No Statute of Limitations for Private Contribution Claims Under New Jersey’s Spill Act

Apr. 15, 2015 / by June Y. Lee

Selling a piece of commercial property often requires much negotiation and planning, and generally represents the culmination of a result of a well-reasoned business decision. And at the conclusion of the deal—and depending on the terms—the seller is divesting itself oftentimes of both an asset and liability. But for those sellers who believe that a sale provides an ending of the relationship with a particular property, recently the Supreme Court stated “not so fast.” Reversing the Appellate Court’s decision, the Supreme Court recently determined that there is no applicable statute of limitations, governing environmental contamination in New Jersey.

According to the Appellate Court, the silence on a limitations period in a statute is the Legislature’s implicit green light to apply the applicable common law statute of limitations. Because the New Jersey Spill Compensation and Control Act (“Spill Act”) does not specifically provide for a limitations period, the Appellate Court reasoned the general six-year statute of limitations governing real property claims would apply to this case, precluding the plaintiff’s claims.

Disagreeing with the Appellate Court, the plaintiff countered the statute of limitations is not an available defense that the Legislature contemplated in the Spill Act. According to the plaintiff, the only available defenses are the ones expressly listed in the statute: namely, an act or omission caused solely by war, sabotage, or God. Numerous environmental and public interest groups jumped into the fray stressing that a mere six year prevents potential plaintiffs from identifying all responsible parties for contamination, actually inhibiting the opportunity for prompt remediation.

Relying on the legislative history and subsequent amendments of the Spill Act, the Supreme Court disagreed with the lower courts, finding that the silence on the statute of limitations in the statute simply means there is no statute of limitation. According to the Court, the fact that the statute expressly restricted the available defenses and the Legislature’s deletion of a provision, which would have applied a common law statute of limitations, “significantly support for a conclusion that no statute of limitations applies.”

This decision will likely prove to have a major impact on property owners – past and present. Prior owners can now be subject to suit, and potentially held liable, if they are deemed responsible for contamination of the property, regardless of when they owned or operated their business on the property. However, as is always the case in the law, one person’s bad news is another’s positive development. Here too, while prior owners and operators have cause to be wary, current property owners will now have the opportunity to unearth those ultimately responsible for environmental contamination on the property they purchased.

Topics: Guidance, Legislation, Agreements & Abatements, Regulation, Commercial Real Estate, Environment, Environmental Law

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June Y. Lee

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