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Spaulding Composites Co. v. Liberty Mut. Ins. Co.

Citation: 32 ELR 20441
No. No. A-3254-00T3, 787 A.2d 238/(N.J. Super. Ct. App. Div., 12/26/2001)

The court holds that a non-cumulation clause in a manufacturer's insurance policy applied to its claims resulting from environmental property damage. The U.S. Environmental Protection Agency and potentially responsible parties at a waste site sued the manufacturer for damages related to the transport of lead-containing waste to the waste site. The manufacturer sued its insurers seeking a declaratory judgment that the insurers were obligated to undertake its defense and to reimburse the manufacturer for the costs of defending the action. As part of that action, a trial court held that the non-cumulation clause in the manufacturer's policy was inapplicable as a matter of law and did not limit the amount that the manufacturer could recover under the policies. The court first holds, however, that the non-cumulation provision clearly states that all damage arising out of continuous or repeated exposure to substantially the same general conditions constitutes a single occurrence. The court next holds that when a single occurrence gives rise to damage partly before and partly within the policy period, the limits of liability shall be reduced by the amount of payment made with respect to such occurrence under previous policies. The court further holds that although state precedent requires nullification of non-cumulation clauses in environmental property damage cases due to the application of a continuous trigger rule, that precedent does not apply because in those cases the court could not discern from the language of the insurance policies at issue how to determine allocation. In this case, the policy language clearly requires that continuous or repeated exposure shall be treated as one occurrence and that the applicable aggregate limit of the policy shall be reduced by the amount of each payment made with respect to such occurrence under a previous policy. Consequently, the policy's non-cumulative clause should be enforced to limit the aggregate liability for a continuous or repeated exposure to $ 1 million. In addition, the non-cumulation clause in the manufacturer's policy is not an "other insurance" clause that does not apply in a contiguous trigger context. Such "other insurance" clauses are designed to prevent double recovery when multiple concurrent policies provide coverage for a loss. The non-cumulation clause at issue does not involve concurrent policies.

The full text of this decision is available from ELR (13 pp., ELR Order No. L-437).

Counsel for Plaintiff
Robert D. Chesler
Lowenstein & Sandler
65 Livingston Ave., Roseland NJ 07068
(201) 992-8700

Counsel for Defendant
Thomas B. O'Brien Jr.
Klett, Rooney, Lieber & Schorling
1000 West St., Ste. 1410, Wilmington DE 19801
(302) 552-4200