damage to cause soil will indemnification, cluding insurance and that preclude coverage not for unintended and providing of compensation victims with unexpected damage groundwater to the or compensation the extent that will not inter- wetlands. deterring injurious fere with behavior. jury fairly district court’s instruction Industries, SL Inc. v. American Motorists adequately jury asked the to consider Ins. 607 A.2d apply at 1278. We will expected whether Chemical Leaman or in- principles these in this case. soil, injury groundwater, tended to the or In the environmental con wetlands. The instruction also allowed the text, appreciation the insured’s magni of the jury to consider the nature and extent of likely tude nature of harm to be caused knowledge Chemical Leaman’s regarding the discharge pollutants is relevant likelihood of knowledge harm as that evolved determining coverage whether insurance over time. ample There was sup- evidence precluded. should be porting jury’s conclusion that Chemical injury significantly When the ex- expect Leaman did not or intend to cause injury ceeds expected intended or property damage. pre- Chemical Leaman then it is hard to characterize the sented evidence that it system believed the truly Moreover, “intentional.” ... if the ponds unlined would cleanse contaminated expect tortfeasor did not intend or to cause rinsewater. Although Chemical Leaman in- harm, resulting denying coverage will tentionally discharged pollutants, known not deter the harmful conduct. In that jury find, reasonable could and the here case, policy justification there is no find, did Chemical Leaman expect did not or denying possibility the victim the of addi- damage soil, groundwater intend to the compensation. tional light wetlands. jury’s findings, Industries, SL Inc. v. Chemical Leaman American is entitled to Motorists coverage Ins. 607 A.2d at for the clean-up 1278. If an costs of environ- damage. mental does not Because understand the causal connection expect soil, did not discharge between the or intend pollutant of a and the groundwater, wetlands, property damage results, we need not in- deterrence is quire property damage whether the by precluding served at the insurance cover- Bridgeport Moreover, improbable site was an age. result of where insured does not Chemical Leaman’s actions. expect intend property damage par- of a ticular nature discharge to result from its B. “Exceptional Circumstances” pollutants, “objectively insured has an Exception expectation” reasonable should property such damage later manifest itself. The LMI contend that under Voo reasons, For these agree we cannot “exceptional rhees’ exception, circumstances” Id. Mor- exist.” exceptional circumstances to canse Leaman’s considering level of is instructive ton as a matter presumed damage should injure required to allow intent to culpability noted, in Morton have As law. we in con- the environmental presumed fac- to be forth several Jersey Supreme Court set Morton, intentionally the insured In evaluating text. in whether considered to be tors mercury-laden compounds direct- discharged in- These exist. circumstances exceptional period of lengthy a over ly streams into clude: and state Department of Health time. the discharges, whether of the the duration for com- repeated demands engineers made intentionally, negli- discharges occurred consistently disre- the pliance and insured the quality of innocently, the gently, or promises to remediate garded its own concerning the harm- knowledge insured’s Morton, at 882. “[T]he 629 A.2d discharge. whether pollutants, propensities ful of pattern a ‘stone- fairly reflect[ed] record attempted dis- to authorities regulatory insured], charac- part [the of walling’ on conduct, insured’s courage prevent or that con- compliance of by promises terized knowledge of and the existence sistently unfulfilled.” Id. were of or likelihood possibility concerning the harm. jury find could a reasonable We believe Intern., Acc. Ins. Inc. v. General Morton “pat- engage in a not Leaman did Chemical New We believe 879-80. 629 A.2d at contrary, a stonewalling.” On the of tern “excep- designed the Jersey Supreme Court Leaman’s that Chemical jury conclude could apply only exception to tional circumstances” at com- good a faith effort suggests behavior apparent much is This conduct. egregious to Chemical agency demands. pliance with as abuse of child sexual use from the court’s Bridgeport initially designed Leaman “so that is inherent- of conduct illustration an purify con- system to treatment wastewater of presumption a warrant injurious” as to ly designers of in 1960. rinseate taminated “in- 879. Because injure. Id. at to of sandy bottom system that the believed of for remediation responsible sureds held purify contami- ponds would the unlined in vary significantly pollution environmental filter, acting as a natural rinsewater nated harm for the culpability degree of their aas overflow intended and the pipe believe discharges,” we by pollutant caused in the prevent rupture safety valve environmental-pollution rule general “[a] ponds in the event of the containment berms permit intent litigation that would coverage inspector from heavy rain. When of simply on the basis injure presumed to be Jersey of Division of Unit Pollution pollutants would discharge of knowing of a Fish, & Wildlife advised Game Id. at 879-880.7 unjustified.” be discharge into a unsatisfactory of an September swamp neighboring ease-by-case “a mandates Instead Morton constructing responded whether, to determine analysis ... in order settling and the final evidence, lagoons set of a second the available of all in the context a court when the test for Morton refines "exceptional of apply cir- law. would 7. The dissent envi- pollution law in judgment a matter may of in all enter test environmental cumstances” "excep- Dissent coverage coverage See Its pollution cases. cases. ronmental however, test, (“The 'exceptional circumstances' no reason- define when circumstances” tional be 'exception,' but the rule is not an applied not intend the insured did jury find could able cases.”). coverage It environmental ob- because expect property to cause court, jury, de- than the rather would have prolonged, of jective circumstances —evidence "expected” or "intend- an insured cide whether intentional, pol- discharges flagrant known damage. properly ed” to cause disapproval regulatory the face of lutants —es- displace usual did not Morton We believe intended must have the insured tablish jury. It and the relationship between “exceptional presence damage. jury re- province unique remains judg- enter a court requires circumstances” as the inten- disputed issues of fact—such solve absence, of law. Their matter of as a ment course, Only in expectations the insured. tions finding prevent a does legally sufficient eviden- is no there cases where tiary prop- cause "expected” or “intended” to jury to find a reasonable basis erty damage. judgment as a matter may party court enter later, lagoon. years pollution (App.Div.1987). Seven water It held the word “sudden” is inspectors ambiguous Department carrying temporal from the New —sometimes meaning and discharges meaning “unexpect- sometimes Health concluded from the la- and, interpreted ed”—and should not goon to ex- pollutional February were clude for environmental harm plans ordered Chemical Leaman to submit by gradual discharges pro- over a system properly for a treat the effluent. longed concluded, period. It “[t]he May Chemical Leaman submitted a precludes coverage exclusion when the in- plan system. for a new rinsewater treatment discharge pollutants, sured has caused the Jersey. Department of The New Health re- discharge unless the expected was neither jected plan years this and over the next four nor intended standpoint from the of the in- parties attempted dispute the to resolve their Lines, sured.” Chemical Leaman Tank Inc. 1974, January they until when entered into a Co., v. Aetna Cas. F.Supp. & Sur. 817 at judgment. history hardly consent This can granted 1157. The district court partial then pattern “a ‘stonewalling’ described as of summary judgment to the insurers with re- by promises compliance characterized spect to damage soil because Chemical Lea- consistently Morton, unfulfilled.” were man discharge intended to contaminants into Accordingly, 629 A.2d at “exceptional trial, the soil. At found Chemical circumstances” do not exist here that would expected and discharges intended to permit presumption of Chemical Leaman’s swamp, but not groundwater. to the On property intent to cause damage. appeal, the LMI liability contest their groundwater damage. IV. Pollution Exclusion Clauses Subsequent decision, to the district court’s 1, 1, April April 1971 to 1985 LMI Jersey Supreme Court addressed policies pollution contained exclusion clauses pollution standard form exclusion clause barring coverage discharges pollutants, Intern., in Morton Inc. v. General Acc. Ins. discharges unless such were “sudden and Co., 629 A.2d at 847-76. Jersey The New “sudden, unintended, accidental” or and un Supreme expressly Court overruled Broad- 8 expected.” argued The LMI to the district well, because it believed that the word “sud- “ coverage court that precluded because ambiguous. den” was not It held ‘sudden’ discharge pollutants Bridgeport possesses element, a temporal generally con- site was not “sudden.” The district court noting an begins event that abruptly or with- rejected argument, relying LMI’s on a prior out warning,” notice or and concluded line of New beginning cases phrase that “the ‘sudden and accidental’ in Serv., Realty Fidelity Broadwell Inc. v. & pollution-exelusion the standard clause de- 516, N.J.Super. Cas. 218 528 only A.2d 76 scribes those discharges, dispersals, re- policies 8. The sold Injury Bodily LMI to Chemical Lea- Injury al or physical or loss of or 1, 1, covering April April man 1977 damage tangible property, to or destruction of period pollution contained the standard ISO ex- property or loss of use damaged of such or clause, provides: clusion which destroyed seepage, pollution, where such or apply Property This insurance does not to ... sudden, contamination is caused unin- Damage arising Discharge, Disper- out of the unexpected tended happening during and sal, Escape Release or of ... Contaminants or period of this insurance. Land, upon Atmosphere Pollutants into or pollution The district court held both exclusions Water, any Body or Watercourse or but this scope. were interpreted identical in It "acciden apply exclusion Discharge, does not if such tal" to mean unexpected, unintended and and Dispersal, Escape Release or is sudden and "sudden, therefore concluded that the unintend accidental. ed, unexpected” exception in the NMA 1685 1, April April April 1971 to 1974 and the exclusion should be construed in the same man April policies 1977 to contained the ner as the exception "sudden and accidental" exclusion, pollution NMA 1685 provides: which pollution the standard ISO exclusion. See Chem This any liability Insurance does not cover for: Lines, (1) ical Leaman Tank Inc. v. Aetna Cas. & Injury of, Sur. Bodily Injury Personal or loss to, case, F.Supp. any at 1156 n. 17. In property directly loss of use of dispute indirectly by seepage, pollution, or contamination, in this application case revolves around "sudden,” provided always of the appears that this term Para- which in both (1) graph apply liability shall not for Person- clauses. requirement, but assert ment of the “sudden” that occur leases, escapes pollutants LMI apply does not to the because unintend- Morton unexpectedly are abruptly or (1) policies Nevertheless, their contain the non- Id., court several of at 847. ed.” exclusion, pollution ex- standard NMA enforce the standard refused (2), misrepresen- they party insur- were written because found clusion regulatory authorities. Sec- regulators in tations made state industry had misled ance ond, if Instead, argue that even Morton’s the LMI approval. securing holding applies, pol- regulatory estoppel precludes pollution exclusion clause held the coverage because intentionally lution exclusion clause bars dis- if the insured coverage discharged intentionally Chemical Leaman pollutant, regardless known charges a pollutants. They argue the known district expected or intended whether the requiring proof that Chemical court erred damage: cause discharge ground- into intended would rea- regulators perceive [W]e water, as to into the environment opposed the effect sonably have understood generally. for the have denied clause release, dispersal, discharge, intentional Regulatory Estoppel A. or not pollutants, whether escape of known or ex- damage was intended the eventual 1. Pollution Non-Standard Exclusion standpoint of the insured. pected from the Morton, Jersey Supreme New clause industry’s presentation of the The applied regulatory estoppel to ISO Court it as described clarification regulators pollution clause and did standard exclusion clause of expected” and “intended of the coverage relating issues non not address as to definition “so “occurrence” the basic pollution exclusion clauses. Mor standard intent,” could any question of avoid Intern., Acc. Ins. 629 ton Inc. v. General attempt to over- fairly understood as be argue LMI that Morton’s A.2d at 881. damage intend- whether ride the issue holding pre regulatory estoppel should not excluding coverage for intentional ed in of the term “sudden” vent enforcement Accord- pollutants. discharges of known pollution 1685 exclusion non-standard NMA give effect to ingly, we construe and policies. of their clause certain contained only to pollution-exclusion clause standard argument lacks Both believe this merit. We coverage preclude it shall extent pollution exclusion and the ISO standard property pollution-caused pollution NMA 1685 exclusion non-standard if by an “occurrence” 1685 The NMA use the term “sudden.” dispersed, re- intentionally discharged, language closely tracks the exclusion leased, escape a known or caused the exclusion, pollu pollution and both standard pollutant. into about clauses came use at tion exclusion original). (emphasis in the 848 Indeed, LMI argue the same time. and the standard exclu district NMA exclusion LMI contend the appeal, On scope because both ex are jury that the sion identical incorrectly instructed the non-abrupt, non-sudden coverage for coverage clude precludes clause pollution exclusion pollutants. See discharges releases of intentionally dis- only if v. Power Co. Elec. groundwa- also Potomac pollutants into the charged known California n. 23 F.Supp. Ins. First, Union argue Morton estab- the LMI ter. (defendant (D.D.C.1991) there insurers admit temporal has a “sudden” lished that the word between standard pre- “no material difference” meaning “abrupt” connotation — —and pollution NMA 1685 pollution discharges, dis- exclusion coverage gradual cludes exclusion). Jersey Supreme Court The New releases, escapes. Because persals, “sudden” in Mor the term refused to enforce discharged contaminated industry mislead the insurance they ar- ton because period, prolonged over a rinsewater obtain to its effect when regulators as precluded. The state coverage gue, should pollution exclu standard ing approval for the regulatory es- acknowledge Morton’s LMI do not believe We sion clause. holding generally prevents enforce- toppel Jersey Supreme Court would enforce the Court would not enforce the term “sudden” pollution policies term “sudden” non-standard ex- in the issued LMI. simply clauses because other lan-

