Case Title: Insurance Company of North America v. Anthony Amadei Sand & Gravel, Inc.

Citation: 

Docket Number: a-69-98

State: new-jersey

Court: New Jersey Supreme Court

Date: 1999-12-22T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). COLEMAN, J., writing for a unanimous Court. The Court addresses whether the right to trial by jury attaches to a declaratory judgment action brought by an insurance company claiming that its insured is not entitled to coverage for environmental remediation. On July 17, 1969, Gloucester Township, Camden County, entered into a contract with Anthony Amadei Sand & Gravel, Inc. (AS&G) to operate the Gloucester landfill known as Environmental Management Services, Inc. (GEMS). Anthony Amadei (Amadei) was a personal guarantor of the contract. In return, AS&G was allowed to conduct a sand and gravel excavation business at the landfill. Amadei had no previous training in hydrology, nor any landfill operating experience. AS&G operated the landfill from 1969 until 1975. During that time, Amadei accepted chemical liquid waste, both as loose liquid and in sealed steel drums, for dumping in the landfill. AS&G obtained permission from Gloucester and the New Jersey Department of Health to accept this kind of waste. In 1970, Amadei was approved by the newly created New Jersey Department of Environmental Protection to operate as a solid-waste disposal facility. Within a month, that approval was rescinded because leaking oil from a tanker truck had seeped into a nearby stream. The DEP prohibited AS&G from depositing in the landfill any chemicals, including oils, greases, septic tank cleanings, and sewer plant sludge. At approximately the same time, residential neighbors of the GEMS landfill obtained an injunction enjoining the dumping of any oils, chemicals, or liquids, with the exception of water, in the landfill. In 1974, Aetna Casualty & Surety Company (Aetna) issued to AS&G two insurance policies: a $500,000 per occurrence primary policy and a $5,000,000 excess policy effective October 1974 through October 1975. The policies insured AS&G for losses due to bodily injury or property damage arising out of an occurrence, which was defined as an accident, including repeated exposure to conditions that result in bodily injury or property damage that is neither expected nor intended by the insured. The policies also contained pollution-exclusion clauses that excluded coverage for bodily injury or property damage resulting from the non-accidental discharge of pollutants. In 1983, the DEP and several of the landfill's neighboring landowners filed lawsuits seeking clean-up costs from AS&G and GEMS. The litigation was split into two phases: Phase I concerned issues relating to closure and Phase II concerned groundwater contamination. In May 1986, during the pendency of the litigation, Insurance Company of North America (INA), another insurer of AS&G and GEMS, filed a declaratory judgment action seeking a determination that it had no obligation to indemnify AS&G and GEMS for claims arising out of their operation of the GEMS landfill. INA joined Aetna as a party, seeking contribution based on the two policies Aetna issued to AS&G for the 1974-75 policy year. Aetna filed a cross-claim seeking a declaratory judgment that under the 1974-75 policies, it had no obligation to defend or indemnify AS&G or Amadei against INA's claims. Aetna claimed that the environmental damage was not an occurrence as defined in its policies and that the pollution-exclusion clauses applied. In 1989, the parties settled Phase I of the underlying litigation for $32,500,000. In September 1995, the coverage issues were tried before a jury. On the first day of trial, the court dismissed INA's declaratory judgment action because INA had entered into settlement negotiations with Gloucester and Amadei. All that remained were issues of coverage relating to the Aetna policies. After all the evidence had been presented, the trial court removed the case from the jury and entered judgment in favor of Amadei and AS&G. The court ruled that the question of whether the 1974-75 policies obligated Aetna to indemnify and defend AS&G and Amadei did not implicate the right to a jury trial. The court found that the environmental remediation was an occurrence as defined in the policies, and that the pollution-exclusion clauses were inapplicable. Alternatively, the court treated the matter as a motion for directed verdict and found that a reasonable jury could not find that Amadei intended or expected to cause the environmental damage. Between the time of trial in 1995 and oral arguments before the Court in March 1998, two significant events happened. First, on September 27, 1996, Phase II of the underlying litigation settled for $30,000,000. Second, on May 12, 1997, the Court decided In re Environmental Insurance Declaratory Judgment Actions, holding that the right to trial by jury does not attach to a declaratory judgment action by an insured to compel indemnification for future environmental clean-up costs. On appeal, the Appellate Division ruled in June 1998 that the trial court improperly denied Aetna's right to a jury trial. The appellate panel concluded that Aetna was entitled to a jury trial on the issues of coverage and on the applicability of the pollution-exclusion clauses. The panel limited the non-jury requirement of In re Environmental Insurance to cases in which an insured, not an insurer, seeks to compel indemnification for future environmental clean-up costs. The panel also found that there were disputed issues of material fact that should have been decided by a jury; therefore, the directed verdict was improper. The Supreme Court granted certification. HELD: An action by an insurer or an insured seeking a declaratory judgment of non-coverage or coverage respectively for future environmental remediation costs is essentially an action for specific performance to which the right to trial by jury does not attach. 