Court Opinion

ID: 4517808
Source: CourtListenerOpinion
Date Created: 2020-03-19 14:08:35.841803+00
Date Added: 2024-06-11T11:46:53.967126
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-1472-18T2

SALLIE SCHONEBOOM,

          Plaintiff-Appellant,

v.

ALLSTATE NEW JERSEY
INSURANCE COMPANY,
ANNE H. MOCKRIDGE, and
OSCAR A. MOCKRIDGE, III,

          Defendants-Respondents,

and

THE POWDERHORN AGENCY,
INC., a/k/a THE PROGUARD
PROGRAM, MITCHELL SUPREME
FUEL COMPANY, and ACT
TECHNOLOGIES, INC., a/k/a
ADVANCED TANK SERVICES
COMPANY,

     Defendants.
________________________________

                    Argued November 4, 2019 – Decided March 19, 2020

                    Before Judges Fasciale and Rothstadt.
             On appeal from the Superior Court of New Jersey, Law
             Division, Essex County, Docket No. L-6653-12.

             Howard P. Davis argued the cause for appellant (The
             Law Office of Howard Davis, PC, attorneys; Howard P.
             Davis, of counsel and on the brief; Anne Ronan and
             Robert Gorrie, on the briefs).

             David J. D'Aloia argued the cause for respondent
             Allstate New Jersey Insurance Company (Saiber LLC,
             attorneys; David J. D'Aloia and Amy K. Smith, on the
             brief).

PER CURIAM

      Plaintiff Sallie Schoneboom appeals from the Law Division's October 26,

2015 order denying her motion for partial summary judgment and granting

defendant Allstate New Jersey Insurance Company's (Allstate) motion for summary

judgment and dismissing her complaint.1         In her complaint, plaintiff, whose

residential property was insured by Allstate, sought a declaration of coverage for the

costs associated with the environmental cleanup of her property and the surrounding

areas, which was caused by an underground storage tank (UST) that leaked fuel oil

1
  Plaintiff also appeals from the October 24, 2018 final judgment entered in this
matter against plaintiff and the previous owners of her home, defendants Anne
and Oscar Mockridge, equally allocating the clean-up costs between them.
However, neither plaintiff nor Allstate briefed this issue and the Mockridges
have not appealed. Under these circumstances we deem the appeal from the
final judgment to be waived. See N.J. Dep't of Envtl. Prot. v. Alloway
Township, 438 N.J. Super. 501, 505-06 n.2 (App. Div. 2015).
                                                                              A-1472-18T2
                                          2
into the soil and groundwater. Allstate denied coverage because it contended that

its policy contained exclusions that applied to such leaks unless they were "sudden

and accidental." Relying on the Court's definition of "sudden and accidental" as

stated in Morton International, Inc. v. General Accident Insurance Co. of America,

134 N.J. 1 (1993), and distinguishing this case from the Court's reasons for not

applying its definition in Morton, the motion judge granted Allstate's motion.

      On appeal, plaintiff argues that we should reverse the motion judge's decision

because "sudden and accidental" is a term of art with a judicially established

meaning under Morton and should have been similarly applied here.                 In the

alternative, even if the phrase was applied literally, plaintiff contends it was an error

to allow Allstate to deny coverage. Plaintiff also argues that Allstate should be

bound by the "[r]easonable [e]xpectations [r]ule" and that the motion judge

erroneously relied on extrinsic evidence in issuing her decision. We reverse as we

conclude the motion judge incorrectly rejected the established meaning of "sudden

and accidental" under Morton.

                                               I.

                                 The Property and the UST

      The material facts are not in dispute and are summarized as follows. The

property insured by Allstate was improved by a single-family home that had been

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                                           3
owned by the Mockridges for approximately thirty-four years, beginning in 1971.

During that time, the Mockridges used a fuel oil system, "which included a 550

gallon" UST that was serviced and maintained by defendant Mitchell Supreme Fuel

Company (Mitchell).

      While the Mockridges owned the home, they maintained an accidental release

service plan through Mitchell (the Mitchell Plan) that covered a cleanup for any

contamination caused by the UST leaking. The Mockridges also had a contract with

defendant ACT Technologies Incorporated, a/k/a Advanced Tank Services

Company (Advanced) to "test[], inspect[], maintain[], repair, monitor[], extract[],

remov[e] and" perform other related services with regard to the fuel system and UST.

