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N.J. Superior Court, Law Division MER-L-1411-03; Law Division, Mercer County; opinion by Ostrer, J.S.C.; decided April 30, 2004; approved for publication September 14, 2004. DDS No. 23-3-7797 Plaintiff Hudson Environmental Services Inc., an environmental remediation firm, paid $52,173.32 for an environmental cost-cap insurance policy with Reliance National Indemnity Company. Hudson’s insurance was designed to protect it against the risk that the environmental cleanups that Hudson undertook on behalf of others would be more expensive than anticipated. The claims-made policy’s term ran from Nov. 24, 1998, to Nov. 24, 2003. The policy provided, among other coverages, $750,000 of “Remediation Stop Loss” coverage with a self-insured retention (SIR) of $275, 000. Thus, plaintiff was responsible for the first $275,000 of extra remediation expenses that it incurred under the “covered scope of work” during the policy period. Reliance was then responsible for all costs exceeding the SIR, up to the policy’s limits. The policy’s scope of work covered removing and closing various underground storage tanks and other related activities, such as soil removal and ground-water monitoring. Hudson’s insured losses arise out of its cleanup of a gas station property in Alpine. For many years, Mr. and Mrs. Philip Gianuzzi leased to Shell Oil Company property they owned in Alpine at the intersection of Closter Dock Road and Church Street. From about 1982 to 1998, the Gianuzzis leased the property to Ride Properties Inc., which then subleased the property to A&S Texaco, which operated a gas station on the site. In 1989, the New Jersey Department of Environmental Protection (DEP) began investigating the source of gas vapors emanating from a storm drain along the property’s western boundary. The DEP found gasoline-contaminated soil and ground water. Ride hired Hudson to provide environmental consulting and remediation services at the site. On March 25, 1998, Ride and Hudson entered into a cleanup agreement that required Hudson to perform cleanup services at the Alpine Texaco site for a fixed sum of $250,000. Hudson agreed to do all work necessary to obtain, at no additional cost to Ride, a No Further Action (NFA) letter from the DEP. Hudson also released Ride from “all liabilities and responsibilities related to or arising out of the contamination including but not limited to all known, unknown, and future liabilities related to the contamination that could arise after the issuance of an NFA letter by the NJDEP.” Remediation at the Texaco site began in 1998. Hudson removed gasoline and diesel fuel underground storage tanks (USTs), excavated and disposed of contaminated soil, remediated ground water, and waterproofed a basement � the Grayson property � located down-gradient of the site where gasoline-contaminated ground water infiltrated. Soil remediation activity continued through May 2002. Approximately 5,400 tons of contaminated soil were excavated and disposed of off site. On Nov. 21, 1998, Hudson entered into another agreement with Ride and the neighbor, Grayson. Hudson agreed to assume full responsibility for the final cleanup of the Alpine Texaco site, and sites off-premises, including the Grayson property. Under the Nov. 21, 1998, agreement, Hudson also agreed to become the DEP-ordered party for the cleanup. On Nov. 24, 1998, Hudson entered into a cleanup agreement with the DEP. At some point, Hudson realized that the costs of its promised cleanups would far exceed its contracted amounts. Around September 1999, Hudson informed Reliance that the work being performed under the policy’s scope of work would exceed the $275,000 retention amount. ECS Claims Administrators Inc., the administrator of Hudson’s claim on behalf of Reliance, paid Hudson $361,419.13 under the policy’s remediation stop-loss coverage. Throughout Hudson’s remediation efforts, the Grayson basement was a source of difficulty. Hudson and ECS entered into an agreement on Nov. 27, 2000, that purported to set forth a cost-splitting arrangement between the parties. The parties agreed that Hudson would pay one-third of the first $75,000 and ECS would pay the remaining two-thirds of that $75,000. ECS would then assume responsibility for payment of all costs above $75,000. In letters dated Sept. 10, 2001, and Sept. 25, 2001, ECS informed Hudson that it had concerns about its billing practices. Reliance National Indemnity Company was placed in liquidation on Oct. 3, 2001. PLIGA notified Reliance’s policyholders in New Jersey, and all parties having claims against them, that PLIGA would administer Reliance claims pursuant to N.J.S.A. 17:30A-1 through -20. Beginning in January 2002, Hudson attempted unsuccessfully to obtain payment from PLIGA, which slowly processed and ultimately denied most of Hudson’s claim. As a result of the nonpayment, Hudson asserts that it lacked the operating capital to continue the cleanup and consequently could not submit invoices for otherwise covered expenses during the policy period. Around November 2002 Hudson was forced to significantly curtail remediation efforts at the Alpine Texaco site and the Grayson’s basement because it could not afford to continue work without any cost-cap insurance protection. Hudson