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

• Decision Date: 02 October 1991
• Citation: 266 N.J.Super. 300,629 A.2d 895
• Parties: MORTON INTERNATIONAL, INC., successor to Morton Thiokol, Inc., now named Thiokol Corporation, Plaintiff-Appellant, Cross-Respondent, v. GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, Defendant-Respondent, Cross-Appellant, and Liberty Mutual Insurance Company, Affiliated FM Insurance Company, American Home Assurance Company, Continental Casualty Company, First State Insurance Company, Insurance Company of North America, Underwriters At Lloyds, London, Defendants-Respondents, and Aetna Casualty & Surety Company, et al., Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 300

266 N.J.Super. 300

629 A.2d 895

MORTON INTERNATIONAL, INC., successor to Morton Thiokol Inc., now named Thiokol Corporation Plaintiff-Appellant, Cross-Respondent, v. GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA Defendant-Respondent, Cross-Appellant and Liberty Mutual Insurance Company, Affiliated FM Insurance Company, American Home Assurance Company, Continental Casualty Company, First State Insurance Company, Insurance Company of North America, Underwriters At Lloyds, London, Defendants-Respondents, and Aetna Casualty & Surety Company, et al., Defendants.

Superior Court of New Jersey,

Appellate Division.

Argued May 30, 1991.

Decided Oct. 2, 1991.

George F. Kugler, argued the cause for appellant Morton Intern. Inc. (Archer & Greiner, attys., Thomas C. Hill, Taft, Stettinius & Hollister, of counsel, Edward C. Laird and Deborah H. Simon, on the brief).

Elliott Abrutyn, for respondent General Acc. Ins. Co. of America (Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, attys., Timothy Saia, on the brief).

John G. McAndrews, for Certain Underwriters at Lloyds and Certain London Market Ins. Companies (Ronca, McDonald & Hanley, attys., Mr. McAndrews and Henry Lee, Kathleen B. Browne, Nancy N. Sipp, Mendes & Mount of the New York Bar, of counsel and on the brief).

William S. Wachenfeld, for defendant-respondent, Affiliated FM Ins. Co. (Priestley, McGuirl & Wachenfeld, attys., Siff, Rosen & Parker, and DeCotiis & Pinto, attys. for respondent, First State Ins. Co., Louis G. Adolfsen and James A. Farber, on the joint brief).

Charles W. Miller, III, for respondent American Home Assur. Co. (Golden, Rothschild, Spagnola & DiFazio, attys.).

Paul R. Koepff, for respondent Ins. Co. of North America (Mudge, Rose, Guthrie, Alexander & Ferdon, attys.).

John C. Sullivan, for respondent Liberty Mut. Ins. Co. (Manta and Welge, attys.).

Smith, Stratton, Wise, Heher & Brennan, counsel for amicus curiae, Ins. Environmental Litigation Ass'n (Thomas W. Brunner, Marilyn E. Kerst, Carol Barthel, Wiley, Rein & Fielding, of counsel, Wendy L. Mager, on the brief).

Haskell & Perrin, and Chasan, Leyner, Tarrant, Loftis & Lamparello, attys. for respondent Continental Cas. Co. (James Kirk Perrin, Daniel P. Caswell, Marsha Kay Ross, of counsel and on the brief).

Before Judges KING, R.S. COHEN and STERN.

The opinion of the court was delivered by

KING, P.J.A.D.

This case is another episode in a long history of litigation which began in 1976 when the State Department of Environmental Protection (DEP) instituted suit against Ventron Corporation, and others, alleging that a mercury processing facility located on its premises was polluting Berry's Creek in Bergen County. The DEP prevailed and Ventron was held strictly liable for clean-up costs in a decision affirmed by the this court and affirmed, as modified, by the Supreme Court. DEP v. Ventron, 182 N.J.Super. 210, 440 A.2d 455 (App.Div.1981), aff'd as modified, 94 N.J. 473, 468 A.2d 150 (1983). Subsequent purchasers of the contaminated property, Robert and Rita Wolf (the Wolfs), were successful in their crossclaim in that litigation and obtained a judgment because Ventron was guilty of fraudulent nondisclosure of the property's polluted condition. See 94 N.J. at 503-504, 468 A.2d 150.