They entered into that contract "with the intention of obtaining information and

assurances as to the environmental condition of the UST and [p]roperty that they

could provide to any potential purchaser," who would be an intended beneficiary of

the contract. On June 17, 2005, Advanced inspected and tested the UST and

informed the Mockridges that the tank "did not [have] any detectable leaks and

certified that [it] . . . had a leak status of 'Pass.'" Nevertheless, at some point during

their ownership, a discharge occurred from the UST.

      In 2006, the Mockridges sold the property to plaintiff. The Mockridges

provided plaintiff with Advanced's certification and assigned the Mitchell Plan to

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                                            4
plaintiff. After plaintiff purchased the property, she continued to purchase heating

oil from Mitchell, which also remained responsible for repair and maintenance

services for the UST.

      On September 1, 2009, the Mitchell Plan was replaced with a plan issued by

defendant The Powderhorn Agency, Incorporated a/k/a The ProGuard Program (the

ProGuard Plan), which provided that Mitchell, ProGuard, or both would pay or

reimburse plaintiff for contamination cleanup costs related to an accidental release

from the UST. The ProGuard Plan also provided coverage for "expenses related to

replacing the UST with an above-ground storage tank ('AST')." Additionally, in

September 2009, Mitchell recommended that plaintiff replace the UST with an AST,

per the coverage provided. Plaintiff followed that recommendation and between

September and December 2009, a new AST was installed, "and the UST was

decommissioned."

                                   Allstate's Policy

      When plaintiff took title to the Montclair property, she purchased

homeowners insurance from Allstate, effective May 1, 2006.            As part of the

application, there was an oil tank certification that required plaintiff's initials. It

stated that "I am not eligible to purchase the Oil Tank Liability Protection

Endorsement because I have an oil tank [ten] or more years old, that is NOT above

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                                          5
ground and indoors on a solid masonry floor, or only a permanently

decommissioned/abandoned oil tank, on the premises."

      The policy issued by Allstate contained several exclusions. They included the

following:

             4. Water or any other substance on or below the surface
             of the ground, regardless of its source. This includes water
             or any other substance which exerts pressure on, or flows,
             seeps or leaks through any part of the residence premises.

                   ....

             13. Soil conditions, including, but not limited to, corrosive
             action, chemicals, compounds, elements, suspensions,
             crystal formations or gels in the soil.

             14. Discharge, dispersal, seepage, migration, release or
             escape of pollutants . . . . Pollutants mean any solid,
             liquid, gaseous or thermal irritant or contaminant
             including smoke, vapor, soot, fumes, acids, . . . chemicals,
             and waste. Waste includes materials to be recycled,
             reconditioned, or reclaimed.

             In addition, we do not cover loss consisting of or caused
             by any of the following:

             15. a) [w]ear and tear, aging, marring, scratching,
             deterioration, inherent vice, or latent defect.

                    ....

                    d) [r]ust or other corrosion.

                   ....

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                                          6
            18. Seepage, meaning continuous or repeated seepage or
            leakage over a period of weeks, months, or years, of water,
            steam or fuel:

                  a) from a plumbing, heating, airconditioning or
                  automatic fire protection system or from within a
                  domestic appliance; or

                  b) from, within or around any plumbing fixtures,
                  including, but not limited to, shower stalls, shower
                  baths, tub installations, sinks or other fixtures
                  designed for the use of water or steam.

                  ....

            22. Planning, [c]onstruction, or [m]aintenance, meaning
            faulty, inadequate or defective:

                  a) planning, zoning, development, surveying . . . ;

                  b) design, specifications, workmanship, repair,
                  construction, renovation, remodeling, grading,
                  compaction;

                  c) materials used in repair, construction, renovation
                  or remodeling; or

                  d) maintenance . . . .

      There was also no coverage for "property damage to property owned by

an insured person whenever any benefit of this coverage would accrue to an

insured person." The policy also included the following provisions:

            15. We do not cover . . . property damage consisting of or
            caused by, the discharge, dispersal, release or escape of
            oil, fuel oil, kerosene, liquid propane or gasoline intended

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                                           7
            for or from storage tank(s) located at the address stated on
            the Policy Declarations. This exclusion does not apply
            when the discharge, dispersal, release or escape is sudden
            and accidental.

