Third circuit rules occurrence clause requires subjective intent to injure in environmental coverage disputes

Abstract

This article addresses, in general, the occurrence clause in comprehensive general liability policies and, inparticular, the Third Circuit's recent holding in Chemical Leaman that under New Jersey law a subjective standard should be applied in determining whether an insured expected or intended environmental damage. Chemical Leaman follows the New Jersey Supreme Court's decision in Morton as to how the occurrence clause should be analyzed in environmental coverage disputes, a decision also known for its regulatory estoppel holding on the pollution exclusion clause. The majority in Chemical Leaman concluded that Morton requires a subjective standard because, among other things, that standard comports with the twin policy goals of deterring wrongful conduct, while maximizing the amount of compensation available for injured third parties.