United States District Court, District of New Jersey
August 2, 1991
NATIONAL-STANDARD COMPANY, PLAINTIFF,
CLIFTON AVENUE CORP. AND HARTZ MOUNTAIN INDUSTRIES, INC., DEFENDANTS.
The opinion of the court was delivered by: Lechner, District Judge.
This is an action brought by National-Standard Company
("National-Standard") against Clifton Avenue Corp. ("Clifton")
and Hartz Mountain Industries, Inc. ("Hartz") (collectively,
"Defendants") to enforce a real estate purchase contract.
Jurisdiction is alleged pursuant to 28 U.S.C. § 1332 and
appears to be appropriate.
Currently before the court is the motion of Defendants for
summary judgment pursuant to Fed.R.Civ.P. 56.*fn1 For the
which follow, summary judgment is granted in favor of
National-Standard is a corporation organized under the laws
of the State of Delaware and maintains its principal place of
business in Michigan. Clifton is a corporation organized under
the laws of and maintains its principal place of business in
the State of New Jersey. Hartz is a corporation organized under
the laws of the State of New York and maintains its principal
place of business in New Jersey.
On 2 August 1987, National-Standard and Clifton entered into
a real estate purchase contract (the "Contract"). The Contract
provided National-Standard agreed to sell to Clifton
approximately thirty-five acres of real property (the
"Property") located in Clifton, New Jersey. The purchase price
of the Property was $10 million. A portion of the Property was
used as landfill for wastes generated by National-Standard's
commercial activities on the Property.
The Contract stated Clifton was a wholly-owned subsidiary of
Hartz. Contract, art. XXIV. The Contract provided Hartz would
pay National-Standard liquidated damages in the amount of $3
million in the event Clifton wilfully defaulted on its
obligations under the Contract. Id.
On 11 July 1990, National-Standard filed its complaint (the
"Complaint") bringing suit against Defendants.
National-Standard brought suit to enforce the Contract on the
grounds Defendants repudiated and anticipatorily breached the
Contract. National-Standard alleges Defendants expressed an
unwillingness to perform under the Contract because Defendants
deemed the clean-up of the portion of the Property used as
landfill to be unacceptable. Complaint, ¶ 15.
The amended answer and counterclaim (the "Def. Answer") was
filed 4 March 1991. Defendants denied National-Standard's
allegations and asserted numerous affirmative defenses and
counterclaims. Of particular relevance to this opinion are the
fourteenth affirmative defense and the fifth counterclaim.
In the fourteenth affirmative defense, Defendants assert the
Complaint should be dismissed because National-Standard "failed
to meet its statutory obligation under N.J.S.A. 13:1E-116 of
disclosing in the Contract the prior utilization of the
Property as a sanitary landfill." Def. Answer at 6. In the
fifth counterclaim, Defendants seek recision of the Contract in
part on the ground "National-Standard knew that the [Property]
contained a sanitary landfill but failed to disclose same to
[Clifton]. N.J.S.A. 13:1E-116 specifically requires a
disclosure of the existence of a sanitary landfill in a
contract for the sale of property containing such a landfill."
Id. at 14.
National-Standard's answer to amended counterclaims (the
"Plntf. Answer") was filed 26 March 1991. National-Standard
asserted several affirmative defenses to the counterclaims,
including laches, anticipatory breach, waiver, equitable and
promissory estoppel and unclean hands. Plntf. Answer at 7.
A. Summary Judgment Standard of Review
To prevail on a motion for summary judgment, the moving party
must establish "there is no genuine issue as to any material
fact and that [it] is entitled to
judgment as a matter of law." Fed. R.Civ.P. 56(c). The present
task is to determine whether disputed issues of fact exist, but
a district court may not resolve factual disputes in a motion
for summary judgment. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986);
see Nathanson v. Medical College, 926 F.2d 1368, 1380 (3d Cir.
1991) (Summary judgment may not be granted "if there is a
disagreement over what inferences can be reasonably drawn from
the facts even if the facts are undisputed."). All evidence
submitted must be viewed in a light most favorable to the party
opposing the motion. Boyle v. Governor's Veterans Outreach &
Assistance Center, 925 F.2d 71, 75 (3d Cir. 1991); Weldon v.
