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. e du/thir dc ir c uit_2000/202Filed September 20, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-5031

BLACK HORSE LANE ASSOC., L.P., a New Jersey limite d partnership; UNITED STATES LAND RESOURCES, L.P., a New Jersey limited partnership; UNITED STATES REA LTY RESOURCES, INC., a New Jersey Corporation; and

LAWRENCE S. BERGER

v.

DOW CHEMICAL CORPORATION; ESSEX CHEMICAL CORPORATION, a wholly owned subsidiary of DOW CHEMICAL CORPORATION, a Michigan Corporation

Black Horse Lane Associates, L.P., United States L and Resources, L.P., United States Realty Resources, Inc. and Lawrence S. Berger,

Appellants

On Appeal from the United States District Court for the District of New Jersey (D.C. Civ. No. 97-1250) District Judge: Honorable Nicholas H. Politan

Argued August 8, 2000

BEFORE: BARRY, WEIS and GREENBERG, Circuit Jud ges

(Filed: September 20, 2000)

Paul H. Schafhauser (argued) Berger & Bornstein

237 South Street

P.O. Box 2049 Morristown, N.J. 07960-2049

Attorneys for Appellants

Kenneth H. Mack (argued)

Linda Mack Fox, Rothschild, O'Brien & Frankel

997 Lenox Drive Princeton Pike Corporate Center, Building 3Lawrenceville, N.J. 08648

Attorneys for Appellees

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes before this court on an appeal b y plaintiffs United States Land Resources, L.P. ("U SLR"), United States Realty Resources, Inc. ("USRR"), Bl ack Horse Lane Associates, L.P. ("Black Horse"), and Lawren ce S. Berger ("Berger") (collectively "appellants") fro m two orders entered by the district court in this matter: (1) the order entered August 10, 1999, granting a motion by app ellees Dow Chemical Corporation ("Dow") and Essex Chemic al Corporation ("Essex") for summary judgment pursua nt to Fed. R. Civ. P. 56, and denying appellants' cross -motion for summary judgment on appellees' counterclaim; and (2) the "Final Order" entered December 16, 1999, affirmin g the June 30, 1999 order of the magistrate judge impos ing sanctions against appellants, and dismissing appe llees' counterclaim without prejudice for lack of subjec t matter jurisdiction. This litigation arises out of a sal e of environmentally distressed real property located at 120 Black Horse Lane, South Brunswick, New Jersey (hereinafter "the Property"), by Essex to USLR.

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For the reasons that follow, we will affirm the Au gust 10, 1999 and December 16, 1999 orders of the district court in all respects.

II. FACTS and PROCEEDINGS

A. Factual Background

The historical facts in this case are rather strai ghtforward and, insofar as material to this appeal, essentia lly are not disputed. Appellants, USLR, USRR, Black Horse, an d Berger, are related entities: USLR is the general partner in Black Horse, USRR is the general partner of USLR, and Berger is the president of USRR.1 Appellees Essex and Dow

also are related entities as Essex is Dow's wholl y-owned subsidiary by virtue of its purchase of all of Es sex's stock

in 1988.

During the 1980s, Essex owned and operated the Property, where it engaged in the business of pre paringadhesive-backed paper products. On or about Augus t 17,

1984, Essex discovered that chemicals it used in that process had leaked into the ground of the Propert y. In October 1984, Essex entered into environmental cl eanup and decommission negotiations with the New Jersey Department of Environmental Protection ("DEP"). E ssex submitted a "Clean-Up Plan" to the DEP on Decembe r 19, 1985, which the DEP conditionally approved on Dec ember 20, 1985.

Prior to Essex's submission of the Clean-Up Plan t o the DEP, it entered into a sales agreement ("the Agre ement") on September 5, 1985, with USLR to sell the Property to USLR for $3.6 million. The parties do not dispute that appellants were aware of the Property's environmental proble ms at the time that USLR and Essex entered into the Agreeme nt. The Agreement required Essex to obtain and implement an approved Clean-Up Plan at its sole expense. Parag raph 16 of the Agreement set forth Essex's responsibiliti es with

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1. Also, Berger is a named partner in the lawfirm representing appellants.

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respect to the remediation and detoxification of t he Property:

The parties acknowledge that the Subject Pr emises to be conveyed are subject to the provisions of the Environmental Clean-Up Responsibility Act, N.J.S.A. 13:1K-6 et seq. (`ECRA') [now named the In dustrial Site Recovery Act (`ISRA')]. Seller agrees to o btain approval of a Clean-Up Plan from the Department of Environmental Protection (`DEP'), post the necessary financial security for performance pursuan t to ECRA, will implement the approved Clean-Up Plan and complete the detoxification of the Subject Premises in accordance with and to the approval of the DEP. Pending DEP approval of a Clean-Up Plan, S eller will attempt to obtain the consent of the DEP t o the conveyance of the Subject Premises. `ECRA Approval' will be deemed to have taken place upon th e receipt by Seller from the DEP of the approval of the implementation of the Clean-Up Plan and sa tisfactory detoxification of the Subject Premises or a consent from the DEP to convey the Subject Premise s to

Purchaser in the form of an Administrative Consent Order and bond securing the detoxification of the Subject Premises by Seller, all in a form and substance satisfactory to Purchaser's mortgage lende r. In no eventshall Purchaser be obligated under this Co ntract to

assume any ECRA Clean-Up responsibilities. If ECRA Approval is not obtained prior to January 1, 1986, Purchaser shall have the continuing right to terminate this Contract by giving Seller notice at a ny time up to January 20, 1986. If ECRA Approval is not obtained by June 1, 1986, this Contract shall be autom atically terminated and after the refund of the Dep osit to Purchaser, neither party shall have any ri ghts or claims against the other arising out of th is Contract.

App. at 93a-94a. Title to the Property closed on D ecember 23, 1985, three days after the DEP conditionally approved the Clean-Up Plan, and on that day USLR assigned its rights in the Property to its present owner, appe llant Black

Horse.

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As previously mentioned, at some point in 1988, ap pellee Dow purchased all of Essex's stock, and Essex bec ame a wholly-owned subsidiary of Dow. Since that time, Dow employees have been involved in the remediation a nd detoxification of the Property, but these Dow emp loyees have been acting as "consultants" to Essex in tha t connection. SA at 546, 549.

Essex began its soil remediation efforts shortly a fter it sold the Property in 1985. While we are not able to ascertain the exact date of completion from the r ecord, appellants' counsel confirmed at oral argument th at soil remediation was finished within two years of the sale of the Property. See generally app. at 235a; SA at 536; appellees' br. at 17. Essex commenced groundwater remediatio n in 1988, app. at 236a, but, to date, it has not comp leted that remediation. It is Essex's alleged failure to com plete remediation and detoxification of the Property wi thin a "reasonable time" that forms the crux of the part ies' dispute

in this case.

One specific example that appellants cite as proof of Essex's alleged failure to remediate the Property within a reasonable time pertains to Essex's cleanup effor ts with respect to certain "chlorinated volatile organic compounds" ("CVOCs") found in the soil and groundwater in ce rtain areas of the Property.2 In 1991, the DEP ordered Essex to perform a "temporary well point survey" to invest igate the presence and source of CVOCs found in the groundw ater and soil gas. See app. at 304a. After Essex condu cted extensive investigations into the source and leve ls of CVOCs found in the soil gas and groundwater, Esse x proposed to remediate the areas of the Propertycontaminated with CVOCs by means of soil vapor

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2. "CVOCs" is a shorthand reference to those volat ile organic compounds that Essex used to clean the plant's adhesive-bac ked paper rolls. The CVOCs found on the northeastern and eastern p ortions of the Property include tetrachloroethylene, trichlo roethylene, trans-1,2- dichloroethylene, and vinyl chloride. App. at 237 a. Essex discovered

trace amounts of CVOCs on the eastern and northea st corners of the Property in 1985, but the concentrations were so low that at that time DEP did not require Essex to address them. See a ppellees' br. at 19; App. at 200a, 237a; SA at 553.

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extraction ("SVE") technology, specifically, a "du al phase extraction system." App. at 307a. In May 1992, DE P approved this proposal. App. at 307a, 240a.

Notwithstanding DEP's approval of Essex's proposed system, Essex did not begin to install and operat e the system immediately. Rather, from 1992 to 1997, Es sex continued to investigate the source of the variou s CVOCs found on the Property, and conducted various test s at DEP's request. See app. at 238a-40a. This additio nal investigation required Essex to modify the SVE de sign, which requirement might account for the delay in its installation. App. at 240a. In any event, Essex c ompleted its installation of the dual-phase extraction sys tem in August 1997. We note, however, that Essex experie nced some "start up" difficulties at the outset of its operation of the system. App. at 240a. Insofar as we can deter mine from the record, Essex is continuing its remediation e fforts in connection with the CVOCs detected on the Propert y.

B. Procedural History

Appellants commenced this action in the district c ourt in 1997, and filed an amended complaint shortly ther eafter. The amended complaint sets forth five causes of a ction against appellees Essex and Dow:3 (1) a claim bas ed on a breach of Paragraph 16 of the sales contract as a result of Essex's failure to complete its cleanup of the Pr operty within a "reasonable time", (count I);4 (2) a cla im based on a breach of the implied covenant of good faith an d fair dealing based on "defendants' " actions in connec tion with their cleanup efforts, (count II); (3) a claim fo r damages pursuant to section 107(a)(4)(B) of the Comprehen sive Environmental Response, Compensation, and Liabili ty Act ("CERCLA"), 42 U.S.C. S 9607(a)(4)(B), based on a ppellants' alleged expenditure of "necessary costs of respon se," and

_________________________________________________ ________________3. Inasmuch as the amended complaint refers to Ess ex and Dow

collectively as "defendants" and asserts allfive claims against each entity, we refer to the defendants together as "a ppellees" unless

otherwise noted.

4. The count does not use the term "reasonable tim e" but appellants contend that a reasonable time provision is impli cit in the Agreement.

6

for declaratory and injunctive relief, (count III) ; (4) a claim for contribution for the costs of "clean-up and r emoval" and for injunctive and declaratory relief pursuant to the New Jersey Spill Compensation and Control Act, N.J. S tat. Ann. S 58:10-23.11 et seq. ("the Spill Act"), (count I V); and (5) a claim for "damages" based on appellees' breach of the Agreement "as well as the contamination with resp ect to the subject Property for which defendants are respons ible," (count V). See app. at 67a. Appellees filed an an swer to the amended complaint and a counterclaim seeking decl aratory relief that remediation of the Property under Par agraph 16 of the Agreement included use of "engineering and institutional controls" and an order requiring ap pellants to consent to them. App. at 80a-81a.

The parties commenced discovery on November 7, 199 7. Appellants designated Berger as their Fed. R. Civ . P. 30(b)(6) witness to testify on behalf of USLR, US RR and Black Horse. On October 2, 1998, appellees' couns el began to depose Berger, but counsel was not able to obt ain a date to reconvene the deposition. As a result of couns els' inability to agree on the date that Berger's depo sition should resume, appellees' counsel sought an order from the magistrate judge overseeing discovery to set the date for the resumption of the deposition. After a teleconfere nce with the parties on October 6, 1998, the magistrate ju dge signed an order dated October, 9, 1998, which provided t he following:

IT IS on this 9th day of October, 1998, ORD ERED, as

follows:

1. Lawrence S. Berger, as Plaintiffs' Fed. R. Civ. P. 30(b)(6) designated witness and fact witne ss, shall appear for oral deposition commencing on T uesday, October 13, 1998, at 10:00 a.m. and contin uing from day to day thereafter until completed.

App. at 657a.

Notwithstanding the court's directive, when appell ees'counsel appeared at Berger's law office to contin ue his

deposition on October 13, 1998, Berger failed to appear and his counsel, Paul Schafhauser, was "in trial" and not in the

7

office. SA at 60-61. At that point, appellees' cou nsel again sought the court's intervention.

On October 15, 1998, the magistrate judge signed a nd entered an order which directed that Berger's dep osition recommence on Monday, October 19, 1998, at 10:00 a.m. App. at 660a. The order also provided that "[a]s a sanction for failure by Lawrence Berger to appear for depo sitions on Tuesday, October 13, Plaintiffs shall promptly pa y the fees and costs of counsel fees for defendants (a) for appearing at Mr. Berger's non-deposition on October 13, and (b ) for bringing this application and appearance today." App. at 660a. While Berger appeared for his deposition at the designated date and time, appellees claim that he provided evasive and non-responsive answers to many of cou nsel's questions relating to the negotiation and executi on of the Agreement, and appellants' damages allegations. S ee generally app. at 540a-655a.

