Sometimes a movie can solve one mystery but hold off answering others, leaving viewers eager for the sequel. Legal opinions can be the same, as is the Third Circuit’s opinion in Cranbury Brick Yard, LLC v. United States, No. 18-3287 (3^rd Cir. Nov. 22, 2019). After holding that the limitations period for a contribution action accrues from the date of entry into a non-judicial settlement and order on consent, the Court then sidesteps the issue of exactly what limitations period applies.

Cranbury Brick Yard is the tale of a real estate developer which purchased contaminated property in Cranbury, New Jersey. The property had been a weapons factory during World War II, and in 1954, a warehouse on the property exploded. Fifty years later (yes, time moves slowly in the world of remediation), the New Jersey Department of Environmental Protection finished an investigation of the site and identified as responsible parties the property owner, the successor to the munitions manufacturer, and the US Navy. In 2005, the property owner and the munitions manufacturer entered into an Administrative Consent Order obligating them to clean up the property, while the Navy declined to participate. The following year, the plaintiff, Cranbury Brick Yard (“CBY”) purchased the property and, by amendment, also became a party to the Consent Order, assuming the remediation obligations of the seller and obtaining contribution protection in the process. In 2013 (yes, time moves slowly in the world of remediation), CBY finally began onsite remediation and in 2015, it brought an action for cost recovery and for contribution against the Navy.

After providing a somewhat truncated summary of the differences between cost recovery and contribution claims, the Court first held that CBY could not bring a cost recovery action. Specifically, the Court found that CBY, having obtained contribution protection, could not then bring a cost recovery action – especially in light of the fact that CBY asserted its contribution protection in response to the Navy’s counterclaim for contribution. As the Court noted, it would be manifestly unjust to allow a party to seek recovery for all costs incurred under a theory of joint and several liability, and then hide behind the grant contribution protection when asked to pay, at the very least, its own fair share of those costs.   The Court rejected CBY’s arguments that it could pursue a cost recovery claim because its actions were “voluntary” or because it could not “settle its liability” in that it had none to settle, noting that as soon as it became an owner of the property it became a PRP and once it signed the amendment to the Consent Decree, it became obligated to conduct the clean-up.

The Court next turned to the crux of the opinion – if CBY had a contribution claim, when did it accrue? This is not a new issue in CERCLA litigation. Section 9613(g)(3) provides for a three- year statute of limitations on contribution actions running from the date of any judgment in a cost recovery action, or the date of certain types of settlements, the itemization of which does not include nonjudicial Consent Orders such as the one at issue in the case. So, the Third Circuit, as have other courts, realized that it needed to “fill a gap.” After reflecting on how some other circuits have addressed the issue, the Third Circuit decided it would “borrow” from Section 9613 – but only the accrual date. Thus the Court held that an action for contribution accrues when “a litigant’s potential CERCLA liability is formally recognized,” such as when it enters into a Consent Order and not, as urged by CBY, the date the clean-up begins.  

And this is where readers wait with bated breath – if the Court borrows the accrual date from 9613(g)(3), then certainly it will also “borrow” the three-year limitations period but …. No, the Court does not go that far. Rather, it points to two potential periods – the three years in Section 9613(g)(3) or the six years found in the Federal Tort Claims Act, which acts as a back-stop when an action is brought against the United States and there is no statute-specific limitations period. From this one might infer that where the party is an individual actor, the Third Circuit would have selected the three-year period, but the Court gives us no security on this, merely stating that, since the action was brought a full nine years after CBY entered into the Consent Order, it need not decide what limitations period would apply.  This leaves the door slightly ajar to the possibility that the next time the Court confronts this issue, it could find some different limitations period more appropriate to “borrow” and adopt. 

So, like any good serial, we'll just have to wait for next time to find out what position the Third Circuit will take.

Share | Email| Print| Comments|  Topics: CERCLA, Cleanup, Contamination, Contribution, Cost Recovery, Federal Tort Claims Act, New Jersey, Remediation, Statute of Limitations, Superfund, Third Circuit