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ANALYTICAL MEASUREMENTS, INC. v. KEUFFEL & ESSER C

February 9, 1993

ANALYTICAL MEASUREMENTS, INC.; (a NJ corporation held in trust by ELLA MAY PAULLY and THERESA SCARINZI), and ELLA MAY PAULLY (individually), Plaintiffs,
v.
THE KEUFFEL & ESSER COMPANY; THE AZON CORPORATION; SELECTIVE INSURANCE COMPANY; THE ORION GROUP; THE AETNA CASUALTY & SURETY COMPANY; and JOHN DOES I through X, Defendants.



The opinion of the court was delivered by: DICKINSON R. DEBEVOISE

 DEBEVOISE, District Judge

 Defendant, Alfred E. Busch, moves for summary judgment pursuant to Fed. R. Civ. P. 56 against plaintiffs', Analytical Measurements, Inc. ("Analytical") and Ella May Paully's, claims and co-defendants', Azon corporation ("Azon"), Keuffel & Esser Company ("K&E"), William G. Keller and Robert K. Keller's, cross-claims for contribution to costs associated with cleaning up hazardous waste at a property site located in Chatham, New Jersey.

 For the following reasons, defendant's motion is denied in part and granted in part.

 SUMMARY OF FACTS AND PROCEDURAL HISTORY

 Plaintiff Ella May Paully is the owner of property located at 31 Willow Street in Chatham, New Jersey (the "Property"). Analytical is a New Jersey corporation that has rented the Property since 1967 and maintains its principal place of business in New Jersey. Analytical is owned and operated by a trust with Ella May Paully and Theresa Scarinzi serving as trustees.

 Plaintiff Paully's deceased husband, Frank Paully, purchased the Property from K&E in 1967. K&E is a California corporation with its principal place of business in New Jersey. Between approximately 1947 and 1967, K&E owned the Property and operated a photosensitive paper coating factory which was commonly known as the "Redon" plant (hereinafter referred to as "Redon Plant" or "Chatham Facility"). Among other things, diazo dye was used by K&E to coat rolls of paper at the Property during this period. Such coated paper was commonly used as blueprint paper by architects, engineers and other draftsmen.

 K&E used many different formulations of diazo dye over the years. Various chemicals, including zinc and zinc chloride, were constituents of some of those formulas.

 This suit arose from Plaintiff Paully's thwarted attempt to sell the Property which Analytical leases. On March 24, 1988, Paully entered into a contract to sell the Property. New Jersey State law requires that before selling an industrial site, the State has to certify that the land is not contaminated. See Environmental Cleanup Responsibility Act ("ECRA") N.J. Stat. Ann. ยง 13:1K-6 et seq. The State found that the Property and the adjoining property were contaminated by hazardous substances and wastes such as asbestos, petroleum hydrocarbons and diazo dye waste, the chemical used by K&E for coating its paper products. The State held both Paully and Analytical jointly and severally strictly liable for the cost of cleaning the Property.

 K&E was a closely-held family run company from the turn of the century to 1965. During a major portion of those years, the Keuffel family owned all the company stock. Busch was a member of the Keuffel family, but Busch was not a common stockholder in K&E until approximately 1971. Prior to 1971, Busch owned preferred shares that he inherited in the 1950's. Busch was an employee of K&E from 1937 until the company was sold in 1982.

 In or about 1955, Busch became Treasurer of K&E. Busch subsequently received a promotion to Vice-President of Finance. Around 1963, Busch became President and Chairman of the Board of K&E. Busch presided over all the Board of Directors' meetings as Chairman of the Board until his retirement from the company.

 Around 1963, Busch became President and Chairman of the Board of K&E. During his tenure as President of K&E, Busch required that all Vice-Presidents of the various divisions of K&E report directly to him in an advisory capacity. Although Defendant William Keller as Vice President of Manufacturing had direct responsibility for the operations of the Chatham Facility and reported directly to Busch, Mr. Keller testified that he did not recall Busch having responsibility for manufacturing. (W. Keller Dep. at 65:5-7.) Mr. Keller also did not recall ever having an occasion to meet with Busch at the Chatham Facility or to discuss the Chatham Facility with Busch. (Id. at 65:8-12.) Mr. Keller's recollection is corroborated by Mr. Juten's acknowledgment that Busch had no direct operational responsibility for the Chatham Facility and that waste disposal decisions were the responsibility of the individual facility. (Juten Dep. at 124:23 to 125:14; 160:1-13.) Mr. Juten remembers Defendant Busch as being in charge of manufacturing in some of the chemical plants as distinguished from coating plants. (Id. at 81:8-11.) The Chatham Facility was considered a coating plant.

 Mr. Juten testified that when he came to the company there were only three officers who acted as heads of the various functions. (Id. at 115:7-8.) According to Mr. Juten, these officers met regularly, and any matter of importance was discussed among them. (Id at 115:9-11.) Mr. Juten, without elaborating, suggested that more than discussions took place such that everybody was involved in the decision to move the Chatham Facility. (Id. at 115:20-24.)

 An important corporate matter in 1964 was the possible expansion of the Chatham plant. (Juten Dep. 49:12-15.) Mr. Juten testified that William Keller was involved in discussions regarding what to do with the lagoons during the possible expansion. (Id. at 60:21-61:10.) Because of the great importance of the expansion, Mr. Juten believes that Busch was also probably involved in these discussions. (Id. at 61:18-25; 62:1; 155:14-25.) Mr. Juten admits that he has no personal recollection of Busch having any involvement in that decision. (Id. at 117:21-118:1-13.) During this time, Mr. Juten represented K&E at a Chatham Planning Board meeting held on May 20, 1964 in K&E's application to have the property adjoining the Chatham Facility rezoned so that K&E could expand its operations there. (Borough of Chatham Planning Board Meeting dated 5/20/64 attached as Ex. G to Oct. 8, 1992 Cert. of George J. Grochala.) The Board made numerous inquiries about the nature of the lagoons and the waste product deposed of therein. (Id.)

 In approximately 1964, K&E hired an outside engineering firm to analyze its Chatham chemical wastes and convince the local sewage authority that the wastes would not affect the bacteria used to treat waste water. (Juten Dep. 74:18-76:11.) The local sewage authority would not accept K&E's chemical waste due to the potential harm to the bacteria. (Id. 74:18-75:23.)

 From the 1950's to 1978, the Board of Directors' meetings were held at least monthly. (Juten Dep. at 110:21-25-111:3.) William Keller and Alfred Busch attended those meetings. (Id. at 111:12-14; 111:18-20.) Chemical waste disposal at the anticipated Rockaway plant was discussed at a board meeting. (Id. at 119:3-16.) Mr. Juten explained that in his opinion Busch was a "detail" ...


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