clusion slightly guage those clauses varies B. Discharge Intentional pollution the standard exclusion. LMI argue also the district court regula- Therefore conclude Morton’s we required separate should not findings have tory estoppel holding applies to NMA regard discharge to intent to into the pollution exclusion as well as the stan- soil, wetlands, groundwater. They con- pollution dard exclusion. tend that if any Chemical Leaman intended soil, discharge, groundwater, whether to the Application Regulatory wetlands, pollution then the exclusion Estoppel LMI preclude clauses coverage for all argue LMI regula- also that Morton’s damage arising discharge. from that Be- tory estoppel holding applied should not be granted partial cause the district court sum- they affirmatively them because did not mary judgment to the insurers with respect Jersey regulators deceive in securing soil, discharges into argue, the LMI approval pollution of the standard exclusion. the district court should also have denied agree. We cannot policies The LMI’s con- resulting property for all damage, pollution pre- tained the standard exclusion including groundwater damage. The effect cluding coverage discharges for non-sudden argument require LMI’s would be to pollutants. They or releases of also con- judgment in their favor as a matter of law on exclusion, pollution tained the NMA 1685 policies all containing exclusion. closely parallels which language of the argument The LMI raised this before the Approval standard exclusion. of the stan- 50(b) district court a Rule motion. The pollution exclusion dard clause'was secured district court refused to argu- consider the through misrepresentations regulatory to au- ment because the LMI had not raised it Regardless of thorities. whether the LMI 50(a) prior their Rule motion. Chemical directly misrepresented themselves the effect Lines, Leaman Tank Inc. v. Aetna &Cas. pollution the term “sudden” in the exclu- 89-1543, (D.N.J. Sur. slip op. No. 4at clauses, they sion benefitted from the mis- 8, 1993). November leading explanation of the effect the stan- pollution dard exclusion to submitted state judgment Motions for as a matter regulators industry trade law must be made before submission of the groups. The LMI did not independently jury case to the “specify judg must Jersey submit information to New regulators sought ment and the law and facts on which attempt explain impact the full moving party of the judgment” entitled to pollution 50(a)(2).10 term “sudden” in the exclusion under Fed.R.Civ.P. We have re they clauses used.9 Under portions these circum- viewed the the record cited to stances, we believe Supreme brief, the LMI in their and conclude that the Morton, (1) Jersey Supreme 9. during by jury Court not party If a trial a a has been industry ed the failure of the insurance to reduce fully heard legally on issue and there is no comprehensive general liability on rates ance clauses, insur evidentiary sufficient jury basis for a reasonable policies containing pollution exclusion issue, party to find for may on the the court though policies dramatically even such against party determine issue may coverage previously reduced damage offered for grant judgment a motion for aas matter of law Intern., by pollution. See Morton against party respect with to a claim v. Inc. General Acc. Ins. 629 A.2d at 872 controlling defense that cannot under the law be Chemical Leaman contends that . the LMI did not maintained or defeated without a favorable find- they charged policies reduce the rates on con ing on that issue. taining pollution exclusion This factor clauses. (2) judgment Motions for aas matter of law support applying regulatory would toppel Morton’s es- may any be made at time before submission LMI, although rely rule to the dowe not jury. the case to specify Such a motion shall reaching holding. on it in our judgment sought and the law and on facts 50(a) moving party provides: judgment. Fed.R.Civ.P. which is entitled to (a) Judgment aas Matter of Law specify 50(b), LMI not did the “law and facts’ suant to Rule moving party must entitling judgment timely summary them to their judgement move for as a matter of motion, Brief, judgment case, their Joint Trial law at the close the nonmovant’s 50(a) pursuant 50(a); their Rule motion before the district specify Rule motion.”). they grounds adequately court. The LMI assert for that The LMI did not 50(a) argument they objected argument raise their raised the because their Rule mo- tion. jury the district court’s instruction on Therefore we will not address it on clauses, appeal. pollution stating: exclusion thing There was one other respect objection We believe the LMI’s perfect- exclusion. Just to be jury the district court’s instruction was also ly my clear. It’s not understanding that preserve insufficient to argument their the law recognize even where it does not appeal under Fed.R.Civ.P. 51. In order to temporal element for the sudden. It is not preserve objection instruction, jury to a required that there be an intent or an party “object[ must ] thereto jury before the expectation discharge particular medi- verdict, retires to consider its stating dis um, discharge rather it’s the itself and tinctly objected the matter to and the goes.