Kraft, Inc., 896 F.2d 793, 797 (3d Cir. 1990); see Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106
S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Todaro v. Bowman,
872 F.2d 43, 46 (3d Cir. 1989); Joseph v. Hess Oil, 867 F.2d 179,
182 (3d Cir. 1989). "`Any "unexplained gaps" in material
submitted by the moving party, if pertinent to material issues
of fact, justify denial of a motion for summary judgment.'"
Ingersoll-Rand Fin. Corp. v. Anderson, 921 F.2d 497, 502 (3d
Cir. 1990) (quoting O'Donnell v. United States, 891 F.2d 1079,
1082 (3d Cir. 1989)).
Although the summary judgment hurdle is a difficult one to
overcome, it is by no means insurmountable. As the Supreme
Court has stated, once the party seeking summary judgment has
pointed out to the court the absence of a genuine issue of
its opponent must do more than simply show that
there is some metaphysical doubt as to the
material facts. . . . In the language of the Rule,
the non-moving party must come forward with
`specific facts showing that there is a
genuine issue for trial.' . . . Where the record
taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no
`genuine issue for trial.'
Matsushita, 475 U.S. at 586-87, 106 S.Ct. at 1356 (emphasis in
original, citations and footnotes omitted). In other words, the
inquiry involves determining "`whether the evidence presents a
sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a
matter of law.'" Brown v. Grabowski, 922 F.2d 1097, 1111 (3d
Cir. 1990) (quoting Anderson v. Liberty Lobby, 477 U.S. at
251-52, 106 S.Ct. at 2511-12), cert. denied sub nom., ___ U.S.
___, 111 S.Ct. 2827, 115 L.Ed.2d 997 (1991).
The Supreme Court elaborated on the summary judgment standard
in Anderson v. Liberty Lobby: "If the evidence [submitted by a
party opposing summary judgment] is merely colorable . . . or
is not significantly probative . . . summary judgment may be
granted." 477 U.S. at 249-50, 106 S. Ct. at 2511 (citations
omitted). The Supreme Court went on to note in Celotex Corp. v.
Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986):
"One of the principal purposes of the summary judgment rule is
to isolate and dispose of factually unsupported claims or
defenses, and we think it should be interpreted in a way that
allows it to accomplish this purpose." Id. at 323-24, 106 S.Ct.
at 2553 (footnote omitted).
Once a case has been made in support of summary judgment, the
party opposing the motion has the affirmative burden of coming
forward with specific facts evidencing a need for trial. see
Fed. R.Civ.P. 56(e); see also Maguire v. Hughes Aircraft Corp.,
912 F.2d 67, 72 (3d Cir. 1990) (non-moving party may not rest
upon mere allegations); Schoch v. First Fidelity
Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990) (neither
unsupported allegations in pleadings and memoranda of law nor
conclusory allegations in affidavits will establish genuine
issue of material fact); Hozier v. Midwest Fasteners, Inc.,
908 F.2d 1155, 1165 (3d Cir. 1990) (cannot create issue of fact
merely by questioning credibility of movant's witnesses;
circumstantial evidence may raise issue of fact); Aronow
Roofing Co. v. Gilbane Building Co., 902 F.2d 1127, 1128 (3d
Cir. 1990) ("summary judgment will be granted where the
nonmoving party fails to `establish the existence' of an
element essential to the case");
Carlson v. Arnot-Ogden Memorial Hosp., 918 F.2d 411, 413 (3d
Cir. 1990) ("nonmoving party must adduce more than a mere
scintilla of evidence in its favor").
B. Contractual Disclosure of Landfill Facilities
Defendants seek recision of the Contract on the ground the
Contract failed to disclose under N.J.S.A. 13:1E-116 that part
of the Property was used as a sanitary landfill. Section
13:1E-116 is part of the Sanitary Landfill Facility Closure and
Contingency Fund Act (the "Closure Act"), N.J.S.A. 13:1E-100
et seq. Section 13:1E-116 provides, in pertinent part:
a. No person shall contract to sell any land
which has been utilized as a sanitary landfill
facility at any time prior to the effective date of
this supplementary act unless the contract of sale
for the land shall state the fact and the period of
time that the land was so utilized.