continued to pump water and conduct indoor air quality tests at the residence on a weekly basis. The Graysons routinely expressed frustration with the continued presence of Hudson employees on their property. Hudson asserts that several steps are needed to obtain a NFA letter. Hudson must excavate and dispose of 530 tons of contaminated soil; install wells; remediate ground water; sample indoor air at the Grayson residence; prepare a remedial action workplan to support a natural attenuation proposal; monitor ground water for two years to confirm decreasing contaminant concentrations; and fill the basement and build an addition to the Grayson residence. Hudson estimates that the additional work necessary to obtain a NFA letter would cost more than $228,000. Hudson anticipates that after the DEP issues an NFA letter, additional ground water monitoring will be necessary, as well as sealing all wells. The estimated cost of these tasks is $12,000. Hudson seeks declaratory judgment that PLIGA is obligated to pay for the past and future cleanup costs associated with the Alpine Texaco site and the adjoining properties. Hudson alleges that: PLIGA assumed Reliance’s obligations under the cost-cap insurance policy and breached its contractual duties thereunder by failing to pay for the cleanup costs covered by the policy; PLIGA is liable for damages resulting from its breach of the covenant of good faith and fair dealing; and PLIGA has failed to try “in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear” in violation of N.J.S.A. 17:29B-4(9)(f). In addition to the declaratory judgment, Hudson demanded attorneys’ fees, interest, costs and expenses. In late 2003, Hudson filed a motion for summary judgment seeking a determination that the policy’s stated coverage limit of $750,000 for remediation stop-loss coverage was not reduced by the $275,000 SIR. PLIGA argued that the policy only provided $475,000 of coverage � $750,000 minus $275,000. Thus, PLIGA argued, inasmuch as Reliance paid claims of close to $370,000, only $105,000 remained payable on the policy. The court held that the SIR did not reduce the policy limit. The court relied on the terms of the policy itself, the accepted distinction in the insurance industry between a deductible and a SIR, and the PLIGA statute. PLIGA then filed this summary judgment motion, seeking to dismiss Hudson’s claims of breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Unfair Claim Settlement Practices Act. Hudson cross-moved for summary judgment seeking payment of its outstanding invoices and a determination of PLIGA’s liability under the theories alleged in the complaint. Held: PLIGA is immune as a matter of law under the Guaranty Act. Also, there is no right of action against PLIGA for violating the UCSPA. Therefore, PLIGA is entitled to judgment dismissing Hudson’s bad-faith and UCSPA claims. It is so entitled, even if it acted in bad faith, as Hudson alleges, and even if Hudson suffered consequential damages because PLIGA wrongfully refused to pay Hudson’s claims. N.J.S.A. 17:30A-17 of the PLIGA Act, provides:
There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association or its agents or employees, the board of directors, or the commissioner or his representatives for any action taken by them in the performance of their powers and duties under this act.

Section 17 is drawn from the National Association of Insurance Commissioners (NAIC) model statute, first promulgated in 1969 and adopted in one form or another by most states. See Post-Assessment Property and Liability Insurance Guaranty Association Model Act, � 17, NAIC (2004). The plain language of � 17 is unclear. Nonetheless, there is ample out-of-state authority for concluding that Hudson’s claims are, simply, against “the association or its agents or employees . . . for . . . action[s] taken by them in the performance of their powers and duties under this act.” Therefore, they are barred. Courts of other jurisdictions have taken this facial approach, relying on nothing more than the statute’s plain language to immunize a state guaranty association from a bad-faith claim. See, e.g., Fernandez v. Florida Ins. Guaranty Ass’n, 383 So.2d 974, 975 (Fla. Dist. Ct. App. 1980) (finding that the plain language of an immunity provision like New Jersey’s unambiguously immunized the association from claim that association’s alleged refusal to settle claim within policy limits made it liable for jury award exceeding coverage limits). Moreover, legislatures of other states have limited their immunity provision’s broad scope when they have deemed it appropriate. For example, Alaska’s statute almost mirrors New Jersey’s � 17, except that it adds, “However, immunity from liability under this section does not apply to wilful or wanton misconduct.” Alaska Stat. � 21.80.150. Virginia’s statute expressly conditions its immunity on the association’s good faith. Va. Code Ann. � 38.2-1615. The New Jersey Legislature’s failure to qualify PLIGA’s immunity conceivably reflects the Legislature’s intent to create a broad, unlimited immunity. The Legislature has certainly fashioned more finely tuned immunity schemes in different contexts when it has concluded it appropriate to do so. Yet, the issue is more complex than that. While the results