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Matched Legal Cases: ['§ 78', '§ 519', '§ 520', '§ 1', '§ 13', '§ 13', '§ 1', '§ 86', '§ 520', '§ 2', '§ 11', '§ 4', '§ 28', '§ 8', '§ 41', '§ 41', '§ 914', '§ 1']

State, Dept. of Environ. Protect. v. Ventron Corp. :: 1983 :: Supreme Court of New Jersey Decisions :: New Jersey Case Law :: New Jersey Law :: US Law :: Justia
Justia › US Law › Case Law › New Jersey Case Law › Supreme Court of New Jersey Decisions › 1983 › State, Dept. of Environ. Protect. v. Ventron Corp.
State, Dept. of Environ. Protect. v. Ventron Corp.
94 N.J. 473 (1983)
468 A.2d 150
STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, PLAINTIFF-RESPONDENT, v. VENTRON CORPORATION, A MASSACHUSETTS CORPORATION; WOOD RIDGE CHEMICAL CORPORATION, A NEVADA CORPORATION AND VELSICOL CHEMICAL CORPORATION, DEFENDANTS-APPELLANTS, AND ROBERT M. WOLF & RITA W. WOLF, HIS WIFE, DEFENDANTS-RESPONDENTS, AND UNITED STATES LIFE INSURANCE COMPANY, A NEW YORK CORPORATION AND F.W. BERK AND COMPANY, INC., DEFENDANTS. and ROVIC CONSTRUCTION CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, BY ITS STATUTORY RECEIVER, JOSEPH KEANE, INTERVENOR-PLAINTIFF, v. VENTRON CORPORATION, A MASSACHUSETTS CORPORATION; WOOD RIDGE CHEMICAL CORPORATION, A NEVADA CORPORATION; VELSICOL CHEMICAL CORPORATION AND F.W. BERK & CO., INC., DEFENDANTS. and MOBIL OIL CORPORATION, CHEVRON U.S.A., INC., TEXACO, INC. AND EXXON COMPANY, U.S.A., FOREIGN CORPORATIONS AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW JERSEY, PLAINTIFFS, v. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION AND STATE OF NEW JERSEY, DEPARTMENT OF THE TREASURY, SPILL COMPENSATION FUND, DEFENDANTS.
*480 Harry R. Hill, Jr., argued the cause for appellants Ventron Corporation, etc., et al. (Backes, Waldron & Hill, attorneys; Michael J. Nizolek, on the brief).
Adrian M. Foley, Jr., argued the cause for appellant Velsicol Chemical Corporation (Connell, Foley & Geiser, attorneys; Adrian M. Foley, Jr., and John F. Neary, of counsel; John F. Neary, on the briefs).
*481 Murry D. Brochin argued the cause for respondents Robert M. Wolf, et al. (Lowenstein, Sandler, Brochin, Kohl, Fisher & Boylan, attorneys; Deanne Wilson Plank, on the brief).
Ronald P. Heksch, Deputy Attorney General, argued the cause for respondent State of New Jersey, etc. (Irwin I. Kimmelman, Attorney General of New Jersey, attorney; Michael R. Cole, Assistant Attorney General, of counsel).
Barry H. Evenchick, Special Counsel, submitted a letter in lieu of brief on behalf of State of New Jersey, Department of the Treasury, Spill Compensation Fund.
Beneath its surface, the tract is saturated by an estimated 268 tons of toxic waste, primarily mercury. For a stretch of several thousand feet, the concentration of mercury in Berry's Creek is the highest found in fresh water sediments in the world. The waters of the creek are contaminated by the compound methyl mercury, which continues to be released as the mercury interacts with other elements. Due to depleted oxygen levels, fish no *482 longer inhabit Berry's Creek, but are present only when swept in by the tide and, thus, irreversibly toxified.
After a fifty-five-day trial, the trial court determined that Berk and Wood Ridge were jointly liable for the cleanup and removal of the mercury; that Velsicol and Ventron were severally liable for half of the costs; that the Wolfs were not liable; and that, while the Spill Act liability provisions did not apply retroactively, monies from the Fund should be made available. The trial court also granted judgment in favor of the Wolfs on their cross-claim against Ventron for fraudulent nondisclosure of mercury pollution in the sale of part of the tract. That judgment included an award of costs and counsel fees incurred by the Wolfs in their defense of the DEP action. Following the entry of judgment, the trial court entered a "Procedural Order *483 Involving Remedy," which approved for submission to the United States Army Corps of Engineers the DEP plan for the cleanup of Berry's Creek.
