NJ Takes the Lead on Another Environmental Coverage Issue: Allocation Choice of Law

In one of the nation's first and most comprehensive allocation choice-of-law decisions, a court recently rejected insurers' claims that allocation law of the forum applies to property damage arising at multiple environmental sites if the policyholder's coverage action is venued in New Jersey. The decision was rendered in four companion environmental coverage cases involving a common choice-of-law issue. <i>See General Electric Co., as successor in interest to RCA Corp. v. Certain Underwriters at Lloyd's London,</i> Docket No. MER-L-4931-87 c/w MER-L-6432-88 (Law Div. Mar. 25, 2004), <i>reconsid. den.,</i> (Law Div. May 12, 2004) (hereinafter "<i>RCA</i>"); <i>Home Ins. Co. v. Cornell-Dubilier Electronics, Inc.,</i> Docket No. MER- L-5192-96 c/w MER-L-2773-02 (Law Div. Mar. 25, 2004), <i>reconsid. den.,</i> (Law Div. May 12, 2004); <i>Sterling Winthrop, Inc. v. Royal Indem. Ins. Co.</i>, Docket No. MER-L-101-94 c/w MER-L-106-94 (Law Div. Mar. 25, 2004); <i>Rohm &amp; Haas Co. v. Allianz Underwriters, Inc.,</i> Docket No. MER-L-4920-87 c/w MER-L-4664-95 (collectively, the "<i>Companion Cases</i>"). The court concluded that the law of the state in which each waste site is located presumptively applies to the allocation of damages. This decision, now the subject of pending appeals, is likely to reach New Jersey's Supreme Court because it was rendered in "high stakes" cases, and it has broad application to many other environmental coverage actions. If the Supreme Court ultimately takes up the matter ' something the court has demonstrated a willingness to do in connection with other challenging coverage issues (<i>see, eg, Spaulding Composites Co. v. Liberty Mutual Ins. Co.,</i> 176 N.J. 25, 819 A.2d 410 (2003) (granting leave for interlocutory appeal regarding inapplicability of non-cumulation clause); <i>Pfizer, Inc. v. Employers Ins. of Wausau,</i> 154 N.J. 187, 721 A.2d 634 (1998) (granting leave for interlocutory appeal regarding choice-of-law governing interpretation of pollution exclusion); <i>Carter-Wallace v. Admiral Ins. Co.,</i> 154 N.J. 312, 712 A.2d 1116 (1998) (granting interlocutory appeal regarding allocation) ' it will be the highest state court in the nation to resolve an allocation choice-of-law dispute in a multistate, multisite environmental coverage action.

42 minute read July 02, 2004 at 11:07 AM

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Sherilyn Pastor