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State Dept. of Environmental Protection v. Caldeira

April 08, 2002

STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, PLAINTIFF-APPELLANT,
v.
JOSEPH J. CALDEIRA, JR., INDIVIDUALLY, AND AS OWNER, OPERATOR, MANAGER, DIRECTOR, OFFICER AND/OR SHAREHOLDER OF FORCEES, INC., AND CALDEIRA BROTHERS, INC., JOSEPH J. CALDEIRA, SR., INDIVIDUALLY, AND, AS PRIOR OWNER, OPERATOR, MANAGER, DIRECTOR, OFFICER AND/OR SHAREHOLDER OF FORCEES, INC., CALDEIRA BROTHERS, INC., AND SOUTHERN OCEAN LANDFILL, INC., AND U.S.A. WASTE RECYCLING OF NEW JERSEY, INC., A CORPORATION OF THE STATE OF NEW JERSEY AND CORPORATE SUCCESSOR TO CALDEIRA BROTHERS, INC., DEFENDANTS-RESPONDENTS,
AND SOUTHERN OCEAN LANDFILL, INC., A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 338 N.J. Super. 203 (2001).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

LONG, J., writing for a unanimous Court

The issue in this appeal is which statute of limitations should apply to a fraudulent transfer action brought by the State Department of Environmental Protection (DEP): The four-year/one-year statute of limitations set forth in the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-31; the ten-year limitation that generally applies to civil actions brought by the State under N.J.S.A. 2A:14-1.2; or the statute of limitations governing actions in connection with a landfill closure, N.J.S.A. 58:10B-17.1.

Joseph Caldeira, Sr., was the owner and operator of the Southern Ocean Landfill, Inc. (SOLF), an entity that operated a sanitary landfill in Ocean County. He also owned and operated Caldeira Brothers, a solid waste collection utility company, and Forcees, Inc., an equipment leasing company that provided equipment exclusively for his solid waste entities. The landfill stopped accepting waste in 1988 after it reached its full capacity. Pursuant to the Sanitary Landfill Closure and Contingency Fund Act ("Closure Act"), N.J.S.A. 13:1E-100 et seq., SOLF submitted a closure plan to the DEP. It was estimated that the closure of SOLF would cost $23 million. Because it had reached full capacity, however, the landfill stopped generating sufficient revenues to fund the closure.

In 1989, Caldeira, Sr., transferred 99% of his stock in Caldeira Brothers to his son, as well as all of his stock in Forcees, Inc.. In 1991, Caldeira, Sr., on behalf of SOLF, and Caldeira, Jr., on behalf of Caldeira Brothers, entered into an agreement in which SOLF agreed to forgive a $600,000 indebtedness owed to it by Caldeira Brothers for "tipping fees." Subsequently, as a result of a series of transactions, all of the assets belonging to Caldeira Brothers and Forcees were acquired by USA Waste Recycling of New Jersey, Inc..

On November 24, 1997, the DEP filed a Closure Act enforcement proceeding against SOLF and Caldeira, Sr., both individually and as owner of SOLF. The DEP alleged improper operation of the landfill, failure to implement a closure and post-closure care plan in violation of the Closure Act, and that spillage of leachate from the landfill into the area surrounding it was imminent and threatened the surrounding environment. It was during discovery in the closure action that the DEP learned of the asset transfers between Caldeira, Sr. and Caldeira, Jr., and the $600,000 debt forgiveness. Consequently, on April 23, 1999, the DEP filed a new complaint under the UFTA, naming Caldeira, Sr., Caldeira, Jr., SOLF, Caldeira Brothers, Inc., and USA Waste as party defendants. The complaint alleged that Caldeira, Sr. and his son engaged in a series of fraudulent transfers in order to avoid liability under the Closure Act. The DEP requested, among other relief, that the transfers be voided; that an accounting take place; that the proceeds of the transfers be held in escrow to underwrite the closure of SOLF's landfill; and, that an injunction be issued to preclude interference with those proceeds.

Following motions and cross-motions to dismiss, the trial court dismissed the DEP's complaint against U.S.A. Waste and Caldeira, Jr., as time-barred under the UFTA four-year/one-year statute of limitations. The court, however, did not dismiss the complaint against Caldeira, Sr., applying instead the general ten-year statute of limitations under N.J.S.A. 2A:14-1.2. The court refused to dismiss the complaint regarding the Forcees transfer because there was no proof that the DEP had notice of it more than a year prior to litigation. That matter is currently pending before the Law Division.

The DEP appealed, and both Caldeiras cross-appealed. The Appellate Division held that the UFTA four-year time limitation applied to all of the defendants, including Caldeira, Sr., New Jersey Dept. of Environmental Protection v. Caldeira, The opinion of the court was delivered by: Long, J.