where This should not be the grounds objection.” Fed.R.Civ.P. 51. subject of the jury. deliberation of the purpose of Rule 51 is to “afford the trial judge an opportunity to correct the error objection jury An charge to a can serve as a charge her jury before the 50(b) retires to consider predicate only for a later Rule motion if its verdict and to lessen the burden on appel explicitly objec the district court treated the late courts 50(a) diminishing the number of tion as a Rule Bonjorno motion. v. rulings at trial they may which be called Kaiser Corp., Aluminum & Chemical HOVIC, on to review.” (3d 1371, Dunn v. 802, Cir.1984) (“A F.3d F.2d 814-15 request (3d Cir.) (in banc), modified, 13 F.3d may fulfill instructions suffice to denied, and cert. 510 U.S. 114 S.Ct. requirement that a motion for a directed (1993). 126 L.Ed.2d 608 We believe the granting verdict be made before a JNOY objection LMI’s did identify the issue only if it is clear the district court treated the they argue now appeal on with sufficient request as a motion for a directed verdict clarity give judge the trial notice of a such.”), denied, and ruled on it as cert. 477 possible only error the instruction. 908, Not 3284, 106 U.S. S.Ct. 91 L.Ed.2d 572 objection was the difficult to (1986); understand be Pepsi-Cola Bottling Lowenstein v. grammar, cause of its convoluted Pennsauken, (3d Cir.) but 9, Co. 536 F.2d 11 objection specify did authority upon (same), denied, 966, cert. 429 U.S. 97 S.Ct. which it was based. 396, (1976). Therefore the LMI’s 50 L.Ed.2d 334 The district objection comply failed to with Rule 51’s objection did not treat the LMI’s requirement objection that an dis 50(a) “stat[e] jury charge as a Rule motion. Accord tinctly grounds objection” ingly, correctly we believe the district court preserve did not argument the LMI’s argument declined to hear the LMI’s on appeal. Zannino, See 50(b) United States v. 895 their Rule motion. (1st 1, 17 Cir.), F.2d (“Judges expect are not jurisprudence “It is clear our under Consequently, ed to be mindreaders. a liti this court cannot reverse the district court’s gant obligation spell has an argu out its 50(b) denying decision [a] Rule motion for squarely distinctly, ments or else forever j.n.o.v. on argument the basis of an the [a (J.S. denied, peace.”), 1082, hold its cert. 494 party] support failed to raise in predi- of its 1814, 108 (1990). 110 S.Ct. L.Ed.2d 944 50(a) cate Rule motion for a directed ver- City dict.” v. Philadelphia, Simmons 947 “In party’s pres the absence of a (3d 1042, Cir.1991), denied, F.2d 1077 cert. assigned appeal, ervation of an error for we 985, 112 1671, 118 error, 503 U.S. plain S.Ct. L.Ed.2d 391 power review for and our (1992); Lube, Lightning see also discretionary.” Inc. v. Wit reverse is Fashauer v. New (3d 1153, 1172 Cir.1993) (“In Corp., co. 4 Inc., F.3d Operations, Transit Rail 57 (3d preserve 1269, Cir.1995). order to judgment pur- an issue for Particularly F.3d 1289 alleged problems knowledge of why its context, power to on we exercise our civil in the into an Id.; not translate at other sites did sparingly. see plain error reverse Carson, that the rinsewa- expectation or intention F.3d v. States also United Cir.1995) Bridgeport would (2d only system in treatment (“plain error review ter in- explanations damage. These context cause in the civil where appropriate others, goes clude, ac- flagrant among that it whether is so serious error sites; trial.”), tually cert. de at the other very integrity of the occurred — -, geological and other condi- nied, 116 S.Ct. whether U.S. (1996). significantly do not be sites were Because we tions at the other L.Ed.2d jury substantially the same as at court’s any in the district different or mistake lieve probative value of pollution Bridgeport.... exclusion clause [T]he on the instructions plain is remote proffered as to amount other site evidence was so fundamental necessarily upon these error, depends our discretion it decline to exercise because we findings. intermediate reverse. Lines, v. Aetna Tank Inc. Chemical Evidence V. Other-Site 89-1543, slip op. at 4-5 No. &Cas. Sur. trial, Leaman made 1993).

Before Chemical (D.N.J. -court The district March relat to exclude evidence a motion in limine jury properly to evalu- that for the believed at other tank problems ing to environmental evidence, mini-trials relat- a series of ate this cleaning operated. The dis truck facilities required. would have been ing to each site under Federal granted this motion concluded, trict court mini-trials, would the court Such 403 because it found Rule of Evidence and confuse delay and mislead cause undue substantially of the evidence probative issue, value factual jury as to the ultimate preju danger of unfair outweighed subjective intent namely Leaman’s Chemical confusion, dice, of time. and undue waste Bridgeport site. Id. harm at the to cause Lines, Inc. v. Aetna Leaman Tank Moreover, district court held 89-1543, slip op. at 4-5 No. Cas. & Sur. signifi- with it a site evidence carried other (D.N.J. 17, 1993). March danger prejudice. unfair On cant noted, evidence, the court basis of such argue court abused it LMI the district Jersey law on jury might ignored New have excluding evidence of environ- discretion applied an intent and the insured’s at other Chemical Leaman mental “Chemical objective assessing whether test They evi- contend the cleaning facilities. rinsewa- have known that its Leaman should sites tended to establish dence from other damage.” system would cause ter treatment system of unlined Leaman knew its Bridgeport would cause ponds at groundwater. including harm to the damage, balancing court’s light In of the district should They insist that such evidence proffered also evidence probative value of the testimony impeach potential have been allowed prejudicial and the against its effect Elston, Harry designer of all Chemical say jury delay, we cannot confusion and facilities, if even waste treatment Leaman’s its discretion district court abused We review not allowed in their case-in-chief. excluding the other site evidence. rulings on the admissibili-

the district court’s ty Trigger for an abuse of discretion. See of evidence VI. Continuous Co., 563, F.2d v. Armor Elevator 958 Tait adopted Jersey Supreme Court The New (3d Cir.1992). 568 theory identify trigger” the “continuous court noted the evidence The district in Owens-Illi the time of an “occurrence” proba- 437, sought Co., to introduce had limited nois, LMI Ins. 138 N.J. Inc. v. United depended (1994). tive value because its relevance trigger 974 The continuous 650 A.2d reasoning linking chain of upon an extended in progressive theory recognizes that “when Bridgeport expo it to the site: injury damage from results divisible injurious for which civil conditions the various sure would have to evaluate may liability may imposed, courts reason- explanations by Chemical Leaman offered

995 ably progressive injury damage treat the property damage resulting from the occur- years occurrence within each of the rence. Id., policy.” a CGL 650 A.2d at 995. appeal, On the LMI contend the conceptual underpinning of the contin- Jersey Supreme New Court recog would not then,

uous-trigger theory, injury is that nize the continuous-trigger theory. light In during phase occurs each of environmental intervening Owens-Illinois, decision in of. exposure, exposure in resi- contamination — argument this is meritless. On (defined the other progression dence as further hand, correctly the LMI dispute the district injury environmental exposure even after holding court’s policies all jointly are ceased), has and manifestation of disease. severally liable under the continuous Id. at 981. trigger theory. Because Jersey the New Owens-Illinois, Jersey the New Su- Supreme rejected joint Court and several preme Court also addressed the allocation of liability in favor of a risk-based allocation of multiple losses between insurers in- and the liability among applicable policies sured when the trigger theory continuous Owens-Illinois, we will remand this mat establishes occurrence in several different ter to the district court for a reallocation of policy years. It held fair “[a] method of liability between the among insurers and appears allocation to be one that is related triggered policies in accordance with Owens- both to the time on the risk and the risk Illinois. assumed,” 995, “i.e., proration id. at on the limits, policy basis of multiplied by years of The LMI also contend that coverage,” id. at 993. Chemical Leaman prove failed to property Owens-Illinois involved a suit for damage during occurred policy year each personal injuries resulting exposure from 1960-70, from and therefore the district asbestos, but Supreme Court in finding erred as a matter of law that made clear the trigger theory continuous ex property damage occurred in the 1960-61 tends to resulting claims policy year, denying and in summary their long-term environmental contamination. judgement respect motion with to the 1961— concluded, It “[p]roperty-damage cases are policy years. 70 Under trig the continuous analogous to the contraction of disease from ger theory, exposure to the harm causing exposure to toxic substances like asbestos. agent is trigger potential sufficient to cover person elements, Like a exposed to toxic age. Actual manifestation of the environment necessarily display does not not required, long continuous, so as there is a long harmful effects until after the initial process resulting indivisible damage. Ow 983; exposure.” Id. at see also Astro Pak ens-Illinois, Inc. v. United Ins. 650 A.2d Corp. v. Fireman’s Fund Ins. 284 (“injury during occurs phase each 491, 1113, N.J.Super. 665 A.2d (App. environmental exposure, ex contamination — Div.) (same), denied, 143 N.J. certif. posure in residence and manifestation of (1995). A.2d 1065 disease”); Harleysville Morrone v. Mut. Ins., N.J.Super.

