Opinion
603601/2002.
August 18, 2009.
In motion sequence number 013, plaintiff Travelers Indemnity Company ("Travelers") moves for partial summary judgment, pursuant to CPLR 3212, declaring that no coverage exists with respect to any claims asserted by defendant Orange and Rockland Utilities, Inc. ("ORU") under the comprehensive general liability insurance policies in effect from September 1, 1971 through February 15, 1978, on the ground that these claims are excluded by virtue of a statute in effect during those years, excluding coverage for all pollution claims unless the pollution or contamination arises out of a sudden and accidental "discharge, dispersal, release or escape of any pollutants, irritants or contaminants into or upon land, the atmosphere or any water course or body of water" (Insurance Law § 46 [a] [13] and [14]), thereafter recodified as Insurance Law § 1113; [the "Statutory Pollution Exclusion"]). Travelers contends that none of the pollution at the manufactured gas plant ("MGP") sites in question was caused by a sudden and accidental event, and, as such, ORU's claims for reimbursement for costs and/or losses associated with the investigation and remediation of pollution that are at issue in this action are not covered by the subject insurance policies.
BACKGROUND
During various periods from approximately 1852 until 1965, ORU (or ORU's predecessors) owned and operated eight MGPs located in Orange County and Rockland County, New York. This declaratory judgment action concerns ORU's underlying claim that various policies issued by Travelers that were in effect from January 1, 1970 through February 15, 1978 (collectively, the "1970's Travelers Policies") require the insurer to pay the costs of the investigation and remediation of pollution at the MGPs.
One MGP, located in Nyack, New York, was denominated by the parties as the "test" site for this motion and the facts concerning the Nyack site are analogous to those applicable to the other MGPs. ORU operated the Nyack site was operated as a MGP until 1964. The MGP initially produced coal gas, then carbureted water gas, and then high British thermal units ("BTU") oil gas.
In 1971, Insurance Law § 46 (a) was amended and provided:
"Policies issued to commercial or industrial enterprises providing insurance against the legal liabilities specified in this subdivision shall expressly exclude therefrom liability arising out of pollution or contamination caused by the discharge, dispersal, release or escape of any pollutants, irritants or contaminants into or upon land, the atmosphere or any water course or body of water unless such discharge, dispersal, release or escape is sudden and accidental."
The policy underlying this amendment was to make corporate polluters bear the costs of their own polluting activities (Signing Statement of Governor Nelson A Rockefeller, dated June 25, 1971). Eleven years later, in 1982, the legislature repealed the 1971 amendment in order to address a different public policy — preventing corporate polluters from avoiding cleanup liability by filing for bankruptcy. The stated public policy for the repeal, which took effect on September 1, 1982, was "to encourage industry responsibility to handle its hazardous wastes and eliminate the attendant risks, and simultaneously to safeguard the public from the adverse consequences of hazardous waste handlers which become financially disabled" (Signing Statement of Governor Hugh L. Carey, dated July 27, 1982).
None of the 1970's Travelers Policies contains an exclusion provision that tracks the language of the Statutory Pollution Exclusion.
ANALYSIS
Travelers contends that the 1970's policies must be deemed to contain the Statutory Pollution Exclusion, which precludes coverage for pollution, unless it was the result of "sudden and accidental" events. Travelers urges that, since the pollution at issue at the MGPs occurred over a period of many decades, the 1970's Travelers Policies do not cover ORU's claims, and partial summary judgment should be granted in its favor.
Travelers emphasizes that courts applying New York law to insurance policies that lacked a provision following the Statutory Pollution Exclusion language, repeatedly held that the exclusion must be read into the policies and enforced ( see e.g., Consolidated Edison of New York, Inc. v American Home Assur. Co., Supreme Ct, NY County, November 6, 2003, Cahn, J., Index No. 600527/01; Consolidated Edison Co. of New York, Inc. v Allstate Ins. Co., Supreme Ct, NY County, December 4, 2002, Gammerman, J., Index No. 600142/98). In opposition, ORU argues that the Statutory Pollution Exclusion is inapplicable in part or in full. First, ORU contends that, since Travelers chose not to include the language of the Statutory Pollution Exclusion in the 1970s Travelers Policies, it should not benefit from the provision. Second, ORU maintains that, even if the Statutory Pollution Exclusion were read into the 1970s Travelers Policies, material issues of fact exist regarding the causes of contamination at the subject MGPs, and, in particular, whether the losses were caused by the sudden and accidental discharge of pollutants. ORU asserts that the record contains evidence from which a finder of fact could conclude that the pollution resulted from abrupt spills and other similar discharges, and therefore, that summary judgment is precluded because questions of fact exist as to whether and to what extent the property damage at issue resulted from the sudden and accidental release of contaminants, as opposed to gradual pollution. Third, ORU submits that, in any event, Policy No. TRK-SLG 910302-70, which had a policy period of January 1, 1970 to January 1, 1973, is outside the scope of the Statutory Pollution Exclusion which only applies to policies written before its effective date of September 1, 1971.
