NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1733-19
COZZOLI MACHINE COMPANY,
Plaintiff-Respondent,
v.
CROWN REAL ESTATE HOLDINGS, INC.,
Defendant,
and
SUMO PROPERTY MANAGEMENT, LLC,
Defendant-Appellant. _________________________
Argued September 28, 2021 – Decided December 7, 2021
Before Judges Messano and Accurso.
On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-000142-17. Victoria A. Flynn argued the cause for appellant (Hill Wallack, LLP, attorneys; Eric I. Abraham, of counsel; Victoria A. Flynn, on the briefs).
Matthew S. Slowinski argued the cause for respondent (Slowinski Atkins, LLP, attorneys; Matthew S. Slowinski, on the brief).
PER CURIAM
Plaintiff Cozzoli Machine Company operated an industrial establishment
in Plainfield for most of the twentieth century. In March 2003, pursuant to the
Industrial Site Remediation Act, N.J.S.A. 13:1K-6 to -13.1, plaintiff and the
owner of the real property, MJ Realty Co. (MJR), a partnership that included
plaintiff, entered into an agreement with the New Jersey Department of
Environmental Protection (DEP) to remediate the site (the Agreement). The
Agreement anticipated plaintiff terminating all operations at the site by March
28, 2003, and selling the property to Noray and Talir Bakalayan, the only
members of RTN, LLC.
RTN funded the purchase through Crown Bank and took title to the
property in May 2003. RTN eventually defaulted. Crown Bank began
foreclosure proceedings in 2010 and took title to the property in 2012; title
ultimately vested with defendant Crown Real Estate Holdings, Inc. (Crown), a
subsidiary of the bank.
A-1733-19 2 On October 17, 2017, pursuant to N.J.S.A. 58:10B-161 and Rule 4:67-1,
plaintiff filed a summary action by way of verified complaint and order to show
cause against Crown seeking access to the property to complete its remediation
and injunctive relief requiring Crown to execute a deed notice. See N.J.A.C.
7:26E-5.2(a)(5) (requiring the filing of a deed notice in certain circumstances
by "[t]he person responsible for conducting the remediation"); N.J.A.C. 7:26C-
7.2 (setting forth administrative requirements of a deed notice). Crown filed an
answer and counterclaim alleging plaintiff tortiously interfered with its pursuit
of economic advantages. To the extent necessary, we discuss the procedural
aspects of the litigation that followed.
1 In relevant part, the statute, a provision of the Brownfield and Contaminated Site Remediation Act (the Act), N.J.S.A. 58:10B-1 to -31, permits entry onto real property by someone who is not the owner "to undertake[] the remediation of suspected or actual contamination." N.J.S.A. 58:10B-16(a)(1). It provides in part:
If, after good faith efforts, the person undertaking the remediation and the property owner fail to reach an agreement concerning access to the property, the person undertaking the remediation shall seek an order from the Superior Court directing the property owner to grant reasonable access to the property and the court may proceed in the action in a summary manner.
[Ibid.] A-1733-19 3 When Crown conveyed the property to Sumo Property Management, LLC
(Sumo), plaintiff amended its complaint to name Sumo, and the court dismissed
the complaint against Crown. Sumo moved, as had Crown, to dismiss the
complaint for failure to state a claim. R. 4:6-2(e). The judge's September 14,
2018 order denied that motion supported by a written statement of reasons
(SOR).
Sumo moved for reconsideration shortly before the trial date. The motion
was supported by the report of a proposed expert, Scott R. Drew, a Licensed Site
Remediation Professional (LSRP), that Sumo produced for the first time. Citing
historic correspondence between DEP and plaintiff that questioned the nature of
contamination on the property, Drew opined that the contamination was not
"historic fill," remediation of which could be accomplished with "capping" and
a deed notice. Rather, in his opinion, more extensive remediation efforts were
necessary.
Jacinto Rodrigues, the chairman and Chief Executive Officer of Crown and
also the managing member of Sumo,2 filed a certification in support of the
reconsideration motion, stating that Sumo would consent to plaintiff's entry on
the property, but only if it agreed to remediate in a manner consistent with DEP's
2 Rodrigues and his wife are the only members of Sumo. A-1733-19 4 more stringent standards for residential development. The judge's April 12,
2019 order denied the reconsideration motion.