After the completion of discovery, the parties fil ed several motions germane to this appeal. First, appelleesf iled a motion for summary judgment pursuant to Fed. R. C iv. P. 56, seeking dismissal of the amended complaint in its entirety. Appellants opposed the motion, and file d a cross- motion for summary judgment on appellees' counter claim for declaratory relief. In addition, appellees fi led a motion before the magistrate judge for discovery sanctio ns pursuant to Fed. R. Civ. P. 37(b), (d), seeking t o preclude appellants "from asserting, at trial, a position which differs from the testimony of their Rule 30(b)(6) witness ." App. at 20a. Appellees also sought reimbursement of the a ttorney's fees and costs associated with Berger's depositio n and their filing of the second sanctions motion.

The magistrate judge granted appellees' request fo r sanctions pursuant to Rule 37 by letter opinion a nd order entered June 30, 1999. Relying on Rule 37(b) and (d), he agreed that Berger's conduct warranted the sancti on appellees requested, namely that appellants would be precluded from asserting a position and introduci ng evidence contrary to the positions Berger asserte d during his deposition. The court also concluded that Ber ger's lack of preparedness at his deposition warranted the i mposition of monetary sanctions pursuant to Rule 37(d) in t he form of

8costs and attorney's fees associated with taking t he

deposition and bringing the sanctions motion befo re the court. App. at 22a. Appellants filed an appeal fr om the magistrate judge's order to the district court.

In the meantime, after hearing oral argument on th e cross-motions for summary judgment on June 28, 19 99, see app. at 806a-831a, the district court granted appellees' motion on the amended complaint and denied appell ants' cross-motion on the counterclaim by letter opinio n and order entered August 10, 1999. Addressing appelle es' motion first, the district court determined that dismissal of the amended complaint in its entirety was appropr iate for several reasons, each of which we will discuss in greater

detail in the discussion that follows.5

With respect to the breach of contract claim (coun t I), the court held that Paragraph 16 of the Agreement did not contain a provision requiring Essex to remediate the Property in a "reasonable time," and, given the c ommercial context in which the parties negotiated and execu ted the Agreement and appellants' subsequent conduct, the court should not imply that the contract had a reasonab le time provision. See app. at 10a. Alternatively, it sta ted that even if it were to assume that there is an implicit "r easonable time" provision in Paragraph 16 of the Agreement,

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5. Before engaging in a substantive analysis of ap pellants' claims against Essex, the district court dismissed with prejudic e all claims appellants asserted against Dow, reasoning that

(1) plaintiffs' causes of action arise sole ly out of plaintiffs' contractual relationship with defendant Es sex; (2) Dow and Essex are not related except to the extent that Dow acquired Essex's stock; (3) Essex is a responsible party and not i nsolvent; and (4) there

is

not even a scintilla of evidence that woul d justify piercing

Essex's corporate veil.

App. at 7a n.1. Appellants assert that the distric t court erred in dismissing outright the claims against Dow, claim ing that there are factual issues concerning whether it is a proper party in this suit. We

will affirm the court's dismissal of Dow without further discussion as appellants' argument clearly is without merit. In any event, our affirmance of the summary judgment for Essex mean s that Dow cannot be liable to appellants.9

appellants failed to adduce any evidence from whic h a reasonable jury could conclude that 14 years, i.e ., from

1985 to the date of the district court's decision , was an unreasonably long time period to complete the typ e of

detoxification and remediation called for in the Clean-Up Plan. App. at 11a. Turning next to appellants' cl aim based on the alleged breach of the implied covenant of good faith and fair dealing (count II), the court found that appellants failed to produce sufficient evidence that Essex acted in bad faith or engaged in misconduct that caused the de lay in completing the cleanup of the Property. App. at 1 3a.

Third, the court dismissed the CERCLA and Spill Ac t claims for damages on the ground that appellants could not demonstrate that they incurred any compensable co sts under either statute. The court pointed out that the only costs that appellants allegedly incurred were the fees they paid to their consultant, Enviro-Sciences, Inc. ( "ESI"), but that such fees were not compensable under either the CERCLA or the Spill Act. App. at 15a. The court a lso denied appellants' request for injunctive and declarator y relief under CERCLA and the Spill Act, reasoning that declaratory relief was inappropriate because "pla intiffs have utterly failed to make any showing that they are likely to incur any future costs that will be recoverable" under either statute. It further found that injunctive relief was not

warranted in view of the circumstance that Essex" is contractually and statutorily bound to detoxify t he Property," and there was no evidence that Essex h ad

breached the contract or violated CERCLA or the S pill Act. App. at 15a-16a. Next, the court dismissed count V, stating that "because plaintiffs have failed to adduce su fficient evidence in support of their breach of contract c laims, they cannot recover the damages outlined in Count Five of the Complaint." App. at 16a.

Finally, the district court addressed and denied appellants' cross-motion for summary judgment on the counterclaim, noting that appellants "cite no aut hority in support of their motion," but "merely allege that `Plaintiffs do not and need not consent to any [engineering a nd institutional controls] with respect to the Prope rty.' " Ultimately the court found that "[o]n the present record,

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this Court is unable to say that the plaintiffs ar e entitled, as a matter of law, to a judgment dismissing defe ndants'counterclaims."6 App. at 17a. The court's order s tated that

appellants' amended complaint was dismissed with prejudice.

After the district court ruled on the parties' dis positive motions, on or about August 13, 1999, the distric t court ordered the parties to file cross-motions with re spect to Essex's counterclaim. App. at 775a. On December 1 3, 1999, the district court heard oral argument on t he cross- motions, and also considered appellants' outstand ing appeal from the magistrate judge's sanctions orde r. Ruling on the outstanding motions the district court (1) affirmed the magistrate judge's sanctions order, and (2) d ismissed Essex's counterclaim against appellants without p rejudice for lack of subject matter jurisdiction because t he controversy set forth in the counterclaim was not ripe. See app. at 832a-49a. The district court then memoria lized its record rulings in its "Final Order" entered Decem ber 16, 1999. App. at 23a. The monetary sanctions have be en quantified and we understand that appellants have paid

them.

Appellants filed a timely notice of appeal to this court from the district court's orders of August 10, 19 99, and December 16, 1999. App. at 34a. The appellees do not cross-appeal from the dismissal of their counterc laim. We have jurisdiction pursuant to 28 U.S.C. S 1291.7 Of course,

the fact that the dismissal of the counterclaim w as without

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6. The court also addressed and denied appellees' motion for sanctions pursuant to Fed. R. Civ. P. 11. That aspect of th e court's ruling is not in issue in this appeal, and we need not address it any further.

7. The district court exercised subject matter jur isdiction pursuant to

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U.S.C. S 1331 inasmuch as count III of the amende d complaint asserted a claim pursuant to CERCLA. The district court ex ercised supplemental jurisdiction over the remaining state law claims pursuant to 28 U.S.C. S 1367. We exercise plenary review over the distr ict court's dismissal

of appellants' amended complaint and the counterclai m, see Nelson v. Upsala College, 51 F.3d 383, 385 (3d Cir. 1995), and review the court's disposition of the sanctions issue pursuant to Ru le 37 for an abuse of

discretion. See General Ins. Co. of Am. v. Easter n Consol. Utils. Inc.,

126 F.3d 215, 219 (3d Cir. 1997).

11

prejudice does not in the circumstances here depri ve us of jurisdiction. See Presbytery of N.J. v. Florio , 40 F.3d 1454,1461 (3d Cir. 1994); see also Erie County Retiree s Ass'n v.

County of Erie, 220 F.3d 193, 202 (3d Cir. 2000).

III. DISCUSSION

As is evident from our recitation of the procedura l history leading to this appeal, appellants challenge seve ral of the district court's rulings made during the proceedi ngs in this matter. First, we will address the court's August 10, 1999 order dismissing the amended complaint. Then, we will review the district court's December 16, 1999 ord er dismissing appellees' counterclaim without prejud ice, and affirming the magistrate judge's sanctions order.

A. District Court's Dismissal of the Amended Complaint

1. Breach of Contract Claim (Count I)

Appellants focus most of their attention on the di strict

court's dismissal of their breach of contract cla im pleaded in count I of the amended complaint. While recogn izing that under New Jersey law, courts generally find that there is a "reasonable time" term implicit in contracts that do not set forth any time limitation for performance, the di strict court nevertheless held that "[i]n this case, the Court finds no justification for implying a `reasonable time' fo r performance because such a term is not `necessary to give business efficacy to the contract as written.' " App. at 8a. The court explained that "[a] main purpose of the Agreement, and the only purpose of Paragraph 16, was to require Essex to remediate the Property to the fu ll satisfaction of the DEP and thereby make the land freely marketable." App. at 8a. The court found that"a `reasonable time' limitation is not necessary bec ause Essex's performance under the contract--obtaining final DEP approval--must be evaluated solely by referen ce to the DEP." App. at 9a. Accordingly, the court stated t hat "such a contract simply does not lend itself to a reaso nable time

limitation." Id.

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It also dismissed the breach of contract claim on the alternative ground that appellants presented insu fficient evidence from which a reasonable jury could concl ude that Essex breached its obligation to perform remediat ion and obtain DEP approval pursuant to the Clean-Up Plan within a "reasonable time." On this point, the district court held as

follows:

Plaintiffs allege that Essex has breached i ts contractualobligation to complete the detoxification and obtain

final DEP approval `within a reasonable ti me.' Therefore, to prevail, plaintiffs must sho w that a `reasonable time' has already expired. The Agreement

was executed in 1985. This Court cannot sa y that fourteen years is unreasonable as a matter of law. In the context of an ISRA clean-up, which pla intiff Berger understood to be a `cumbersome' and `long' process, plaintiffs must adduce evidence that a `re asonable time' for completion of the clean-up is less the n fourteen

years. . . .

Such evidence might be in the form of repr imands or other statements from regulatory agencies like the DEP. Plaintiffs might also carry their evi dentiary burden with expert testimony that, under t he circumstances of this site and comparing i t to other sites, fourteen years is an unreasonable l ength of time. In this case, however, plaintiffs have sim ply failed to adduce any evidence that fourteen years is unreasonable. The only evidence that even remotely addresses this issue is contained in plain tiffs' expert
report. . . .

Giving plaintiffs the best of Mr. Cohen's report, `the environmental program undertaken on this s ite has been slow and ineffective in treating the contaminants that were release by Essex Chemical.' But evidence of a slow and ineffective clean-up process, w ithout more, cannot reasonably support an inference tha t fourteen years is unreasonable.

App. at 11a-12a.

Appellants contend that the court erred in dismiss ing their breach of contract claim because, notwithst anding the

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absence in Paragraph 16 of the Agreement of an exp licit date by which Essex was to complete its cleanup o f the Property and obtain DEP approval, by implication the Agreement requires Essex to fulfill its contractu al obligations within a reasonable time. Appellants rely on the well-established principle of New Jersey law, whi ch is applicable here on the contractual issues, that" `[w]here no time is fixed for the performance of a contract, by implication a reasonable time was intended.' " Br . at 41 (quoting, inter alia, Becker v. Sunrise at Elkrid ge, 543 A.2d 977, 983 (N.J. Super. Ct. App. Div. 1988)). They claim that the district court erred in concluding that the n ature of this particular contract, and Essex's obligation with respect tothe remediation of the Property, rendered a "reas onable

time" limitation unreasonable in the circumstance s. Alternatively, they assert that at a minimum, the re was a genuine issue of material fact as to whether the parties intended that Essex complete its remediation obli gations within a reasonable time, thus precluding summary judgment in appellees' favor. Second, appellants contend that contrary to the district court's finding, th ey presented sufficient evidence from which a reasonable jury could conclude that Essex failed to remediate the Prope rty within

a "reasonable time."

Appellees respond that the district court correctl y dismissed the breach of contract claim because ap pellants base their argument on the incorrect premise that Paragraph 16 omits a contractual provision which in turn requires the court to supply a "reasonable time" limitation. Br. at 36. They claim that contrary to appellants ' construction of the contract, Paragraph 16 does c ontain a definite term for completion of the Property's re mediation and therefore does not omit a contractual provisi on. In appellees' view the contract unambiguously provid es the only term for completion that is reasonable in th e circumstances--namely, that Essex's obligation is satisfied

if the detoxification is undertaken "in accordanc e with and to the approval of DEP." Br. at 35-36. They claim that the district court correctly determined that it would be unreasonable to find that the Agreement included an implied reasonable time limitation, given the com mercial context of the sale and purchase.

