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Kerr v. Able Sanitary and Environmental Services

November 15, 1996


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

Before Judges Brochin, Kestin and Eichen. The opinion of the court was delivered by Eichen, J.A.D.

The opinion of the court was delivered by: Eichen

The opinion of the court was delivered by


In this consumer fraud/professional negligence action, plaintiffs David L. Kerr and Gail L. Kerr sued defendant Able Sanitary and Environmental Services, Inc. (Able), a remediation excavation contractor, and Andover Environmental Engineering, Inc. (Andover), an environmental engineering company, and two of their principals, alleging that defendants misrepresented the extent of work necessary to clean up and remediate plaintiffs' property as a condition for obtaining a "no further action" letter *fn1 from the New Jersey Department of Environmental Protection (NJDEP).

Plaintiffs are the former owners of residential property in Essex Fells. Plaintiffs contracted to sell the property in March 1994. As a condition of sale, the prospective purchasers required plaintiffs to remove an underground storage tank on the property and to provide proof that the tank had been removed in accordance with governmental regulations, including proof that no discharge into the soil had occurred.

During the pendency of the action, counsel for plaintiffs, Timothy Haley, apparently initiated a Discussion about the case with a reporter at The Star-Ledger, who was preparing an article concerning unscrupulous contractors active in the remediation field. Haley also communicated with representatives of the NJDEP regarding the status of plaintiffs' property. Based on these occurrences, defendants concluded Haley had "independent knowledge" concerning the events giving rise to the action and served him with a subpoena commanding him to appear for a deposition and to produce documents.

The Law Division refused to quash the subpoena and, without making any specific findings of fact concerning defendants' allegations of "independent knowledge" or indicating the legal standard the court was applying, granted defendants' cross-motion to enforce the subpoena, subject to certain protective measures. In so ruling, the court stated as follows:

[Haley] has acted far more than an attorney representing someone and he has done a lot of things that have made this Court suspect of not any bad intentions, but of the manner of certain information being obtained. I think that for clients to be adequately represented on all sides, people have to know where information is coming from, how it is being filtered, how it is being used. And when Mr. Haley is going to make statements to the press that his client denies he has any knowledge of and say that he openly goes and asks the press information, makes me very suspect of what is going on.

I had a feeling about this case that is very disconcerting. And I think that any lawyer worth [his salt] in this state would not be talking to the press. And this is by no means meaning no disrespect to the press.

I am making no findings as to what has gone on. It is just that I have become very suspect as to the way this litigation is going on.... And I would caution everybody to stay away from the press.

We granted Haley leave to appeal from the Law Division order. For the reasons discussed below, we reverse.

We review the background circumstances in some detail so that the parties' arguments can be better understood. In November 1993, plaintiffs engaged Able's excavation services to remove the storage tank from the property. Upon its removal, holes were discovered in the body of the tank and, consequently, Able recommended further investigation to determine whether soil contamination had occurred. On Able's recommendation, plaintiffs retained Andover to perform soil testing. Andover is an engineering company providing project management for soil and groundwater remediation, including designing systems and operations for such purposes. Ultimately, Andover and Able performedsignificant remediation work, including removal of 350 tons of soil and the installation of a carbon filtration system, contending the system was necessary to clean up the contamination caused by oil leakage into the groundwater. Plaintiffs contend that they expended in excess of $70,000 to clean up the property and that much of the expense was unnecessary.

On September 23, 1994, plaintiffs filed an unverified complaint in the Superior Court alleging that they obtained a "no further action" letter" from the NJDEP without the carbon filtration system being operated. After filing the complaint, plaintiffs arranged to sell the carbon filtration system to a third party in order to mitigate their damages. According to plaintiffs, they learned for the first time from the prospective purchaser in November ...

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