NJ App. Div. Affirms Dismissal of Spill Act Cost Recovery Action Based Upon NJDEP Primary Jurisdiction

On November 15, 2013, in an unreported decision, the N.J. App. Div. affirmed the dismissal of a private costs recovery action under the Spill Act on the basis of the primary jurisdiction of the NJDEP. This case, Meyer v. Constantinou, arose out of the presence of PERC discovered at a former auto repair and gasoline station site. The site in question is located adjacent to a three-unit retail shopping center which has contained a dry cleaning facility since 1996. While remediating contamination caused by leaking underground gasoline and waste oil storage tanks at the gas station site, plaintiffs discovered that the ground was also contaminated by PERC. They denied in their complaint that they used any chlorinated solvent in their business. On October 5, 2007, plaintiffs were informed by the DEP that no further action was necessary to remediate the contamination caused by the USTs, but specifically excluded from its NFA determination the PERC soil contamination. Plaintiffs retained an environmental consulting firm to investigate the source of this contamination. Ultimately it was determined that the PERC in question had been discharged from the dry-cleaning business in the adjacent shopping center, and had migrated downhill onto the plaintiffs’ property. Accordingly, plaintiffs filed a complaint alleging, in relevant part, claims for negligence, nuisance, trespass, strict liability, violation of the New Jersey Environmental Rights Act (“ERA”), violation of the New Jersey Spill Compensation and Control Act (the “Spill Act”), and negligence per se. During the course of discovery, on January 13, 2009 the DEP sent a “Notice of Deficiency” to several defendants indicating that “[t]he soil data indicate that the source of the PCE contamination was at the [dry-cleaning] facility,” and requiring submission of a Remedial Investigation Work Plan. DEP later sent a “Directive and Notice to Insurers” informing defendants that it had “determined that it is necessary to conduct a Departmentally approved remedial investigation at the Contaminated Site in order to fully determine the nature and extent of the problem presented by the discharges.” Over two years later, DEP sent a Notice of Violation to plaintiffs and several defendants, providing that “respondents have failed to conduct the required remediation,” and specifically cited their “[f]ailure to delineate the vertical and horizontal extent of groundwater contamination and the sources of ground water contamination including free and residual product.” Shortly thereafter, defendants filed a motion in the Law Division to refer the case to the DEP pursuant to N.J.S.A. 2A:35A-8, the ERA provision directing a court to remit parties to administrative proceedings that are “required or available to determine the legality of the defendant’s conduct.” The court determined that “the DEP is acting to enforce the environmental laws, including the [Spill Act]” with regard to the involved properties. Noting that the DEP had “taken positive steps in promoting the cleanup of the site” and that it “continues to act to encourage voluntary remediation without the necessity of assessing fines,” the court explained that “[t]he purpose of the ERA private right of action is . . . the redress of public harm, not private harms[,] [a]nd the DEP has been shown to have taken steps to force the private parties to remediate the harm caused by the property.” Therefore, the trial court concluded that after “a cleanup is complete [plaintiffs] may certainly seek to determine fault[] and obtain contribution for its cleanup action.” However, with respect to plaintiff’s common law causes of action, it was held that “judicial economy requires that the action be referred to the DEP, that the balance would be dismissed without prejudice since all of the same facts will be necessary to establish claims under the Spill Act as they would under the common law causes of action.” On appeal, plaintiff argued that the trial court erroneously applied the primary jurisdiction doctrine in that it failed to consider all of the factors necessary to that analysis. The Appellate Division began its analysis by noting that the need to resort to primary jurisdiction under the circumstances was questionable, as the ERA itself “include[s] the same objectives as the judicial doctrine of primary jurisdiction.” Whereas the primary jurisdiction doctrine “promotes proper relationships between courts and regulatory agencies,” the ERA expressly embodies that balancing in its instruction that “[i]f administrative or other proceedings are required or available to determine the legality of the defendant’s conduct, the court shall remit the parties to such proceedings, except where immediate and irreparable damage will probably result . . . .” Accordingly, although the DEP took no action to intervene after being provided the statutorily-required pre-suit notice, the court was not prohibited from “utilize[ing] the expertise of interested administrative agencies to assist it in reaching a just result.” Further, although the court, not the DEP was required to allocate liability for remediation costs,“such costs could not be determined until DEP approved the methodologies for determining the extent of the contamination and removing it. For that reason, the court properly exercised its authority to utilize the expertise of DEP to assist it in reaching a just result.” The App. Div. previously relied upon primary jurisdiction to confirm dismissal of a Spill Act contribution claim in an unreported decision in Magic Petroleum v. Exxon Mobil, reported in this blog on September 1, 2011. DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, PC is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department. The information contained in this blog is intended solely for informational purposes; it is a advertising publication of DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum P.C.This publication is intended to alert recipients of developments in the law and is not intended to provide legal counsel, advice or opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult a member of this firm or your own attorney concerning your particular situation and any specific legal questions you might have.


DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services. For additional information about the matters in this bulletin or in the firm’s Employment Practice, please contact Richard P. Flaum, Esq.

The information contained in this blog is intended solely for informational purposes; it is a advertising publication of DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum P.C.This publication is intended to alert recipients of developments in the law and is not intended to provide legal counsel, advice or opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult a member of this firm or your own attorney concerning your particular situation and any specific legal questions you might have.