In a unanimous decision on January 26, 2015, the Supreme Court of New Jersey, in Morristown Associates v. Grant Oil Co., overturned two lower-court decisions and held that the six-year statute of limitations for damage to real property does not apply to Spill Act private contribution claims. The Court ruled that the state’s Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (Spill Act), which requires dischargers to pay for cleaning up contaminated sites, does not impose a statute of limitations on plaintiffs pursing private claims for contribution against other potential defendants.
The Spill Act and Morristown Associates
The Spill Act strictly prohibits the discharge of hazardous substances, defining a “discharge” as “any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of hazardous substances into the waters or onto the lands of the State, or into waters outside the jurisdiction of the State when damage may result to the lands, waters or natural resources within the jurisdiction of the State.”
The Spill Act imposes broad liability for a discharge and sets forth that “any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.” Further, the Spill Act provides a discharger with a private right of action for recovery of cleanup and removal costs.
The language of the Spill Act does not contain a statute of limitations for a private contribution claim, and prior courts have held that no time bar applied for such claims. See e.g., Pitney Bowes, Inc. v. Baker Industries, 649 A.2d 1325 (App. Div. 1994); Mason v. Mobil Oil Corp., 1999 N.J. Super. Unpub. LEXIS 7 (App. Div. June 8, 1999) (finding that private claims for contribution under the Spill Act are not subject to a statute of limitations defense). Recently, however, in Morristown Associates, two lower courts held that the plaintiffs in spill cases must comply with the six-year statute of limitations. Morristown Associates involved an underground storage tank (UST) system at a shopping center that leaked oil into the soil and groundwater from 1988 to 2003. The plaintiff sued various fuel delivery companies and a prior owner of the mall for contribution toward remediation and investigation expenses. The plaintiff alleged that the oil companies and prior owners of the mall had failed to inspect the pipes and the UST to ensure they were not leaking.
The defendants filed motions for summary judgment on grounds that the plaintiff’s claims were time-barred by the general six-year statute of limitations. The trial court granted the motions and held that a private claim for contribution under the Spill Act is subject to the general six-year statute of limitations of common law environmental claims.
The Appellate Division affirmed dismissal of the claim and held for the first time that private claims for contribution were subject to the six-year statute of limitations found in N.J.S.A. 2A:14-1. Further, the Appellate Division held that the plaintiff did not get the benefit of the discovery rule because the plaintiff should have discovered its claims when another leaking UST was found on a neighboring property.
The Supreme Court reversed the Appellate Division’s decision, noting that the Spill Act contains no statute of limitations on filing contribution claims. The Court also noted that there is no “hard and fast rule” requiring the application of a statute of limitations when a statute is silent. Thus, the Court reasoned that the Legislature intended to include no statute of limitations defense for Spill Act contribution claims.
Specifically, the Court explained that:
… the Spill Act is remedial legislation designed to cast a wide net over those responsible for hazardous substances and their discharge on the land and waters of this state. The Legislature could not have intended to permit its imposition of contribution liability on culpable dischargers to be frustrated by the imposition of a general and prior enacted, but unreferenced, statute of limitations. Where the Legislature intended to include a statute of limitations within the Spill Act, it has said so. Accordingly, we will not add to its list of identified defenses based on an inference from its silence about statutes of limitations specifically…
In other words, the Court found that the Legislature failed to include a statute of limitations when it amended the Spill Act in 1991 to permit contribution claims. Thus, the Court concluded that the “only defenses” available to contribution claims were those prescribed in N.J.S.A 58:10-23.11g(d).
Implications for Future Claims
The Morristown Associates case is important because it specifically rejects a limitations period for Spill Act contribution claims. Therefore, the case has significant ramifications for parties performing remediation activities in New Jersey.
- First, litigants can approach the issue with certainty because state and federal courts are now bound by this interpretation of a New Jersey statute by the New Jersey Supreme Court.
- Second, claimants may fully engage in remediation activities without any need to beat a statute of limitations deadline.
- Third, contribution defendants can be equally certain that there is no defense based on the passage of time. Overall, this decision is likely to spawn additional environmental litigation in New Jersey as many sites may be reevaluated for potential contribution claims even decades after the remediation is complete. Likewise, with additional certainty and a more expansive contribution program, transfers of real property may become easier.
- Finally, insurers issuing older “occurrence-based” policies may find themselves responding to a new wave of contribution claims filed against their insureds under policies issued decades ago.