In 1960, Velsicol formed Wood Ridge as a wholly-owned subsidiary for the sole purpose of purchasing Berk's assets and operating the mercury processing plant. In 1967, Wood Ridge *484 subdivided the tract and declared a thirty-three-acre land dividend to Velsicol, which continued to permit Wood Ridge to dump material on the thirty-three acres. As a Velsicol subsidiary, Wood Ridge continued to operate the processing plant on the 7.1-acre tract from 1960 to 1968, when Velsicol sold Wood Ridge to Ventron.
Ventron's action was consistent with a heightened sensitivity in the 1960's to pollution problems. Starting in the mid-1960's, DEP began testing effluent on the tract, but did not take any action against Wood Ridge. The trial court found, in fact, that *485 the defendants were not liable under intentional tort or negligence theories.
Although Wolf knew he was buying from a chemical company land that had been the site of a mercury processing plant, Ventron knew other material facts that it did not disclose to the Wolfs. Ventron knew that the site was a man-made mercury mine. From a study conducted by Metcalf & Eddy at Ventron's request in 1972, Ventron knew the mercury content of the soil. Although the soil and water adjacent to the plant were still *486 contaminated in 1974, that fact was not readily observable to the Wolfs, and Ventron intentionally failed to advise the Wolfs of the condition of the site and to provide them with the relevant part of the Metcalf & Eddy report. Based on these factual findings, the lower courts concluded that Ventron fraudulently concealed material facts from the Wolfs to their detriment. The trial court limited damages, however, to the recovery of the actual costs of the containment system on the 7.1-acre tract and other costs of abating the pollution. In affirming, the Appellate Division extended damages to include diminution in the fair market value of the premises below the purchase price because of the undisclosed mercury contamination. Both courts awarded to the Wolfs those counsel fees and costs incurred in defending the DEP action.
The trial court also determined that the 1977 Spill Act did not impose retroactive liability for discharges of mercury into a waterway of the State. After the entry of the judgment, *487 however, the Legislature amended the act to impose retroactive strict liability on "[a]ny person who has discharged a hazardous substance or is in any way responsible for any hazardous substance" being removed by DEP. See N.J.S.A. 58:10-23.11g(c).
The lower courts imposed strict liability on Wood Ridge under common-law principles for causing a public nuisance and for "unleashing a dangerous substance during non-natural use of the land." 182 N.J. Super. at 219. In imposing strict liability, those courts relied substantially on the early English decision of Rylands v. Fletcher, L.R. 1 Ex. 265 (1866), aff'd, L.R. 3 H.L. 330 (1868). An early decision of the former Supreme Court, Marshall v. Welwood, 38 N.J.L. 339 (Sup.Ct. 1876), however, rejected Rylands v. Fletcher. But see City of Bridgeton v. B.P. Oil, Inc., 146 N.J. Super. 169, 179 (Law Div. 1976) (landowner is liable under Rylands for an oil spill).
Twenty-one years ago, without referring to either Marshall v. Welwood or Rylands v. Fletcher, this Court adopted the proposition that "an ultrahazardous activity which introduces an unusual danger into the community ... should pay its own way in the event it actually causes damage to others." Berg v. Reaction Motors Div., Thiokol Chem. Corp., 37 N.J. 396, 410 (1962). Dean Prosser views Berg as accepting a statement of principle derived from Rylands. W. Prosser, Law of Torts § 78 at 509 & n. 7 (4th ed. 1971).
In imposing liability on a landowner for an ultrahazardous activity, Berg adopted the test of the Restatement of the Law of *488 Torts (1938). See id., §§ 519-20. Since Berg, the Restatement (Second) of the Law of Torts (1977) has replaced the "ultrahazardous" standard with one predicated on whether the activity is "abnormally dangerous." Imposition of liability on a landowner for "abnormally dangerous" activities incorporates, in effect, the Rylands test. Restatement (Second) § 520, comments (d) & (e).