ANALYSIS
Travelers has established its prima facie right to partial summary judgment, and ORU has failed to refute that showing.
New York courts have repeatedly recognized that the Statutory Pollution Exclusion, by operation of law, applies to all insurance policies issued during the period it was in effect ( see e.g., Consolidated Edison of New York, Inc. v American Home Assur. Co., Supreme Ct, NY County, November 6, 2003, Cahn, J., Index No. 600527/01; Consolidated Edison Co. of New York, Inc. v Allstate Ins. Co., Supreme Ct, NY County, December 4, 2002, Gammerman, J., Index No. 600142/98). Thus, although the 1970's Travelers Policies either do not contain pollution exclusion clauses or the pollution exclusion clauses fail to track the same language as the Statutory Pollution Exclusion, the statutory language nonetheless is deemed to be included in the policies.
The evidence shows that the contamination at the MGPs began at the outset of operations and spanned over a period of many decades. The Statutory Pollution Exclusion, in effect from 1971 through 1982, by its plain terms, provided that gradual pollution was uninsurable as a matter of public policy and excluded it from coverage during that period. ORU and its predecessors owned and operated the MGP sites from approximately 1858 to 1965. During that period, the MGPs used coal and related products to manufacture and produce gas for light and heat. As a byproduct of the process, quantities of tars, oils, waste water, and benzene were produced and were often dumped on-site, or were discharged into nearby water bodies, buried and/or otherwise discharged into the environment as part of normal operations. ORU's expert submission fails to controvert that the pollution at the MGPs was the result of more than 100 years of continuous operations and the ongoing migration of that contamination. There is no set of facts under which such events can possibly be construed as "sudden and accidental" (see, Consolidated Edison of New York, Inc. v American Home Assur. Co., Supreme Ct, NY County, November 6, 2003, Cahn, J., Index No. 600527/01; Consolidated Edison Co. of New York, Inc. v Allstate Ins. Co., Supreme Ct, NY County, December 4, 2002, Gammerman, J., Index No. 600142/98). Accordingly, the Statutory Pollution Exclusion precludes coverage for ORU's claims under the 1970's Travelers Policies.
The Travelers 1970's Policies each fall within the period during which, by statute, pollution, other than pollution resulting from "as sudden and accidental" event, was uninsurable. With respect to the one multi-year policy, which was in effect before the effective date of the Statutory Pollution Exclusion, the court concludes that, in light of the strong public policy, the Statutory Pollution Exclusion may be read into the policy ( accord American Ins. Co. v Fairchild Indus., Inc., 852 F Supp 1173 [ED NY 1994], affd 56 F3d 435 [2d Cir 1995]).
Although ORU asks that this decision be limited to the Nyack MGP, the issue of whether the Statutory Pollution Exclusion applies to the policies is not site or policy specific.
Accordingly,
It is ORDERED that the motion by plaintiff Travelers Indemnity Company for partial summary judgment is granted, and it is further
ORDERED that coverage is excluded under any and all comprehensive general liability insurance policies in effect from September 1, 1971 through February 15, 1978 issued by plaintiff Travelers Indemnity Company to defendant Orange Rockland Utilities, Inc. and/or its predecessor companies (to wit, policies T-RKSLG-910302-70 [effective from 1/1/70 through 1/1/73], TRK-SLG-910302-73 [effective from 1/1/73 through 1/1/76], TRK-SLG-136T478-76 [effective from 1/1/76 through 2/15/77] and TRK-SLG-144T739-2-77 [effective from 2/15/77 through 2/15/78]) with respect to any claims for investigation and or remediation of pollution at any of the MGPs at the following locations:
(1) Fulton and Canal Streets, Middletown, NY;
(2) Genung and Phillip Streets, Middletown, NY;
(3) Pike and King Streets, Port Jervis, NY;
(4) Gedney Street, Nyack, NY;
(5) Chestnut Street, Ramapo Avenue and Pat Malone Drive, Suffern, NY;
(6) 93B Maple Avenue, Haverstraw, NY;
(7) Clove and Maple Avenue, Haverstraw, NY;
(8) McVeigh Road, Middletown, NY.
This constitutes the Decision and Order of the Court.