320 ASSOCIATES, LLC VS. NEW JERSEY NATURAL GAS CO. (L-1180-16, OCEAN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: June 29, 2018
• Docket: A-1831-16T2
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1831-16T2

320 ASSOCIATES, LLC,

Plaintiff-Appellant,

v.

NEW JERSEY NATURAL GAS CO.,

Defendant-Respondent. __________________________

Argued June 5, 2018 – Decided June 29, 2018

Before Judges Reisner, Mayer, and Mitterhoff.

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1180- 16.

Marguerite Kneisser argued the cause for appellant (Carluccio, Leone, Dimon, Doyle & Sacks, LLC, attorneys; Stephan R. Leone, of counsel; Marguerite Kneisser, on the briefs).

Lisa S. Bonsall argued the cause for respondent (McCarter & English, LLP, attorneys; Lisa S. Bonsall, of counsel and on the brief; J. Forrest Jones and Stephanie A. Pisko, on the brief).

PER CURIAM Plaintiff, 320 Associates, LLC, appeals from a December 5,

2016 order, granting summary judgment in favor of defendant New

Jersey Natural Gas (NJNG) and dismissing plaintiff's complaint on

statute-of-limitations grounds.1 We affirm in part and remand in

part.

I

Plaintiff owns a piece of commercial property located just

to the north of NJNG's property. On May 2, 2016, plaintiff filed

a six-count complaint asserting that NJNG's property was polluted

with coal tar, discharged as the result of industrial operations

on NJNG's land decades earlier. Plaintiff asserted that the coal

tar pollution on NJNG's property resulted in the migration of coal

tar plumes (migration) onto plaintiff's land.

Plaintiff asserted that it first learned of the migration in

2008. Plaintiff alleged that it had its land tested in 2007,

after cleaning up pollution from leaking underground storage tanks

(USTs) on its own property and putting down clean soil. In 2007,

plaintiff's property was found to be clean. However, when the

property was tested again in 2008, more pollution was found, but

this new pollution was attributable to migrating coal tar plumes

1 Defendant filed a motion to dismiss, which the court converted to a summary judgment motion, because the parties submitted materials outside the pleadings. See R. 4:6-2(e).

2 A-1831-16T2 from NJNG's land. Plaintiff has not tested its property since

2008.

Plaintiff claimed that, as a result of the newly discovered

pollution, it could not sell its property to a current commercial

tenant. Plaintiff asserted that the tenant had leased the land

from 2006 through 2016, with an agreement to buy, but the agreement

required plaintiff to obtain an unconditional "no further action"

letter from the Department of Environmental Protection (DEP).2

Plaintiff claimed that it could not obtain such a letter due to

NJNG's failure to abate the pollution. As a result, the tenant

terminated the purchase agreement on April 4, 2014. To mitigate

damages, plaintiff extended the tenant's lease through 2023.

Plaintiff asserted that the pollution from NJNG's land had

decreased the value of plaintiff's land and might negatively affect

plaintiff's future ability to either sell or lease the property.

The complaint further asserted that in 2011, NJNG obtained a

remedial action workplan from Haley & Aldrich, Inc., which called

for a clean-up of NJNG's property and plaintiff's property.

Plaintiff asserted that in 2012, NJNG had "indicated" that "based

on the estimated amount of time to complete the initial remediation

2 Plaintiff's brief states that the DEP no longer issues "no further action" letters, but instead a property owner may obtain a Response Action Outcome (RAO).

3 A-1831-16T2 work," it planned to start the remediation project on plaintiff's

property in spring 2015. However, the 2016 complaint alleged that

NJNG had not yet undertaken any remedial actions on plaintiff's

property. The complaint did not directly address whether NJNG had

already cleaned up its own property, but it could be read as

implying that NJNG had not done so.

Based on those essential facts, which were repeated

throughout the complaint, plaintiff asserted claims for

negligence, per se negligence, strict liability, violation of the

Spill Act, violation of the New Jersey Environmental Rights Act,3

nuisance, and trespass. In each count of the complaint, plaintiff

sought the same relief, including damages for the lost sale or

rental value of its property, and injunctive relief requiring NJNG

to clean up the pollution on NJNG's property and on plaintiff's

property.

NJNG filed a motion to dismiss, supported by authenticated

copies of documents referenced in plaintiff's complaint, and two

letters from plaintiff's attorney. See R. 4:18-2. Those documents

included a 2003 remedial investigation workplan prepared by

3 On this appeal, plaintiff did not brief its Environmental Rights Act claims and the related Spill Act claims, and those statutory claims are, therefore, waived. Plaintiff did not separately brief its trespass claims, treating them as essentially the same as its nuisance claims. We will not separately address the trespass claims.

4 A-1831-16T2 Environmental Evaluation Group, in connection with an

investigation of pollution from the USTs on plaintiff's property.

