Search Site
Menu
NJ Supreme Court Recognizes Direct Claim for Contribution between Insurers

The New Jersey Supreme Court held recently that an insurer with an obligation to indemnify and defend has a direct claim for contribution against a co-insurer for costs associated with defending the insured in continuous property damage litigation. This is true even if the insured releases that co-insurer.

In Potomac Ins. Co. v. Pennsylvania Manufacturers’ Ass’n Ins. Co., 215 N.J. 409 (2013), several insurance companies became involved in a dispute between a municipality and a general contractor relating to construction defects at a school building, which was owned by the municipality. Each of the insurance carriers had covered the contractor during some period of the construction at the school and during the years following construction, prior to the municipality bringing suit. After considerable negotiation and legal action between the parties to determine liability, the contractor settled with an earlier insurance carrier and released that carrier of all claims, including any action for attorneys’ fees and costs. Subsequent to the release, a later insurer paid towards the settlement of the dispute between the municipality and the contractor. The later insurer then sought to recover defense costs from the earlier carrier under the “continuous trigger” methodology employed in New Jersey courts.

Under the continuous trigger theory, a progressive, indivisible injury that results from ongoing conditions that could be the basis for civil liability is considered an occurrence within each of the years of a commercial general liability insurance policy. In other words, New Jersey courts use a pro rata formula to determine the relative portion of defense and indemnity costs between successive insurance carriers when defending a continuous injury case, rather than allowing joint and several liability between carriers.

In Potomac, the Court examined two earlier cases explaining the continuous trigger theory – both involving environmental damages – and applied the theory to the successive insurers’ scenario. The Court held that employing the continuous trigger theory to recognize an insurer’s cause of action against a co-insurer for allocation of defense costs was in accord with the earlier line of cases. In reaching this decision, the Court noted that allowing such a claim found strong support based on the principles relied on in past cases, including incentivizing prompt and proactive involvement of all impacted insurance carriers in litigation, promoting early settlement, incentivizing individuals and businesses to carry sufficient coverage, and fairness between carriers. The Court also held that a release between one carrier and an insured could not bar a claim of a co-insurer against the insurer when the co-insurer was not party to the release.

This decision will likely have a significant impact in the area of environmental property damage and environmental-related insurance recovery. Going forward, when property suffers from contamination or other environmental damage over a period of time, insurers covering the property will have a claim against prior or subsequent insurers for contribution. Ideally, the principles detailed by the Court in Potomac will guide property owners and insurance carries in the future, simplifying the recovery process.

The attorneys at Lieberman Blecher & Sinkevich P.C., who regularly assist clients with issues that arise in the context of environmental contamination and insurance recovery, will be closely following the developments in this area of the law. Our attorneys, who are highly experienced in environmental litigation, remediation, and insurance issues, have assisted many clients in cases involving multiple insurance carriers and property contamination. Our attorneys are poised to address the impact of this recent decision in present and future cases.

Leave a Reply

Your email address will not be published. Required fields are marked *

Our Attorneys

Recent Twitter Posts

  • Fishing to be allowed in future wind farm off the coast of Atlantic City. https://t.co/x8vlsXFtcW
    1 week ago
  • New Jersey Economic Development Authority approves pilot program to replace diesel trucks with electric vehicles in… https://t.co/EZ5xkmDIjY
    1 week ago
  • New Jersey sues the Federal Government over PFAS contamination at military bases. https://t.co/f3BTcTmMJ8
    1 week ago
  • Bald eagles, continuing a remarkable comeback, are now nesting in all 21 New Jersey counties. https://t.co/F8i2rKUedo
    2 weeks ago

Recent Blog Posts

Underground storage tank leaks may lead to development delays and costly clean-ups

Earlier this month, multiple sources reported an oil leak at a redevelopment site in Haddonfield, New Jersey. According to the Borough of Haddonfield’s press release dated January 6, 2021, the
Read More
Underground storage tank leaks may lead to development delays and costly clean-ups

New Jersey Court of Appeals rules in favor of DEP’s ability to create public beach access over private property

In an April 2020 decision of a matter comprised of 63 consolidated cases, the New Jersey Court of Appeals affirmed that the New Jersey Department of Environmental Protection (“NJDEP”) has
Read More
New Jersey Court of Appeals rules in favor of DEP’s ability to create public beach access over private property

Changes to expect in environmental regulation with the incoming administration

President-elect Joe Biden ran on a platform that highlighted climate change and environmental regulation as national priorities. His plans state the intention to take the necessary steps to decrease our
Read More
Changes to expect in environmental regulation with the incoming administration

NJDEP files Additional Natural Resource Damages claims

The State DEP continues to pursue natural resource damages (called NRD) claims. These are lawsuits where the relief sought is not just a cleanup, which is normally the relief sought
Read More
NJDEP files Additional Natural Resource Damages claims

In the media

  • Gulf Coast Town Center facing foreclosure

    Naples Daily News, September 16, 2015

    Wells Fargo filed a lawsuit Sept. 8 against an affiliate of CBL & Associates, the owners of the decadeold, 1.2 million-square-foot mall in south Fort Myers for a $190.9 million unpaid loan. The center has 94 stores on 204 acres, with such anchors as Super Target, Belk, Best Buy, Dick’s Sporting Goods, Marshalls and Costco...

    Read More
  • Town liable for private company's leaking underground tanks, court rules

    NJ.com Jul 26, 2017

    CRANFORD -- A couple that owned a businesses in town and became sick from leaking underground tanks owned by an adjacent business can sue the township for damages because the tanks were partially ...

    Read More
  • Dark Waters: How a Class Action Catapulted NJ to Forefront of 'Forever Chemicals' Battle

    NJ Law Journal Jan 09, 2020

    As property owners become increasingly aware of PFAS contamination, and as individuals exposed to PFAS learn of the health risks associated with exposure, liability will likely affect entire supply chains.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
Contact Our Firm

Quick Contact Form