PENN NATIONAL INSURANCE COMPANY v. CRUM & FORSTER INSURANCE COMPANY, INC. et al
OPINION. Signed by Judge Katharine S. Hayden on 9/1/17. (jr)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PENN NATIONAL INSURANCE COMPANY,
Civil No.: 2:9-cv-4644 (KSH) (CLW)
CRUM & FORSTER INSURANCE COMPANY;
NORTH RIVER INSURANCE COMPANY; and
ABC INSURANCE COMPANIES (1-5)
Katharine S. Hayden, U.S.D.J.
Penn National Insurance Company, Inc. (“Penn National”), as primary insurer, and North
River Insurance Company (“North River”), as excess carrier, are seeking declaratory relief
regarding their rights and obligations with respect to insurance coverage they provided to Gus
Bittner, Inc. (“Bittner”), a defunct New Jersey waste hauler named as a defendant and/or thirdparty defendant in several environmental superfund litigations. The Court heard oral argument
on May 23, 2017, and in an opinion dated June 29, 2017 (D.E. 75) the Court denied the parties’
motions for summary judgment (D.E. 58, 59), declining to exercise its discretion under the
Declaratory Judgment Act and to render a decision on the merits without a reconciliation from
Penn National of seemingly inconsistent positions it has taken throughout this nearly eight-year
litigation. For the reasons set forth below, and in light of supplemental oral argument by the
parties on July 7, 2017, the Court now rules on the merits of the parties’ summary judgment
motions. For the reasons set forth below, Penn National’s motion (D.E. 58) is denied and North
River’s motion (D.E. 59) is granted.
The parties stipulated to the following facts in their final pretrial order (D.E. 57)
Bittner is a defunct New Jersey corporation that was in the business of hauling waste
from various companies and municipalities to landfills located throughout New Jersey from the
late 1950s until approximately 1996. FPTO, at p. 4, ¶¶ 1–2. As relevant to this action, Bittner
deposited waste at the following landfills in southern New Jersey: (1) the Buzby Brothers
Landfill, located in Vorhees (the “Buzby landfill”); the Big Hill Sanitary Landfill, located in
Southampton Township and operated by the Burlington Environmental Management Services,
Inc. (the “BEMS landfill”); and the Helen Kramer Landfill, located in Mantua (the “Helen
Kramer landfill”). Id. at ¶ 3.
After these landfills closed, Bittner was named as a defendant and/or third-party
defendant in various superfund lawsuits as an alleged transporter of refuse and waste materials.
The lawsuits relevant to this action are: (1) Incollingo, et al v. RCA Corp, et al, v. Buzby
Brothers, et al., 87-cv-4263 (D.N.J. 1987) (the “Buzby litigation”); (2) NDJEP v. Burlington
Environmental Management Services, Inc., et al., BUR-L-895-02 (N.J. Sup. Ct. 2002) (the
“BEMS litigation”); and (3) United States of America v. Helen Kramer, et al., 89-cv-4340
(D.N.J. 1989) (the “Helen Kramer litigation”). FPTO, at p. 6, ¶¶ 22–23.
Bittner was insured by Penn National under several commercial general liability
insurance policies for the period beginning January 30, 1976 through January 30, 1986. FPTO,
at p. 7, ¶ 25. North River insured Bittner under various excess/umbrella policies for the period
beginning January 30, 1976 through January 30, 1985. FPTO, at p. 11, ¶ 37. The North River
excess policies required exhaustion of the limits of Penn National’s primary policies before
North River incurred any defense and indemnity obligations. FPTO, at p. 12, ¶ 40.
Penn National provided a defense to Bittner in the Helen Kramer, Buzby, and BEMS
litigations. In May 1998, Penn National paid $2,550,320.00 and North River paid $349,680.00
to settle claims against Bittner in the Helen Kramer litigation. FPTO, at p. 13, ¶¶ 43–46; id. at p.
