Title: Continental Insurance Company v. Honeywell International, Inc.

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

SYLLABUS

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
Court. In the interest of brevity, portions of an opinion may not have been summarized.)

 Continental Insurance Company v. Honeywell International, Inc. (A-21-16) (078152)

Argued October 24, 2017 -- Decided June 27, 2018

LaVECCHIA, J., writing for the Court.

        This appeal involves questions about the insurance coverage available to defendant
Honeywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands of
bodily-injury claims premised on exposure to brake and clutch pads (friction products)
containing asbestos. The Court granted certification to address two issues. First, whether the
law of New Jersey or Michigan (the headquarters location of Honeywell’s predecessor when
the disputed excess insurance policies were issued) should control in the allocation of
insurance liability among insurers for nationwide products-liability claims. Second, whether
it was error not to require the policyholder, Honeywell, to contribute in the allocation of
insurance liability based on the time after which the relevant coverage became unavailable in
the marketplace (that is, since 1987).

        The Bendix Corporation (Bendix) -- a corporate predecessor to defendant Honeywell
-- for many years manufactured and sold friction products that contained asbestos. Bendix
stopped using asbestos in its friction products in 2001, having continued to manufacture the
items even after 1987 when insurance for asbestos-related claims for such products ceased to
be available in the marketplace. In 2000, Continental Insurance Company (Continental)
(which wrote many primary insurance policies for Bendix during the relevant years), and
related companies, commenced this action seeking declaratory relief concerning the rights
and obligations associated with insurance coverage for the asbestos-related bodily injury
claims filed against Honeywell as a corporate successor to Bendix.

        The choice-of-law issue: Bendix was incorporated in 1929 under the laws of the
State of Delaware. Aspects of its business took place in different states. Between 1969 and
1983, Bendix situated its executive headquarters, including its insurance office, in Michigan;
another central office was in New York. Bendix also had significant contacts with New
Jersey. Until 1973, Bendix’s largest center of operations and payroll was in New Jersey.
Honeywell is the corporate successor to Bendix. Honeywell’s headquarters and principal
place of business have always been located in Morristown, New Jersey. Since 1983, all
insurance operations for Bendix and its successors have been located in New Jersey. The
excess insurance policies at issue here were all brokered, issued, and delivered to Bendix in
Michigan. None contain a choice-of-law provision governing the allocation issue. In 2006
the trial court held that New Jersey insurance-allocation law would apply in this matter.

                                               1
       The allocation issue: Under New Jersey’s current law on allocation of liability
among insurers, an insured is not forced to assume responsibility in allocation during the
insurance coverage block of policies for years in which insurance is not reasonably available
for purchase. Owens-Illinois, Inc. v. United Ins. Co., 
138 N.J. 437, 478-79 (1994). Travelers
Casualty & Surety Company (Travelers) (taking the lead in argument) and St. Paul Fire and
Marine Insurance Company (St. Paul), both excess insurers, argued that the coverage block
should run until the year in which Honeywell, as the successor to Bendix, ceased
manufacturing the friction products -- 2001. Honeywell maintained that the coverage block
should end in the 1986-87 period when first primary (1986) and then excess (April 1, 1987)
insurance ceased to be available. Applying Owens-Illinois’s approach to allocation of risk to
claims arising exclusively from pre-1987 initial exposure, the court determined in 2011 that
the unavailability of commercial insurance should end the coverage block of insurance.

        The trial court entered a final judgment in 2013, after which Travelers and St. Paul
jointly appealed the trial court’s 2006 order, which granted Honeywell’s partial summary
judgment motion and applied New Jersey allocation law, and the 2011 order, which granted
Honeywell’s partial summary judgment motion and held that Honeywell had no allocation
responsibility for pre-1987 initial exposure claims because after 1987 it was not able to
obtain insurance coverage for asbestos claims. The Appellate Division affirmed but required
a remand not pertinent to this appeal. The Court granted certification. 
228 N.J. 437 (2016).

HELD: New Jersey law on the allocation of liability among insurers applies in this matter, and
the Court sets forth the pertinent choice-of-law principles to resolve this dispute over insurance
coverage for numerous products-liability claims. Concerning the second question, on these
facts, the Court also affirms the determination to follow the unavailability exception to the
continuous-trigger method of allocation set forth in Owens-Illinois.

1. The first step in a conflicts analysis is to decide whether there is an actual conflict
between the laws of the states with interests in the litigation. New Jersey law employs the
continuous-trigger doctrine, as initially adopted in Owens-Illinois, 
138 N.J. 437. Given that
the continuous-trigger theory would implicate multiple insurance policies, the Court also
adopted a methodology for allocating liability among those policies. Id. at 474-75. When
determining an insurer’s liability, a court is to consider both the insurer’s time on the risk and
the degree of risk that insurer assumed. Ibid. Several policy rationales were at work in the
Owens-Illinois approach. See id. at 472-76. The Court emphasized that the theory
underlying insurance is risk allocation, id. at 472, and that an insurance allocation scheme
that spreads costs throughout the industry and promotes an efficient use of resources
translates to more money available to respond in the event of disease and damage, id. at 478.
Michigan utilizes a different allocation method. In Arco Industries Corp. v. American
Motorists Insurance Co., 
594 N.W.2d 61, 69 (Mich. Ct. App. 1998), aff’d by an equally
divided court, 
617 N.W.2d 330 (Mich. 2000), the Michigan Court of Appeals specifically
considered and rejected the Owens-Illinois approach, concluding that policy considerations
weighed in favor of adopting the time-on-the-risk method. A substantive difference
separates the New Jersey and Michigan legal approaches and policy considerations here, and
so the Court must engage in a choice-of-law analysis. (pp. 30-37)
                                                  2
2. The Court stated in State Farm Mutual Automobile Insurance Co. v. Estate of Simmons
that “the law of the place of the contract ordinarily governs the choice of law because this
rule will generally comport with the reasonable expectations of the parties . . . and will
furnish needed certainty and consistency in the selection of the applicable law.” 
84 N.J. 28,
37 (1980). In Simmons, the Court relied on § 193 of the Restatement (Second) of Conflict of
Laws (Am. Law Inst. 1971) (Restatement). Id. at 35-36, 57. Since Simmons, the Court has
discussed the role of two other pertinent Restatement provisions. Section 188 of the
Restatement generally addresses conflicts-of-law determinations in contract settings where
the parties have not made an effective choice of law. Section 6 of the Restatement sets forth
the factors that are relevant in a conflicts determination when there is no local statutory
directive controlling the issue. In Gilbert Spruance Co. v. Pennsylvania Manufacturers’
Ass’n Insurance Co., the Court considered choice of law regarding insurance coverage in the
context of a mass tort and noted that, when determining the conflicts-of-law rule to govern
casualty-insurance contracts, Restatement § 193 usually is initially consulted but that
Restatement §§ 188 and 6 are analytically more appropriate. 
134 N.J. 96, 97, 104 (1993).
Courts have found it “tempting” to extract from Spruance a “bright-line rule.” The Court
clarified in Pfizer, Inc. v. Employers Insurance that “there is no way to avoid a careful site-
specific determination, made upon a complete record,” and that, when the risk is “to some
degree transient,” a court must use the Restatement § 6 factors in its analysis. 
154 N.J. 187,
197 (1998). Although condensed and reframed into four inquiries, the Pfizer analysis
nevertheless remained tethered to the section 6 factors. (pp. 37-46)