The trial was adjourned, and plaintiff moved for summary judgment and,
alternatively, to bar Drew from testifying. Plaintiff contended that Drew's
opinion was a net opinion unsupported by any actual testing or sampling of the
property. It also argued that pursuant to the doctrine of judicial estoppel, Sumo
should be barred from proffering Drew's testimony that the property contained
anything but historic fill. Plaintiff noted in prior filings that Crown argued entry
on the property was unnecessary because the site contained only historic fill.
The judge entered an order on September 17, 2019, denying plaintiff's request
for summary judgment, but barring Drew "from testifying that ther e is historic
fill on the property." 3
At trial, plaintiff presented the testimony of Kenneth L. Nieuwenhuis, an
LSRP and owner of Peak Environmental LLC (Peak), and several documents
were admitted into evidence; we discuss them as necessary below . On
November 14, 2019, the judge entered an order supported by a written SOR
granting plaintiff access to the property to complete its remedial activities and
3 This language seems to be a typographical error. The judge's written SOR that accompanied the order concluded Sumo was judicially estopped from now taking the position that there was only historic fill on the site. A-1733-19 5 requiring Sumo to "execute the [d]eed [n]otice and pay all reasonable costs
associated with it." Sumo subsequently moved for a stay pending appeal, which
the judge granted.
Before us, Sumo argues the judge disregarded the plain intent of the Act
by failing to compel plaintiff to complete its remediation obligations under the
statute, and by forcing Sumo to execute the deed notice and accept a
"remediation strategy" to which it never consented. Sumo also contends the
judge failed to "protect its interests" in developing the property because she
applied the doctrine of judicial estoppel and barred a fair presentation of the
evidence through Drew's testimony.4 We affirm.
I.
The record contains additional facts important to our resolution of this
appeal.
4 In a separate point, Sumo makes a similar argument, contending the judge erred in barring Drew's report as a net opinion. Sumo's citations to the judge's written SOR supporting the April 2019 order denying reconsideration, and the SOR supporting the September 2019 order barring Drew's testimony regarding the presence or absence of historic fill, however, fail to support the argument. The former SOR never addressed the net opinion issue, and in the latter, the judge wrote that although Drew did not perform his own tests at the property, "[h]is opinion [wa]s valid since it relie[d] on scientific data relied upon by experts." We do not address the argument any further. A-1733-19 6 Plaintiff hired Peak to investigate contamination on the property, submit
the necessary filings to DEP, and oversee remediation of the site. By the time
the complaint was filed, plaintiff allegedly had incurred more than five-hundred
thousand dollars in remediation expenses.
In August 2006, prior to Crown Bank's foreclosure, Plainfield adopted a
redevelopment plan of which the property was a large part. The redevelopment
plan's express purpose was to "promote opportunity for homeownership . . .
through the encouragement of high density, multi-family housing as well as
compatible commercial uses that serve the daily needs of residents." In 2008,
RTN filed suit against plaintiff and MJR (the RTN litigation), asserting that
plaintiff and MJR were not remediating the site "in a timely and commercially
reasonable manner."
In January 2009, while the lawsuit was pending and remediation efforts
ongoing, plaintiff responded to DEP's notice of deficiency (NOD) which cited
the lack of "documentation that the current property owner has agreed to the
filing of a Deed Notice." 5 Plaintiff's counsel's letter to DEP attached an
"Acceptance and Acknowledgement" executed by RTN's principal, Noray
5 The record reveals that the site was designated a Brownfield Development Area sometime in 2009. See N.J.S.A. 58:10B-1. A-1733-19 7 Bakalayan, agreeing that "engineering and institutional controls, including a
Deed Notice may be utilized . . . as part of the remedial strategy." RTN further
"agree[d] to execute and record a Deed Notice for the [s]ite . . . once approved
by [DEP]."
