Court Opinion

ID: 9961646
Source: CourtListenerOpinion
Date Created: 2024-04-19 14:09:25.040258+00
Date Added: 2024-06-11T08:21:14.088630
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-1189-22

NEW JERSEY DEPARTMENT
OF ENVIRONMENTAL
PROTECTION and THE
COMMISSIONER OF THE
NEW JERSEY DEPARTMENT
OF ENVIRONMENTAL
PROTECTION,

          Plaintiffs-Appellants,

v.

HEXCEL CORPORATION and
FINE ORGANICS CORPORATION,

     Defendants-Respondents.
______________________________

                   Submitted February 13, 2024 – Decided April 19, 2024

                   Before Judges Gooden Brown and Puglisi.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Bergen County, Docket No. L-1864-22.

                   Matthew J. Platkin, Attorney General, attorney for
                   appellants (Donna Sue Arons, Assistant Attorney
                   General, of counsel; Willis A. Doerr, Deputy Attorney
                   General, on the briefs).
            Richard B. Harper (Baker Botts LLP), Joshua B. Frank
            (Baker Botts LLP) of the District of Columbia bar,
            admitted pro hac vice, and Martha S. Thomsen (Baker
            Botts LLP) of the District of Columbia bar, admitted
            pro hac vice, attorneys for respondents (Richard B.
            Harper, Joshua B. Frank, and Martha S. Thomsen, on
            the brief).

PER CURIAM

      Plaintiffs New Jersey Department of Environmental Protection and the

Commissioner of the New Jersey Department of Environmental Protection

(collectively, the DEP), appeal from the Law Division's August 19, 2022 order

dismissing without prejudice the DEP's complaint against defendants Hexcel

Corporation and Fine Organics Corporation. Because the trial court mistakenly

found the complaint was barred by a prior consent judgment between the parties,

we reverse and remand.

                                        I.

      In 1973, defendant Hexcel acquired a chemical manufacturing facility in

Lodi (the site) where it conducted operations until 1986, when it sold the site to

defendant Fine Organics. In 1998, Fine Organics sold the site back to Hexcel,

after which no further operations occurred there.

      The 1986 sale triggered remediation obligations under what became the

Industrial Site Recovery Act (ISRA), N.J.S.A. 13:1k-6 to -14, stemming from

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chemical use and fuel oil contamination at the site. To address remediation,

Hexcel, Fine Organics and the DEP entered into an administrative consent order.

In 2016, a licensed site remediation professional issued a response action

outcome deeming remediation complete.

      In 2005, the DEP sued Occidental Chemical Corporation and various other

entities pursuant to the Spill Compensation and Control Act (the Spill Act),

N.J.S.A. 58:10-23.11 to -23.24, the Water Pollution Control Act (WPCA),

N.J.S.A. 58:10A-1 to -35, and common law, seeking past and future damages

associated with the discharge of hazardous substances from a property in

Newark that migrated throughout the Newark Bay Complex (the Passaic River

Litigation). (N.J. Dep't of Env't Prot. v. Occidental Chem. Corp., No. ESX-L-

9868-05 (N.J. Super. Law Div. 2005)). Defendants in that case filed third-party

complaints against Hexcel, Fine Organics and over 200 other companies.

      In 2013, the DEP entered into a consent judgment with Hexcel, Fine

Organics and other third-party defendants, partially resolving the potential

claims raised in that matter. Through the consent judgment, the parties settled

liability for natural resource damages (NRD) of the Newark Bay Complex,

subject to a cap/reopener not at issue in this appeal.

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      In 2022, the DEP commenced this action against defendants asserting

causes of action under the Spill Act, WPCA, strict liability, public nuisance, and

trespass. The complaint alleged investigations prior to the 1986 sale of the site,

as well as later investigations, "revealed widespread contamination of soil and

groundwater and other natural resources at and around the [s]ite."

      Count I alleged defendants discharged "hazardous substances at the [s]ite"

under the Spill Act.      Count II alleged defendants were strictly liable for

contamination of the site's groundwater under the WPCA. Count III alleged

defendants were strictly liable for contaminating the site's groundwater because

defendants' activities were abnormally dangerous. Counts IV and V alleged the

site's groundwater contamination constituted a public nuisance and trespass.