3. In a contract dispute over insurance allocation for nationwide products liability claims
asserting bodily injury due to asbestos exposure, neither Restatement § 193 nor Simmons
provides the proper starting point. The conflicts analysis here should center on Restatement
§§ 188 and 6, as the later decisions in Spruance and Pfizer have taught. With respect to the
§ 188 contacts, not all are of equal importance or value in this fact-specific inquiry. Two
strong considerations under § 188, applied to this matter, combine to point toward New
Jersey. Here, the place of performance, § 188(c), and the domicile, residence, and places of
incorporation and of business of the parties, § 188(e), all point to New Jersey. The latter
takes into account enduring characteristics and deserves to be a starting point in the analysis.
Further, heavy weight must be given to the nature of the insured risk and its site. New Jersey
is the longstanding domicile of the insured in this litigation (since 1983). Turning to the
Restatement’s factors in section 6, helpfully condensed in Pfizer, the question is whether
New Jersey’s relationship with the case is sufficiently significant to warrant application of
New Jersey law. The first inquiry described in Pfizer consolidates several § 6 factors and
asks, simply, whether application of the competing states’ laws would advance the policy
interests that the law was intended to promote. The second Pfizer factor focuses on whether
application of a competing state’s law would frustrate the policies of other states. The third
factor considers the interests of the parties, and the contacts outlined in Restatement § 188
the come to the fore. Finally, courts look at the interests of judicial administration under the
last Pfizer factor, which asks “what choice of law works best to manage adjudication of the
controversy before the court.” 
154 N.J. at 199. Applying those inquiries, conflicts-of-law
principles favor application of New Jersey allocation law in the present dispute over liability
among insurers and affirms the Appellate Division on the first issue. (pp. 46-54)
                                                 3
4. The continuous-trigger and related unavailability exception theories for allocation of
insurance liability have been recognized and applied in New Jersey since Owens-Illinois.
The Court determined to use that method of allocation of liability, finding it superior by
virtue of (1) encouraging the acquisition of insurance and spreading costs throughout the
industry; (2) promoting the efficient use of insurance resources to make more money
available to respond in catastrophic circumstances; (3) compelling insurers to minimize their
costs; and (4) advancing principles of simple justice. 
138 N.J. at 472-78. The continuous-
trigger method assumes the availability of insurance and incorporates an unavailability
exception. Courts have applied the “unavailability exception,” in accordance with Owens-
Illinois, to require an insured to share in an allocation of liability under the continuous-
trigger doctrine only when it foregoes purchasing available insurance. (pp. 54-55)

5. St. Paul and Travelers ask the Court to create an equitable exception to the unavailability
rule, whereby corporations that continue to manufacture products after insurance becomes
unavailable for those products would be deprived of the insurance coverage they purchased
prior to that unavailability. The Court has affirmed that the continuous-trigger theory of
liability is the law of New Jersey multiple times since Owens-Illinois. That theory holds
insurers responsible for the losses that actually occur on their watch, using a formula that
approximates a scientific assessment of the amount of injury, even if the actual injury
manifests later. Clearly, the law on allocation methodology differs among the states. No
doubt, legitimate policy reasons may have led sister courts to reach diverse conclusions. In
Owens-Illinois the Court acknowledged that “[i]f, after experience, we are convinced that our
solution is inefficient or unrealistic, we will not hesitate to revisit” the allocation paradigm
with its continuous-trigger and unavailability doctrines. 
138 N.J. at 478. This appeal,
however, does not present a compelling vehicle to reconsider New Jersey precedent on
allocation. None of the initial asbestos exposures, on which claims Honeywell is seeking
insurance coverage, occurred after insurance became unavailable. Although the disputed
policies involved in this appeal concern excess insurance, they are occurrence policies. This
case simply does not present facts on which to consider abandoning the unavailability
exception, let alone whether to create a novel equitable exception to that exception. Indeed,
the basic policy objectives of Owens-Illinois are all served by affirming the judgment as to
the coverage block and moving the case to closure. (pp. 55-64)

       AFFIRMED.

         JUSTICE ALBIN, dissenting in part, expresses the view that, as applied here, the
judicially created doctrine known as the “unavailability exception” gives a corporation a free
pass if it continues to expose workers to extremely dangerous products after insurance
coverage becomes unavailable and stresses that equity demands that a corporation that
continues to manufacture a dangerous product without insurance become the ultimate insurer
for its actions. Justice Albin concurs in the Court’s conflict-of-law analysis and resolution.

CHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA, SOLOMON, and
TIMPONE join in JUSTICE LaVECCHIA’s opinion. JUSTICE ALBIN filed an
opinion, dissenting in part. JUSTICE PATTERSON did not participate.
                                        4
                                    SUPREME COURT OF NEW JERSEY
                                      A-
21 September Term 2016
                                               078152

CONTINENTAL INSURANCE
COMPANY, FIDELITY & CASUALTY
COMPANY OF NEW YORK,
COMMERCIAL INSURANCE COMPANY
OF NEWARK, N.J., and COLUMBIA
CASUALTY COMPANY,

    Plaintiffs,

         v.

HONEYWELL INTERNATIONAL, INC.
(f/k/a ALLIEDSIGNAL, INC.,
successor to BENDIX AVIATION
CORPORATION and BENDIX
CORPORATION),

    Defendant-Respondent,

         and

ST. PAUL FIRE AND MARINE
INSURANCE COMPANY,

    Defendant-Appellant,

         and

AFFILIATED FM INSURANCE
COMPANY, ALLSTATE INSURANCE
COMPANY, AMERICAN HOME
ASSURANCE COMPANY, AMERICAN
INSURANCE COMPANY, CALIFORNIA
UNION INSURANCE COMPANY,
CENTURY INDEMNITY COMPANY,
COMMERCIAL UNION INSURANCE
COMPANY as successor to
EMPLOYERS LIABILITY ASSURANCE
CORPORATION, LTD., EMPLOYERS
INSURANCE OF WAUSAU,
FIREMAN’S FUND INSURANCE
COMPANY, GRANITE STATE

                                1
INSURANCE COMPANY, GREAT
AMERICAN INSURANCE COMPANY,
HOME INSURANCE COMPANY,
INSURANCE COMPANY OF NORTH
AMERICA, NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA, NORTH RIVER
INSURANCE COMPANY, TRAVELERS
INDEMNITY COMPANY,
UNDERWRITERS AT LLOYDS LONDON
and CERTAIN LONDON MARKET
COMPANIES, including ANGLO
SAXON INSURANCE ASSOC. LTD.,
DOMINION INSURANCE COMPANY,
DRAKE INSURANCE COMPANY,
EAGLE STAR INSURANCE COMPANY,
INSTITUTE OF LONDON
UNDERWRITERS, LONDON &
EDINBURGH INSURANCE COMPANY
LTD., PRUDENTIAL ASSURANCE
COMPANY LTD., SOUTHERN
INSURANCE COMPANY, and WORLD
AUXILIARY INSURANCE CORP.,
LTD.,

    Defendants,

         and

HONEYWELL INTERNATIONAL, INC.
(f/k/a ALLIEDSIGNAL, INC.,
successor to BENDIX AVIATION
CORPORATION and BENDIX
CORPORATION),

    Defendant/Third-Party
    Plaintiff-Respondent,

         v.