14, ¶ 48. Penn National also made indemnity payments on Bittner’s behalf in the amounts of
$99,590.00 and $48,013.00, in 2007 and 2011, respectively, in settlement of the Buzby and
In July 1998, two months after the Helen Kramer litigation settled, the New Jersey
Supreme Court in Carter-Wallace, Inc. v. Admiral Ins. Co., 154 N.J. 312 (1998) set forth an
allocation scheme for measuring the responsibility of an excess insurer in the context of longterm environmental damage cases where both primary and excess policies are in effect. On
September 9, 2009, Penn National, as primary insurer, filed a declaratory judgment action (D.E.
1) against North River, as excess carrier, seeking reimbursement, pursuant to Carter-Wallace, for
defense and indemnity payments Penn National made that allegedly exceed the limits of the
insurance policies it issued to Bittner. In its complaint, Penn National sought reimbursement in
the amount of $349,520.00 for past amounts allegedly expended in excess of the aggregate limits
in its primary policies, in addition to any future indemnification and defense costs owed to it
under a Carter-Wallace allocation.
In March 2012, after the BEMS litigation settled, the parties moved for summary
judgment (D.E. 26, 29), with Penn National arguing that North River was required to contribute
a total of $422,670.23 in defense and indemnity costs under Carter-Wallace. See Penn National
2012 Moving Br. (D.E. 26-3), at pp.34–37; Exhibit Z (D.E. 26-29). The court denied those
motions in an opinion dated November 20, 2012 (D.E. 30) after finding that material issues of
fact existed as to whether: (a) Penn National’s payment toward the Helen Kramer litigation was a
binding settlement that precludes it from seeking contribution from North River; and (b) Penn
National’s primary policies were exhausted such that North River had defense and indemnity
obligations under its excess policies.
After further discovery, the parties again moved for summary judgment before the
undersigned (D.E. 58, 63, 66, 59, 64, and 65), with Penn National now asserting that pursuant to
a Carter-Wallace allocation, North River owes it approximately $1,628,227.82 in defense and
indemnity costs, nearly four times the amount it specified in its 2012 summary judgment motion.
The Court heard oral argument on May 23, 2017 and denied the parties’ motions in an
opinion dated June 29, 2017 (D.E. 75), declining exercise its discretion to declare the rights and
obligations of the parties under the Declaratory Judgment Act and to render a decision on the
merits without a reconciliation from Penn National of the seemingly inconsistent positions it has
taken throughout the instant litigation regarding coverage under the applicable policies.
The Court heard supplemental oral argument on July 7, 2017 and now rules on the merits
of the parties’ motions.
Under Federal Rule of Procedure 56, “[s]ummary judgment is appropriate when the
movant shows that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party seeking summary
judgment “has the burden of demonstrating that the evidentiary record presents no genuine issue
of material fact.” Willis v. UPMC Children's Hosp. of Pittsburgh, 808 F.3d 638, 643 (3d Cir.
2015). A court’s function at the summary judgment stage is to “determine whether there is a
genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505,
2511, 91 L. Ed. 2d 202 (1986). “Interpretation of an insurance contract is a question of law for
the Court’s determination, and thus the issue may be decided on summary judgment.” U.S.
Specialty Ins. Co. v. Sussex Airport, Inc., No. CV145494SRCCLW, 2016 WL 2624912, at *3
(D.N.J. May 9, 2016) (citing Simonetti v. Selective Ins. Co, 372 N.J. Super. 421, 428 (App. Div.
Under New Jersey law, every action “for recovery upon a contractual claim or liability,
express or implied . . . shall be commenced within 6 years next after the cause of any such action
shall have accrued.” N.J.S.A. 2A:14-1. Here, the applicable accrual date depends on whether
Bittner’s hauling activity at each of the Helen Kramer, Buzby, and BEMS landfills constitutes a
single occurrence or separate occurrences under New Jersey law. North River argues that
Bittner’s disposal of waste at separate landfills are separate occurrences, and that the statute of
limitations on any claims that Penn National had with respect to the Helen Kramer site began to
accrue immediately upon settlement of the Helen Kramer litigation in 1998. See North River
Reply Br. (D.E. 65), at pp. 1–7. By contrast, Penn National argues that because Bittner’s hauling
activities at each of the three landfills constitute one single occurrence under New Jersey law, the
allocation principles set forth in Carter-Wallace could not be applied, and its cause of action for
contribution against North River did not accrue, until the BEMS litigation was settled in 2011.
