Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-21-1995

Gen. Ceramics v Fireman's Fund
Precedential or Non-Precedential:

Docket 94-5371




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995

Recommended Citation
"Gen. Ceramics v Fireman's Fund" (1995). 1995 Decisions. Paper 259.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/259


This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1995 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
1
                UNITED STATES COURT OF APPEALS
                    FOR THE THIRD CIRCUIT


                         N0. 94-5371


      GENERAL CERAMICS INC., National Beryllia Division

                               v.

FIREMEN'S FUND INSURANCE COMPANIES; THE ST. PAUL PROPERTY AND
     LIABILITY INSURANCE COMPANY; HOME INSURANCE COMPANY;
    MARINE INSURANCE COMPANY; HARTFORD INSURANCE COMPANY;
 UNION INDEMNITY, C/O STATE OF NEW YORK INSURANCE DEPARTMENT
    LIQUIDATION BUREAU; GREATER ATLANTIC INSURANCE COMPANY

                                GENERAL CERAMICS, INC.,
                                NATIONAL BERYLLIA DIVISION
                                a Corporation of the State
                                of New Jersey,
                                        Appellants



       On Appeal From the United States District Court
                For the District of New Jersey
             (D.C. Civil Action No. 92-cv-03292)


                   Argued February 14, 1995

   BEFORE:   STAPLETON, GREENBERG and COWEN, Circuit Judges

              (Opinion Filed   September 21, 1995)




                        David C. Dixon (Argued)
                        Scangarella & Feeney
                        565 Newark Pompton Turnpike
                        P.O. Box 216
                        Pompton Plains, N.J. 07444
                          Attorneys for Appellant

                        Wendy L. Mager (Argued)
                        Jay M. Tuckerman


                               2
                          Smith, Stratton, Wise, Heher & Brennan
                          600 College Road East
                          Princeton, N.J. 08540
                            Attorneys for Appellee
                            Home Insurance Co.
                          Laura A. Foggan
                          Daniel E. Troy
                          Stephen D. Goldman
                          Tanja E. Hens
                          Wiley, Rein & Fielding
                          1776 K Street, N.W.
                          Washington, D.C. 20006
                            Attorneys for Amicus Curiae
                            Insurance Environmental Litigation
                            Association



                        OPINION OF THE COURT




STAPLETON, Circuit Judge:



          This is an action for a declaratory judgment that a

standard comprehensive liability insurance policy covers a

liability incurred under the Comprehensive Environmental

Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42

U.S.C. §§ 9601-9675.    Central to its resolution is a choice-of-

law issue governed by New Jersey's choice-of-law rules.    We must

decide whether New Jersey or Pennsylvania law controls the

interpretation of an exception to a pollution-exclusion clause

when New Jersey has significant contacts with the insurance

contract and the insured but Pennsylvania is the site of the

hazardous waste site giving rise to the liability for which

coverage is sought.    Based on the strong public policy that



                                 2
underlies New Jersey's broad interpretation of the pollution-

exclusion exception, we conclude that the Supreme Court of New

Jersey would hold the New Jersey law governs this dispute.

Because the district court applied Pennsylvania law and granted

summary judgment in favor of the insurer on that basis, we will

reverse.



                                I.

           The insured, General Ceramics, Inc.,1 is a New Jersey

company that manufactures high temperature beryllium oxide

ceramics at its main manufacturing plant in Haskell, New Jersey.

Until 1991, all of General Ceramics's corporate, manufacturing,

marketing, and sales operations were located at the Haskell, New

Jersey facility.   Between December 1977 and October 1978,

approximately five shipments of contaminated waste from the

Haskell facility were transported by private waste haulers to a

resource recovery and processing facility in McAdoo, Pennsylvania

("the McAdoo site").
           In 1981, General Ceramics received notice from the

United States Department of Environmental Protection ("EPA") and

the Pennsylvania Department of Environmental Resources that these

agencies were investigating contamination at the McAdoo site.

This investigation led to a request that General Ceramics remove

from the site approximately 115 drums allegedly containing toxic


1
  General Ceramics was formerly known as National Beryllia
Corporation and is so identified on the relevant insurance
policies.

                                 3
waste.   General Ceramics complied with that request.    In 1987, a

proposed consent decree for clean-up, monitoring, and remediation

of the McAdoo site was filed with the District Court for the

Eastern District of Pennsylvania.    The EPA then filed a civil

action in that court, pursuant to CERCLA, against General

Ceramics and others, seeking damages and injunctive relief, and

incorporating the provisions of the consent decree.     Through

September 1991, General Ceramics had expended approximately

$132,000 in clean-up and remediation costs pursuant to the McAdoo

site consent decree.   In October 1992, General Ceramics notified

its insurers of the environmental claims pending against it.

           Between December 1972 and December 1978, Home Indemnity

Company (referred to in the caption as "Home Insurance Company"

and in this opinion as "Home" or "the insurer") had issued seven

liability polices to General Ceramics, each covering

approximately a one year period.    Home is incorporated in New

Hampshire and has its principal place of business in New York.

The policies were obtained through a New York insurance broker.

All of the policies listed Haskell, New Jersey as the insured's

address; all policies were maintained and counter-signed there;

and all premium notices were sent to and paid from that address.

