604 N.Y.S.2d 633 | N.Y. App. Div. | 1993
Lead Opinion
OPINION OF THE COURT
On July 1, 1989, a customer at the Petr-All gasoline station in Onondaga County drove his vehicle away from a gas pump with the pump’s nozzle still in the vehicle’s gas tank, resulting in damage to the pump. Petr-All called plaintiff to repair the
Plaintiff, pursuant to its comprehensive general liability insurance policy (hereinafter the policy) with defendant in effect from July 31, 1988 to July 31, 1989, requested defendant to defend and indemnify it with respect to the three actions. Defendant reserved the right to disclaim coverage for the three actions on the grounds that the alleged property damage was discovered after the policy period expired and the policy excluded coverage.
Thereafter plaintiff brought these three declaratory judgment actions to declare its rights to a defense and indemnification under the policy. Plaintiff moved for summary judgment and defendant cross-moved for summary judgment declaring that it was under no duty to defend or indemnify plaintiff in the three underlying actions. In a written decision, Supreme Court found that the policy was not in effect at the time of the discovery of the gas fumes by the adjoining property owners and, relying on Greenlee v Sherman (142 AD2d 472) and Miccio v National Sur. Corp. (170 AD2d 937), denied plaintiff’s motions and granted defendant’s cross motions for summary judgment. Orders and judgments were entered from which plaintiff appeals. The three appeals were consolidated by order of this Court.
The relevant part of the policy pertaining to liability coverage provides that defendant "will pay those sums that [plaintiff] becomes legally obligated to pay as damages because of * * * 'property damage’ * * * This Insurance applies only to * * * 'property damage’ which occurs during the policy period. The * * * 'property damage’ must be caused by an 'occurrence’.” "Property damage” is defined as "[pjhysical injury to tangible property, including all resulting loss of use of that property; or * * * [l]oss of use of tangible property that is not physically injured”. "Occurrence” is defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions”.
With respect to property damage caused by contamination from hazardous materials, our research reveals no controlling authority as to whether the date of discovery or the date of injury-in-fact triggers insurance coverage. In resolving this issue we do not find persuasive the cases that Supreme Court relied upon because intervening causation, not shown to exist here, was a predominant factor in those cases (see, Miccio v National Sur. Corp., 170 AD2d 937, supra; Greenlee v Sherman, 142 AD2d 472, supra). Rather, we find persuasive the fact that the instant policy provides that property damage can be caused by an "occurrence”, which the policy defines as a "continuous or repeated exposure to substantially the same general harmful conditions” (cf., Matychak v Security Mut. Ins. Co., 181 AD2d 957, 958, lv denied 80 NY2d 758), that generally an insurance contract "must be construed in its entirety with reference to the subject matter and the nature of the risk involved” (69 NY Jur 2d, Insurance, § 699, at 88),
Although the complaints in the underlying actions by the adjoining property owners do not allege that the property damage occurred during the policy period (see, Borg-Warner Corp. v Insurance Co., 174 AD2d 24, 36, lv denied 80 NY2d 753), plaintiff is entitled to a defense as they do " ' "permit proof’ of the facts establishing coverage * * * [and] do not exclude the possibility that injury-in-fact occurred during the policy period’ ” (Continental Cas. Co. v Rapid-Am. Corp., 177 AD2d 61, 65, affd 80 NY2d 640, supra, quoting Abex Corp. v Maryland Cas. Co., 790 F2d 119, 128-129). The duty of an insurer to defend is exceedingly broad, "far broader than any ultimate liability to indemnify” (supra, at 65). Thus, we conclude that defendant is obligated to defend plaintiff in the two underlying actions brought by the adjacent property owners.
Defendant’s contention that the governmental directive limitation is unambiguous, and therefore the absolute pollution exclusion is applicable in the underlying direct action commenced by Petr-All against plaintiff, has merit.
. Maryland Casualty Company and W. R. Grace Company have filed appellate briefs as amici curiae.
. Defendant concedes that at this point it cannot be determined from the underlying complaints whether the governmental directive limitation applies to the two underlying actions by the adjacent property owners.
Concurrence in Part
(dissenting in part and concurring in part). I disagree with the majority’s conclusion that the "governmental directive” limitation of plaintiff’s "products-completed operations hazard” coverage renders the absolute pollution exclusion applicable to the underlying direct action against plaintiff by Petr-All Petroleum Consulting Corporation. It is undisputed that under the circumstances present here, the pollution exclusion will not apply if "[a]ny loss, cost or expense incurred as a result of any 'clean-up’ of 'pollutants’ is not the result of a governmental directive or request” (emphasis supplied). Although Petr-All’s complaint alleges that the Department of Environmental Conservation (hereinafter DEC) served a notice and claim that Petr-All "was obligated under the Navigation Law * * * and otherwise to investigate and remediate discharges from the Site or be subject to fines and penalties”, it does not necessarily follow that Petr-All was caused to expend sums relating to the investigation, remediation, sampling and control of the discharge solely as "the result of’ the governmental directive or request. Quite to the contrary, under Navigation Law § 181 (1) Petr-All was strictly liable for all cleanup and removal costs and all direct and indirect damages resulting from the petroleum discharge (see, Matter of White v Regan, 171 AD2d 197, 200, lv denied 79 NY2d 754) regardless of any action on the part of DEC. Consistent therewith, the complaint repeatedly alleges that plaintiff incurred the subject expenses as the result of the discharge and its resulting liability under the Navigation Law. I agree with plaintiff that, as applied to liability under the Navigation Law for the discharge of petroleum, the policy’s governmental directive limitation is meaningless. Accordingly, I would reverse Supreme Court’s grant of summary judgment in favor of defendant in all three of the actions and not just
As a final matter, in its motion for summary judgment in each of the actions, plaintiff sought a declaration (1) that it was entitled to a defense in the underlying action, (2) that it was entitled to be defended by counsel of its own choosing, and (3) that it was entitled to indemnification. Because of its determination to dismiss the complaints, Supreme Court had no occasion to consider plaintiff’s individual prayers for relief. In view of the fact that the current record offers little assistance in this regard, I would remit the matter to Supreme Court for determination of plaintiff’s motions for summary judgment.
Cardona, Mahoney and Casey, JJ., concur with Mikoll, J. P.; Mercure, J., dissents in part and concurs in part in a separate opinion.
Ordered that the orders and judgments in the two actions relating to the two underlying actions commenced by the adjoining property owners are reversed, on the law, without costs, defendant’s cross motions for summary judgment are denied, plaintiff’s motions for summary judgment are granted, and it is declared that defendant is obligated to defend plaintiff in said underlying actions.
Ordered that the order and judgment in the action relating to the underlying direct action by Petr-All Petroleum Consulting Corporation is affirmed, without costs.
