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Aetna Insurance Co. v. Aaron12/4/1996
Constr. Co., 713 F. Supp. 35, 39-41 (D. Mass. 1989). The results are by no means uniform or consistent. Figgie Int'l, Inc. v. Bailey, 25 F.3d 1267, 1273-74 (5th Cir. 1994). See New Jersey v. Signo Trading Int'l, Inc., 130 N.J. 51, 612 A.2d 932 (1992). Compare Continental Ins. Cos. v. Northeastern Pharm. & Chem. Co., 842 F.2d 977, cert. denied, 488 U.S. 821 (1988) (denying recovery for clean-up costs under Missouri law) with Independent Petrochemical Corp. v. Aetna Cas. & Sur. Co., 292 U.S. App. D.C. 19, 944 F.2d 940, 946-7 (D.C. Cir. 1991), cert. denied, 503 U.S. 1011 (1992) (concluding, under Missouri law, that insured is entitled to recover). See also Kenneth Abraham, Environmental Liability and the Limits of Insurance, 88 Colum. L. Rev. 942, 966-70 (1988).
In our review of these cases, it appears that, with certain limitations, environmental response costs are considered damages within the meaning of a comprehensive general liability policy. Moreover, in order to protect third-party property from imminent harm, the overwhelming weight of authority favors coverage under such liability policies for remediation expenses incurred in connection with an insured's own property, notwithstanding an owned property exclusion, when the concern is primarily addressed to the premises of a third party. See, e.g., Intel Corp. v. Hartford Acc. & Indem. Co., 952 F.2d 1551 (9th Cir. 1991); Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023 (2nd Cir. 1991); South Carolina Ins. Co. v. Coody, 813 F. Supp. 1570 (M.D. Ga. 1993); Maryland Cas. Co., 809 F. Supp. at 696; Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 788 F. Supp. 846 (D.N.J. 1992); Claussen v. Aetna Cas. & Sur. Co., 754 F. Supp. 1576 (S.D.Ga. 1990); Boyce Thompson Inst. for Plant Research, Inc. v. Insurance Co. of North America, 751 F. Supp. 1137 (S.D.N.Y. 1990); Allstate Ins. Co. v. Quinn Constr. Co., 713 F. Supp. 35, 40-41 (D.Mass. 1989); Bankers Trust Co. v. Hartford Acc. Indem. Co., 518 F. Supp. 371, 374, vacated to permit submission of additional evidence, 621 F. Supp. 685 (S.D.N.Y. 1981); City of Edgerton v. General Cas. Co. of Wisconsin, 172 Wis. 2d 518, 493 N.W.2d 768 (1992). See also 7A J. Appleman, Insurance Law & Practice ยง 4526 (Supp. 1995) ("If the contamination has already damaged land belonging to persons other than the insured, the [owned property] exclusion does not bar coverage of any cleanup on the insured's land necessary to prevent further migration to another's property").
II.
We focus first on Aetna's duty to defend based on Aaron's potential liability for damages. The Council's damages allegedly resulted from the need to alleviate a hazardous or defective condition on Aaron's property that caused earlier damage to third-party property. Aetna's interpretation of the Policy clause "for damages because of...property damage" essentially would preclude recovery for the Council's damages, because they are consequential damages flowing from damages to St. Clair's property, not embodied within the clause.
In our view, repairs to prevent imminent and further damage, whether undertaken by the insured or another, are potentially a component or consequence of third-party property damage. Based on the plain meaning of the Policy language, the Council's claim to recover for the cost of such repairs is a claim "for damages because of...property damage." What the court said in Diamond Shamrock Chemicals Co. v. Aetna Cas. & Sur. Co., 231 N.J. Super. 1, 554 A.2d 1342 (1989), is pertinent here:
The 'owned property' exclusion does not purport to exclude claims because they are for sums expended for work performed within the premises owned by the insured. It
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