See Penn National Opp. Br. (D.E. 64), at pp. 8–12.
So the initial determination must be whether Bittner’s hauling activity at each of the
Helen Kramer, Buzby, and BEMS landfills were separate occurrences, and under New Jersey
law the Court holds that they were. As an initial matter, Penn National’s corporate designee
testified that Penn National itself considered Bittner’s disposal of waste at separate landfills to be
separate occurrences. See Transcript of Deposition of Boyd Wright, dated June 25, 2010 (D.E.
59-11) at 50:6–51:1 (“each site was considered a separate occurrence”); id. at 121:14–122:17
(same). At oral argument, counsel for Penn National argued that despite Wright’s statements,
“claims adjustor’s testimony don’t make the law.” See Transcript of Oral Argument, dated May
23, 2017, at 11:6–9. But under the relevant cases, Wright’s interpretation of the Penn National
policies regarding single versus multiple occurrences turns out to be consistent with New Jersey
The seminal case on single versus multiple occurrences under insurance policies, Doria v.
Ins. Co. of N. Am., 210 N.J. Super. 67 (App. Div. 1986), turned on whether injuries sustained by
two young boys after one fell into an abandoned swimming pool and the second fell in trying to
rescue him were caused by one or two occurrences under a homeowners’ liability policy. Id. at
69. The court decided that “for the purpose of counting the number of occurrences, the term
must be construed from the point of view of the cause or causes of the accident rather than its
effects.” Id. at 72–73. The court also explained that the number of occurrences depends on the
“temporal and spatial connection” between the injuries. Id. at 75. On the facts, the court found:
The boys entered the premises together through the dilapidated
fence and became exposed to the uncovered pool precisely at the
same time. There was absolutely no change in the dangerous quality
of the pool during the intervening seconds between their respective
falls into the pool. Andrew's fall was precipitated by his immediate
attempt to rescue his brother. Essentially, the injuries to both boys
occurred simultaneously while they were submerged in the pool
water. Both were rescued at the same time. Their falls and respective
injuries occurred during a single, brief sequence of events so closely
linked in time and space as to be considered by the average person
as one event.
Id. at 75–76.
Applying the logic of Doria, and consistent with Penn National’s corporate designee’s
deposition testimony, the Court finds that Bittner’s hauling activities at the Helen Kramer, Buzby,
and BEMS landfills constitute separate occurrences under New Jersey law. In Doria, two boys
were exposed to a negligent condition “precisely at the same time,” and “the injuries to both boys
occurred simultaneously . . . during a single, brief sequence of events.” Here, Bittner hauled to
separate landfills, in separate geographical locations, at separate times over the course of nearly a
decade, causing alleged environmental damage at distinct and discrete locations.
Penn National’s argument that its claims for contribution with respect to the underlying
superfund litigations were not ripe until the BEMS litigation settled in 2011 is further weakened
by the fact that it filed the instant complaint in 2009, two years prior to the BEMS settlement,
seeking past and future indemnification and defense costs owed to it under a Carter-Wallace
allocation. When asked at supplemental oral argument why Penn National did not seek such relief
in 1998, after the Helen Kramer litigation settled—and in the immediate wake of the CarterWallace decision—counsel was candid in not offering an explanation.
See Transcript of
Supplemental Oral Argument, dated July 7, 2017, at p. 32:5–17.
