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NEW WEST URBAN RENEWAL CO. v. WESTINGHOUSE ELEC. C

November 9, 1995

New West Urban Renewal Co., Plaintiff,
v.
Westinghouse Electric Corp., Defendant.



The opinion of the court was delivered by: WALLS

 Walls, District Judge,

 Plaintiff New West Urban Renewal Co. ("New West") and defendant Westinghouse Electric Corporation ("Westinghouse") have submitted cross-motions for summary judgment and partial summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. Pursuant to a Case Management Order issued by the Magistrate Judge, this motion presents two issues, referred to as: "The Contract Issue" and the "ECRA Issue." For reasons stated below, the Court grants partial summary judgment to New West on the "Contract Issue," and partial summary judgment to Westinghouse on the "ECRA Issue." The respective motions of their adversaries are denied.

 Background

 This lawsuit was brought by New West, the buyer of a parcel of land improved with a building against Westinghouse, its seller. This litigation is New West's effort to impose the cost of making that property environmentally sound on Westinghouse. Obviously, the parties have characterized the facts underlying this conflict in a completely divergent manner.

 According to New West, this case is about a prosperous company--Westinghouse--which conducted an industrial operation on a site for nearly a century, and polluted that site, and which now seeks to escape through subterfuge from governmentally-imposed duties to remedy the situation.

 Westinghouse sees the situation differently. According to it, New West is a sophisticated operation which has made great profits by buying urban properties cheaply and then converting the sites into more profitable holdings. Here, it bought Westinghouse's former site at a bargain and then determined that the economic prospects were not as rosy as anticipated. Westinghouse claims that this lawsuit was brought by New West to buy its way out of an improvidently entered deal.

 New West's First Amended Complaint was filed on March 8, 1995. Essentially, it alleges the following: On December 29, 1983, Westinghouse sold to New West a lot of real property situated at Orange and High Streets in Newark, New Jersey ("the Property"), with a 500,000 square foot building on it. Westinghouse had used the Property from the 1880's until its 1983 conveyance as a manufacturing facility. Additionally, after New West received title to the Property, Westinghouse maintained its occupancy therein for one year, pursuant to a lease agreement dated December 29, 1983. During the period when Westinghouse owned and then leased the Property, it utilized various hazardous substances. These substances were discharged and released into the soils and buildings at the Property. Westinghouse also kept hazardous materials in underground storage tanks ("UST's"), which also were released into the soils and buildings.

 The Contract for Sale

 New West and Westinghouse entered into an Agreement of Sale on July 25, 1983. Section 5 of the Agreement, titled "Deed" states that,

 
Seller, at closing, shall execute and deliver a special warranty deed in recordable form, to Purchaser conveying title to the Property in fee simple title, free and clear of all liens and encumberences except the following:
 
(a) Zoning, planning subdivision, environmental or ecological controls, sanitary, health and building laws, codes, ordinances, regulations, rules, requirements and restrictions imposed by any governmental authority or otherwise affecting the Property. Seller represents and warrants that it will use its best efforts to provide that there will be no violations existing as of the date of closing of the aforementioned laws, codes, ordinances, regulations, rules, requirements or restrictions. If there are any such violations, Purchaser shall give Seller notice thereof, and thirty (30) days to cure them. If Seller is unable to cure within said thirty (30) day period, Purchaser, may decline to close and shall be entitled to a refund of its deposit. . . .
 
Except as otherwise specifically stated herein, acceptance of the deed by the Purchaser shall conclusively establish the full satisfaction and discharge of all obligations of Seller under this Agreement. (emphasis added).

 Also relevant to this lawsuit is Section 12 of the Agreement, titled "Property Sold "As Is". " That section states

 
The Property and any improvements thereto is sold and purchased in its present condition, ordinary wear and tear excepted, and Seller shall have no obligation to alter, restore, repair or develop the Property. The Purchaser has not relied and does not rely on any representations, facts or conditions, other than those expressly set forth in this Agreement. Without limiting the generality of the foregoing, no representations have been made or are made, or responsibility assumed by Seller, as to the condition or repair of the Property, or the value, expenses of operation, or development or income potentials thereof, or as to any fact, circumstance, thing or condition which may affect or relate to the same.
 
Purchaser is hereby notified by Seller that asbestos-based materials were used in several applications in improvements to the Property. These may be found primarily in piping insulation. Purchaser should take reasonable precautions and follow applicable regulations to protect personnel in the event of the disturbance or removal of such material from its existing locations.
 
Notwithstanding anything else contained herein to the contrary, Seller agrees that if the chemical storage tanks located in the plating room on the Property are not removed prior to closing, it shalldrain [sic] those tanks before it vacates the Property so that they may be removed without any special precautions or danger and so that their removal will not result in any violation of law.

 The Magistrate Judge to whom this case was assigned issued a Case Management Order to permit early adjudication of two issues:

 
I. Whether, or the extent to which, environmental liability was contractually transferred from Westinghouse to New West under the terms and conditions of the sale of the property in question; ("Contractual issue")
 
II. Whether Westinghouse had any responsibilities for compliance with New Jersey's Environmental Cleanup Responsibility Act ("ECRA issue").

 Westinghouse's Motion for Summary Judgment

 Westinghouse asserts three theories in support of its motion for summary judgment.

 The first relates to the Contractual Issue. Westinghouse contends that, legally, it, under the plain terms of the Agreement of Sale of the Property, transferred to New West, and New West assumed, all responsibility and liability associated with any environmental condition at the Property. If Westinghouse prevails on this theory, it is entitled to complete summary judgment.

 The second and third theories seek partial summary judgment on the ECRA issue. More specifically, Westinghouse claims that ECRA does not apply because New West took title to the Property before December 31, 1983, when ECRA became effective, and that Westinghouse thereafter did not behave in a manner which would give rise to any ECRA liability. Finally, Westinghouse argues that even if ECRA does apply, New West's claim either is barred by its six-year statute of limitations, or the "as-is" clause.

 New West's Motion for Partial Summary Judgment

 In its quest for summary judgment, New West's argument regarding the contractual issue is straightforward. It claims that Westinghouse's liability for environmental contamination was not contractually transferred "because an "as is" clause does not shield a seller of real property from liability for environmental contamination."

 New West also opposes Westinghouse's view of the ECRA issue. New West concedes that it bought the Property before ECRA was enacted. However, it maintains that Westinghouse triggered ECRA because it remained on the Property as an occupant and continued to handle, store, transport and dispose of hazardous substances at the Property in 1984 and 1985. Thus, New West claims that Westinghouse's actions at the Property after ECRA's effective date subject it to that statute's liability.

 Standard for Summary Judgment

 Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir. 1976), cert. denied, 429 U.S. 860, 50 L. Ed. 2d 137, 97 S. Ct. 161 (1976).

 Discussion/Analysis

 Contract Issue

 Westinghouse asserts that it bears no liability to indemnify New West for any costs of remediating environmental contamination on the Property because the contract of sale contained an "as is" clause, ...


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