            16. We do not cover any liability imposed upon any
            insured person by any governmental authority . . . for
            property damage consisting of or caused by the discharge,
            dispersal, release or escape of oil, fuel oil, kerosene, liquid
            propane or gasoline intended for or from storage tank(s)
            located at the address stated on the Policy Declarations.
            This exclusion does not apply when the discharge,
            dispersal, release or escape is sudden and accidental.

            17. We do not cover any loss, cost or expense arising out
            of, consisting of or caused by any request, demand or order
            that any insured person test for, monitor, clean up, remove,
            contain, treat, detoxify, or neutralize or in any way
            respond to or assess the effects of oil, fuel oil, kerosene,
            liquid propane or gasoline intended for or from storage
            tank(s) located at the address stated on the Policy
            Declarations. This exclusion does not apply when the
            discharge, dispersal, release or escape of oil, fuel oil,
            kerosene, liquid propane or gasoline is sudden and
            accidental.

            [(Emphasis added).]

      The exclusion and the "sudden and accidental" exception to it had been

approved by the New Jersey Department of Banking and Insurance (DOBI) in

2004. When Allstate made the application to include that language, it disclosed

to DOBI that its intent was to not provide coverage for its insureds' costs

associated with leaks from fuel tanks due to corrosion.

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                                          8
      When plaintiff obtained her Allstate policy, she also received a notice

regrading oil tanks being excluded from coverage, "other than for a sudden and

accidental loss," but that if she installed a new tank, she could purchase coverage

for damages caused by other leaks as well. The notice stated that, "if you have an

oil tank, liability losses or damages you incur because of a discharge of oil for

example, from your oil tank, other than for a sudden and accidental loss, will not be

covered by your Allstate New Jersey homeowners policy." (Emphasis added). The

notice also suggested plaintiff consider purchasing oil tank liability protection "if

[she] replace[d] [her] existing tank with a new one. If [she had] a tank that [did not]

meet [Allstate's] eligibility requirements, perhaps [it was] time to replace it and then

make sure that [she was] protected with this coverage." (Emphasis added).

      Regardless of the contents of Allstate's policy, according to plaintiff, it was

not her practice to "review insurance policies, service plans, [or] other

documentation of that type." She did not read the insurance policy from Allstate

when she bought the house and would "file [policy declarations and policy forms]

without reviewing them." She believed that the Mitchell Plan would "provide the

necessary coverage" in the event of a leak from the UST.

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                                           9
                        The Failure of the UST and Plaintiff's Claim

      In July 2010, the UST failed a tank evaluation test, which plaintiff reported to

ProGuard. The tank was removed by an environmental contractor in August 2010,

at which time it was discovered that the UST had eight or more holes and had been

leaking, causing soil, subsoil, and groundwater contamination.           It was later

determined that the leak began sometime between 1969 and 1975 and continued

leaking through 2010.

      On August 24, 2010, plaintiff filed a claim with Allstate, which promptly

rejected the claim without conducting an investigation because the policy did not

provide coverage for a fuel tank leak. A year later, plaintiff demanded that Allstate

withdraw its prior denial to avoid litigation and that it conduct a proper

environmental investigation. According to plaintiff, the contamination was covered

because it was not the result of an intentional act and to deny coverage without an

investigation amounted to bad faith.

      In response, Allstate withdrew its denial of coverage under a reservation of

rights and retained an environmental specialist to perform the investigation. Plaintiff

retained her own consultant to be onsite when samples were taken and to conduct its

own independent analysis. Allstate's and plaintiff's environmental investigations,

which included numerous tests of soil samples, confirmed that soil and groundwater

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                                         10
contamination were present at the property. Based on those findings, in a coverage

diary entry, Allstate indicated that "[t]he observation of free phase oil seems to

indicate a coverage trigger . . . ."

