ELR Citation: ELR 20751
No(s). 94-1033 (WHW) (D.N.J. Nov 21, 1995)

The court holds that a seller of contaminated property did not contractually transfer its environmental liability to the buyer and that the seller is subject to New Jersey's Environmental Cleanup Responsibility Act (ECRA), but that the buyer's claim against the seller for cleanup costs is time barred. The seller transferred the property two days before ECRA became effective, and remained on the site for a year as a tenant. Twelve years later, the buyer sued the seller for its costs of cleaning up the property under ECRA. The court first holds that an "as is" clause in the sale agreement did not transfer the seller's environmental liability to the buyer. Other courts have construed such clauses as not transferring liability. Also, although another clause in the agreement makes an oblique reference to "environmental or ecological controls . . . codes, ordinances, regulations, rules, requirements and restrictions," that section is not a clear manifestation of the parties' intent to transfer environmental liabilities. Rather, it refers to the nature of the title the seller conveyed to the buyer and outlines the scope of the warranty contained therein. The court refuses to consider extrinsic evidence to ascertain the parties' intent in drafting the agreement. The court holds that the agreement does not anywhere contain a clear statement that the buyer agreed to assume environmental liabilities with which the seller otherwise would have been saddled, and refuses to alter the terms of the contract.

The court next holds that the fact that the seller had divested itself of title to the property before ECRA's effective date does not require judgment in its favor. The seller's post-sale close-down of the property is sufficient to trigger ECRA. Although it ceased its manufacturing operations before ECRA's effective date, its removal of at least 256 drums of hazardous waste from the property after ECRA's effective date was sufficient to make the seller an "operator" under ECRA. When the seller finally ceased the operation of this waste storage and removal, ECRA was engaged. The court next holds that the ECRA claim is barred if it accrued more than six years before the buyer brought suit. Although ECRA does not contain a statute of limitations, one should apply when a private actor brings suit under ECRA. And a private cause of action by a transferee of land against the transferor for failing to comply with ECRA is most analogous to a common-law environmental tort action, which must be commenced within six years of its accrual. The court rejects the buyer's assertion that the accrual of the claim should be delayed based on the seller's fraudulent concealment of environmental reports. The buyer has not directed the court to anything factual that indicates a basis for a finding that the seller fraudulently concealed noncompliance with ECRA. The court also rejects the buyer's assertion that the accrual of the claim should be delayed based on the "discovery rule." The buyer has not furnished the court with evidential justification to apply the discovery rule. The court holds that the claim accrued, at the latest, when the buyer discovered drums that the seller's hired mover left behind at the site, nine years before the buyer sued. The court thus holds that the claim is legally stale. Finally, the court holds that it need not determine whether the property was an "industrial site" after ECRA's effective date.

Counsel for Plaintiff
Dennis M. Toft, Thomas W. Sabino
Wolff & Samson
Five Bekerfarm Rd., Roseland NJ 07068
(201) 740-0500

Counsel for Defendant
Mark D. Shepard
Babst, Calland, Clements & Zomnir
Two Gateway Ctr., Pittsburgh PA 15222
(412) 394-5400