b. Any contract made in violation of this section
N.J.S.A. 13:1E-116 (emphasis added). National-Standard
"concedes for summary judgment purposes that it operated a sole
source landfill as the depository for waste generated by its
on-site commercial operation on the real property which is the
subject matter of the instant action and that the real estate
purchase contract does not include the required statutory
language." Plntf. Supp. Brief at 2. Accordingly, the only issue
which needs to be considered is whether a "sole source
landfill" such as the one National-Standard concedes it
operated on the Property constitutes a "sanitary landfill
facility." This question was addressed in Johnson Machinery Co.
v. Manville Sales Corp., 248 N.J.Super. 285, 590 A.2d 1206
(App. Div. 1991).
1. Johnson Machinery Co. v. Manville Sales Corp.
The Johnson Machinery court was faced with the same question
raised by Defendants: Whether the definition of a solid waste
facility, which includes sanitary landfills, encompasses a
noncommercial sole source landfill. 248 N.J.Super. at 297,
590 A.2d 1206. A noncommercial sole source landfill is a landfill
which accepts only solid waste from a source on the site of the
landfill and not from any other commercial sources. Id.
In Johnson Machinery, the purchaser of real property brought
an action to void the purchase agreement in part on the ground
the agreement did not contain a statement pursuant to N.J.S.A.
13:1E-116 that the property had been used as a sanitary
landfill. 248 N.J.Super. at 288-89. The purchaser moved for
summary judgment. The trial court denied the purchaser's motion
in part on the ground section 13:1E-116 did not apply to a
noncommercial sole source landfill. Id.
The purchaser appealed. The Appellate Division of the
Superior Court of New Jersey (the "Appellate Division")
We hold that the term "sanitary landfill
facility" in the Closure Act includes a sole
source landfill which operates only as the
depository of the waste its own commercial
operation has generated. We also hold that the
Closure Act means exactly what it says: [W]here
sale property has been used as a sanitary landfill
facility, the seller must include in the contract
of sale a statement that the property has been so
used and for what period of time. Failure to
include this information will result in the
contract being void at the sole discretion of the
buyer. No equitable defenses to the voiding of the
contract are recognized.
Johnson Machinery, 248 N.J.Super. at 290, 590 A.2d 1206
In reaching these conclusions, the Appellate Division first
examined the Solid Waste Management Act (the "SWMA"), N.J.S.A.
13:1E-1 et seq., which incorporates and therefore determines
the scope of the Closure Act. Johnson Machinery, 248 N.J.Super.
at 296, 590 A.2d 1206. The SWMA defines "sanitary landfill
facility" as: "[A] solid waste facility at which solid waste is
deposited on or in the land as fill for the purpose of
permanent disposal or storage for a period exceeding six
except that it shall not include any waste facility approved
for disposal of hazardous waste." N.J.S.A. 13:1E-3q; see
Johnson Machinery, 248 N.J.Super. at 296-97, 590 A.2d 1206.
Under the SWMA, a "solid waste facility" is defined as:
. . [T]he plants, structures and other real
and personal property acquired, constructed or
operated or to be acquired, constructed or
operated by any person . . . including transfer
stations, incinerators, resource recovery
facilities, sanitary landfill facilities or other
plants for the disposal of solid waste, and all
vehicles, equipment and other real and personal
property and rights therein and appurtenances
necessary or useful and convenient for the
collection or disposal of solid waste in a sanitary
N.J.S.A. 13:1E-3h (emphasis added); see Johnson Machinery, 248
N.J.Super. at 297, 590 A.2d 1206
. "Solid waste" is defined as:
"[G]arbage, refuse, and other discarded material resulting from
industrial, commercial and agricultural operations, and from
domestic and community activities, and shall include all other
waste materials including liquids. . . ." N.J.S.A. 13:1E-3a;
see Johnson Machinery, 248 N.J.Super. at 297, 590 A.2d 1206
In holding that the presence of a noncommercial sole source
landfill must be disclosed in a real property purchase
agreement, the Appellate Division first examined the language
of the relevant statutes and the relevant legislative history.