TRAVELERS CASUALTY & SURETY
COMPANY (f/k/a AETNA CASUALTY
& SURETY COMPANY),

    Third-Party Defendant-
    Appellant,

                                2
         and

AIU INSURANCE COMPANY,
AMERICAN CENTENNIAL INSURANCE
COMPANY, ASSOCIATED
INTERNATIONAL INSURANCE
COMPANY, CENTRE INSURANCE
COMPANY (f/k/a LONDON
GUARANTEE AND ACCIDENT
COMPANY OF NEW YORK),
CONTINENTAL CASUALTY COMPANY,
THE CONTINENTAL INSURANCE
COMPANY as successor in
interest to HARBOR INSURANCE
COMPANY (f/k/a HARBOR
INSURANCE COMPANY), EVEREST
REINSURANCE COMPANY (f/k/a
PRUDENTIAL REINSURANCE
COMPANY), EXECUTIVE RISK
INDEMNITY INC. (f/k/a
AMERICAN EXCESS INSURANCE
COMPANY), FEDERAL INSURANCE
COMPANY, FIRST STATE
INSURANCE COMPANY, FREMONT
INDEMNITY COMPANY (f/k/a
INDUSTRIAL INDEMNITY
COMPANY), GENERAL REINSURANCE
CORPORATION, HARTFORD
ACCIDENT & INDEMNITY COMPANY,
INTERNATIONAL INSURANCE
COMPANY (f/k/a INTERNATIONAL
SURPLUS LINES INSURANCE
COMPANY), LEXINGTON INSURANCE
COMPANY, MT. MCKINLEY
INSURANCE COMPANY (f/k/a
GIBRALTAR CASUALTY COMPANY),
MUTUAL FIRE, MAINE & INLAND
INSURANCE COMPANY, ROYAL
INDEMNITY COMPANY, THE TOKIO
MARINE & FIRE INSURANCE
COMPANY, LTD., TWIN CITY FIRE
INSURANCE COMPANY, UTICA
MUTUAL INSURANCE COMPANY,
WESTPORT INSURANCE COMPANY
(f/k/a PURITAN INSURANCE
COMPANY), and CERTAIN LONDON
MARKET COMPANIES, including

                                3
ACCIDENT & CASUALTY INSURANCE
COMPANY, ALBA GENERAL
INSURANCE COMPANY (f/k/a ALBA
GENERAL INSURANCE COMPANY
LIMITED), AVIATION & GENERAL
INSURANCE COMPANY LIMITED,
AXA INSURANCE PLC (f/k/a
PROVINCIAL INSURANCE PUBLIC
LIMITED COMPANY), THE BRITISH
AVIATION INSURANCE COMPANY
LIMITED, BRITISH LAW
INSURANCE COMPANY LIMITED,
BRITISH RESERVE INSURANCE
COMPANY LIMITED, BRITISH
TRADERS INSURANCE COMPANY
LTD., C.A.M.A.T. INSURANCE
COMPANY LIMITED, C.F.A.U.,
CONTINENTAL ASSURANCE COMPANY
OF LONDON, LTD., CORNHILL
INSURANCE PUBLIC LIMITED
COMPANY (f/k/a CORNHILL
INSURANCE COMPANY LIMITED),
EDINBURGH ASSURANCE COMPANY
LTD., EDINBURGH INSURANCE
COMPANY LIMITED, EDINBURGH
NO. 2 GROUP, ELVIA SWISS
INSURANCE COMPANY (f/k/a
HELVETIA ACCIDENT INSURANCE
COMPANY LIMITED), EXCESS
INSURANCE COMPANY LIMITED,
FIDELIDADE INSURANCE COMPANY
OF LISBON, GE SPECIALTY
INSURANCE (UK) LIMITED (f/k/a
THREADNEEDLE INSURANCE
COMPANY LIMITED), GENERAL
INSURANCE COMPANY HELVETIA
LIMITED, GROUPAMA INSURANCE
COMPANY LIMITED (f/k/a
MINISTER INSURANCE COMPANY
LIMITED), HELVETIA INSURANCE
COMPANY LTD., HELVETIA SWISS
INSURANCE COMPANY LIMITED
(f/k/a HELVETIA ACCIDENT
SWISS INSURANCE COMPANY),
IRON TRADES INSURANCE COMPANY
LIMITED (f/k/a IRON TRADES
MUTUAL INSURANCE COMPANY

                                4
LIMITED), LA MINERVE
INSURANCE COMPANY LIMITED,
LOMBARD MARINE & GENERAL
INSURANCE COMPANY LTD.,
LONDON & EDINBURGH GENERAL
INSURANCE COMPANY, LONDON &
OVERSEAS AVIATION A.C., MOTOR
UNION INSURANCE COMPANY
LIMITED, NATIONAL CASUALTY
COMPANY, NATIONAL CASUALTY
COMPANY OF AMERICA, THE NEW
INDIA ASSURANCE COMPANY
LIMITED, PHOENIX ASSURANCE
PUBLIC LIMITED COMPANY,
PHOENIX AVIATION INSURANCE
COMPANY LIMITED, PHOENIX
INSURANCE COMPANY LTD., RIVER
THAMES INSURANCE COMPANY
LIMITED, ROAD TRANSPORT &
GENERAL INSURANCE CO. LTD.,
ROYAL SCOTTISH ASSURANCE PLC
(f/k/a THE ROYAL SCOTTISH
INSURANCE COMPANY LIMITED),
SCOTTISH LION INSURANCE
COMPANY LTD., STRONGHOLD
INSURANCE COMPANY LIMITED,
SWISS NATIONAL INSURANCE
COMPANY LIMITED, SWISS UNION
GENERAL INSURANCE COMPANY
LIMITED, SWITZERLAND GENERAL
INSURANCE COMPANY LIMITED,
TRENT INSURANCE COMPANY
LIMITED, TUREGUM INSURANCE
COMPANY LIMITED, ULSTER
INSURANCE COMPANY LIMITED,
UMA, UNITED SCOTTISH
INSURANCE COMPANY AVIATION
LTD., UNITED SCOTTISH
INSURANCE COMPANY LIMITED,
VANGUARD INSURANCE COMPANY
LIMITED, VICTORIA AVIATION,
VICTORIA INSURANCE COMPANY,
LTD., and THE WORLD MARINE &
GENERAL INSURANCE PLC (f/k/a
THE WORLD MARINE & GENERAL
INSURANCE COMPANY LIMITED),

                                5
    Third-Party Defendants.

CONTINENTAL INSURANCE COMPANY,
FIDELITY & CASUALTY COMPANY OF
NEW YORK, COMMERCIAL INSURANCE
COMPANY OF NEWARK, N.J., and
COLUMBIA CASUALTY COMPANY,

    Plaintiffs,

         v.

