Presented by the Environmental & Toxic Tort Litigation Practice Group

Legal Updates for Environmental Law - July 2016

July 14, 2016

Party Not Entitled to Counsel Fees for Either Negotiations or Litigation Involving Access Agreement for Remediation on Residential Property

In State Farm Fire and Casualty Insurance Company v. Florkiewicz, 2008 N.J. Super. Unpub. LEXIS 572 (App. Div. 2008), State Farm Fire and Casualty Insurance Co. appealed from a judgment which granted Marion Florkiewicz’s application for counsel fees incident to the negotiation of an access agreement needed to conduct remediation on a residential property. The New Jersey Department of Environmental Protection had directed Florkiewicz’s neighbors, Jan and Connie Thomas, insured by State Farm, to perform remediation on Florkiewicz’s property because of contamination emanating from their property. State Farm commenced the lawsuit against Florkiewicz seeking access to her property so that remediation could be performed pursuant to the Brownfield and Contaminated Site Remediation Act (Brownfield Act), N.J.S.A. 58:10B-1 to 31. Specifically, N.J.S.A. 58:10B-16 provides:

Any person who undertakes the remediation of suspected or actual contamination and who requires access to conduct such remediation on real or personal property that is not owned by that person, may enter upon the property to conduct the necessary remediation if there is an agreement, in writing, between the person conducting the remediation and the owner of the property authorizing the entry onto the property. If, after good faith efforts, the person undertaking the remediation and the property owner fail to reach an agreement concerning access to the property, the person undertaking the remediation shall seek an Order from the Superior Court directing the property owner to grant reasonable access to the property and the court may proceed in the action in a summary manner. N.J.S.A. 58:10B-16a(1).

The statute further provides:

The court shall promptly issue any access order sought pursuant to this section upon the showing that (1) a reasonable possibility exists that the contamination from another site has migrated onto the owner’s property, or (2) access to the property is reasonable and necessary to remediate contamination. The presence of an applicable department oversight document or a remediation obligation pursuant to law involving the property for which access is sought shall constitute prima facie evidence sufficient to support the issuance of an Order. N.J.S.A. 58:10B-16b.

State Farm argued that Florkiewicz’s attorney was not entitled to any legal fees for the negotiation of the access agreement. The Appellate Division agreed, and reversed the judgment. After more than a year of unsuccessful negotiations, State Farm, exercising its right of subrogation on behalf of its insureds, did file a verified complaint and obtained an order to show cause pursuant to the statute in order to secure access to the property. Florkiewicz filed a cross-motion seeking to have State Farm accept her proposed agreement. An agreement was ultimately entered into by the parties, but it did not resolve their dispute as to the issue of counsel fees relating to the matter.

The trial court considered Florkiewicz’s application for fees and did award $13,228.35.

The issue for the Appellate Division was the question of entitlement to counsel fees under the Brownfield Act, N.J.S.A. 58:10B-16.

The Appellate Division noted that, before the litigation was commenced, the parties had differed on a number of issues relative to access and remediation, including compensation for the decreased value of the defendant’s property; guarantees relating to the work to be done; costs of removal of the defendant’s oil tank and conversion to natural gas; inspection, review and approval of the work done; compensation for the defendant’s damages for inconvenience and the costs related thereto; and costs of legal fees relating to the agreement.

However, the narrow issue on appeal was whether attorney’s fees are permissible with respect to either the negotiations or the litigation, or both.

The defendant insisted that attorney’s fees are permissible as an element of damages because N.J.S.A. 58:10B-16(a)(2)(d) permits recovery to “indemnify the owner of the property for any damages, penalties or liabilities resulting from the remediation.” That question, of course, turned on whether “damages” under N.J.S.A. 58:10B-16 included counsel fees. The text of N.J.S.A. 58:10B-16 does not specifically authorize legal fees as part of damages. Therefore, the Appellate Division also considered whether counsel fees can be an element of damages independent of the statute.

