The New Jersey Appellate Division just ruled that the general six-year statute of limitations for property damage claims applies to a private claim for contribution brought under the New Jersey Spill Compensation and Control Act.  Morristown Associates v. Grant Oil Co., et al, (App. Div., No. A-0313-11T3, Aug. 23, 2013).  Additionally, the court determined that the equitable discovery rule for determining when a claim has accrued, see Lopez v. Swyer, 62 N.J. 267 (1973), applies to Spill Act contribution claims.  The court declined to follow its earlier unpublished decision, which held that the six-year statute of limitations does not apply to bar Spill Act claims, and clearly announced the availability of the statute of limitations as a bar to suit.

This case stems from a three-count complaint against several heating oil companies seeking contribution for plaintiff’s environmental remediation costs.  Plaintiff, the owner of a shopping plaza, alleged that fill pipes to an underground storage tank (“UST”) located beneath a former dry cleaning business leaked oil into the soil and groundwater between 1998 and 2003. According to the complaint, the defendant oil companies allegedly failed to inspect the pipes and the UST to ensure they were not leaking.  Plaintiff  brought claims under the Spill Act, the New Jersey Environmental Rights Act and common law negligence.

The defendants filed motions for summary judgment and argued that the statute of limitations barred plaintiff’s claims arising from damage occurring more than six years before the filing of the complaint.  The trial court applied the statute of limitations and also concluded that plaintiff could not prove an equitable basis for relaxing the statute of limitations under the discovery rule, as the evidence showed that plaintiff should have discovered its claims no later than 1999.

On appeal, plaintiff advanced various arguments, all of which were rejected by the appellate court.  First, plaintiff argued that because the Spill Act does not contain a statute of limitations, one cannot fairly be read into the Act.  Next, plaintiff argued that the statute of limitations would undermine the legislature’s intent to make contribution available regardless of when the conduct of the responsible parties occurred.

In rejecting the plaintiff’s contentions, the Appellate Division declined to follow two earlier state court opinions.  Specifically, the court acknowledged its opinion in Pitney Bowes v. Baker Industries, Inc., 277 N.J. Super. 484, 488-89 (App. Div. 1994), wherein it held that the statute of repose, N.J.S.A. 2A:14-1.1, did not apply to bar an action for contribution in an environmental contamination case.  But, said the Morristown court, Pitney Bowes is not controlling, because unlike the statute of limitations, a statute of repose “is strictly applied to bar a claim without any regard to when the claimant discovered or could have reasonably discovered the harm.”  (Morristown, slip op. at 14.)  By contrast, the discovery rule can be used to mitigate a harsh or unjust result caused by the application of a statute of limitations.  The court also declined to follow a later, unpublished opinion in Mason v. Mobil Oil Corp., Docket No. A-885-98T1 (decided June 1999)¹, which applied the reasoning of Pitney Bowes to conclude that the statute of limitations in N.J.S.A. 2A:14-1 did not apply to bar a claim for contribution.

Instead, the Appellate Division adopted the approach announced by a New Jersey federal court in Reichhold, Inc. v. United States Metals Refining Co., 655 F. Supp. 2d 400, 446-47 (D.N.J. 2009).  In Reichhold, the district court recognized that the Spill Act does not contain a statute of limitations for private contribution claims,  but in those “circumstances courts are directed to select a limitations period from among those periods applicable to actions seeking similar relief at common law.”  (Morristown, slip op. at 12, quoting Reichhold.)  Because a six-year statute of limitations applied to common law claims of trespass and tortious injury to real property, the district court found it appropriate to apply the same limitation to claims under the Spill Act.

The Morristown court noted that New Jersey’s general statutes of limitations have been applied to a variety of statutory claims that similarly do not contain any express period of limitation.  The court reasoned that when the legislature amended the Spill Act to provide for a private right of contribution, “it is presumed to have been aware of the application of general statute of limitations to causes of actions in our courts.”  (Morristown, slip op. at 16.)

With respect to the discovery rule, the court affirmed the lower court’s ruling that the plaintiff should have reasonably discovered the contamination by 1999, when a UST leaked at the supermarket on its property and had to be removed under DEP oversight.  Citing a district court decision, the Appellate Division noted that the discovery rule “does not depend on whether actual sampling results have been taken, but on whether enough indications of environmental contamination were present to put the plaintiff on reasonable notice to investigate further.”  (Morristown, slip op. at 18.)

The Morristown opinion is significant in that it is the first reported New Jersey appellate level decision to recognize the statute of limitations as a defense to a private claim for contribution under the Spill Act.  Moreover, although the court provided for application of the equitable discovery rule, its decision makes clear that a plaintiff’s “lack of knowledge” about the contamination, absent a showing of diligence, will not toll the statute of limitations.  Unless there is a contrary ruling by the New Jersey Supreme Court or a legislative enactment, the current decision is binding on New Jersey trial courts.

¹ The court did not refer to the Mason decision by name.