HONEYWELL INTERNATIONAL, INC.
(f/k/a ALLIEDSIGNAL, INC.,
successor to BENDIX AVIATION
CORPORATION and BENDIX
CORPORATION),

    Defendant-Respondent,

         and

ST. PAUL FIRE AND MARINE INSURANCE
COMPANY,

    Defendant-Appellant,

         and

AFFILIATED FM INSURANCE COMPANY,
ALLSTATE INSURANCE COMPANY,
AMERICAN HOME ASSURANCE COMPANY,
AMERICAN INSURANCE COMPANY,
CALIFORNIA UNION INSURANCE
COMPANY, CENTURY INDEMNITY
COMPANY, COMMERCIAL UNION
INSURANCE COMPANY as
successor to EMPLOYERS
LIABILITY ASSURANCE
CORPORATION, LTD., EMPLOYERS
INSURANCE OF WAUSAU,
FIREMAN’S FUND INSURANCE
COMPANY, GRANITE STATE

                                   6
INSURANCE COMPANY, GREAT
AMERICAN INSURANCE COMPANY,
HOME INSURANCE COMPANY,
INSURANCE COMPANY OF NORTH
AMERICA, NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA, NORTH RIVER
INSURANCE COMPANY, TRAVELERS
INDEMNITY COMPANY,
UNDERWRITERS AT LLOYDS LONDON
and CERTAIN LONDON MARKET
COMPANIES, including ANGLO
SAXON INSURANCE ASSOC. LTD.,
DOMINION INSURANCE COMPANY,
DRAKE INSURANCE COMPANY,
EAGLE STAR INSURANCE COMPANY,
INSTITUTE OF LONDON
UNDERWRITERS, LONDON &
EDINBURGH INSURANCE COMPANY
LTD., PRUDENTIAL ASSURANCE
COMPANY LTD., SOUTHERN
INSURANCE COMPANY, and WORLD
AUXILIARY INSURANCE CORP.,
LTD.,

    Defendants,

         and

HONEYWELL INTERNATIONAL, INC.
(f/k/a ALLIEDSIGNAL, INC.,
successor to BENDIX AVIATION
CORPORATION and BENDIX
CORPORATION),

    Defendant/Third-Party
    Plaintiff-Respondent,

         v.

TRAVELERS CASUALTY & SURETY
COMPANY (f/k/a AETNA CASUALTY
& SURETY COMPANY),

                                7
    Third-Party Defendant-
    Appellant,

         and

AIU INSURANCE COMPANY,
AMERICAN CENTENNIAL INSURANCE
COMPANY, ASSOCIATED
INTERNATIONAL INSURANCE
COMPANY, CENTRE INSURANCE
COMPANY (f/k/a LONDON
GUARANTEE AND ACCIDENT
COMPANY OF NEW YORK),
CONTINENTAL CASUALTY COMPANY,
THE CONTINENTAL INSURANCE
COMPANY as successor in
interest to HARBOR INSURANCE
COMPANY (f/k/a HARBOR
INSURANCE COMPANY), EVEREST
REINSURANCE COMPANY (f/k/a
PRUDENTIAL REINSURANCE
COMPANY), EXECUTIVE RISK
INDEMNITY INC. (f/k/a
AMERICAN EXCESS INSURANCE
COMPANY), FEDERAL INSURANCE
COMPANY, FIRST STATE
INSURANCE COMPANY, FREMONT
INDEMNITY COMPANY (f/k/a
INDUSTRIAL INDEMNITY
COMPANY), GENERAL REINSURANCE
CORPORATION, HARTFORD
ACCIDENT & INDEMNITY COMPANY,
INTERNATIONAL INSURANCE
COMPANY (f/k/a INTERNATIONAL
SURPLUS LINES INSURANCE
COMPANY), LEXINGTON INSURANCE
COMPANY, MT. MCKINLEY
INSURANCE COMPANY (f/k/a
GIBRALTAR CASUALTY COMPANY),
MUTUAL FIRE, MAINE & INLAND
INSURANCE COMPANY, ROYAL
INDEMNITY COMPANY, THE TOKIO
MARINE & FIRE INSURANCE
COMPANY, LTD., TWIN CITY FIRE
INSURANCE COMPANY, UTICA
MUTUAL INSURANCE COMPANY,

                                8
WESTPORT INSURANCE COMPANY
(f/k/a PURITAN INSURANCE
COMPANY), and CERTAIN LONDON
MARKET COMPANIES, including
ACCIDENT & CASUALTY INSURANCE
COMPANY, ALBA GENERAL
INSURANCE COMPANY (f/k/a ALBA
GENERAL INSURANCE COMPANY
LIMITED), AVIATION & GENERAL
INSURANCE COMPANY LIMITED,
AXA INSURANCE PLC (f/k/a
PROVINCIAL INSURANCE PUBLIC
LIMITED COMPANY), THE BRITISH
AVIATION INSURANCE COMPANY
LIMITED, BRITISH LAW
INSURANCE COMPANY LIMITED,
BRITISH RESERVE INSURANCE
COMPANY LIMITED, BRITISH
TRADERS INSURANCE COMPANY
LTD., C.A.M.A.T. INSURANCE
COMPANY LIMITED, C.F.A.U.,
CONTINENTAL ASSURANCE COMPANY
OF LONDON, LTD., CORNHILL
INSURANCE PUBLIC LIMITED
COMPANY (f/k/a CORNHILL
INSURANCE COMPANY LIMITED),
EDINBURGH ASSURANCE COMPANY
LTD., EDINBURGH INSURANCE
COMPANY LIMITED, EDINBURGH
NO. 2 GROUP, ELVIA SWISS
INSURANCE COMPANY (f/k/a
HELVETIA ACCIDENT INSURANCE
COMPANY LIMITED), EXCESS
INSURANCE COMPANY LIMITED,
FIDELIDADE INSURANCE COMPANY
OF LISBON, GE SPECIALITY
INSURANCE (UK) LIMITED (f/k/a
THREADNEEDLE INSURANCE
COMPANY LIMITED), GENERAL
INSURANCE COMPANY HELVETIA
LIMITED, GROUPAMA INSURANCE
COMPANY LIMITED (f/k/a
MINISTER INSURANCE COMPANY
LIMITED), HELVETIA INSURANCE
COMPANY LTD., HELVETIA SWISS
INSURANCE COMPANY LIMITED
(f/k/a HELVETIA ACCIDENT

                                9
SWISS INSURANCE COMPANY),
IRON TRADES INSURANCE COMPANY
LIMITED (f/k/a IRON TRADES
MUTUAL INSURANCE COMPANY
LIMITED), LA MINERVE
INSURANCE COMPANY LIMITED,
LOMBARD MARINE & GENERAL
INSURANCE COMPANY LTD.,
LONDON & EDINBURGH GENERAL
INSURANCE COMPANY, LONDON &
OVERSEAS AVIATION A.C., MOTOR
UNION INSURANCE COMPANY
LIMITED, NATIONAL CASUALTY
COMPANY, NATIONAL CASUALTY
COMPANY OF AMERICA, THE NEW
INDIA ASSURANCE COMPANY
LIMITED, PHOENIX ASSURANCE
PUBLIC LIMITED COMPANY,
PHOENIX AVIATION INSURANCE
COMPANY LIMITED, PHOENIX
INSURANCE COMPANY LTD., RIVER
THAMES INSURANCE COMPANY
LIMITED, ROAD TRANSPORT &
GENERAL INSURANCE CO. LTD.,
ROYAL SCOTTISH ASSURANCE PLC
(f/k/a THE ROYAL SCOTTISH
INSURANCE COMPANY LIMITED),
SCOTTISH LION INSURANCE
COMPANY LTD., STRONGHOLD
INSURANCE COMPANY LIMITED,
SWISS NATIONAL INSURANCE
COMPANY LIMITED, SWISS UNION
GENERAL INSURANCE COMPANY
LIMITED, SWITZERLAND GENERAL
INSURANCE COMPANY LIMITED,
TRENT INSURANCE COMPANY
LIMITED, TUREGUM INSURANCE
COMPANY LIMITED, ULSTER
INSURANCE COMPANY LIMITED,
UMA, UNITED SCOTTISH
INSURANCE COMPANY AVIATION
LTD., UNITED SCOTTISH
INSURANCE COMPANY LIMITED,
VANGUARD INSURANCE COMPANY
LIMITED, VICTORIA AVIATION,
VICTORIA INSURANCE COMPANY,
LTD., and THE WORLD MARINE &

                                10
GENERAL INSURANCE PLC (f/k/a
THE WORLD MARINE & GENERAL
INSURANCE COMPANY LIMITED),

    Third-party Defendants.