       Plaintiff sent a letter to Allstate on July 17, 2012, stating that the results

evidencing groundwater contamination triggered coverage under the policy. She

requested immediate coverage and further evaluation of the extent of the

contamination. Allstate issued a denial of coverage on September 7, 2012, based

upon its investigation not "disclos[ing] any covered loss or occurrence under the

Policy." It explained that no coverage existed because "the leaking UST [did] not

result[] in a sudden and accidental direct physical loss." (Emphasis added). It noted

that coverage was not provided for "land or its replacement, restoration or

stabilization." Allstate also advised that no coverage was available "because the

leaking UST [did] not cause[] property damage arising from an occurrence."

                                       The Litigation

       On September 13, 2012, plaintiff filed her complaint against Allstate, alleging

breach of contract; bad faith denial; delay; and violation of the covenant of good

faith and fair dealing; and violation of the New Jersey Consumer Fraud Act, N.J.S.A.

56:8-1 to -20. She also sought judgment declaring that the policy covered the loss,

requiring Allstate to "defend and indemnify [p]laintiff against" loss and liability

                                                                              A-1472-18T2
                                         11
based on the contamination, granting her specific performance under the contract,

and "[d]eclaring and adjudicating [her] rights and obligations . . . under the . . .

polic[y] with respect to . . . past and future liabilities for the environmental claims."

      Allstate filed its answer on October 25, 2012.2 It denied the allegations and

asserted twenty-six separate affirmative defenses, including that "[t]here [was] no

coverage under the Policy for the losses alleged in the [c]omplaint because the

leaking [UST was] not a sudden and accidental direct physical loss." Citing to its

policy's exclusions, Allstate reiterated in its separate defenses that there was no

coverage provided. After plaintiff later amended her complaint to join the other

defendants in this matter, Allstate filed crossclaims for contribution and

indemnification against them as well.

      Plaintiff filed a motion for partial summary judgment in February 2014.

Allstate filed a cross-motion seeking summary judgment and on May 30, 2014,

the parties appeared before the motion judge for oral argument.

      In an oral decision placed on the record on October 22, 2015, the judge

denied plaintiff's motion and granted Allstate's, dismissing plaintiff’s complaint

against Allstate with prejudice. At the outset, the judge noted that plaintiff's

2
   Defendant also filed for declaratory judgment against plaintiff that no
coverage existed. The complaint was ultimately dismissed.

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                                          12
"interpretation of the term 'sudden' render[ed] the exclusion of basic nullity" and

"essentially[ rewrote] the exclusion to be one that [was] applicable only to that small

category of insureds who would purchase a home and a homeowner's insurance

policy actually expecting [a UST] to leak." The judge noted that the Morton Court

determined for a disbursal of fuel or other pollutant to be sudden, it must begin

abruptly, which was a "temporal quality, albeit, it may last a long time or a short

time, but . . . the beginning of it is abrupt." Because the event causing a gradual

deterioration must be abrupt, the judge found that Morton did not support plaintiff's

argument that "general deterioration without some other abrupt event that causes it

can be considered sudden as defined in the policy exclusion." The judge also cited

to ACL Technologies, Inc. v. Northbrook Property & Casualty Insurance, 22 Cal.

Rptr. 2d 206 (Cal. Ct. App. 1993) for the proposition that sudden does not mean both

unexpected and gradual. While she noted that the leakage may have been accidental

and unexpected, the holes in the tank were caused from corrosion and the leak itself

was gradual.

      The judge then addressed the regulatory estoppel applied in Morton. She

noted that the insurance industry "misled . . . regulatory authorities when it sought

approval of the sudden and accidental . . . language." In distinguishing this case, the

judge noted that Allstate was "very up front [in] what [it] w[as] attempting to do"

                                                                               A-1472-18T2
                                         13
when applying for approval for its policy’s language and explained that it should not

have to pay for leaks caused by failure to maintain tanks.

      The judge further explained that any argument regarding plaintiff's reasonable

expectation that she would have coverage was without merit given the notices in the

policy about oil tank liability protection. The judge also noted that any claims

regarding Allstate's failure to act in good faith were likewise without merit because,

while it originally denied coverage, Allstate subsequently performed an

investigation under a reservation of rights before it denied coverage again. The

judge entered the order memorializing her decision on October 26, 2015.