Even in its nascent stages, the English common law recognized the need to provide a system for redressing unlawful interference with a landowner's right to the possession and quiet enjoyment of his land. See 2 W. Blackstone, Commentaries [*]218; 1 F. Harper & F. James, The Law of Torts, § 1.23 (1956); 2 F. Pollock and F. Maitland, The History of English Law 53 (1895). Trespass and nuisance developed as the causes of action available to a landowner complaining of an unauthorized intrusion on his lands. See Prosser, supra, §§ 13, 86; P. Keeton, "Trespass, Nuisance, and Strict Liability," 59 Colum.L.Rev. 457 (1959); Note, "The Rylands v. Fletcher Doctrine in America: Abnormally Dangerous, Ultrahazardous, or Absolute Nuisance," 1978 Ariz.St.L.J. 99, 123. In their early forms, predating the development of negligence as a basis for liability, neither trespass nor nuisance required a showing of fault as a prerequisite to liability. See Keeton, supra, at 462-65; Prosser, supra, § 13, at pp. 63-64. Historically, any actual invasion that was the direct result of the defendant's act and that interfered with the *489 plaintiff's exclusive possession of his land constituted an actionable trespass, even in the absence of fault. Keeton, supra, at 464-65; see 1 Harper & James, supra, §§ 1.2-1.3. In contrast, nuisance required only an interference with the enjoyment and possession of land caused "by things erected, made, or done, not on the soil possessed by the complainant but on neighboring soil." 2 Pollock & Maitland, supra, at 53; see W. Seavey, "Nuisance; Contributory Negligence and Other Mysteries," 65 Harv.L.Rev. 984 (1952); Prosser, supra, § 86, at 571-74. The continuing nature of the interference was the essence of the harm, and as with trespass, fault was largely irrelevant. See Prosser, supra, at 576.
We think that the true rule of law is that the person who for his own purposes brings on his land and collects and keeps there anything likely to do mischief if it escapes, must keep it at his peril, and if he does not do so, is prima facie answerable for all damage which is the natural consequence of its escape. [Rylands v. Fletcher, L.R. 1 Ex. 265, 279-80 (1866), aff'd, L.R. 3 H.L. 330 (1868)].
On appeal, the House of Lords limited the applicability of this strict liability rule to "nonnatural" uses of land. Consequently, *490 if an accumulation of water had occurred naturally, or had been created incident to a use of the land for "any purpose for which it might in the ordinary course of enjoyment of land be used," strict liability would not be imposed. Rylands v. Fletcher, L.R. 3 H.L. 330, 338-39.
Early decisions of this State recognized the doctrine of nuisance as a basis for imposing liability for damages. See, e.g., Cuff v. Newark & N.Y.R. Co., 35 N.J.L. 17, 22 (1870) (when the owner of land undertakes to do work that is, in the ordinary mode of doing it, a nuisance, he is liable for any injuries to third persons, even when an independent contractor is employed to do the work). The former New Jersey Supreme Court, however, became one of the first courts to reject the doctrine of Rylands v. Fletcher. See Marshall v. Welwood, 38 N.J.L. 339 (1876). That Court reached this result by referring to the Exchequer Chamber's broad formulation of the rule, which extended liability to anything on the land "likely to cause mischief," rather than the narrowed version affirmed by the House of Lords, which limited liability to "nonnatural" use of the land. Writing for the Court, Chief Justice Beasley refused to adopt Rylands because it did not require the challenged activity to be a nuisance per se. Using the example of an alkalai works, however, he distinguished those situations in which the causes of injury partake "largely of the character of nuisances," even when they "had been erected upon the best scientific principles." Marshall v. Welwood, 38 N.J.L. at 342-43; see also Ackerman v. Ellis, 81 N.J.L. 1 (Sup.Ct. 1911) (trees whose branches overhang the premises of another are an actionable nuisance).
