On appeal from Superior Court of New Jersey, Law Division, Atlantic County.
Before Judges Villanueva, Wefing and Braithwaite.
The opinion of the court was delivered by
Plaintiffs, Sanford Weed and Nancy Weed, appeal from a jury verdict of no cause of action in favor of defendant, and plaintiff Sanford Weed appeals from an award of $92,514.24 under N.J.S.A. 2A:15-59.1, the so-called frivolous litigation statute (Act), to defendant. In the latter appeal, the issue is whether a plaintiff who in bad faith fabricates a lawsuit can be assessed under the Act for attorney and expert fees incurred by the defendant successfully defending the lawsuit. We hold that he can so be assessed and affirm both judgments.
Plaintiffs, Sanford Weed and Nancy Weed, individually and t/a Weed's Texaco, sued defendant Casie Ecology Oil Salvage, Inc. (Casie or defendant) to recover damages for an environmental cleanup resulting from a spill of gasoline allegedly caused by defendant's negligent removal of a gasoline storage tank from plaintiffs' property. Plaintiffs sought recovery upon theories of breach of contract and negligence.
Sanford Weed (Weed or plaintiff) operated a gasoline business there from 1977 to 1987. The site in question had been used as a gasoline filling station since 1954. The original fuel storage tanks and underground pipes were used until 1987.
Sanford Weed testified that while one of Casie's workmen was in the excavation hole striking the pipe leading from the tank to the pump island with a sledgehammer in order to disconnect it, a spill occurred which lasted approximately two to three minutes and caused an estimated 50 gallons of fuel to be released. He stated that, although he knew of the spill, neither he nor Casie did anything to try to stop the spill or contain the product. Indeed, he claimed that he did not even watch the spill while it was happening and was busy attending to various matters. He also testified that he never contacted the Department of Environmental Protection (DEP)*fn2 to report the spill and did not tell anyone about it until the DEP contacted him, which is when he claims to have first learned that there was a problem. He further confirmed that he did not complain to Casie about the alleged spill and paid Casie in full on four separate occasions for its work. He conceded that the first time that Casie was informed that Weed believed Casie was responsible for the cleanup of his premises was a few months before he filed the complaint in September 1991 when his lawyer contacted Casie.
The main issue at the trial was whether an event that caused a spill had occurred prior to Casie's arrival on the premises on May 16, 1987. Indeed, a DEP document showed that on May 15, 1987, Patrolman Reindwalds of the Egg Harbor Township Police Department reported that on May 14, two days before Casie did its work, a spill of gasoline was noted during underground tank removal at the Weeds' premises. At trial, Weed testified that the day before Casie arrived, an excavator hired by Weed used a backhoe to expose the tank and later two of Weeds' employees then dug out soil around the tank. Weed insisted that neither his men nor the excavator touched the tank or the pipes connected to the tank, and gave contradictory accounts as to whether the excavator was Michael Zyndorf or Brian Osborne.
An important issue at the trial was whether the gasoline that had been stored in the tank removed by Casie was leaded or unleaded. In a deposition taken in June 1992, Weed stated that the tank held unleaded fuel before he had stopped using it. However, after Casie's expert determined that most of the contamination on the site, including that in the area where the 3,000-gallon tank had been removed by Casie, was from leaded gasoline, Weed submitted an affidavit to the court signed June 14, 1993 which stated that he distinctly remembered testifying to the storage of leaded gasoline in the particular tank and the "Court Reporter apparently typed up my testimony as indicating unleaded gasoline in that tank. That is not correct. ... My specific recollection [is] that there was leaded and only leaded gasoline in the tank which was the subject of the excavation and which is the subject of this litigation."
Following the submission of Weed's affidavit, the defendant obtained a document that Weed had signed and submitted to the DEP in May 1986 in which he stated that the tank in question contained unleaded gasoline. The DEP document was an "underground storage tank registration questionnaire" which stated that Weed's Texaco had five tanks -- two 3,000-gallon tanks, one 4,000-gallon tank, one 2,000-gallon tank, and one 1,000-gallon tank with diesel fuel. The questionnaire indicated that both 3,000-gallon tanks contained unleaded gasoline. Casie removed one of these 3,000-gallon tanks. At trial, Weed ultimately conceded that the tank had in fact contained unleaded gasoline before he stopped using it.
Weed also conceded that he observed a hole on the top of the tank after it was removed from the excavation, but insisted that the hole was only pinpoint in size. However, he admitted that the tank was rusty and that he did not look for any other holes in the tank. In a pretrial deposition Weed had testified that his decision to have the storage tank removed by Casie was not prompted by a belief that the tank was leaking, rather he was preparing the property for sale. At trial, however, he testified that Casie's services were requested because of "the possibility" the tank was leaking. Weed's admission that inventory records had shown a loss of product from the tank and that he had it removed because of a belief that it might be leaking occurred after the defense took a deposition of Weed's former gas station manager, Charles "Butch" Giovinazzi. Contrary to Weed's deposition testimony, Mr. Giovinazzi testified that Weed knew prior to the removal of the tank that it was leaking. Likewise, Weed's inventory records for his other tanks revealed fuel shortages, but he nevertheless continued to use them.