On March 17, 2009, DEP issued another NOD requiring additional final
corrective actions for two areas of concern at the property. In other respects,
the NOD called for no further investigation of the site and indicated DEP would
issue a "No Further Action/Covenant Not to Sue" at the completion of the case
and the filing of "institutional controls," i.e., the Deed Notice. DEP specifically
recognized that plaintiff's counsel's January letter "contained documentation
that the current property owner agree[d] to the filing of a [d]eed [n]otice." Peak
was to submit an appropriate remedial action plan to remove contaminants at
the two areas of concern and file a revised action plan to include a draft "site-
wide Deed Notice." DEP served the March 17, 2009 NOD on the Plainfield
Municipal Clerk and Health Officer.
In his trial testimony, Nieuwenhuis said that Peak had already addressed
the two areas of concern. However, the Deed Notice, although drafted, was still
required to complete the process and obtain from DEP "a final remediation
document," known as "a Response Action Outcome."
A-1733-19 8 Meanwhile, in September 2009, the parties in the RTN litigation entered
a stipulation voluntarily dismissing the suit without prejudice and setting forth
the conditions of the settlement in a separate agreement incorporated by
reference. Among other things, the stipulation required plaintiff and MJR "to
continue to use timely and reasonable commercial efforts to conclude the
environmental investigation and remediation of the [p]roperty by, inter alia,
obtaining a Deed Notice." RTN had secured a potential purchaser of the
property, and the stipulation required it to continue those negotiations in good
faith. If RTN sold the property for $1.5 million or more, the dismissal of the
suit would "become binding as final with prejudice." As noted, RTN never sold
the property, but, instead, defaulted on its mortgage with Crown Bank.
In 2015, Crown obtained the approval of the Plainfield Planning Board to
construct a 125-unit residential project with underground parking for 118 cars.
The approval was conditioned on remediation of the site to the stricter standards
for residential developments that DEP requires. Those standards do not permit
the "capping" of contaminated sites as proposed by plaintiff, agreed to by RTN ,
and approved by DEP.
Rodrigues's certification in opposition to the initial order to show cause
stated that plaintiff and Crown had engaged in ongoing negotiations to modify
A-1733-19 9 the remediation plan for the site so Crown could construct the proposed
residential development, but that Crown was unwilling to bear any additional
costs to excavate and remove ground cover necessary to bring the property into
compliance with DEP's regulations.
II.
Sumo's central argument is that any consent RTN gave to plaintiff's
remediation plan and RTN's agreement to execute a deed notice is ineffective
because the Act and its regulations require consent of the "current property
owner," and a past owner, like RTN, cannot "bind future owners of the
[p]roperty." Sumo relies upon the language of the N.J.S.A. 58:10B-13 (Section
13) and the legislative purposes undergirding the Act for support.
"To the extent that our review involves questions of statutory
interpretation . . . our review is de novo." Brugaletta v. Garcia, 234 N.J. 225,
240–41 (2018) (citing Verry v. Franklin Fire Dist. No. 1, 230 N.J. 285, 294
(2017)). Our "objective . . . 'is to effectuate legislative intent,' and '[t]he best
source for direction on legislative intent is the very language used by the
Legislature.'" Bozzi v. City of Jersey City, 248 N.J. 274, 283 (2021) (alteration
in original) (quoting Gilleran v. Twp. of Bloomfield, 227 N.J. 159, 171–72
A-1733-19 10 (2016)). "If the language is clear, the court's job is complete." Ibid. (quoting In
re Expungement Application of D.J.B., 216 N.J. 433, 440 (2014)).
"Where the plain meaning does not point the court to a 'clear and
unambiguous result,' [the court] then considers extrinsic evidence from which it
hopes to glean the Legislature's intent." TAC Assocs. v. N.J. Dep't of Env't
Prot., 202 N.J. 533, 541 (2010) (quoting Bedford v. Riello, 195 N.J. 210, 222
(2008)). "Included within the extrinsic evidence rubric are legislative history
and statutory context, which may shed light on the drafters' motives." Ibid.
(citing Aponte-Correa v. Allstate Ins. Co., 162 N.J. 318, 323 (2000)); see also
Spade v. Select Comfort Corp., 232 N.J. 504, 515 (2018) ("We construe the
words of a statute 'in context with related provisions so as to give sense to the
legislation as a whole.'" (quoting N. Jersey Media Grp., Inc. v. Twp. of
Lyndhurst, 229 N.J. 541, 570 (2017))).
