United States Bronze Powders, Inc. v. Commerce & Industry Insurance

Citations: 259 N.J. Super. 109; 611 A.2d 667; 1992 N.J. Super. LEXIS 319

Court: New Jersey Superior Court Appellate Division; June 12, 1992; New Jersey; State Appellate Court

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Defendant Commerce and Industry Insurance Company has filed a pre-trial motion for partial summary judgment against plaintiff United States Bronze Powders Inc. This motion follows a similar ruling previously granted in favor of another defendant, Providence Washington Insurance Company, which will be addressed together. The plaintiff initiated a declaratory judgment action on May 29, 1990, seeking insurance coverage due to an unintentional spill of copper sulfate and other chemicals from its facility, which has allegedly threatened damage to neighboring properties. The plaintiff incurred and anticipates further expenses for containment and cleanup efforts. The amended complaint indicates that airborne contamination from the U.S. Bronze plant has elevated levels of harmful substances in nearby soil.

U.S. Bronze, a New Jersey corporation involved in manufacturing copper powder, is contesting coverage under six general liability policies issued by the defendant, specifically focusing on the last two policies covering the periods from July 1, 1986, to July 1, 1987, and from July 1, 1987, to July 1, 1988. The relevant policy from 1986-1987 includes a pollution exclusion endorsement, which denies coverage for bodily injury or property damage arising from the discharge or release of pollutants, with specific exclusions related to the premises owned or occupied by U.S. Bronze, as well as any site used for waste handling. The endorsement further clarifies that costs arising from governmental cleanup directives are also excluded. Pollutants are broadly defined to include a range of irritants or contaminants, encompassing chemicals and waste material.

The insurance policy from July 1, 1987, to July 1, 1988, includes an "Absolute Pollution Exclusion" that is similar to a previous policy. Commerce and Industry Insurance Company seeks partial summary judgment, asserting that this exclusion precludes coverage for the damages claimed in the plaintiff's complaint. The court previously ruled on similar exclusions in policies from Providence Washington Insurance Company, determining that the exclusionary language was clear and unambiguous, indicating that environmental claims were not covered. The plaintiff opposes Commerce and Industry's motion by referencing the earlier case against Providence Washington. The court emphasizes that it must enforce the insurance policy as written when the language is clear, without imposing strained interpretations. The court will reassess the exclusions for both defendants and stresses that unambiguous contracts should be enforced according to the reasonable expectations of the insured. Strict interpretation is required for exclusion clauses, and the court will consider whether clearer alternative language could have further clarified the exclusions. The presence of unambiguous language allows for resolution by summary judgment.

The resolution of ambiguous terms in insurance policies must favor the insurer that drafted the contract. The court evaluates whether the language in the Providence Washington exclusion clause is clear. The plaintiff argues that the clause's broad terms create ambiguity, referencing Weedo v. Stone-E-Brick, Inc., which established that ambiguity exists when a policy's language confuses the average policyholder about coverage boundaries. Specific concerns include the lack of definitions for "toxic chemicals," "waste materials," and "pollutants," as well as the vague use of "discharge" and the absence of a timeline for discharges. Additionally, the clause does not adequately define the excluded land, simply stating "into or upon the land," leaving ownership interpretations open. The court notes three unreported New Jersey decisions where similar exclusion clauses were deemed unambiguous and upheld, precluding coverage. The court finds the August 1986 to July 1988 Providence Washington exclusion clear and unambiguous, functioning as an Absolute Pollution Exclusion, explicitly excluding various pollutants from coverage. The court rejects the plaintiff's claims of ambiguity, emphasizing that the insurance contract's clear terms cannot be ignored. Notably, prior policies included a limiting clause for sudden and accidental discharges, which is absent in the current policies, indicating the intent for an absolute exclusion. Regarding the Commerce and Industry Insurance Company policies, the plaintiff's only ambiguity claim pertains to the unclear definition of "pollutants."

Pollutants are defined as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste material, which encompasses materials intended for recycling or reclamation. The court firmly establishes that this definition excludes all pollutants and contaminants from coverage, indicating that environmental claims are not covered under the relevant policies. The policy language clearly delineates the boundaries of coverage, as upheld in Weedo v. Stone-E-Brook, Inc., where the average policyholder can understand the exclusions. Specifically, the Providence Washington policy excludes claims related to the discharge of smoke, vapors, soot, fumes, or gases into the atmosphere, while the Commerce and Industry policy encompasses gaseous and thermal irritants, including the same contaminants. Both policies lack limiting language and unambiguously exclude coverage for pollutants in all forms. The inclusion of terms related to gaseous and airborne contamination reflects the parties' intent to exclude such coverage. The court references Vantage Development v. American Environmental Technology, where a similar pollution exclusion was upheld, emphasizing that ambiguity cannot be created by failing to list every synonym for pollutants. United States Bronze Powders, Inc. cannot argue that the defendants needed to enumerate all potential pollutants for clarity. Consequently, as there are no genuine issues of material fact regarding the defendants' liability, motions for partial summary judgment by Providence Washington Insurance Company and Commerce and Industry Insurance Company are granted. The definition of 'airborne' is noted as being related to items released into or traveling through the air.