N.J Supreme Court Settles Dispute Regarding Application of Statute of Limitations for Claims for Contribution under The Spill Act

By John K. Fiorilla, Esq.

On January 26 of this year, the New Jersey Supreme Court resolved a critical dispute as to whether or not the general six year statute of limitations applies in actions by private parties for contribution under the State’s Spill Act.

Justice Jaynee LaVecchia writing for a unanimous court in Morristown Associates v. Grant Oil Co. 2015 N.J. LEXIS 50 (2015) found that there is NO statute of limitations applicable to private contribution claims under the New Jersey Spill Compensation and Control Act (N.J.S.A 58:10-23.11).  The Court overturned an Appellate Division decision which had applied a six year statute of limitations.

The court found that though there were defenses specifically mentioned in the Spill Act that an alleged contributor to the pollution could make in defense of such an action (an act or omission caused solely by war, sabotage, or God or a combination thereof) that the legislature had not included a statute of limitation as a specific defense to a Spill Act contribution claim.  The court said that prior to the Appellate Division decision they were overturning, that there was a decades long understanding that no limitations period restricts contribution claims against responsible parties and that that understanding should not be disturbed.

This decision means that if you are required to clean up property that you sold or previously owned you cannot use the defense that the party seeking contribution waited more than six years to bring a contribution action.  On the other hand, it also means that you may seek contribution for such a cleanup from previous owners or occupiers who may be responsible for the pollution you are tasked to clean up without a concern that more than six years have passed since the pollution took place.

Although there is no longer a potential time bar to contribution claims, parties still need to understand that the Spill Act imposes timeframes for cleanup which must be met. In addition the longer a party waits to make a contribution claim the more likely it is that such claim is no longer viable because the responsible party may no longer be able to be found or is no longer a viable business concern.

It should also be noted that prospective purchasers and future tenants should still conduct their due diligence appropriately to remain eligible for innocent purchaser status.

These issues also arise in eminent domain actions by the State, Municipalities or other condemning authorities including railroads.  Should a condemning authority take property and find that it is in need of cleanup under the Spill Act, it may under Housing Auth v. Suydam Investors LLC, 177 N.J. 2 (2003) withhold from the amount of fair market value set aside for the property owner an amount required to clean the property.  The property owner however has the right to seek contribution for such cleanup costs against prior owners, tenant or others who may be responsible for the pollution.  The contribution sought will not be subject to a statute of limitations defense.