The Appellate Division noted: "Nothing in our research suggests
that the commercial/sole source distinction . . . was ever
contemplated by the Legislature." Id. The Appellate Division
then noted the SWMA was enacted to regulate all solid waste
disposal activities and "[n]othing in the previously cited
definitions suggests . . . sole source landfills were meant to
fall outside the broad reach of the SWMA." Id.
In addition, the Appellate Division noted that although the
SWMA permits the Department of Environmental Protection (the
"DEP") to exempt specific waste disposal activities from
regulation, sole source landfills were never exempted by the
DEP. Id. at 297-98, 590 A.2d 1206. Moreover, "from the
inception of its regulatory jurisdiction, DEP treated the
`intra-plant' land disposal of `plant generated waste
materials' as a `sanitary landfill' subject to the
`registration, operation and closure maintenance' requirements
of the SWMA and the agency's implementing regulations." Id. at
298, 590 A.2d 1206 (quoting N.J.A.C. 7:26-1.1).
The Appellate Division pointed out that non-commercial
landfills had been exempted from regulation under SWMA in
limited situations. Johnson Machinery, 248 N.J.Super. at
298-99, 590 A.2d 1206. Never, however, had sole source
landfills been exempted. Id. From this, the Appellate Division
drew the conclusion that the SWMA on its face encompassed
non-commercial and sole source landfills. Id. at 299,
590 A.2d 1206. For non-commercial landfills to be entirely excluded from
SWMA, either the New Jersey legislature or the DEP would have
to expressly create an exemption. Id. No such exemption,
however, has been created. Id.
Turning to the Closure Act, the Appellate Division noted the
scope of the Closure Act is just as broad as the scope of the
SWMA. Id. at 299, 590 A.2d 1206. The Appellate Division pointed
out that neither the Closure Act nor the only New Jersey
Supreme Court case interpreting the Closure Act indicated that
noncommercial sole source landfills were excluded from
regulation under the Closure Act. Id. at 300, 590 A.2d 1206.
The Appellate Division also examined the policy
considerations behind regulating noncommercial sole source
landfills under the Closure Act. The Appellate Division noted:
. . [T]here is simply no basis to distinguish
between sole source and ordinary commercial
landfills. All landfills present an identical
danger to the environment. That danger is not
diminished because the solid waste comes from one
source instead of many and there is no policy
reason that we can discern why a sole source
noncommercial industrial landfill should not be
closed in the same
environmentally sound manner as is prescribed for
all other landfills. Likewise, we see no reason
why the operator of such a landfill should not be
required to set aside funds for such closure and
as compensation for innocent victims. In the
absence of clear legislative direction to the
contrary, there is no reason to exempt sole source
noncommercial landfills from the operation of the
Id. at 302, 590 A.2d 1206
. Accordingly, the Appellate Division
reversed the trial court ruling that the disclosure requirement
set forth in N.J.S.A. 13:1E-116 did not apply to noncommercial
sole source landfills. Id. at 302-03, 590 A.2d 1206
As a final matter, the seller in Johnson Machinery attempted
to argue there is no absolute right to void a purchase
agreement which does not contain the language required by
N.J.S.A. 13:1E-116. 248 N.J.Super. at 307, 590 A.2d 1206.
Rather, the seller argued equitable defenses might make such a
purchase agreement enforceable, rather than voidable. Id. The
Appellate Division, however, rejected this argument. The
Appellate Division reasoned that permitting equitable defenses
to make a purchase agreement enforceable rather than voidable
would undermine the mandatory language of N.J.S.A. 13:1E-116.
Johnson Machinery, 248 N.J.Super. at 308, 590 A.2d 1206.
Accordingly, the power of a purchaser to void a real property
purchase agreement which lacks the required disclosure under
N.J.S.A. 13:1E-116 is not subject to equitable defenses.
Johnson Machinery, 248 N.J.Super. at 308-09, 590 A.2d 1206.
2. Applicability of Johnson Machinery
The ruling of the Appellate Division in Johnson Machinery is
dispositive. Because noncommercial sole source landfills are
encompassed by N.J.S.A. 13:1E-116, the Contract had to disclose
that National-Standard operated a landfill on the Property. It
is uncontroverted that the Contract does not make such a
disclosure. Accordingly, the Contract is voidable under
N.J.S.A. 13:1E-116 at the election of Defendants.