      Defendants moved for dismissal, arguing the complaint was untimely

under the applicable statute of limitations and barred by the consent judgment.

The court agreed with defendants and dismissed the complaint without

prejudice, finding the consent judgment barred the complaint.         Because it

decided the motion on those grounds, the court did not address the other

arguments raised in defendants' motion, including whether the complaint was

subject to dismissal based on statute of limitations grounds and for failure to

plead with specificity.

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                                        4
      On August 19, 2022, the court filed an order and written opinion. In its

decision, the court noted DEP's counsel's statement at oral argument that it was

not seeking damages related to offsite impacts but rather damages related to

groundwater below the site was "in direct contrast with the allegations set forth

in [the DEP's] complaint." The court found both the site's groundwater and

offsite impacts were included in the scope of the consent judgment, and took

"specific note" the consent judgment's definition of NRD "include[d] all of the

causes of action set forth in [the DEP's] complaint . . . specifically[,] the Spill

Act, the WPCA, state common law, and state statutory claims."

      In addressing the consent judgment's reservation of rights with respect to

"other actions," the court stated it was "uncontested that the [s]ite is located in

the Newark Bay Complex."         The court also found the consent judgment's

definition of the Newark Bay Complex included "'adjacent waters' investigated

as part of the Diamond Alkali Superfund Process."             Relying on public

Environmental Protection Agency (EPA) documents appended to defendants'

motion, the court noted in the years following the consent judgment, "the EPA

has made clear . . . that the areas investigated in the Diamond Alkali Superfund

Site (and, by definition, the Newark Bay Complex) include not just the surface

waterbodies and sediments, but the entire areal extent of the contamination and

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watershed area." The court further noted the site and associated groundwater

are included "upland sites."

      The court found "[b]oth the Saddle River and the adjacent groundwater

(including the groundwater at the [s]ite) were within the geographic scope of the

Diamond Alkali Superfund Process investigation and specifically within the

area studied around the Lower Passaic River." Because the site was within the

"areal extent of the contamination" investigated by the EPA in connection with

the Diamond Alkali Superfund Process, the court determined it was part of the

Newark Bay Complex.

      The court found "the plain language of the [consent judgment] provides

that the [s]ite, [s]ite groundwater, and any alleged off-site contamination are all

part of the 'Newark Bay Complex' and [the] DEP's claims for NRD in this case

are therefore barred by the [consent judgment]."

      The court denied the DEP's subsequent motion to amend the order. This

appeal followed, wherein the DEP raises the following issues for our

consideration:

            POINT I

            THE TRIAL COURT’S ORDER SHOULD BE
            REVERSED    BECAUSE   IT   ERRONEOUSLY
            CONCLUDED THAT THE SITE’S GROUNDWATER
            IS AN "ADJACENT WATER."

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                                        6
              POINT II

              THE     TRIAL    COURT    INCORRECTLY
              INTERPRETED AND APPLIED THE TERMS OF
              THE 2013 CONSENT JUDGMENT TO CONCLUDE
              THAT THE SITE WAS INVESTIGATED FOR
              REMEDIATION AS PART OF THE DIAMOND
              ALKALI SUPERFUND PROCESS AND FAILED TO
              PROVIDE THE STATE WITH THE BENEFIT OF
              ALL REASONABLE INFERENCES.

                                        II.

      In considering a motion to dismiss for failure to state a claim upon which

relief may be granted under Rule 4:6-2(e), the court assumes "allegations of the

pleading are true and affords the pleader all reasonable factual inferences."

Seidenberg v. Summit Bank, 348 N.J. Super. 243, 249-50 (App. Div. 2002).

"This requires that the pleading be searched in depth and with liberality to

determine whether a cause of action can be gleaned even from an obscure

statement."    Id. at 250.   Courts must "proceed gingerly because Rule 4:6-

2(e) motions to dismiss should be granted in 'only the rarest [of] instances.'"

Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (citations omitted).

Our review of an order granting a motion to dismiss is governed by the same

standard as applied by the trial court. Ibid.

