Opinion ID: 1929242
Heading Depth: 1
Heading Rank: 2

Heading: What law governs the interpretation of the pollution-exclusion clause?

Text: The analysis differs from Pfizer, supra, and HM Holdings, supra, in that two of the waste sites are located in New Jersey. It is therefore clear that factor one, derived from Restatement (Second) of Conflict of Laws section 6 (1971) ( Restatement ), the competing interests of the states, favors the application of New Jersey law, at least insofar as the New Jersey sites are involved. At issue is the extent of that interest because Unisys has either cleaned up or committed funds to clean up the sites. Because all of the cleanup costs are not yet fully determined, we hesitate to say that New Jersey no longer has an interest in providing funds to remediate the New Jersey sites. Moreover, to penalize a company that has advanced funds to expedite the cleanup of hazardous waste sites would counter the public policy that encourages rapid cleanup of environmental contaminants. As counsel put it, that would turn public policy on its head. Finally, we ought not have a rule of law that distinguishes between the mom-and-pop businesses that need access to insurance funds to clean up hazardous materials and companies that appear to have more cash reserves. If the sums reserved prove to be insufficient to clean up the sites, New Jersey would retain an interest in the outcome of the action. Concerning the interest of commerce among the states, it is clear that application of New York law to the issue of coverage under the pollution-exclusion clause at the New Jersey sites would frustrate New Jersey's policies. Concerning the justifiable expectations of the parties and their interests in predictability of result at the time the insurance policies were issued, we cannot say that the parties would have expected that New York law would govern liability at waste sites in New Jersey or, as Unisys claims, that New Jersey law would govern waste sites elsewhere. For example, all of the subject Wausau policies were negotiated and issued in New York by Wausau's Syracuse, New York office and Burroughs' New York-based brokers. The premiums for these policies were paid to Wausau in New York. Throughout this twenty-five year period, the Burroughs insurance and risk management employees who were involved with the Wausau policies were based in Detroit, Michigan. The policies were countersigned by an agent authorized to countersign policies in Michigan. There is simply no New Jersey connection with the out-of-state sites. With respect to factor four, the concern for judicial administration, we respect the trial court's concerns for a single governing law. We do not expect, however, that the issues will be unmanageable. Wausau's counsel acknowledged that [w]hen Phase I is complete, the legal principles and central facts which have emerged will likely translate to the remaining, less significant sites, so that resolution of the remaining sites will proceed more rapidly. An extraordinarily experienced trial court is handling these cases and will make the issues manageable. Hence, we believe that in the case of New Jersey sites, New Jersey law should govern; in the case of the other sites, the law of the waste sites should govern if it differs from New Jersey's.