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Environmental Insurance Dispute to be Heard in New Jersey courts

On December 30, 2021 the Appellate Division of the Superior Court decided Getty Prop. Corp. v. St. Paul Fire & Marine Ins. Co. Getty Properties Corp. (“Getty”) filed an appeal from the Superior Court’s dismissal of their complaint against Travelers, AIG, and Bedivere (“Insurance Companies”). Getty had polluted groundwater in New Jersey, Pennsylvania, and Maryland with methyl tertiary butyl ether (MTBE) and each of those states’ environmental agencies have filed suit against Getty. These suits were all consolidated into one federal multi-district case in New York. Travelers, AIG, and Bedivere had all issued commercial general liability insurance policies to Getty at various times since 1971. Getty filed  a lawsuit against these insurance companies in New Jersey seeking indemnification for its liability in the contamination suit. 

Prior to Getty filing suit in New Jersey, Traveler’s had filed a declaratory judgment action in New York and AIG and Bedivere intervened in this action. The Insurance Companies filed a Motion to Dismiss in the Superior Court of New Jersey. The Superior Court  granted the Insurance Companies’ Motion to Dismiss due to the action first having been filed in New York and that New York was the most appropriate forum. Getty appealed this decision stating that the Superior Court failed to appropriately analyze if any special equities existed in favor of keeping the lawsuit in New Jersey rather than New York.  

The Supreme Court of New Jersey has previously held that under the doctrine of comity, “the court which first acquires jurisdiction over a dispute has precedence in the absence of special equities.” Sensient Colors, Inc. v. Allstate Insurance Co., 193 N.J. 373, 386 (2008). Special equities are reasons of “a compelling nature that favor the retention of jurisdiction by the court in the later-filed action.” Id. at 368. Whether special equities exist is a fact-specific inquiry. Id.The opposing party has the burden to establish that there is an earlier filed action that involves substantially the same parties, claims, and legal issues. Once that is met, the non-opposing party has the burden to demonstrate the presence of one or more special equities that override the presumption favoring the first filed action presumption. Id.

The Appellate Division held that the trial court failed to fully consider the special equities at stake. The trial court failed to identify and weigh New Jersey’s interest in remediating contamination within New Jersey’s borders, which includes the determination of insurance policies. New Jersey has a strong interest in remediating its contaminated land, which was not analyzed by the Superior Court. The Appellate Division also held that the trial court failed to consider New York and New Jersey’s divergent public policies regarding environmental insurance coverage. New York and New Jersey Courts have differing views regarding the pollution exclusion clauses within insurance coverage contracts and late notice. Both of these are issues within the lawsuit filed by Getty in New Jersey. The Appellate Division vacated the trial court’s decision and remanded for a full balance of the special equities that exist within this case. 

The Appellate Division also ruled that the trial court needs to do a full analysis on forum non conveniens on remand. The analysis must consider the private and public interest factors, which includes the public’s interest in New Jersey remediating contamination within its borders and ensuring insurance coverage for that process. The general rule of a forum non conveniens analysis favors retention of jurisdiction unless it is completely inappropriate. 

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