      Thereafter, plaintiff resolved her claims against the remaining defendants,

except for the Mockridges. After plaintiff amended her complaint to include a

claim under the New Jersey Spill Compensation and Control Act (the Spill Act),

N.J.S.A. 58:10-23.11 to -23.34, her claims against the Mockridges were

addressed by a different judge. On August 22, 2018, that judge issued a written

decision in which he determined that the leak began during the Mockridges'

ownership, and discharges from the UST continued after plaintiff acquired title

to the premises. For that reason, he concluded that both parties were "equally

responsible for clean[]up costs," as they both used the UST in the same way and

                                                                              A-1472-18T2
                                        14
released the same pollutants into the ground. The judge entered a final judgment on

October 24, 2018, allocating the costs of the cleanup. This appeal followed.

                                            II.

      On appeal, plaintiff argues that the motion judge did not apply Allstate's

"sudden and accidental" provisions consistent with the Court's holding in

Morton and, in the alternative, even under a literal application of that clause, it

was error to deny coverage.       Moreover the "reasonable expectation" rule

compelled a finding of coverage and, in any event, the judge improperly

"rel[ied] on extrinsic evidence in determining coverage under the fuel oil

pollution exclusions at issue in this case."

      We review a court's grant of summary judgment de novo, "apply[ing] the

same standard as the trial court." Conley v. Guerrero, 228 N.J. 339, 346 (2017).

The motion "judge's conclusions and interpretation of the record are not entitled

to our deference." Wear v. Selective Ins., 455 N.J. Super. 440, 453 (App. Div.

2018). Summary judgment must "be granted if the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact challenged and

that the moving party is entitled to a judgment or order as a matter of law."

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                                       15
Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224
N.J. 189, 199 (2016) (quoting R. 4:46-2(c)).

      Initially, we observe that "exclusions in insurance policies are

presumptively valid and enforceable 'if they are "specific, plain, clear,

prominent, and not contrary to public policy."'" Wear, 455 N.J. Super. at 454

(quoting Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010)).               Typically,

exclusions are construed narrowly. Ibid. However, we will "not . . . disregard the

'clear import and intent' of a policy's exclusion," ibid. (quoting Flomerfelt, 202 N.J.

at 442), but we will not enforce even a "conspicuous, plain and clear" exclusion if it

"misleads," Sosa v. Massachusetts Bay Ins., 458 N.J. Super. 639, 652 (App. Div.

2019) (quoting Gerhardt v. Cont'l Ins., 48 N.J. 291, 298 (1966)).

      The Court in Morton addressed a similar exclusion in a commercial

general liability policy and determined for public policy reasons the "sudden and

accidental" exception should not be given its plain meaning.3 134 N.J. at 28-29.

3
  In our opinion in J. Josephson, Inc. v. Crum & Forster Insurance, 293 N.J.
Super. 170, 191 (App. Div. 1996) we summarized the facts in Morton as follows:

             In Morton our Supreme Court settled the vexing
             questions of how the standard pollution exclusion
             clause and the definition of a covered "occurrence"
             found in [commercial general liability] policies should
             be interpreted where claims for coverage were based on

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                                         16
In determining the proper application of a "sudden and accidental" provision

relating to environmental claims under a general commercial liability policy, the

Court initially applied the well-settled rule that "courts should give the policy's

words 'their plain, ordinary meaning.'" Wear, 455 N.J. Super. at 453 (quoting

Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J. 110, 118 (2005)); see also

Morton, 134 N.J. at 56.       However, it held that despite the "sudden and

accidental" exception's ordinary meaning, in the context of exceptions to

            environmental pollution. There, the insured sought
            coverage for cleanup costs related to the remediation of
            Berry's Creek, a waterway polluted by discharges from
            a mercury processing plant operated for over forty
            years by Morton's predecessors.         Morton sought
            coverage      under     policies     which     provided
            indemnification for property damage "resulting from an
            occurrence" except where that property damage arose
            out of the discharge, dispersal, release or escape of
            contaminants or pollutants in or upon land. That
            exclusion, however, did not apply if "such discharge,
            dispersal, release or escape is sudden and accidental."
            An occurrence was defined as an "unexpected event or
            happening . . . or a continuous or repeated exposure to
            conditions" resulting in property damage "provided the
            insured did not intend or anticipate that injury to or
            destruction of property would result."