in the above cases bolster the result reached here, the reasoning of these cases is ultimately unpersuasive. The broad unqualified statutory language � taken on its face � proves too much. It would shield PLIGA from a suit for payment of the covered loss itself. It conceivably could shield PLIGA from even a declaratory judgment action to establish that coverage exists. Yet, the statute expressly contemplates suit against PLIGA at least for some purposes. See N.J.S.A. 17:30A-8(b) (stating that “[t]he association . . . may [s]ue or be sued”). At least one court agrees that such claims would fall outside the immunity provision’s scope. See Isaacson v. California Ins. Guarantee Ass’n, 750 P.2d 297, 301, n. 2 (Cal. 1988). However, the plain language of the statute might be read to immunize such claims, inasmuch as they conceivably would have occurred as a result of actions by PLIGA employees while they were exercising their powers and performing their duties under this act. The court must engage in some line-drawing not apparent from � 17′s plain language. Without plotting the immunity provision’s full scope, or deciding cases not before it, but mindful of the impact of the court’s reasoning on other potential cases, the court concludes, based on the principles expressed below, that Hudson’s claims of bad faith and consequential damages are barred. Barring Hudson’s claims is consistent with PLIGA’s mission to provide only incomplete relief to victims of an insurer’s insolvency. While it is sometimes said that PLIGA “stands in the shoes of the insolvent carrier,” the shoes are not PLIGA’s, and the fit is not snug. The New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 to -20, created PLIGA, a nonprofit organization comprised of property and liability insurers, and charged it with protecting insureds in the event of the insolvency of New Jersey insurers. N.J.S.A. 17:30A-2(a), -5(d), -5(e). With limited exceptions, the act requires that all New Jersey insurers join PLIGA as a condition of doing business in the state. The money used to pay “covered claims” against such insolvent insurers is raised by assessments against its member insurers in proportion to the amount of net direct written premiums each generates in a particular calendar year. The cost of providing coverage to the clients of insolvent insurers is then passed on to the members’ own clients via increases in rates and premiums. N.J.S.A. 17:30A-16. The legislation is to be liberally construed. New PLIGA assumes the obligations of insolvent insurers. See N.J.S.A. 17:30A-8(a)(2). On the other hand, in numerous ways, the Legislature restricted the availability of fund resources to claimants, reflecting an intention that the act be applied in a way that conserves its limited resources to serve its core purposes. Thus, there is tension between the mandates to liberally construe the statute, and to preserve the association’s resources. For example, the extent to which PLIGA can be required to pay claims is limited to payment of covered claims up to the amount of the policyholder’s contract but subject to a maximum liability of $300,000. PLIGA’s obligations are also limited by an “exhaustion and setoff provision,” which requires insureds to first exhaust all non-PLIGA coverage. N.J.S.A. 17:30A-12(b). The act also apportions the costs of insolvency to claimants, policyholders and solvent insurance carriers. Just as a claimant is remediless if (a) his losses exceed $300,000, (b) he seeks prejudgment interest or counsel fees, or (c) he seeks payment before exhausting other coverages, a claimant has no remedy for botched claim processing or bad-faith failure to pay. In short, the act, taken as a whole, reflects the Legislature’s desire to make PLIGA’s liability narrower than what would have attached to the insurer, if it were acting instead of PLIGA. Other courts have relied on the limited mission of the guaranty association in construing their respective state’s immunity provision to bar bad-faith claims. In sum, the Legislature’s intent to afford only limited relief to policyholders generally supports immunity from bad-faith claims. However, the general intent to limit relief does not provide a rule for determining when the immunity applies and when it does not. The language of the statute � albeit vague � and the public policy goals of the statute and comparable immunity statutes provide the material for fencing in the otherwise-sprawling immunity. In charting the boundaries of PLIGA’s immunity, one begins with the language itself of � 17. Key is the clause that PLIGA is immune from liability for an “action . . . taken . . . in the performance of . . . powers and duties under this act.” Although the “powers and duties” clause is subject to varying interpretation, it is restricted to actions incidental to claims adjustment, processing and payment. In determining whether liability arises from “an action . . . in the performance . . . of powers and duties,” it is helpful to consider whether the harm would occur if there were no PLIGA at all. Aside from the covered claim itself, the Legislature apparently did not intend to make PLIGA liable for harms that arise as much out of the insolvency of the insurer as PLIGA’s exercise of its powers and duties. For example, in this