      A consent judgment is both a judicial decree and a contract—"it is not

strictly a judicial decree, but rather in the nature of a contract entered into with

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                                         7
the solemn sanction of the court." Cmty. Realty Mgmt., Inc. for Wrightstown

Arms Apartments v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at

Freehold v. Township Comm., 139 N.J. Super. 311, 313 (Law. Div. 1976)).

Contract principles apply to a consent judgment, and it is treated as a quasi -

contract. See ibid.

      Generally, contract interpretation is subject to de novo review. Kieffer v.

Best Buy, 205 N.J. 213, 222 (2011). "Accordingly, we pay no special deference

to the trial court's interpretation and look at the contract with fresh eyes." Id. at

223. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995). Courts enforce contracts based on the parties' intent, the underlying

purpose of the contract, and the surrounding circumstances.          Cypress Point

Condo. Ass'n v. Adria Towers, LLC, 226 N.J. 403, 415 (2016). "The judicial

task is simply interpretative; it is not to rewrite a contract for the parties better

than or different from the one they wrote for themselves." Kieffer, 205 N.J. at

223. "The document must be read as a whole, in 'accord with justice and

common sense.'" Cumberland Cnty. Imp. Auth. v. GSP Recycling Co., Inc., 358

N.J. Super. 484, 497 (App. Div. 2003) (quoting Krosnowski v. Krosnowski, 22

N.J. 376, 387 (1956)). Additionally, the contract "should not be interpreted to

render one of its terms meaningless." Ibid.

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                                         8
      "The court makes the determination whether a contractual term is clear or

ambiguous." Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div.

2002). A contract term is ambiguous when it is susceptible to more than one

reasonable interpretation. Ibid.; see Powell v. Alemaz, Inc., 335 N.J. Super. 33,

44 (App. Div. 2000). The court should interpret contract terms "so as to avoid

ambiguities, if the plain language of the contract permits." Stiefel v. Bayly,

Martin and Fay of Conn., Inc., 242 N.J. Super. 643, 651 (App. Div. 1990).

      When contractual terms are clear, "[courts] must enforce the contract as

written," Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999), and

courts are to interpret contracts "in accord with justice and common sense."

Homann v. Torchinsky, 296 N.J. Super. 326, 334 (App. Div. 1997) (quoting

Krosnowski, 22 N.J. at 387).

      When contractual terms are ambiguous, however, courts "consider the

parties' practical construction of the contract as evidence of their intention and

as controlling weight in determining a contract's interpretation." Barila v. Bd.

of Educ. of Cliffside Park, 241 N.J. 595, 616 (2020) (internal citations omitted).

      Here, the "matters addressed" by the consent judgment included all

liabilities of the third-party defendants associated with the discharge of

hazardous substances into the Newark Bay Complex from third-party sites,

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                                        9
regardless of the location of the source of the discharge, whether inside or

outside the Newark Bay Complex.

      "Claims" included all claims of the DEP against defendants for discharges

to the Newark Bay Complex or otherwise sought by the DEP from defendants

in the Passaic River Litigation; all claims of the DEP for which third-party

plaintiffs alleged or could have alleged that they were entitled to contribution

from third-party defendants for discharge of hazardous substances to the Newark

Bay Complex or otherwise sought by the third-party plaintiffs from third-party

defendants in the Passaic River Litigation; and all claims for NRDs associated

with settling third-party defendants' discharges of hazardous substances to the

Newark Bay Complex.

      NRDs were defined as:

            all claims arising from [d]ischarges at or to the Newark
            Bay Complex, known or unknown, that occurred prior
            to the effective date of this [c]onsent [j]udgment and
            that are recoverable by any New Jersey state natural
            resource trustee as damages for injuries to natural
            resources under the Spill Act; the WPCA; the Oil
            Pollution Act, 33 U.S.C.A. §§ 2701 through -2761; the
            Clean Water Act, 33 U.S.C.A. §§ 1251 through -1387;
            CERCLA,[1] or any other state or federal common law,
            statute, or regulation, for compensation for the
            restoration and/or replacement of, the lost value of,

1
 Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. §§ 9601 to 9675.
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                                      10
            injury to, or destruction of natural resources and natural
            resource services.