         Argued October 24, 2017 – Decided June 27, 2018

         On certification to the Superior Court,
         Appellate Division.

         Andrew T. Frankel argued the cause for
         appellants St. Paul Fire and Marine Insurance
         Company and Travelers Casualty and Surety
         Company (Windels Marx Lane & Mittendorf, and
         Simpson Thacher & Bartlett, attorneys; Stefano
         V. Calogero, of counsel; Stefano V. Calogero,
         Andrew T. Frankel, Tanya M. Mascarich, on the
         briefs).

         Michael J. Lynch (K&L Gates) of the
         Pennsylvania bar, admitted pro hac vice,
         argued the cause for respondent Honeywell
         International, Inc. (K&L Gates, attorneys;
         Michael J. Lynch, Donald E. Seymour, John T.
         Waldron, and Donald W. Kiel, on the briefs).

         Carl A. Salisbury and Paul E. Breene submitted
         a brief on behalf of amicus curiae United
         Policyholders (Bramnick, Rodriguez, Grabas,
         Arnold & Mangan, and Reed Smith, attorneys).

         Brian R. Ade submitted a brief on behalf of
         amicus curiae Complex Insurance Claims
         Litigation Association (Rivkin Radler,
         attorneys).

    JUSTICE LaVECCHIA delivered the opinion of the Court.

    This appeal involves questions about the insurance coverage

available to defendant Honeywell International, Inc.

(Honeywell), a New Jersey based corporation, for thousands of

bodily-injury claims premised on exposure to brake and clutch

                               11
pads (friction products) containing asbestos.     We granted

certification to address two issues.   First, we consider whether

the law of New Jersey or Michigan (the headquarters location of

Honeywell’s predecessor when the disputed excess insurance

policies were issued) should control in the allocation of

insurance liability among insurers for nationwide products-

liability claims.   Second, we address whether it was error not

to require the policyholder, Honeywell, to contribute in the

allocation of insurance liability based on the time after which

the relevant coverage became unavailable in the marketplace

(that is, since 1987).

    In addressing the allocation question, we note that

Honeywell does not seek coverage in this dispute for claims that

involve initial product exposure occurring after insurance was

not available and while the policyholder continued to

manufacture the product.   Although some of the claims presented

involve injury that manifested after the date of excess-

insurance unavailability, the class of claims to be addressed by

the coverage block of insurance all presume that product

exposure predated the insurance unavailability.     Thus,

consistent with New Jersey’s continuous-trigger doctrine,

Honeywell is seeking coverage under excess insurance policies

for claims only from exposure occurrences during the period of

policy coverage.

                                12
    Different jurisdictions approach pinpointing the occurrence

of injury using varying methodologies.    We, and a majority of

jurisdictions, rely on medical science that teaches asbestos-

related disease is progressive, as body tissue is injured when

an individual inhales asbestos fibers.    Owens-Illinois, Inc. v.

United Ins. Co., 
138 N.J. 437, 454 (1994).    That concept led to

our adoption of the continuous-trigger doctrine in insurance

liability allocation, which assumes progressive injury in each

policy year following initial exposure.   See ibid.   To some

extent that determination involves a legal fiction.     Id. at 457.

However, by allocating responsibility based on the date of

initial exposure and every policy year thereafter, we maximize

the insurance resources available to claimants suffering bodily

injury.

    Under our current law on allocation of liability among

insurers, an insured is not forced to assume responsibility in

that allocation during the insurance coverage block of policies

for years in which insurance is not reasonably available for

purchase.   Id. at 478-79 (referring to unavailability rule).

    The trial court and the Appellate Division both concluded

that New Jersey law applied, although for different reasons.

Both courts further determined that, under the circumstances,

the second question must be answered in the negative.

                                13
    For the reasons that follow, we also hold that New Jersey

law on the allocation of liability among insurers applies in

this matter, and we set forth the pertinent choice-of-law

principles to resolve this dispute over insurance coverage for

numerous products-liability claims.

    Concerning the second question, on these facts, we also

affirm the determination to follow the unavailability exception

to the continuous-trigger method of allocation set forth in

Owens-Illinois.

                                I.

    The unpublished Appellate Division decision in this matter

distilled the extensive record developed by the trial court.     We

draw from the panel’s summary of the facts and procedural

history and credit the panel for its fine work.

                                A.

    By way of general background, The Bendix Corporation

(Bendix) -- a corporate predecessor to defendant Honeywell --

for many years manufactured and sold friction products that

contained asbestos.   Bendix stopped using asbestos in its

friction products in 2001, having continued to manufacture the

items even after 1987 when insurance for asbestos-related claims

for such products ceased to be available in the marketplace.

    Beginning around 1975, Bendix began to receive liability

claims asserting that asbestos in its friction products caused

                                14
bodily injury to users.    In the years leading up to the summary

judgment proceedings in this matter, Bendix and its successors

received approximately 147,000 claims, of which about 71,000

have been resolved.    Claimants sued Bendix in almost all fifty

states, and its insurers have spent more than $1 billion on

indemnity payments.

    Certain matters are undisputed.    The friction products

contained asbestos.    Honeywell is responsible for asbestos

liabilities attributed to Bendix, although it disputes the

dangerousness of its friction products.    And, excess insurance

coverage for asbestos-related personal injury claims became

unavailable for purchase after April 1, 1987.

    In 2000, Continental Insurance Company (Continental) (which

wrote many primary insurance policies for Bendix during the

relevant years), and related companies, commenced this action

seeking declaratory relief concerning the rights and obligations

associated with insurance coverage for the asbestos-related

bodily injury claims filed against Honeywell as a corporate

successor to Bendix.    Bendix advanced cross-claims and third-

party claims against various insurers, including Travelers

Casualty & Surety Company (Travelers) and St. Paul Fire and

Marine Insurance Company (St. Paul).

    Honeywell settled with Continental and most other insurers.

The ten insurance policies that remain at issue involve excess

                                 15
insurance issued to Bendix by Travelers and St. Paul.    Eight of

the policies were issued to Bendix by Travelers’s predecessor,

Aetna Casualty & Surety Company (Aetna).    Two of the policies

were issued by St. Paul.    St. Paul was since acquired by

Travelers but is separately identified for purposes of this

appeal.

    The choice-of-law issue in this matter arose from the

following procedural actions.    Honeywell filed a motion for

partial summary judgment in 2006, asking the court to apply New

Jersey insurance allocation law while opposing the application

of Michigan law.    Travelers opposed Honeywell’s motion and filed

a cross-motion, seeking the application of Michigan law to its

policies.    St. Paul did not oppose Honeywell’s motion or make a

separate motion.    The motion judge granted Honeywell’s motion,

denied Travelers’s cross-motion, and held that the laws of New

Jersey would apply to the insurance allocation questions.     The

court memorialized its order on November 9, 2006.

    With that general background in mind, we turn to some finer

details.

                                  B.

