IN THE MATTER OF SPILL FUND LIEN, DJ NO. 129570-02 954 ROUTE 202, BLOCK 44, LOT 30, BRANCHBURG TOWNSHIP, SOMERSET COUNTY (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION)

New Jersey Superior Court Appellate Division·Decided August 13, 2019·No. A-2665-15T1·Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2665-15T1

IN THE MATTER OF SPILL FUND LIEN, DJ NO. 129570-02; 954 ROUTE 202, BLOCK 44, LOT 30, BRANCHBURG TOWNSHIP, SOMERSET COUNTY.

Argued November 14, 2018 – Decided August 13, 2019 Before Judges Ostrer, Currier and Mayer.

On appeal from the New Jersey Department of Environmental Protection, Spill Compensation Fund.

Stuart J. Lieberman argued the cause for appellant Branch 2002, LLC (Lieberman & Blecher, PC, attorneys; Stuart J. Lieberman, of counsel and on the brief; Jordan M. Asch, on the briefs).

Thomas P. Lihan, Deputy Attorney General, argued the cause for respondent New Jersey Department of Environmental Protection (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Matthew D. Orsini, Deputy Attorney General, on the briefs).

PER CURIAM

Branch 2002 LLC appeals from a final agency decision of the Spill Compensation Fund (Fund). The Fund rejected Branch's contest of a lien filed against its property and revenues to recover pollution remediation costs that the Fund expended. Branch challenges the decision on three grounds. First, citing N.J.S.A. 58:10-23.11f(f), it contends the Spill Compensation and Control Act (Spill Act) authorizes pre-judgment liens only against the property or revenues of a "discharger," and the Fund did not contend Branch was a discharger; rather, it contended Branch was a person in any way responsible for hazardous substances. Second, Branch contends the lien contest procedures denied it due process, and the Fund was obliged to establish the reasonableness of its cleanup and removal costs before filing a lien. Third, Branch argues that the Fund was barred from filing the lien because the Department of Environmental Protection (Department) knew that a third party agreed to indemnify Branch for the Fund's claims. Having reviewed Branch's arguments in light of the record and applicable principles of law, we affirm.

I.

The case involves the discharge of various hazardous substances at a gas station in Branchburg. In 1988, the owner, Daniel Shoplock, discovered the discharge while removing three underground storage tanks, and notified the

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Department. Following monitoring, sampling and testing, the Department in 1991 ordered Shoplock to conduct a remedial investigation and remove or treat the contaminated soil. Shoplock's consultant conducted some analysis of the site, but the Department, not Shoplock, performed remediation with Fund resources. At one point, the Department had to seek judicial relief to access the property to remediate it.

In the meantime, control of the property changed hands. In 1993, Shoplock entered into a lease-purchase agreement with John & Jerry, Inc., which thereafter leased and operated the gas station (and, for a time, entered into a sublease with an automobile repairer). There is some evidence in the record that discharges continued after John & Jerry took over, but that point is disputed. On April 23, 2004, John & Jerry purchased the property from Shoplock for $448,000. Branch alleges that Shoplock and its insurer agreed to indemnify John & Jerry for any liability arising out of Shoplock's discharge. 1 Within a week of acquiring title, John & Jerry transferred the property to Branch for token

1 The record includes a copy of an indemnification agreement, but it is not fully executed.

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or no consideration.2 Peter Singh was John & Jerry's sole shareholder, and, apparently, Branch's sole member. Branch admits it is the successor to John & Jerry and continued to operate the gas station.

In May 2002, while Shoplock was still the title owner, the Fund Administrator filed the Fund's first notice of lien against the property "for all expenditures made as of April 15, 2002, from the Fund in connection with the discharge of hazardous substances at or from" the property. The notice stated that the expenditures totaled $48,601, but the "lien may be amended from time to time as additional expenditures and/or commitments are incurred by the Fund in connection with the discharge of hazardous substances at or from" the property. The notice characterized Shoplock as "the discharger," and requested the Superior Court Clerk to enter Shoplock's name and address in the record of docketed judgments and the amount of the debt. The notice did not mention John & Jerry or Singh.

Remediation continued at the site in the years that followed. In March 2015, almost thirteen years after filing the initial lien, the Department wrote to Branch, John & Jerry, and Shoplock, advising them that as of March 16, 2015,

2 The deed is not in the record. The agency contends the property was transferred for $1. However, hearsay documents indicate the property was transferred for zero dollars.

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the Fund's expenditures at the site reached $1,876,689.77. The Department sought reimbursement and advised that if the costs were not paid within thirty days, the Department would amend its prior lien on the Branchburg property and on Branch's other real or personal property. The letter also advised Branch that it was responsible for further remediation of the site, including hiring its own licensed site remediation professional; and its failure to remediate "may cause the Department to incur additional cleanup and removal costs at the site, which would increase [Branch's] debt to the State and the Spill Fund."

On June 5, 2015, the Administrator filed its notice of amended first priority lien with the Superior Court. This time, the notice asked the clerk to enter "the names and addresses of the responsible parties" including Shoplock, as "Discharger"; John & Jerry as "A Person in Any Way Responsible"; and Branch as "Owner(s) and A Person in Any Way Responsible".

Ten days later, the Department notified Branch in writing that it had filed the amended lien, and the lien against the Branchburg property had first priority over all other claims or liens that may have been filed against the property; but the lien also attached – without asserting first priority status – to Branch's revenues and other real and personal property. The Department advised Branch it could contest the lien if it believed "the Department did not have a reasonable

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basis to file the lien." It also advised Branch that it could obtain the "Lien Filing Record," which contained documents related to the agency's decision to file the lien.

The lien contest procedure – which we discuss at greater length below – consists of written submissions to a "neutral agency officer," who then submits a recommended decision to the Administrator. Spill Act Lien Administrative Guidance (Feb. 4, 2016), https://www.nj.gov/dep/srp/guidance/srra/spill_act_ lien_guidance.pdf. In opposing the lien, Branch contended it was not a "discharger" as the Spill Act's plain language required; the lien amount was grossly inflated – although Branch did not identify which costs were excessive or inflated; and the agency acted in bad faith in pursuing Branch while aware of Shoplock's and its insurer's agreement to indemnify Branch.

In response, the Department, through the Attorney General, contended that Branch purchased the property subject to the initial lien. As the lien was amendable and not discharged, the increased lien properly encumbered the property. The Department addressed Branch's three points. The Department argued that even if Branch were not a "discharger" – a point the Department did not concede – it was a person "in any way responsible" and therefore subject to a lien. The Department asserted that Branch's objection to the Fund's costs

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IN THE MATTER OF SPILL FUND LIEN, DJ NO. 129570-02 954 ROUTE 202, BLOCK 44, LOT 30, BRANCHBURG TOWNSHIP, SOMERSET COUNTY (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION), (N.J. Ct. App. 2019).

IN THE MATTER OF SPILL FUND LIEN, DJ NO. 129570-02 954 ROUTE 202, BLOCK 44, LOT 30, BRANCHBURG TOWNSHIP, SOMERSET COUNTY (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION) (IN THE MATTER OF SPILL FUND LIEN, DJ NO. 129570-02 954 ROUTE 202, BLOCK 44, LOT 30, BRANCHBURG TOWNSHIP, SOMERSET COUNTY (NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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