In a case that involves some $500 million in insurance coverage, a New Jersey state court has held that a fragrance company has the right to seek coverage for various environmental claims, because the transfer of insurance policies to it from a related unit did not require insurers' prior approval.

The ruling by the Superior Court of New Jersey, appellate division, in Trenton, New Jersey, in the complex litigation, Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co. et al. reverses a lower court ruling.

The original company, Burton T. Bush Inc., which was incorporated in February 1924, through various incarnations eventually became a unit of the Geneva-based Givaudan Group, whose affiliated units include Givaudan Fragrances Corp. and Givaudan Flavors Corp., according to the ruling and the Givaudan Group's website.

In August 2004, the New Jersey Environmental Protection Agency notified the fragrances unit it was potentially liable under the U.S. Comprehensive Environmental Response, Compensation and Liability Act for hazardous discharges that had emanated from a site in Clifton, New Jersey, and in January 2007 filed suit against the unit for damage caused by the discharges.

In addition, two other defendants in the agency's action filed third-party contribution claims against more than 300 entities that had also conducted activities in the area, including the fragrances unit.

In February 2009, the fragrances unit filed suit, seeking a declaratory judgment it was entitled to insurance coverage under the relevant policies.

In March 2010, the flavors unit assigned to the fragrances unit all of its insurance rights under various policies issued by numerous insurers between November 1964 and January 1986.

In December 2012, the state superior court in Morristown, New Jersey, denied the fragrances unit's motion. A three-judge panel of the appellate court unanimously reversed that ruling.

“Defendants refused to recognize the assignment on the ground their respective policies prohibited policy assignments without the insurers' consent, and none of the insurers had consented to the assignment,” said the ruling. “Defendants also contended that fragrances was not included within the definition of insured in any of the policies.”

However, said the ruling by a unanimous three-judge panel, “Flavors did not require the insurers' consent to assign its rights under the policies.”

The ruling states also that “the assignment of the rights to policies specified in the assigning document could not have increased the risk to any defendant insurer because all losses occurred before the assignment.” The case was remanded for further proceedings.

According to a statement by Kasowitz, Benson, Torres & Friedman L.L.P., whose New York-based partner Robin L. Cohen represented Givaudan, the ruling involves more than $500 million in insurance coverage.