United States: Case Settled! New Jersey Supreme Court Says No Time Limits To Spill Act Contribution Claims

Last Updated: February 6 2015
Article by Kevin J. Bruno and Kevin R. Doherty

Action Item: Defendants can no longer assert a statute of limitations defense to claims of contribution under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11, et seq. ("Spill Act"). Following this week's unanimous decision by the New Jersey Supreme Court in Morristown Associates v. Grant Oil Co., et al., a responsible party cleaning up a contaminated site can pursue claims against other potentially responsible parties without worrying that their claims may be time-barred. Simply put, there is no statute of limitations applicable to statutory claims for contribution brought under the Spill Act.

Facts & Procedural History

In 1979, plaintiff Morristown Associates purchased a strip mall in Morristown, New Jersey. One of the strip mall's tenants, a dry cleaning business, had installed a steam boiler and an underground storage tank ("UST") to house fuel for the boiler. The dry cleaning business was later sold and resold several times to different individuals. In 2003, when oil contamination was subsequently discovered in the soil surrounding the strip mall, it was determined that the contamination was caused by the dry cleaner's leaking UST.

Morristown Associates took steps to remediate the property, and in 2006, filed Spill Act claims against one of the fuel companies that had serviced the UST, seeking contribution for costs related to the cleanup. Over the next three years, Morristown Associates filed three amended complaints, adding the owners and prior owners of the dry cleaning business and several other oil companies as additional defendants.

The defendants moved for summary judgment on the ground that the plaintiff's contribution claims, based on the Spill Act, were time-barred by the general six-year statute of limitations for property damage claims (N.J.S.A. 2A:14-1), arguing that the plaintiff should have been aware of the leaking UST by at least 1999, when another UST in the strip mall was investigated and found to be leaking. The trial court agreed, finding that the six-year statute of limitations applied to Spill Act claims for contribution and, as such, claims against the defendants for damage that occurred more than six years before a defendant was brought into the case were time-barred. Relying on reasoning contained in several New Jersey Federal District Court decisions, rather than an unpublished New Jersey Appellate Division decision that found otherwise, the Appellate Division affirmed the trial court, ruling that because the Spill Act does not address a statute of limitations, plaintiffs in Spill Act cases must comply with the general six-year statute of limitations applicable to common law property claims. The Appellate Division looked for guidance by looking to the Spill Act's federal counterpart, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), which unlike the Spill Act contains several explicit statute of limitations periods applicable to private CERCLA contribution claims. In so doing, the court also applied discovery rule concepts in determining when the statutory period began to run, thereby not only applying a defense to a Spill Act contribution claim that previously had not existed, at least in New Jersey state courts, but doing so in what the plaintiff certainly believed to be a rather draconian way.

The New Jersey Supreme Court granted certification to answer once and for all whether the six-year statute of limitations applies to contribution claims under the Spill Act. It does not.

The Supreme Court's Analysis

The Supreme Court began by looking at the history and purpose of the Spill Act, noting that under the Act, any person who has discharged or is responsible for a hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred. The Court also recognized, among other things, that the Spill Act was expressly amended to allow the party performing the cleanup to bring contribution claims against other potentially responsible parties to recoup the costs of the cleanup and removal.

Although the Spill Act is notably silent as to whether there is a statute of limitations for such contribution claims, the Act does list several specific defenses for contribution defendants. In turn, the Court focused on the Act's provision specifying that a defendant shall have "only" those defenses to liability available to it under N.J.S.A. 58:10-23.11g(d), i.e., "an act or omission caused solely by war, sabotage, or God, or a combination thereof." Recognizing that the Spill Act enumerates the only defenses available to contribution defendants, and that a statute of limitations defense is not included in the list, the Supreme Court found that the legislature could not have intended to permit the imposition of contribution liability on culpable dischargers to be frustrated by the imposition of a general and prior enacted, but unreferenced, statute of limitations. The Supreme Court differentiated the statute of limitations defense from other unlisted defenses that should presumably be maintained, such as challenges to venue, service of process, and subject matter jurisdiction, as those defenses are established by court rules under the jurisdiction of the Supreme Court, and are not subject to overriding legislation. Statutes of limitations, by contrast, are the product of the legislature.

The Supreme Court concluded that the plain text and a common-sense reading of the Act supports this view—that the only defenses available to contribution claims are the ones to which the legislature specifically referred. Moreover, the construction adopted by the Court "supports the longstanding view, expressed by the legislature and adhered to by the courts, that the Spill Act is remedial by design to cast a wide net over those responsible for hazardous substances and their discharge on the land and water of this state." Consequently, Morristown Associates is now permitted to move forward with its contribution claims against the partiesthat serviced the UST years ago.

Conclusion

The Supreme Court's ruling is welcome news to responsible parties performing cleanup work, as they no longer have to fear losing the opportunity to sue other potentially responsible parties for contribution due to time constraints. The ruling is consistent with the Spill Act, which is designed to facilitate the cleanup of contaminated sites and hold dischargers responsible for such cleanups. It undoubtedly allows more contributing defendants to be brought into the cleanup process, as the Court's decision once and for all closes the door on the statute of limitations defense (unless, of course, the legislature amends the Act).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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