      Although the DEP agreed not to sue for any future claims against any

settling third-party defendant under State and federal statutory and common law,

the consent judgment included one exception relevant to this appeal: the DEP

was not precluded from bringing future claims related to the discharge of a

hazardous substance "at, onto or from" a third-party site to the extent the claims

were caused by discharge of hazardous substances not located in the Newark

Bay Complex, that do not come to be located in the Newark Bay Complex.

      The DEP argues the trial court erred in finding the site's groundwater was

an adjacent water based on three different incorrect premises: 1) because the

groundwater was investigated for remediation as part of the Diamond Alkali

Superfund Process, based on the site's location in the geographic scope of the

investigation; 2) based on an expanded definition contrary to the consent

judgment; and 3) because it was located in the Passaic River Watershed.

      The consent judgment defined the Newark Bay Complex as:

            (i) the lower [seventeen] miles of the Passaic River, (ii)
            Newark Bay, (iii) the Arthur Kill, (iv) the Kill Van
            Kull, (v) to the extent investigated for remediation as
            part of the Diamond Alkali Superfund Process, the
            lower reaches of the Hackensack River and as may be
            further extended by [the] EPA in the Diamond Alkali
            Superfund Process, and (vi) to the extent investigated

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                                       11
            for remediation as part of the Diamond Alkali
            Superfund Process, any adjacent waters and sediments
            of (i) through (v).

      Because the site's groundwater is not a body of water enumerated in (i)

through (v), two criteria must be met for it to fall within the scope of the Newark

Bay Complex: it must be adjacent to either the Passaic River, Newark Bay,

Arthur Kill, Kill Van Kull, or the lower reaches of the Hackensack River; and

must have been investigated for remediation as part of the Diamond Alkali

Superfund Process. These are separate and distinct determinations.

      The DEP acknowledges the consent judgment does not define "adjacent

waters," but relies on 33 C.F.R. 328.3(c) and 40 C.F.R. 120.2(c)(2), both of

which define adjacent as "having a continuous surface connection." The DEP

asserts the term is "typically understood in the environmental context to mean

'bordering' or 'contiguous' waters."

      The DEP also cites Rapanos v. U.S., which held that a "continuous surface

connection," or instances of "no clear demarcation" between two water bodies

would be sufficient to deem waters "adjacent" to one another, but "an

intermittent, physically remote hydrological connection" is not. 547 U.S. 715,

742 (2006). As such, the DEP contends "adjacent water" does not refer to

groundwater, and even if it did, the groundwater at the site has no direct

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                                       12
connection to the Passaic River, Newark Bay, Arthur Kill, Kill Van Kull, or the

lower reaches of the Hackensack River.

      In Rapanos, the plurality opinion determined wetlands are within the

scope of the CWA only when they have "a continuous surface connection to

bodies that are 'waters of the United States' in their own right, so that there is no

clear demarcation between 'waters' and wetlands." Id. at 742. Justice Kennedy's

concurring opinion stated wetlands are subject to the CWA if they shared a

significant nexus with waters of the United States. Id. at 780. Under the second

test, wetlands were "adjacent to" waters of the United States, and thus within

the CWA, if they, "either alone or in combination with similarly situated lands

in the region, significantly affect the chemical, physical, and biological integrity

of other covered waters more readily understood as 'navigable.'" Ibid. In U.S.

v. Donovan, the Third Circuit held "the CWA is applicable to wetlands that meet

either the test laid out by the plurality or by Justice Kennedy in Rapanos." 661

F.3d. 174, 184 (3rd Cir. 2011).

      While Rapanos addressed the adjacency of wetlands to surface waters, it

is instructive in this case, where the consent judgment did not define the term.

Here, under either test, the site's groundwater is not adjacent to the Passaic

River, Newark Bay, Arthur Kill, or Kill Van Kull. It is groundwater, not surface

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                                        13
water, and therefore it cannot have "a continuous surface connection" to the

enumerated bodies of water.

