Countryside Oil Co. v. Travelers Ins. Co.

• Decision Date: 21 September 1995
• Docket Number: Civ. No. 95-653.
• Citation: 928 F. Supp. 474
• Parties: COUNTRYSIDE OIL COMPANY, INC., Plaintiff v. TRAVELERS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

928 F. Supp. 474

COUNTRYSIDE OIL COMPANY, INC., Plaintiff v. TRAVELERS INSURANCE COMPANY, Defendant.

Civ. No. 95-653.

United States District Court, D. New Jersey.

September 21, 1995.

COPYRIGHT MATERIAL OMITTED

Christopher W. Hliboki, Garman & Amdur, Rutherford, NJ, for plaintiff.

James Michael Altieri, Shanley & Fisher, Morristown, NJ, for defendant.

OPINION

CHESLER, United States Magistrate Judge.

I. INTRODUCTION

This matter comes before the Court on the motion of defendant, Travelers Insurance Company, for summary judgment. The parties consented to have this action heard by the undersigned, see 28 U.S.C. § 636(c), and all proceedings regarding this matter have been referred to the undersigned for disposition. Oral argument on this motion was heard on June 12, 1995. For the reasons set forth herein, the Court will grant defendant's motion for summary judgment, and will dismiss the above-captioned action in its entirety.

II. BACKGROUND

The gravamen of this action is a dispute over whether defendant, Travelers Insurance Company ("Travelers"), must provide insurance coverage to plaintiff, Countryside Oil Company, Inc., ("Countryside") for losses and expenses arising from the cleanup of an accidental oil spill from one of Countryside's trucks. Subject matter jurisdiction lies in this Court on the basis of diversity of citizenship under 28 U.S.C. § 1332. Plaintiff is a New Jersey corporation, defendant is a Connecticut corporation, and the amount in controversy exceeds $50,000. Complaint at ¶¶ 1-2, 5.

Countryside is engaged in the home fuel oil delivery business. Affidavit of Harold Finch at ¶ 2 ("Finch Aff."). Countryside purchased from Travelers an insurance policy,¹ effective from September 12, 1992, to September 12, 1993, which provided coverage for commercial general liability and commercial automobiles. Finch Aff. at ¶ 3; Harry M. Baumgartner Certification, Ex. A ("Baumgartner Certif."). Countryside purchased the policy through Triangle Insurance Services, Inc. ("Triangle") and remitted the policy premium payments directly to Triangle. Finch Aff. at ¶ 3.

Travelers and Triangle had entered into a "commercial lines agency contract" wherein Triangle was "given the written authority to write Property-Casualty Commercial Lines policies" on behalf of Travelers. Rodgen Aff., Ex. F. The agency agreement provides in relevant part:

2. Except as specifically authorized in writing by the Company, the Agent has no authority to make, alter, vary or discharge any policy contract, to extend the time of repayment of premiums, to waive or extend any policy obligation or condition, to place any advertisement regarding the Company, or to incur any liability on behalf of the Company.

Rodgen Aff., Ex. F. at ¶ I.2.

The policy purchased by Countryside in September of 1992 was a renewal of a policy which was effective from 1991 to 1992.² Both policies contained identical provisions dealing with the exclusion of pollution coverage. Compare Rodgen Aff., Ex. A (as to 1991-1992 policy) with Baumgartner Certif., Ex. A (as to 1992-1993 policy). Section two of the commercial general liability coverage policy contained the following coverage exclusions:

2. Exclusions.

This insurance does not apply to

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f(1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured;

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment or waste;

(c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom you may be legally responsible; or

(d) Which arises out of "your work" or the work or operations of any contractors or subcontractors who work or worked directly or indirectly on your behalf; or

(e) Which arises out of "your product".

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to or assessing the effects of pollutants.

Pollutants means any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Baumgartner Certif., Ex. A at 3. The commercial automobile policy also contained a pollution exclusion which reads:

B. EXCLUSIONS

This insurance does not apply to any of the following:

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11. POLLUTION

"Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants":

a. That re, or that are contained in any property that is:

1. Being transported or towed by, handled, or handled for movement into, onto or from, the covered "auto";

2. Otherwise in the course of transit by the "insured";

"Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and wastes. Waste includes materials to be recycled, reconditioned or reclaimed.

