Morton Intern., Inc. v. General Acc. Ins. Co. of America

Decision Date21 July 1993
Citation629 A.2d 831,134 N.J. 1
CourtNew Jersey Supreme Court
Parties, 62 USLW 2079 MORTON INTERNATIONAL, INC., successor to Morton Thiokol, Inc., now named Thiokol Corporation, Plaintiff-Appellant and Cross-Respondent, v. GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, A Pennsylvania Corporation (Successor to the Potomac Insurance Company and the United States Branch of General Accident Fire and Life Assurance Corporation, Ltd.); Affiliated FM Insurance Company, A Rhode Island Corporation; Continental Casualty Company, An Illinois Corporation; First State Insurance Company, A Delaware Corporation, Defendants-Respondents, and Liberty Mutual Insurance Company, A Massachusetts Corporation; American Home Assurance Company, A New York Corporation; Insurance Company of North America, A Pennsylvania Corporation; Underwriters at Lloyd's London, and Certain Subscribing London Market Insurance Companies, Defendants-Respondents and Cross-Appellants, and Aetna Casualty & Surety Company, A Connecticut Corporation; American Centennial Insurance Co., A Delaware Corporation; Fireman's Fund Insurance Company, A California Corporation; Granite State Insurance Company, A New Hampshire Corporation; The Hartford Accident & Indemnity Company, A Connecticut Corporation; Insurance Company of the State of Pennsylvania, A Pennsylvania Corporation; Integrity Insurance Company, A New Jersey Corporation; International Insurance Company, An Illinois Corporation; Lexington Insurance Company, A Delaware Corporation; Mission Insurance Company, A California Corporation; Mission National Insurance Company, A California Corporation; National Union Fire Insurance Company of Pittsburgh, A Pennsylvania Corporation; and Northbrook Insurance Company, An Illinois Corporation, Defendants.

George F. Kugler, Jr., for plaintiff-appellant and cross-respondent (Archer & Greiner, attorneys; Mr. Kugler, Edward C. Laird, and Gary J. Lesneski, on the briefs) Haddonfield.

Elliott Abrutyn, for defendant-respondent General Acc. Ins. Co. of America (Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, attorneys; Mr. Abrutyn and Timothy Saia, on the brief) Livingston.

William S. Wachenfeld, for defendant-respondent Affiliated FM Ins. Co. (Mendes & Mount, Newark, attorneys for Affiliated FM Ins. Co., and DeCotiis & Pinto, Hackensack, attorneys for First State Ins. Co.; Mr. Wachenfeld, Rosemary A. Juster, Newark, James A. Farber, Hackensack and Robert F. Walsh, New Brunswick, on the brief).

John C. Sullivan, for respondent and cross-appellant Liberty Mut. Ins. Co. (Manta and Welge, attorneys) Cherry Hill.

Paul R. Koepff, New York City, a member of the New York Bar, for defendants-respondents and cross-appellants Underwriters at Lloyd's London, and certain subscribing London Market Ins. Companies (Ronca, McDonald & Hanley, Livingston, attorneys for Underwriters at Lloyd's London; Mudge, Rose, Guthrie, Alexander & Ferdon, attorneys for Ins. Co. of North America; and Golden, Rothschild, Spagnola & DiFazio, attorneys for American Home Assurance Co.; Mr. Koepff, New York City, Robert J. Kovacs, Livingston, Paul A. Leodori, W. Cary Edwards, Parsippany, Stephen V. Kovarik, New York City, and Charles W. Miller, III, Somerville, of counsel).

Eugene R. Anderson, a member of the New York Bar, argued the cause for amicus curiae New Jersey State League of Municipalities (Stickel, Koenig & Sullivan and Anderson, Kill, Olick & Oshinsky, attorneys; Mr. Anderson, New York City, John A. MacDonald, Newark, Ralph J. Kmiec, Cherry Hill, and Michael A. Pane, Hightstown, of counsel; Mr. MacDonald, Newark, and Fred G. Stickel, III, Cedar Grove, on the brief).

Richard F. Engel, Deputy Atty. Gen., argued the cause for amicus curiae State of N.J. (Robert J. Del Tufo, Atty. Gen. of New Jersey, attorney; Mary C. Jacobson, Deputy Atty. Gen., of counsel; Karen L. Jordan and John F. Dickinson, Jr., Deputy Attys. Gen., on the brief).

John P. Cascio submitted a letter in lieu of brief on behalf of defendant-respondent Continental Cas. Co. (Chasan, Leyner, Tarrant & Lamparello, attorneys) Jersey City.