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Appellees further assert that, in any event, even if we agreed with appellants that the district court sh ould have implied a "reasonable time" limitation on Essex's remediation obligations pursuant to Paragraph 16, summary judgment was appropriate because there is no evidence that Essex breached its contractual obli gations in that connection. They claim that the district cou rt correctly determined that appellants failed to meet their b urden of producing evidence demonstrating that as of the d ate that appellants filed their complaint in the district court, Essex had failed to remediate and detoxify the Property in accordance with the Clean-Up Plan, and obtain DEP approval of its efforts, within a reasonable time

.

Appellees' protestations notwithstanding, we rejec t the

district court's conclusion that a reasonable tim e provision was not implicit in Paragraph 16 of the Agreement . After all, New Jersey courts uniformly have applied the principle that "where no time is fixed for the performance of acontract, by implication a reasonable time was in tended."

See Becker, 543 A.2d at 983 (contract for sale of real property); see also, e.g., River Dev. Corp. v. Li berty Corp., 148 A.2d 721, 722 (N.J. 1959) (license to reclaim land must be exercised within a reasonable time); Ridge Che vrolet- Oldsmobile, Inc. v. Scarano, 569 A.2d 296, 300 (N .J. Super. Ct. App. Div. 1990) (performance under real estat e contract); Mazzeo v. Kartman, 560 A.2d 733, 737 ( N.J. Super. Ct. App. Div. 1989) ("If the trial judge c annot determine the parties' actual intent [concerning the temporal limits of a right of first refusal], he should determine a `reasonable time' for the expiration of the right."); Ocean Cape Hotel Corp. v. Masefield Cor p., 164 A.2d 607, 614 (N.J. Super. Ct. App. Div. 1960) (w here plaintiff claimed that defendant was obligated to make certain repairs to property, if plaintiff 's clai m had been based on breach of contract, the court would have implied a term that required completion of performance wi thin a reasonable time and would not have permitted paro l evidence that defendant promised repairs as of a certain fixed date); McGraw v. Johnson, 126 A.2d 203, 206 (N.J. Super. Ct. App. Div. 1956) (noting that performan ce under contract must be completed within reasonable time where claim was based on contractor's alleged failure t o complete

15

building of home within a reasonable time); Curtis Elevator Co. v. Hampshire House, Inc., 362 A.2d 73, 76 (N. J. Super. Ct. Law Div. 1976) (performance under contract to install elevators; where no specific date for completion was provided in contract, court implied term requirin g completion within a reasonable time).

The district court predicated its analysis on stat ements in New Jersey cases to the effect that terms are imp lied to "give business efficacy to the contract as writte n." See app. at 8a (citing McGarry v. Saint Anthony of Padua R oman Catholic Church, 704 A.2d 1353, 1357 (N.J. Super. Ct. App. Div. 1998)). But appellants argue persuasively th at it would be commercially unreasonable to construe the term s of Paragraph 16 so as to permit Essex to begin its c leanup at its leisure, and to continue its efforts in perpe tuity without the threat or even the slightest possibility of a dverse legal consequences flowing from inordinate delay. We al so doubt that the parties could have intended such a bizar re result. See Onderdonk v. The Presbyterian Homes of N.J., 425 A.2d 1057, 1063 (N.J. 1981) ("Central to this inquiry of ascertaining what, if any, terms are implied is t he intent of the parties. Intent may be determined by examinat ion of the contract and in particular the setting in whi ch it was
executed.").Nevertheless, notwithstanding our holding that a

"reasonable time" term is implicit is Paragraph 1 6 of the Agreement, we agree with the district court's alt ernative basis for dismissing appellants' breach of contra ct claim, i.e., that a reasonable time period has not expir ed.8 We are mindful that "[w]hat constitutes a reasonable tim e under New Jersey law `is usually an implication of fact , and not of law, derivable from the language used by the part ies considered in the context of the subject matter a nd the

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8. In view of our result appellees should understa nd that they do not have forever to complete the remediation and deto xification. To the contrary, they must diligently pursue their effor ts to obtain the DEP approval within a reasonable time. Of course, it is not our intention by making this point to invite further litigation. W e believe that if appellees are diligent in these efforts and keep appellants advised of the steps they are taking that the parties should be able to avo id additional judicial proceedings.

16

attendant circumstances, in aid of the apparent in tention.' " Mazzeo, 560 A.2d at 737 (quoting Borough of West Caldwell v. Borough of Caldwell, 138 A.2d 402, 412 (N.J. 1 958)). Nevertheless, appellants would bear the burden of proof on this issue at trial, to show that a reasonable ti me has expired, and to survive summary judgment, they mu st adduce evidence from which a reasonable jury coul d

conclude that Essex breached its contractual obli gation to complete its remediation and detoxification effor ts within a reasonable time. Here, even viewing the facts in the light most favorable to appellants, we agree with the d istrict court's assessment of the weakness of appellants' evidence as well as the court's conclusion that appellants failed to demonstrate that there was a genuine issue of mat erial fact

on the issue of whether Essex had breached its ob ligation to remediate the Property and obtain DEP approval within a reasonable time. Simply put, the record does no t support the conclusion that appellants posit, i.e., that Essex breached its contractual duties to complete the r emediation

and detoxification efforts within a reasonable ti me.

For example, appellants first point to an Essex"Ex pense Appropriation Request" which indicated that the "completion date" of the entire project would be "1987."9 App. at 777a. But we do not share appellants' vie w that this evidence can support a conclusion that Essex breached Paragraph 16 of the Agreement. Obviously, the fac t thatEssex estimated its completion date incorrectly d oes not

support the conclusion that it has failed to clea nup the Property within a reasonable time. While a party' s advance estimate of the time to complete a project might be persuasive evidence of the reasonable time for th at undertaking, it is not in the circumstances here in which the scope of the project was so uncertain.

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9. According to the deposition testimony of Irwin Zonis, Essex's Chief

Environmental Officer who was involved in the rem ediation and detoxification of the Property, the purpose of th e Expense Appropriation Request was to notify Essex's financial departmen t of the amount of funds deemed necessary for the completion of the project. He further explained that the document "told the financial d epartment that the $320,000 would be expended by the end of 1987." A pp. at 189a.

17

Appellants also rely on the fact that in March 198 6, shortly after the DEP approved Essex's Clean-Up P lan, Dr. Calvin J. Benning ("Benning"), Director of Enviro nmental Affairs for Essex, wrote to the DEP questioning w hether

certain of the standards set forth in the Clean-U p Plan with respect to the contemplated soil remediation and whether the Clean-Up Plan's requirements were reasonable in the circumstances. App. at 225a-26a. For convenience, we will refer to this correspondence as Essex's "March 19 86 letter." Appellants claim that the March 1986 letter was E ssex's "attempt[ ] to circumvent the parameters and cond itions" of its Clean-Up Plan, and that it demonstrates that Essex failed to proceed "reasonably and diligently" wit h the Property's detoxification. Br. at 46.

We cannot agree. The March 1986 letter questions t he cleanup levels relating to the soil remediation w hich Essex completed within two years of the sale of the Pro perty. See generally app. at 235a; appellees' br. at 17. Cer tainly if Essex also had completed the groundwater remediat ion within that period appellants would not have inst ituted litigation alleging a breach of Paragraph 16. Thu s, inasmuch as appellants' breach of contract claim essentially is predicated on Essex's failure to c omplete groundwater remediation, we fail to see how this letter supports appellants' argument.

Similarly, appellants cite the fact that Essex did not begin groundwater remediation efforts until 1988 or remediation of the CVOCs until 1997. See br. at 4 7-48. However, appellants do not present evidence indic ating that the delays were avoidable, and in any event, were unreasonable. Also they rely on the circumstance thatgroundwater pumping "was frequently interrupted

throughout the years," br. at 47, and that the DE P gave Essex a rating of "unacceptable due to `failure t o operate the groundwater remediation system in the capacity it was designed.' " App. at 298a (emphasis added). But a review of

the evidence in the record confirms that the inte rruptions Essex experienced are not a basis for holding tha t it unreasonably delayed its performance under Paragr aph 16. To the contrary, intermittent delays are to be ex pected on a remediation project which cannot be compared to an

18

ordinary construction project built in accordance with fixed plans which is thus far less likely to encounter problems than a remediation undertaking. Moreover, as appe llees correctly point out, the DEP's "unacceptable" rat ing did not relate to the length of time that Essex had expen ded on the remediation and detoxification of the Property. R ather, the DEP comments related to the need for Essex to imp lement a sufficient maintenance program so that it could manage the problems it had been experiencing with the we lls more efficiently in the future. See app. at 298a. Thus , we cannot

view the DEP's comments as tantamount to a statem ent that Essex was taking too long to finish the Prop erty cleanup.

As the district court correctly observed, app. at 11a-12a, appellants' strongest evidence on this score is a statement by their environmental consultant, Irving Cohen o f ESI. Cohen issued a report in which he opined that "th e environmental program undertaken on this site has been slow and ineffective in treating the contaminants that were released by Essex Chemical." App. at 418a. In our view, however, this statement does not create a factual issue for the jury on the issue of unreasonable delay. Impo rtantly, Cohen stops short of stating definitively that, g iven the circumstances, Essex had taken too long to comple te its remediation and detoxification efforts. Moreover, even if he

had stated such a conclusion it would not have an adequate foundation as he does not analyze specif ically the types of contaminants involved in this project an d the circumstances surrounding the remediation of this site. Nor does he compare Essex's efforts to other sites pl agued with similar environmental contaminants. Given the vag ue nature of Cohen's conclusion, we agree with the d istrict

court's observation that "evidence of a slow and ineffective cleanup process, without more, cannot reasonably support an inference that fourteen years is unreasonable. " App. at

12a.

When boiled down to its essence, appellants' argum ent isthat because the cleanup of the Property has take n longer

to finish than the parties originally anticipated , Essex has breached Paragraph 16 of the Agreement as it has not completed the cleanup within a "reasonable time." While it

19

may be unfortunate that it has taken Essex an exte nded period of time to complete the cleanup of this Pr operty, the delay does not support a conclusion that the amou nt of time it already has spent is unreasonable given t he nature of Essex's contractual obligation. By appellants' own admission, the remediation and detoxification of the Property is a large effort which, by its very nat ure, is a lengthy and time-consuming process. Given the rea lities of the situation, appellants simply have failed to p oint to any evidence in this record demonstrating that the le ngth of time that Essex has taken to detoxify the Propert y and obtain DEP approval is unreasonable in the circum stances. Accordingly, we will affirm the district court's dismissal the

breach of contract claim.

2. Breach of the Implied Duty of Good Faith and Fair Dealing (Count II)

The district court also dismissed appellants' clai m based on Essex's alleged breach of the implied duty of good faith and fair dealing, reasoning:

In this case, plaintiffs allege only that E ssex has failed to complete the clean-up process and obtai n final DEP approval within a reasonable time. They po int to no

acts or omissions done in bad faith. There is no allegation, and certainly no evidence, tha t Essex has committed any misconduct. Summary judgment is therefore appropriate.

App. at 13a. Appellants claim that the district co urt erred in granting summary judgment on this claim becaus e it ignored evidence from which a reasonable jury cou ld conclude that Essex breached the implied duty of good faith and fair dealing during the course of its cleanup of the Property. Appellants point to the following evide nce in support of their claim: (1) documents confirming that appellees "attempted to renege upon the standards set forth in the Clean-Up Plan"; (2) evidence showing that appellees "inexplicably failed to even begin remediation fo r many years after delineating contamination on the Prop erty"; and (3) DEP documents reprimanding Essex for " `viola tions' and `unacceptable' progress." Br. at 49.

20To be sure, "every contract in New Jersey contains an

implied covenant of good faith and fair dealing." Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 1997); see also Restatement (Second) of Contracts S 205 (1981) ("Every contract imposes upon each party a duty of good faith and fair dealing in its performance an d its enforcement."). "The implied covenant is an indep endent duty and may be breached even where there is no b reach of the contract's express terms." Emerson Radio C orp. v. Orion Sales, Inc., 80 F. Supp.2d 307, 311 (D.N.J. 2000) (citing, inter alia, Sons of Thunder, Inc., 690 A .2d at 575); see also Bak-a-Lum Corp. v. Alcoa Bldg. Prods., I nc. , 351 A.2d 349, 352 (N.J. 1976).