Before turning to Section 13, we discuss the statutory and regulatory
context. Noting "New Jersey's industrial history," and that "areas formerly used
for commercial and industrial purposes [we]re underused or abandoned," the Act
required the adoption of "strict remediation standards . . . to protect public health
and safety and the environment . . . based upon the risk posed by discharged
hazardous substances." N.J.S.A. 58:10B-1.2. The Legislature also recognized
A-1733-19 11 attendant economic realities, noting that "to encourage the cleanup of
contaminated sites, there must be finality in the process, the provision of
financial incentives, liability protection for innocent parties who clean up,
cleanup procedures that are cost effective and regulatory action that is timely
and efficient." Ibid.
The Act required DEP to "develop residential and nonresidential soil
remediation standards." N.J.S.A. 58:10B-12(c)(1). "Residential soil
remediation standards . . . will allow the unrestricted use of th[e] property,"
whereas "[n]on-residential soil remediation standards . . . recognize the lower
likelihood of exposure to contamination on property that will not be used for
residential . . . uses." Ibid.
The Act recognizes that in certain circumstances, remediation is
appropriate through the use of engineering controls and institutional controls.
"'Engineering controls' means any mechanism to contain or stabilize
contamination or ensure the effectiveness of a remedial action[] . . . [and] may
include . . . caps, . . . signs, fences and physical access controls." N.J.S.A.
58:10B-1; see also N.J.A.C. 7:26E-1.8.
"Institutional controls" means a mechanism used to limit human activities at or near a contaminated site, or to ensure the effectiveness of the remedial action over time, when contaminants remain at a contaminated site
A-1733-19 12 in levels or concentrations above the applicable remediation standard that would allow unrestricted use of that property. Institutional controls may include, without limitation . . . deed notices.
[Ibid.; see also N.J.A.C. 7:26E-1.8.]
Among other things, the Act required DEP to "establish a procedure for a
person to demonstrate that a particular parcel of land contains large quantities
of historical fill material," defined as "generally large volumes of non-
indigenous material, no matter what date they were emplaced on the site, used
to raise the topographic elevation of a site, which were contaminated prior to
emplacement and are in no way connected with the operations at the location of
emplacement." N.J.S.A. 58:10B-12(h)(1); see also N.J.A.C. 7:26E-1.8.
Critically,
Upon a determination by [DEP] that large quantities of historic fill material exist on that parcel of land, there is a rebuttable presumption that [DEP] shall not require any person to remove or treat the fill material in order to comply with applicable health risk or environmental standards. In these areas[, DEP] shall establish by regulation the requirement for engineering or institutional controls that are designed to prevent exposure of these contaminants to humans, that allow for the continued use of the property, that are less costly than removal or treatment, which maintain the health risk standards . . . , and, as applicable, are protective of the environment.
[N.J.S.A. 58:10B-12(h)(1).]
A-1733-19 13 The regulation implementing this provision of the Act, N.J.A.C. 7:26E-5.4(a),
states: "Notwithstanding the presumptive remedies for residences . . . there is a
rebuttable presumption pursuant to N.J.S.A. 58:10B-12h that the remedial action
for soil contamination associated with historic fill material is the establishment
of engineering and institutional controls pursuant to N.J.A.C. 7:26C-7."
(Emphasis added).
N.J.A.C. 7:26C-7.2(a) in turn sets forth the administrative requirements
for a deed notice, including that it be "worded exactly" as a model document in
an appendix to the regulations. N.J.A.C. 7:26C-7.2(a)(1). Notably, the model
deed notice requires that the actual filed deed notice include as an exhibit, "[a]s-
built diagrams of each engineering control, including caps . . . that may be
required as part of a ground water engineering control in addition to the deed
notice." N.J.A.C. 7:26, Appx. B, § 12B(i)(A).
We come then to the provisions of Section 13, the nub of Sumo's
argument. Subsection (a)(2) requires that "[w]hen . . . engineering or
institutional controls are used in lieu of remediating a site . . . the person
responsible for conducting the remediation shall . . . with the consent of the
owner of the real property, provide for the recording with the office of the county
recording officer, in the county in which the property is located," an appropriate
A-1733-19 14 deed notice. N.J.S.A. 58:10B-13(a)(2); see also N.J.A.C. 7:26C-7.2(c)(1)
(requiring the remediator to provide DEP "with the property owner's written
agreement to record the deed notice"). "The notice shall be recorded in the same
manner as are deeds and other interests in real property." N.J.S.A. 58:10B-
13(a)(2).
