On August 23, 2013, the New Jersey Superior Court, Appellate Division, clarified that a six-year statute of limitations applies to contribution claims under the New Jersey Spill Compensation and Control Act (the “Spill Act”) in Morristown Associates v. Grant Oil Company. This clarification was necessary because prior to Morristown Associates there was uncertainty about whether any statute of limitations applied. This uncertainty caused some entities with Spill Act contribution claims to be lax about when they filed their actions and caused some entities who are defendants in Spill Act contribution actions to refrain from moving for summary judgment on statute of limitations grounds. Now, both Spill Act contribution plaintiffs and defendants will need to consider how the six-year statute of limitations affects their litigation strategy in Spill Act contribution actions.
The confusion regarding the statute of limitations for Spill Act contribution claims arose from the Appellate Division’s 1994 decision in Pitney Bowes v. Baker Industries, Inc.1 Pitney Bowes held that a New Jersey statute of repose did not apply to bar an action for Spill Act contribution. Language in the case suggested that the Spill Act did not permit any defense based on the passage of time. A later unpublished decision of the Appellate Division2 applied the reasoning ofPitney Bowes to deny a statute of limitations defense in a Spill Act contribution action. Federal courts did apply the six-year limitations period in Spill Act cases.
The Morristown Associates court held that the reasoning of Pitney Bowes, which involved a statute of repose, was not controlling regarding the statute of limitations. A statute of limitations does not necessarily prevent a diligent plaintiff from pursuing a claim outside the statutory period because the discovery rule takes into account when the plaintiff knew or could have known of the claim. This mitigates the harsh effect of the statute of repose, which does not consider when the claim could reasonably have been known.
The court then considered the application of the discovery rule to the facts in Morristown Associates. There, a dry cleaning business leasing property within a Morristown shopping center had, in the late 1970s, installed an underground storage tank to hold heating oil for the dry cleaner’s steam boiler. The tank was inaccessible except for fill and vent lines that protruded into an alleyway. In 2003, an adjoining property owner discovered oil in a monitoring well, and in 2004 the tank and attached lines were removed, revealing holes in the pipes as large as two inches.
In 2006, the shopping center’s owner sued several companies that had allegedly delivered oil to the dry cleaner. The plaintiff alleged that the fill pipes had been leaking oil for about fifteen years until the 2003 discovery. Among other claims, plaintiff sought contribution under the Spill Act for its remediation costs from the oil companies, who it said had failed to inspect the pipes and the tank and to make repairs.
Because the plaintiff had purchased the shopping center in 1979, after the tank was already in place, it claimed to have been unaware of the tank’s existence. However, in 1999, a different underground tank within the shopping center had leaked, requiring remediation. Plaintiff’s then-property manager had supervised its removal and discussed this with plaintiff’s representative, and even testified to having been aware of the dry cleaner’s tank. Plaintiff’s current property manager claimed to be unaware of the 1999 events or the dry cleaner’s tank, and a 1993 environmental audit had not reported the tank’s existence. But that same audit also had missed the tank that was removed in 1999. Moreover, witnesses testified that the wall from which the tank’s lines protruded was heavily stained.
The trial court refused to apply the discovery rule to toll the limitations period, ruling that plaintiff should have discovered the basis for its claims no later than the 1999 discovery of the other leaking underground tank. The Appellate Division deferred to the trial court’s refusal to toll the limitations period using the discovery rule, noting that plaintiff’s and its property manager’s lack of knowledge of the dry cleaner’s tank suggested a lack of diligence in attending to the property. Plaintiff was therefore not entitled to the discovery rule’s equitable protection.
Parties seeking contribution and those subject to Spill Act contribution claims must take into account this important clarification of New Jersey law. These claims now must be asserted within a six-year period from the time they are either discovered or should have been discovered using “reasonable diligence and intelligence.”3