Although Weed testified at trial that only he and Casie's employees witnessed the spill, the next day he produced a witness, Draper Ellis, a former employee and tenant, who claimed he witnessed the spill. Ellis testified that he observed the initial digging with the backhoe and the digging with the shovels. The men doing the digging, Ellis alleged, were Casie's employees who attempted to disconnect a pipe from the bottom of the tank with "enormously large pipe wrenches." The men then reportedly beat on the pipe with sledgehammers for about an hour. Next, Ellis testified that he saw the bottom of the pipe split, and gasoline "come pouring out all over the place." According to Ellis, the workers scrambled about to stop the spill, but the gasoline spilled into the earth for 20 to 30 minutes unabated because Casie did not have a receptacle to catch it.
On cross-examination, Ellis insisted that Casie's men operated the backhoe to break the concrete, exposed the tank, banged on a pipe and caused the spill. However, he also confirmed making a certification to an investigator, Robert Browne, on November 6, 1992, which stated that he was on the premises when they were taking the gas tank out, but he "wasn't where they were working." The certification further stated that he did not remember if there was any spillage when they took the tank out and did not know who took the tank out. Ellis attributed the discrepancy in his testimony and statement to "a major heart attack" he suffered just prior to giving the statement.
Prior to November 6, 1992, Ellis had spoken to Browne. Ellis, however, did not recall making the following statements, to which Browne testified, "[Ellis] recalls that the tank was losing product. The excavators cut open the tank from the top and then washed the tank out before removing it. He does not recall any spill from the tanks when they were removed."
The testimony of plaintiffs' two expert witnesses, Matthew Wristbridge and Donald Bello, contradicted much of Weed's testimony. Wristbridge, an employee of Tank Management, Inc., stated that based upon the length and size of the pipe running from the pump to the tank, approximately six gallons of gasoline could be contained in the pipe allegedly disconnected by Casie. This was in stark contrast to Weed's estimate that 50 gallons of gasoline had spilled out of the pipe allegedly broken by Casie. Wristbridge also confirmed that it was his understanding that the spill occurred from a tank which ruptured as it was being removed from the hole, and not while the tank was in the ground. Additionally, Wristbridge stated that the tanks which had been removed in 1987 and 1989 were made of bare steel which were rusty and had no modern features such as leak protection. He explained that he had taken soil samples from the premises prior to excavating three tanks in 1989, and that these findings indicated contamination throughout the premises, not just near the tank excavated by Casie. Indeed, a substantial amount of soil contamination was right under the area where the 4,000-gallon tank that held leaded gasoline had been.
Bello also testified on cross-examination that he had originally believed that the spill occurred while the tank was "on its way out of the hole," but he realized that he was incorrect in this understanding. He further admitted that his information concerning discharges at the site came only from Weed. Bello also confirmed that he advised the DEP that the hole found on the top of the tank was a likely source of contamination. That statement was contrary to Bello's deposition testimony where he testified that there was no evidence that a release came from the hole on the top of the tank. Bello also conceded that he wrote in a report submitted to the DEP in December 1990 that "the owner of the facility has indicated that during the removal of the [underground storage tanks] at the Weed's facility performed on July 25, 1989, the removal contractor spilled an unknown quantity of residue fuel from one of the [underground storage tanks] into the [underground storage tank] excavation." Monitoring and remediation of the site, Bello testified, could cost up to $800,000.*fn3
Defendant is in the business of removing and cleaning oil tanks, installing tanks, conducting groundwater remediation, and emergency spill response for the DEP. Rex Mouser, a Casie employee, testified that Weed's Texaco contacted Casie on May 13, 1987 for "tank cleaning and petroleum hydrocarbons ... and ... the removal of the tank off site" with the apparent understanding that the tank would first be exposed by Weed. The job did not include cleaning or the disconnecting of any of the pipes. If that had been an aspect of the job, such a charge would have been specifically included in the estimate and the "hard card" that was issued for the job by Casie.
Casie presented the testimony of James Smith, Ph.D., an environmental chemist who was the head of Trillium, Inc. Dr. Smith explained that after reviewing a sample taken from the site on April 8, 1993, numerous documents including deposition transcripts, a DEP file, Bello's reports and file, the data from Casie and two site visitations, he determined that the gasoline found in the "well" was leaded gasoline containing two tenths of a gram per gallon, an amount in excess of that which the law allowed for gasoline after January 1, 1986. Dr. Smith therefore concluded that the contamination found in that "well" did not come from the 3,000-gallon tank that was removed by Casie, nor from any alleged spillage during its removal. Finally, Dr. ...