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Champion Dyeing & Finishing Co.11/19/2002
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 9, 2002
This insurance case raises issues relating to the trigger of coverage and the allocation of the duty to provide indemnification for progressive environmental damage that commenced during a period of time in which coverage was offered customarily on an occurrence basis and continued into a period in which coverage was offered, if at all, on a claims-made basis. Their resolution requires some background. I. In its decision in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994), the Supreme Court adopted a continuous-trigger theory of coverage under occurrence-based policies of comprehensive general liability (CGL) insurance for the risks of progressive, indivisible bodily injury and property damage arising from long-term exposure to asbestos and, presumptively, other toxic and environmental agents. Under that theory, each policy of insurance in effect from the date of first exposure to an injury-producing substance to the date of manifestation of a progressive injury caused by the substance was held provide coverage for that injury. See also, e.g., Carter-Wallace, Inc. v. Admiral Ins. Co., 154 N.J. 312 (1998) (specifically applying a continuous trigger to coverage of damages caused by environmental contamination).
In adopting a continuous trigger, the Court specifically rejected, among others, triggers of coverage based solely upon the date of first exposure to the harmful product (see, e.g., Insurance Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980), clarified in part, 657 F.2d 814 (6th Cir.), cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981)) or the date of manifestation of injury (see, e.g., Eagle-Picher Indus. v. Liberty Mutual Ins. Co., 682 F.2d 12 (1st Cir. 1982), cert. denied, 460 U.S. 1028, 103 S.Ct. 1279, 75 L.Ed.2d 500 (1983)), since those theories did not take into account the presumptively progressive and indivisible nature of the injury at issue, but were adopted solely as a means of maximizing coverage. See Owens-Illinois, supra, 138 N.J. at 449-459.
Additionally, the Court established a mechanism for allocating coverage for toxic tort liability between triggered insurance policies and corporate tortfeasors when coverage was afforded on an occurrence basis. It held that, in instances in which multiple policies of insurance were triggered as the result of the operation of a continuous-trigger theory, coverage should be allocated pro rata on the basis of the carrier's time on the risk and the degree of risk assumed: "i.e., proration on the basis of policy limits, multiplied by years of coverage." Id. at 475. The Owens-Illinois Court held further that, if coverage for the risk were available in a particular period, and if it had not been obtained by the corporate tortfeasor, the tortfeasor would share in the pro- rata allocation for the period and to the extent that it had, itself, assumed the risk of loss. Id. at 479. The allocation principles established by the Court in Owens-Illinois were adopted in the context of liability for environmental damage in Carter-Wallace, supra, 154 N.J. at 320-28 (discussing exhaustion of coverage) and Quincy Mut. Fire Ins. Co. v. Bellmawr, 172 N.J. 409, 435-37 (2002) (discussing coverage of limited duration).
II.
The Owens-Illinois decision established a framework for allocation of liability in the context of occurrence-based CGL policies. However, the nature of insurance coverage has not remained static, particularly with respect to coverage of damages caused by environmental contamination.
In 1969, a major blowout at an offshore oil dr
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