The implied covenant of good faith and fair dealin g requires that "neither party shall do anything wh ich will have the effect of destroying or injuring the rig ht of the other party to receive the fruits of the contract ." Sons of Thunder, Inc., 690 A.2d at 587 (internal quotatio n marks omitted); Palisades Properties, Inc. v. Brunetti , 207 A.2d 522, 531 (N.J. 1965). A party to a contract breac hes the covenant if it acts in bad faith or engages in so me other form of inequitable conduct in the performance of a contractual obligation. See, e.g., Sons of Thunde r, Inc., 690 A.2d at 589 (distinguishing prior decision in Kar l's Sales & Service, Inc. v Gimbel Bros. Inc., 592 A.2d 647 ( N.J. Super. Ct. App. Div. 1991), in which "there were no alle gations of bad faith or dishonesty on the part of the termin ating party" to the contract); Association Group Life, Inc. v. Catholic War Veterans, 293 A.2d 382, 384 (N.J. 19 72) (stating that a contracting party breaches duty o f good faith and fair dealing by engaging in behavior that was "not contemplated by the spirit of the contract and fe ll short of fair dealing"); Emerson Radio Corp., 80 F. Supp.2 d at 311 ("The Restatement and the [New Jersey] cases note a state of mind or malice-like element to breach of good faith and fair dealing, holding that the duty excludes acti vity that is unfair, not decent or reasonable, nor dishonest." ); Kapossy v. McGraw-Hill, Inc., 921 F. Supp. 234, 248 (D.N. J. 1996) (noting that courts "imply a covenant of good fai th and fair dealing in order to protect one party to a contra ct from the other party's bad faith misconduct or collusion w ith third parties where there is no breach of the express t erms of the

21

contract"); see also Restatement (Second) of Contr acts S 205 cmt. a (noting that "[t]he phrase `good faith' is used in a variety of contexts, and its meaning varies somew hat withthe context" and explaining that "[g]ood faith pe rformance

or enforcement of a contract emphasizes faithfuln ess to an agreed common purpose and consistency with the ju stified expectations of the other party; it excludes a va riety of types of conduct characterized as involving `bad faith' because they violate community standards of decen cy, fairness or reasonableness.").10

Section 205 of the Restatement (Second) of Contrac ts provides examples of the types of behavior that c an give rise to a claim for breach of the implied duty of good faith and fair dealing in the context of one's performa nce under

a contract:

Subterfuges and evasions violate the obliga tion of good faith in performance even though the actor believes his conduct to be justified. But the obligatio n goes further: bad faith may be overt or may consist of i naction, and fair dealing may require more than honesty . A complete catalogue of types of bad faith is impossi ble, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slackin g off , willful rendering of imperfect performance, abuse of power to specify terms, and interference with or fa ilure to cooperate in the other party's performance

.

Id. S 205 cmt. d (emphasis added).

Appellants' basic contention is that the circumsta nces of this case demonstrate that there is a genuine iss ue of material fact concerning Essex's lack of good fai th in its

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10. Quite coincidentally this very panel on the sa me day that it heard argument in this case also heard argument in a ca se under Pennsylvania law involving the implied duty of good faith and fair dealing. See Northview Motors, Inc. v. Chrysler Motors Corp., No. 99-3873, 2000 WL 1273953, ___ F.3d. ___ (3d Cir. Sept. 8, 2000). P lainly, New Jersey law imposes a broader obligation on a party to a cont ract than Pennsylvania law to act in good faith in its performance. The parties, however, do

not dispute that New Jersey law applies in this case, and we will decide the

case on that basis.

22

performance of its obligation to remediate the Pro perty and obtain DEP in accordance with Paragraph 16 of the Agreement. They claim that since the DEP approved the Clean-Up Plan in 1985, Essex has not performed it s cleanup in a diligent manner, and in fact, has en gaged inbad faith conduct purposely to protract the proce ss.

According to appellants, Essex's conduct has prec luded them from obtaining the fruits of their contract, i.e., a property that is not environmentally distressed.

We cannot agree that the evidence in this case sup ports the existence of a genuine issue of material fact on the issue of Essex's good faith in its performance of its obligation to remediate and detoxify the Property . In reality, appellants' argument rests exclusively on their s ubjective interpretation of the March 1986 letter in which Benning set forth the following reservations as to whethe r certain aspects of the Clean-Up Plan were reasonable in t he

circumstances:

The clean-up plan calls for the excavation and disposal of the contaminated soil to a level of 1 p pm, . . . based on the requirements of the case manager at BISE. I believe these levels are extremely low and not warranted. . . . We fully intend to remove the

contaminated dirt from the former tank far m area. . . . However to satisfy BISE we are required to perform 15 separate sample analyses in the laboratory instead of using a portable field analyzer to determi ne the extent of pollution and excavation, and to excava te to 1 ppm

residual total VOC in the soil. I believe these requirements are both unreasonable and unw arranted. The clean up plan had to be approved by th e end of 1985 and time was not available to questio n the requirement or to rationally discuss these points. However, the IAG discussion [which Benning attended on March 18, 1986] indicate [sic] that the [DEP] has also been rethinking some of their procedu res and actions. I believe hexane and heptane are classified as hydrocarbon and I believe that a higher le vel than 1 ppm is perfectly justified.

App. at 225a-26a. Appellants claim that this lette r exhibits Essex's lack of good faith and confirms that Esse x

23

attempted to "renege upon the standards set forth in the Cleanup Plan." Br. at 49; reply br. at 22-23.

While the letter questions whether the cleanup lev el of 1 ppm is warranted and whether lab analysis of soil samples is necessary as opposed to Essex merely conductin gfield measurements of the soil, the letter does not dem onstrate a lack of good faith on Essex's part in performin g its obligations pursuant to Paragraph 16 of the Agree ment. First, as we previously mentioned, the letter dis cussesEssex's obligations under the Clean-Up Plan relat ing to soil

remediation, but appellants do not dispute that E ssex has completed its soil remediation and detoxification efforts. In fact, appellants confirmed that Essex began its c leanup of the soil shortly after the sale, and that it comp leted soil remediation sometime within two years. Thus, we f ail to see

how this letter can demonstrate Essex's lack of d iligence in that regard, or how Essex's conduct in questionin g certain aspects of the Clean-Up Plan compromised appellan ts' right

"to receive the fruits of the contract." See Sons of Thunder, Inc., 690 A.2d at 587 (internal quotation marks o mitted).

Moreover, and perhaps more importantly, Benning wr ote

the March 1986 letter after he met with DEP offic ials and discussed the topic of appropriate cleanup levels in soil. The letter specifically states that the "IAG disc ussion on March 18 indicate [sic] that the department has a lso been rethinking some of their procedures and actions." App. at 225a. Thus, while the letter questioned the reaso nableness of certain aspects of the Clean-Up Plan, Benning' s comments indicate that he did so because of his p revious discussions with DEP officials which apparently l ed him to believe that the DEP might no longer view some of its requirements as necessary or appropriate. Thus, w hen viewed in context, the letter does not indicate t hat Essex intended to renege on its obligation to cleanup t he Property, and it does not indicate that Essex performed its contractual obligations with a lack of good faith

.

In any event, Benning's concern over certain aspec ts of the Clean-Up Plan is of no consequence when we co nsider that less than two months later, he wrote a memor andum to Essex officials in which he recognized and re- emphasized

24

Essex's obligation to adhere to the requirements s et forth in Clean-Up Plan. The memorandum states:

Lately we have received letters from NJDEP and have discussed our program and permit applicati ons with

both state and local officials. These disc ussions have led to some very specific program requirem ents and items we must `keep in mind.'

For example:

1. The NJDEP's ECRA office and the departme nt of solid waste management have made it very c lear that we must adhere to the Clean Up Plan .

App. at 227a.Simply put, the fact that Benning questioned certa in

aspects of the Clean-Up Plan is not evidence that Essex acted in bad faith, as the DEP obviously responde d to Benning's concerns by indicating that Essex was o bligated to remediate the Property in accordance with the Clean-Up Plan, and Benning expressly reaffirmed Essex's in tent to comply with its contractual and statutory obligat ions in that regard. Moreover, appellants do not demonstr ate that Essex ever failed to implement a substantive reme diation measure that the DEP required in connection with Essex's cleanup of the Property, and do not dispute that Essex completed soil remediation on the Property within two years of the sale. In our view, Benning's May 1986 memo randum reaffirming Essex's commitment to remediate the P roperty in accordance with the Clean-Up Plan belies appel lants'

assertion that the March 1986 letter evidences Es sex's

intent from the outset to conduct its remediation and detoxification efforts in "bad faith." Reply br. at 23. In the circumstances, we will affirm the district court' s dismissal of appellants' claim that Essex breached the duty of good faith and fair dealing.

3. Appellants' CERCLA Claim (Count III) and Spill Act Claim (Count IV)

Count III of the amended complaint asserts a claim for damages and injunctive and declaratory relief pur suant to CERCLA, and count IV seeks the same relief pursua nt to

25

the Spill Act. As previously mentioned, the distri ct court dismissed the CERCLA claim, reasoning that appell ants had not incurred any compensable "necessary costs of response" pursuant to section 107(a)(4)(B) of CER CLA. See 42 U.S.C. S 9607(a)(4)(B). In particular, the cou rt explained that the only costs that appellants claimed to ha ve incurred were the fees they paid to their environmental co nsultant,

ESI. The district court found that those fees wer e not recoverable under CERCLA "because they had nothin g to do with any effort by plaintiffs to detoxify the Property or to prevent or minimize the release of hazardous subs tances." App. at 14a (emphasis added). The district court explained

that the fees were not recoverable because ESI me rely reviewed the quarterly reports that Essex submitt ed to appellants and the DEP; ESI never visited the Pro perty, monitored the contamination or the cleanup of the Property, or gathered data related to the investi gation or remediation of the Property. The district court s tated that "ESI's fees are those of an ordinary expert witne ss: the fees represent litigation costs, not environmental mon itoringcosts." App. at 15a. Similarly, the court dismiss ed

appellants' Spill Act claim seeking to recover ES I's fees because the fees "are unrelated to any prevention

, mitigation, or remediation of contamination on th e Property." App. at 14a.

The district court also denied appellants' request for a declaration that Essex is liable to appellants fo r any future costs pursuant to CERCLA or the Spill Act. The co urt stated that "[p]laintiffs have utterly failed to make any showing that they are likely to incur any future costs that will be recoverable under CERCLA or the Spill Act . Indeed, it is undisputed that Essex is contractually obli gated to remediate the Property at its own expense." App. at 15a.

Inasmuch as there was "no evidence--or even an al legation --that the plaintiffs intend to participate in fu ture clean-up activities or incur any costs that might be recov erable under CERCLA," the court concluded that granting declaratory relief would be inappropriate.

Finally, the court denied appellants' request for an injunction compelling Essex to commence and compl ete the cleanup on the basis that there was no present ca se or

26

controversy. The court reasoned that "[t]here is n o dispute

that Essex is under both a contractual and statut ory duty to detoxify the Property; nor is there any disput e that Essex has worked continuously to remediate the Property ." The court further explained that "[i]n the absence of evidence that Essex has breached the Agreement or violated CERCLA or IRSA, there is no basis for the injunction tha t plaintiffs seek." App. at 16a.

On appeal from the CERCLA and Spill Act dispositio ns, appellants primarily claim that the district cour t erred in dismissing their CERCLA claim for monetary relief . 11 While

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11. We will address only briefly the several other issues appellants

raise in connection with their CERCLA and Spill Act cla ims pleaded in counts III and IV of the amended complaint. Specifically , appellants maintain that the district court erred in rejecting their request for injunctive

and declaratory relief pursuant to CERCLA, and in dis missing count IV of the amended complaint, their Spill Act claim. First, appellants contend that they are entitled to declaratory relief under CER CLA even if they have not incurred any compensable response costs as of yet, "[p]articularly [because] in light of the inexplicable lack of pr ogress by Defendants in detoxifying the Property to date, Plaintiffs may well be forced to incurfuture response costs to complete [the] detoxific ation. . . ." Br. at 52

(citing Bowen Eng'g v. Estate of Reeve, 799 F. Su pp. 467, 476 (D.N.J. 1992), aff 'd, 19 F.3d 642 (3d Cir. 1994) (table) ). They also state generally that injunctive relief pursuant to CERC LA is appropriate in

the circumstances, but fail to explain the reason for their position on that point. See id.

