The Supreme Court of New Jersey recently heard arguments on whether private claims for contribution brought under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (Spill Act) are subject to a general six-year statute of limitations applicable to common law property damage claims. The Supreme Court’s ruling in Morristown Associates v. Grant Oil Co. could represent a major shift in the way courts view contribution claims and may have significant impacts on the ability of parties undertaking remedial activities at sites in New Jersey to recover their costs from other responsible parties.
The Spill Act
The Spill Act strictly prohibits the discharge of hazardous substances. The Spill Act defines 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 Spill Act does not contain a statute of limitations for a private contribution claim. Not surprisingly, state courts had held that there was no applicable statute of limitations defense for contribution claims under the Spill Act.
For example, in Pitney Bowes, Inc. v. Baker Industries, 649 A.2d 1325 (App. Div. 1994), the Appellate Division held that claims for contribution under the Spill Act were not subject to a 10-year statute of repose because the Spill Act itself had no statute of limitations defense enumerated in the statute. Likewise, the court in Mason v. Mobil Oil Corp., 1999 N.J. Super. Unpub. LEXIS 7 (App. Div. June 8, 1999), applied the reasoning of Pitney Bowes to conclude that private claims for contribution under the Spill Act are not subject to a statute of limitations. However, the decision in Mason(an unpublished opinion) did not constitute precedent in New Jersey and, accordingly, the question of whether a statute of limitations defense could be asserted remained unanswered until the Appellate Division’s opinion inMorristown Associates.
The Morristown Associates case 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 the prior owners of the mall failed to inspect the pipes and the UST to ensure they were not leaking and to make necessary repairs.
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 court also concluded that the plaintiff should reasonably have discovered the contamination by 1999 – more than six years prior to the filing of the lawsuit – when the plaintiff was made aware of another leaking UST that was removed from the plaintiff’s shopping center.
The Appellate Division affirmed dismissal of the claim and held for the first time that private claims for contribution under the Spill Act are subject to the six-year statute of limitations found in N.J.S.A. 2A:14-1. Even though the Spill Act does not contain a statute of limitations, the court reasoned that when the legislature amended the Spill Act to provide for a private right of contribution, “it is presumed to have been aware of the application of [the] general statute of limitations to causes of actions in our courts.” The court also noted that the general statute of limitations has been applied to a variety of statutory claims that do not contain any express period of limitation.
Moreover, the court found that “applying a statute of limitations to a claim for private contribution under the Spill Act does not prevent a diligent plaintiff from recovering the costs of cleanup and remediation from other responsible parties.” In other words, the Appellate Division determined that application of the statute of limitations is subject to the discovery rule, which tolls the limitations period until such time as the plaintiff either knows or should know of the facts giving rise to the cause of action. In doing so, the court concluded that the plaintiff should have exercised due diligence and supervision over its property to investigate whether any other USTs existed and whether they were functioning properly.
Implications for Current Claims
The Morristown Associates case is significant because it specifically provides that Spill Act claims, although subject to a statute of limitations, are also subject to the equitable discovery rule doctrine, which tolls the limitations period until such time as the plaintiff becomes aware of the facts underlying a potential cause of action. Therefore, the Supreme Court’s review of the case has potentially significant ramifications for parties performing remediation activities in New Jersey. If upheld, parties that have been performing remediation activities for years may encounter hurdles in recovering all of their costs. Likewise, parties beginning to perform remediation activities may face time limitations for investigating and filing their claims. These parties may also seek to negotiate tolling agreements with potentially responsible parties to still protect themselves.