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Birchwood Lakes Colony Club, Inc. v. Borough of Medford Lakes

Decided: August 3, 1982.

BIRCHWOOD LAKES COLONY CLUB, INCORPORATED, PLAINTIFF-RESPONDENT,
v.
BOROUGH OF MEDFORD LAKES, DEFENDANT-APPELLANT



On certification to the Superior Court, Appellate Division, whose opinion is reported at 179 N.J. Super. 409 (1981).

For affirmance -- Chief Justice Wilentz, and Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. For reversal -- None. The opinion of the Court was delivered by O'Hern, J.

O'hern

The central issues in this appeal are (1) whether downstream owners may recover in nuisance for injury to their property caused by the discharge of municipal sewerage, and (2) whether the New Jersey Tort Claims Act, N.J.S.A. 59:1-1 et seq., (hereinafter TCA) applies. We hold that an action may be brought in nuisance against a public entity, and that the Tort Claims Act applies.

The history of the case is rather involved. The facts are set forth in detail in the Appellate Division opinion below. Birchwood Lakes Colony Club, Inc. v. The Borough of Medford Lakes, 179 N.J. Super. 409 (1981). A short summary will suffice for the issues before us.

Plaintiff, a representative organization of the residents of the Birchwood Lakes area, brought suit for damages and injunctive relief against the neighboring municipality, Borough of Medford Lakes. Plaintiff alleged that the Medford Lakes sewage treatment plant, owned and operated by the borough, discharged effluent with excessive levels of nitrates, ammonia, suspended solids and phosphates into plaintiff's lake, causing the lake to be over-enriched with nutrients. The discharge of excessive phosphates caused the proliferation of algae and aquatic weeds, which killed the lake's fish and made the lake unsuitable for

swimming, boating, fishing and any other recreational purposes. The once pleasant prospects of lakeside retirement living are claimed to have been severely diminished by the eutrophication*fn1 of the lake.

The Birchwood Lakes are located 500 feet downstream from the site where the Borough of Medford Lakes constructed its first sewage treatment plant in 1939 and began to pump treated sewage into the stream. In 1964, the plant was essentially rebuilt, undergoing extensive modifications with "only a couple of items from the old plant" remaining. The plans for both the original 1939 construction, as well as for the 1964 modifications, were approved by the State Department of Health, the department then responsible for the supervision of sewage treatment plants.

Sometime in 1969, residents of the area surrounding Birchwood Lakes began to notice mats of algae on the lakes, and from that time on, algae could be seen from late spring until early fall each year. The condition worsened so much that by the early 1970's, the lakes were rendered unusable during several months.

Following investigation in 1971, the Department of Environmental Protection (DEP) issued a report in March 1972 finding that the lakes were undergoing eutrophication and that the effluent discharged by the sewage plant contained amounts of phosphorous that exceeded DEP standards.

In September 1972, DEP ordered the borough to devise a plan and to begin disposing of its sewage prior to December 31, 1972 in a manner approved by the Department. The order further stated that a significant threat to the health of New Jersey

citizens was posed by the effluent discharge, which ultimately reached the Rancocas Creek, a tributary of the Delaware River.

The borough objected to the order. It contested the nature of the problem, the appropriate steps to be taken, the source of the financing, and the deadlines for correcting the problem. After negotiations the borough was issued a construction permit in 1974 for additions and improvements to the plant. The borough appropriated $74,000 for the improvements, but the bids received were in excess of the appropriation, and all were rejected.

Finally, after further delay, the Department filed suit to compel the borough to abate the pollution. A consent judgment in June 1977 stipulated several alternate methods for abating the effluent discharge. Construction was to be completed by January 1979. The record does not state whether the borough has complied with the injunction.