Baumgartner Certif., Ex. A at 3-4 of Commercial Auto Form. Moreover, the auto policy defined "covered pollution cost" to exclude

any cost or expense arising out of the actual, alleged or threatened discharge, dispersal seepage, migration, release or escape of pollutants:

a. That are, or that are contained in any property that is:

(1) Being transported or towed by, handled, or handled for movement into, onto or from the covered "auto";

(2) Otherwise in the course of transit by or on behalf of the "insured";

Baumgartner Certif., Ex. A at 9 of Commercial Auto Form.

While the 1991-1992 policy was in effect, Travelers notified Countryside by letter dated July 1, 1992, that a "broadening of coverage for the pollution auto non-cargo exposure has been implemented". Rodgen Aff., Ex. D at 2. The letter warned Countryside that the change effected its renewal policy. Thus, the 1992-1993 commercial auto policy contained an endorsement entitled "New Jersey Changes", which provides in relevant part:

Exclusion 11. POLLUTION, is amended by the addition of the following:

This exclusion does not apply for coverage up to the minimum financial responsibility limits specified in N.J.S.A. 39:6B-1.

N.J.S.A. 39:6B-1 set a $5,000 minimum limit for damage to property in any one accident. Lastly, a provision in the 1991-1992 policy provides, "this policy contains all the agreements between you and us concerning the insurance afforded.... This policy's terms can be amended or waived only by endorsement issued by us as part of this policy." Rodgen Aff., Ex. a at 1.

According to Harold Finch, president of Countryside, in November of 1992 he contacted Norman Feld of Triangle to determine whether the policy issued by Travelers provided coverage for sudden and accidental discharges of fuel from its trucks. Finch Aff. at ¶ 5. Finch explains that this inquiry was prompted by a customer of Countryside who had questioned whether Countryside had such coverage. Finch Aff. at ¶ 4.

Feld responded by letter dated December 9, 1992, which advised that since the automobile policy "includes the liability exposure for loading and unloading of fees ... the policy provides coverage for sudden and accidental oil spills from your trucks as respects third party liability." Finch Aff. at ¶ 6, Ex. B. Based on this advise Finch decided not to purchase additional insurance. Finch Aff. at ¶ 7.

On December 28, 1992, a Countryside oil truck accidentally overturned causing approximately 2500 gallons of No. 2 home heating oil to be spilled onto the roadway and adjoining field. Finch Aff. at ¶ 8. Countryside incurred cleanup costs of $105,000 for services rendered by S & M Waste Oil Co. as well as an "enforcement invoice" for $72,553.12 from the New Jersey Department of Environmental Protection.

Countryside submitted both bills to Travelers for payment under the insurance policy. Travelers denied the claim concluding that the insurance policy issued to Countryside did not cover the peril causing the loss. In settlement of the claim, however, Travelers offered to pay $5,000 representing the minimum limit for "damage to property" within N.J.S.A. 39:6B-1. Finch Aff., Ex. D and F.

On December 15, 1994, Countryside filed a complaint in the New Jersey Superior Court — Law Division, Sussex County, seeking a judgment declaring Travelers liable pursuant to the insurance policy issued to Countryside for all cleanup costs resulting from the oil spill. Specifically, the complaint alleges that:

4. On or about December 28, 1992, Plaintiff suffered a loss which claim falls within the terms of the coverage of the policy, namely the accidental spillage of approximately 2,500 gallons of number 2 fuel oil on a roadway and adjoining ballpark ...

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6. A controversy exists between the parties concerning the respective rights under the policy as follows:

a. Defendant contends that pursuant to an exclusion provided by the policy, Plaintiff's loss herein is not covered.

b. Plaintiff contends that such loss is not subject to the alleged exclusion, and that the claimed loss is covered by the insurance policy at issue.

7. By reason of the foregoing, Declaratory Judgment is both necessary and proper in order to set forth and determine the rights, obligations and liabilities that exist between the

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