    Bendix was incorporated in 1929 under the laws of the State

of Delaware.    Aspects of its business took place in different

states.     During the course of its corporate existence, Bendix

had manufacturing operations in all fifty states and twenty-two

                                  16
foreign countries, and sold its products throughout the United

States.    Administratively though, from about 1940 to 1969,

Bendix maintained its headquarters in South Bend, Indiana, while

also having central offices in Detroit and New York.     Its

insurance office was in South Bend.     Between 1969 and 1983,

Bendix situated its executive headquarters, including its

insurance office, in Michigan; another central office was in New

York.     Bendix also had significant contacts with New Jersey.

Until 1973, Bendix’s largest center of operations and payroll

was in New Jersey.

    Bendix had a variety of businesses, spanning such areas as

automotive products, aerospace products, industrial products,

financial services, and others.     Included among its products are

those at the center of the claims at issue here:     friction

products.

    Bendix and its successors manufactured asbestos products in

New York from 1939 until 2001 and in Tennessee from 1965 through

2001.     As noted, asbestos ceased to be used as a component of

the friction products in 2001.

    Honeywell is the corporate successor to Bendix as a result

of the following corporate changes.     The Allied Corporation

(Allied) acquired Bendix in 1983 and operated it as a wholly

owned subsidiary, assuming Bendix’s obligations and liabilities.

Allied was incorporated under the laws of the State of New York

                                  17
and had its principal place of business in New Jersey.       In 1985,

Allied and Signal Companies merged, becoming wholly-owned

subsidiaries of The Allied-Signal Inc., a new Delaware

corporation that also has been headquartered in New Jersey since

the merger.     The Allied-Signal Inc. changed its name to

AlliedSignal Inc. in 1993; AlliedSignal Inc. merged with

Honeywell, Inc., in December of 1999 and changed its name to

Honeywell.     Honeywell was incorporated under the laws of the

State of Delaware, but its headquarters and principal place of

business have always been located in Morristown, New Jersey.

    Since 1983, all insurance operations for Bendix and its

successors have been located in New Jersey.     In total, Honeywell

has purchased more than $3.5 billion in umbrella and excess

insurance for Bendix’s and its successors’ liabilities from

insurers whose principal places of business were located in over

fourteen states and countries, including New Jersey.

    It appears not to be disputed that the excess insurance

policies, which were not subject to settlement before the trial

court, were all brokered, issued, and delivered to Bendix in

Michigan.     Travelers’s predecessor, Aetna, issued its disputed

policies to Bendix between 1977 and 1983; St. Paul issued its

disputed policies between 1968 and 1970.     None of the policies

contain a choice-of-law provision governing the allocation issue

before us.

                                  18
                                C.

    As noted, the trial court granted Honeywell’s motion for

partial summary judgment in 2006, holding that New Jersey

insurance-allocation law would apply in this matter.

    When, in 2011, the motion court addressed motions for

partial summary judgment that involved the dispute over the

duration of the coverage block of insurance, the parties were

eleven years into the case.   The parties asked the court to

consider resolving six issues as a matter of law, as well as to

appoint a special allocation master as Owens-Illinois suggested

would be appropriate for complicated, long tail, asbestos-

injury-claims cases.

    The duration of the coverage block teed up the issue of the

unavailability rule’s application in this matter.    All parties

agreed that the beginning point would be 1940.    Continental, the

primary insurer for many years, started paying out claims in the

1980s, before Owens-Illinois was decided in 1994.    It had some

years in which its policy had no upper limit.    Consistent with

promoting the interests of its insured, it began paying claims

for claimants and to assist Bendix and its successors in the

resolution of claims, leaving coverage disputes to be resolved

independently.   Eventually, Continental assigned to Honeywell

its rights with respect to the primary’s responsibilities under

allocation.   That assignment included the considerable

                                19
complication that its records made it difficult to determine how

Continental had been variously assigning costs (i.e., defense

costs or liability costs and to which matter), which affected

the order of exhaustion of policies among insurers.   As the

record highlights, between 1980 and 1994, Continental’s

assignment of past defense costs was unclear and, once those

costs could be identified, required assessment in respect of the

allocation theory to be applied to this matter.   That and other

issues were implicated in this complicated matter of insurance

liability allocation that was the essence of the complaint in

this matter.

    The trial court determined that one law on allocation

should apply and that should be New Jersey law.   That approach

allowed the court to use one set of rules to sensibly and

coherently allocate responsibility among insurers, over decades

of actions, and the many payments already made by insurers, as

well as the insured, depending on the policy-imposed obligations

and coverage limitations held to apply.   And, the court’s

determination was consistent with previous decisions that

recognized that Owens-Illinois could be applied retroactively,

including for defense costs.   See Champion Dyeing & Finishing

Co. v. Centennial Ins. Co., 
355 N.J. Super. 262, 270-71 (App.

Div. 2002); see generally Chem. Leaman Tank Lines, Inc. v. Aetna

                                20
Cas. & Sur. Co., 
177 F.3d 210, 229-31 (3d Cir. 1999) (applying

Owens-Illinois retroactively).

    The determination of the coverage block was immensely

important to the continued resolution of the issues.    The Owens-

Illinois allocation methodology, simply described, looks at the

time on the risk horizontally and the total limits in each

annual period vertically.   Thus, an endpoint to the coverage

block of insurance to be divvied up for claims and defense costs

is essential to the calculation and to the assignment of risk to

be borne by primary insurers and exhausted in each policy year

before the excess insurer is tapped for its contributions for

that year.

    Owens-Illinois utilizes that allocation approach,

recognizing also a continuous-trigger doctrine to explain the

basis for recognizing occurrences in the year of first exposure

to asbestos and in each subsequent policy year.   To avoid having

its insurance triggered, an insurer has the burden of showing

that exposure did not occur earlier or during the policy year

for which it wrote coverage for the insured.   Otherwise,

manifestation of injury presenting itself thereafter resulted in

allocation of that individual’s claim, in accordance with

mathematical formulae, to that insurer’s policy year.

    It was within the context of that setting and law that the

motion court considered the parties arguments over the duration

                                 21
of the coverage block.   Travelers (taking the lead in argument)

and St. Paul, both excess insurers, argued that the coverage

block should run until the year in which Honeywell, as the

successor to Bendix, ceased manufacturing the friction products

–- 2001.   Honeywell maintained that the coverage block should

end in the 1986-87 period when first primary (1986) and then

excess (April 1, 1987) insurance ceased to be available.     To the

excess insurers, Honeywell was arguing for truncating the

insurance coverage block.   To Honeywell, Travelers was arguing

for extenuation of the insurance coverage block.

    The unavailability rule’s application in this case became a

point of debate.   Travelers asserted earlier in this matter that

a fact question existed about whether insurance was available in

the marketplace.   In 2007, another motion judge ordered

discovery and a hearing on that question.   When the presently

discussed motion for partial summary judgment came before the

deciding motion judge, the court concluded that there was no

genuine issue of fact concerning the question.     The court held

that commercial policies were not available to Honeywell

beginning with the 1986/87 period as it had maintained, and we

note that fact determination is not challenged in this appeal.

    As a result of the discovery that had taken place though,

Travelers also argued, in connection with the partial summary

judgment motion, that Honeywell was self-insured.     In advancing

                                22
that argument, it pointed to the company’s maintenance of

corporate reserves.   Travelers further argued that Honeywell had

assumed the risk and should be treated as responsible for the

years that it continued to manufacture friction products after

1987 until 2001 -- another fifteen years, which would reduce the

exposure of the excess carriers in the allocation methodology

form that which would occur under a coverage block that ended in

1987.