The report referenced the possible migration of pollution from

NJNG's property onto plaintiff's property. A February 28, 2006

proposal from Brinkerhoff Environmental Services, Inc. to

plaintiff, addressing removal of the USTs, also stated that "a co-

mingled groundwater contaminant plume and contaminated soil" on

plaintiff's property was "impacted" by both former industrial

operations on NJNG's property and the leaking USTs on plaintiff's

NJNG also submitted with its motion a copy of the lease and

lease extension between plaintiff and plaintiff's tenant. The

lease, dated July 28, 2006, contemplated a sale if plaintiff could

obtain an unconditional no further action letter from the DEP. On

April 4, 2014, plaintiff entered into a lease extension with the

tenant, acknowledging the presence on the property of coal tar

residue from NJNG's property. The lease also recited that NJNG

had prepared a remedial workplan "that is in the process of being

approved by the [DEP]." The tenant agreed to allow NJNG to perform

remediation work on the leased property.

In its opposition, plaintiff relied on some additional

documents, including an August 3, 2011 environmental assessment

of plaintiff's property. This report noted that the March 2008

5 A-1831-16T2 testing showed an increase in groundwater contamination, but

attributed the increase to "recontamination of the area from the

[NJNG property] coal tar plume" rather than leakage from the USTs.

An additional report, dated April 7, 2011, prepared for NJNG and

submitted to DEP, detailed the history of the pollution on NJNG's

property and neighboring land and NJNG's plans for remediation.

The plan included a proposal to clean up plaintiff's property,

reciting that "A Deed Notice will be established for [plaintiff's

land] incorporating the institutional and engineering controls

necessary for commercial and industrial use of this property,

subject to property owner consent."

Plaintiff's submission also included a 2015 proposal from an

environmental engineering firm. The firm proposed further

sampling of plaintiff's property and development of a plan to work

with NJNG to complete the clean-up and obtain a RAO from DEP.

Plaintiff's submission also included an August 19, 2014 letter

from plaintiff's attorney to NJNG's senior environmental engineer.

The letter insisted on retaining plaintiff's right to pursue

damages for loss of value to its property, as a condition of

allowing NJNG to enter on plaintiff's land for remediation

purposes. A second letter sent in 2015 recited similar concerns,

and enclosed an appraisal report opining that plaintiff had

suffered losses of about $2.5 million. Thus, it appears that the

6 A-1831-16T2 remediation process may have stalled due to a dispute over

plaintiff's monetary demands.

II

Our review of the trial court's decision is de novo, using

the same standard employed by the trial court. See Townsend v.

Pierre, 221 N.J. 36, 59 (2015) (summary judgment); State ex rel.

Campagna v. Post Integrations, Inc., 451 N.J. Super. 276, 279

(App. Div. 2017) (motion to dismiss). On a summary judgment

motion, the facts must be viewed in the light most favorable to

the non-moving party. Townsend, 221 N.J. at 59; Brill v. Guardian

Life Ins. Co., 142 N.J. 520, 540 (1995). Likewise, in reviewing

a motion to dismiss filed under Rule 4:6-2(e), "we assume that the

allegations in the pleadings are true and afford the pleader all

reasonable inferences." Sparroween, LLC v. Township of West

Caldwell, 452 N.J. Super. 329, 339 (App. Div. 2017) (citation

omitted).

In this case, the parties agree that the applicable statute

of limitations (SOL) is the six-year SOL for tortious injury to

real property. N.J.S.A. 2A:14-1. Ordinarily, a cause of action

will accrue when "the right to institute and maintain a suit first

arose." Johnson v. Roselle EZ Quick LLC, 226 N.J. 370, 395 (2016)

(citation omitted). Under the discovery rule, however, "a cause

of action will be held not to accrue until the injured party

7 A-1831-16T2 discovers, or by an exercise of reasonable diligence and

intelligence should have discovered that he may have a basis for

an actionable claim." Belmont Condo. Ass'n, Inc. v. Geibel, 432

N.J. Super. 52, 83 (App. Div. 2013) (quoting Lopez v. Swyer, 62

N.J. 267, 272 (1973)).