Although 662 A.2d considering the issue before the (App.Div.1995) (exposure Jersey Supreme gasoline suffi Court’s decision in Ow occurrence). ens-Illinois, trigger cient to undisputed It is applied district court that trigger theory, discharged continuous Chemical Leaman ruling contami all of the policies ponds LMI’s nated rinsewater into the through from 1960 unlined and 1985 had lagoons every in triggered by year been from the environmental 1960-70. More contam over, site, ination Bridgeport at the the district policy a court found as a unless factual coverage. exclusion barred matter that Chemical Lea “contaminated rinsewater from Lines, man Tank settling ponds Inc. v. Aetna the three migrating Cas. & Sur. started Co., F.Supp. 817 at through 1153-54. underlying groundwater The district the soil to court also that policies held all immediately insurance almost beginning pond op after by activated a continuing occurrence are in eration 1960.” Chemical Leaman Tank jointly severally policy Lines, Co., liable to limits for Inc. v. Aetna Cas. & Sur. 817

996 has determining insurer in whether an tors district Accordingly, the 1148. F.Supp. at of cov- justifying a denial prejudice of law suffered as matter correctly concluded court have been rights substantial upon erage: initial “whether damage occurred property that of the failure irretrievably lost virtue concluded 1960, have and should in exposure timely in a notify the carrier property insured to that law matter of as a fashion,” Grange Mut. 1961-70. v. National period from Morales policy occurred each 325, 347, Co., A.2d course, N.J.Super. 423 LMI, prejudiced 176 were not Ins. The (Law Div.1980), likeli whether “the error. 329 court’s the district defending of the insurer hood of success district assert the Finally, the LMI [underlying has been ad claim]” against the jury on the incorrectly instructed id., affected, Apply 423 A.2d 330. versely at under damage” in the “property meaning of test, court found part the district ing this two object they Specifically, lying policies. prejudice no because had suffered the LMI may Leaman that “Chemical instruction irretrievably had not been material evidence defendants’ coverage under the entitled to existed to lost, defense and no meritorious damage that property policies liability un underlying Leaman’s Chemical origi that period, but during policy occurs Tank Leaman Chemical der CERCLA. period.” policy during an earlier nally began Lines, & Sur. Inc. v. Aetna Cas. required was They argue Chemical (D.N.J.1993). 1136, 1158-59 F.Supp. policy injury” during each prove “actual incorrectly jury equated ex and the period, district court contend the LMI The damage. property pollutants with posure to contrac holding Leaman’s erred in Chemical theory, proof of trigger arose, Under continuous at notify it of claims obligation to tual of manifestation injury the sense earliest, actual They argue that obli 1984. could find required. jury earlier, not twenty years gation arose much as policy during a damage occurred complaints Leaman received when Chemical that a contin proof long as there is period regu so various from of environmental injury occurred uous, process of disagree. indivisible Lea- latory Chemical bodies. We court’s during period. that district known the liabilities have man could not charge was erroneous. not EPA coverage which it until seeks Superfund Bridgeport site on placed the Late Notice

VII. Prior New List 1984. National Priorities against Lea- notify Jersey state its actions Leaman failed injunc- non-monetary only Bridge sought man had relating to the claim insurers earliest tive relief. Because was years after facility four port until which Chemical practicable EPA date with the into consent decree entered LMI, CERCLA, given notice to the could have liability and even admitting under potential valuable evi that that LMI’s assertions events longer underlying after prior to 1984 are irrelevant. LMI assert dence was lost harmed environment. argue evidence the LMI also that provisions of While the notice this failure violated died, lost, any between obli witnesses relieves them policies and disputed “a wealth they coverage. have provide insurance gation to documentary remains evidence of relevant that seeks to disclaim An insurer Moreover, LMI intact.” untimely notice from its upon based depose, and opportunities to had extensive policy must dem under an occurrence-based Elston, cross-examine, Harry the de later “appreciable it has suffered onstrate Accordingly, signer Bridgeport site. Employ Cooper v. prejudice.” Government correctly found the district court (1968); N.J. 237 A.2d ees Ins. any irretrievably substan had not lost LMI Exchange v. Care Inter Health Med. Ins. untimely right due Chemical Leaman’s tial 513, 651 A.2d Exchange, N.J.Super. 278 Ins. notice. denied, 1029, 1033 140 N.J. (App.Div.), certif. addition, (1995). LMI assert that Chemical courts 658 A.2d Lower timely notice ad- give fac- Leaman’s failure relevant identified New have two versely ability trial, affected their to defend ments. After the LMI moved for relief against underlying claim. But judgment the dis- from the and a new trial under prejudice trict court held no 60(b)(3). had resulted: Federal Rule of Civil Procedure court Leaman, motion, district denied the operator Chemical as owner al- though it believed a question” “close Bridgeport facility, strictly of the had is liable presented. been After to, reviewing damages under CERCLA for the record arguments and the of, parties, resources, destruction we con- loss natural clude the district court did not as well as for abuse the reasonable costs of as- denying discretion in sessing resources, such LMI’s motion. to natural removal, remediation, and all costs of necessary

other response costs. Chemical IX. Conclusion liability Leaman’s damages for these foregoing reasons, For the we will affirm retroactive, joint, several, imposed except district court as to the allocation regardless of fault. Defendants do not of liability among applicable policies. We contend that a meritorious challenge exists will remand to the district court for a reallo- findings, made in the 1985 consent damages cation of among applicable policies order.... Nor do defendants assert there in accordance with the Jersey Supreme New is a meritorious defense to the EPA’s alle- Owens-Illinois, holding Court’s 650 A.2d gation presence that the of hazardous sub- at 993-95. Bridgeport facility stances at the and their migration surrounding ground- soils and McKEE, Judge, Circuit concurring in part, water constitute a release within the mean- dissenting part. 101(22) ing CERCLA, of section 9601(22). § Accordingly, U.S.C. I respectfully must part dissent from III of finds that defendants have not shown a majority opinion I agree because do not likelihood of in defending success majority’s interpretation of Morton against claims International, under CERCLA. Inc. v. General Accident Ins. Co. America 134 N.J. Defendants also ask this court 629 A.2d to find — (1993), denied, U.S.-, timely cert notice would have resulted S.Ct. 2764, 129 (1994). likelihood that L.Ed.2d 878 I believe carriers Mar- objective ton inquiry disputes would have mandates reached more favorable set- However, such tlement. as this. Because the district defendants fail to dem- court’s improperly instruction arrangement onstrate what better the in- focused on subjective intent, surance carriers Leaman’s I would have been would able to remand they if this matter to obtain had the district court for assumed Chemical Lea- retrial timely “exceptional man’s determine if upon defense notice. circum objectively stances” established Chemical appeal, Id. On the LMI have not advanced injury, so, Leaman’s intent to cause and if any arguments that cause us to doubt the whether the extent of resulting injury district court’s conclusion. was foreseeable. Finally, question the LMI whether Jersey Supreme New apply Court would I. The Evolution of The “Intent” part two in determining Morales test wheth- Analysis in “Occurrence- er an insurer has appreciable preju- suffered Based” Policies dice. But the LMI have not directed us to any Jersey precedent questions Although majority’s analysis has much vitality Accordingly, of Morales. their con- it, to commend I believe that a more thor- tention lacks merit. ough discussion of the evolution of New Jer- sey’s law in necessary fully this area is Discovery