Notwithstanding the fact that the issues in Johnson Machinery
are identical to the issues in this action, National-Standard
argues the ruling in Johnson Machinery should not be applied in
this action. First, National-Standard argues the Johnson
Machinery decision is not controlling because it is not a
decision from the New Jersey Supreme Court. Plntf. Supp. Brief
at 3. Second, National-Standard argues the holding in Johnson
Machinery that the Closure Act applies to sole source landfills
will be reversed by the New Jersey Supreme Court. Plntf. Supp.
Brief at 5. Furthermore, National-Standard argues the holding
in Johnson Machinery that the voiding of a contract under
N.J.S.A. 13:1E-116 is not subject to equitable defenses will be
reversed by the New Jersey Supreme Court. Plntf. Supp. Brief at
8. Third, National-Standard argues the Johnson Machinery
decision should not be applied retroactively. Plntf. Supp.
Brief at 11. Finally, National-Standard argues this summary
judgment motion should be stayed pending appeal of the Johnson
Machinery decision. Plntf. Supp. Brief at 18. Each of these
arguments will be considered in turn.
a. Reliance on a State Court Decision
As mentioned, National-Standard argues it is inappropriate to
rely upon the Johnson Machinery decision because that is not a
decision of the New Jersey Supreme Court. Plntf. Supp. Brief at
A federal court sitting in diversity must apply substantive
state law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct.
817, 822, 82 L.Ed. 1188 (1938); Yohannon v. Keene Corp.,
924 F.2d 1255, 1264 (3d Cir. 1991). Ordinarily, controlling state
law will be that which is pronounced by the relevant state
legislature or highest state court. Erie, 304 U.S. at 78, 58
S.Ct. at 822; see Commercial Union Ins. Co. v. Bituminous
Casualty Co., 851 F.2d 98, 100 (3d Cir. 1988). When a
particular question of law has not been authoritatively decided
by highest state court, the federal court must predict what the
highest state court would decide if confronted with the same
question. Yohannon, 924 F.2d at
1264; Aetna Casualty & Surety Co. v. Farrell, 855 F.2d 146, 148
(3d Cir. 1988); McKenna v. Ortho Pharmaceutical Corp.,
622 F.2d 657, 661 (3d Cir.), cert. denied, 449 U.S. 976, 101 S.Ct. 387,
66 L.Ed.2d 237 (1980).
In predicting how the highest state court would decide an
issue, the federal court may look to analogous state court
cases, treatises, restatements and law review articles.
McKenna, 622 F.2d at 662-63. In addition, particular attention
should be given to the decisions of intermediate state
appellate courts. Aetna Casualty, 855 F.2d at 148; Patterson v.
American Bosch Corp., 914 F.2d 384, 391 (3d Cir. 1990);
Commercial Union, 851 F.2d at 101; McKenna, 622 F.2d at 662.
It has been noted that "`under some conditions, federal
authority may not be bound even by an intermediate state
appellate court ruling.'" McKenna, 622 F.2d at 662 (quoting
Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct.
1776, 1782, 18 L.Ed.2d 886 (1951)).*fn2 Decisions of
intermediate state appellate courts, however, constitute
"presumptive evidence of state law." Commercial Union, 851 F.2d
at 101; see Aetna Casualty, 855 F.2d at 148 ("[G]ive serious
consideration to the opinion of an intermediate appellate
court."). Indeed, the decision of an intermediate state
appellate court "`is not to be disregarded by a federal court
unless it is convinced by other persuasive data that the
highest court of the state would decide otherwise'" Bosch, 387
U.S. at 465, 87 S.Ct. at 1782 (emphasis omitted) (quoting West
v. A.T. & T. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85
L.Ed. 139 (1940)); see Patterson, 914 F.2d at 391.
The Johnson Machinery decision is a compelling, well-reasoned
decision by a New Jersey intermediate appellate court on the
exact issue raised by Defendants. National-Standard concedes
that if the ruling in Johnson Machinery is applied to the facts
in this action, then summary judgment must be granted in favor
of Defendants. Plntf. Supp. Brief at 2.
In Aetna Casualty, the court held that it was "obliged to
accept" the decision of a New Jersey intermediate appellate
court decision as controlling when the state court decision
"represent[ed] a reasonable prediction of the rationale the
state Supreme Court would adopt. . . ." 855 F.2d at 150.
