## Facts

- Gilbert Spruance Company, a Pennsylvania paint manufacturer, generated industrial waste during the 1970s and 1980s.
- Spruance consigned waste to independent haulers who transported and disposed of it at multiple New Jersey sites, including the Helen Kramer Landfill, Scientific Chemical Processing site, Gloucester Environmental Management Services Landfill, and Swope Oil and Chemical site.
- The New Jersey disposal sites became the subject of toxic-tort claims alleging personal injury and property damage, and of remediation and enforcement actions by the New Jersey Department of Environmental Protection.
- Pennsylvania Manufacturers’ Association Insurance Company (PMA), a Pennsylvania insurer, issued comprehensive general liability policies to Spruance that were negotiated, executed, and paid for in Pennsylvania.
- The policies contained a standard pollution-exclusion clause, with an exception for discharges that were “sudden and accidental.”
- After New Jersey claims and enforcement actions arose, Spruance sought defense and indemnity from PMA; PMA denied coverage, asserting the pollution exclusion and arguing for application of Pennsylvania law.
- Spruance filed a New Jersey declaratory judgment action seeking a determination that New Jersey law governed interpretation of the pollution exclusion and that coverage was available.

## Issues

1. Whether New Jersey or Pennsylvania law governs interpretation of a CGL policy’s pollution-exclusion clause when the insurer and insured are Pennsylvania entities and the policies were formed in Pennsylvania, but the insured’s waste was foreseeably deposited in New Jersey, causing New Jersey tort claims and environmental enforcement.

## Decision

- The New Jersey Supreme Court affirmed the Appellate Division.
- New Jersey law governed interpretation of the pollution-exclusion clause for liabilities arising from waste disposed of at New Jersey sites.
- Applying Restatement (Second) of Conflict of Laws principles, the court held New Jersey had the dominant significant relationship to the dispute because the waste predictably came to rest in New Jersey and the resulting harm and regulatory response occurred there.

## Legal Principles

- Choice of law for insurance-contract disputes is determined by the state with the “dominant significant relationship” to the parties, the transaction, and the outcome, assessed under Restatement (Second) of Conflict of Laws § 6 factors.
- In environmental-coverage disputes, the location where the waste “comes to rest” (the waste site) is a central contact; “waste site” includes any location where waste ultimately rests, whether or not a designated landfill.
- When parties can reasonably foresee that the insured’s waste will be deposited in New Jersey and generate in-state contamination, claims, and enforcement, New Jersey’s interests in protecting residents and remediating pollution justify applying New Jersey law to interpret coverage.
- Contracting contacts (place of negotiation, execution, delivery, premium payment, and domicile of insurer/insured) are relevant but may yield to the state where the insured risk materializes and where strong regulatory and remedial interests are implicated.

## Conclusion

New Jersey law applied to interpret the CGL pollution-exclusion clause because the insured’s waste was foreseeably deposited at New Jersey sites and the resulting contamination produced New Jersey tort litigation and state remediation enforcement, giving New Jersey the dominant significant relationship to the coverage dispute.


Gilbert Spruance Co. v. Pa. Mfrs. Ass’n Ins. Co., 134 N.J. 96, 629 A.2d 885 (1993)