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Consol. Edison Co. of N.Y. v. Allstate Ins. Co.

Court of Appeals of New York

March 12, 2002, Argued ; May 2, 2002, Decided

No. 39

Opinion

 [**688]  [***623]  [*215]    Chief Judge Kaye.

Central to this appeal by an insured against its insurers are two important law questions: first, whether the insured (or the insurers) should have the burden of proving that the damage was (or was not) the result of an "accident" or "occurrence" within the meaning of the policies, and second, how any liability should be allocated. This case presents something of a time capsule in that nineteenth century technology polluting twentieth century [***624]   [**689]  properties will have significant twenty-first [****2]  century financial ramifications. For approximately 60 years--from 1873 to 1933--Consolidated Edison's corporate predecessors owned and operated a manufactured gas plant in Tarrytown, New York. The site was later sold to Anchor Motor Freight, Inc. In 1995, Anchor notified Con Edison that, during an investigation it was conducting pursuant to Department of Environmental Conservation (DEC) requirements, it discovered contamination at the site. Anchor alleged that the manufactured gas plant caused the contamination and demanded that Con Edison participate in the investigation and remediation.

After its own investigation, Con Edison entered into an agreement with the DEC to clean up the site, and commenced this declaratory judgment action against 24 insurers that had issued it general liability policies between 1936 and 1986, demanding defense and indemnification for environmental damages arising from the contamination caused by the Tarrytown plant. The policies that were the subject of the complaint were issued in layers, and provided for a self-insured retention  [*216]  in the amount of $ 100,000 per year from 1936 to 1961, and $ 500,000 per year from 1961 to 1986. Con Edison's total coverage [****3]  in excess of the retention ranged between $ 2 million and $ 49.5 million during each of the relevant years.

Defendant Travelers Indemnity Company, which provided coverage for liability in excess of $ 20 million from 1964 to 1970, moved for dismissal on the ground that, as to it, the claim was nonjusticiable. Travelers argued that where there is both continuous, progressive property damage and successive insurance, liability should be allocated pro rata among the insurers. Applying a pro rata allocation to damage estimates most favorable to Con Edison, Travelers contended that its excess insurance policies would not be reached in any given policy year. Nineteen other defendants cross-moved to dismiss the complaint against them on the same ground. In response, Con Edison argued against pro rata allocation, asserting that it should be permitted to allocate all liability to any defendant for any one year it elects within the coverage period.

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98 N.Y.2d 208 *; 774 N.E.2d 687 **; 746 N.Y.S.2d 622 ***; 2002 N.Y. LEXIS 1041 ****; 32 ELR 20699; 55 ERC (BNA) 1020

Consolidated Edison Company of New York, Inc., Appellant, v. Allstate Insurance Company et al., Respondents. (And a Third-Party Action.) Consolidated Edison Company of New York, Inc., Appellant, v. Certain Underwriters of Lloyd's, London, et al., Respondents, et al., Defendants. (And a Third-Party Action.)

Subsequent History:  [****1]  As Corrected August 30, 2002.

Prior History: Appeal, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered May 24, 2001, which (1) affirmed a judgment of the Supreme Court (Ira Gammerman, J.), entered in New York County, upon a verdict in favor of defendants Certain Underwriters of Lloyd's, London and London Market Insurance Companies, Home Insurance Company, and St. Paul Fire and Marine Insurance Company, and (2) dismissed, as moot, appeals and cross appeals from orders of that Supreme Court, entered in New York County, which, to the extent appealed and cross-appealed from as limited by the briefs, granted a motion by defendant Travelers Indemnity Company to dismiss the complaint as against it as nonjusticiable, granted similar cross motions of 13 other defendant insurers, and granted in part a motion by defendant New England Insurance Company for partial summary judgment.

Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 283 AD2d 322, 724 N.Y.S.2d 853, affirmed.

Consolidated Edison Co. of N.Y. v Certain Underwriters of Lloyd's, London, 283 AD2d 322, affirmed.

Disposition: Affirmed, with costs.

CORE TERMS

insurers, policies, occurrence, coverage, property damage, burden of proof, policy period, damages, prorated, pro rata, provide coverage, joint and several, jury question, indemnification, courts, accidental result, insurance policy, trial court, self-insured, pollutants, unintended

Insurance Law, Contract Formation, Evidence, Burdens of Proof, General Overview, Claim, Contract & Practice Issues, Policy Interpretation, Fortuity Doctrine, Plain Language, Initial Burden of Persuasion, Coverage, Triggers, Allocation, Exclusions, Pollution, Burdens of Proof, Commercial General Liability Insurance, Pollution, Labor & Employment Law, Employment Contracts, Conditions & Terms, Business Insurance, Multiple Insurers