The Court rejects the notion that Bittner’s activities in hauling waste to the Helen
Kramer, Buzby, and BEMS landfills—spatially and temporally distinct events—should be
reduced to a single occurrence under the applicable policies. Carter-Wallace noted the
importance of “respecting the distinction between primary and excess insurance” and found that
its method of apportionment was “consistent with contract language . . . [providing that the
excess carrier’s] second-level excess policy will not be pierced unless and until the primary and
first-level excess policies in effect for a given year have been expended.” Carter-Wallace, Inc.
v. Admiral Ins. Co., 154 N.J. 312, 327 (1998). Here, as excess carrier, North River contracted
for liability only to the extent that Bittner’s primary policies are exhausted. Penn National
argues that the amount paid in settlement of the Helen Kramer litigation exhausts its primary
policies and is inextricably linked to Bittner’s hauling at the other sites. But at the same, Penn
National concedes, as it must, that each site has a different trigger period. And although it argues
that its claims for contribution were not ripe until litigation regarding all three landfills settled,
Penn National brought the instant action two years before the BEMS litigation settled, and
candidly admits that it could have brought suit on the Helen Kramer landfill when CarterWallace was decided in 1998. While Carter-Wallace established that New Jersey courts seek a
fair apportionment of liability between primary and excess carriers, its holding does not strain
logic (nor did Penn National’s corporate representative when he testified that Bittner’s hauling
activity at each site was a separate occurrence). Here, the cause of the harm flowing from
Bittner’s waste hauling is distinct as to each landfill, and Bittner’s hauling activities in the
abstract cannot be rolled into one single occurrence.
Because Bittner’s hauling operations constitute separate occurrences, Penn National’s
claim for contribution against North River with respect to the Helen Kramer litigation accrued in
1998 and is time barred under N.J.S.A. 2A:14-1, and the issue becomes whether Penn National’s
2009 complaint entitles it to contribution for the Buzby litigation, which settled in 2007, and the
BEMS litigation, which settled in 2011. Penn National made indemnity payments on Bittner’s
behalf for the Buzby and BEMS litigations in the amounts of $99,590 and $48,013.00,
respectively. Each of the policies Penn National issued to Bittner between 1976 and 1982
contained per occurrence limits of $100,000, and each of the policies Penn National issued to
Bittner between 1982 and 1985 contained per occurrence limits of $500,000. See FPTO, at ¶¶ 26–
31, 33. The North River excess policies required exhaustion of the limits of Penn National’s
primary policies before North River incurred any defense and indemnity obligations. FPTO, at p.
12, ¶ 40. Accordingly, North River argues, because “[n]either of the indemnity payments made
by Penn National in the Buzby and BEMS cases . . . exceed the per occurrence limits in even one
of the primary policies” Penn National’s primary policies were never exhausted. See North River’s
Moving Br. (D.E. 59-33), at p. 18. Indeed, Penn National’s own Carter-Wallace calculations with
respect to the Buzby and BEMS litigations rely on amounts paid toward the Helen Kramer
litigation to establish exhaustion of Penn National’s primary policies. See Penn National’s Moving
Br., at p. 20 (Buzby: “On account of the payments made by Penn National on the Helen Kramer
landfill, Penn National’s policy limits for the years 1977-1978 through 1982-193 have been
exhausted”) (emphasis added); id. at p. 22 (BEMS: “Again, Penn National’s policy limits have
been exhausted for policy years 1977-1978 through 1982-1983, on account of settlement of the
Helen Kramer litigation”) (emphasis added). Thus, as counsel for North River stated at oral
argument, and consistent with Penn National’s own Carter-Wallace calculations, “Penn National
does not recover a [d]ime from North River unless and until it is able to reallocate the [Helen]
Kramer settlement. And if it can’t do that the case is over.” See Transcript of Oral Argument,
dated May 23, 2017, at p. 27:8–11.
Because Penn National’s claim with respect to the Helen Kramer litigation is time barred,
it cannot establish exhaustion of its primary policies with respect to amounts it paid for the Buzby
and BEMS litigations, and North River’s did not incur any liability under the excess policies it
issued to Bittner.
For the foregoing reasons, the Penn National’s motion (D.E. 58) (seeking judgment that
North River owes it indemnity and defense payments) is denied, and North River’s motion (D.E.
59) (seeking dismissal of Penn National’s claims with prejudice) is granted. An appropriate
order will be entered.
s/ Katharine S. Hayden___________
Katharine S. Hayden, U.S.D.J.
Dated: September 1, 2017
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