            [(Alteration in original) (emphasis added) (citations
            omitted).]

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                                       17
contamination exclusions, a different meaning would be applied. Morton, 134
N.J. at 28-29.

      In explaining the plain language of the exception, the Court noted that

"sudden" is a "temporal element, generally connoting an event that begins abruptly

or without prior notice or warning," but clarified that "the duration of the event . . .

is not necessarily relevant to whether the inception of the event is sudden." Id. at

29. It does not matter how long the event lasted but the focus is rather on the

"inception of the event."4 Ibid. The Court specifically stated "'sudden' events

may begin abruptly, and continue undetected for a significant period," and that

the "gradual deterioration of a pipeline or container is not necessarily

inconsistent with a 'sudden' discharge of pollutants." Id. at 72 (emphasis added);

but see ACL Techs., Inc., 22 Cal. Rptr. 2d at 212 ("[T]he 'sudden and accidental'

language in the . . . pollution exclusion does not allow for coverage for gradual

pollution.").     It also explained that "accidental" referred to discharges of

pollutants that "occur abruptly or unexpectedly and are unintended." Morton,
134 N.J. at 29.

4
  Contrary to Allstate's focus on "sudden and accidental" applying to plaintiff's
"direct physical loss" in denying coverage, the Court's application of "sudden
and accidental" looks to the inception of the cause of the loss. Ibid.
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                                         18
      Instead of applying the plain meaning of the exception to the exclusion,

the Morton Court expressly "limit[ed its] holding concerning the limited effect

of the pollution-exclusion clause to cases in which the insured or an agent

specifically authorized to act for the insured intentionally discharges a known

pollutant." Id. at 78. The Court rejected the application of the exclusion's plain

language as suggested by insurers at that time because it would severely limit

any situations where coverage would apply. Id. at 29.

      Relying on the industry's representations at the time the policy language

was approved by DOBI, the Court concluded insurers were estopped from

asserting that application.   Id. 74-76.    The Court "declined to enforce the

standard pollution exclusion clause [exception] as written" because

            [w]hen the standard pollution exclusion clause was
            presented to state insurance regulatory agencies, the
            industry maintained that the exclusion would simply
            clarify existing coverage and there would be a
            continuation of coverage for pollution-caused injuries
            which resulted from an accident. However, the
            language of the clause did not support that
            representation. Rather, the clause virtually eliminated
            pollution-caused property damage coverage.

            [J. Josephson, Inc., 293 N.J. Super. at 192 (citation
            omitted) (citing Morton, 134 N.J. at 29).]

      In Morton,

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                                       19
            [t]he touchstone of [the Court's] decision . . . was that
            the insurance industry may not seek approval of a
            clause restricting coverage for the asserted reason of
            avoiding catastrophic environmental pollution claims
            and then use that same clause to exclude coverage for
            claims that a reasonable policyholder would believe
            were covered by the insurance policy.

            [Nav-Its, Inc., 183 N.J. at 124.]

      Thus, "under Morton[, u]nless the insurer establishes that the insured

intentionally discharged a known pollutant or had specifically authorized an

agent to act for it in intentionally discharging a known pollutant, the pollution

exclusion clause will not bar coverage." J. Josephson, Inc., 293 N.J. Super. at

200; see also Chem. Leaman Tank Lines v. Aetna Cas. & Sur. Co., 89 F.3d 976,

990-91 (3d Cir. 1996) (finding that even though the insurer in that case did not

make any misrepresentations, the Third Circuit held that Morton still controlled

and the "sudden and accidental" exception would apply as interpreted by the

New Jersey Supreme Court).

      After Morton, in order for the exclusion to apply, a court must determine

through a "case-by-case analysis . . . the existence of 'exceptional circumstances

that objectively establish the insured's intent to injure [the environment] .'" J.

Josephson, Inc., 293 N.J. Super. at 201 (second alteration in original) (quoting

Morton, 134 N.J. at 86). This includes considering

                                                                          A-1472-18T2
                                       20
             the duration of the discharges, whether the discharges
             occurred intentionally, negligently, or innocently, the
             quality of the insured's knowledge concerning the
             harmful propensities of the pollutants, whether
             regulatory authorities attempted to discourage or
             prevent the insured's conduct, and the existence of
             subjective knowledge concerning the possibility or
             likelihood of harm.