case, Hudson asserts that it suffered damages as a consequence of PLIGA’s slow processing and refusal to pay for covered losses. Yet, had PLIGA not existed at all, Hudson would have suffered much the same loss (putting aside that it might not have relied on its expectation of payment by PLIGA). Reliance’s insolvency would have interrupted Hudson’s cash flow even more severely than PLIGA’s processing and payment delays. The same may not be said of personal injury or intentional torts by PLIGA personnel. Reliance’s insolvency would not cause a person to slip on water spilled by a PLIGA staffer or subject a claimant to the emotional distress of discrimination or the physical and emotional injury from sexual assault. Had an insured of an insolvent company remained where the insolvency left him, he would be unpaid, but he would not suffer personal injury or an intentional tort. Nonetheless, the immunity under � 17 does not extend to liability for the covered claim itself. That would shield PLIGA from doing what it was created to do � pay insured claims up to the $300,000 cap. The Legislature could not have intended to bar policyholders from bringing suit to secure the basic benefit that the act was drafted to provide. Thus, reading the immunity provision in concert with PLIGA’s obligation to pay “covered claims,” it appears that the immunity only affects potential liability outside the obligation to pay covered claims. Yet it does not immunize any and all actions outside of covered claims. That would extend the immunity too far, to include liability for torts to third parties. Rather, negligence outside of the claims adjustment, processing and payment functions � such as negligence causing personal injury or intentional torts � likewise fall outside the scope of the immunized functions. Likewise, the immunity � particularly in the case of bad-faith claims � shields PLIGA from consequential damages in excess of the express contractual amounts. In that regard, the immunity is analogous to the state’s immunity for consequential damages for breach of contract. N.J.S.A. 59:13-3 (waiver of immunity for contractual liability does not extend to consequential or punitive damages). That immunity, also, is designed in part to shield the state from contractual liability that it cannot foresee. Particularly regarding claims by an insolvent insurer’s policyholders � who, absent PLIGA, would have no remedy at all � the Legislature appears to have concluded that a limited remedy is most appropriate. It strikes a balance between mitigating the losses of the policyholder, preserving resources for other claimants, and enabling PLIGA to manage and plan the disposition of claims. Planning is especially important because, in the wake of an insolvency, PLIGA is often called on to assume processing of numerous claims all at once. The associated bureaucratic challenge is substantial. Under the circumstances, it would be unreasonable to hold PLIGA liable if it moves too slowly, misplaces a file, or otherwise delays processing or payment. Thus, like the beneficiaries of charities who may not easily sue the charities that serve them, N.J.S.A. 2A:53A-7, and the beneficiary of a Good Samaritan who may not complain of his helper’s negligence, N.J.S.A. 2A:62A-1, an insured of an insolvent insurer may not complain that PLIGA has done harm while attempting � however carelessly, negligently or ineptly � to fulfill its statutory powers and duties. Thus, the immunity afforded by � 17 applies only to liability in excess of the coverage itself. PLIGA is immune from claims of consequential damages, or other forms of relief, grounded on the allegation that it adjusted, processed or paid claims in bad faith. Nonetheless, PLIGA remains liable for the insurance coverage up to $300,000. The conclusion reached here is consistent with the result, if not the reasoning, of the majority of states that have determined that their guaranty laws immunize their funds from claims of bad-faith settlement or claims adjustment. Lastly, the court also grants summary judgment dismissing Hudson’s claim for damages arising out of PLIGA’s alleged violation of the Unfair Claim Settlement Practices Act (UCSPA). The UCSPA regulates insurance trade practices and proscribes those practices that “constitute unfair methods of competition or unfair or deceptive acts or practices ” N.J.S.A. 17:29B-1. Hudson’s claim fails for two reasons. First, the UCSPA only regulates the practices of insurers, and PLIGA is not an “insurer” as defined by N.J.S.A. 17:22A-28 and N.J.S.A. 17:30A-5(e). Second, it is well-settled that insureds have no private cause of action under the statute, in any event. Instead, the remedy for violation of the statute rests with the Department of Banking and Insurance. In short, Hudson cannot maintain a claim against PLIGA under the Unfair Claims Settlement Practices Act as set forth in N.J.S.A. 17:29B-4(9). Partial summary judgment is granted, dismissing with prejudice Hudson’s claims for relief arising out of PLIGA’s alleged bad faith and alleged violation of the UCSPA. � Digested by Steven P. Bann [The slip opinion is 34 pages long.] For plaintiff � Francis J. Brennan III. For defendant � Mark Tallmadge (Bressler, Amery & Ross).

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