Clyde A. Szuch, Donald W. Kiel, Florham Park, Paul E. Breene, Newark, Michael L. Rodburg, Albert G. Besser, Roseland, and Jerry Fitzgerald English, Summit, submitted a brief on behalf of amici curiae Allied Signal, Inc., The American Fiber Mfrs. Ass'n, The American Petroleum Institute, Armstrong World Industries, Inc., Athlone Industries, Inc., The BOC Group, Inc., The Chemical Mfrs. Ass'n, Hanson Industries, Intern. Business Machines Corp., J.T. Baker, Inc., Nestle Food Company, Olin Corp., Public Service Elec. & Gas Co., Reichhold Chemicals, Inc., Rohm and Haas Co., Safety Light Corp., Sandvik, Inc., Schering-Plough Corp., USR Industries Inc., Warner-Lambert Co., Waste Management, Inc., and Westinghouse Elec. Corp. (Hannoch Weisman, attorneys for The American Fiber Mfrs. Ass'n, The American Petroleum Institute, The Chemical Mfrs. Ass'n, Intern. Business Machines Corp., Olin Corp., Rohm and Haas Co., Hanson Industries, Safety Light Corp., and USR Industries, Inc.; Anderson, Kill, Olick & Oshinsky, Newark, attorneys for Allied-Signal, Inc., The BOC Group, Inc., Reichhold Chemicals, Inc., and Schering-Plough Corp.; Lowenstein, Sandler, Kohl, Fisher & Boylan, attorneys for Westinghouse Elec. Corp.; Kerby, Cooper, English, Danis & Garvin, Summit, attorneys for Waste Management, Inc.).

Victor C. Harwood, III, submitted a brief on behalf of amicus curiae Aetna Cas. & Sur. Co. (Harwood Lloyd, attorneys; Mr. Harwood, Brian J. Coyle, and Edward Zampino, on the brief) Hackensack.

Wendy L. Mager submitted a brief on behalf of amicus curiae Ins. Environmental Litigation Ass'n (Smith, Stratton, Wise, Heher, Brennan, attorneys) Princeton.

The opinion of the Court was delivered by


This case concerns insurance coverage for environmental pollution. The events affecting the coverage claims before us span a period of several decades, in the course of which societal indifference concerning environmental-pollution damage has been supplanted by a heightened awareness of the need for environmentally-sound waste-disposal practices and an increasingly aggressive governmental effort to remediate the consequences of past environmental damage. That evolution understandably has influenced the insurance industry's concern about its exposure for damages caused by environmental pollution, and has resulted in an industry-wide determination to modify the scope of insurance coverage for such damages.

The claims for coverage involve Comprehensive General Liability (CGL) policies covering plaintiff and its predecessors during the period 1961 to 1976, issued by three primary carriers and a large number of excess carriers. Four principal variations of CGL policies are involved, and no dispute exists concerning the language of the critical provisions that affect the question of coverage. Because the policies are essentially standardized, industry-wide forms, our interpretation of their coverage provisions may affect significantly the allocation of damages for environmental pollution of New Jersey property among insurance carriers, industry, and government. The scope of the relief sought by plaintiff requires us to consider not only the kinds of pollution-causing events entitled to coverage under the various policies, but also whether remediation expenses and response costs imposed under the authority of federal and state environmental statutes constitute sums that the insured is legally obligated to pay "as damages" because of property damage covered by the policies. Because the economic consequences are significant, the issues before us already have generated a multiplicity of reported decisions by federal and state courts.


The procedural history and material facts are set forth in abundant detail in the Appellate Division's comprehensive and thoughtful opinion. Morton Int'l v. General Accident Ins. Co., 266 N.J.Super. 300, 629 A.2d 895 (1991). A useful perspective concerning that history and those facts is afforded by this Court's opinion in New Jersey Department of Environmental Protection v. Ventron Corp., 94 N.J. 473, 468 A.2d 150 (1983). Plaintiff, Morton International, Inc. (plaintiff or Morton), is the successor in interest to Ventron Corporation (Ventron), and the claims it now asserts derive from liability imposed on Ventron in that litigation. The Department of Environmental Protection (DEP) had instituted suit against Ventron and other defendants, Velsicol Chemical Corporation (Velsicol), Wood Ridge Chemical Corporation (Wood Ridge), and F.W. Berk and Company (Berk), to compel the defendants to bear the costs involved in remediating pollution of Berry's Creek, an estuary of the Hackensack River, that had been caused by discharges from a mercury-processing plant operated for over forty years by the various defendants. Justice Pollock's opinion graphically described the end result of the defendants' prolonged discharge of mercury and other pollutants:

Beneath its surface, the tract is saturated by an estimated 268 tons of toxic waste, primarily mercury. For a stretch of several thousand feet, the concentration of mercury in Berry's Creek is the highest found in fresh water sediments in the world. The waters of the creek are contaminated by the compound methyl mercury, which continues to be released as the mercury interacts with other elements. Due to depleted oxygen levels, fish no longer inhabit Berry's Creek, but are present only when swept in by the tide and, thus, irreversibly toxified.

[Id. at 481-82, 468 A.2d 150.]

This Court determined that the discharging of toxic mercury constituted an abnormally-dangerous activity, and imposed strict liability under common-law principles against all the defendants for remediation of the resulting nuisance and property damage. Id. at 493, 468 A.2d 150. We also held that all the defendants were jointly and...

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