Similarly, in this action, the Johnson Machinery decision is a
reasonable (indeed probable) prediction of how the New Jersey
Supreme Court would decide the issue of the applicability of
the Closure Act to sole source landfills. The Johnson Machinery
court considered and based its decision on New Jersey Supreme
Court cases. See Johnson Machinery, passim. The Johnson
Machinery decision is controlling.*fn3 Under New Jersey law,
noncommercial sole source landfills are sanitary landfills
which fact must be disclosed in a real property purchase
agreement under N.J.S.A. 13:1E-116. Johnson Machinery, 248
N.J.Super. at 290, 590 A.2d 1206.
b. Reversal of Johnson Machinery
As mentioned, National-Standard contends the Johnson
Machinery decision should not be deemed controlling because it
will be reversed by the New Jersey Supreme Court. Plntf. Supp.
Brief at 5-10. National-Standard relies on the trial court's
decision in Johnson Machinery (which was reversed by the
Appellate Division) as the proper interpretation of the Closure
Act. Plntf. Supp. Brief at 5-7. National-Standard offers no
other support for its proposition that the Johnson Machinery
decision will be reversed. This argument is baseless.
The Appellate Division in Johnson Machinery examined the
history and case law. Indeed, the Appellate Division considered
the same arguments made by National-Standard. There is no
reason to discount the decision. National-Standard does nothing
more than speculate that the Johnson Machinery decision may be
reversed. Accordingly, the Johnson Machinery decision is
National-Standard contends the Johnson Machinery decision
should not be applied retroactively to National-Standard.
Plntf. Supp. Brief at 11.
Under New Jersey law, judicial decisions are, as a general
rule, applied retroactively. New Jersey Election Law
Enforcement Comm'n v. Citizens to Make Mayor-Council Government
Work, 107 N.J. 380, 387, 526 A.2d 1069 (1987); see Gruber v.
Price Waterhouse, 911 F.2d 960, 965 (3d Cir. 1990) (presumption
of retroactivity). The ruling in Johnson Machinery was applied
to the facts before the Johnson Machinery court. Notably, the
facts in the Johnson Machinery case are similar to the facts in
this case in several significant aspects. The purchase
agreement considered in Johnson Machinery was entered into in
1987, approximately four years before the Appellate Division
held the Closure Act applied to sole source landfills. 248
N.J.Super. at 292, 590 A.2d 1206. In this case, National
Standard and Defendants also entered into the Contract in 1987.
Neither contract made the required disclosure. The Closure Act
was enacted in 1981, approximately six years before the
execution of both the purchase agreement in Johnson Machinery
and the Contract between National Standard and Defendants. See
Vi-Concrete Co. v. New Jersey, 115 N.J. 1, 13, 556 A.2d 761
(1989) (citing Sanitary Landfill Facility Closure and
Contingency Act (Closure Act), L. 1981, c. 306).
In essence, the Appellate Division in Johnson Machinery
applied its ruling to an agreement executed approximately four
years earlier. There is no reason the ruling in Johnson
Machinery should not be similarly applied to the Contract,
which was also executed approximately four years earlier than
the Appellate Division decision. Because the relevant facts and
contracts in this case and in Johnson Machinery are parallel,
the Appellate Division holding that the Closure Act applies to
noncommercial sole source landfills is applicable to the facts
and Contract in this case.
A decision, however, may be limited to prospective
application under certain circumstances. Chevron Oil Co. v.
