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Vol. 4 No. 139 – JULY 22, 1996 STATE COURT CASES CONTRACTS — SURETY BONDS Now on Counsel Connect 11-1-9658 Eagle Fire Protection Corp. v. First Indem. of Am. Ins. Co., Supreme Ct. (33 pp. – includes dissent) Since subcontractor — a third-party beneficiary under construction surety bond — commenced suit within one year of the date that the general contractor ceased work under a contract, under the terms of the surety bond, subcontractor is entitled to judgment against surety as a matter of law, although it is not entitled to attorneys fees. INSURANCE — ENVIRONMENT — GROUNDWATER CONTAMINATION Now on Counsel Connect 25-2-9652 23-2-9659 Reliance Ins. Co. v. Armstrong World Indus. Inc., App. Div. (33 pp. — includes concurring opinion) The court reaffirms its decision in Morrone v. Harleysville Mut. Ins. Co., 283 N.J. Super. 411 (1995), that owned property exclusions in comprehensive general liability policies do not preclude coverage for defense and indemnification related to groundwater contamination, and further holds that such contamination is not excluded by the use and care and custody or control exclusion such as may be found in the policies here in issue. [Approved for publication July 22, 1996.] Editor s Note: The following eight cases, all approved for publication, are companion cases to the Reliance case above, and all reverse trial court opinions granting summary judgment to insurers based on owned property exclusions. Now on Counsel Connect 23-2-9660 Adron, Inc. v. The Home Ins. Co., et al., App. Div. (16 pp.) Trial judge erred in granting summary judgment to insurers on plaintiff s claim for damages related to groundwater monitoring and remediation costs, since owned property and related use and care, custody or control exclusions are inapplicable to the facts of this case, and judge also erred in refusing to allow plaintiff to amend its complaint to include claims against the insurers for its liability under a 1993 DEP Spill Act directive. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9661 United Mobile Homes Inc., etc., et al. v. Foremost Ins. Co., App. Div. (11 pp.) Law Division judge erred in granting summary judgment to insurers under both the owned property and pollution exclusions of plaintiffs CGL insurance policies, in suit for groundwater contamination cleanup costs resulting from home heating oil leaks or discharges under mobile home park. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9662 Robert E. Ohaus, et al. v. Continental Casualty Ins. Co., et al., App. Div. (15 pp.) Since groundwater contamination is not excluded by the owned property exclusion in CGL policies, the judge erred in granting insurer summary judgment on that basis, and, further, there is no merit to insurer s argument that because neither the adjoining property owner nor the DEP has made a damage claim against plaintiffs, plaintiffs do not face a claim for third-party property damage, as it was plaintiffs legal obligation, pursuant to ECRA, to monitor and remediate the contaminated groundwater. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9663 Eugene Kentopp, et al. v. Franklin Mut. Ins. Co., App. Div. (17 pp.) Judge erred in granting summary judgment to insurer — under the owned property exclusion of a homeowner s policy containing CGL coverage — since insurer was obligated to defend and indemnify homeowners in a third-party lawsuit arising from the discovery of contaminants on their property after it was sold, however, the policy did bar coverage for on site soil contamination under the owned property exclusion. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9664 Charles Strnad Jr., et al. v. The North River Ins. Co., etc.; Arlington Drop Forge Co. Inc., et al. v. The North River Ins. Co., etc., App. Div. (8 pp.) The expenses of monitoring site s groundwater were environmental response costs and therefore damages under the applicable CGL insurance policies, and insurer is obligated to cover these expenses, however, other costs associated with remediating the site — such as soil excavation, fill and tank removal — should not be considered covered damages except to the extent that such expenses were deemed costs reasonably associated with groundwater remediation. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9665 F.L. Smidth & Co. v. Travelers Ins. Co., et al., App. Div. (10 pp.) Judge erroneously granted summary judgment to insurers on plaintiff s coverage action seeking indemnification of defense expenses and pollution remediation costs after plaintiff had been sued by a purchaser of its prior manufacturing site, the judge having wrongly concluded that there was no evidence that the contaminated groundwater migrated offsite, and holding that the owned property and alienated property exclusions barred coverage for the costs of remediating the groundwater pollution beneath the site. [Approved for publication July 22, 1996.] Now on Counsel Connect 23-2-9666 Edward P. Sagendorf, et al. v. Selective Ins. Co. of Am., App. Div. (22 pp.) Questions of whether the plaintiffs policy covers groundwater pollution and remediation for DEP directives are coverage issues that are not affected by plaintiffs late notice to insurer of its potential liability, and plaintiffs claims for coverage of the monitoring or remediation expenses associated with the groundwater pollution under a service station are not barred by the policy exclusions presented in this case. [Approved for publication July 22, 1996.] CRIMINAL LAW AND PROCEDURE Now on Counsel Connect 14-1-9667 State v. Florence Hessen, Supreme Ct. (26 pp.) The imposition of a ban on plea bargaining in cases involving violations of N.J.S.A. 39:4-50 does not violate the constitutional separation of powers and does not impermissibly infringe on the municipal prosecutor’s power to dispose of cases. The prohibition against plea bargaining in municipal court drunk-driving cases includes the offense of allowing or permitting an intoxicated person to drive one s car. Editor s Note: The caption of State v. R.F.L., DDS No. 14-2-9323, which was decided and approved for publication on June 21, 1996, has been amended to include the full name of the defendant and is now known as State v. Rodney F. Lyles. A Daily Reporter of New Jersey Court Decisions

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