VIII. Misconduct appreciation understand Morton. An The LMI assert that Chemical development of that law casts a different willfully suppressed identity light upon portions relevant Morton con- produce witnesses and failed certain docu- analysis. trol our develop- with argument in context Employers v. insureds’ Ins. Co. A. Atlantic juris- that some The court noted ing Pre law. School & Toddlers Tots in de- Center, a test employed dictions Day Inc.1 Care coverage under these termining insurance with, guid- begin and analysis must Our circumstances, ob- upon an and some relied Employers, Atlantic by a discussion ed pub- concluded that jective The court test. court language because used approach. objective mandated an policy lic I has which believe and later cite would logic we public policy and a matter incorrect As to take an my colleagues ap- rule warrants the better par- conclude that Employers, In Atlantic analytical turn. A objective approach. sub- sexually plication who had been children ents of possible it is jective suggests that test operators of a the owners abused sued cause some kind of a child and not purportedly molest the abuse day care center where unacceptable conclusion.... injury, company that insured place. The took declaratory judgment brought a center then policy to against public simply ... It is obligation defend to determine action a incurred as a indemnify person a for loss recovery any indemnify owners for his|7her] wrongdoing. own willful result injury personal might win in their plaintiffs Thus, policy, held at 304. court Id. upon negligence and intentional based suits “objective ap- required an logic, as well tort. general rule. exception proach” as an policy in- day center’s insurance The care “oc- damage resulting from an against sured Casualty Property & B. Prudential injury An “occurrence” included currence.” v. Karlinski2 Ins. Co. nor expected “neither damage that was Em- year and a of Atlantic half Within Employ- insured.” Atlantic intended decided Kar- Appellate ployers, the Division ers, policy also con- A.2d 303. The There, 13-year old son linski. insured’s penal for violations of tained exclusion (James) fight prearranged engaged had Divi- Appellate or ordinances. statutes (Mark) in 14r-year which Mark had old “cover- general rule that sion first noted the hip. The a broken court fallen suffered results age ... ‘for the unintended does exist if a homeowner’s to determine was asked act, damages for but not of an intentional de- obligated plaintiff insurer to policy to be of an intended assessed because ” poli- indemnify the fend defendant. omitted). (citation inflicted.’ “ injury ... ‘bodily cy excluded stated: by the in- expected or intended which is dispute if be no There seems to Karlinski, A.2d at 919. The sured.’” sexually Knighton Robert molested motion for granted the insurer’s motion court children, requisite level of then he had the that the son of the summary judgment noting guilty of molesta- to be sexual found “ fight and threw the ‘instigated the tion, of this criminal statutes based on the far as fight. As I first and started blow that this does appellants But insist State. concerned, conduct it is intentional am necessarily that he mean intended ” apply.’ Id. The mo- coverage doesn’t injuries incurred the chil- damages or ‘leg’ “a broken judge also concluded that tion actions_ Fur- of such dren as a result actually hip] broken suffered a [Mark ther, they that the existence such insist extraordinary consequence of the not an imputed automatically be intent cannot fight.” Id. policy so as the other insureds under reject coverage.... this We exclude noted, aptly “[t]he appeal the court On position. explore the requires again that we appeal unclearly but still charted frequently visited court then examined cases Id. The liability coverage intentional torts analyze the area of jurisdictions in order to other (App.Div. N.J.Super. (App.Div.), A.2d 918 2. 251 N.J.Super. 571 A.2d 300 1. 239 (1990). 1991). denied, A.2d 218 122 N.J. cert. produce upon which unintended results.” Id. The The language insurer relied this court went on to observe: refused to defend the against suit, asserting teacher’s that the claims were Jersey Our review of New authorities based on the insured’s intentional act and

satisfies us that ... it is difficult to ascer- complaint that sought damages for a weight authority tain a clear of on the “personal” “bodily” rather than injury. a subject liability coverage of for parent eventually The sued her carrier for of intentional acts. Dif- unintended results damages resulting from provide its refusal to variables, fering of combinations such as a indemnify defense and parties her. Both clause, language of the exclusion summary moved for judgment. relationship nature of the harm and its act, availability the intentional and the granted The trial court the insurer’s mo- injured party, appear relief to the to influ- ruling tion that complaint allege did not ence the extent to which our decisions have “bodily the kind of injury” that would be inquired into the nature of the intent. policy. covered under the A panel divided Appellate Id. at 921. court then stated: Division reversed. that, coverage hold when a exclusion [W]e Jersey Supreme The New Court noted bodily expressed injury is terms of ex- duty that the policy defend under the was insured, pected by or intended triggered potentially-eoverable “absent a

where the intentional act does not have an occurrence.” Id. at assessing In probability causing degree inherent whether the insured’s statements constituted inflicted, injury actually inquiry a factual potentially occurrence, a coverable the court into the actual intent of the actor to cause first held that “the accidental nature of an injury necessary. is by occurrence is analyzing determined alleged wrongdoer whether the intended expected injury.” to cause an Id. at 1264. v. C. Voorhees Preferred As to what injure,” constitutes an “intent to Mutual Ins. Co.3 the court general noted that the trend in the Voorhees, appeared require law inquiry parent into the was sued for state- subjective injury: actor’s intent to public ments cause meeting she had made questioned where she had the competency of prevalent We adhere to her child’s teacher. The teacher claimed she rule and hold that the accidental nature of had suffered emotional distress and mental occurrence is analyzing determined anguish parent’s aas result of the conduct. alleged wrongdoer whether the intended alleged parent The teacher that the had act- expected injury. not, to cause an If “willfully, deliberately, recklessly ed neg- injury “accidental,” resulting then the ligently,” making false accusations that if even the act that caused the damaged had professionally, teacher interpretation prevents intentional. That subjected Voorhees, public her to ridicule. intentionally those who cause harm from 607 A.2d at 1257. Medical evidence estab- unjustly benefitting from insurance cover- lished the emotional distress the teacher age injured providing while victims with “ complained of had resulted in ‘an undue greatest compensation chance con- physical complaints,’ amount of including wrong-doing. sistent with the need to deter ‘headaches, nausea, pains, stomach [and] objective- It also accords with an insured’s ” body pains.’ Id. at 1258. ly-reasonable expectation coverage for unintentionally-caused harm. parent had a policy homeowner’s provided coverage liability arising operative if question Even is the “bodily injury” injure act, caused an “occurrence.” than to rather policy question defined an “occurrence” as an of what constitutes an “intent to “accident,” bodily injure” and excluded key remains. The issue is whether injury intentionally the insured. the court must find intent to (1992). 3. 128 N.J. A.2d trig- thus potentially coverable occurrence presume an intent it can

injure, whether duty See Id. objective gering circumstances. the insurer’s to defend. injure from plaintiffs inquiry parallels that affirmed regard, Accordingly, our the court that for policy summary judgment. exclusions interpreting in award of taken pre- Those exclusions acts. intentional injuries expected or for coverage clude Industries, Inc. v. American D. SL Case law inter- by the insured. intended Co.4 Motorists Ins. exclusions, in addition policy preting those Industries, employee an had filed In SL “oc- interpreting the definition of that to age against employer alleging dis- suit his currence,” is thus relevant. as a re- and common law fraud crimination appears require to an general trend The position. employer eliminating his sult of the subjective intent to the actor’s inquiry into sought recovery the al- employee for The the actions injury. Even when cause bodily injury that resulted. The em- leged reckless, foolhardy question seem ployer policy insured under a which was inquiry an into the have mandated courts indemnify agreed to defend and the insurer injury. subjective intent to cause actor’s resulting from a employer for all sums Id. at bodily injury by an “occurrence.” however, court, recognized that: was defined as an “‘accident “Occurrence” repre- particularly the actions are When bodily injury ... neither ... which results hensible, injure pre- can be the intent to standpoint of expected nor intended from the inquiry an into from the act without sumed Industries, 607 A.2d at the insured.’” SL subjective injure. intent the actor’s 1269-70. objective approach on the That focuses employer the suit and then settled injury that an will result from likelihood declaratory judgment brought action wrong- than on the behavior rather actor’s right to against its insurer to establish its subjective state of mind. doer’s granted The Law Division indemnification. court 1265. The Voorhees reasoned Id. at summary judgment, Ap- insurer but the actions there were a far that the insured’s reversed, holding that al- pellate Division type egregious cry from the behavior not covered under though intended harm was justified objective approach that had coverage policy, policy provide did that Employers. The court held