      Under the concurring test, nothing in this record supports a conclusion the

groundwater "significantly affect[ed] the chemical, physical, and biological

integrity of other covered waters." While the first action brought by the DEP

included contamination of surface waters, the instant complaint is for the site's

groundwater, not its impact on other bodies of water.

      Additionally, the plain meaning of "adjacent" does not support the trial

court's finding. Black's Law Dictionary defines "adjacent" as "[l]ying near or

close to, but not necessarily touching." Black's Law Dictionary 50 (11th ed.

2019). Utilizing this definition, the site's groundwater is not adjacent to any of

the enumerated bodies of water.

      We also reject defendants' contention that any water within the Lower

Passaic River Study area is part of the Newark Bay Complex because it was

part of the EPA's investigation. This interpretation of the consent judgment

renders the requirement of adjacency obsolete and meaningless, and we are

reluctant to construe contract terms in such a manner. See Cumberland Cnty.

Imp. Auth., 358 N.J. Super. at 497.

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                                       14
      We are also unpersuaded by defendants' argument that the groundwater

is part of the Newark Bay Complex because it is hydrologically connected to

the Saddle River. Defendants theorize that because the groundwater is "plainly

adjacent to the Saddle River," which is part of the Newark Bay Complex, and

the Saddle River flows into the Lower Passaic River, establishing a

hydrological connection between the three waterbodies, they are all adjacent.

This contention is an overbroad reading of the specific term of the consent

judgment. The Saddle River was part of the EPA's investigation and was

adjacent to the Passaic River, which makes the Saddle River part of the Newark

Bay Complex. However, the site's groundwater's adjacency to the Saddle River

does not, under the confines of the consent judgment, render it part of the

Newark Bay Complex.

      The second issue is whether the site's groundwater was "investigated for

remediation as part of the Diamond Alkali Superfund Process," which refers to

            all investigations and/or response actions (including
            without limitation removal actions and remedial
            actions) undertaken in respect to the Diamond Alkali
            Superfund Site . . . that address or respond to any
            Discharge of Hazardous Substances that are located or
            come to be located within the Diamond Alkali
            Superfund Site (regardless of the location of the source
            of such Discharge whether inside or outside the Newark
            Bay Complex).

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                                      15
      The "Diamond Alkali Superfund Site" was the "geographic area consisting

of all operable units or areas identified for investigation and/or response actions

. . . by [the EPA], the [DEP], or any other agencies and departments of the State

of New Jersey as part of the Diamond Alkali Superfund Process" and such areas

include, among others, "the Lower Passaic River Study Area." The "Lower

Passaic River Study Area" was "the lower [seventeen] miles of the Passaic River

and its tributaries, from the confluence with [the] Newark Bay to the Dundee

Dam, . . . and as may be expanded by [the EPA]."

      The parties disputed whether the EPA had investigated the site's

groundwater, reasserting the arguments they advanced before the trial court. In

support of their respective positions, both parties submitted documents

regarding the EPA's involvement with the area. The DEP provided the EPA's

2016 and 2021 records of decision, which do not indicate the site's groundwater

was part of the Diamond Alkali Superfund Process. The DEP pointed out the

EPA's modeling "suggest[ed] that groundwater discharge [was] not a significant

source of contamination," and therefore the EPA did not expect it "to be [a]

major contaminant source[] to the [Lower Passaic River]." The DEP argued

these statements showed the EPA declined to investigate groundwater.

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      Defendants countered that, under the plain language of the contract, the

EPA investigated the site groundwater because it was part of the areal extent of

the contamination and watershed area. Defendants argued the term watershed

includes groundwater, which in turn means the EPA investigated the site's

groundwater.

      Whether the EPA investigated the site's groundwater was a factual issue

in dispute that should not have been resolved on motion. The documentation

referred to by both parties is not dispositive of the issue, as it does not squarely

answer the question and is subject to interpretation. Accordingly, the factual

question of the scope of the EPA's investigation should not have been resolved

at this early stage, where "plaintiffs are entitled to every reasonable inference of

fact." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989)

(citation omitted).

      Reversed and remanded for further proceedings.            We do not retain

jurisdiction.

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