    With respect to the reserves, the trial court dismissed the

argument that maintenance of reserves is the equivalent of self-

insurance.   The court also rejected the argument that somehow

that business practice of maintaining reserves represented an

assumption of insurance risk relevant to resolution of the

coverage block dispute.

    The focal point to the argument and decision by the court

was the unavailability rule application, or not, to determining

triggered years of insurance for purposes of allocation under

the Owens-Illinois paradigm.

    On that point, the court heard from Travelers the arguments

that continued manufacturing by Honeywell from 1987 to 2001

increased the number of pre-1987 exposure claims, increased the

potential value of pre-1987 claims by alleged enhanced injury

from continued exposure, and resulted in encouraging more people

to file claims based on pre-1987 exposure.

                                23
    Honeywell argued that the record lacked factual or expert

evidence to support those assertions of inference.   Moreover,

Honeywell emphasized that Owens-Illinois allocation theory

addressed assumption of insurance risk not assumption of tort

risk.

    Ultimately, the trial court agreed with Honeywell that the

insurance coverage period should not be extended, as Travelers

requested, to include years from 1987 to 2001.   Applying Owens-

Illinois’s approach to allocation of insurance risk to claims

arising exclusively from pre-1987 initial exposure, the court

determined that the unavailability of commercial insurance

should end the coverage block of insurance.   Hence, the decision

fixed with certainty the policies, with their specific terms and

amounts, that were available for the special master to consider

when allocating among insurers and Honeywell for that period of

time alone.   That July 22, 2011 decision had the result of not

requiring the court, or anyone else, to attempt to determine how

policy amounts or limits or related insurance concerns for post-

1987 years would be overlaid on Honeywell during the 1987-2001

period when manufacturing continued or how such corporate

finances would be sorted out between post- and pre-1987 claims.

    After the parties consented to the appointment of a special

allocation master (SAM), this matter proceeded before the SAM

with policy years, policies, and amounts certain for the period

                                24
of 1940-1987 as he addressed the already complicated issues

before him.   As the SAM’s initial report to the trial court

clearly noted before delving into the difficult issues assigned

to him,

          [a] Bendix asbestos claim triggers those
          policies issued to Bendix and/or Honeywell
          that were in effect during the portion of the
          Trigger Period that is within the coverage
          block. Exposure to an asbestos product shall
          be presumed to be exposure to a Bendix
          product, with the burden shifting to each
          insurer to prove that there was no exposure to
          a Bendix product before or during its policy
          period. There is no coverage under a policy
          where the claimant’s first exposure to
          asbestos from a Bendix product takes place
          after the effective period of a given policy
          expired.

    After holding hearings and hearing argument, the SAM issued

a report and supplemental report containing recommendations on

allocation.   The trial court adopted the SAM’s recommendations,

with one exception not relevant to this appeal, and entered a

final judgment on September 16, 2013.   By the time this matter

reached appellate processes, almost all claims had settled.

                                D.

    Travelers and St. Paul jointly appealed the trial court’s

two orders to the Appellate Division.   They appealed the

November 9, 2006 order, which granted Honeywell’s partial

summary judgment motion and applied New Jersey allocation law,

and the July 22, 2011 order, which granted Honeywell’s partial

                                25
summary judgment motion and held that Honeywell had no

allocation responsibility because after 1987 it was not able to

obtain insurance coverage for asbestos claims.    The Appellate

Division affirmed the trial court but required a limited remand

not pertinent to this appeal.

     The appellate panel considered the trial court’s choice-of-

allocation-law ruling only as applied to Travelers’s eight

excess policies.1   In its substantive review of that question,

the panel determined that there was a conflict between the

insurance-allocation methodologies of New Jersey, as determined

by Owens-Illinois, and the Michigan time-on-the-risk

methodology, espoused by the Michigan Court of Appeals in Arco

Industries Corp. v. American Motorists Insurance Co., 
594 N.W.2d 61 (Mich. Ct. App. 1998) (Arco), aff’d by an equally divided

court, 
617 N.W.2d 330 (Mich. 2000).    The appellate panel found

inapplicable the Restatement (Second) of Conflict of Laws (Am.

Law Inst. 1971) (Restatement) § 193, entitled “Contracts of

Fire, Surety or Casualty Insurance,” because its site-specific

approach was inconsistent with Travelers’s nationwide insurance

policies and Bendix’s selling of the friction products

1  Because St. Paul had not filed a   motion before the trial court
for the application of Michigan law   and did not oppose
Honeywell’s motion asking the court   to apply New Jersey law, its
policies were not considered by the   panel for purposes of this
first issue.

                                26
throughout the United States.    The appellate panel instead

analyzed the issue through Restatement §§ 188 and 6.     The panel

particularly relied on the § 6 factors, as distilled by this

Court in Pfizer, Inc. v. Employers Insurance, 
154 N.J. 187, 198-

99 (1998).   The appellate panel considered the public policy

interests of both states; the interests of commerce among the

states; the interests of the parties, including an evaluation of

where the insurance policies were brokered, negotiated,

underwritten, and issued; and the interest of judicial

administration.    Ultimately, the panel agreed with the trial

court and concluded that the choice-of-law analysis supported

the application of New Jersey law to Travelers’s eight excess

policies, which were in effect between February 1, 1977 and

October 1, 1983.

    The appellate panel further agreed with the trial court

that, under Owens-Illinois, Honeywell was not required to

contribute to allocation for pre-1987 initial exposure claims

even if the claimant did not manifest injury until after 1987,

given that excess insurance for asbestos-related claims was not

reasonably available for purchase after 1987.

    St. Paul and Travelers petitioned this Court for

certification, raising both the choice-of-law and allocation

issues.   We granted their petition.   
228 N.J. 437 (2016).

                                 II.

                                 27
    Turning first to the choice-of-law question, the parties

disagree on the outcome of the first step in that inquiry:

whether a true conflict exists.    Travelers contends there is a

difference in the methodologies of the two states.    Honeywell,

on the other hand, maintains that Michigan has not clearly

adopted a set methodology and, so, it has no policy with which

New Jersey’s methodology can be said to conflict.

    Assuming there is a conflict requiring a choice-of-law

determination, the parties differ as to the proper analytic

approach and the outcome.

    Travelers asks this Court to resolve and clarify the

relationship between Restatement §§ 193 and 188 and our prior

decisions and focuses in particular on State Farm Mutual

Automobile Insurance Co. v. Estate of Simmons, 
84 N.J. 28

(1980).   Travelers acknowledges that our law has moved from a

lex-loci-contractus approach toward a most-significant-

relationship approach in contract disputes.    However, Travelers

emphasizes that

          the law of the place of the contract
          ordinarily governs the choice of law because
          [that] rule will generally comport with the
          reasonable   expectations  of   the   parties
          concerning the principal situs of the insured
          risk during the term of the policy and will
          furnish needed certainty and consistency in
          the selection of the applicable law.

          [(quoting Simmons, 
84 N.J. at 37).]

                                  28
Travelers maintains that we have directly addressed choice-of-

contract-law questions only in the context of environmental

coverage disputes and not in circumstances akin to those present

here, where a products-liability case has resulted in claims

across the nation.   It argues that New Jersey’s site-specific

choice-of-law approach for environmental disputes is not well

suited for products-liability cases in which insurance contract

disputes arise.