Huson, 404 U.S. 97, 106, 92 S.Ct. 349, 355, 30 L.Ed.2d 296
(1971); Gruber, 911 F.2d at 965; Juzwin v. Asbestos Corp.,
900 F.2d 686, 692 (3d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct.
246, 112 L.Ed.2d 204 (1990); Hill v. Equitable Trust Co.,
851 F.2d 691, 695-96 (3d Cir. 1988), cert. denied sub nom.,
488 U.S. 1008, 109 S.Ct. 791, 102 L.Ed.2d 782 (1989). As the Third
Circuit stated in Gruber, the question whether a decision is to
be applied prospectively only "involves a balancing which must
be done on a case by case basis." 911 F.2d at 965. Under
Chevron, three factors must be shown in order to overcome the
presumption of retroactive application of newly created rules
First, the decision to be applied nonretroactively
must establish a new principle of law, either by
overruling clear past precedent on which litigants
may have relied, or by deciding an issue of first
impression whose resolution was not clearly
foreshadowed. Second, it has been stressed that
"we must . . . weigh the merits and demerits in
each case by looking to the prior history of the
question, its purpose and effect, and whether
retrospective operation will further or retard its
operation." Finally, we have weighed the inequity
imposed by retroactive application, for "[w]here a
decision of this Court could produce substantial
inequitable results if applied retroactively,
there is ample basis in our cases for avoiding the
`injustice or hardship' by a holding of
Chevron, 404 U.S. at 106-07, 92 S.Ct. at 355 (citations
omitted); see New Jersey Election Law Enforcement Comm'n, 107
N.J. at 389, 526 A.2d 1069
. "The burden of persuasion rests on
the party attempting to avoid retroactive application." Gruber,
911 F.2d at 965.
National-Standard contends it "did not believe that [N.J.S.A.
13:1E-116a] applied to sole source landfills which operated
only as the depository of the waste that its own commercial
operation had generated." Plntf. Supp. Brief at 14.
National-Standard contends it was reasonable for it to rely on
its belief because there were no contrary interpretations of
the Closure Act at the time the Contract was entered into.
As mentioned, for National-Standard to meet the first prong
of the Chevron test, National-Standard must show Johnson
Machinery overruled past precedent upon which National-Standard
reasonably relied. 404 U.S. at 106, 92 S.Ct. at 355.
Alternatively, National-Standard must show that Johnson
Machinery resolved an issue of first impression in a manner not
clearly foreshadowed. Chevron, 404 U.S. at 106, 92 S.Ct. at
355. The absence of past interpretation, however, is not
equitable to the past precedent upon which National-Standard
would have to show it relied.
In addition, the holding in Johnson Machinery was
foreshadowed by pertinent authority. As the Appellate Division
noted in Johnson Machinery, the SWMA had always been
interpreted to encompass the Closure Act and sole source
landfills. 248 N.J.Super. at 299, 590 A.2d 1206. The Appellate
Division concluded the New Jersey legislature "has expressed
its view of the SWMA legislation as generally including sole
source landfills and its approval of the long-standing DEP
interpretation to that effect." Id. Therefore, the holding that
sanitary landfills include sole source landfills was clearly
National-Standard has failed to meet its burden of showing
the first prong of the Chevron test is met. There is no need to
consider the remaining prongs of the Chevron test. The
principles pronounced in the Johnson Machinery decision are
appropriately applied to the facts and Contract in this case.
d. Stay Pending Appeal of Johnson Machinery
As mentioned, National-Standard argues discretion exists to
stay this action pending the appeal of the Johnson Machinery
decision. Plntf. Supp. Brief at 18. National-Standard indicates
that the defendant in Johnson Machinery has applied to the New
Jersey Supreme Court for review of the Johnson Machinery
decision. Plntf. Supp. Brief at 19. There is no indication,
however, whether the appeal will be heard. Accordingly, there
is no reason to exercise the discretion to stay this action
pending the appeal of the Johnson Machinery decision.*fn5
Moreover, even if certification is granted and the New Jersey
Supreme Court reviews the Appellate Division decision, it is
appropriate to anticipate an affirmance.
For the reasons set forth above, the decision in Johnson
Machinery is controlling. The Appellate Division explained the
basis for its holding with compelling reasoning. Moreover, the
decision is squarely in line with the intent of the explicit
language and intent of the legislation: the disclosure and
duration of environmental problems, or potential environmental
problems, must occur in the contract of sale; a seller fails to
do so at its own risk. Therefore, the Contract is voidable
because it fails to disclose under N.J.S.A. 13:1E-116 that a
sanitary landfill exists on the Property. There are no
equitable defenses to the voiding of the Contract under
N.J.S.A. 13:1E-116. Accordingly, summary judgment is granted in
favor of Defendants. National Standard is to return to Clifton
all deposit monies, plus accrued interest at the rate set forth
in Article II of the Contract. The remainder of this action is