New Jersey Appellate Division Resolves Conflict With Federal Courts: Claims for Contribution Under Spill Act Are Subject to Six-Year Statute of Limitations

By Kevin T. Bright, Esq.*

The New Jersey Appellate Division recently resolved a conflict that had existed between state and federal courts regarding the applicability of the statute of limitations to claims for contribution brought under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11, et seq. (Spill Act). In Morristown Associates v. Grant Oil Company, 74 A.3d 968 (N.J. Super. App. Div. 2013), the Appellate Division decided for the first time that private claims for contribution under the Spill Act are subject to the six-year statute of limitations found in N.J.S.A. 2A:14-1. The court also determined that application of the statute of limitations is subject to the discovery rule, which tolls the limitations period until such time as the plaintiff either knows or should know of the facts giving rise to the cause of action. See, Lopez v. Swyer, 300 A.2d 563 (N.J. 1973).

In Morristown Associates, the plaintiff sued various fuel delivery companies and a prior owner of a shopping mall complex it owned for contribution toward remediation and investigation expenses related to contamination from a leaking underground storage tank (UST). The plaintiff alleged that the fill pipes to the UST, located under a dry cleaning business, leaked oil into the soil and groundwater from 1988 to 2003. The plaintiff alleged that the oil companies and the prior owners of the mall failed to inspect the pipes and the UST to ensure they were not leaking and to make necessary repairs. The plaintiff brought claims under the Spill Act, the New Jersey Environmental Rights Act, N.J.S.A. 2A:35A-1 to-14, and common law negligence.

The trial court granted various motions for summary judgment filed by the defendants, thereby limiting the plaintiff’s claims to events of contamination that occurred within six years preceding the filing of the complaint. Subsequently, the plaintiff resolved or voluntarily dismissed all such claims that arose during the six-year limitation period and then filed an appeal from the trial court’s rulings on summary judgment.

The Appellate Division, in an apparent about-face, upheld the trial court’s decision, finding that claims for contribution under the Spill Act are subject to the six-year limitations period set forth in N.J.S.A. 2A:14-1. In doing so, the Appellate Division resolved a long-standing conflict between state and federal courts on this issue, which stemmed from two previous decisions of the Appellate Division dealing with a statute of repose and a statute of limitations.

In the first case, Pitney Bowes v. Baker Industries, Inc., 649 A.2d 1325, 1327-1328 (N.J. Super. App. Div. 1994), the Appellate Division found that claims for contribution under the Spill Act were not subject to a statute of repose. The Morristown Associates case acknowledged this discrepancy, but explained that, 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.” In contrast, any harshness or unjustness that results from the application of a statute of limitations can be eased by application of the discovery rule. Thus, the Appellate Division in Morristown Associates found that the statute of limitations, unlike the statute of repose, is not “patently repugnant or inconsistent” with the purposes of the Spill Act.

The second case could not as easily be distinguished since, unlike Pitney Bowes, it dealt specifically with the statute of limitations issue. In an unpublished opinion, Mason v. Mobil Oil Corp., 1999 N.J. Super. Unpub. LEXIS 7 (N.J. Super. App. Div. June 8, 1999), the Appellate Division applied the reasoning of Pitney Bowes to conclude that private claims for contribution under the Spill Act are not subject to a statute of limitations. Although this case is in direct contrast to the Appellate Division’s more recent decision in Morristown Associates, it was an unpublished decision and, therefore, non-binding and non-precedential.

The Morristown Associates case puts New Jersey state courts in line with their federal counterparts by adopting the reasoning set forth in several federal court decisions on the very same issue. Specifically, in Reichhold, Inc. v. United States Metals Refining Co., 655 F. Supp. 2d 400, 446-47 (D.N.J. 2009), the District Court of New Jersey found that private claims for contribution under the Spill Act were subject to a six-year statute of limitations. The Reichhold court reasoned that other environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), were also subject to a six-year statute of limitations. The Reichhold court also noted that where a statute does not contain an express limitations period, courts should select a limitations period from among those periods applicable to actions seeking similar relief at common law. Finding that a claim under the Spill Act was most similar to an environmental tort at common law, the court imposed a six-year limitations period on Spill Act claims, the same limitations period applicable to common law environmental torts.

The Morristown Associates case is significant in several respects. First, it reconciles the discrepancy between federal and state courts on the statute of limitations issue. Second, it eliminates the possibility of “forum shopping” that can happen when either the plaintiff, or the defendant, attempt to litigate a case in state or federal court based only upon which court has more favorable case law. Lastly, it specifically provides that such claims, although subject to a statute of limitations, are also subject to the equitable discovery rule doctrine, which tolls the limitations period until such time as the plaintiff becomes aware of the facts underlying a potential cause of action.

*Kevin is an associate in our Cherry Hill, New Jersey, office who can be reached at 856.414.6057 or ktbright@mdwcg.com.

Defense Digest, Vol. 19, No. 4, December 2013

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2013 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.