Argued January 15, 2002

We are called on here to resolve the question of which statute of limitations should apply to a fraudulent transfer action brought by the State Department of Environmental Protection (DEP). Implicated are the one- and four-year limitations set forth in the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-31; the ten-year limitation that generally applies to civil actions brought by the State under N.J.S.A. 2A:14-1.2; and the statute of limitations governing actions in connection with a landfill closure, N.J.S.A. 58:10B-17.1. The Appellate Division ruled that the four-year UFTA statute barred the DEP action. We hold that in these circumstances the DEP action was timely under the ten-year limit of N.J.S.A. 2A:14-1.2. We therefore reverse and remand the case for trial.

I.

Under the common law doctrine of nullum tempus occurrit regi, which literally means "no time runs against the king," a statute of limitations did not bar an action brought by the government. New Jersey Dep't of Envtl. Protection v. Larchmont Farms, Inc., 266 N.J. Super. 16, 34 (App. Div. 1993), certif. denied, 135 N.J. 302 (1994). Originally established in England and incorporated into American law after the colonial period, the nullum tempus doctrine was based on the theory that "the king was too busy protecting the interests of his people to keep track of his lands and to bring suits to protect them in a timely fashion." Devins v. Borough of Bogota, 124 N.J. 570, 576 (1991); New Jersey Educ. Facilities Auth. v. Conditioning Co., 237 N.J. Super. 310, 316 (App. Div. 1989), aff'd in part and rev'd in part sub nom, New Jersey Educ. Facilities v. Gruzen Partnership, 125 N.J. 66 (1991); see also United States v. Thompson, 98 U.S. 486, 489, 25 L. Ed. 194, 195 (1879) ("It was deemed important that, while the sovereign was engrossed by the cares and duties of his office, the public should not suffer by the negligence of his servants.").

Specifically, under New Jersey law prior to 1991 the nullum tempus doctrine provided that "statutes of limitation do not run against any civil action brought by the State or any of its agencies and subdivisions, unless the Legislature so allows by express language or necessary implication." New Jersey Educ. Facilities Auth., supra, 237 N.J. Super. at 317. Presumably, the requirements of express language or necessary implication to trump nullum tempus were strictly construed. Indeed, in no reported case in which the State invoked the doctrine of nullum tempus was a statute of limitations ever held to meet those requirements.

On the contrary, nullum tempus was resorted to regularly by the courts to avoid applying statutes of limitation against the State. See, e.g., State v. Owen, 23 N.J. Misc. 123 (Sup. Ct. 1945) (finding that N.J.S.A. 2:24-15, current version at N.J.S.A. 2A:14-8, did not bar State attempt to recover unpaid rent under terms of riparian lease); Livingston Bd. of Educ. v. United States Gypsum Co., 249 N.J. Super. 498 (App. Div. 1991) (holding that N.J.S.A. 12A:2-725 did not abrogate nullum tempus even though it included the term "parties," and that school district was state agency against whom statute of limitations for seeking recovery of asbestos removal costs did not run); State v. Scientific Coating Co., 228 N.J. Super. 320 (App. Div. 1988) (allowing action against asbestos removal contractor because nullum tempus applied and not statute of limitations set forth in N.J.S.A. 2A:14-1); Port Auth. of New York and New Jersey v. Bosco, 193 N.J. Super. 696 (App. Div. 1984) (allowing action to recover duplicate payments made to policemen for their tuition because nullum tempus applied and not statute of limitations set forth in N.J.S.A. 2A:14-1); Veterans Loan Auth. v. Wilk, 61 N.J. Super. 65 (App. Div. 1960) (allowing action on promissory note because nullum tempus applied and not statute of limitations set forth in N.J.S.A. 2A:14-1); Trustees for the Support of Public Schools v. Ott & Brewer Co., 135 N.J. Eq. 174, 178 (Ch. 1944) (holding that because fund was dedicated to public schools, it "c[ould] not be supposed that the legislature in the enactment of statutes of limitation intended to forbid the recovery of a loan made from that fund because of a delinquency in its collection").

In a series of 1991 opinions, we abolished the nullum tempus doctrine "insofar as it would preclude the application of general statutes of limitations to the State." Gruzen Partnership, supra, 125 N.J. at 76; see also Holloway v. State, 125 N.J. 386, 397 (1991) (recognizing abolishment of the nullum tempus doctrine); Devins, supra, 124 N.J. at 579 (abolishing nullum tempus doctrine as to municipally-owned real estate not dedicated to or used for a public purpose). In response to the abrogation of the doctrine, the Legislature enacted N.J.S.A. 2A:14-1.2. New Jersey Transit Corp. v. Borough of Somerville, 139 N.J. 582, 587 (1995). That statute provides a general ten-year limitations period for actions brought by the State or its agencies:

Except where a limitations provision expressly and specifically applies to actions commenced by the State or where a longer limitations period would otherwise apply, and subject to any statutory provisions or common law rules extending limitations periods, any civil action commenced by the State shall be commenced within ten years next ...


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