In what may be a cautionary tale for owners of contaminated property, a New Jersey appellate court has ruled that a landowner forfeited any claim to property damages when he allowed the responsible party to perform remediation. The court reaffirmed that landowners alleging contamination of their property must choose between either the diminution in property value or the reasonable costs of remediation; they cannot have both. See Favorito v. Puritan Oil Co., Inc., No. A-o (N.J. App. Ct. Apr. 29, 2014).

In 2005, Plaintiff purchased a residential property across the street from Defendant’s gas station. Unbeknownst to Plaintiff, in 1988, the Defendant oil company discovered that its underground storage tanks had been leaking and that hazardous substances had contaminated the groundwater underneath Plaintiff’s property. In 2001, the state environmental agency designated a portion of Plaintiff’s property as a Classification Exception Area (CEA), which prohibited it from being used for drinking water.  The agency also approved a remediation plan that required Defendant to screen water and soil within the CEA twice a year for hazardous substances. In 2009, Plaintiff granted Defendant access to its property and allowed Defendant to cover all costs to install two groundwater monitoring wells and test the soil on Plaintiff’s property. 

Plaintiff sued, alleging in relevant part that Defendant’s discharge of hazardous substances onto his property constituted a nuisance and trespass, and sought damages for the diminution in property value. The trial court granted summary judgment in favor of Defendant on both claims, and Plaintiff appealed. Citing a 1987 New Jersey Supreme Court opinion, the appellate court ruled that a party may recover damages for diminution in land value or the reasonable costs of restoration; loss of use of the land; and discomfort and annoyance to the occupant. Finding that Plaintiff had already accepted Defendant’s offer to pay for remediation, the appellate court held that Plaintiff could not also recover damages for diminution in property value and therefore affirmed the trial court’s summary judgment decision.