The confusion occasioned by the rejection of the Rylands principle of liability and the continuing adherence to the imposition of liability for a "nuisance" led to divergent results. See Majestic Realty Assocs., Inc. v. Toti Contracting Co., 30 N.J. 425, 433-35 (1959); see also McAndrews v. Collerd, 42 N.J.L. 189 (1880) (storing explosives in Jersey City is a nuisance per se, and one who stores them is liable for all actual "injuries caused thereby"). In Majestic Realty, this Court abandoned the term *491 "nuisance per se," 30 N.J. at 434-35, and adopted a rule of liability that distinguished between an "ultrahazardous" activity, for which liability is absolute, and an "inherently dangerous" activity, for which liability depends upon proof of negligence. Id. at 436. In making that distinction, the Court implicitly adopted the rule of landowner liability advocated by section 519 of the original Restatement of Torts, supra.
In determining whether an activity is abnormally dangerous, the following factors are to be considered: (a) existence of a high degree of risk of some harm to the person, land or chattels of others; (b) likelihood that the harm that results from it will be great; (c) inability to eliminate the risk by the exercise of reasonable care; (d) extent to which the activity is not a matter of common usage; (e) inappropriateness of the activity to the place where it is carried on; and *492 (f) extent to which its value to the community is outweighed by its dangerous attributes. [Restatement (Second) of Torts § 520 (1977)].
Pollution from toxic wastes that seeps onto the land of others and into streams necessarily harms the environment. See Special Report to Congress, Injuries and Damages from Hazardous Wastes Analysis and Improvement of Legal Remedies in Compliance with section 301(e) of the Comprehensive Environmental Response Compensation and Liability Act of 1980 By the "Superfund Section 301(c) Study Group" (reprinted as Comm. Print for the Senate Comm. on Envtl. & Pub. Works, Serial No. 97-12, 97th Cong., 2d Sess., 1982) [hereinafter cited as Special Report]. Determination of the magnitude of the damage includes recognition that the disposal of toxic waste may cause a variety of harms, including ground water contamination via leachate, surface water contamination via runoff or overflow, and poison via the food chain. Special Report, supra, at 27. The lower courts found that each of those hazards was present as a result of the contamination of the entire tract. 182 N.J. Super. at 217-18. Further, as was the case here, the waste dumped may react synergistically with elements in the environment, or other waste elements, to form an even more toxic compound. See W. Stopford & L.J. Goldwater, "Methylmercury in the Environment, A Review of Current Understanding," 12 Envtl. Health Persp. 115-18 (1975). With respect to the ability to eliminate the risks involved in disposing of hazardous wastes by the exercise of reasonable care, no safe way exists to dispose of mercury by simply dumping it onto land or into water.
The disposal of mercury is particularly inappropriate in the Hackensack Meadowlands, an environmentally sensitive area where the arterial waterways will disperse the pollution through the entire ecosystem. Finally, the dumping of untreated hazardous waste is a critical societal problem in New Jersey, which the Environmental Protection Agency estimates is the source of more hazardous waste than any other state. J. Zazzali and F. Grad, "Hazardous Wastes: New Rights and Remedies?," 13 *493 Seton Hall L.Rev. 446, 449 n. 12 (1983). From the foregoing, we conclude that mercury and other toxic wastes are "abnormally dangerous," and the disposal of them, past or present, is an abnormally dangerous activity. We recognize that one engaged in the disposing of toxic waste may be performing an activity that is of some use to society. Nonetheless, "the unavoidable risk of harm that is inherent in it requires that it be carried on at his peril, rather than at the expense of the innocent person who suffers harm as a result of it." Restatement (Second), supra, comment h at 39.
The Spill Act expressly provides that its remedies are in addition to existing common-law or statutory remedies. N.J.S.A. 58:10-23.11v. Our examination leads to the conclusion, consistent with that of the lower courts, that defendants have violated long-standing common-law principles of landowner liability. Wood Ridge and Berk were at all times engaged in an abnormally dangerous activity dumping toxic mercury. Ventron remains liable because it expressly assumed the liability of Wood Ridge in the merger. After 1967, Velsicol, as an adjacent landowner, permitted Wood Ridge to dump mercury onto its land. That activity has poisoned the land and Berry's Creek. Even if they did not intend to pollute or adhered to the standards of the time, all of these parties remain liable. Those who poison the land must pay for its cure.
