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NJ Appellate Division Rules Spill Act Subject to 6-Year Statute of Limitations

In a decision that may upset decades of environmental remediation litigation in New Jersey, the Appellate Division held recently that the catch-all six-year statute of limitations for damages to property found in N.J.S.A. 2A:14-1 applies to contribution claims under the New Jersey Spill Compensation and Control Act (“Spill Act”).

In Morristown Assocs. v. Grant Oil Co., ___ N.J. ____ (App. Div. 2013), the owner of a shopping center brought a claim under the Spill Act against several oil companies and the owners of a dry cleaner in the shopping center for contamination resulting from an underground storage tank that allegedly leaked oil into the soil and groundwater. The Court, applying the discovery rule, held that the claim was time barred because it was brought outside the six year period imposed by N.J.S.A. 2A:14-1, which began running in 1999 when an agent of the owner should have realized that contamination may have existed.

In reaching its decision, the Court cited two cases that had previously addressed similar issues. In Pitney Bowes v. Baker Industries, Inc., 277 N.J. Super 484 (App. Div. 1994), the court held that the statute of repose protecting those who make improvements to real property did not apply to the Spill Act, reasoning that the language of the Spill Act strictly limited defenses to those enumerated in the Act. Then, in a later unpublished decision, the Court applied the reasoning of Pitney Bowes and found that the catch-all statute of limitations similarly had no application to the Spill Act. However, rather than adhering to reasoning expressed in the earlier decisions, the Court in Morristown Assocs. looked to federal courts’ interpretation of the Spill Act and compared the Act to its federal counterpart, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” or “Superfund”), which contains a six-year limit to recover costs for “remedial action.” See 42 U.S.C. § 9613(g)(2)(B). The Court also noted that the general statutes of limitation have been applied to the many other statutes that do not contain internal limitations periods.

Finally, the Court justified its position by reasoning that enforcing the statute of limitations does not prevent a diligent plaintiff from recovering contribution for Spill Act damages. Rather, it simply forces a prospective Spill Act plaintiff to act in a timely manner. Nevertheless, the decision could have wide-reaching impacts in the context of hazardous site remediation, brownfield redevelopment, transactional matters, and pending environmental litigation. Apart from the obvious issue of factual disputes as to when contamination was or should have been discovered, the entire breadth of the remediation industry, including environmental service providers, engineers, attorneys, consultants, and government agencies have relied on the lack of a time limitation in bringing a contribution claim since the inception of the Spill Act. Strict application of the discovery rule could prevent deserving plaintiffs from bringing meritorious claims based on judicial determinations of when the individual “should have known” a site was contaminated.

The attorneys at Lieberman & Blecher, P.C., who regularly assist clients with environmental issues that arise in the context of site remediation and claims under the Spill Act, will be closely following the developments in this area. Our attorneys are highly experienced in areas of land use, real estate, redevelopment and regulatory permitting, compliance, and enforcement. We have assisted many property owners, both plaintiffs and defendants, in contribution actions under the Spill Act and our attorneys are poised to address the impact of this recent decision in present and future cases.

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