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Township of South Orange Village v. Hunt

Decided: May 19, 1986.


On appeal from Final Determination of the New Jersey Spill Compensation Fund.

Fritz, Brody and Baime. The opinion of the court was delivered by Baime, J.A.D.


[210 NJSuper Page 410] This is an appeal from the final determination of the New Jersey Spill Compensation Fund denying the Township of South Orange Village's claims for damages arising from the contamination of its water supply as a result of the discharge of gasoline caused by leaking underground storage tanks. The Fund decided that the Township's claims were facially ineligible because they were not timely filed under N.J.S.A. 58:10-23.11k*fn1 and because the damages were caused by discharges

which occurred prior to April 1, 1977, the effective date of the Spill Compensation and Control Act, (N.J.S.A. 58:10-23.11 et seq.).

The tortured procedural history is inextricably interwoven with the facts underlying the Township's initial and amended claims. On February 14, 1977, Township officials discovered a leaking underground gasoline tank located at a Gulf service station in the business district of the municipality. Although much of the gasoline was ultimately recovered, the owner of the service station estimated that approximately 6,000 gallons had been lost. On March 12, 1977, the odor of gasoline was detected in the Township's number 8 water well located in Walton field which was approximately 1500 feet southwest of the Gulf service station. This well was immediately removed from service and pumped in an unsuccessful effort to remove the contamination.

Shortly thereafter, the Township's number 5 well, located several hundred feet further south, began to emit gasoline odors. On April 4, 1977, two other wells in the near vicinity disclosed gasoline contamination. Within the week, Township officials detected the strong odor of gasoline emanating from additional wells. Eventually, eight of the Township's wells were contaminated and the entire field was removed from operation on April 18, 1977.

The initial gasoline spill was investigated by Township officials, the Gulf Oil Corporation and the Department of Environmental Protection (DEP). In the course of this investigation, it was discovered that storage tanks at several other service stations had leaked substantial quantities of gasoline. Although several of these discharges clearly occurred prior to the effective date of the Act, others were discovered in June 1977

and thereafter. Because of these discharges, the Township found it necessary to purchase water from outside sources.

The Township submitted its initial claim for damages to the Fund on January 11, 1978. The claim form prepared by the Township was somewhat ambiguous with respect to when the discharge was alleged to have occurred. While the Township represented that the "first indication" of the discharge was on March 12, 1977, the Township Mayor emphasized in an accompanying letter that the investigation was ongoing and that the claim form was being submitted merely to satisfy the one year deadline set forth in N.J.S.A. 58:10-23.11k. In addition, the Township attached an exhibit to the claim in which it indicated that it had been advised by the DEP's Oil Spill Response Unit of additional discharges emanating from other facilities.

An amended claim was filed on February 26, 1979. In that claim form, the Township represented that the discharge had taken place "on or about March 12, 1977." Attached to the claim form was the exhibit described previously which indicated that the investigation of the Oil Spill Response Unit had revealed discharges from other facilities. The amount of the damages claimed was increased from $436,000, as initially requested, to $1,068,787.

On September 4, 1979, the Spill Fund Administrator denied the Township's original and amended claim. In his letter to the Township, the Administrator wrote that "[t]he Fund has taken a position that it is not obligated to pay claims where the discharge commenced prior to April 1, 1977." However, the Fund's denial of the Township's claims was not wholly unequivocal. The Administrator emphasized that "the retroactivity question is presently in litigation and we will maintain your claim on file for further evaluation following the court decision."

On February 29, 1980, the Township filed a second amended claim seeking compensation in the amount of $2,606,372. In that claim form, the Township ...

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