We approve the trial court's finding that Berk, Wood Ridge, Velsicol, and Ventron are liable under common-law principles for the abatement of the resulting nuisance and damage. The courts below found that the Wolfs are not liable for the costs of cleanup and containment. See 182 N.J. Super. at 227. DEP did not petition for certification on that issue, and we do not consider it on this appeal. Berk and Wood Ridge, not Mr. and Mrs. Wolf, polluted the environment. During their ownership, the Wolfs have not continued to dump mercury and they have been responsible for only a minimal aggravation of the underlying hazardous condition.
No person shall allow any dyestuff, coal tar, sawdust, tanbark, lime, refuse from gas houses, or other deleterious or poisonous substance to be turned into or allowed to run into any of the waters of this state in quantities destructive of life or disturbing the habits of the fish inhabiting the same, under penalty of two hundred dollars for each offense. [N.J.S.A. 23:5-28, L. 1937, c. 64, § 2, p. 176].
The 1937 act imposed strict liability on anyone who allowed a pollutant to escape into the waters of the State. State v. Kinsley, 103 N.J. Super. 190, 192-94 (Law Div. 1968), aff'd, 105 N.J. Super. 347 (App.Div. 1969) (landfill operator held liable under the statute, even in the absence of "guilty knowledge," because the landfill polluted streams); see Lansco, Inc. v. Department *495 of Envtl. Protection, 138 N.J. Super. 275 (Ch.Div. 1975) (insurer held liable under comprehensive liability policy covering "all sums which the insured shall become legally obligated to pay as damages ..." because insured, the owner of a tank farm, was strictly liable under statute for cleaning up oil spill even if the spill was caused by a third party). But see State v. American Alkyd Indus., Inc., 32 N.J. Super. 150, 153 (Cty.Ct. 1954) (defendant was not liable under statute when, contrary to instructions, watchman left his post and allowed fuel oil to flow into Berry's Creek).
This statute remained in substantially the same form through 1968 thus spanning the majority of the period during which Berk operated its mercury processing plant, and the entirety of the period during which Wood Ridge ran it as a Velsicol subsidiary.[1] We agree with the trial court's finding that both Berk and Wood Ridge violated the statute by intentionally permitting mercury-laden effluent to escape onto the land surrounding Berry's Creek.
No person shall put or place into, turn into, drain into, or place where it can find its way into any of the fresh or tidal waters within the jurisdiction of this State any deleterious destructive or poisonous substances of any kind.... In case of pollution of said waters by substances known to be injurious to fish, birds or mammals, it shall not be necessary to show that the substances have actually caused the death of any of these organisms. [L. 1968, c. 329, p. 979-80].
*496 A 1971 amendment, which is still in effect, added petroleum products, debris, and other hazardous substances of any kind to the list of prohibited substances; it also eliminated the necessity of showing harm to living organisms as a prerequisite to application of the statute. L. 1971, c. 173, p. 663, § 11. Ample evidence supports the trial court's conclusion that, while operating the plant as a Ventron subsidiary from 1968-74, Wood Ridge violated this version of the statute.
elements and compounds which, when discharged in any quantity into, upon, or in any manner which allows flow and runoff into the waters of this State or adjoining shorelines, presents a serious danger to the public health or welfare, including but not limited to, damage to the environment, fish, shellfish wildlife, vegetation, shorelines, stream banks, and beaches. [N.J.S.A. 58:10-23.3(b)].
The Legislature, in 1976, enacted the Spill Compensation and Control Act of 1977 (Spill Act), N.J.S.A. 58:10-23.11 to -23.11z, as amended, L. 1977, c. 346, § 4. The Spill Act, which is quite comprehensive in its scope, repealed and supplanted the Water *497 Quality Improvement Act. L. 1976, c. 141, § 28. As a result, the State amended its complaint, originally filed in 1976, to allege liability under the Spill Act.
to provide liability for damage sustained within this State as a result of any discharge of said substances, by requiring the `prompt containment and removal of such pollution and substances, and to provide a fund for swift and adequate compensation to resort businesses and other persons damaged by such discharge.' [N.J.S.A. 58:10-23.11a].
... any intentional or unintentional action or omission resulting in the release, spilling, leaking, pumping, pouring, emitting, emptying or dumping of hazardous substance into the waters of the State or onto lands from which it might flow or drain into said waters outside the jurisdiction of the State. [N.J.S.A. 58:10-23.11b(h)].