1. In civil matters, the right to a jury trial is not absolute. Generally, the New Jersey Constitution protects the right of trial by jury in legal, not equitable, matters. It is the nature of the action and the relief sought that is determinative. (pp. 10-12) 2. This case presents the flip-side of the issue presented in In re Environmental Insurance. Regardless of whether the insured or the insurer institutes the declaratory judgment action, the purpose of the litigation is the same: a declaration of whether coverage exists for environmental remediation. That issue is inappropriate for jury consideration because of the inadequacy of the potential remedy at law. (pp. 12-13) 3. The Appellate Division relied on the Phase II settlement in reaching its determination, even though that settlement did not occur until after the trial was over. An appellate court's review is confined to the record made in the trial court; therefore, the Appellate Division erred in concluding that a jury trial was required because the damages were liquidated. The trial court properly functioned as the ultimate fact finder. (pp. 14-15) 4. Aetna received a fair trial. The trial court's determination that Amadei never intended to cause the environmental damage is supported by the evidence. (pp. 15-16) Judgment of the Appellate Division is REVERSED and the judgment of the trial court is REINSTATED. JUSTICES O'HERN and STEIN, concurring, notes that, notwithstanding their dissent in In re Environmental Insurance , they are bound by the Court's disposition of that appeal. Accordingly, they concur in the Court's opinion and judgment in this case. CHIEF JUSTICE PORITZ and JUSTICES O'HERN, GARIBALDI, STEIN, VERNIERO and LONG join in JUSTICE COLEMAN'S opinion. JUSTICE STEIN filed a separate concurring opinion in which JUSTICE O'HERN joins. SUPREME COURT OF NEW JERSEY A- 69 September Term 1998 INSURANCE COMPANY OF NORTH AMERICA, Plaintiff, v. ANTHONY AMADEI SAND & GRAVEL, INC., and ANTHONY AMADEI, Defendants-Appellants, and DENNIS DUBIN, DAVID EHRLICH, GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC., JACK M. LISS, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RICHARD H. WINN, TOWNSHIP OF GLOUCESTER, GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, THE HOME INSURANCE COMPANY and FIREMAN'S FUND INSURANCE COMPANY, Defendants, and AETNA CASUALTY & SURETY COMPANY, Defendant-Respondent. Argued September 27, 1999 -- Decided December 22, 1999 On certification to the Superior Court, Appellate Division. John A. Yacovelle, Jr., argued the cause for appellants (Mr. Yacovelle and John A. DeFalco, attorneys). The opinion of the Court was delivered by COLEMAN, J. The primary issue presented in this appeal is whether the right to trial by jury attaches to a declaratory judgment action brought by an insurance company claiming that its insured is not entitled to coverage for environmental remediation. The case began as a jury trial but, after the parties rested, the trial court removed the case from the jury and entered judgment for the insured. The Appellate Division reversed, concluding that the insurer is entitled to a jury trial and that there are disputed issues of material fact that must be decided by a jury. We granted certification, 158 N.J. 73 (1999), and now reverse. We hold that an action by an insurer against its insured for a judgment declaring that its policy does not provide coverage for indemnification for future environmental clean-up costs is essentially an action for specific performance, to which a right to trial by jury does not attach. Our review of the record convinces us that Aetna received a fair trial. Amadei had no formal training in hydrology or landfill operating experience. He never attempted to hide the fact that chemical waste was being dumped at the GEMS landfill, and in fact, requested and received approval from the State and the town numerous times to accept such waste. Although reasonable minds could differ, the trial court believed that Amadei never intended to cause the environmental damage. That determination by the trial court is supported by the evidence. Rova Farms, supra, 65 N.J. at 483-84. SUPREME COURT OF NEW JERSEY A- 69 September Term 1998 INSURANCE COMPANY OF NORTH AMERICA, Plaintiff, v. ANTHONY AMADEI SAND & GRAVEL, INC., and ANTHONY AMADEI, Defendants-Appellants, and DENNIS DUBIN, DAVID EHRLICH, GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC., JACK M. LISS, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RICHARD H. WINN, TOWNSHIP OF GLOUCESTER, GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, THE HOME INSURANCE COMPANY and FIREMAN'S FUND INSURANCE COMPANY, Defendants, and AETNA CASUALTY & SURETY COMPANY, Defendant-Respondent. O'HERN and STEIN, JJ., concurring. Notwithstanding our dissent in In re Environmental Insurance Declaratory Judgment Actions, 149 N.J. 278, 302 (1997), we are bound by the Court's disposition of that appeal. Accordingly, we concur in the Court's opinion and judgment reversing the Appellate Division and reinstating the judgment of the Law Division. NO. A-69 INSURANCE COMPANY OF NORTH AMERICA, Plaintiff, v. ANTHONY AMADEI SAND & GRAVEL, INC., and ANTHONY AMADEI, Defendants-Appellants, and DENNIS DUBIN, DAVID EHRLICH, GLOUCESTER ENVIRONMENTAL MANAGEMENT SERVICES, INC., JACK M. LISS, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RICHARD H. WINN, TOWNSHIP OF GLOUCESTER, GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, THE HOME INSURANCE COMPANY and FIREMAN'S FUND INSURANCE COMPANY, Defendants, and AETNA CASUALTY & SURETY COMPANY, Defendant-Respondent. DECIDED December 22, 1999 Chief Justice Poritz