The Appellate Division noted that the award of counsel fees is permitted only in certain circumstances provided in Rule 4:42-9(a). One of these circumstances is when a statute permits the award. R. 4:42-9(a)(8). See, e.g., Satellite Gateway Commc’ns, Inc. v. Musi Dining Car Co., Inc., 110 N.J. 280, 285-86, 54, A.2d 1267 (1988); Dep’t of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 504-05, 468 A.2d 150 (1983); In Re Thomas, 278 N.J. Super. 580, 584-85, 651 A.2d 1063 (App. Div.) Certif. Denied, 141 N.J. 95, 66 A.2d 1194 (1995). However, counsel fees are not precluded as a “traditional element of damages.” Pressler, Current N.J. Court Rules, 2.9 R.4 42-9 (2009).

The Appellate Division distinguished cases dealing with causes of action grounded in the common law and that do not arise as a result of a statutory cause of action stemming from legislation which can address the right to counsel fees under the statute. In finding that attorney’s fees were not recoverable, the Appellate Division stated:

It is clear from the above cited cases that the Legislature is aware of how to provide for the award of counsel fees when intended. See also N.J.S.A. 10:5-7.1 (providing in part that in any action commenced under the law against discrimination, the prevailing party may be awarded a reasonable attorney’s fees as part of the costs...); N.J.S.A. 34:19-5-6 (permitting “reasonable attorney’s fees” to an employee or employer under the Conscientious Employee Protection Act); N.J.S.A 34:11-56.40 (providing for “reasonable attorney’s fees” under the prevailing Wage Act). Yet the Brownfield Act does not authorize parties to bring a civil action for the specific purpose of recovering attorney’s fees, as does the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to 30; nor does the Brownfield Act specifically or expressly permit the award of fees. See N.J.S.A. 58:10B-16. Accordingly, we conclude that defendant may not seek counsel fees as damages for the cost of the negotiations. Nor do our court rules authorize an award with respect to the litigation in the absence of express statutory authorization. See R. 4:42-9(a). Id. at 10.

Therefore, consistent with the above, counsel fees related to the negotiation and/or preparation of a site access agreement are not recoverable under the Brownfield Act. Therefore, the Appellate Division reversed the award of counsel fees.

The Brownfield Act does contain a long litany of relief that may be awarded by a court to a person granting access for remedial purposes. See N.J.S.A. 58:10b-16(a)(2). These very specific items include:

A temporary or permanent injunction.
Assessment of the person undertaking the remediation for costs associated with any disruption in operations on the property.
Assessment of the person undertaking the remediation for any cost to return the property to its condition before the commencement of the remediation.
A requirement that the person undertaking the remediation indemnify the owner of the property for any damages, penalties or liabilities resulting from the remediation.
A requirement that the person undertaking the remediation indemnify the owner of the property for any liability resulting from the entry of persons onto the property to perform the remediation. N.J.S.A. 58:10B-16a(2).

It is important to note that many of these items are intended to protect the interests of the party granting site access. Thus, it is clear that the legislature sought to impose very specific protections in favor of any party having to grant access to its property for purposes of environmental remediation. Notably absent, however, from this specifically enumerated list was the relief requested by the defendant in State Farm.

The statute also preserves each party’s right to initiate a civil action to seek any damages available under law against the other party. N.J.S.A. 58:10B-16(d)(e). In addition, the statute explicitly states that “non-germane issues” should not be included in the access action, including, but not limited to, “issues concerning contribution, treble damages or other damages involving either the contamination or the remediation”. N.J.S.A. 58:10B-16(b). The statute, therefore, contemplates that actions for access will proceed in a summary manner, free from ancillary issues.

Therefore, if a party refuses to grant access to conduct a remediation, we recommend filing a verified complaint and order to show cause under the Access Act and, if a claim is made for attorney’s fees related to the negotiation and/or preparation of the access agreement, that application should be opposed because such fees are not recoverable under New Jersey law.

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