What Does This Appellate Court Decision Mean For The New Jersey Spill Act?

Investigation Costs Subject to Contribution Claim Under New Jersey’s Spill Act

A recent Appellate Division decision may spur contribution suits under the New Jersey Spill Compensation and Control Act (the Spill Act). In Matejek v. Watson (N.J. Super. Ct. App. Div., Mar., 3, 2017), the appeals court held that a property owner may compel neighboring property owners to share in the costs of investigating potential environmental contamination prior to establishing liability for the pollution.

Contribution Claims under NJ Spill Act

The Spill Act renders “all dischargers [of contamination] jointly and severally liable for the entire cost of a cleanup.” The statute, N.J.S.A. 58:10-23.11f(a)(2)(a), also authorizes a private cause of action by a responsible party for contribution from other responsible parties.

In this case, the New Jersey Department of Environmental Protection (NJDEP) removed five underground storage tanks, one from each of five adjoining condominium units, after oil was discovered on the surface of a nearby brook. After confirming the absence of oil in the tributary, the NJDEP took no further action, and its file remained open.

Approximately seven years later, plaintiffs Greg and Renee Matejek sought to remove the cloud on the title of their condominium unit, which was one of those impacted. They filed a complaint under the Spill Act against the owners of the other four units. The suit sought to compel the other owners to participate in and equally share in an investigation and, if necessary, remediation of the contaminated property.

The trial court found that even though the precise source of the contamination had not yet been determined, the fact that the NJDEP had removed all five tanks was sufficient to impose on the impacted parties the obligation “to participate in the investigation process.” The court ordered the plaintiffs to retain the services of a licensed site remediation professional (LSRP) to investigate and prepare a report to the parties as to whether remediation was required. If remediation was required, the court order compelled the division of the costs equally among the five owners. One of the owners appealed, arguing that there was no evidence that they caused the contamination, in whole or in part.

Appellate Division Affirms Order to Share Investigation Costs

The Appellate Division affirmed the lower court ruling, citing that it found “nothing in the letter or spirit of the Spill Act that would preclude the issuance of such a remedy.”

While the court acknowledged that the “plaintiffs’ suit varies from what the Legislature likely anticipated when authorizing a private cause of action for contribution,” it further noted that the plaintiffs would have no other way to remove the encumbrance other than to solely bear the expense of investigation and remediation.

“We agree with the trial judge that such a scenario leaves plaintiffs with no adequate remedy at law. And we agree that, in such circumstances, a court may provide a remedy that fairly and justly alleviates the inequitable burden that a narrow interpretation of the Spill Act would impose,” the court explained. In affirming the trial court’s ruling, the Appellate Division further wrote that “we do not interpret the Spill Act as being so narrow or ineffectual as to permit a private action only on proof that another caused contamination in whole or in part.”

The Appellate Division also agreed with the trial court’s assumption that additional environmental litigation is likely in the future, including the possibility that the parties might seek further adjustment of their rights depending on the outcome of the investigation. “By affirming that judgment, we also do not foreclose that possibility nor limit the scope of any future litigation or the potential issuance of a remedy for those property owners who may be exonerated by the investigation to follow,” the court noted.

Impact on Environmental Liability

The Appellate Division’s decision is significant in that it makes it possible for responsible parties to seek contribution much earlier in the remediation process. In certain circumstances, responsible parties may now be required to share in the investigation costs without a prior determination of liability. While such costs may be recouped once the exact cause of the contamination is proven, the court’s decision in Matejek v. Watson could still cause legal headaches for commercial and residential property owners.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Dan McKillop, at 201-806-3364.