Subsection (b), however, provides: "If the owner of the real property does
not consent to the recording of a notice pursuant to paragraph (2) of subsection
a. . . . , the person responsible for conducting the remediation shall implement a
remedial action that meets the residential soil remediation standard in the
remediation of that real property." Sumo's argument is straightforward: because
it did not consent to the deed notice, plaintiff must remediate the property to
residential standards.
The record is clear: plaintiff obtained the consent of RTN, the then-
current property owner, to the filing of a deed notice in 2009. DEP recognized
this in its March 2009 NOD. Obviously, Sumo's position only advances its
transparent financial interests, which did not come into being until Sumo
acquired the property — after DEP had already executed the Agreement with
plaintiff, and plaintiff initiated remediation efforts, obtained RTN's consent to
execute the deed notice, and addressed DEP's March 2009 NOD.
A-1733-19 15 Plaintiff had no control over disposition of the property thereafter. Sumo's
position would hold a good-faith remediator, who had essentially obtained
DEP's approval of its plan and the consent of the current owner to the filing of
a deed notice, hostage to the demands and whims of the property's successors-
in-interest. That would be inconsistent with the Legislature's stated purpose to
enact "cleanup procedures that are cost effective and regulatory action that is
timely and efficient." N.J.S.A. 58:10B-1.2.
Moreover, DEP's regulations provided plaintiff with a "rebuttable
presumption" that any remedial action at the property could be accomplished
through "the establishment of engineering and institutional controls" because
the contamination was historic fill. N.J.A.C. 7:26E-5.4(a). Obtaining the
consent of the owner was a condition precedent for plaintiff to "use . . . that
standard or control measure." N.J.S.A. 58:10B-13(a)(2). That is precisely what
DEP required and what plaintiff did. Nothing in the record reveals that Sumo
or its predecessors-in-interest ever challenged DEP's determination regarding
the nature of the contamination until plaintiff brought this suit and Sumo
belatedly sought to introduce Drew's expert opinion.
A-1733-19 16 We also reject Sumo's claims that it was unaware of RTN's consent
because neither it nor the Agreement was ever publicly filed. 6 Sumo argues it
was improper for the judge to impute RTN's consent to Sumo, a separate legal
entity from Crown, in turn a subsidiary of RTN's mortgagee, Crown Bank. We
agree that Sumo and Crown's interlocking ownership presents sufficient
evidence to impute such knowledge. Rodrigues was both the chairman and CEO
of Crown while Crown was a party to this lawsuit. Crown then transferred the
property to Sumo, where Rodrigues was the managing member.
There is another reason why Sumo should be bound by RTN's consent.
"[A] party may be charged with inquiry notice where there are facts or
circumstances indicating some outside claim that would prompt a reasonable
purchaser to investigate further." Pearson v. DMH 2 LLC, 449 N.J. Super. 30,
50 (Ch. Div. 2016). Therefore, a "claimant will be charged with knowledge of
whatever such an inquiry would uncover where facts are brought to his [or h er]
attention, 'sufficient to apprise . . . of the existence of an outstanding title or
claim, or the surrounding circumstances are suspicious and the party
6 To the extent Sumo suggests it was not on notice because of plaintiff's failure to record the deed notice, the argument lacks sufficient merit to warrant extensive discussion. R. 2:11-3(e)(1)(E). As the regulations already cited provide for the deed notice to include as an exhibit "as built" drawings of all engineering controls at the site, it could not be filed until they were installed. A-1733-19 17 purposefully or knowingly avoids further inquiry.'" Friendship Manor, Inc. v.
Greiman, 244 N.J. Super. 104, 108 (App. Div. 1990) (quoting Scult v. Bergen
Valley Builders, Inc., 76 N.J. Super. 124, 135 (Ch. Div. 1962)).