Any person who has discharged a hazardous substance or is in any way responsible for any hazardous substance which the department has removed or is removing pursuant to subsection b. of section 7 of this act shall be strictly liable, jointly and severally without regard to fault, for all cleanup and removal costs. [N.J.S.A. 58:10-23.11g(c), as amended, L. 1976, c. 141, § 8].
As previously mentioned, the 1979 amendment of the Spill Act became effective subsequent to the judgment of the *498 trial court. Under the "time of decision rule," when legislation affecting a cause is amended while a matter is on appeal, an appellate court should apply the statute in effect at the time of its decision. In re Petition of South Lakewood Water Co., 61 N.J. 230, 248 (1972); see Kruvant v. Mayor of Cedar Grove, 82 N.J. 435, 440 (1980). An exception to that rule obtains if the facts change substantially during the pendency of the appeal. 61 N.J. at 248. Here, however, defendants have not made any showing of additional evidence to support such a change.
When considering whether a statute should be applied prospectively or retroactively, our quest is to ascertain the intention of the Legislature. In the absence of an express declaration to the contrary, that search may lead to the conclusion that a statute should be given only prospective effect. Rothman v. Rothman, 65 N.J. 219, 224 (1974). Conversely, when the Legislature has clearly indicated that a statute should be given retroactive effect, the courts will give it that effect unless it will violate the constitution or result in a manifest injustice. Baldwin v. Newark, 38 N.J.L. 158, 159 (Sup.Ct. 1895); see Gibbons v. Gibbons, 86 N.J. 515, 522-23 (1981); Howard Savings Inst. v. Kielb, 38 N.J. 186, 193 (1962). As noted, the Legislature has expressly declared that the Spill Act should be given retroactive effect.
Retroactivity need not render a statute unconstitutional, Rothman v. Rothman, 65 N.J. at 225, and the Spill Act, not being a criminal provision, is not invalid as an ex post facto *499 law. Furthermore, the due process clause generally does not prohibit retroactive civil legislation unless the consequences are particularly harsh and oppressive. United States Trust Co. v. New Jersey, 431 U.S. 1, 19 n. 13, 97 S. Ct. 1505, 1516 n. 13, 52 L. Ed. 2d 92, 106 n. 13 (1977). In the exercise of the police power, a state may enact a statute to promote public health, safety or the general welfare. Rothman v. Rothman, 65 N.J. at 225. Although retroactive application of a statute may impair private property rights, when protection of the public interest so clearly predominates over that impairment, the statute is valid. Id. In this case, we find that the public interest outweighs any impairment of private property rights.
The remaining question concerns the propriety of imposing liability under the Spill Act on Ventron and Velsicol for the acts *500 of Wood Ridge. Resolution of this question involves recognition that the limited liability generally inherent in the creation of a corporation presents the potential for avoidance of responsibility for the dumping of toxic wastes by the creation of a wholly-owned subsidiary. Implicit in that consideration is a need to balance the policy in favor of granting limited liability to investors against the policy of imposing liability on polluters for environmental torts. The lower courts struck the balance by piercing Wood Ridge's corporate veil and holding Velsicol liable for the pollution caused by its subsidiary. Although we disagree with the reasoning of those courts, we affirm the finding that Velsicol is responsible for the cleanup of Berry's Creek under the 1979 amendment to the Spill Act.
Except in cases of fraud, injustice, or the like, courts will not pierce a corporate veil. Lyon v. Barrett, 89 N.J. at 300. The purpose of the doctrine of piercing the corporate veil is to prevent an independent corporation from being used to defeat the ends of justice, Telis v. Telis, 132 N.J. Eq. 25 (E. & A. 1942), to perpetrate fraud, to accomplish a crime, or otherwise to evade the law, Trachman v. Trugman, 117 N.J. Eq. 167, 170 (Ch. 1934).