We reject appellants' arguments in their entirety. First, appellants have not presented any evidence with respect to their request for a declaratory judgment as to future response costs under CERCLA demonstrating that such relief is appropriate. Given our discussion in the text that follows, it is clear that appellants have not incurred any response costs to date, and it is undisputed that Essex, rather than appe llants, is bound contractually to complete the cleanup of the Prop erty and obtain final DEP approval. Thus, there is nothing in the recor d suggesting that appellants ever will incur response costs, and th ere is no potential for injury that is "sufficiently immediate and real" so as to warrant declaratory relief pursuant to section 113(g)(2) of CERCLA, 42 U.S.C. S 9613(g)(2). See Kelley v. E.I. DuPont de Nemour s & Co., 17 F.3d 836, 845 (6th Cir. 1994) (internal quotation marks omi tted); see also United States v. USX Corp., 68 F.3d 811, 819 (3d Cir. 19 95) (quoting statement in Kelly, 17 F.3d at 844, that " `[i]n providing for the recovery of

response

27

appellants have not set forth their CERCLA argumen t in any detail, we understand they predicate it on a belief that they are entitled to recover the amounts paid to appellants' environmental consultant, ESI, as "necessary cost s of response" pursuant to section 107(a) of CERCLA, b ecause those "oversight costs" fall within the scope of either

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costs, Congress included language [in section 113( g)(2)] to insure that a responsible party's liability [for response costs ], once established,

would not have to be relitigated. . . .' ") (emphasis a dded)); The Southland Corp. v. Ashland Oil, Inc., 696 F. Supp. 994, 999 (D.N. J. 1988) ("To be granted a declaratory judgment on the issue of liability, . . . plaintiff[ ]

must establish four factors to satisfy the requirement s of section 107(a)," including "that, as a result [of defendants' cond uct], [plaintiff] has incurred response costs."); compare Bowen Eng'g, 799 F. Supp. at 476 (stating that "[O]nce some expenditure [for respo nse costs] has beenmade, the controversy is sufficiently real to per mit the court to issue

a declaratory judgment on defendant's liability.") (internal quotation

marks omitted). Second, appellants' vague assertion tha t injunctive relief is appropriate in this case, without any further ela boration on that point, is unconvincing.

Finally, we agree with the district court's dispos ition of the Spill Act claim seeking both monetary and equitable relief. While we have considered appellants' argument on this score, wh ich essentially

consists only of a citation to T&E Industries, Inc. v. Saf ety Light Corp., 587

A.2d 1249 (N.J. 1991), we fail to see how the case is germane here because it did not present claims under the Spill Act. In any event, after reviewing the applicable statutory provisions and case law on point, we

are convinced that the district court did not err in dismissing count

IV. Accordingly, we will affirm the court's dismissal of the Spill Act claim

without further discussion. See N.J. Stat. Ann. S 58:10-23.11b.d. (providing definition of "cleanup and removal cos ts" for purposes of Spill Act); id. S 58:10-23.11g.c.(1) (stating that resp onsible persons are "strictly liable, jointly and severally, without regard to fault, for

all cleanup and removal costs no matter by whom incur red") (emphasis added); compare Analytical Measurements, Inc. v. The Keuffel & Esser Co., 843 F. Supp. 920, 929-30 (D.N.J. 1993) (stat ing that costs of the initial soil and groundwater investigation, analy sis of problems and alternatives, excavation of soil, removal of thef irst 600 tons of soil

to Ohio, and design of a groundwater investigation p lan were "clearly recoverable under the Spill Act since they are as sociated with the cleanup and removal of discharged hazardous subst ances"; court also noted that declaratory relief was appropriate bec ause it would "resolve any uncertainties over who is responsible for fut ure cleanups").

28

"removal" or "remedial" action as defined by secti on 101 of CERCLA, 42 U.S.C. S 9601(23), (24). See generally br. at 53 (citing United States v. Lowe, 118 F.3d 399, 401- 02 (5th Cir. 1997), which held, contrary to our decision in United States v. Rohm and Haas Co., 2 F.3d 1265 (3d Cir. 1993), that EPA's costs incurred in oversight of the pri vate party cleanup of site were compensable "response costs" pursuant to section 107(a) of CERCLA). Appellants state that the court erred in finding that ESI's fees w ere those of "an ordinary expert witness," inasmuch as"an `exp ert witness' is clearly required only in the context of litigation while, by contrast, Plaintiffs have been forced t o retain andutilize the expertise of ESI, an environmental co nsultant,

for the past fifteen years due to the lack of pro gress made by Essex with respect to the Property's `detoxifi cation.' " Br.

at 53.

Appellants' argument thus raises the issue of whet her ESI's fees are "necessary costs of response" for which appellants, as private parties, may recover in a suit pursuant to section 107(a)(4)(B) against Essex, t he party indisputably responsible for the cleanup of the P roperty pursuant to the Clean-Up Plan approved by the DEP . To answer that question, we must ascertain the chara cter of the costs in question, and determine whether they fall within the types of costs recoverable by an innoc ent party pursuant to section 107(a)(4)(B) of CERCLA.

We begin with the relevant statutory language. Sec tion 107 of CERCLA, 42 U.S.C. S 9607(a)(4), provides t hat certain enumerated parties "shall be liable for . . . all costs of removal or remedial action incurred by the Uni ted States

Government or a State or an Indian tribe not inco nsistent with the national contingency plan; [and] . . . a ny other necessary costs of response incurred by any other person consistent with the national contingency plan. . . ." The statute defines "response" as "remove, removal, r emedy, and remedial action," and states that these terms include

"enforcement activities related thereto." See CER CLA section 101(25), 42 U.S.C. S 9601(25). It then de fines "remove or removal" and "remedy or remedial actio n" as

follows:

29

(23) The terms `remove' or `removal' means[ sic] the cleanup or removal of released hazardous s ubstances from the environment, such actions as may be necessary taken in the event of the threat of release of hazardous substances into the environment, such actions as may be necessary to monitor, as sess, and

evaluate the release or threat of release of hazardous substances, the disposal of removed materi al, or the taking of such other actions as may be nec essary to prevent, minimize, or mitigate damage to t he public health or welfare or to the environment, w hich may

otherwise result from a release or threat of release. The term includes, in addition, without being limited to, security fencing or other measures to limi t access, provision of alternative water supplies, t emporary evacuation and housing of threatened indiv iduals not otherwise provided for, action taken under section 9604(b) of this title, and any emergency a ssistance which may be provided under the Disaster R elief andEmergency Assistance Act. . . .

(24) The terms `remedy' or `remedial action ' means [sic] those actions consistent with permanent re medy taken

instead of or in addition to removal actio ns in the event

of a release or threatened release of a ha zardous substance into the environment, to prevent or minimize

the release of hazardous substances so tha t they do not migrate to cause substantial danger to present or future public health or welfare or the env ironment. The term includes, but is not limited to, such actions at the location of the release as storage, confin ement, perimeter protection using dikes, trenches , or ditches, clay cover, neutralization, cleanup of rel eased

hazardous substances and associated contam inated materials, recycling or reuse, diversion, destruction, segregation of reactive wastes, dredging o r excavations, repair or replacement of leaking container s, collection of leachate and runoff, onsite treatment o r incineration, provision of alternative wat er supplies, and any monitoring reasonably required to assure that such actions protect the public health and welfare and

the environment. The term includes the cos ts of permanent relocation of residents and busi nesses and

30

community facilities where the President de termines that, alone or in combination with other m easures, such relocation is more cost-effective tha n and environmentally preferable to the transpor tation, storage, treatment, destruction, or secure disposition offsite of hazardous substances, or may ot herwise be necessary to protect the public health or welfare; the term includes offsite transport and offsit e storage, treatment, destruction, or secure disposit ion of

hazardous substances and associated contam inated

materials.

Section 101(23)(24), 42 U.S.C. S 9601(23), (24) (f ootnotes omitted).

As we explained in United States v. Rohm and Haas Co., "[i]n general, removal actions are short term res ponses to a

release or threat of release while remedial actio ns involve long term remedies." 2 F.3d at 1271. Here, while appellants fail to recognize explicitly the distinction betw een"removal" and "remedial" actions and do not attempt to plac e ESI's consultant fees in either category, given the cha racter of the

costs at issue we believe that if the activities involved here are included within the definition of "response c osts," it is because they are "removal" rather than "remedial" actions.Cf. id. (noting that the parties agreed that if t he

government's oversight activities were deemed "ne cessary costs of response," it would be because they were removal actions rather than remedial actions).

Although the district court believed that ESI's co nsulting

fees are best characterized as those of an "ordin ary expert witness," appellants contest that statement by in dicating rather cryptically in their brief that ESI has be en appellants' environmental consultant for "fifteen years with respect to the Property's `detoxification,' " and therefore contend that we cannot consider ESI to be an "exp ert witness" retained only for litigation purposes. W hile appellants fail to cite an applicable portion of the record in support of that statement, our review of the part ies'

submissions confirms that Cohen testified at his deposition that appellants had retained ESI as a consultant as early

as 1987 or 1988. See SA at 527.

31

Nevertheless, based on our study of the record, ex ercising plenary review we conclude that the district cour t did not err in concluding that ESI's consulting fees for which appellants seek reimbursement were litigation-rel ated expenses. Inasmuch as private parties may not rec oup litigation-related expenses in an action to recov er response costs pursuant to section 107(a)(4)(B) of CERCLA, see Key Tronic Corp. v. United States, 511 U.S. 809, 819- 20, 114 S.Ct. 1960, 1967 (1994); Redland Soccer Club, Inc . v. Department of the Army, 55 F.3d 827, 850 (3d Cir. 1995), and appellants do not claim to have incurred any other

costs which fall within the definition of "necess ary costs of response," we agree with the district court's dis position of

the CERCLA claim.

In Redland Soccer Club, we determined that the Red land plaintiffs' litigation costs, which included atto rney's fees, health risk assessments and expert witness fees, were not "response costs" under any of the statutory defin itions

found in section 9601 of CERCLA. 55 F.3d at 849-5 0 & n.12 (citing, inter alia, Key Tronic Corp., 511 U .S. at 819, 114 S.Ct. at 1967, which held that litigation-rel ated attorney's fees were not recoverable in a private response cost recovery action). In reaching our result, we first observed that "under section [107], plaintiffs ma y only recover response costs which are necessary and co nsistent with the [National Contingency Plan]." Id. at 850 . Second, we found that "[t]he heart of these definitions o f removal and remedy are `directed at containing and cleani ng up hazardous releases.' . . . [T]herefore[,] . . . ` necessary costs of response' must be necessary to the containment andcleanup of hazardous releases." Id. (quoting Unit ed States v.

Hardage, 982 F.2d 1436, 1448 (10th Cir. 1992) (al teration in original) (internal quotation marks omitted)). Given that the costs incurred were all litigation-related ex penses unrelated to any remedial or response action at t he property itself, we stated that "we do not believ e the district court erred in determining that plaintiffs' costs are not response costs because they are not `monies . . . expended to clean up sites or to prevent further releases of hazardous chemicals.' " Id. (quoting Redland Soccer Club, I nc. v. Department of Army, 801 F. Supp. 1432, 1435 (M.D. Pa. 1992), aff 'd in relevant part, 55 F.3d 827 (3d C ir. 1995)).

32

Here, as in Redland, the record required the distr ict court

to reach its conclusion that the costs for which the parties involved were seeking reimbursement were litigati on-related expenses, and thus do not fall within the definit ion of "necessary costs of response." We first point out that, notwithstanding appellants' use of ESI's services prior to the commencement of this litigation, the billing statements that appellants submitted as proof of the amounts expended for ESI's service were for "consulting f ees." Importantly, the billing statements cover service s that ESI rendered in connection with the Property intermit tently from November 1996 to May 1998. See SA at 1-17. Obviously, inasmuch as appellants filed their com plaint in the district court in March 1997, appellants are seeking reimbursement for consulting services rendered ju st prior to the time that they commenced this litigation, as well as reimbursement for services during the duration of the proceedings in the district court. The timing of the

transactions demonstrates that the district court correctly concluded that ESI performed consulting services in anticipation of appellants instituting this litig ation, and also performed consulting work during the pendency of this litigation.