The nominal plaintiff here, Morton International, Inc., (Morton or plaintiff) is the successor by acquisition to the rights of Ventron. When the Ventron complaint first was filed, all of the insurers of the owners of the contaminated property disclaimed coverage and refused to defend the action. After the Supreme Court's decision in 1983, Morton filed this declaratory judgment action in the Chancery Division seeking indemnity for remediation expenses and recoupment of the costs incurred in defending the suit brought by the DEP and the crossclaim asserted by the Wolfs. Twenty-one insurance companies were named in this declaratory judgment action. Partial summary judgment was granted to all defendants with respect to their obligation to defend and indemnify Morton on the crossclaim by the Wolfs. Cross-motions for summary judgment on the remaining issues were filed by plaintiff and the defendants which resulted in a ruling that only General Accident Insurance Company of America (General Accident) was liable and only for part of Morton's costs in defending the DEP suit but that no defendant had a duty to indemnify Morton with respect to the claims made in the Ventron case. Judge Huot, the Law Division judge who granted the summary judgment, ordered a trial to establish the reasonable costs due for defense of the Ventron case. A trial was held before Judge Lesemann, and Morton was awarded judgment against General Accident for part of the Ventron case defense costs ($100,420.07) and attorneys' fees ($40,000) for successfully prosecuting the "cost of defense" trial. See R. 4:42-9(a)(6). The full costs of defense of the Ventron case were in excess of $1 million. Costs of remediation of environmental damage are yet undetermined.

Morton now appeals from the ruling dismissing its indemnity claims and from the claimed inadequate amount of the cost of the defense award contending that: (1) genuine issues of material fact were in dispute; (2) the judge erred in deciding as a matter of law and fact that the damages resulting from the mercury contamination were not caused by "an accident" within the meaning of the insurance policies; (3) the judge improperly construed the record and the law with respect to "occurrence" as defined in the insurance policies; (4) damage resulting from a covered "occurrence" took place after the plant closed; (5) the judge erroneously failed to order reimbursement of the full cost of defending the Ventron action and (6) the court abused its discretion in restricting the scope of discovery. General Accident's cross-appeal challenges Judge Huot's determination that it had any duty to defend Morton in the Ventron action.

On appeal from the rulings on the motions and cross-motion for summary judgment, R. 4:46-2, we affirm the judgment concluding that the insurers had no duty to indemnify Morton. We reverse that part of the judgment which concludes that General Accident had a partial duty to defend Morton and we vacate the award of counsel fees in Morton's favor.

The facts pertinent to decision were presented in various forms to Judge Huot on the cross-motions for summary judgment. This included portions of the trial testimony and documentary evidence presented at the initial liability trial, DEP v. Ventron, before Judge Lester. Documents relevant to the various coverages were before Judge Huot and were not in dispute. The focus of the dispute in the Chancery Division was the inferences and conclusions to be drawn from these facts in the stipulated record. This suit was brought by Morton in the Chancery Division without a demand for a jury. Under the circumstances we see no practical difference between an adjudication at a bench trial or on this stipulated record on cross-motions for summary judgment. The decision was essentially a legal one for the judge.

This is the pertinent information about the insurance coverage. General Accident, Reserve and Liberty Mutual provided primary general liability insurance coverage for plaintiff between 1961 and 1976. General Accident insured plaintiff for the longest period of time, between 1961 and 1972. Reserve insured plaintiff for about the next two years; Liberty Mutual, for about one year. The remaining defendant insurance companies (London Market, American Home, Continental Casualty, INA, First State and FM Affiliated) provided excess coverage.

Although Judge Huot's opinion states that, chronologically, the first primary policy was issued by General Accident in 1964, the insurance coverage chart supplied by plaintiff in its appendix indicates that Continental Casualty actually provided the first primary coverage in 1960 and General Accident began its primary coverage in the last quarter of 1960 to the last quarter of 1971. Due to General Accident's long-term primary coverage, the focus of the judge's opinion was on the provisions of General Accident's policy.

As noted by Judge Huot, neither General Accident nor Morton was able to produce either the original or a copy of the insurance contract in existence at that time. Rather, sample policy forms were submitted and accepted by all parties as accurate for purposes of the cross-motions for summary judgment. A form dated "7/64" indicated that with respect to property damage liability, except involving an automobile, General Accident agreed "to pay on behalf of the insured all sums which the insured shall become legally obligated to pay ... because of injury to or destruction of property ... caused by accident." The coverage applied only to "occurrences or accidents" which happened during the policy period and required that written notice be given to the company "as soon as practicable ... in the event of an accident or occurrence." Similarly, the insured was required to "immediately forward to the company" any process served upon the insured if a claim was brought or suit was instituted. The policy, however, did not define the term "accident."

In subsequent policies, at least after 1964, the policy language was amended to delete the phrase "caused by accident" in that section which defined the company's non-automobile property damage liability and to substitute the words "resulting from an occurrence." An occurrence was then defined as

... An unexpected event or happening which results in injury to or destruction of tangible property during the policy period, or a continuous and repeated exposure to conditions which result in injury to or destruction of tangible property during the policy period, provided the insured did not intend or anticipate that injury to or destruction of property would result. All damages arising out of such exposure to substantially the same...