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Enertron Industries Inc. v. Mack

Decided: June 25, 1990.


On appeal from the Superior Court, Law Division, Essex County.

Gaulkin, Dreier and D'Annunzio. The opinion of the court was delivered by Gaulkin, P.J.A.D. Dreier, J.A.D. (concurring and dissenting).


[242 NJSuper Page 85] Plaintiffs brought this action in lieu of prerogative writs to compel arbitration of their claims for compensation under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. See N.J.S.A. 58:10-23.11n. On the parties' cross-motions, the Law Division denied plaintiffs' application to compel arbitration and granted defendants' motion to dismiss the complaint. Plaintiffs appeal.


The substantive question presented by the appeal is whether plaintiffs' claims are barred under N.J.S.A. 58:10-23.11k, which requires them to be filed "not later than one year after the date of discovery of damage."

Plaintiffs, manufacturers of electric heaters and fans, occupied leased space in a warehouse at 140 Thomas Street in Newark. On April 11, 1983 the warehouse was damaged by a fire originating in space occupied by another tenant, Vista Warehousing, Inc. By letter of June 9, 1983, the Newark Fire Department advised plaintiffs that "hazardous conditions" existed at the warehouse, including "dangerous chemicals which are stored . . . on these premises . . . [which] present a definite health and safety hazard due to [their] toxicity and flammability." The letter instructed plaintiffs that "[u]ntil this situation is abated no business should be conducted at this location."

According to plaintiffs, they "were denied meaningful access to the building from April 1983 to October 1984." During that 18-month period, they had access only to the ground floor. In September 1984, they authorized the Department of Environmental Protection (DEP) to enter the premises "for the purpose of securing samples to determine the presence of PCBs." By letter of October 18, 1984, counsel for DEP advised that plaintiffs would have to "be evacuated during the cleanup of the warehouse" and were allowed "approximately 2 weeks in which to make whatever arrangements are necessary to transfer your operations." Apparently plaintiffs vacated the premises shortly thereafter; on December 7, 1984 DEP denied plaintiffs' request to enter the warehouse "for the purpose of removing stored materials."

On December 10, 1984 plaintiffs filed their initial claim with the administrator of the Spill Compensation Fund. See N.J.S.A. 58:10-23.11i et seq. The claim identified Vista Warehousing, Inc. as the owner of "the potentially hazardous chemicals"

and described "the causes of the damage or loss of income" as follows:

As a result of a fire on 11th April, 1983 certain potentially hazardous chemicals were found in the space occupied by Vista Warehousing, Inc., in the premises known as 140 Thomas St., Newark. Since that time, access to the premises have either been severely restricted or prohibited, by either the Fire Dept., or the DEP. Access is still prohibited, and the claimant continues to incur losses.

The claim asserted $1,500,000 in income losses, allocated as follows:

April-July 1983 $200,000

August-October 1983 $300,000

November 1983-January 1984 $300,000

January-March 1984 $200,000

April-July 1984 $200,000

August-October 1984 $300,000

The claim stated that those losses resulted because plaintiffs had "suffered continually from either restricted, or at times, prohibited entry into its premises." The restricted or prohibited access led to substantial reductions in plaintiffs' manufacture and sale of electric heaters in 1983 and 1984 and prevented them from bidding for additional orders.

On July 8, 1985 plaintiffs filed a second claim, which repeated "the causes of the damage or loss of income" as in the original claim but asserted additional losses after October 1984. Those losses included vandalism damage to machinery after "our forced evacuation" ($245,000), damages to inventory resulting from DEP's consolidation of inventory "with no amount of reasonable care" ($150,000), continuing loss of profits from December 1984 through April 1985 ($396,680) and losses "as a result of our inability to warehouse . . . imported fans" between April and July 1985 ($300,000).

For more than 2 1/2 years after the filing of the second claim, defendants requested a variety of additional documentation in order to "evaluate" and "process" the claims. Plaintiff responded to those requests, but apparently not to defendants' satisfaction. Finally, on January 6, 1988, plaintiffs requested arbitration of their claim pursuant to N.J.S.A. 58:10-23.11n.

By letter of February 19, 1989, defendants refused to proceed to arbitration until all the requested documentation was submitted and "until such time as the Major Fraud Unit of the New Jersey Department of Law and Public Safety, Division of Criminal Justice, Office of the Attorney General has completed an investigation it is currently conducting on this claim."

On April 4, 1988, plaintiffs filed this action to compel defendants to submit the dispute to arbitration. On plaintiffs' motion for summary judgment brought shortly thereafter, defendants responded that arbitration was not appropriate because the administrator "has not yet made a decision concerning the validity or amount of plaintiffs' damage claim." Accordingly, on November 1, 1988, the Law Division judge ordered defendants to "render a decision on the claim of the ...

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