Publication

When a “discharger” or “person in any way responsible” cleans up and removes a discharge of a hazardous substance, New Jersey’s Spill Compensation and Control Act provides that person with a right of contribution against all other dischargers or persons who are in any way responsible for the discharge.¹ Although the Spill Act contains a statute of limitations providing the state with up to three years to commence suit after a contaminated site is remediated,² the Act does not have a statute of limitations for private parties to commence contribution actions.

Until the Appellate Division decided Morristown Associates v. Grant Oil Co. on Aug. 23, it was unclear how New Jersey courts would determine the timeliness of private contribution actions to recover cleanup and removal costs under the Act.  An unpublished 1999 Appellate Division decision, Mason v. Mobil Oil, found that because the Spill Act had specific enumerated defenses that did not include the statute of limitations, there was no statute of limitations defense..³Thus, practitioners had been able to bring contribution actions without much concern for time constraints.  The absence of a statute of limitations also allowed private parties to join third-party defendants in cleanup cost litigation once the state sued them.  These practices must now be shelved.

In Morristown Associates, the Appellate Division determined that applying a statute of limitation to Spill Act claims is consistent with federal environmental laws such as CERCLA.  The court reviewed various state statutes of limitation to determine which would be most appropriate and elected the state’s six-year period for “every action at law for trespass to real property, for any tortious injury to real or person property . . . and for any tortious injury to the right of another not stated in [other sections].”  The court also recognized that this six-year period would be subject to the “discovery rule” to “avoid the harsh effects” that may result from a mechanical application of the statute of limitations.  Thus, the six- year period begins to run when a claimant discovered or should have discovered the grounds for its claim. 

In Morristown Associates, the contamination was from a leaking underground storage tank at a multi-tenant shopping center.  The heating oil tank was located beneath a former dry cleaning store.   The property owner alleged that it was not aware of the tank when it purchased the property and only became aware of a problem when the neighboring property owner reported oil in its monitoring well.  The property owner asserted that the discovery rule should have tolled the running of the statute of limitations until it had objective evidence of the contamination that actually occurred, such as sample results or notice from an environmental authority. 

The Morristown Associates court was not sympathetic and relied on federal precedent that found that tolling does not depend on whether actual sampling results had been taken, but on whether sufficient indications of environmental contamination were present to put the plaintiff on reasonable notice of a need to investigate further.   Because one other tenant at the shopping center had a tank removed years earlier, the plaintiff was charged with a duty to investigate whether there were other underground tanks on the property.  Moreover, the court believed that the property managers at the shopping center should have been aware of oil deliveries to the tenants and overfills of oil during those deliveries.

Now that the court has found a six-year limitations period, in an action commenced by the state relating to cleanup and removal costs, a defendant’s third-party claims against other potentially responsible parties under the Spill Act may be time-barred altogether or, at best, limited to the six-year period prior to the commencement of a third-party action. 

The significance is: The clock is now running against property owners/operators and anyone else that may have a private contribution action under the New Jersey Spill Act for claims that are known or should have been known involving the remediation of contaminated sites. 

The opinion in Morristown Associates v. Grant Oil Co., et al., ___ N.J. Super. ___ (August 23, 20013), is not final.  It may be withdrawn from publication, modified on rehearing, or review may be granted by the New Jersey Supreme Court.  These events would render the opinion unavailable for use as legal authority in New Jersey state courts.

² See N.J.S.A. 58:10B-17.1

³ See Mason v. Mobil Oil, 1999 WL 33605936 (App.Div.1999)