    Here, Travelers maintains that, because the insurance

contracts at issue were brokered, negotiated, underwritten,

issued, and delivered to Bendix in Michigan, the presumption

under Simmons and Restatement § 193 in favor of application of

the law of the place of contract should result in a presumptive

application of Michigan law in this matter.   Travelers asserts

that no state has an interest that overcomes, in this instance,

the presumption that a court should apply the laws of the site

of contracting.

    Honeywell disagrees that Simmons’s purported presumption --

that the site of the place of contract is of paramount

importance -- is applicable in these circumstances.   It argues

that we have rejected adopting the law of the site of the

contract as the presumptive law and urges consideration of the

comparative interests of the respective states.   Here, Honeywell

urges application of the Restatement § 6 factors, as distilled

                                29
in Pfizer.    Applying those factors, Honeywell argues that the

relative interests of Michigan are minimal compared to the

interests of New Jersey.

    We reserve a more granular discussion about the § 6

factors, as they pertain in this matter, for our later analysis.

                                 III.

    We begin with familiar terrain.     Choice-of-law questions

involve legal determinations, and therefore our review is de

novo.   McCarrell v. Hoffmann-La Roche, Inc., 
227 N.J. 569, 583-

84 (2017).    Furthermore, when a civil action is brought in New

Jersey, we use New Jersey choice-of-law rules to decide whether

this state’s or another state’s legal framework should be

applied.   Id. at 583.

                                  A.

    The first step in a conflicts analysis is to decide whether

there is an actual conflict between the laws of the states with

interests in the litigation.    P.V. ex rel. T.V. v. Camp Jaycee,

197 N.J. 132, 143 (2008).    “If there is no actual conflict, then

the choice-of-law question is inconsequential, and the forum

state applies its own law to resolve the disputed issue.”     Rowe

v. Hoffman-LaRoche, Inc., 
189 N.J. 615, 621 (2007).    A conflict

of law requires a “substantive difference” between the laws of

the interested states.     DeMarco v. Stoddard, 
223 N.J. 363, 383

(2015).    A “substantive difference” is one that “is offensive or

                                  30
repugnant to the public policy of this State.”      Ibid.; see also

McCarrell, 
227 N.J. at 584 (noting statute of limitations

difference was “outcome determinative” to question before

Court).   Here, we agree with the appellate panel’s determination

that there is a substantive difference between the New Jersey

and Michigan approaches to determining the allocation of

liability between manufacturers and insurers for injuries that

progress after exposure to an allegedly toxic substance.

                                 1.

    New Jersey law employs the continuous-trigger doctrine, as

initially adopted by this Court in our seminal case on insurance

allocation, Owens-Illinois, 
138 N.J. 437.

    In Owens-Illinois, we held “that when progressive

indivisible injury or damage results from exposure to injurious

conditions for which civil liability may be imposed, courts may

reasonably treat the progressive injury or damage as an

occurrence within each of the years of [the insurance] policy.”

Id. at 478.   We acknowledged that “injury may mean different

things in different contexts” and that “the point at which the

law will say that injury requires indemnity” is not “easily

understandable.”   Id. at 457.   “In that sense,” we noted, “the

concept of injury, like the related concepts of duty and

causation, is an instrument of policy.”     Ibid.   We reviewed the

approaches taken by other jurisdictions to that same question,

                                 31
id. at 459-68, and ultimately settled on the continuous-trigger

theory of liability as a matter of compelling public policy, id.

at 478.    We held that “courts may reasonably treat the

progressive injury or damage as an occurrence within each of the

years of a CGL [(comprehensive general liability insurance)]

policy.”   Ibid.

    Given that the continuous-trigger theory would implicate

multiple insurance policies, we also adopted a methodology for

allocating liability among those policies.          Id. at 474-75.

Under that approach, when determining an insurer’s liability, a

court is to consider both the insurer’s time on the risk and the

degree of risk that insurer assumed.        Ibid.   That entails

“proration on the basis of policy limits, multiplied by years of

coverage.”   Id. at 475.

    Several policy rationales were at work in the Owens-

Illinois approach.     See id. at 472-76.    Our decision identified

the goals sought to be achieved through the designated

allocation approach.    Specifically, we sought to (1) “make the

most efficient use of the resources available to cope with

environmental disease or damage,” id. at 472; (2) encourage

“responsible conduct that will increase, not decrease, available

resources,” ibid.; (3) spread risk among multiple insurers, id.

at 472-73; (4) encourage policyholders to purchase coverage

                                  32
every year, ibid.; and (5) serve “principles of simple justice,”

id. at 473.

    It bears repeating here, as we emphasized then, that the

theory underlying insurance is risk allocation.    Id. at 472.

“Because insurance companies can spread costs throughout an

industry and thus achieve cost efficiency, the law should, at a

minimum, not provide disincentives to parties to acquire

insurance when available to cover their risks.    Spreading the

risk is conceptually more efficient.”   Id. at 472-73.   We said

that an insurance allocation scheme that spreads costs

throughout the industry and promotes an efficient use of

resources translates to more money available to respond in the

event of disease and damage.   Id. at 478.

    This Court has continued to emphasize those public interest

effects when, for example, extending the allocation principles

to include excess insurance in its methodology.    See Carter-

Wallace, Inc. v. Admiral Ins. Co., 
154 N.J. 312, 325-27 (1998)

(rejecting excess insurers’ horizontal exhaustion theory and

adopting vertical loss allocation by year as keeping with policy

principles of Owens-Illinois); see also Spaulding Composites

Co., Inc. v. Aetna Cas. & Sur. Co., 
176 N.J. 25, 39-42 (2003)

(reinforcing primacy of Owens-Illinois’s policy goals when

rejecting enforcement of non-cumulation clause in CGL policy).

                                33
       In sum, we have in New Jersey a longstanding allocation

approach built on a continuous-trigger theory premised on the

notion that asbestos and other progressive environmental

injuries are multiple occurrences and must be treated as such.

See Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 
179 N.J. 87,

104 (2004) (“The multiple occurrence template is a matter of

substance that is at the heart of Owens-Illinois.”).      Our

methodology for determining allocation of liability among

insurers whose policies cover asbestos-related diseases over a

period of years considers both the insurers’ time on the risk

and the degree of risk assumed.    Insurers do not share a single

loss under that methodology; rather, each is made responsible

for losses on its watch, subject to the limits of the policy

each has written, “as calculated in accordance with a formula we

developed as a proxy for a scientific assessment of the amount

of injury happening at each phase on the continuum.”      Id. at

105.

                                  2.

       Michigan utilizes a different allocation method.

       A pro rata allocation theory based on a “time-on-the-risk”

methodology was adopted by the intermediate Court of Appeals in

Arco, 
594 N.W 2d at 68-69.2   That approach “allocates liability

2  We acknowledge the argument that Michigan does not have a
settled policy because of a Michigan Court of Appeals decision
                                  34
among triggered policies using the periods covered by each

insurer without considering the coverage limits of the triggered

policies.”   Id. at 68.   Although a majority of the Michigan

Supreme Court did not vote to affirm Arco, lending it

“diminished precedential value,” In re Martin, 
602 N.W.2d 630,

632 n.2 (Mich. Ct. App. 1999), Arco remains precedential

nonetheless, see Mich. Ct. R. 7.215(J)(1); see also Stoner v.

N.Y. Life Ins. Co.,