           The Home policies provided coverage for "bodily injury

[or] property damage . . . caused by an occurrence."     (See, e.g.,

app. at 84.)   "Occurrence" was defined in the policies as "an

accident, including continuous or repeated exposure to

conditions, which results in bodily injury or property damage

neither expected nor intended from the standpoint of the


                                4
insured."    (See, e.g., app. at 78.)   The policies also contained

the following standard exclusion clause applicable to bodily

injury and property damage resulting from pollution:


            This insurance does not apply:

                 . . .

            (f) to bodily injury or property damage
            arising out of the discharge, dispersal,
            release or escape of smoke, vapors, soot,
            fames, acids, alkalis, toxic chemicals,
            liquids or gases, waste materials or other
            irritants, contaminants or pollutants into or
            upon land, the atmosphere or any water course
            or body of water; but this exclusion does not
            apply if such discharge, dispersal, release
            or escape is sudden and accidental.

(See, e.g., app. at 84 (emphasis added).)

            After giving Home notice of the EPA claims against it,

General Ceramics filed an action in the Superior Court of New

Jersey against Home and a number of other insurers seeking a

declaration that any liability in connection with the McAdoo site

environmental claims was covered by General Ceramics's insurance
policies.    After removal to the United States District Court for

the District of New Jersey, summary judgment was granted in favor

of Home, and General Ceramics's cross-motion for summary judgment

was denied. The district court determined that Pennsylvania law

applied, that the discharge of the pollution in this case had

been gradual and not abrupt, and that under Pennsylvania law the

gradual discharge of pollutants was not covered under the "sudden

and accidental" exception to the pollution-exclusion clause.

Accordingly, the damage at the McAdoo site resulting from General



                                 5
Ceramics's delivery of waste over a one year period was not

covered.   General Ceramics promptly filed a notice of appeal.

           Both before and shortly after the district court

granted summary judgment to Home, the other defendant insurance

companies were voluntarily dismissed from the action with

prejudice.

           The district court had jurisdiction over this diversity

action pursuant to 28 U.S.C. § 1332.    We have jurisdiction over

the appeal pursuant to 28 U.S.C. § 1291.    Although at the time

General Ceramics filed its notice of appeal on June 21, 1994,

claims remained pending against other defendant insurers, General

Ceramics's premature notice of appeal ripened when the remaining

defendants were dismissed from the action on July 25 and July 26,

1994.   Because this court had not yet taken any action on the

appeal at that time, we may assert appellate jurisdiction over

the prematurely filed appeal.    See New Castle County v. Hartford

Accident & Indem. Co., 

, 1178 (3d Cir. 1991) (citing

Cape May Greene, Inc. v. Warren, 

(3d Cir. 1983)).

             General Ceramics raises three issues on appeal:   (1)

whether the district court erred when it determined under New

Jersey's choice-of-law rules that Pennsylvania law applies to the

interpretation of the insurance contract provisions, (2) whether

under Pennsylvania law the pollution-exclusion clause bars

recovery, and (3) whether there existed substantial issues of

material fact precluding summary judgment.     Because we conclude

that application of New Jersey's choice-of-law rules require

application of New Jersey law, we do not reach the second issue.


                                  6
Because the district court granted summary judgment on the basis

of Pennsylvania substantive law and because genuine issues of

material fact preclude summary judgment under New Jersey law at

this juncture, we will reverse and remand for application of New

Jersey law in further proceedings.

          In reviewing a grant of summary judgment, we apply the

same test that the district court should have used initially.

Public Interest Research Group of New Jersey, Inc. v. Powell

Duffryn Terminals, Inc., 

, 76 (3d Cir. 1990), cert.

denied, 

(1991).    Summary judgment is appropriate

where "there is no genuine issue as to any material fact and . .

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

Fed. R. Civ. P. 56.   The allegations of the party opposing the

motion are taken as true and inferences are drawn in a light most

favorable to the non-movant.    Goodman v. Mead Johnson & Co., 

, 573 (3d Cir. 1976), cert. denied, 

(1977).

In responding to a motion for summary judgment, however, the

nonmoving party must "go beyond the pleadings and by her own

affidavits, or by the 'depositions, answers to interrogatories,

and admissions on file,' designate 'specific facts showing that

there is a genuine issue for trial.'"    Celotex Corp. v. Catrett,

, 324 (1986) (quoting Fed. R. Civ. P. 56(e)).    The

district court's application of New Jersey's choice-of-law rules

involves the application of legal principles and therefore is

subject to plenary review.




                                 7
                                II.

            A choice-of-law issue arises in this case because

Pennsylvania and New Jersey law differ regarding the

interpretation to be given the "sudden and accidental" discharge

exception found in the pollution-exclusion clause of standard

comprehensive liability policies like those issued by Home to

General Ceramics.2   Pennsylvania's intermediate appellate courts

have consistently held that the "sudden and accidental" exception

does not extend coverage for gradual discharges of pollution.

See, e.g., O'Brien Energy Sys., Inc. v. American Employers Ins.

Co., 

, 962 (Pa. Super. Ct. 1993), appeal denied, 

(Pa. 1994); Lower Pe Goodman v. Mead Johnson & Co., 

, 573 (3d Cir. 1976), cert. denied, 

(1977).__




2
  The parties do not contend that the law of Home's state of
incorporation, New Hampshire, or its principal place of business,
New York, should apply. We accordingly do not consider the law
of those states.


                                 8