Based on the facts as recited above, we agree with the trial

court that plaintiff's claim for permanent diminution in the value

of its property, however characterized in the complaint, was

untimely. Plaintiff's claim is based on a permanent loss in the

value of its land, due to the migration of coal tar contaminants

from NJNG's property. Arguably, plaintiff first learned about

this problem in 2003 or in 2006. However, viewing the evidence

in the light most favorable to plaintiff, at the latest it learned

about the condition in 2008. Thus, the six-year statute of

limitations for a damages claim based on permanent diminution in

the value of the property began to run in 2008 and expired in

2014. See P.T. & L. Const. Co., Inc. v. Madigan & Hyland, Inc.,

245 N.J. Super. 201, 209 (App. Div. 1991) ("[O]nce a party knows

that it has been injured and that the injury is the fault of

8 A-1831-16T2 another, it has the requisite knowledge for the applicable period

of limitations to commence running.").4

We likewise reject plaintiff's negligence argument, which it

asserts by analogy with the Spill Act, that migration constitutes

a new "discharge" of pollutants every time it occurs. Contrary

to plaintiff's argument, the discharge of pollutants on NJNG's

property occurred decades ago. The migration of those pollutants

onto plaintiff's land does not constitute a new discharge. See

White Oak Funding Inc. v. Winning, 341 N.J. Super. 294, 299-300

(App. Div. 2001); see also N.J. Dep't of Env. Prot. v. Dimant, 418

N.J. Super. 530, 544 (App. Div. 2011), aff'd, 212 N.J. 153 (2012).

The trial court correctly dismissed plaintiff's negligence claim.

We reach a different conclusion with respect to plaintiff's

nuisance claim, insofar as plaintiff requests a court order

requiring NJNG to complete the clean-up of its own property and

plaintiff's property. Viewed favorably to plaintiff, there

appears no dispute that NJNG can implement a clean-up. The record

suggests that NJNG may be unwilling to do so unless plaintiff

waives any claim for money damages; that dispute may be driving

this lawsuit.

4 Plaintiff's equitable estoppel claim is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

9 A-1831-16T2 As the Supreme Court held in Russo Farms v. Vineland Board

of Education, if a nuisance can be abated, the failure to abate

constitutes a continuing tort that entitles a plaintiff to relief.

144 N.J. 84, 103-04 (1996). If a nuisance cannot be abated, there

is no continuing tort, and the statute of limitations begins to

run when the defendant creates the harmful condition. Id. at 103.

Arguably, under the discovery rule, the SOL might be tolled until

a plaintiff discovers the harmful condition. However, once it is

discovered, the SOL begins to run. See Lopez, 62 N.J. at 272.

In this case, to the extent plaintiff claims that its land

can never be remediated to the point where it can obtain a RAO,

thus permanently diminishing the land's value, or that the

pollution of NJNG's property is a permanent condition that

diminishes the value of plaintiff's land, those claims are barred

by the SOL. See Russo, 144 N.J. at 103. Plaintiff knew about the

ongoing pollution in 2008 and could have learned about the

diminution in the value of its land had it chosen to investigate

the issue then.

However, to the extent plaintiff claims that its property can

be remediated, and that NJNG can remediate its own property, it

has the right to pursue its demand that defendant proceed with the

remediation. See Interfaith Cmty. Org. v. Honeywell Int'l, Inc.,

263 F. Supp. 2d 796, 857 (D.N.J. 2003). Plaintiff may also be

10 A-1831-16T2 entitled to damages, if any accrued within the six-year SOL, due

to unreasonable delay in abating the nuisance. However, it would

be premature to decide now if plaintiff is in fact entitled to

damages, or any other relief, because the parties have not

completed discovery and the record is inadequate.

For example, plaintiff's complaint asserts that NJNG's

remediation plan called for NJNG to start cleaning up plaintiff's

property in 2015. Plaintiff's complaint does not assert that was

an unreasonable schedule. Yet, according to plaintiff, its tenant

canceled the purchase agreement in 2014.

Also missing from this record is any legally competent

evidence of DEP's actual approval of any plan, any particular

time-frame for remediation, or any particular required level of

remediation. Nor is there evidence of how that remediation level

will affect the legally permitted uses of the property.5 That

information may be relevant to whether NJNG has acted reasonably

or unreasonably. It may also be relevant to whether plaintiff can

enforce a remedy if that remedy is inconsistent with actions that

5 Because NJNG filed its application as a motion to dismiss in lieu of an answer, the parties had not taken discovery, other than preliminary discovery of documents referenced in the complaint, under Rule 4:18-2. The parties also did not present certifications of corporate employees or officers having personal knowledge of facts. Nor did either side present expert reports elucidating the parties' dueling environmental theories.

11 A-1831-16T2 DEP has permitted or required. Those issues, however, are not

ripe for our consideration and we do not address them. See Lyons

v. Township of Wayne, 185 N.J. 426, 434-35 (2005) (finding summary

judgment on a continuing nuisance claim was "inappropriate" due

to the unsatisfactory record).

In summary, viewing the complaint and the limited documentary

record in the light most favorable to plaintiff, we conclude that

the trial court acted prematurely in dismissing plaintiff's

nuisance claims. We remand for the purpose of reinstating those

claims and proceeding with discovery.

Affirmed in part, remanded in part. We do not retain

jurisdiction.

12 A-1831-16T2