ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. Civil No. 88-03110)
Before: Mansmann and Alito, Circuit Judges Diamond, District Court*fn*
An insured sued to recover under general liability insurance policies for costs related to a state-mandated cleanup of toxic waste at an industrial site. The district court granted summary judgment for the insurer, holding that Pennsylvania rather than New Jersey law should be applied, and that under the policies the insured's claims were not covered because, as defined by the policies, no occurrence caused property damage while the policies were in effect. We will affirm.
Armotek Industries, Inc. ("Armotek") was incorporated under the laws of New York*fn1 but its principal place of business has always been in New Jersey. From 1979 to 1985, Armotek was covered by general liability insurance policies issued by Employers Insurance of Wausau ("Wausau"), a Wisconsin corporation. These polices obligated Wausau to pay "all sums which the insured shall become legally obligated to pay as damages because of . . . property damage . . . caused by an occurrence." The policies defined an "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in . . . property damage." "Property damage" was defined to include "physical injury to property which occurs during the policy period." The policies also contained a standard pollution exclusion clause that excluded coverage for property damage caused by pollution unless the "discharge, disbursal, release or escape" of pollution was "sudden and accidental."
Armotek procured these policies through the Philadelphia office of an insurance brokerage, Alexander & Alexander, Inc. ("A & A"). As directed by Armotek, A & A canvassed the market and recommended coverage. A & A applied to Wausau in Philadelphia for the Armotek policies. A & A also conducted all negotiations with Wausau in Philadelphia. A & A, however, had no authority to secure coverage without express authorization from Armotek's chief financial officer. After the negotiations were completed, the policies were countersigned by Wausau in its Philadelphia office.
Wausau sent all premium bills to A & A's Philadelphia office; A & A then sent its own invoices to Armotek in New Jersey; Armotek sent A & A's Philadelphia office checks payable to A & A; and A & A then sent its own checks to Wausau's Philadelphia office.
In 1979, after securing its first policy, Armotek acquired the Chambers - Storch Company ("CSC"), which operated a chromeplating plant in Norwich, Connecticut. In 1984, the Connecticut Department of Environmental Protection ("DEP") inspected the Norwich facility, and in 1985 the Connecticut DEP ordered Armotek to remediate pollution at the plant. Armotek sought recovery under its Wausau policies for costs related to the DEP order, but Wausau denied any obligation to provide a defense or indemnification.
Armotek then filed this action in the United States District Court for the District of New Jersey, seeking to recover the costs incurred as a result of the DEP order. Wausau moved to transfer venue to the District of Connecticut, but Armotek opposed transfer, and the district court denied Wausau's motion. In ruling on this motion, the district court considered the choice-of-law question that would have to be decided by the court that ultimately adjudicated the case. The district court noted that neither Wausau nor Armotek was claiming that Connecticut law should apply. The court observed that the parties' choice-of-law dispute centered on whether Pennsylvania or New Jersey was the place of contracting.
In a later opinion, the district court ruled that Pennsylvania rather than New Jersey law would be applied. Applying the choice-of-law rules of the forum (New Jersey), the district court stated that the law of the place of contracting presumptively governs contract disputes, and the court concluded that the contracts in question had been formed in Pennsylvania, because the last act necessary to give the contracts binding effect, Wausau's countersignature, occurred in Philadelphia. The court then considered whether any factors other than the place of contracting were sufficient to require a choice of New Jersey law. The court noted that the policies had been negotiated in Pennsylvania and were "performed" in Pennsylvania, since that is where the premiums were paid. The court acknowledged that the location of Armotek's principal place of business weighed in favor of New Jersey law, but the court concluded that this lone factor was outweighed by the others.
On cross-motions for summary judgment, the court granted summary judgment for Wausau. The court observed that Armotek was seeking coverage for expenses incurred as a result of a spill of chromic acid that occurred in 1977. The court rejected Wausau's argument that government-mandated cleanup costs are not "damages" within the meaning of the policies, but the court held that the policies, which as noted were in effect from 1979 to 1985, did not cover property damage caused by the 1977 spill. The court also held that Wausau had not breached its duty to defend because nothing in the order issued by the Connecticut DEP "remotely suggested a 'sudden and accidental' release of pollution." Finally the court held that Wausau was not obligated to reimburse Armotek for costs incurred by Armotek in suing the prior owner of the Norwich plant and that Wausau had not violated 42 Pa. Cons. Stat. Ann. § 8371 (1991), which provides relief in cases in which an insurer "has acted in bad faith toward the insured." Armotek appealed,*fn2 and Wausau cross-appealed, contesting the district court's holding that cleanup costs constitute "damages."*fn3
We turn first to the choice-of-law argument pressed by Armotek. Armotek contends that the district court should have applied New Jersey law. Wausau maintains that the district court correctly decided to apply Pennsylvania law. Neither party argues that the law of Connecticut, the site of the Norwich plant, should be applied. We generally decide only those issues raised by parties, Winston v. Children & Youth Servs., No. 90-1788, 948 F.2d, at *13 (3d Cir. Nov. 7, 1991); Beaver Valley Power Co. v. National Eng'g & Contracting Co., 883 F.2d 1210, 1217 ...