Atlantic conduct. the unforeseen results of intentional “[ajbsent exceptional circumstances that ob- then remanded the case to the The court in- jectively the insured’s intent to establish Division to determine whether the em- Law subjective jure,” intent to in- the insured’s intend- ployee’s distress had been emotional govern. jure Id. The Voorhees must it was foreseeable. ed or whether “exceptional circum- court’s reference Supreme appeal, Court On clearly recognize intended to stances” general had to determine if the intent objective specific test in the the need for an injure is inherent in a claim of fraud Em- circumstances it confronted Atlantic necessarily incorporates the intent to cause ployers, and it foreshadowed the test (emotional distress), injury specific proclaim in Morton. would subjective proof of a intent to cause whether Although court in Voorhees felt that injury required. at 1277- specific subjective in- little evidence of a there was analysis began court 1279. The teacher, injure the court never tent to differing required examining intent question this because the had address approaches taken earlier cases. alleged had plaintiff had also the insured ap- allegation negli- Our courts have taken different negligently. acted subjec- question specifically of how proaches of a gence presupposed the absence injure insured must have intended the result- and stated a claim for a tive intent (1992). policies Jersey, in New and I will therefore take A.2d SL Indus- 4. 128 N.J. explains liberty quoting length opinion. the evolution of tries from that summarizes the law of under “occurrence-based” ” test,5 “Lyons ing injury. Employing expect did not intend or to cause the re- subjective harm, some courts have held that a sulting denying coverage will not injure inquiry pre- intent to ends the ease, deter the harmful conduct. In that coverage. approach, cludes if Under policy justification there is no denying injure is a there then the victim possibility of additional com- any injury that results from the action will pensation. As the Karlinski noted, “intentional,” if be deemed even the precluding coverage if ‘even the actual greater is different from or than that in- harm far consequences exceed[s] the which tended. ... might reasonably expected by the in- hand, On the other some courts have injured sured ... diminishes the party’s preclude coverage indicated that to if the possibility realistic recovery of more than injury actually that occurred was not a impacts upon the insured tortfeasor.’ probable wrongful outcome of the act is hand, On the approach other allowing ]_ Karlinski [discussing unfair Howev- coverage whenever the adverse conse- er, in those in circumstances which the quences intended the tortfeasor did not facts indicate that the in acts which the precisely match the consequences actual unlikely engaged insured were in result wrongful their actions undermines the ba- degree type injury the that in fact policy sic against indemnifying wrong- occurred, inquiry subjective into the doers. resulting injury intent to cause the is in Karlinski test We believe the presents order. the most approach_ reasonable As- approach A likely third is even more suming wrongdoer subjectively the intends In Hanover Insurance coverage. lead to expects to cause some sort injury, Group v. Cameron [122 51, N.J.Super. 298 that intent will generally preclude cover- (Ch.Div.1973)], rejected A.2d 715 the court age. If there is that evidence the extent of company’s argument the insurance that to injuries improbable, however, the was then preclude coverage only the intent to harm inquire the court must as to whether the need be demonstrated. The court indicat- subjectively expected intended or only ed that “intent” would be found when injury. Lacking intent, to cause that that consequences the actual that resulted from injury was ‘accidental’ intended, the act were or when the actor provided. will be substantially they certain would result. approach (citations omitted). To determine which adopt, Id. at 1277-78 general principles underly- we refer to the Accordingly, the court affirmed Appel- ing interpretation of insurance-policy judgment late remanding Division’s the case provisions involving intentional conduct. to the Law Division to determine whether Lyons precludes coverage test employee’s emotional distress had a been in in some cases which an insured could probable general outcome of the insured’s reasonably expect coverage. in- When the not, injure, intent to if whether the in- significantly caused injury exceeds the injure sured had the intent to expected intended or improbable and is an Id. See employee. consequence wrongful of the act that it, then it is hard to characterize International, E. Morton Inc. v. truly inju- as ‘intentional.’ The General Accident Ins. Co.6 ry, insured, standpoint from the of the Morton, ‘accidental,’ Finally, and could thus be in deemed an Su- Moreover, occurrence. if preme the tortfeasor apply Court had to the law of “occur- Lyons significance 5. The test portions opinion derives its name from v. Hart- of certain of the 239, Group, N.J.Super. Morton, Ins. 310 A.2d disagree meaning but as to the ford (App.Div.1973). 488-89 language. Since it is difficult to eliminate all repetition explaining disagree, why I I will be (1993), 6. 134 N.J. 629 A.2d 831 cert. de discussing somewhat redundant in Morton. nied, -U.S.-, 114 S.Ct. 129 L.Ed.2d (1994). majority agree and I on the injury had been in which the very manner policies rence-based” erroneously concluded caused and had injuries the environ- realm different coverage for the provide policy did insured, There, Interna- Morton ment. Id. at a act.” unexpected result of deliberate tional, CGL insur- and excess primary sued omitted). (citation costs incurred seeking reimbursement ers Department defending a suit filed upon Appellate Division also relied “ (DEP), as well Protection of Environmental Employers ‘[t]he conclude Atlantic and remediation cleanup indemnity for act is the basis character intentional proceed- the DEP resulting from expenses in- that the insured either for the inference Morton, Morton’s at 834-835. A.2d ing. manifestly indifferent to or was tended ” Corporation, including Ventrón omitted). predecessors, (citation injury.’ prospect of as Ber- body of water known polluted had conclusion, Appellate reaching this “[f]or an extent ry’s to such (without Creek of either Voo- the benefit Division feet, concen- thousand Industries) stretch of several noted that or SL rhees “ Berry’s mercury [was] Creek tration over ‘substantial environmental in the water sediments highest found fresh knowledge long period’” together with the claims were Morton’s Id. at 834. world.” predecessors that ‘“the sub- by Morton’s prior as other as well from Ventrón derived toxic and being discharged ... was stance ” DEP The sued land. See Id. owners of the a conclu- unacceptable harmful’ rendered compel owners to prior other Ventrón and expected. Id. that no harm had been sion remediating pollution of pay to for them (citation omitted). surrounding area. Berry’s and the Creek Jersey Supreme appeal to the New On damage had been caused The environmental Court, Di- argued Appellate that the Morton mercury-processing discharges from a by im- Employers reliance on vision’s Atlantic forty years the various operated for plant pollutants equated discharge of properly Jersey Department See New defendants. of that could be molestation as acts with child Corp., Protection v. Ventron Environmental intentionally injurious as a matter of deemed (1983). 468 A.2d 94 N.J. argued Appel- that “the law. Morton further liability, objective underlying improperly to establish invoked an In the suit late Division determining affirmed the harm had Supreme Court for whether standard judgment holding the the ‘occur- Appellate expected Division’s intended or under been severally long- jointly ignoring hable. The policies, defendants rence’-based mercury discharge principle exists for standing court reasoned that the that activity, abnormally dangerous of intentional acts.” constituted the unintended results liability against all defen- imposed strict Id. Id., at 160. dants. 468 A.2d See analysis by acknowl- began court The its unique that sur- edging the circumstances declaratory a then commenced Morton coverage for envi- issues of insurance round right to judgment action to determine damage. ronmental the various insurers from indemnification in to applying holding our Voorhees provided primary and excess cover- that had seeking coverage property-dam- claims mercury-processing plant was age while un- age environmental primary issue that operation. policies, we ac- CGL pol- der occurrence-based was whether court had to determine adherence knowledge impracticality under from an “occurrence” lution resulted look to the general rule that “we will qualify as an applicable policies. To in- subjective intent to determine insured’s environmental “occurrence” may injure.” Although insureds tent “expected nor intended must not have been pol- known pollutants that Mor- concede standpoint of the insured.” from the —even intentionally dis- ton, lutants —had been granted trial court 629 A.2d at 836. The virtually cer- charged, are summary judgment. those insureds the insurer’s motion harm was that resultant holding that tain to insist reversed Appellate Division unexpected. Absent improperly on unintended had “focused the trial court “smoking testimony disgrun- gun” the court had stated that it adopting from subjective employee, proof majority tled intent to requires that proof view of a trans- rarely cause environmental harm will be gressor’s subjective intent. Voorhees at 607 available in [environmental insurance] A.2d at 1255. coverage litigation. court, however, had also noted that that an We noted Voorhees alternative particularly “[w]hen actions are repre- subjective proof injure intent to exist- hensible, injure the intent pre- can be ed those cases which the insured’s sumed from the act without an inquiry into particularly reprehensible, “actions are [so subjective injure.” actor’s intent to Id. injure presumed that] the intent to can be at 1265. In the context of Employ- Atlantic inquiry from the act without an into the ers, reprehensible actions of child moles- “ subjective injure.” actor’s intent We tation did indeed public ‘[a]s matter of Employers cited Atlantic ... as illustra- policy logic application ] warrant! ” inherently inju- tive of conduct that was so objective Then, approach.’ Id. rious as to warrant the conclusion that language separates used the me injure presumed.... intent could be my colleagues. The court added: unpersuaded

We are that environmental- exceptional “[a]bsent circumstances that ob- pollution litigation generally should be in- jectively establish the insured’s intent to in- cases, category typified cluded jure, we will look to the insured’s Employers, reprehen- Atlantic in which injure.” to determine intent justifies presumption sible conduct added). (emphasis Id., injury was intended. 629 A.2d at 879 (citations omitted) added). (emphasis Applied II. Morton Dispute Instant relying upon of Instead such an unwar- presumption thereby Morton, ranted extending In the court was careful to distin- “public policy logic” guish the of policy Atlantic Em- the pollution considerations ployers, the court called for an individualized cases from that those dictated an inquiry upon objective based approach the facts of each case. in all cases of child moles- unpersuaded tation. ‘We are that environ- responsible held