In this connection, we find it significant that Co hen prepared an expert report for purposes of this li tigation on behalf of ESI for appellants dated April 28, 1998 , see app. at 412a, and that ESI correspondingly recorded a significant charge on its billing statement to US LR for that billing period. See SA at 13. The only reasonable inference

we can draw from these circumstances is that the "consulting fee" that appellants paid to ESI for that time period represented, at least in significant part, ESI's payment for its preparation of the expert report.

Second, we note that the record reflects, and it i s not disputed, that as appellants' environmental consu ltant,ESI's responsibilities were limited to reviewing Essex's

quarterly reports it submitted to the DEP, and to providing appellants with a summary or analysis of Essex's progress in completing its remediation and detoxification efforts in accordance with the approved Clean-Up Plan. See app. at 466a; see also SA at 527. Indeed, ESI was not inv olved in

33

Essex's cleanup effort; it neither performed an in vestigation of the Property nor gathered data for that purpos e. In our view, the nature of Essex's responsibilities towa rd its

clients as described in the record thus confirms that it was retained to assess, for litigation purposes, whet her Essex was complying with its contractual responsibility to cleanup the Property pursuant to the requirements set out in the Clean-Up Plan.

Moreover, it is relevant to our analysis that Berg er's deposition testimony, as appellants' designated R ule 30(b)(6) witness, is far from illuminating on the necessary costs of response issue. Contrary to the spirit o f Rule 30(b)(6), Berger's evasive answers provide us wit h little assistance in determining the exact purpose for w hich appellants retained ESI, the nature of ESI's serv ices that are referenced cryptically in the billing invoice s in the record, and whether the costs incurred in relatio n thereto were the result of litigation-related consultatio n or were incurred in connection with work performed for so me other purpose. Berger's responses clearly do not sugges t that ESI's consulting fees were anything other than ex penses incurred in connection with the lawsuit that appe llants eventually might file if they were not satisfied with Essex's progress (and ultimately did file) against appell ees. We only need cite the following colloquy between Essex's counsel and Berger, which occurred at his deposition, to illustrate our point:

Q: [Referring to the invoices for ESI] Mr. Berger, have you ever seen those bills before?

A. I have no idea.

Q. Well, then look through them.

A. I could look through them for the next f ive hours and I would have no idea. We've 90 propert ies. I get bills from people. There are bills going i nto 1997 and

before. I have no idea whether I have ever seen these bills or any other bills you might put in front of me today.Q. Mr. Berger, other than the charges repre sented in

those bills, are there any other costs tha t have been

34

expended by any plaintiff for any environme ntal consulting or removal or remediation with respect to the Black Horse Lane property?

A. I have no idea.

Q. Do you know a man named Mr. Irving Cohen ?

A. Yes.

Q. How long have you known him?

A. I would say about ten years.

Q. And in what capacity do you know him?

A. Mr. Cohen was the president of Enviro-Sc iences. It's an environmental consulting firm.

Q. Has that firm ever been used by [appella nt] Black

Horse Lane Associates?

A. I have no idea.

Q. Looking through the exhibits, if you cou ld, could you tell me whether those bills appear to indicate that

such was the case?

A. These bills are--at least the ones that I can see here --are from Enviro-Sciences, Inc. They refe rence Essex Chem, and I will tell you that every one r eferences Essex Chem, except for those that referenc e Black Horse Lane, which is the subject property of this lawsuit. Other than that, I can't tell you anything about these bills. All I'm doing is readin g from the bills for you.

Q. Turn to the bills that talk about Black Horse Lane, Phase One, I believe.

A. There's a bill dated 10-16-97 that says `Phase One,

Black Horse Lane.'

Q. All right. To what does that bill refer?

A. I don't understand the question.Q. What does Phase One, Black Horse Lane re fer to?

A. I have no idea.

35

Q. Did you ever order a Phase One on Black Horse

Lane?

A. I have no idea.

Q. Do you have an understanding what the ph rase `Phase One' means?

A. Yes, I do.

Q. What is that?

A. It's a preliminary environmental report which basically points out areas of potential en vironmental

concern.

Q. Does it include any invasive testing, as far as you

know?

A. Typically, no.

Q. Do you have any idea why Black Horse Lan e would

have ordered a Phase One at or about the t ime period

for which the bill is indicated?

A. Sitting here today, I have no idea why w e did or didn't. I suspect if we did, in fact, orde r one a year ago, at that point I had a reason for it, but I don't know what that reason would be sitting here tod ay. If, in fact, we did order a Phase One. I don't re call that

either.

App. at 544a. Our review of the remainder of Berge r's deposition testimony regarding the nature of ESI' s consulting work for appellants confirms that he f ailed to offer any useful information concerning the factu al basis for appellants' CERCLA response cost claim relating t o the fees paid for ESI's services. See generally app. at 54 4a-49a.

Given the totality of the information in the recor d, we agree with the district court's assessment of the nature of ESI's consulting responsibilities to its client d uring the time period for which appellants seek reimbursement. W e believe that the record requires the conclusion that ESI' s work was designed to assess, for potential or actual litig ation purposes, the extent of Essex's remediation effor ts and itsprogress in that regard. Accordingly, ESI's consu lting fees

charged in connection with its services are not"r esponse

36

costs" that are recoverable in a private cost reco very suit pursuant to section 107(a)(4)(B) of CERCLA.12

In any event, assuming arguendo that we were to ac cept appellants' position that ESI's consulting fees w ere not for strictly "litigation costs" in the sense that app ellants retained ESI's services during the relevant time period solely to assist them in preparing to litigate th is matter, we nevertheless would reach the result we do, primar ily for two reasons. First, appellants cannot reasonably deny that the

record demonstrates that ESI's role was limited t o evaluating Essex's progress on the cleanup effort and to reporting its progress (or lack thereof) to appel lants. Indeed, it is significant that neither appellants nor ESI have played any role in the containment and cleanup of the Pr operty. At best, it appears that ESI served as appellants' environmental advisor in relation to the Property , and that appellants simply monitored, for their own benefi t, Essex's progress in its cleanup efforts. Given that neith er ESI nor appellants were involved in any capacity in the a ctual environmental cleanup of the Property, it is clea r that the fees appellants paid in connection with ESI's con sulting work did not relate to any remedial or response a ction at the Property. As in Redland, the funds for which appellants seek reimbursement were not "necessary to the containment and clean up of hazardous releases," see Redland, 55 F.3d at 850 (emphasis added), inasmuc h as appellants simply had no involvement in any remed ial or removal actions on the Property. Cf. Key Tronic C orp., 511 U.S. at 820, 114 S.Ct. at 1967 (stating that "som e lawyers'

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12. Again, we have not overlooked the circumstance that there are references in the record to the fact that Cohen p erformed some undefined environmental work for appellants prior to the dates found on the billing invoices in the record. See, e.g. , a pp. at 546a (Berger testifying that he had a "general recollection" that Cohen o f ESI performed

"environmental work" for Black Horse Lane Associa tes prior to February 14, 1997). Nevertheless, as we previously stated, the invoices submitted indicate that the environmental consulting for wh ich appellants seek reimbursement in this cost recovery claim began i n November 1996 and continued intermittently through May 1998. Thus, while it appears that ESI performed work for appellants prior to its wo rk for which they seek reimbursement, that fact is irrelevant inasmuch a s appellants only seek

reimbursement for those amounts listed on the bil ling invoices.37

work that is closely tied to the actual cleanup m ay constitute a necessary cost of response in and of itself under the terms of S 104(a)(4)(B)," andfinding th at the component of claim that covers attorneys' work in identifying other potentially responsible parties fell within that category).

Second, inasmuch as ESI's role was limited to revi ewing the manner in which Essex was performing its lega l obligation to remediate the Property and reportin g Essex's progress to appellants, we think it fair to chara cterize ESI as an "overseer" of Essex's progress on behalf of appellants. But our decision in Rohm & Haas precludes appella nts from recovering such "oversight" costs as"respons e costs" pursuant to section 107(a)(4)(B) of CERCLA. In Ro hm & Haas, we held that the EPA could not recover from the statutory responsible party the cost of its "over sight" of the remedial actions performed and paid for by the pr ivate party. See 2 F.3d at 1278. The oversight costs th e EPA incurred there included "direct costs (i.e. , hir ing contractors to provide sampling support and field investigati on) and indirect costs (i.e., travel costs, payroll, hiri ng contractors to review [defendants'] work"). Id. at 1269 n.4 (em phasis added). We stated that the "key issue" was whethe r CERCLA's definition of "removal" should be read " to encompass the government's activity in overseeing a removal or remedial action paid for and conducted by private parties." Id. at 1275.

In reaching our conclusion, we looked to the defin ition of "removal" found in section 101(23) of CERCLA, and noted that "[n]owhere in the definition of removal is t here an explicit reference to oversight of activities con ducted and paid for by a private party." Id. at 1275. Moreov er, we reviewed the five categories in the definition of removal, with particular focus on the third of the five, i .e., "such actions as may be necessary to monitor, assess, a nd

evaluate the release or threat of release of haza rdous substances," as the EPA argued that it was that a spect of the definition that applied to permit recovery of the oversight costs it sought. In analyzing this lang uage, we rejected the EPA's argument that it supported the relief requested, explaining our holding as follows:

38

Examined in a vacuum, this language could be understood to encompass at least some over sight of theactivities of a private party, particularl y private

activities focusing on assessment of the r isk. On the other hand, it is at least as plausible to read this language as referring only to actual monit oring of a

release or threat of release rather than o versight of the monitoring and assessment activities of ot hers. This latter reading would be consistent with an understanding of the definition that disti nguishes at all stages--assessment, response formulation, and

execution--between actions taken to define the scope of the risk created by a release or threat ened release and actions taken to evaluate the performa nce of others to determine whether they are meeti ng their legal obligations. We believe a reading of the statutory

definition that embraces this distinction is linguistically the more plausible one.

Id. at 1275-76. We further concluded that"[a]ll th ings considered, we cannot say that clause [3] of the removal

definition is sufficient to constitute the clear statement of intent required by [National Cable Television Ass 'n, Inc. v. United States, 415 U.S. 336, 342, 94 S.Ct. 1146, 1149-50 (1974) ("NCTA")]."13 Id. at 1276.

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13. Obviously, we premised our result in Rohm & Ha as on our application of the NCTA doctrine, which we believ ed required the EPA to demonstrate "a clear statement of congressional i ntent" for it to

recover the oversight costs as response costs. See 2 F.3d at 1273, 1276. But our application of the NCTA doctrine does not undermi ne our reliance on our statutory interpretation analysis in Rohm & Haas as germane here. Plainly put, we reach our result because the lang uage of the relevant statutory provisions requires that we do so. Inde ed, the only plausible basis for finding that appellants' oversight acti ons through ESI are "removal" activities is if they fall within the t hird category of

"removal" actions, i.e., actions "necessary to monitor, ass ess, and evaluate the

release or threat of release of hazardous substan ces." But as we explained in Rohm & Haas, this language plainly r efers to actual monitoring, assessment or evaluation "of a releas e or a threat of

release." Id. at 1275 (emphasis added). Here, ESI's oversig ht activities, to the extent that we are willing for the sake of argume nt to deem them monitoring, assessment or evaluation activities, were not related to the

release or threat of release of hazardous substan ces. Rather, the object of ESI's reports, insofar as we can tell from the record, was to analyze Essex's removal activities, including its cleanup , disposal, monitoring and assessment actions, as described in its quart erly reports to the

DEP.

39Our interpretation of the removal definition as ex cluding

the sort of "oversight" costs that the EPA sought in Rohm & Haas compels the conclusion that appellants canno t recover the funds paid to ESI for its consultant work, even though appellants are private entities rather tha n a governmental agency. As in Rohm & Haas, appellant s seek reimbursement from Essex, the responsible party, for costs appellants incurred in monitoring the responsible party's compliance with its legal obligations. See Rohm & Haas, 2 F.3d at 1279 n.23 ("The oversight costs here held to be

non-recoverable are incurred at a different level of supervision. They are the costs of overseeing the performance of the entity that has assumed respon sibility for the cleanup."). Indeed, there is no dispute i n this case that Essex is bound contractually to complete rem ediation and detoxification of the Property, and that appe llants have not assisted Essex in meeting its statutory and c ontractual obligations. In this sense, then, the district co urt was

correct in its observation that the costs for whi ch appellants seek reimbursement were not incurred a s a result of appellants' actions in cleaning up the Property.