Meanwhile, the present suit was filed in July 1975. At trial in May 1978, plaintiff presented various theories of liability,*fn2 which included:

active wrongdoing prior to July 1, 1972 (the effective date of the Tort Claims Act, N.J.S.A. 59:1-1 et seq.) which was a proximate cause of plaintiff's damage; negligent construction of the sewage treatment plant; actual or constructive knowledge by defendant that it was operating the plant "in a manner which was damaging plaintiff's lake by reason of which a duty arose, a duty on the part of the defendant, to correct the problem" and defendant's failure to discharge its duty resulting proximately in the damages complained of; defendant's failure to observe the conditions of the federal operating permit, to obey the departmental order and to obey the consent judgment; and negligent operation by defendant of the sewage treatment plant. [179 N.J. Super. at 417].

The court instructed the jury on all of the issues and submitted 12 special interrogatories to them. The jury found that the defendant had been negligent in failing to take corrective steps to prevent the excessive discharge of nutrients from its sewer

treatment plant and to observe the conditions imposed on the limitation of the emission of phosphorous as required in its operating permit issued in 1974. In each of these instances, the jury found that the negligence was the proximate cause of plaintiff's injury. It also found, however, that the defendant was not negligent in the operation, planning or design of the plant, nor was it negligent "in response to the Department of Environmental Protection Order" issued in 1972. Damages of $45,000 were awarded to the plaintiff. Plaintiffs also were successful on their motion for expert fees of $2500.

On defendant's appeal, the Appellate Division held that the jury's finding that the borough negligently failed to observe the conditions of its 1974 operating permit was not supported by the record since the operating permit did not require a low phosphate concentration until the fall of 1976, and there was no proof of additional damage caused by phosphates after that date. Moreover, the court found a contradiction between two of the jury's findings. On the one hand, there was a broad finding that the borough failed to discharge a duty to take corrective steps to end the pollution. On the other hand, the jury found that the borough was not negligent in its response to the 1972 DEP order. That order, however, called upon the borough to take the only feasible corrective step -- the construction of additional facilities. Therefore, the jury reached opposite findings on what was essentially the same issue.

The Appellate Division went on, however, to consider the borough's liability in nuisance. As to this, the court stated:

We are satisfied, setting aside for the moment the further issue of discretionary or other immunity, that the borough, as operator of a sewage disposal plant, would be subject to liability for compensatory damages if the effluent from its plant unreasonably polluted waters, thereby depriving the riparian owner of the use and enjoyment thereof or otherwise caused injury to such owner. It would not matter that the activity complained of commenced prior to the effective date of the Tort Claims Act and continued thereafter. [179 N.J. Super. at 424].

Since the borough could not be liable for nuisance unless its actions were unreasonable, and since that issue was not presented to the jury, the Appellate Division concluded that the trial

judge's failure to include instructions on the nuisance theory amounted to plain error, requiring a new trial on the issue of liability only. Id. at 432-33. With respect to the Tort Claims Act defenses, the court found that the act did not provide the borough with immunity from suit, and that the borough had, and did not sustain, the burden of proving that design immunity was applicable here. With respect to the award of experts' fees to plaintiffs, the court found the award erroneous. Under the applicable statute, N.J.S.A. 2A:35A-1 et seq., such a fee is available only to a prevailing party who sought declaratory or equitable relief under the act. Since the trial court denied the injunction on the basis that one was pending in the companion DEP suit, plaintiff was not a prevailing party, and thus was deemed not entitled to fees.

We granted defendant's petition for certification. 88 N.J. 478 (1981). Plaintiff did not cross-petition. The Court thereafter invited the Attorney General of New Jersey to appear as amicus curiae.

I.

The defendant and the Attorney General argue that the Tort Claims Act, N.J.S.A. 59:1-1 et seq., constitutes the exclusive source of public entity tort liability and that since the act does not expressly authorize suits in nuisance against public entities, the effect of the decision below is to allow a common law cause of action in nuisance independent of the Tort Claims Act. On the contrary, the Appellate Division found that the Tort Claims Act includes liability for nuisance and that no statutory immunity could be found as a matter of law on the record before it.

Private nuisance is but one possible theory for recovery of damages caused by the invasion of one's interest in the private use and enjoyment of land. That interest may be invaded by more than one type of conduct, i.e., the conduct may be intentional, it may be unintentional but caused by negligent or reckless conduct, or it may result from an abnormally dangerous

activity for which there is strict liability.*fn3 One is subject to liability for private ...


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