As mortgagee-in-possession at the time of foreclosure, Crown Bank was
charged with inquiry notice of RTN's consent because DEP's March 2009 NOD
was on file with the municipal clerk and health officer. Plaintiff alludes to other
indicia of the condition of the property, such as its Brownfields Designation and
signs and notices that were posted. Additionally, RTN and plaintiff were in
active litigation. Surely, even a perfunctory investigation of its mortgagor's
property would have made Crown Bank aware of DEP's involvement and
plaintiff's remediation plan before it foreclosed. From that point in time, Crown
and Sumo were at least charged with inquiry notice such that Sumo cannot rely
on a lack of public documentation to support its contention.
III.
Sumo contends the judge erred in utilizing the doctrine of judicial estoppel
to bar Drew's testimony, thereby denying it a fair opportunity to defend against
plaintiff's complaint. Sumo claims the judge never accorded it an opportunity
to argue against application of the doctrine, and, because positions taken by
A-1733-19 18 Crown during the course of the litigation cannot be attributable to Sumo, a
separate legal entity, the doctrine is inapplicable as a matter of law.
Judicial estoppel is "an equitable doctrine precluding a party from
asserting a position in a case that contradicts or is inconsistent with a position
previously asserted by the party in the case or a related legal proceeding."
Newell v. Hudson, 376 N.J. Super. 29, 38 (App. Div. 2005) (quoting Tamburelli
Props. Ass'n v. Borough of Cresskill, 308 N.J. Super. 326, 335 (App. Div.
1998)). "To protect the integrity of the court system, '[w]hen a party
successfully asserts a position in a prior legal proceeding, that party cannot
assert a contrary position in subsequent litigation arising out of the same
events.'" In re Declaratory Judgment Actions Filed by Various Muns., 446 N.J.
Super. 259, 291–92 (App. Div. 2016) (alteration in original) (quoting Kress v.
La Villa, 335 N.J. Super. 400, 412 (App. Div. 2000)). "Prior success does not
mean that a party prevailed in the underlying action, it only means that the party
was allowed by the court to maintain the position." Cummings v. Bahr, 295 N.J.
Super. 374, 387 (App. Div. 1996).
Here, it is indisputable that Crown sought reconsideration of the denial of
its motion to dismiss the complaint arguing, in part, there was only historic fill
on the property, historic fill was not a "contaminant" under the Act, and
A-1733-19 19 engineering controls and a deed notice were unnecessary. Clearly, if Crown
remained the party defendant in this case through the court's final order, after
losing those applications it would have been judicially estopped from asserting
the property contained contaminants other than historic fill and engineering
controls and a deed notice were inadequate.
For reasons already expressed, the judge was justified in concluding the
mid-litigation conveyance of the property from Crown, where Rodrigues was
president and CEO, to Sumo, where he was the sole managing member, was
simply an attempt to "play fast and loose" with the court. Any claim that Sumo
was not given a chance to rebut plaintiff's argument that judicial estoppel should
not apply lacks sufficient merit to warrant discussion in a written opinion.
The judge, however, also reasoned that Drew's report only surfaced
through an improperly filed motion for reconsideration made immediately
before trial. Certainly, Crown and Sumo had the opportunity to produce the
report sooner; Sumo has never contended otherwise. Whether viewed solely as
a discovery issue or in the broader context of the judge's management of the
trial, we conclude there was no error in her barring Drew as an expert witness
for Sumo. See, e.g., C.A. by Applegrad v. Bentolila, 219 N.J. 449, 459 (2014)
("An appellate court applies 'an abuse of discretion standard to decisions made
A-1733-19 20 by [the] trial courts relating to matters of discovery.'" (alteration in original)
(quoting Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371
(2011))); Zehl v. City of Elizabeth Bd. of Educ., 426 N.J. Super. 129, 141 (App.
Div. 2012) ("Judges retain the inherent authority to impose reasonable
conditions on motion practice to allow for appropriate case management and the
efficient and effective administration of the case.").
For all these reasons, we affirm the November 14, 2019 final order
permitting plaintiff entry onto the property to complete any engineering controls
and ordering Sumo to execute an appropriate deed notice and bear all reasonable
costs associated with it. We also vacate the December 30, 2019 order that
entered a stay pending appeal.
Affirmed.
A-1733-19 21