Under certain circumstances, courts may pierce the corporate veil by finding that a subsidiary was "a mere instrumentality of the parent corporation." Mueller v. Seaboard *501 Commercial Corp., supra, 5 N.J. at 34-35; see generally Note, "Liability of a Corporation for Acts of a Subsidiary or Affiliate", 71 Harv.L.Rev. 1122 (1958). Application of this principle depends on a finding that the parent so dominated the subsidiary that it had no separate existence but was merely a conduit for the parent. 1 W. Fletcher, Cyclopedia of the Law of Private Corporations § 41.1 (Perm. ed. 1974 rev.); see Annot., "Corporations Torts of a Subsidiary," 7 A.L.R.3d 1343, 1355 (1966). Even in the presence of corporate dominance, liability generally is imposed only when the parent has abused the privilege of incorporation by using the subsidiary to perpetrate a fraud or injustice, or otherwise to circumvent the law. Mueller v. Seaboard Commercial Corp., 5 N.J. at 34-35; see generally Note, "Liability of a Parent or Affiliate," supra, 71 Harv.L.Rev. at 1123; 1 Fletcher Corporations, supra, § 41.1.
In holding that Velsicol is liable for the acts of Wood Ridge, the lower courts found it "immaterial" that Wood Ridge was not undercapitalized and that it did not engage exclusively in business with Velsicol. 182 N.J. Super. at 225. Those courts found dispositive the facts that Velsicol created Wood Ridge for the sole purpose of acquiring and operating Berk's mercury processing business and that, as the trial court found, "Velsicol personnel, directors, and officers were constantly involved in the day-to-day business" of Wood Ridge. By themselves those conclusions are not sufficient to support the further conclusion that the intrusion of Velsicol into Wood Ridge's affairs reached the point of dominance. Furthermore, it appears that Velsicol incorporated Wood Ridge for a legitimate business purpose. Contrary to the implication of the trial court opinion, it is proper to establish a new corporation for the sole purpose of acquiring the assets of another corporation and continuing its business. We cannot conclude that Velsicol incorporated Wood Ridge for an unlawful purpose. See Rippel v. Kaplus, 124 N.J. Eq. 303, 304 (Ch. 1938).
Although it would be inappropriate to pierce Wood Ridge's corporate veil by applying the traditional common-law *502 doctrine, liability of Velsicol may be predicated upon the 1979 amendment to the Spill Act. As amended, the Spill Act provides: "Any person who has discharged a hazardous substance or is in any way responsible for any hazardous substance ... shall be strictly liable, jointly and severally, without regard to fault, for all clean up and removal costs." N.J.S.A. 58:10-23.11g(c) (emphasis added).
The phrase "in any way responsible" is not defined in the statute. As we have noted previously, however, the Legislature intended the Spill Act to be "liberally construed to effect its purposes." N.J.S.A. 58:10-23.11x. The subsequent acquisition of land on which hazardous substances have been dumped may be insufficient to hold the owner responsible. Ownership or control over the property at the time of the discharge, however, will suffice. See State Dep't of Envtl. Protection v. Exxon Corp., 151 N.J. Super. 464, 470-74 (Ch.Div. 1977). From 1967 to 1974, and thereafter, Velsicol could have controlled the dumping of mercury onto its own thirty-three-acre tract. By permitting Wood Ridge, even after it became a Ventron subsidiary in 1968, to use that tract as a mercury dump, Velsicol made possible the seepage of hazardous wastes into Berry's Creek. Furthermore, from 1960 to 1968, Velsicol was the sole shareholder of Wood Ridge and all members of the Wood Ridge Board of Directors were Velsicol employees. Velsicol personnel, officers, and directors were involved in the day-to-day operation of Wood Ridge. In addition to constant involvement in Wood Ridge's activities, Velsicol permitted the dumping of waste material on the thirty-three-acre tract. When viewed together, those facts compel a finding that Velsicol was "responsible" within the meaning of the Spill Act for the pollution that occurred from 1960 to 1968.
Given the extended liability of the Spill Act, we conclude that the Legislature intended that the privilege of incorporation should not, under the circumstances that obtain here, become a device for avoiding statutory responsibility. A contrary result *503 would permit corporations, merely by creating wholly-owned subsidiaries, to pollute for profit under circumstances when the Legislature intended liability to be imposed.