[I]nsureds for remediation mental-pollution litigation generally should pollution vary significant- of environmental category cases, be included in typified that of ly in degree culpability their of for the Employers, reprehensi- Atlantic in which by pollutant discharges. harm caused A justifies ble conduct a presumption inju- that general environmental-pollution rule in Morton, ry was intended.” 629 A.2d at 879. coverage litigation permit that would in- mean, This majority sug- does not as the injure presumed tent to to simply on gests, alleged polluter’s subjective that the knowing discharge pollu- the basis of a of only intent controlled. It means that the act unjustified. tants would be polluting of reprehensible “pub- is not so that Instead, we hold that in environmental- policy logic” require lic presumption coverage litigation case-by-case analysis resulting the harm is intended aas whether, required is in order to determine Rather, matter of law. the circumstances evidence, in the context all the available surrounding polluting act the must be “exceptional circumstances that ob- [exist] if, examined in each case to determine in that jectively establish the insured’s intent situation, particular they objectively establish injure.” environment, an thereby intent to harm the (citation omitted) (emphasis Id. at 879-80 negating an occurrence. added). “exceptional The term circum- The court then listed those circumstances stances” had been used Voorhees. As objectively that would establish this above, there, intent. that, noted the court stated circumstances, exceptional subjec- absent Those circumstances include the duration tive discharges, intent of the insured controlled whether discharges whether the intentionally, negligently, there was “occurrence” under an occur- occurred or inno- Voorhees, policy. cently, quality rence-based insurance of the insured’s knowl- of harm.” How- possibility or likelihood propensities concerning the harmful edge ever, knowledge is not used subjective regulatory au- whether pollutants, expected if definitively determine discourage pre- attempted thorities Rather, damage. conduct, or intended environmental and the exis- insured’s vent the knowledge one subjective is but insured’s concerning knowledge subjective tence of that de- “exceptional circumstances” those of harm. likelihood possibility place. taken if has termine an “occurrence” agree when Accordingly, I cannot Id. at 880. inquiry of that start and finish It is not the state, believe the “[w]e my colleagues suggests. majority’s reasoning as the ‘excep- designed the Jersey Supreme Court excep- only exception apply Morton court concluded tional circumstances’ as a Majority Op. at 989. matter tional established circumstances egregious conduct.” egre- is had no occurrence as if conduct of law that there been only can determine One expected to have “exceptional predecessors circum- had examining Morton’s gious Indeed, objective na- they caused. it occurred. in which stances” may well is evident because the this conclusion circumstances ture of of those examination deciding conduct is was not polluter’s clearly stated that particular that a establish predecessors “intended” all. whether Morton’s egregious at was (i.e.“subjectively”) damage: reflected what majority’s error determining that such Without require It did not did. court in Morton intended, inescapable the con- we pollute on find proof compa- damage qualitatively clusion that predecessors. or its part of the insured in the to that found to Ventrón rable exist record and deter- Rather, it examined anticipated been litigation must have objec- before that the circumstances mined of their predecessors on the basis Morton’s to harm. “In an intent tively established knowledge and avoidance of prolonged of this in the context determining whether by regulatory complaints compliance concluded, as properly trial court record discharging company was that the officials law, predecessors Morton’s matter of emissions, mercury including unacceptable inju- environmental expected intended had Berry’s Based into Creek. on compounds, “excep- [i.e. factors ry, on we focus those conclusion, ... a matter of law the that previously that we circumstances”] tional Berry’s and the property damage to Creek Morton, significant.” to be identified have by surrounding area was not then noted the The court A.2d at 882. meaning of the within the “occurrence” na- discharge, the intentional of the duration policies. in CGL term the various knowl- discharge, the insured’s ture of harm, added). likely edge (emphasis environmental of the Id. at conclusion, “stonewalling.” In history of adopting prior (particularly the law of these its examination court noted that Karlinski) insur- to holding environmental quali- “damage that confirmed circumstances coverage, the court in Morton ance noted ... found to tatively comparable to that exist polluter’s subjective of the in- that evidence pre- anticipated Morton’s have been must merely become because tent not relevant did prolonged ... of on the basis decessors greater than an- of was extent compliance of knowledge avoidance of and ticipated. regulatory complaints by officials.” question whether envi- Turning to the at expect- injury was intended or ronmental ed, although mag- pro- first observe that with the court’s we This consistent Berry’s damage Creek and polluting, fact of nitude that mere nouncement any surrounding may exceed in- areas present Mor- egregious extent to the even to Mor- itself, expectation ton, attributable reprehensible such tention not was predecessors, we do not consider that pre- ton’s required a conclusive that it conduct severity Moreover, relating harm harm. differences sumption intent damage give to a rise “the of environmental include “exceptional circumstances” of harm that in- finding “improbability” knowledge concerning subjective existence subjective need for evidence of jury vokes the define when no reasonable could find predecessors the insured did not expect intent. Whether Morton’s intend or property damage cause objective because anticipated discharges that of untreated prolonged, circumstances —evidence of in- plant Berry’s into effluent on the site and tentional, flagrant discharges of known forty years for more than would Creek pollutants in the regulatory disap- face of severity cause environmental harm of the proval that the insured must hardly described demonstrates —establish property damage. have intended The “improbable.” the extent of the presence “exceptional circumstances” holding SL Industries was based on requires a court to judgment enter as a Appellate ruling Division’s in Karlin- absence, course, matter law. Their arising that in a action from ski prevent jury does not a from finding an fight young teenagers between two “expected” or “intended” to cause hip, which one sustained a broken factual property damage. presented issue of intent was Majority Op. However, See at n.7. Morton improbability because of the inherent quantify did not factors identified as hip in a skirmish would result fracture. objectively establishing pollute. “improbability” No such inherent can be Rather, “ease-by-case analysis” was nec- ascribed to the environmental at- essary for the fact finder to make an individ- predecessors. tributable to Morton’s ualized determination of whether the nature (citations omitted). Id. at 882 particular of those in a justified factors ease majority notes that the district court denying coverage in lieu of the limitations held that Thus, contained in the insurance contract. I agree that the absence of the factors detailed Chemical Leaman’s actions were not so majority opinion footnote 7 of the “doe[ ] reprehensible justify presumption as to prevent jury finding an insured property damage of an intent to cause ‘expected’ or ‘intended’ to cause “exceptional under the circumstances” ex- damage,” but not for the reason stated ception. It concluded that Chemical Lea- Rather, majority. “subjec- it is because “throwing man was not toxic waste out into knowledge concerning tive possibility pre- meadow-lands” as Morton and its “exceptional likelihood of harm” is one of the done; rather, decessors had it had “de- that a circumstances” must also consid- signed facility prevent and built the Accordingly, er. if an insured knows [harm the environment].” likely actions most will harm the environ- added). Majority Op. at (emphasis 985-86. ment, one, brief, just discharge of a known “exceptional test, circumstances” howev- pollutant by complied one who had otherwise er, “exception,” is not an but the rule that is regulatory with preclude authorities could applied in coverage to be environmental coverage under an occurrence-based insur- addition, although cases. In Chemical Lea- policy. ance reducing Berry man was not Creek to one of majority argues The that Morton cannot great the world’s environmental disasters as objective creating be read as an test for Morton, was the ease in there is nevertheless intent because an insured who “intention- testimony jury from a which reasonable al[ly] discharges pollutant a generally known “exceptional could conclude that circum- harm,’ intends ‘some sort of however de min- objectively stances” establish Chemical Lea- imis, actually the harm that results is man’s intent to harm the environment. usually probable discharge.” a result of the Morton, majority (the holds that Thus, after a majority suggests) objective an court can determine that an insured is enti- general preclud- test “would result a rule tled to indemnification under an occurrence- ing knowing [all] based on the dis- policy based as a matter of law charge absent “ex- pollutant.” Majority Op. of a at 987. ceptional My colleagues is, however, circumstances.” precisely why That it is neces- suggest “exceptional sary “exceptional circumstances” to use circumstances” to merely prove objectively pollution intent to harm There, Morton, re- the A.2d at 882. resulting inquiry establishes If the cases. of Health Department of the peated demands objectively “intend” did the insured discharges or install halt the environment, into the that the owner inquiry the the harm regularly facilities were adequate makes actual treatment