Obviously then, inasmuch as our holding in Rohm & Haas precludes the EPA from seeking reimbursement for "oversight" costs incurred in overseeing the perf ormance of a private entity where a private party has assume d responsibility for the cleanup, an analysis of th e scope of the "removal" definition necessarily requires us to reach the same result in a situation where a private party seeks reimbursement for overseeing another private part y's legal obligation to cleanup a property. In short, we ar e satisfied that Congress did not intend section 107(a)(4)(B) to provide a private party with a cause of action against a responsible party for reimbursement of the party's expenses i n retaining an environmental consultant for oversig ht purposes without direct involvement in the respon sible party's remediation and detoxification efforts.

In sum, we are convinced that the district court c orrectly determined that appellants could not recover, pur suant to section 107(a)(4)(B) of CERCLA, the monies they e xpended in consulting fees in connection with ESI's servi ces during the relevant time period. We will affirm the dist rict court's

40

dismissal of appellants' private cost recovery act ion pleaded in count III of the amended complaint.14

B. District Court's Final Order of December 16, 1999Appellants next contend that the district court er red in

affirming the magistrate judge's letter opinion a nd order entered June 30, 1999, which granted appellees' m otion for discovery sanctions against appellants pursuant t o Rule 37(b) and (d).15 As we previously mentioned, the magistrate

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14. We also will dismiss appellants' Spill Act cla im under Count IV. See n.11, supra. Moreover, as we previously mentioned , count V of the complaint pleaded a claim for "damages" stemming from appellees' alleged "acts, omissions and breaches." App. at 6 6a. The district court dismissed this count, stating that "[b]ecause pla intiffs have failed to adduce sufficient evidence in support of their br each of contract claims, they cannot recover the damages outlined in Count Five of the Complaint." Id. at 16a. Inasmuch as we agree with the district court's dismissal of counts I through IV of the complaint , we will affirm the district court's dismissal of count V, as there i s no independent substantive basis for appellants' claim for relie f.

15. Appellants also maintain that the district cou rt erred in dismissing appellees' counterclaim without prejudice. The co unterclaim sought a declaratory judgment that remediation of the Prop erty under the Agreement included use of "engineering and instit utional controls," and an order requiring appellants to consent to them. App. at 80a-81a. Appellees explain that their counterclaim actuall y sought an order compelling appellants to consent to their use of a Classification Exception Area ("CEA"), which is "a remediation b y passive rather than active means." App. at 845a.

As we previously mentioned, appellants initially s ought partial summary judgment to dismiss the counterclaim with prejudice, but the

district court denied their motion in its order o f August 10, 1999, reasoning that appellants failed to demonstrate t hat they were entitled

to judgment as a matter of law. The court observed t hat appellants failed to cite any authority in support of the motion, a nd"merely allege[d]

that `Plaintiffs do not and need not consent' to the e ngineering and institutional controls." App. at 16. After the co urt dismissed the amended complaint in its entirety, appellees move d for summary judgment on the counterclaim. After oral argument on appellees' motion, the court entered an order dismissing the counter claim without

41

judge agreed with appellees' argument that Berger' s conduct warranted a sanction in the form of precl uding appellants from asserting a position and introduc ing evidence contrary to the position Berger asserted during his deposition. In addition, the magistrate judge con cluded thatBerger's lack of preparedness at his deposition j ustified the

imposition of monetary sanctions pursuant to Rule 37(d) in the form of costs and attorney's fees associated with taking the deposition and bringing the sanctions motion before the court. App. at 22a. The magistrate judge clearly set forth the factual and legal basis for his ruling, relyi ng primarily on the Court of Appeals for the Fifth Circuit's d ecision in Resolution Trust Corp. v. Southern Union Co., 985 F.2d 196 (5th Cir. 1993) ("Southern Union"):

Here, Berger was not completely prepared on any occasion for which he sat for a deposition . Further, his

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prejudice, because, in its view, there was no curr ent case or controversy with respect to the subject matter of the counter claim.

We have reviewed the entire record, and we agree w ith the district court's disposition of the counterclaim. It appea rs that the appellees instituted the counterclaim in response to certai n statements by appellants to the effect that they would not cons ent to the use of a CEA to remediate the Property, and would oppose any a pplication that Essex made to the DEP for that purpose. Appellees' br. at 14. Nevertheless,

the court's dismissal of the counterclaim was appropr iate because appellees do not dispute that Essex has not applied for a C EA, and presently cannot do so. Accordingly, appellants' threats to the effect that they would not consent to the use of a CEA do not pres ent a controversy ripe for resolution, and the court did not err in dism issing the counterclaim without prejudice for lack of subject matter juri sdiction. See, e.g., Philadelphia Fed'n of Teachers v. Ridge, 150 F.3d 319, 323 (3d Cir. 1998) (discussing and applying ripeness doctrine in context of claims seeking declaratory relief, and noting that "[t]h e function of the ripeness doctrine is to prevent federal courts, `through a voidance of premature adjudication, from entangling themselves in abstr act disagreements.' ") (quoting Abbot Labs v. Gardner, 387 U.S. 136, 148 , 87 S.Ct. 1507 (1967), overruled on other grounds, Califano v. S anders, 430 U.S. 99, 105, 97 S.Ct. 980 (1977)); The Presbytery of N.J. v. Florio, 40 F.3d at 1462 (addressing ripeness issue in context of sui t seeking declaratory relief and stating that "[i]t is the plaintiff 's responsibility to allege

facts that invoke the court's jurisdiction").

42

lack of preparation cannot be a mere oversi ght but is, instead, a clear demonstration of bad fait h. This is obvious from Berger's repeated denial of a ny knowledge of his status as a 30(b)(6) witness despit e being present at the deposition and being asked each and every timehe appeared if he had knowledge of his sta tus. Further,

Berger, as did the plaintiffs' witness in Resolution Trust Corp., even denied knowledge of documents which he himself had signed, claiming that he had n o recollection of such documents despite ack nowledging that he normally did not sign anything tha t he did not

read first. These infractions would not be so detrimental if Berger were no so consisten t with his apparent incompetence and lack of cooperat ion. Had he taken the time to prepare in the slight est as Rule 30(b)(6) requires, he might have been full y prepared for at least one deposition. Additionally, Ber ger's actions are magnified by his status as a member of the Bar.

App. at 21a.

In affirming the magistrate judge's order, the dis trict court provided its reasons on the record:

I read the record. It is appalling. It is a ppalling.

[Berger] did nothing except show his face only under

the threat of court orders. When he showed up, he knew he was a 30(b)(6) witness and, notwit hstanding the fact that he knew he was a 30(b)(6) wi tness, he refused to answer questions in an intellig ent way. He refused to prepare, as you are required to prepare under 30(b)(6), to intelligently answer qu estions and just literally thumbed his nose at the def endants and, frankly, at the Court.

. . . .

I'm satisfied, based upon my review of the record--and I defy anyone to look at the record here w hich was created by Mr. Berger--that the actions ta ken by[the magistrate judge] were well within his dis cretion and

do not constitute either an abuse of discr etion or are they contrary to law or shocking to the co nscience of

the Court.

43

One, in order to come to that conclusion, one must live in the shoes of [the magistrate judge ] in trying to conduct orderly discovery in this matter.

One must review meticulously the record of noncompliance by Mr. Berger in this matter

.

[The magistrate judge] did not issue this opinion lightly. [The magistrate judge] was fully cognizant ofthe totality of the facts surrounding this matter, which

border upon almost conscious disregard of the Court

and the court rules. . . .

Affirmed.

App. at 836a, 843a-44a.

Appellants make two arguments in support of their request to vacate the monetary sanctions order. 1 6 They first

claim that the district court abused its discreti on in affirming the magistrate judge's monetary sanctio ns because the court misunderstood the requirements for

imposing sanctions pursuant to Rule 37(d). They a ssert that Rule 37 required as a prerequisite to imposi ng a monetary sanction that the court first issue an o rder compelling appellants to supply the requested dis covery responses, and then find that they failed to do s o. See Reply Br. at 29. They further claim that pursuant to Rule 37(d), "a party making a motion based upon an all eged violation of Rule 37(d) must certify that the mov ant has in good faith conferred or attempted to confer with the party failing to answer or respond in an effort to obta in such answer or response without court action," but tha t there was no such "good faith" effort by appellees to r esolve the

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16. Appellants also claim that the court abused it s discretion in granting appellees' motion pursuant to Rule 37(b) to the e xtent that it precluded appellants from asserting at trial a position whi ch differs from Berger's testimony. Given that we are affirming the summar y judgment dismissing the amended complaint in its entirety, we need not address this argument. Also, appellants apparently conten d that the court erred in awarding a monetary sanction pursuant to Rule 37(b)(2). This argument is without merit, as it is clear to us t hat the court awarded attorney's fees and costs pursuant to subdivision (d) of Rule 37 rather than subdivision (b). See App. at 22a (citing Rul e 37(d)).

44

dispute without court action. Reply Br. at 30 (int ernal quotation marks omitted).

Finally, they rely on the fact that Rule 37(d) sta tes that sanctions may be imposed when a party, inter alia , "fails . . . to appear before the officer who is to take the deposition, after being served with a proper noti ce." Here, they argue that we should apply the "fails to app ear" language literally, and that sanctions were inapp ropriate inthis case because Berger appeared for his deposit ion after

the magistrate judge's October 15, 1998 order and "testified

under oath for more than seventeen hours." Br. at 59-60. In support of their literal reading of Rule 37(d), t hey rely primarily on the Court of Appeals for the First C ircuit's opinion in R.W. International Corp. v. Welsh Food s, Inc., 937 F.2d 11 (1st Cir. 1991), which stated that "Rule 37(d) sanctions apply only when a deponent `literally f ails to show up for a deposition session.' " Id. at 15 n .2 (quoting Salahuddin v. Harris, 782 F.2d 1127, 1131 (2d Cir . 1986)).

Their second argument is based on their interpreta tion of Berger's behavior during his deposition. They cla im that even if we agree with the magistrate judge's find ing that Rule 37(d) could support the imposition of sancti ons when a Rule 30(b)(6) witness provides inadequate and e vasive answers, the record demonstrates that Berger's de position did not present a situation warranting sanctions. They claim that "[a] fair examination of the transcrip t of Mr. Berger's 570-page deposition confirms that Mr. Be rger testified fully and in good faith in response to Defendants' questioning." In any event, they maintain that"an y `violation' of Rule 30(b)(6) which might be said to have existed was minimal, and indeed, paled in compari son with the extraordinarily broad discovery obtained by D efendants

in this matter." Br. at 63.

We are not persuaded by either contention. Beginni ng with appellants' interpretation of the language o f Rule 37(d),17

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17. Rule 37(d) provides:

(d) Failure of Party to Attend at Own Depos ition or Serve Answers

to Interrogatories or Respond to Request for Inspection. If a party

or

an officer, director, or managing agent of a party or a person designated

45

they simply are incorrect that the magistrate judg e committed an error of law in awarding a monetary sanction to appellees. Initially, we point out that unlike subdivision (b) of Rule 37, on its face subdivision (d) does not require the court, prior to imposing sanctions, to have i ssued an order compelling discovery. See Al Barnett & Son, Inc. v. Outboard Marine Corp., 611 F.2d 32, 35 (3d Cir. 1 979) ("[A] direct order by the Court, as Rule 37(a) and (b) requires, is not a necessary predicate to imposing penalties u nder Rule37(d)."), repudiated on other grounds, Alexander v. Gino's

Inc., 621 F.2d 71 (3d Cir. 1980); compare Fed. R . Civ. P. 37(b)(2) ("If a party . . . or a person designate d under Rule 30(b)(6) . . . fails to obey an order to provide or permit discovery, including an order made under subdivis ion (a) of this rule . . . .") with Fed. R. Civ. P. 37(d) (s tating that if the party fails, inter alia, to appear for a depositi on, "the court . . . may make such orders in regard to the failu re as are just"). Moreover, while appellants claim that sub division (d)

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under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails
( 1) to appear before the officer who is to take t he deposition, after being served with a proper notice, or (2) to ser ve answers or objections

to interrogatories submitted under Rule 33, a fter proper service of

the interrogatories, or (3) to serve a written response to a request

for inspection submitted under Rule 34, after proper service of the request, the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others it may take any action authorized u nder subparagraphs (A), (B), and (C) of subdivision (b)(2) of this rule. Any motion specifying a failure under clause (2) or (3) of this subdivision shall

include

a certification that the movant has in good faith conferred or attempted to confer with the party failing to answer or respond

in

an effort to obtain such answer or response w ithout court action. In lieu of any order or in addition thereto, the court shall require

the party failing to act or the attorney advis ing that party or both

to

pay the reasonable expenses, including attorne y's fees, caused by the

failure unless the court finds that the fa ilure was substantially justified or that other circumstances make an award of expenses unjust.

