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Prospect Industries Corp. v. Singer Co.

Decided: October 27, 1989.

PROSPECT INDUSTRIES CORP., PLAINTIFF,
v.
THE SINGER COMPANY, DEFENDANT/THIRD-PARTY PLAINTIFF, V. MONSANTO COMPANY, THIRD-PARTY DEFENDANT. UNITED STATES LAND RESOURCES, INC., PLAINTIFF, V. PROSPECT INDUSTRIES CORPORATION, ET AL., DEFENDANTS, AND THE SINGER COMPANY, DEFENDANT/THIRD-PARTY PLAINTIFF, V. MONSANTO COMPANY, THIRD-PARTY DEFENDANT. BROOK WAREHOUSING CORP. AND FINDERNE ASSOCIATES, PLAINTIFFS, V. THE SINGER COMPANY, DEFENDANT/THIRD-PARTY PLAINTIFF, V. THE MONSANTO COMPANY, THIRD-PARTY DEFENDANT



Arnold, P.J.Cv.

Arnold

The old Singer manufacturing plant in Bridgewater Township is contaminated with polychlorinated biphenyls, or PCBs, and the contamination has spread to the soil and groundwater outside the plant. The contamination occurred as a result of manufacturing operations conducted by the Singer Company (hereinafter "Singer") when hydraulic fluids containing PCBs leaked from die-casting machines. Plaintiff, Prospect Industries Corporation, (hereinafter "Prospect") purchased the plant from Singer in 1977. Although the contract between Prospect and Singer for the purchase of the property provided that Prospect had inspected the property and essentially would take the property "as is" without any warranty by Singer, there is no evidence that Prospect was aware of the PCB contamination.

In this toxic-tort action, Prospect moved for partial summary judgment arguing that the undisputed facts establish that Singer is strictly liable to Prospect for damages because Singer conducted an abnormally dangerous activity in the plant. Prospect relies on the decision of the New Jersey Supreme Court in State, Dept. of Environ. Protect. v. Ventron Corp. 94 N.J. 473, 468 A.2d 150 (1983) in support of its motion. In Ventron the Court held that the "disposal" of a toxic waste gives rise to the common law tort of engaging in an abnormally dangerous activity which results in strict liability for such conduct. Prospect's motion seeks an order requiring Singer immediately to clean up the PCB contamination inside the plant. Singer opposes the motion on numerous grounds. The principal ground argued in opposition to the motion is that Singer did not engage in an abnormally dangerous activity because it did not "dispose" of a toxic waste as defendant did in Ventron, but only consumptively used hydraulic fluids in its manufacturing process not knowing at the time that the hydraulic fluids contained toxic substances. Singer also argues that the issue of strict liability cannot be decided on a motion for summary judgment because it requires a fact-sensitive analysis of all the relevant circumstances under the Restatement, Torts 2d, ยง 520 (1977).

Furthermore, Singer argues that they are not strictly liable to Prospect because Prospect essentially purchased the property "as is." Prospect's motion thus raises the novel issue of whether strict liability can be imposed on a prior landowner to a successive purchaser for contamination as a result of leaks during a manufacturing process of a substance only later learned to be hazardous and whether summary judgment can be granted as a matter of law without making an analysis of the Restatement factors. This opinion is intended to supplement this court's oral opinion rendered on October 27, 1989.

Singer built its Bridgewater Township manufacturing plant in 1942 and operated it until 1977 when it sold the plant to Prospect. In 1968, Singer installed two hydraulic die-casting machines in the plant. From 1968 through 1972 Singer used thousands of pounds of hydraulic fluid purchased from the Monsanto Company in these die-casting machines. These hydraulic fluids contained very high percentages of PCBs. According to the deposition testimony of Singer's corporate manager of environmental control these hydraulic fluids routinely leaked from the hoses, connectors, O-rings and seals of the die-casting machines and he concluded that the PCB contamination in the plant is due to the wood-block floors in the plant being soaked with these PCB laden hydraulic fluids. Despite almost four years of intensive pretrial discovery in this action there is absolutely no evidence of any other source for the PCB contamination in the plant except for an unsubstantiated possibility set forth in Singer's brief that Westinghouse transformers in the plant may have leaked PCBs. Singer did not clean up the contamination in the plant before selling it to Prospect in 1977. Prospect manufactured steel containers in the plant from 1977 through 1985, but there is no evidence that Prospect ever used PCBs in the plant.*fn1

In late 1984, Prospect became interested in selling the plant. Since Prospect was aware that it needed approval of any sale from the Department of Environmental Protection (hereafter "DEP") under the Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et seq. (hereafter "ECRA"), it had environmental tests performed on the property. These tests revealed the presence of PCBs and, in 1985, the DEP instructed Prospect to seal off the plant and to notify the DEP of the status of remedial work in ten days. However, no remedial work to remove the contamination has ever been done. The plant has been closed since 1985 because of serious health hazards and it cannot be sold because ECRA approval cannot be obtained until the contamination has been eliminated. In August 1989, the DEP ordered both Prospect and Singer to remove various types of pollution from the plant site, including the PCB contamination, but the DEP has not charged that Prospect caused any of the PCB contamination.

Prospect relies on the decision in Ventron and its progeny in support of its motion for partial summary judgment. In Ventron, the Court held strictly liable prior owners of property who processed mercury and disposed of it on the property. The Court held the prior owners strictly liable because they were at all times engaged in an abnormally dangerous activity -- dumping toxic mercury. That activity poisoned the land and a neighboring creek and the prior owner was held liable even if it did not intend to pollute and adhered to the standards of the time. Ventron, supra, 94 N.J. at 493, 468 A.2d 150. The opinion of the Court concluded broadly that, "Those who poison the land must pay for its cure." Ibid.

The principal ground argued by Singer, in opposition to Prospect's motion for summary judgment, is that it did not "dispose" of a toxic waste so that the holding in Ventron is not applicable to the facts and circumstances of this case. Certainly in Ventron the toxic waste found its way into the soil and water because of intentional dumping. Furthermore, the use of

a fluid in a manufacturing operation is a different activity than the dumping of that fluid. However, in determining whether Singer was engaged in an abnormally dangerous activity this court believes that the activity to be examined is not manufacturing, but rather the leakage of hydraulic fluids from the machinery. While this leakage is less egregious than the dumping in Ventron, the failure of Singer to control this leakage is sufficiently similar to the actions of defendant in Ventron to conclude that it should be considered a "disposal." Amland Properties Corp. v. Aluminum Co. of America, 711 F. Supp. 784, 806 (D.N.J.1989).

Singer also argued that the decision in Ventron is inapplicable because the Court was discussing the definition of the term "discharge" under the New Jersey "Spill Compensation and Control Act" (Spill Act), N.J.S.A. 58:10-23.11 et seq. However, the opinion of the Court stated: "[T]he Spill Act does not so much change substantive liability as it establishes new remedies for activities recognized as ...


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