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New Jersey Appellate Division Applies Six-Year Statute of Limitations To Spill Act Claims

For decades, it has been the unanswered question – what is the statute of limitations for a claim under New Jersey’s Spill Compensation and Control Act, N.J.S.A. 58:10-23.11, et. seq. (the “Spill Act”)?  Unlike CERCLA, the Spill Act contains no express statute of limitations for private contribution actions.  Thus, trial courts have been left to fend for themselves and, as a result, have failed to achieve consensus.  Federal district courts have unanimously applied New Jersey’s six year limitations period for actions for damages to real property, while, until Friday, the only state decision was an unpublished trial court opinion holding that there is no limitations period for such claims.  But on August 23, 2013, the Appellate Division of the Superior Court of New Jersey, in the case of Morristown Assoc. v. Grant Oil Co., No. A-0313-11T3 (App. Div. Aug. 23, 2013), finally spoke and, in agreement with the federal courts, held that the six-year limitations period applies.

The Spill Act was first adopted in 1976 to address concerns regarding contamination from oil and gas spills.  It has been amended several times since enactment to apply to all “hazardous substances” as defined by the Spill Act and in 1991 expanded to permit private rights of action.  N.J.S.A. 58:10-23.11g.c(1) provides, in relevant part, that “any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.”  Section 58:10-23.11f(a)(2) expressly permits a private right of contribution by individuals who perform a remediation “against all other dischargers and persons in any way responsible for a discharged hazardous substance or other persons who are liable for the cost of the cleanup and removal of that discharge of a hazardous substance.” 

New Jersey’s limitations period for actions for “trespass to real property [and] for any tortious injury to real or personal property” is six years from the date of accrual.  N.J.S.A. 2A:14-1.  From early on, the federal trial courts in New Jersey have applied this limitations period to claims under the Spill Act under the rationale that the Spill Act is most comparable to a claim for trespass and/or injury to real property.  Kemp Indus. v. Safety Light Corp., 1994 WL 532130 (D.N.J. 1994); see, also Reichhold v. United States Metals Refining Co., 655 F. Supp.2d 400 (2009); Champion Laboratories, Inc. v. Metex, 2005 WL 160692 (D.N.J. 2005); SC Holdings, Inc. v. A.A.A. Realty Co., 935 F. Supp. 1354, 1367 (D.N.J. 1996).  This is in keeping with the practice of New Jersey courts to apply the most analogous limitations period where a state statute is silent on the issue and where the selected limitations period “comports with the purpose” of the statute.  Montells v. Haynes, 133 N.J. 282, 292 (1993).  However, despite several trial court rulings to this effect, no federal appellate court has taken up the issue.

Prior to Morristown, the state cases or, rather, the only state case, looking at the matter of the limitations period under the Spill Act came to the conclusion that no limitations period applies to private contribution actions under the Spill Act.   In a single paragraph in a very short opinion, the Court in Mason v. Mobil Oil Corp., 1999 WL 33605936 (N.J. Super. Ct. App. Div. June 8, 1999), held that, because the statute of limitations was not expressly itemized as an available defense to Spill Act claims, and because the statute was otherwise silent, “the six-year statute of limitations does not bar plaintiffs' claim for contribution under [the Spill Act].”  Although the decision was not officially published and therefore not controlling precedent, N.J. Ct. R. 1:36-3, it was decided in reliance upon the published decision in Pitney Bowes, Inc. v. Baker Indus., Inc., 277 N.J. Super. 484 (App. Div. 1994), which held that the state’s Statute of Repose did not apply to Spill Act claims because it was not expressly listed N.J.S.A. 58:10-23.11g. 

The salient facts in Morristown are as follows.  Plaintiff is the owner of a shopping center who brought suit in 2006 against a host of heating oil companies who delivered oil to the site, alleging that the fill pipes to an underground storage tank had leaked, causing contamination of the soil and groundwater, and that the heating oil companies knew, or should have known, that the tanks were leaking.  Finding that the plaintiff should have discovered the leak no later than 1999, the trial court granted summary judgment for the heating oil companies.  On appeal, and in reliance on Mason, plaintiff argued that imposition of the six-year limitations period was in error.

The Appellate Court disagreed.  It noted that Mason did not constitute precedent that it was bound to follow and distinguished Pitney Bowes, Inc., explaining that statutes of repose impose a strict bar to claims regardless of the facts, while the harshness of limitations periods may be mitigated by application of the discovery rule and thus “does not prevent a diligent plaintiff from recovering the costs of cleanup and remediation from other responsible parties.”[1]   The Court then went on to list the many instances where the state’s limitation periods were applied to statutory claims that did not expressly contain them, thus finding the application of the six-year limitations period consistent with New Jersey’s practice.  Further, the Court held that since this practice was well-established when the legislature amended the Spill Act providing for a private right of action and since nothing in the Spill Act precluded application of the general statute of limitations, it could be presumed that the legislature intended for the six year period to apply.

Where the case goes from here is unknown.  In addition to arguing that there was no statute of limitations to be applied, the plaintiff also argued that its claim did not accrue until 2003, when it first “discovered” that the fill pipes had been compromised.  As discussed above, the Appellate Division disagreed, and upheld that trial court’s finding that the plaintiff should have discovered the leak four years earlier.  One would expect the plaintiff to seek review of both aspects of this opinion in the New Jersey Supreme Court, but the better part of valor may result in a settlement which would cause this decision to be the final word on the matter, at least for the time being.

[1] There are other significant differences between statutes of repose and statutes of limitations.  A statute of repose is substantive and operates to bar a claim from arising after a set time period (and cannot be tolled) while a statute of limitations is procedural and operates to bar initiation of an action after a set time period (and may be tolled by delayed discovery or agreement).  Greczyn v. Colgate-Palmolive, 183 N.J. 5, 18, 869 A.2d 866, 874 (2005).  Moreover, a statute of repose runs regardless of whether a cause of action has accrued.  For example, the statute of repose at issue in Pitney Bowes, for example, provides that after ten years from the performance of services, no claim can be brought against an architect, engineer or contractor for damages arising from the unsafe condition of an improvement on real property.  If the statute of repose applied to Spill Act claims, then this class of potentially responsible parties would be exempt from Spill Act liability even if the damage did not occur (e.g. a storage tank did not leak) during the ten year period.  N.J.S.A. § 2A:14-1.1.  The Court in Pitney Bowes, Inc. concluded that excluding a group of potential dischargers from contribution through application of the statute of repose would be inconsistent with the liability scheme and underlying policy of the Spill Act.