ELR Citation: ELR 20751
No(s). 93-653 (WHW) (D.N.J. Dec 29, 1994)

The court denies a motion by a former owner of a contaminated site to amend its third-party complaint to expand its claim for reimbursement and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the New Jersey Spill Compensation and Control Act (Spill Act) to include additional years that a former lessee owned stock in the former owner's corporate predecessors. The former owner and its predecessors owned the site from 1886 to 1954, and the former lessee and its predecessor leased and operated the site from 1886 until 1899, at which time the former owner's predecessors, in which the former lessee's predecessor owned stock, released it from all liability relating to the site. The former owner seeks contribution for the years after 1899.

The court first holds that it will decide the motion under Fed. R. Civ. P. 15(a) rather than Fed. R. Civ. P. 16(b), which requires that scheduling orders be issued for case management purposes and demands a demonstration of "good cause" for extensions of deadlines. Although the former owner has caused significant delay, hearing the motion does not disrupt any overall trial schedule set for the case, and the delay can properly be considered in the context of a traditional rule 15(a) analysis. The court next holds that the former owner has caused undue delay without a satisfactory explanation. The former owner filed the motion to amend nine months after the deadline set for motions to amend and did not come forward with the results of its investigation of its own corporate history indicating a continued relationship between it and the former lessee until the third extension of discovery was expiring. The court holds that it is not satisfied with the former owner's reason for delay, because knowledge of the former owner's own corporate history must be imputed to it and the reported Third Circuit opinion from which it derived a great deal of the new information was discoverable before the former owner claims to have learned of it.

The court next holds that while a motion to amend may be properly denied on undue delay grounds alone, the court is hesitant to enter such an order where alternative sanctions are available. Thus, the outcome of the motion must abide a futility analysis. The court holds that the former owner's allegation that the former lessee is liable under CERCLA as an owner of the site during the years in which it owned a majority of the stock of one of the former owner's predecessors is untenable because there is no doubt that the predecessor became the owner of the site before the years in question. Moreover, there is no claim that the former lessee was ever a parent or sister corporation of the former owner. The former owner has not argued that piercing its own corporate veil to hold its shareholder liable is justified, nor has it alleged that circumstances such as fraud, injustice, self-dealing, or unconscionable conduct exist that would justify piercing the corporate veil. Consequently, the court holds that a finding of ownership liability based on the former lessee's status as a shareholder is unwarranted. Further, the fact that the former owner and former lessee may have shared a director does not present a ground for piercing the corporate veil, because the former owner has not alleged any misconduct or malfeasance of the director that would allow the court to disregard the concepts of limited liability. The court next holds that operator status cannot be found under any version of the facts asserted by the former owner, because the court cannot conclude that the former lessee had substantial control over the policymaking decisions or day-to-day operations of another of the former owner's predecessors. The former owner alleges no facts that suggest that the former lessee had actual control over the predecessor, and the Securities and Exchange Commission finding on their relationship, on which the former owner relies, did not find that the former lessee acting alone had actual control over the predecessor.

Finally, the court holds that the former owner does not allege sufficient facts to establish liability against the former lessee under the Spill Act. New Jersey case law requires the former owner to prove the same elements under the Spill Act as under CERCLA. The court holds that the former owner has not stated a cause of action under the Spill Act through its proposed amended third-party complaint. The court finds that the amended complaint is futile because the facts alleged within its four corners fail to state an independent cause of action on which relief could be granted. The court denies the motion for leave to amend the third-party complaint.

Counsel for Plaintiff
John P. Beyel
McElroy, Deutsch & Mulvaney
1300 Mount Kemble Ave., P.O. Box 2075, Morristown NJ 07962
(201) 993-8100

Counsel for Defendants
Joseph F. Lagrotteria, Karol C. Walker
Robinson, St. John & Wayne
Two Penn Plaza E., Newark NJ 07105
(201) 491-3300