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Titan Corp. v. Aetna Casualty & Surety Co.2/10/1994
Respondent The Titan Corporation (Titan) owned a plant in New Jersey (hereafter the Keasbey site or Keasbey facility) that had been operating since 1906. When Titan decided to close the plant in 1985, it began investigating the extent of its environmental cleanup responsibilities under a New Jersey statute. The investigation revealed the site had some forms of pollution.
Titan then purchased a policy of insurance from appellant Aetna Casualty and Surety Company (Aetna). The Aetna policy contained, among other provisions, a "pollution exclusion" which on first consideration appears unambiguously to declare that the policy covered neither pollution damages nor cleanup liabilities. Titan nevertheless made a claim on the policy for the costs of cleaning up the Keasbey facility. Aetna denied the claim.
After trial the court below made factual and legal findings which had the net effect of declaring Aetna liable for part of the cleanup costs. On appeal, we are asked to review the policy and its exclusions, and to determine whether the evidence, viewed most favorably in support of the judgment, supports the Conclusion the policy applied to the costs incurred by Titan.
I. BACKGROUND
A. THE FACILITY
For nearly 80 years Titan and its predecessors produced "soft" ferrite at the Keasbey facility. The ferrite manufacturing process produced, as a by-product, waste streams of ferrite sludge. Titan disposed of waste sludge by allowing it to flow into two "infiltration/percolation" lagoons (the I/P lagoons) under permit from the New Jersey Department of Environmental Protection (NJDEP). Titan also placed on the southeastern portion of the site piles of waste materials (i.e., scrap ferrite, old pallets, empty or partially filled drums, etc.). The waste streams and scrap material were classified as
nonhazardous. "Hazardous" wastes were disposed of off site as required by state and federal regulations.
B. THE CLEANUP
Titan's decision to close the facility in September 1985 triggered obligations under New Jersey's Environmental Cleanup Responsibility Act (ECRA). (N.J. Stat. Ann., ยง 13:1K-6 et seq.) ECRA is a strict liability statute requiring the owner to clean up a facility before transferring the property or ceasing operations. To comply with its obligations, Titan retained Dames & Moore as its environmental consultant to investigate the site, perform the required sampling, and prepare a cleanup plan.
The initial site evaluation, submitted to the NJDEP in October 1985, identified a number of areas of contamination. This October 1985 report did not, however, identify "TCE" contamination or groundwater contamination, nor did it identify the dumped brick, concrete, wood or rubbish as "contaminants" for ECRA cleanup.
Following issuance of the October 1985 report, Titan purchased the Aetna policy, effective February 1986. After issuance of the Aetna policy, Titan discovered the so-called "TCE spill area." The TCE contamination was first discovered when groundwater sampling during March and April 1986 revealed TCE contamination of the groundwater, leading to the discovery of TCE contamination of the soil.
Additionally, in June 1986 the NJDEP identified as a "deficiency" certain solid waste piles (i.e., the brick and rubble from demolished buildings, ceramic waste, etc.). The NJDEP required removal of this waste as part of the cleanup operation.
The remediation efforts thus entailed cleanup of the I/P lagoons and overflow area, as well as the TCE spill area; removal of the oil storage tanks and excavation of some surrounding soil; excavation of soil along the fue
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