The failure to act described in this subdi vision may not be excused on the ground that the discovery s ought is objectionable unless the party failing to act has a pend ing motion for a protective order as provided by Rule 26(c).

46requires the party seeking sanctions to certify in their

motion papers that they conferred or attempted to confer in good faith with the party failing to answer or re spond in an effort to avoid court intervention, subdivision ( d) explicitly only requires such a certification where the moti on specifies a failure "under clause (2) or (3) of this subdiv ision." Fed. R. Civ. P. 37(d). Here, appellees made the motion for sanctions based on clause (1) of subdivision (d), which deals with a party's failure "(1) to appear befor e the officer who is to take the deposition." Id.

In addition, while we recognize that the court's s tatement in Welsh Foods supports appellants' interpretatio n of the language of Rule 37(d)--namely that it requires a n actual "no show" to satisfy the "fails to appear" requir ement in subdivision (1)--they apparently have overlooked the circumstance that the magistrate judge's decision relied on Southern Union, 985 F.2d 196. Importantly, in Sou thern Union the Court of Appeals for the Fifth Circuit rejected a literal interpretation of Rule 37(d) in situation s where the uncooperative deponent is a party's Rule 30(b )(6) designated witness.

In Southern Union the defendant Southern Union Co. ("Southern Union") served notice on the RTC that it intended to depose it pursuant to Rule 30(b)(6), and set forth with specificity ten discrete topics with w hich the deponent was to be familiar. After the RTC design ated two individuals as Rule 30(b)(6) deponents, Southern Union's representatives traveled from Washington, D.C. to Dallas, Texas, to conduct the depositions. Neither repres entative, however, possessed any knowledge relevant to the matters designated in the Rule 30(b)(6) notice. Consequen tly, Southern Union moved for sanctions, and the distr ict court granted the motion, awarding costs and fees incur red in deposing the RTC's two witnesses and in identifyi ng ultimately the proper deponent with knowledge of the

relevant facts. See id. at 196-97.

Relying upon the Court of Appeals for the Second Circuit's opinion in Salahuddin, a case cited sub sequently in Welsh Foods, the RTC contended that sanctions pursuant to Rule 37(d) were not appropriate becau se both witnesses literally appeared for their deposition s, albeit that

47

neither was helpful or forthcoming with pertinent information. The Court of Appeals for the Fifth C ircuitrejected that argument, reasoning:

Were we here faced with a case involving th e deposition of a natural person we might be inclined t o agree with the reading of Rule 37(d) by our Second Ci rcuit colleagues [in Salahuddin]. The deposition of a corporation, however, poses a different pr oblem, as reflected by Rule 30(b)(6). Rule 30(b)(6) streamlines the discovery process. It places the burden of identifying responsive witnesses for a corporation on the corporation. Obviously, this presents a po tential for abuse which is not extant where the party noticing the deposition specifies the deponent. When a corporation or association designates a person to test ify on its behalf, the corporation appears vicariousl y through that agent. If that agent is not knowledge able about relevant facts, and the principal has fail ed to designate an available, knowledgeable, and readily i dentifiable witness, then the appearance is, for all p ractical purposes, no appearance at all.

In the instant case, RTC possessed documen ts that clearly identified [the eventual deponent] as having personal knowledge of the subject of the d eposition.

RTC did not furnish those documents or des ignate [that deponent] until after it had designa ted Perry and Wieting, obliged Southern Union's counsel to travel from Washington, D.C. to Dallas for a usel ess deposition, and been served with Southern Union's motion for sanctions. The finding that RTC did not make a meaningful effort to acquit its dut y to designate an appropriate witness is manifest. The di strict court did not abuse its discretion in awarding f ees and costs under Rule 37(d).

Id. at 197-98.

Following the reasoning in Southern Union, several courts similarly have read the phrase "fails . . . to ap pear" in Rule 37(d) pragmatically in light of the purposes of R ule 30(b)(6) and the parties' obligations thereunder. See, e.g ., Starlight Int'l Inc. v. Herlihy, 186 F.R.D. 626, 639 (D. Ka n. 1999)

48

("Corporations, partnerships, and joint ventures h ave a duty to make a conscientious, good-faith effort t o designate knowledgeable persons for Rule 30(b)(6) depositio ns and to prepare them to fully and unevasively answer ques tions about the designated subject matter."); The Bank of New York v. Meridien Biao Bank Tanzania Ltd., 171 F.R .D. 135, 151 (S.D.N.Y. 1997) (" `Producing an unprepared w itness istantamount to a failure to appear.' ") (quoting U nited States

v. Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996)); Taylor, 166 F.R.D. at 363 ("[I]nadequate preparation of a Rule 30(b)(6) designee can be sanctioned based on the lack of good faith, prejudice to the opposing side, and d isruption of the proceedings."); Zappia Middle East Constr. Co . v. The Emirate of Abu Dhabi, No. 94-1942, 1995 WL 686715 , at *8 (S.D.N.Y. Nov. 17, 1995) (agreeing with rule anno unced in Southern Union that providing a wholly inadequate witness may amount to non-appearance under Rule 30(b)(6), but finding that sanctions were not warranted in the circumstances of that case); Municipal Subdistric t, Northern Colo. Water Conservancy District v. OXY USA, Inc. , 990 P.2d 701, 710 (Colo. 1999) (en banc) (following Southe rn Union, 985 F.2d at 197, and holding that trial court may issue sanctions for failure to appear under Col. R. Civ . P. 37(d)-- the state's analogue to Fed. R. Civ. P. 37(d)--wh en a corporation designates a deponent who appears but is unable to answer all the questions specified in t he Col. R. Civ. P. 30(b)(6) notice); see also, e.g., Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 78-79 (S.D.N. Y. 1991) ("[A] party that fails to provide witnesses knowl edgeable in the areas requested in a Rule 30(b)(6) notice is likewise subject to sanctions."); Thomas v. Hoffman-LaRoch e, Inc., 126 F.R.D. 522, 525 (N.D. Miss. 1989) ("Sanctions are appropriate when a party fails to comply with a r equest under Rule 30(b)(6) to provide a knowledgeable de ponent to testify on behalf of the organization."); see gen erally Boland Marine & Mfg. Co. v. M/V Bright Field, No. 97-309 7, 1999 WL 280451, at *3 (E.D. La. May 3, 1999) (acknowle dging the rule announced in Southern Union butfinding t hat deponent was prepared adequately and that sanctio ns were not warranted).

We agree with the distinction the Court of Appeals drew

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in Southern Union, and find its analysis persuasiv e.18 In reality if a Rule 30(b)(6) witness is unable to g ive useful information he is no more present for the deposit ion than would be a deponent who physically appears for th e deposition but sleeps through it. Indeed, we beli eve that the purpose behind Rule 30(b)(6) undoubtedly is frust rated in the situation in which a corporate party produces a witness who is unable and/or unwilling to provide the nec essary factual information on the entity's behalf. See g enerally Fed. R. Civ. P. 30 advisory committee's notes (st ating that the procedure outlined in subdivision (b)(6) shou ld be viewed as "an added facility for discovery" and w ould "curb the `bandying' by which officers or managing agen ts of a corporation are deposed in turn but each disclaim sknowledge" of relevant facts). "For courts to per mit litigants

to disregard the responsibilities that attend the conduct of litigation would be tantamount to `encouraging di latory tactics.' " Al Barnett & Son, Inc., 611 F.2d at 3 5 (quoting Cine Forty-Second Street Theatre v. Allied Artist s Pictures Corp., 602 F.2d 1062, 1068 (2d Cir. 1979)). Thus, we hold that when a witness is designated by a corporate party to speak on its behalf pursuant to Rule 30(b)(6), "[ p]roducing an unprepared witness is tantamount to a failure to appear" that is sanctionable under Rule 37(d). Se e Taylor, 166 F.R.D. at 363. Accordingly, we conclude that the

district court did not commit an error of law in affirming the magistrate judge's sanctions order entered pu rsuant to Rule 37(d), as the magistrate correctly applied t he Court of Appeals for the Fifth Circuit's construction, whi ch we

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18. We point out that the cases appellants cite in addition to Welsh Foods in further support of their argument are eq ually unhelpful, as

none of them involved a situation in which the un cooperative and/or unknowledgeable witness was a corporate entity's Rule 30(b)(6) designee. See, e.g., Estrada v. Rowland, 69 F.3d 405, 405-0 6 (9th Cir. 1995) (deponent was plaintiff pursuing action pursuant to 42 U.S.C. S 1983 against prison officials); Aziz v. Wright, 34 F.3 d 587, 588-89 (8th Cir. 1994) (same); Salahuddin, 782 F.2d at 1131 (same) ; Stevens v. Greyhound Lines, Inc., 710 F.2d 1224, 1228 (7th C ir. 1983) (deponent was plaintiff in employment discrimination suit); SEC v. Research Automation Corp., 521 F.2d 585, 587 (2d Cir. 1975 ) (deponent was individual defendant and president of corporate d efendant).

50

approve, of the phrase "fails . . . to appear" in Southern

Union.

We reject appellants' final contention that Berger 's responses during his deposition did not support t he district court's finding that he failed to cooperate with appellees' attorneys, and that his conduct was tantamount to a failure to appear that warranted sanctions under Rule 37(d). To the contrary, our review of Berger's de position testimony in its entirety confirms the observatio ns of both the magistrate judge and the district court on th is point. Indeed, throughout his lengthy deposition, Berger failed to offer meaningful testimony about most, if not all , of the items specified in the notice of deposition. Whil e we need not recite every instance in which Berger's testi mony was incomplete and unhelpful on the specified topics, we believe that two examples of his uncooperative attitude a nd his flagrant disregard for his obligation as a Rule 3 0(b)(6) witness amply illustrate our point.First, when Berger was asked about the Agreement h e

signed between USLR and Essex, he stated that he had no recollection of (1) seeing or signing the Agreeme nt, (2) negotiating the Agreement (or who participated in its negotiation), (3) drafting the various provisions in the Agreement (or who participated in its drafting), or (4) the circumstances surrounding the purchase of the Pro perty, i.e., if he attended the closing and where it occ urred, even though he admitted that he was personally involve d in the purchase of the Property and "probably negotiated the contract." See app. at 525a. Second, when asked a bout any and all cleanup costs appellants' incurred as a r esult of the contamination on the Property, Berger testified t hat he did not know: (1) whether appellants spent any money to cleanup hazardous waste; (2) whether appellants p erformed any environmental evaluation or investigation on the Property, whether they incurred costs in doing so , and whether there are any records that such tests wer e performed; (3) whether appellants hired ESI to pe rform consulting services for the Property, and if so, the dates and purposes for which appellants retained ESI; ( 4) whether ESI's billing statements in the record re flected work performed on the Property or other unrelated services;

51

and (5) whether appellants performed any removal o r remedial actions on the Property. App. at 521a, 5 23-25a,

544a-49a.

Obviously, as appellants' Rule 30(b)(6) witness, B erger should have been prepared to discuss these and ot her topics designated in the notice of deposition. In stead, he divulged as little information as possible in eve ry area that appellees identified. Moreover, Berger's uncooper ative attitude is demonstrated further by statements in which he claimed that he was unaware that he was appellant s' designated Rule 30(b)(6) representative, did not know what the phrase "Rule 30(b)(6) representative" meant, and was not familiar with Rule 30(b)(6) or what it requir ed him to do. App. at 513a-14a, 527a, 544a. He also admitte d at one point that he did not recall whether he reviewed the notice of deposition prior to the date of the deposition , app. at 527a, and later stated clearly that he had not bo thered to read it at all. App. at 610. Simply put, we find his professed ignorance on these points particularly unconvinci ng given that he obtained undergraduate and law degrees fr om prestigious universities and has been licensed to practice law since "either [19]65 or [19]66." App. at 508a

.

In any event, we believe that the magistrate judge 's finding that Berger engaged in discovery abuses p lainly isjustified on this record. The magistrate judge ha d ample

evidence of Berger's failure to cooperate, which in turn rendered his deposition a virtual non-event. Acco rdingly, we will affirm the monetary sanctions ordered pursua nt to Rule 37(d).

IV. CONCLUSION

For the foregoing reasons, the district court's or ders of August 10, 1999, and December 16, 1999, will be a ffirmed.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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