             [Ibid. (quoting Morton, 134 N.J. at 86-87).]

      Additionally, after Morton, the Court's definition of "sudden and

accidental" became the established meaning for the same term in policies

addressing coverage for contamination and cleanup. As the Court observed,

courts have relied "on the principle that '[t]he judicial construction placed upon

particular words or phrases made prior to the issuance of a policy employing

them will be presumed to have been the construction intended to be adopted by

the parties.'" Morton, 134 N.J. at 57 (alteration in original) (quoting 2 George

J. Couch, Couch on Insurance 2d § 15:20 at 195-96 (Mark S. Rhodes rev. vol.

1984)); see also Nav-Its, Inc., 183 N.J. at 124 ("The drafters' utilization of

environmental law terms of art ('discharge,' 'dispersal,' . . . 'release' or 'escape'

of pollutants) reflects the exclusion's historical objective-avoidance of liability

for environmental catastrophe related to intentional industrial pollution."

(alteration in original) (quoting Motorists Mut. Ins. Co. v. RSJ, Inc., 926 S.W.2d
679, 681 (Ky. Ct. App. 1996))). For that reason, insurers who continued to

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                                        21
include the "sudden and accidental" language were bound by the Court's

determination of its meaning.     See Champion Dyeing & Finishing Co. v.

Centennial Ins., 355 N.J. Super. 262, 266-67 (2002) (explaining that "any

restrictive effect intended by adoption of [the sudden and accidental] exclusion

was substantially nullified by the courts" after the decision in Morton).

      For example, in Chemical Leaman, the Third Circuit continued to follow

Morton's limited application of the sudden and accidental exception, even

though the insurer argued that it was "not party to the misrepresentations made

to regulatory authorities." 89 F.3d at 991. The Third Circuit rejected that

argument, concluding that the insurer "benefitted from the misleading

explanation of the effect of the standard pollution exclusion submitted to state

regulators by insurance industry trade groups," and the court believed that "the

New Jersey Supreme Court would not enforce the term 'sudden' in the policies

issued by the" in the manner suggested by the insurer. Id. at 992.

      We reject Allstate's arguments here, as accepted by the motion judge, that

it is not bound by Morton because in 2004 it obtained DOBI approval to include

in its policies the language of the subject exclusion and its exception, and in

doing so disclosed its desire to exclude coverage for costs associated with

gradual oil tank leaks from its policies. There is no language in Morton limiting

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its holding to the circumstances of that case. To limit the holding, as Allstate

suggests, would require a court in every disputed coverage claim to investigate

the insurer's conduct before regulatory authorities in every case, a result not

suggested by Morton.

      Applying Morton here, as Allstate admits, when it sought approval of the

"sudden and accidental" language in its policies, it explained that it should not

be required to cover losses that result from a lack of maintenance, as that is not

"sudden and accidental." As already noted, consistent with Morton, a leak is not

"sudden and accidental" if there is evidence of a failure to maintain. As the

Morton Court observed after reviewing the split among state and federal courts

on the issue, see Morton 134 N.J. at 44-71, the gradual deterioration of a tank is

not inconsistent with a sudden discharge nor is there anything intentional, as

compared to accidental, about such an occurrence at its inception. In order to

make it inconsistent and intentional, there must be some evidence that the

insured failed to act or acted intentionally by ignoring a known hazard.

      Here, Allstate never supported its motion with evidence that plaintiff was

negligent by failing to maintain the oil tank. See Cobra Prods., Inc. v. Fed. Ins.,

317 N.J. Super. 392, 401 (App. Div. 1998) ("The insurer has the burden of

establishing application of an exclusion."). To the contrary, the evidence on

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summary judgment revealed that plaintiff continually employed professionals to

service the tank and she followed their recommendations. Allstate provided no

suggestion as to what more plaintiff could have done under the circumstances.

Moreover, there was no evidence that at its inception, the leak did not begin

suddenly. The fact that it lasted for years did not make it anything less than

"sudden and accidental."

      Because we agree with plaintiff that she was entitled to coverage under

the "sudden and accidental" exception we need not reach her remaining

arguments.

      Reversed.

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