foreseeability of the Here, nature of intentional the ignored. perfect sense. Lea- discharge is also evident. Chemical the further concern majority expresses a intentionally designed its waste treat- man anything oth- require reading Morton pipe would overflow system so that the ment be akin to a subjective intent “would er than Furthermore, swamp. discharge into [,and] negligent acts negligence [i]f standard subjective framework that even under a covered fall within the definition did evidence, given to review was occurrence, point be no there would then releases concluded that Chemical Leaman’s liability comprehensive general purchasing sup- That conclusion intentional. were (citing Pitt Majority Op. at 985 insurance.” Leaman and Chemical by the record ported F.Supp. Ins. v. Co. Allianz ston successfully that the dis- argue cannot now (D.N.J.1995)). guided properly A In- anything intentional. charges were but circumstances,” “exceptional inquiry into deed, illustrate Leamaris denials Chemical however, negligence equate a does not pol- in Morton that expressed the concern of environmen assigns It the cost standard. discharge, would but may to the luter admit upon negligence, not based tal remediation intentionally polluting the en- never admit to culpability for the “degree of upon the but only be That concern could satis- vironment. discharges.” Mor by pollutant harm caused objective by the test that factorily addressed ton, A.2d at 879. today rejects. majority Exceptional Circumstances III. Morton, Here, nature the intentional as in Bridgeport Site. of The discharge Chemical is confirmed of the lagoon pond time the Throughout the of the State’s evasion Leamaris continued dis- repeated system use there were was in discharge. The stop the unac- demands pipe through overflow charges of waste discharge from condition of the ceptable fact, very adjacent swamp. In brought to was pipe swamp into the overflow pipe was to allow purpose of overflow govern- attention Chemical Leaman’s Inspector An observed discharges. these 1961. Al- inspector September mental during Sep- pond last discharge from the installed three though 12,1961 observed visit and thereafter tember attempt to alleviate this lagoons in an more discharges on about half of his visits similar staple situation, pipe remained a overflow In Bridgeport site. November 1968, Chemical Bridgeport site and in inspectors from the New Jer- water into the discharging wastes Leaman was still again observed sey Department of Health lagoon. pipe in discharge from the overflow Although it characterized lagoon. last regularly informed Chemical officials State “trickle”, employed sporadic engineer aas flowing the effluent Leaman that (Elston), and at least unacceptable pipe constituted overflow over- employee that the other admitted one swamp. discharge FGW into discharge swamp into pipe flow did discharge Leaman that told Chemical lagoon pond and throughout time the and that unacceptable condition was an Moreover, there was system was use. in stopped within resulting pollution should 1974, by path of this “trick- that evidence 1968, in the NJDOH year. Subsequently, could “be impoundment last from the le” “the waste ema- Leaman that told Chemical looking wide lane easily by for a seen 75-foot pollutional lagoon highly is nating from the swamp. in trees” of dead [should] be immediate measures [that] to suffi- discharge or this dis- taken eliminate that the court concluded The Morton discharge” ciently prior to treat the waste there was intentional charge pollutants of 1969, was ordered Chemical unacceptable. polluters knew it was once the imagine to find an alternative method of waste treat- what other reason Chemical Leaman ment. could have attributed to the state’s if concern not the of impact discharge upon argues Chemical Leaman that it was not environment. It is clear from Chemical Lea- propensities pol- aware of the harmful of its argument man’s own regard in this that it discharging pure lutants because it was not attempted never to ascertain the reason for chemicals, but rather “trace amounts” of the State’s concern. highly chemicals in these diluted rinsewater. evidence, however, The uncontroverted clear- Nevertheless, assuming arguendo that 1968, ly showed that at least 1961 Chemical Leaman could not ascertain discharge Leaman was alerted that the into system that damaging was the environ- swamp “highly pollutional” was even ment, dispute is there no that Chemical Lea- Furthermore, its diluted form. as noted man learned that discharges to the above, discharge may however diluted swamp likely were to cause harm as of No- been, sufficiently potent sculpt have it was 1968, vember of expressly when it was told path the 75-foot wide of dead trees into the that emanating “the waste lagoon from the is landscape environmental it touched. highly pollutional and [that] immediate mea- certainly It is true that Chemical Leaman sures [should] be taken to eliminate this dis- sympathetic polluters is more than charge sufficiently or to treat the prior waste Morton, engaged pattern who in a deliberate to discharge.” telling Harry Even more “stonewalling” promises characterized Elston’s concession at trial that both at the Morton, compliance that went unfulfilled. inspections time of 1962, Few’s in 1961 and notes, majority 629 A.2d at 882. As the point and at the when NJDOH issued its apparently thought Chemical Leaman 1969, order he knew that Chemical Lea- system its natural filtration would reduce the discharge swamp man’s causing into the was fact, danger pollution. designed it was some swamp. Finally, just Nevertheless, to do that. the record should be noted Chemical Leaman never clearly finding here could support required permits obtained the for its waste “stonewalling” regula- Chemical Leaman was Thus, disposal regulatory cite. it took au- tory pattern authorities. There is a unful- longer thorities “highly even to discover the promises compliance filled agency to state pollutional” discharge. Once the cite was

requests polluting discharge. to abate the discovered, compliance Chemical Leaman’s Even after caught officials Chemical Lea- regulatory with agencies was less than exem- discharging man swamp into the in 1968 and plary. way ordered it to find a better to treat 1969, wastes in Chemical Leaman did not discharged approxi- improve system the waste treatment until mately gallons 100 million of contaminated the summer of when it into a entered ponds waste water into its unlined and la- disposal contract with Du Pont. In the inter- goons years for the fifteen Bridge- that the im, 40 to gallons 50 million of contaminated port operation. site was in The bottom of processed waste water using had been lagoons only those was two and a half feet system. same treatment groundwater, above the and the insurers’ Thus, when the State first noti- soil, expert groundwater, testified that fied Chemical Leaman discharge that the swamp probable contamination was the swamp unacceptable, was until discharge. testimony result of this That began when Chemical Leaman off-site dis- expert not refuted Chemical Leaman’s posal plant, Du Pont Chemical Lea- though even argues Chemical Leaman on responded regulatory man agencies appeal system that their unlined treatment promises compliance that went unfulfilled. was the state of the art. Chemical Leaman was informed that the dis-

charge say I swamp cannot that such a course of unacceptable. was Al- conduct though why negate the state did not does articulate the not the existence of an occur- discharge improper, it is Jersey difficult to rence under New law. Jersey Supreme result the New This is the IV. Conclusion Yet, sought promote Morton. to Court the issue of have addressed Courts today give polluters adopt will rule we the negate insur intent that would kind of discharge pollu- allow them to comfort and an occurrence-based under ance safety because of the obvious in relative tants policy guided certain have been policy subjective establishing their impraeticality of attempted to have Courts considerations. the environment. Since intent to harm that victims be com possibility maximize recognized the Jersey Supreme Court New minimizing injuries while for their pensated subjective in en- approach impraeticality of a wrongdoer. Voo of the See indemnification it coverage disputes, I find diffi- vironmental rhees, They have also been A.2d at 1264. this result.8 intended cult to believe in this area deterred that the law concerned majority concludes that the Industries, 607 A.2d at

wrongdoers. SL See subjective a stan- Supreme established Court Looking “exceptional circum to 1278. disputes insurance dard in environmental objectively determine intent stances” so im- proclaiming such a rule to be while just that. To the does harm the environment result, unworkable. As practical as to be suggest that circumstances extent that those impossible holding places insurers in the our did not intend environmental the insured Jersey Supreme Court situation harm, regulatory au cooperated with and pronounce- thoughtful sought to avoid it, likely be avoid the insured will thorities to objective “exceptional circum- of an ment of remediation under liability for the cost disputes indemnified over test stances” it dis policy even where up pollution. an occurrence cleaning the extent charged pollutant. a known To STAPLETON, BECKER, Present protract circumstances establish a that those SCIRICA, COWEN, MANSMANN, however, discharge, ed deliberate and/or LEWIS, NYGAARD, ALITO, ROTH, environment, knowledge of disregard for the SAROKIN, Judges. McKEE and Circuit “stonewalling” pollutant, properties of a subjec agencies FOR REHEARING regulatory and insured’s SUR PETITION harm; knowledge possibility of tive of the rehearing by appel- petition filed logic”7 require that “public policy and Jackson, Anthony an Un- Gildart lants Robin insurers, insured, pay the cost of and not its London, in the Lloyds, et al. derwriter cleanup. That allocation of environmental having case been submitted above-entitled eyes persons closing their deters cost participated in the decision of judges who impact activities. of their the environmental available and to all the other this Court judges regular circuit in active circuit of the Furthermore, with the this is consistent service, judge no who concurred enforcing long-standing doctrine of rehearing, having asked for decision in a manner that is consistent contracts majority judges circuit of the circuit of the expectations parties. the reasonable rehear- regular having voted for service reasonably expect to es- An insured cannot rehearing by panel ing, petition for cape “occurrence-based” limits on its banc, Judge is denied. Court “exceptional right to indemnification where grant rehearing. would McKee culpability for circumstances” establish its Similarly, an should be pollution. insurer reasonably expect that it will not be

able polluter such a for the

required to reimburse callously damage so caused.

environmental Thus, antago- although employee’s gator. Employers, 7. Atlantic 571 A.2d at 304. See provide may or her to nism motivate him Indeed, approach difficulty we with the employer’s necessary to establish the evidence greater expressed in adopt even than was pollute, establish bias and it would also intent testimony "smoking gun Morton because thereby testimony mini- motive to fabricate disgruntled employee” often needed to from a testimony’s probative value. mize surely would be sub- establish by any ject impeachment liti- to effective decent

Case Details

Case Name: Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Surety Co.

Court Name: Court of Appeals for the Third Circuit

Date Published: Jun 20, 1996

Citation: 89 F.3d 976

Docket Number: 93-5777, 93-5794

Court Abbreviation: 3rd Cir.