The question remains to what extent Velsicol should share with Ventron the costs of containing and cleaning up the contaminated area. Wood Ridge, as a successor landowner that purchased all of the assets and continued the activities of Berk, was liable for the damage caused by its own operations and those of Berk. See New Jersey Dep't of Transp. v. PCS Resources, Inc., 175 N.J. Super. 447 (Law Div. 1980); State v. Exxon Corp., 151 N.J. Super. 464 (Ch.Div. 1977); Note, "Successor Landowner Liability for Environmental Torts: Robbing Peter to Pay Paul?," 13 Rutgers L.J. 329, 334-42 (1982). Through the merger of Wood Ridge into Ventron, the latter corporation assumed all of Wood Ridge's liabilities, including those arising out of the pollution of Berry's Creek. See N.J.S.A. 14A:10-6(c). Ventron, however, did not assume Velsicol's liability.
Finally, we consider the issues raised by the Wolfs' cross-claim against Ventron, in which the Wolfs alleged fraudulent nondisclosure in the sale of realty. As noted by the trial court, the elements necessary to prove fraudulent concealment on the part of a seller in a real estate action are: the deliberate concealment or nondisclosure by the seller of a material fact or defect not readily observable to the purchaser, with the buyer relying upon the seller to his detriment. Weintraub v. Krobatsch, 64 N.J. 445, 455 (1974); Berman v. Gurwicz, 189 N.J. Super. 89 (Ch.Div. 1981), aff'd, 189 N.J. Super. 49 (App.Div. 1983), *504 certif. den., 94 N.J. 549 (1983). The trial court found that Ventron knew of a latent defect, gross mercury pollution in the soil, but intentionally failed to disclose that fact to the Wolfs. Furthermore, the court found that the contamination was not readily observable by the Wolfs and that the Wolfs relied upon the nondisclosure to their detriment. The Appellate Division determined that those findings were supported by credible evidence. 182 N.J. Super. at 227. We agree, and affirm the judgment in favor of the Wolfs on the cross-claim.
Our review begins with the general rule that sound judicial administration is best advanced if litigants bear their own counsel fees. Right to Choose v. Byrne, 91 N.J. 287, 316 (1982). Consistent with this policy, legal expenses, whether for the compensation of attorneys or otherwise, are not recoverable absent express authorization by statute, court rule, or contract. R. 4:42-9; Cohen v. Fair Lawn Dairies, Inc., 86 N.J. Super. 206 (App.Div.), aff'd 44 N.J. 450 (1965); Jersey City Sewerage Auth. v. Housing Auth. of Jersey City, 70 N.J. Super. 576 (Law Div. 1961), aff'd 40 N.J. 145 (1963). A further exception obtains where counsel fees are awarded to "[o]ne who through the tort of another has been required to act in the protection of his *505 interests by bringing or defending an action against a third person...." Restatement (Second) of Torts § 914(2); see Dorofee v. Pennsauken Township Planning Bd., 187 N.J. Super. 141, 144-46 (App.Div. 1982); Pressler, Current N.J. Court Rules, Comment R. 4:42-9.
Accordingly, in a fraud action, such as that asserted in the Wolfs' cross-claim against Ventron, if a third party sues one who has been defrauded, as DEP sued the Wolfs, the defrauded party "may recover from the tortfeasor the expenses of that litigation, including counsel fees, as damages flowing from the tort." Dorofee v. Pennsauken Township Planning Bd., supra, 187 N.J. Super. at 144; Feldmesser v. Lemberger, 101 N.J.L. 184, 187 (E. & A. 1925); Hagen v. Gallerano, 66 N.J. Super. 319, 333 (App.Div. 1961). That is, the Wolfs may recover from Ventron that portion of their legal expenses that was incurred as a proximate result of Ventron's fraud.
For affirmance as modified Justices CLIFFORD, SCHREIBER, HANDLER, POLLOCK and GARIBALDI 5.
[1] During this time, the Legislature amended the act once, in 1950. It then read:
No person shall allow any dyestuff, coal tar, sawdust, tanbark, lime, refuse from gas houses, oil tanks or vessels, vitriol or any of the compounds thereof, or other deleterious or poisonous substance to be turned into or allowed to run into any of the fresh or tidal waters within the jurisdiction of this State in quantities destructive of life or disturbing of the habits of the fish or birds inhabiting the same, under a penalty of five hundred dollars ($500.00) for the first offense, and one thousand dollars ($1000.00) for any subsequent offense. [N.J.S.A. 23:5-28, as amended, L. 1950, c. 49, § 1, p. 88].